Under this scenario, detailed by Brian Wieser, VP-director of industry analysis at Magna Global USA, a free VOD approach would still mean that the traditional :30 spots-in-pods approach would lose its hegemony while long-form branded content would gain currency among advertisers in fighting clutter and fragmentation.
Wieser's argument is fueled by his thesis that many consumers would not want to pay the additional $10-12 in monthly fees to receive DVR capability within the set-top boxes that their local cable or satellite operator would offer. Both DVR and VOD offer when-you-want-it programming but VOD doesn't offer such features as commercial-skipping or the ability to pause live programming. Magna's theory is that those features wouldn't be enticing enough for many American viewers to want to shell out extra money every month.
The Magna study predicts that in a free VOD world, DVR usage will cap out at 25% of U.S. households. There are currently 3 million plus homes with a DVR in the U.S. These forecasts have been made as cable providers like Comcast and Time Warner roll out DVR and News Corp. chairman Rupert Murdoch dangles it as a customer acquisition carrot for his DirecTV satellite unit.
%%PULLQUOTE_RIGHT%% "Advertisers have new opportunities to create branded entertainment for VOD," Wieser said. "As marketers grow more comfortable with long-form advertising like BMW Films in an on-demand environment, programmers will be [more incentivized] to secure top-quality content on-demand."
One branded entertainment maven agreed that VOD will make a huge impact but doesn't buy into the 25% DVR penetration cap prediction. "We're definitely coming to a time that ads delivered by VOD will become an incredibly robust market and could become a primary means of brands delivering messages to consumers, especially high consideration brands, but I don't believe that VOD replaces the DVR role for the consumer under any scenario," said Chris Gebhardt, co-head of the Brand Ventures Group at The Firm, a leading Hollywood talent management and production company. "All the consumer research is saying people love DVR and commercial-skipping and time-shifting are key hooks."