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Speaking a day after his network announced a video-on-demand deal for its signature programming with Comcast Corp., Mr. Poltrack said he sees significant potential and little downside in an on-demand world.
50 million homes
Mr. Poltrack based his figure on an estimate of 50 million homes with VOD access and CBS research that shows an average household would pay $100 a year to watch network programming on their own schedules.
VOD has been limited so far, he said, with few popular programs available and networks hesitating to be involved. CBS and the other major networks have changed that with this week’s deals offering their top shows for 99 cents an episode. Viewers will be able to order CBS ratings hits like “CSI: Crime Scene Investigation,” “The Amazing Race” and “Survivor.”
“The clear news from the last few weeks is that people are beginning to believe in the potential for video-on-demand,” he said. “The marketplace will change dramatically in the era of digital TV, but it will look more familiar than the pundits say.”
Mr. Poltrack said he's been the voice of dissent in the continuing debate about the threat of on-demand to the TV business. “Some people see this as the beginning of the end for broadcast networks,” he said at the two-day conference, which drew about 200 entertainment, media, advertising and marketing executives. “I’d argue that’s myopic. The system will not only survive, it will thrive.”
The future of the business will hinge largely on franchise programming, “the survival of the fittest,” he said, meaning the most popular series such as “CSI,” “Desperate Housewives,” “Lost” and “American Idol” will draw audiences willing to pay to watch them at will. Since the networks are part of much larger vertically integrated conglomerates that produce shows, they will continue to be at the center of the activity, he said.
Buying specific shows
A CBS study found that 19% of a sampling of adult TV watchers would be “definitely likely” and 16% “very likely” to consider buying their favorite TV shows to watch at their leisure. The numbers were higher when the participants were asked about specific shows -- 33% said they would consider paying for episodes of “CSI,” and 32% said they would do so for “Desperate Housewives.” Numbers were almost evenly split between those who would pay $1 for a show without ads and those who would pay 50 cents for shows with commercials.
It remains to be seen if VOD will cannibalize DVD sales, which have been a boon for some TV series. Mr. Poltrack said he favors a model where the show is available for a short on-demand window, perhaps a week or two, and then removed from that service. The extras-loaded DVD would launch later with its sales potential intact, he said.
Much of CBS’s research has focused on how to debunk some of the predictions about DVR penetration and commercial skipping. DVR penetration is about 8%, up from 3% two years ago, which Mr. Poltrack said was below earlier projections and surprising because of aggressive marketing from cable operators.
As other studies have shown, CBS research has found that people who own DVRs watch more TV in general -- a combination of live and recorded -- and that the top 10 network shows are the most heavily recorded. Still, early DVR adopters are likely to miss the ads in those shows, with 64% of adults in a study saying they fast-forward through the commercials. Even so, Mr. Poltrack said he isn't convinced that viewers skip the entire marketer message, with research showing that 21% of those who zap the ads still recall some of the brands.
Brand integration is one way to get around ad-skipping devices, he said, and he expects the practice to keep growing even though there’s no one established measure for its effectiveness. Marketers and networks will need to be more creative about those partnerships, but he thinks it’s a fertile area if the integrations are well done.