Nielsen Media Research has begun to develop a measurement system for video-on-demand, which could serve as a breakthrough that would allow television's most popular programming to migrate to the on-demand platform.
The researcher is exploring several methods to gather information about on-demand viewing, ranging from new PeopleMeter technology in VOD homes to Nielsen-based software applications residing in set-top boxes.
Such a move could be an important step forward in VOD's evolution. Save for Fox's 24, no ad-supported entertainment broadcast network programming has appeared on VOD. And only a handful of ad-supported cable network programs have been made available to the platform.
Reasons range from piracy concerns to finding acceptable business models. But the ratings issue is at its center. Many programmers said they can't afford to provide content to VOD platforms without getting paid. They also worry about cannibalizing ratings on their core linear networks.
In a handful of cases, as with Insight Communications Co.'s kids SVOD package, basic-cable programmers are getting paid. But the fees are based on subscription revenue, not the number of eyeballs watching the shows.
Seeing value
Programmers — and, increasingly, MSOs — see the value of developing a ratings system for VOD, especially for TV's popular advertiser-supported programming. Comcast executives have alluded to developing ad-based revenue streams for VOD, which range from long-form ads to traditional network fare that would be amenable to programmers and Madison Avenue.
"In order to have full understanding of the impact of VOD on our linear networks and to support the development of a VOD advertising revenue stream for this product for Turner and our affiliate partners, we need to have a Nielsen measuring system in place," said Kevin Cohen, senior vice president, general manager, interactive/enhanced TV, of Turner Network Sales. "The goal is to have a rating system set up to measure VOD viewership as aggessively as it currently does linear network programming, providing the industry with a cumulative value for linear and non-linear programming."
The Madison Avenue connection is key, and may not be well-understood by MSO executives, save for their local ad-sales departments. Throughout the history of broadcast — and now cable television — billions of dollars in advertising is spent based on the TV watching that occurs in Nielsen homes. Even though cable VOD server vendors can gather boatloads of information on streaming and usage, those companies have little history in TV measurement that carries any weight on Madison Avenue.
Enter Nielsen: At last month's National Show in Chicago, Scott Brown, senior vice president, strategic relationships, marketing and technology for Nielsen, gave a presentation to members of the Cable & Telecommunications Association for Marketing's On Demand Consortium on the role the research company could provide in this space.
Brown is charged with looking at future applications for Nielsen. As such, he's engaged in an ongoing dialogue with MSOs, steeped in the deals for local ad ratings that Nielsen has with most MSO ad sales departments.
"We started paying close attention when the digital rollout started picking up steam," Brown said, realizing that VOD, SVOD, FOD and other applications would soon develop. "There is an entirely new suite of needs. VOD is a big area and we started working with many of the MSOs on an individual basis.
"There is a need for measurement and Nielsen is extremely well-suited to provide that measurement," he continued. "The question is: 'What is the mechanism? It's a natural place for Nielsen to evolve."
Channel challenges
Currently Nielsen has access to some anecdotal VOD data. A small, undetermined number of Nielsen's 5,000 people-meter homes have access to VOD. But people meters record viewing patterns on particular channels, limiting the amount of usable information when it comes to VOD.
For instance, in a Time Warner Cable market where HGTV On Demand might be on channel 211, Nielsen can record viewing to channel 211, but couldn't say what HGTV shows from the server were viewed.
In other cases, MSO VOD content streams through a single VOD "channel," so a Nielsen people meter would have no idea if a consumer was watching a FOD show, a VOD movie or an SVOD selection.
Part of the initial discussions with operators center on the kind of universe that should Nielsen seek to "measure." Nielsen could find a subset of VOD homes and use that as a base from which to extrapolate information. Another approach is to gather information for every VOD home and assemble that information for the MSO, to pass along to programmers and advertisers.
To that end, Nielsen is working on a pair of initiatives, Brown said. One is the development of an "active passive metering system."
The system would require all VOD programmers to apply an audio and video code to each piece of content. The in-home metering system would then be able to detect those codes once a VOD program is viewed on the television and log that information for MSOs.
The broadcast networks have been inserting codes for many years, and most cable networks have begun similar inclusions over the past year, Brown said. Brown said the active passive metering system could be ready by mid-2004.
A second option is to use a Nielsen software application that would reside inside a set-top box and record all VOD viewing information. TiVo Inc. uses software written to a Nielsen specification to record viewership on its digital video recorder box.
"It's an increasingly elegant way of measuring," Brown said of the software approach. "We've gone to MSOs to talk about that application residing on their platform."
The software application might be the easiest solution to implement, but the timing is up to the MSO. Although Nielsen would want some common elements in the software, moving towards a standard, "everybody's software engine would be slightly different. Each MSO has its own business model and paradigm," he said. But the clear hope is that they'd build such a specification into set-tops going forward.
Until now, server vendors have been the primary source for VOD usage information. Server vendors have software that integrates with an MSO's billing system to record VOD transactional buys, such as movies.
The vendors also steadfastly maintain they can provide MSOs all sorts of viewership data, including FOD usage. It's unclear how many, if any, MSOs have availed themselves of that offer.
Thus, server vendors are in the audience measurement business, to a degree, and could plunge into it further. But it's not clear whether that strategy would do those firms any good with cable MSOs, content providers or ad agencies.
Brown said Nielsen has signed agreements with some server vendors relating to working together on enabling access to server-based data. Nielsen lets those vendors know the types of advertising or usage information it is most interested in.
It's an interesting dance, at this point. "There aren't too many firms providing data information on buying and facilitating TV time," Brown said.
And Nielsen has decades of credibility with advertisers. "Is trust worth paying for?" Brown asks rhetorically. Although server vendors could come up with usage data, "Who's going to buy from a firm who doesn't highly specialize in that. That's a powerful theme."
A second issue concerns privacy.
"We have to assure the privacy of the data. Assuring the public that nothing is released about that particular home, that's huge," Brown said.
Given the cable industry run-ins with privacy on the high-speed data side, a third-party like Nielsen is positioning itself as trusted go-between among cable MSOs, programmers and Madison Avenue.
Still another issue with server-based reports is linking viewing to demographics.
"How do you collect demographics from a server?" Brown asked. Again, linking demographic information with ratings is key for programmers to get dollars from advertisers.
Brown said he's seen a strong level of interest among MSOs about Nielsen's VOD initiatives. Part of operators' interest stems from making sure cable systems get all the revenue they can out of the VOD platform, which took billions of dollars to build.
And the final model for Nielsen? Brown said it's too early to say. Nielsen will have to spend money on new technology to track VOD usage. Traditionally, cable and broadcast networks pay Nielsen to deliver ratings that those programmers took to advertisers. Cable MSOs aren't used to spending a lot of money with Nielsen, but they may have to, in order to continue developing VOD. And programmers also will play a role, perhaps also on the funding side.
And even if a ratings system is developed and numbers are reported to Madison Ave., it could take time for VOD ad revenue to flow, as witnessed by cable's ongoing fight with broadcast for a fair share of ad dollars.
But, as Brown said, "You've got to start someplace."
