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will be hot. Sure.
Study says will someday dominate TV viewing
By Toni Fitzgerald
Consumer impatience has led to many innovations in the electronic age: cell phones, ATMs, instant messaging.
It also sparked the creation of on-demand television and video packages that until now have seen middling sales and even less consumer recognition.
What consumers appeared to want in theory they have yet to consume at retail.
But a new report from Forrester Research says on-demand sales will skyrocket over the next five years.
The report even goes so far as to claim that on-demand viewing will one day replace prepackaged viewing (such as regular network television schedules and DVDs).
It’s a service that 8 million video-on-demand customers already enjoy, but what about the country’s 250 million other TV watchers?
They may be missing out.
Video-on-demand devices such as TiVo and music-on-demand services like Pressplay allow consumers to enjoy the parts they like and get rid of the ones they don’t. TiVo includes an optional commercial-zapping feature. Pressplay offers the ability to skip the songs you don’t like on a CD.
Even with these options out there, sales to date haven’t exactly foretold a revolution. TiVo’s gained only 500,000 customers in three years. But as prices drop and availability widens, Forrester sees a major change taking place. Its predictions call for a 50 percent VOD saturation rate by 2007.
“The new power in media is at the end of a wire--or a wireless network,” the report says. “Post-merger, the 22-million-subscriber AT&T Comcast will overshadow broadcast networks, with a national ad sales force and power over channel placement and technology in consumers’ homes.”
That suggests a dour future for some current entertainment superpowers. Video on demand means no more running to the video store to check if “Star Wars” is available. Like pay-per-view services that popped up in the ‘80s, video-on-demand promises instant gratification.
“Blockbuster will fade in the face of VOD,” the Forrester report predicts. “Tower Records will wither as Amazon electronically delivers to customers customized collections of music that track radio airplay.”
That may mean repurposing by the record stores and video renters in the face of a VOD outbreak. Blockbuster tried to test the waters through a video-on-demand deal with Enron (broken when the energy giant went bust). And other industries will feel the repercussions, too.
Cable networks have begun specializing their services to stay competitive. The Weather Channel, for example, provides local forecasts on TV and offers a personalization option on its web site.
ESPN has run a sports ticker with scores, news and stats on the bottom of its “SportsCenter” broadcasts for years. CNN, MSNBC and other news channels instituted news tickers after Sept. 11 to keep viewers up-to-date with the latest developments. These sorts of packaged news bytes drive demand for VOD. After all, everything from a beeper to a PDA can deliver the news these days.
Premium cable channels HBO and Starz offer on-demand services scheduled to grow over the next few years. Experts suggest that basic cable nets like MTV and CNN will soon follow.
Changes in television will also mean changes for advertisers. Forrester doesn’t currently advise its clients to forgo traditional media placements, but it does suggest some new approaches.
The report recommends placing ads directly in content, such as the “Prudential Halftime Report” or “Chik-Fil-A Peach Bowl.” It also suggests, since VOD allows for editing out of commercials, more direct contact with customers through “customized cable lists or addressable ads in cable VOD.”
In all, Forrester predicts a mind-boggling jump from $115 million spent on VOD devices in 2001 to a projected $6 billion by ’07. Big numbers for an industry still battling for name recognition. But feasible enough considering where the internet was 10 years ago and where it is today.
“On-demand media will feed the next decade of media mega-trends,” Forrester predicts.
“American Idol” highlights whenever you want them? There’s no price for that.
October 7, 2002 © 2002 Media Life
-Toni Fitzgerald is a staff writer for Media Life.
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