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Comcast Signals New Ad Era for VoD

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
7/29/2011
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After years of fits and starts sprinkled in with some small field trials, dynamic ad insertion for cable video-on-demand (VoD) appears to be on the verge of becoming a reality, giving MSOs a system that can rival the flexibility and speed enjoyed by advert systems that power Web-fed video services. (See Comcast Gets Dynamic With VoD Ads and Charter Tests Dynamic VOD Ads.)

Evidence of cable's emerging ability to switch ads in VoD content on-the-fly emerged this week when Comcast Corp. (Nasdaq: CMCSA, CMCSK) announced it had started a scaled deployment that's covering 17 markets, about 7 million homes. The MSO expects to complete the deployment by early 2012, according to Comcast SVP and GM of Video Services, Marcien Jenckes.

In terms of content suppliers, USA Network, E!, Syfy, Bravo Media and Oxygen Media are already on board, and networks from the MSO's corporate cousin, NBCUniversal LLC , will be joining in the months ahead. Chrysler and Kraft are the first major advertisers to sign on, with Comcast Spotlight bringing in several local advertisers.

"We believe it's ready for prime time," Jenckes says of the technology, which at long last will help MSOs try to staunch the flow of video advertising that's been leaking to the Internet. (See Plugging the Ad Drain.)

Comcast, in tandem with campaign management and ad-serving partner BlackArrow Inc. , is starting off with the ability to digitally splice commercials into the front- and back-ends of "free" ad-supported VoD content. The MSO expects to start inserting ads into the middle of shows by the fall.

That's something programmers have been able to do pretty easily for a while for Web-sourced VoD, but now cable's legacy digital TV platform is finally catching up. Before dynamic splicing became available, programmers had to insert the commercial into the VoD asset and re-edit whenever new adverts needed to be inserted.

The ability to make swaps rapidly will help programmers insert ads that are more relevant, but it will also put the industry on the path toward addressable (i.e. targeted) advertising. Adding addressable ads to the mix will probably have to wait until 2012, Jenckes says.

Jenckes says Comcast has reached the scaled deployment stage for dynamic VoD ads now that it has built out its central VoD library and developed the associated video-optimized content delivery network (CDN). Also factoring in was its investment in a unified database that manages all of Comcast's VoD assets centrally. (See Comcast's 'Project Infinity' Takes Flight .)

Going wider
But the value and scale of this is limited if Comcast acts alone. Canoe Ventures LLC , the cross-MSO advanced ad joint venture, will help other MSOs join the mix in early 2012. In addition to Comcast, Canoe's backers include Time Warner Cable Inc. (NYSE: TWC), Charter Communications Inc. , Cox Communications Inc. , Cablevision Systems Corp. (NYSE: CVC) and Bright House Networks . (See Canoe Experiments With VoD Ads.)

Jenckes says ad-supported VoD is already profitable -- Comcast averages about 350 million VoD views per month -- but this new capability should drive incremental on-demand revenues for MSOs and programmers and give them upside on the ad dollars that are already coming in from traditional linear TV and via the Internet.

"This is new revenue at scale against a significant amount of viewership," he says.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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