Cash-strapped small and independent North American cable operators will no longer have to imagine what it's like to monetize IPTV services by selling ads on them. Under a deal struck between the National Cable Television Cooperative (NCTC) and Imagine Communications, NCTC members will now be able to insert ads on their IP video streams as they increasingly shift away from offering traditional pay-TV services.

Announced Wednesday right after the conclusion of the NCTC's Winter Educational Conference in Las Vegas, the deal calls for Imagine to offer AdKey, a cloud-based service that supports ad insertion on all IP-based video streams, to NCTC's 750-plus service provider members across the US and Canada. With tech trials slated to start shortly, Imagine aims to start rolling out the ad insertion service in the third quarter.

Imagine executives said AdKey will offer service providers, content owners and other video players the same ad insertion capabilities for IP video services that linear ad insertion offers today on legacy pay-TV services. They also said the cloud-based service will enable operators to sell ads on hundreds of other channels that they are not monetizing now.

"We open up all the inventory that's not sold now," said Chris Gordon, vice president of product marketing for Imagine. "What we're looking at is creating a virtual ad interconnect."

Besides the cloud-based ad insertion technology, Imagine is also offering links to other key parts of the advertising ecosystem. Most notably, AdKey will be pre-integrated with SpotX and other supply-side platforms to provide access to programmatic exchanges and campaign fulfillment systems.

Why this matters
With cable operators of all stripes and sizes seeing their legacy pay-TV customers and revenues shrink quarter after quarter, they have been seeking ways to still offer video services at dramatically lower costs. IP video offers a prime way to do that by permitting them to deliver video streams to TVs, tablets, smartphones and other consumer-owned connected devices without paying huge license fees to content providers or installing costly set-top boxes in homes.

Indeed, NCTC officials said more than 100 of their members are either already offering app-based IP video services or are seeking to do so in the near future. So they are looking for ways to make those services pay off as they discard or at least de-emphasize their legacy pay-TV offerings.

"I think there is a lot of demand" from members, said Jon Radloff, vice president of video solutions for NCTC. "We've been thinking about this for a while."

The AdKey deal was announced just two days after NCTC unveiled an agreement with Amazon to provide discounts on Fire TV devices to the co-op's members. Under that program, NCTC members will be able to bundle low-cost Fire TV devices with their pay-TV service or in conjunction with their broadband offerings.

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— Alan Breznick, Cable/Video Practice Leader, Light Reading