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A study of exotic Long Island reveals stubborn attachment to primitive linear TV

We've all heard of anthropologists doing their work on Easter Island or the Aleutian Islands. Late last year, Mag Rack worked with Sapient Research to send an anthropologist to conduct research on a different sort of island: Long Island.

Sapient conducted in-depth interviews in people's homes, asking them about how they use VOD and how the experience could be improved. I went along on one of the sessions. I wore jeans and pretended to be a cameraman so that the family we were interviewing would speak freely. What I learned was eye opening.

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One finding that came through early and remained consistent was that simply offering viewers the on-demand functionality does not necessarily translate into a demand to watch - let alone pay to watch - the programs. While VOD has long been considered a killer application that would revolutionize television, many viewers today don't have a sense of urgency when it comes to using the service.

In homes where viewers have VOD, the average mode of engagement is linear programming first (a mode which I suspect will become second to PVRs), with VOD as a last resort - if at all.

In a vertical world of instantly gratified multitaskers, why are they not welcoming VOD with open arms? The study showed me that while many viewers do embrace the notion of on-demand and enjoy the novelty of the new technology, many remain confused over how VOD works and are thus not motivated to return for a second try. Viewers are overwhelmed by options in terms of cost yet underwhelmed in terms of content.

Some premium channels have found early success packaging their products for SVOD. This model may work for select content offerings, but may not work for most basic networks or operators. A growing menu of a la carte services - each with a retail price - may not only be confusing and difficult to market, but may actually hinder adoption of VOD. And the proliferation of PVRs will certainly erode SVOD's consumer proposition over time.

So where do we go from here? We need to integrate on-demand principles into how viewers watch television. Programmers need to think of VOD as a new platform and the brand as a new network, rather than simply a storage device. Some ideas: Schedule content that is not readily available on linear networks; create new content for VOD; offer bonus content on-demand; and develop program schedules that have a consistent refresh rate which can be clearly communicated to viewers. Consider VOD a new venue for viewers. Imagine if a popular TV series premiered a few days early on-demand. That would create urgency for VOD.

An economic model that allows programmers and operators to support these innovations has yet to emerge.

Analog cable brought a package of basic channels for one price; digital brought more channels with a basic tier of choices. Today, the closest model we have for on-demand is free-on-demand. Yet, not much content on FOD is new or unique; there is no real economic model to support it. In the end, viewers are left with a random selection of brands and content stitched together to allow them the ability to test the functionality of VOD at no incremental cost. In many cases this is the first, and possibly the last, experience viewers have with VOD. No urgency.

The novelty and perceived value of FOD could possibly wear thin unless the content changes. FOD might be a meaningful evolution of on-demand television into a basic VOD tier: a package that is marketed to consumers as the best of cable on-demand and made available at a modest price. The main objective is not to generate incremental revenue, but to present a strategy that would allow operators to curate a deeper, more compelling and actively programmed content package that showcases the true value of VOD and drives digital growth.

Basic VOD enables programmers to embrace VOD without changing the economics of basic cable networks and eroding operators' digital margins. A per subscriber license fee paid to programmers facilitates fresh, unique content that is designed for the platform. Our study found that viewers are learning about and exploring VOD, that they are curious about what they will find and that they are willing to give the product a chance. That means our industry also has a chance to make VOD a desired destination for viewers. The technology on TV is new, but the strategy is as old as television. Content is king.

Matthew Strauss is EVP and general manager for Mag Rack.

Technology Industry

A study of exotic Long Island reveals stubborn attachment to primitive linear TV

Cable World, June 23, 2003

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