Video-on-demand shows to be free, with a catch
Walt Disney Co. and Cox Communications Inc. are planning an experiment in Orange County this fall to gauge whether people who have advertising-skipping technology are really willing to watch commercials.
The trial program, unveiled Tuesday, will give Cox's 250,000 cable subscribers in the county the option of watching episodes of four shows on Disney's ABC network -- "Ugly Betty," "Grey's Anatomy," "Desperate Housewives" and "Lost" -- through Cox's video-on-demand service. Certain college football games also will be made available.
The shows and games won't cost anything but also won't be free of commercials, because Cox will disable the fast-forward feature that lets on-demand viewers zip through the ads.
Television executives will be watching closely. They have been scrambling to find ways to protect more than $60 billion a year in advertising revenue as audiences for their shows shrink and as more consumers become comfortable watching shows on their own terms and time schedules.
"No one wants to move into the future without figuring out how to take the advertisers along with them," said James McQuivey, an analyst with Forrester Research. "This simply gives people a choice. Do you want to plan ahead and set the recorder and make sure that you have space on your hard drive? Or if you miss a show, you could always go back and watch it with some ads."
The arrangement will cover only ABC programming on Cox's video-on-demand platform and won't affect subscribers with digital video recorders. They will still be able to speed through ads.
According to some estimates, within five years more than half of all U.S. homes with TVs will be equipped with digital video recorders, making the industry's challenge to protect its ad revenue all the more urgent.
During the last year, TV executives have tested the digital waters by putting some shows online with just a few commercial messages. CBS and NBC have offered ad-free shows for 99 cents through some cable and satellite TV providers.
So far, people have been more inclined to watch shows they don't have to pay for even if they include ads.
"We're trying to find a model where we will keep our ads in," said Ben Pyne, the Disney executive in charge of cable affiliate sales and marketing. "We're trying to find ways to have the consumer see our best content in ways that we can monetize."
