New From TV Networks: Prime Time on Demand
Two television networks announced deals Monday that would allow pay TV subscribers to watch some of their most popular prime-time shows shortly after they air, carrying the promise that many more viewers may no longer be at the mercy of broadcast schedules.
Cable giant Comcast Corp. struck an agreement with Viacom Inc.'s CBS network that will let cable subscribers with digital service order the top-rated “CSI: Crime Scene Investigation,” “Survivor,” “The Amazing Race” and “NCIS.” Viewers will pay 99 cents an episode through their video-on-demand cable service.
Also, DirecTV Group Inc. and General Electric Co.'s NBC Universal struck a similar accord enabling satellite subscribers with new digital video recording boxes to order some of the network’s prime-time programs, including “The Office,” “Law & Order: Special Victims Unit” and “Law & Order: Criminal Intent,” also for 99 cents an episode.
Although viewers who own personal video recorders such as TiVos or VCRs can record their favorite shows now, the two deals are unique in that they make TV-on-demand available to a broader audience. They also let customers pay for shows on an a-la-carte basis.
Both deals are the first of what are expected to be numerous similar arrangements. They mark the latest examples of how technology is altering the television experience and the traditional network business.
“For 50 years, TV has been a passive medium,” said David Zaslav, president of NBC Universal’s cable group, which includes networks USA and Bravo, whose programming is also part of the DirecTV deal. “But consumers want more choice and more convenience. All the signals are there of a meaningful change in how people watch television.”
For the cable industry, prime-time network programming is seen as the magic bullet for fueling the popularity of video-on-demand, which has been slow to get off the ground because it offers limited programming such as older movies. In addition, cable operators are adding services to cement customer loyalty at a time when telephone giants such as Verizon Communications Inc. and SBC Communications Inc. are making inroads into the pay TV business.
Broadcasters, however, have been reluctant to make their programs available on demand for fear that viewers will skip the commercials.
The industry has long been wary of overexposing hit shows, concerned about devaluing their rerun jackpots and DVD sales. What’s more, advertisers probably will be angry that DirecTV and Comcast customers who order the 99-cent episodes will be able to fast-forward through commercials.
Yet changes in how consumers are using technology are forcing television programmers to rethink their old models. Advertisers are shifting dollars away from television into the Internet as the more than 4 million personal digital video recorders have eroded the value of advertising by allowing consumers to zap through commercials.
Just last month, Walt Disney Co.'s ABC struck a deal to sell its popular network series “Lost” and “Desperate Housewives” on Apple Computer Inc.'s video iPods for $1.99 an episode.
“If you don’t play, you’ll get left behind,” NBC Universal’s Zaslav said.
He added that NBC programming would be increasingly available on devices other than television, such as cellphones, to expand its revenue sources. NBC makes parts of “The Tonight Show With Jay Leno” available for download on mobile phones.
The cable industry has been pushing interactive TV for a decade. Industry leaders say that consumers are just now ready to embrace the idea of compiling their own personal TV lineups because they are sufficiently comfortable with technology and computers.
Both services will be limited. Comcast’s will launch in January to digital subscribers in cities where CBS has a TV station, including Los Angeles. No personal video recorder will be needed. On-demand offerings will permit commercial-free viewing of the four CBS shows within hours after their initial airing and until the next episode.
As for the NBC shows, any of DirecTV’s more than 12 million subscribers can access its new service but must buy a DirecTV Plus digital recorder, available at retailers this month. Satellite providers such as DirecTV are not technologically equipped to provide video-on-demand services but have turned to personal digital recorders to stay competitive with cable rivals.