TV viewers take control over choices: targeting ad viewers may become easier.

IT'S HARD TO REMEMBER when there were a mere three networks to choose programming from and viewers were stuck with the schedule television executives in New York and Los Angeles decided upon.

In today's entertainment landscape, the words "broadband" and "digital" have served up thousands of choices at viewers' fingertips at any given sitting.

"When I was a kid we had about three channels and we were stuck watching whatever Mom and Dad wanted to watch," said Gary Massaglia, vice president and general manager at Comcast Arkansas. "The changes in technology are astronomical and the opportunities are faster and constantly changing. The way we watch television has evolved to almost completely putting the power in the hands of the viewers."

That viewer control is known generically as video on demand (VOD), and though viewers are gladly accepting the power switch, advertisers are slowly finding additional ways to avoid being cut out of the mix.

"I don't think the traditional 30-second spot is dead," said Larry Audas, general manager at KTHV-TV, Channel 11. "Look at what happened last week for the Super Bowl; the interest is still there. But there are also new avenues being explored and implemented to keep up with this video-on-demand culture."

With digital video recorders (DVRs) and VOD programming allowing viewers to enjoy virtually commercial-flee programming with the touch of a button, the traditional chain that uses advertiser dollars to bring low-cost programming to a broad audience is in flux.

And the end result may be as good for advertisers as it is for the audience. Eventually, media watchdogs speculate, advertisers will have an easier and more effective way to reach the most likely customers, though several strategies are still being tested.

Mike Wilson, a Comcast spokesman, said its On Demand product automatically captures demographic data because viewers are only watching what they want based on their interests.

"The total audience watching a show On Demand might be less than its regular audience in prime time, but they know that those who are there are watching because they specifically chose to be there," he said.

Ad Effect

Sea Change International of Boston, the dominant supplier of VOD systems to cable providers, is one of several companies trying to keep advertising as relevant as possible and began creating the technology necessary for "addressable advertising" in 2004.

Addressable advertising, where specific video ads are targeted to specific audiences, means two families in different markets can be viewing the same program but the ads that are interspersed are custom tailored to each.

Steve Burke, COO of Comcast Corp. and president of Comcast Cable, said in a recent earnings conference call that addressable advertising is the "Holy Grail" of VOD. Customers will begin seeing some tailored ads this year and will certainly see much more in the next two to four years, he said.

Several local media buyers declined to comment on the impact of VOD on advertising, but one said it hasn't yet trickled down to affect local accounts.

Media companies that want to compete for subscribers better have some way to keep liberated television viewers happy.

"I think consumers are becoming more aware now of what's possible, and we've increasingly tried to integrate more choice into our products," said Adrian Quintanilla, general manager of AT&T Arkansas. "We're all catering to a busy consumer that wants to have television, movies and music at their fingertips and on their schedule."

AT&T currently offers a form of VOD through its satellite television service and will soon take it up a notch when its hyped Internet Protocol Television (IPTV) starts hitting selected Arkansas markets later this year. But it was Comcast that first unleashed its On Demand product in central Arkansas in May 2005. Comcast's $50 million technology upgrade nearly six years ago set the stage for its telephone offering, cable Internet and the rollout of digital cable service, the latter of which is necessary to give subscribers the power over programming.

For Comcast that means the ability to give subscribers a giant database with movies, sports, television shows, instructional videos, music and more at the touch of a button.

On Demand is only available to customers who have upgraded to a digital box. When On Demand is activated, the menu is much the same as the normal digital cable guide but the programming isn't sorted--or limited--by times and dates.

"The point, obviously, is that customers can go there and find thousands of titles that can be accessed at any time," said Phyllis Elliot, director of marketing at Comcast. "The catalog is continually updated and changed so it's always fresh."

The remote allows On Demand viewers to fast forward, rewind, pause and play, as if watching a VHS tape or DVD.

Wilson, the Comcast spokesman, said there were just 3,000 titles available to On Demand when the product launched, a number that has since grown to more than 7,000. And though Comcast is hesitant to release statistics on how many of its customers use the product or have even upgraded to digital, Wilson did say On Demand viewing reached a record in January with more than 538,000 titles viewed in central Arkansas alone.

"People don't watch channels; I think they watch programs," said Wilson. "And as you look to On Demand, I think that really is the direction that we're headed--a choice of what you want to watch and not just what a certain network tells you to watch."

In the Zone

Cable and telecom companies are spilling over into each other's territories with cable providers now offering phone service and telecoms venturing into the video market. Bundled services of Internet, television and telephone usage are the order of the day and the source of fierce competition.

AT&T has held its ground against Comcast's digital service with its satellite television offering through Dish Network. The telecom bills its product as Homezone, and it is tied in with its Yahoo Internet service to give viewers even more control.

Satellite receiver boxes are available with built-in DVRs that allow customers to record programming onto a built-in hard drive without the hassle of a VHS tape or DVD--another advance that is putting viewers in control of how they watch television. Some can even control it when they aren't at home.

"With any computer you can go in and control DVR recording," said AT&T's Quintanilla. "If I'm at work and I realize I have to work late and that I'll be missing my favorite show, I can go into my account on any computer and access my channel guide and hit record and set programming."

That process takes advantage of the integration of several products. In the near future, said Quintanilla, customers will be able to set programming using their wireless phones.

AT&T has aggressively been securing agreements with municipalities for rollout of its next generation of video service through IPTV technology called U-verse.

In Arkansas, Maumelle will likely be the first community wired for U-verse as it was the first to secure a municipality agreement last summer. Little Rock and North Little Rock followed suit, and AT&T is now hitting several markets in northwest Arkansas, including Springdale, where a deal is done, and Fayetteville, where its city council is poised to pass a measure in the coming weeks.

"What's great about IPTV is that it's totally digital and offers viewers the ability to record with their DVRs up to four programs at once, remote access, built-in picture-in-picture abilities, extremely fast channel changing and a picture that's never jittery or compromised in any way," said Quintanilla.

AT&T has rolled out the product in about 15 markets nationwide and plans to double that by the end of this year.

The Future on Demand

VOD programming and recording are the future of television and movies, and several recent developments prove it.

Just last week Wal-Mart Stores Inc. became the first major retailer to offer a digital download service featuring movies from nearly every major studio. The retailer, which was already the largest seller of DVDs, will give customers the chance to download movies and television shows to personal computers. Wal-Mart says its video downloads will cost less than those of iTunes, the Apple Inc. online store that's been selling video downloads for more than a year.

Amazon.com announced last week that its video downloading service, called Unbox, would partner with TiVo Inc., the original DVR service, to offer a product that allows downloaded movies to be viewed on television screens and not just on a computer.

Unbox will likely compete with Apple TV, an Apple Inc. gadget unveiled last month. It will move downloaded videos from the computer to the TV wirelessly.

Just as VOD brought forth "time-shifting," the art of watching what you want when you want on television, "place-shifting" is the next trend of watching or listening to stored media on several different devices, like mobile phones, computers and televisions.

There are also companies developing products that will tell a DVR to record only certain highlights of a sporting event, make television more interactive with a handheld device, allow customers to view their cable bills and charges on the television's screen, and a way to transport what was recorded in the living room to a different device in a separate location.

CBS has been the first major network to leap to VOD with its original programming, as it did with its slate of "CSI" crime dramas and selected reality shows last fall.

Les Moonves, CBS president and CEO, said at the time of the release that viewers don't mind the growing presence of advertising On Demand.

"Early results show that viewers are responding to programming being made available on emerging platforms for free, supported by advertising," Moonves said.

KATV-TV, Channel 7, is the only local affiliate to join Comcast's local offerings, as news and some sports programming is offered up On Demand soon after its normal airing and is updated to stay current. Comcast also has local programming like the "Wally Hall Show" and "Steve Shields Show" available on demand.

Audas said the idea of "on demand" isn't limited to what cable providers and telecoms are offering, but is a business model news stations have embraced to stay current with the "information at your fingertips mentality," he said.

"Offering news stories and weather updates through streaming video and wireless phone transmissions and things like that are what you have to do to stay relevant anymore," said Audas. "It's a natural order of things in the delivery of information; folks are busy and have a lot of options, and if we want to reach them effectively, we have to reach them and give them options as they prefer.... Those that resist will fall."

BY NATE HINKEL

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