OTTAWA-GATINEAU – Canadian broadcasters have offered at least tepid support for a Rogers Cable application to the CRTC to alter the video on demand regs to allow for greater advertising flexibility in the VOD platform.
Some of those organizations which filed an intervention on the issue added that a decision on what Rogers wants should be deferred and discussed under the upcoming review of broadcast distribution undertaking policy recently announced by the Commission.
As the rules stand right now, ads within video on demand content must have already appeared on a linear Canadian TV channel, there must be a written agreement in place and BDUs are not allowed to charge any additional subscription fee for on demand content that contains advertising.
Rogers wants the rules to say simply that there must be a written agreement to air content with ads and that the content must come from a Canadian broadcaster. It also wants the ability to have up to 10% of the total programming on Rogers On Demand come from Rogers Communications sources like OMNI, Rogers Community Television, Sportsnet or its most recent acquisition, Citytv (a purchase that, of course, still has to be approved by the CRTC).
New VOD rules such as RCI would like would give the company or any other BDU, the option to charge customers a fee if they like, as well as to deploy better advertising models like dynamic ad insertion where new ads are automatically inserted into VOD streams so last month’s Pepperoni Pizza promotion at Pizza Hut or somesuch, can be replaced with a new ad from a new company or an updated one from the pizza purveyor.
As recently profiled by Cartt.ca in an exclusive story, there are advantages across the board in a more flexible VOD platform. Advertisers like it because it can offer a very targeted, very measurable new kind of campaign and broadcasters can envision a new revenue stream, charging more for better results. For cable, it boosts VOD usage, which is an important competitive advantage over its satellite competition.
The toughest part may be coming up with that written agreement and what it says about paying the cost for dynamically inserting the ads – whether it’s a revenue share or a fee-based model – and sharing any VOD subscription fee revenue if ROD wants to charge customers 99-cents to see Corner Gas, for example.
While Corus Entertainment, the Association of Canadian Advertisers, the Canadian Media Directors Council offered up their strong support for Rogers’ application, VisionTV owner S-Vox and Insight Sports voiced support, too. Others like CTV, Alliance Atlantis and Pelmorex offered qualified support and some said looking at the matter during the BDU policy hearing might be a better idea.
Still others, including CanWest Global, Astral Media, the CBC and the CFTPA could not support the application at this time and preferred to see the matter reviewed thoroughly during the BDU policy review.
"More flexible, timely and relevant advertising on the VOD platform, governed by and subject to agreements negotiated with Programmers, will help to strengthen the Canadian system and individual channel brands. Key to these agreements will be the confirmation that Programmers will continue to hold exclusive rights to the selling of all commercial inventory appearing in their programming on the VOD platform," said the Insight Sports submission.
From the ACA and CMDC: "Advertisers have become increasingly concerned with clutter on television generally, and regard the growing popularity of digital video recorders (DVRs) with their commercial avoidance capabilities to be a consumer coping mechanism.
"It is a cruel irony that DVRs in fact most affect the very type of programming that the Commission is trying to encourage – episodic dramas and comedies. As DVR penetration increases, advertising support for this type of program on linear television will diminish, and VOD may become the primary platform for their exhibition," write the advertisers and buyers.
However, while they support the application, the two bodies don’t want VOD clutter, suggesting that "it should only be allowed at a much reduced commercialization rate (maximum 3 minutes per hour) in order to provide Canadian viewers with an un-cluttered viewing option."
The CBC had perhaps the most negative reaction to the ROD application, stressing the company doesn’t have any financial need to make this change. "Rogers has presented no evidence of financial need in support of this application. There is no indication that Rogers’ VOD service or VOD as a service platform is in any financial jeopardy," reads the CBC submission. Indeed, Rogers claims no such thing, and instead claims everyone might be able to make some more money while offering customers more viewing flexibility.
Further, like other broadcasters, the CBC already has its own broadband channels for viewers to watch on their PCs that it would like to protect – so it doesn’t see the big rush in changing the VOD rules.
"Rogers is assuming that the flexibility to insert new advertising will attract more programming to its VOD platform from Canadian program services. The availability of programming for distribution on VOD from Canadian program services is limited because many Canadian programming services, including CBC/Radio-Canada, have established an Internet presence where they offer their content on-demand and control the advertising that wraps around it. In those cases, VOD may not always be the most effective service platform for Canadian program services," reads the CBC entry.
CTV voiced its approval, too, subject to a number of conditions. "Only the licensed Canadian broadcaster that supplies programming for distribution on a VOD platform should be permitted to sell the Commercial Material in that programming and further, the licensed Canadian broadcaster that supplies such programming should be entitled to 100% of the revenues generated by the Commercial Material in that programming," it wrote.
This is something that Rogers Cable’s vice-president, television, David Purdy, has committed to already, saying the MSO does not want to begin selling VOD ad time and will leave that up to the broadcaster. "We are not interested in disrupting the value chain," he said.
Finally, the submission from CanWest, which opposed the Rogers application, soft-pedaled it a bit. " We… appreciate and acknowledge Rogers’ efforts to include broadcaster concerns in this process. To this end, we note that Rogers has specifically maintained the condition that any VOD program containing a commercial message must (a) be obtained from a Canadian programming service, and (b) be subject to, and in accordance with, the terms of a written agreement entered into with the operator of the Canadian programming service that broadcasts the program," says the company’s submission.
"Rogers has also correctly identified some of the inherent flaws in the current system – especially the time- and location-sensitive nature of commercials and the problems associated with talent compensation for advertising running outside of traditional timeframes. We also add that the removal of inappropriate commercials for VOD presentation is another cost in the process that must be borne by the broadcaster, distributor, or both parties."
But, says CanWest, Rogers’ timing is all wrong. "Approval of this application would effectively change VOD policy in an isolated licence specific application – and other applicants would no doubt follow. That is not the correct approach – and the Commission, and all other interested parties, would benefit from a much more comprehensive and broader understanding of discretionary and BDU regulatory dynamics."
