Metue.com

Video on Demand (VOD) got a boost yesterday when the nations 3rd largest cable operator, Cox Communications, and Disney’s two leading TV properties, ESPN and ABC, inked a distribution deal.

Under the terms of the agreement, viewers using Cox’ digital cable services, and equipped for VOD, wil get free on-demand access to first run TV series and programming including hits like Lost and Desperate Housewives (and sports content from ESPN).   Programs will premier on-demand 12 hrs after their regularly scheduled broadcast.

Advertising will be added to the programs for on-demand broadcasts.  At least one 15 second commercial slot per episode will be allocated for Cox to use in the promotion of their products and services.  Other ad slots will be allocated to Disney-ABC-ESPN  or their local affiliates for resale.  The ads will also test a geographic targeting system that delivers region, or even zip-code, specific advertising.

One of the key components of the deal is a promise by Cox to disallow fast-forwarding through commercials by means of integrated digital-cable features during the broadcast.  Cox can’t, or won’t, however, attempt to disable fast-forwarding features on the DVR’s (Digital Video Recorders) its customers lease from them.    As a result, should a customer record an on-demand broadcast for later viewing (or any kind of time-deferred viewing), there’d be no recourse to prevent ad-skipping.

With approximately 20% of Television owning households in the United States owning a DVR and able to record, or watch, programming at times that suit their schedules already, the impact of the partnership will likely be limited from the start.  Still, it’s a notable, even if only as a small adjunct distribution channel, to test market a new concept and experiment with means of mitigating the threat posed to the networks from changes to TV distribution technologies.  It’s also not a bad effort to capture more of the $3.9b market that is estimated to exist for VOD by 2010.