Derek Harrar

This interview was originally published in the MIPTV 2010 issue of World Screen.

 

The best way to describe how well the Comcast On Demand service on TV has been received by its 18 million customers is to offer a few figures. With 150 million hours of programming available, it gets 350 million views a month. That’s 20 views per home on average each month, and Derek Harrar explains what fuels such success.

 

WS: Why was offering free on-demand important?

HARRAR: If you think about the time frame, it was 2003. The Internet existed and was relatively mature. People were used to having an awful lot of content they could interact with but not necessarily having it show up on their bill. Strategically, in order to offer this new platform and really train consumers to do something that they had never really done before—in other words, interact with their TV—we felt that having price sit between every single interaction would be a bottleneck to adoption. We had a bunch of content which wasn’t even subscription that was available at no additional charge. We probably were the first, or among the first, to buy libraries of films and put them on demand at no additional charge. Free movies, still to this day, is one of the highest usage categories on demand. We thought that the free offering was really strategic to adopting a new way of interacting with your TV.

 

WS: What do your subscribers enjoy most on demand?

HARRAR: The highest usage category is movies. That’s movies across three areas. There are the new releases—the transactional movies—many of which are offered the same day and date as the DVD release. There are also the movies that are available within HBO, Showtime, Starz—the subscription VOD movies. Then there are the free movies, where we offer a library of free films. So if you add those three types of movies, they make up the top usage category within our on-demand offering.

 

It’s been interesting to watch the usage patterns over the years. In the beginning it was young male-dominated action films. Now, we see romantic comedies performing extremely well. When you look at our library films, the highest performing movie collections are always children’s transactional movies. What that means is, you’ve really seen the usage of the platform, across the board but even just in movies, migrate from one user in the home to multiple users in the home to real family usage. Which is a great trend. It’s very sticky.

 

WS: Tell us about your movie collections—they are very popular, aren’t they?

 

HARRAR: For example, when American Gangster came into the VOD rental window, we went back to the studios, and we located all three of The Godfather movies; A Bronx Tale; Lock, Stock and Two Smoking Barrels; Scarface; Goodfellas. We got them all in standard-def and hi-def. All of it was transactional at a library film rate, more like $3, instead of $5. We put them all together, did a whole bunch of press around the stunt, calling it Gangster Films, to make it fun and exciting.

 

We’ve steadily grown that business since we started it in early 2008. Last year we did more than 100 movie collections.

 

The film category is the most viewed and yet it’s still probably only 20 percent of the usage of the platform. In fact, the transactional movies make up only 6 or 7 percent of usage. When you’re talking about 350 million views a month, 140 views per second, it’s still pretty small.

 

WS: After movies what is the second-most-watched genre?

HARRAR: The next-highest-usage category within on-demand is TV shows. This is the fastest-growing usage category. We have over 250 TV series, with about four or five episodes each, so over 1,000 episodes of TV shows. This range includes ABC, CBS, NBC, FOX, to HBO, Starz, and cable channels like A&E, AMC, Bravo, Discovery, E!, FX, MTV, Lifetime. What is really interesting is that our research shows that DVR users, believe it or not, actually over-index on video-on-demand usage. The reason is that the average DVR user is kind of a time-shifting connoisseur. They usually tend to run their DVRs roughly full, which means they’re actively managing the content that’s on their DVRs. As we shift more and more content into the high-def realm, these viewers can record fewer and fewer shows on their DVRs because of the storage requirements for high-def. So as people realize that, they think, why am I recording Dexter in high-def on my DVR when I know it’s going to be available the next day on demand anyway? So on-demand makes the DVR experience better for the DVR user, but then, importantly, it actually provides a time-shifting experience at no additional charge for our customers that don’t have DVRs.

 

The next-highest-usage category is kids’ shows. We probably do about 40 to 50 million views a month of children’s shows. The fact that we have over 1,000 kids’ episodes available on demand at any given time is a great service for families.

 

Finally, within On Demand we have more than 17,000 titles every month. It tends to work out that about 97 percent of them are watched. We’ve got about 18 million customers. We do about 350 million views a month. That’s 20 views per home on average each month. So Comcast On Demand is enormous—150 million hours a month of programming is available.

 

WS: Do the TV episodes that you put on demand have the same commercial load as when they air on linear channels?

HARRAR: It depends. The advertising model across VOD is still pretty broad. Some networks give us shows with literally zero ads. Some give us shows that will start with, “This episode is brought to you by” and have a couple of spots but all from the same sponsor. They’ll have a lighter load like the episodes you find on the Internet. Then there are other episodes that are going for C3 ratings, and they’re the exact same ad load as they have on linear channels. Other episodes use the commercial load to promote themselves. You might have MTV put spots inside of a VH1 show that cross-promotes a new series coming out on MTV. We really work very closely with our content partners. We’ve gotten very good at using on-demand as a promotional platform for them.

 

Another really good example is Showtime. We always have great catch-up stunts whenever the next season of Dexter or Weeds is coming out. We’ll put the previous season on demand and make it available to all of our customers—whether you’re a Showtime customer or not—and we’ll tag it with a Showtime upgrade offer in partnership with Showtime to say, “If you like Dexter, the next season is coming up, so subscribe to Showtime now and here’s a great offer.” Showtime then uses it to build their subscription base inside a Comcast footprint. So we do all kinds of interesting things on the advertising side as well as the promotion side.

 

WS: Do you pay programmers extra to be able to offer episodes on demand?

HARRAR: Every deal with every programmer is highly complex, and has multiple layers. We view VOD as a platform in which we work very aggressively with all of our program partners to extend their franchise and achieve whatever their objectives are. For a given show, if a network is looking for higher ratings, we can figure out interesting ways to use video on demand as a promotional platform to drive ratings. If they’re looking for promotion and creating a buzz for the launch of a new series, maybe they’ll premiere that show on demand even before it shows up on linear. We’ll promote it across all of the Comcast platforms to really help drive the buzz associated with that series. Then, three or four episodes into the series, that’s when the network is really looking for ratings, so we’ll have a different strategy for on-demand.

 

We really look at on-demand as a mechanism to extend a franchise. A great example of that is Mad Men. Mad Men became popular well into the first season. It was a highly critically acclaimed show but many people didn’t know about it. We had Mad Men on demand ever since it launched. You could go into on-demand and catch up on the series and then you’d be much more likely to actually watch it in linear. As a result, we can show that we had higher linear ratings inside our footprint than outside our footprint because of how we featured Mad Men on-demand.

 

WS: Where do you see the on-demand trend going? And how is Comcast going to anticipate what viewers expect from an on-demand service?

HARRAR: The great thing about on demand is that we actually know what viewers are watching. We have our finger on the pulse of pop culture. We can really tune the offering to exactly what our customers are looking for very well. We get a lot of feedback that way.

In 2008 we announced Project Infinity, a vision to give consumers the ability to watch any movie, television show, user-generated content or other video that a producer wants to make available on demand. We think that over time that will be available more and more on any screen. That’s where we’re headed.