(NYSE: ) is getting tired of explaining to advertisers why it has fewer viewers. One reason ad performance is dropping has nothing to do with the networks losing audience. It is a technology issue.
Viewers with digital video recorders can skip the ads.
Disney has a way to claw some of the audience back. It can refuse programming licenses to cable systems for on-demand applications unless the ads run as they were placed in the shows.
This philosophy is at the heart of a new deal with Cox Cable. [subscription required] its ESPN and ABC networks to Cox, but the cable system must ensure that the cable customers see all of the markets' messages.
Rentrak, a research firm, estimates that cable on-demand orders have gone from under 200 million per quarter in 2004 to over 700 million in Q107.
So, Disney has real leverage by threatening to hold back valuable content. According to The Wall Street Journal, "Media research firm Convergence Consulting predicts VOD revenue will total $1.6 billion this year, with the business growing to $3.
9 billion by 2010."
The digital video recorder business had traditional broadcasters on the ropes. They could no longer guarantee their huge advertisers that their commercials would be seen.
With the Cox deal, the networks are beginning to push the pendulum the other way.
1. Screw Disney and the commercials!
I will forbid my kids to watch anything they produce. Greedy Bastards!
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