Multichannel News has a great write-up on the state of Video On Demand usage. While some of the numbers for VOD included should be taken with a grain of salt since they are based on user surveys (what people say they do often differs signficantly when you measure what they actualy do!), based on the sparse VOD usage stats I've seen, I think the user surveys are probably in sync in this case.
“The growth in VOD has been steady because digital cable growth is relatively steady,” said Magna Global global director of forecasting Brian Wieser. “The VOD libraries that the MSOs offer are certainly popular and they may be contributing to churn reduction, but they still don't account for a significant amount of time spent with TV. … VOD advertising is still very difficult to buy and it doesn't account for a significant quantity of consumption, so there are better alternatives for most large advertisers.”
Consumer-usage data is also mixed. Use of VOD continues to lag behind both live-TV and DVR viewing, according to survey data from Horowitz Associates.
“If you look at each demographic, DVR usage is 30% to 50% higher than VOD,” said Howard Horowitz, the research firm's president. “VOD has a lot of cable business momentum driving it into consumer homes and consumers are responding, but not in an overwhelming kind of way. It is another useful, very convenient device, but not a killer app.”
VOD also comes up short compared to consumer adoption of online video. The April 2009 Magid Media Futures survey, by Frank N. Magid Associates, found that about 43% of the population is now watching online video. That's compared to 21% of survey respondents, who used VOD “frequently or occasionally,” said Magid senior vice president Jill Rosengard Hill.
“For consumers, on-demand is not top of mind,” said Rosengard Hill. “Operators must commit more marketing inventory and dollars to build awareness of on demand if they want to see usage increase.”
I agree with Ms. Rosengard Hill, although things aren't quite as bad as they seem if you dig a little deeper into the article:
“We have a tendency to forget that this is an evolutionary process,” said Bruce Leichtman, president and principle analyst at Leichtman Research Group.
“If we go back to 2004, the number of people using on demand on a monthly basis was only 6.5 million; but by 2008, we were talking about 23 million using it monthly. That is tremendous growth.”
That view is confirmed by a slew of data from Rentrak, which collects VOD usage data from most of the cable footprint.
Between the start of 2007 and the end of 2008 “we saw a 21% increase in the number of VOD orders and 11% increase in those using the platform,” said Sandra Kilbridge, vice president of operations at the Advanced Media and Information division of Rentrak.
Because of relatively very heavy television consumption on my part, I try not to project my own usage out to the general population. I tend to wind up utilizing On-Demand regularly and for a variety of reasons. Still, it lags my DVR usage, but that is more of a function of the VOD offering itself. Many of the programs I watch on TBS, SyFy, USA and HBO are actually available on demand, but are not available in high definition. Because the quality of video is so much better in high defintion, I wind up recording and watching a lot more shows via DVR than I would if those same shows were available in high definition on the On Demand service. Many also complain, at least in the case of Comcast's On Demand offering that the interface is lousy. It's true, especially when you want to binge on a particular show that the number of button presses to get from the end of one episode to the beggining of the next is exorbanant.
Not mentioned in the article will be the impact of networked DVRs on On Demand offerings. Technically speaking from the way that networked DVRs will work, there's not really a lot of difference between them and On-Demand services. It will be interesting to see how that winds up evolving.
Lots more, including some Rentrack On Demand data at MultiChannel News