VOD’s vigor gives digital new hope | Hollywood tiptoes toward VOD

LONDON — The rise in viewers watching TV in non-traditional ways — including VOD, DVR and so-called “catch-up” services that allow viewers to see recently aired shows — has benefited one form above all others: the TV drama.

Netflix chief content officer Ted Sarandos said at Mipcom earlier this month that up to 60% of the fare now streamed on the site is TV content, and that serials like “Mad Men” and “Breaking Bad” are the most popular.

When offered online, episodes of these shows are often watched back-to-back, with their complicated narrative structures, complex characters and dense backstories lending themselves to an immersive experience. “Maybe we’ll start to premiere multiple episodes so you can do the binge-watching from day one,” Sarandos says.

He believes the series can almost be categorized as 13-hour movies — part of what he calls the “cinematization of television.” Increasingly there’s a blurring of lines between film and TV viewing online, Sarandos adds, and Netflix has found strong links between the type of movies people like and the highly serialized drama series that they watch.

Netflix would like to air more hourlongs — and show them closer to their initial run dates. But cablers see Netflix as a rival and are loathe to allow easy access to their series.

But with increased production costs, a difficult syndication market and declining DVD sales, where producers have traditionally recouped costs on the back of boxed sets, streaming is increasingly looking like a viable financial option.

Consequently, Netflix has started to acquire series directly from producers and distributors, and will make them available in the firstrun window. So far this year it has picked up political thriller “House of Cards,” exec produced by David Fincher and Kevin Spacey, among others, as well as Tom Fontana’s 15th-century Italy-set drama “Borgia.” At Mipcom, Sarandos said that Netflix had also picked up contempo thriller “Lilyhammer,” toplining “The Sopranos” thesp Steven Van Zandt.

Netflix isn’t the only stream in town. Online players including Facebook, Yahoo, Amazon, YouTube and Hulu are offering more streamed TV drama, giving distribs new doors to knock on.

BBC Worldwide, which is the world’s largest distributor of TV programs outside the major U.S. studios, saw revenues from digital rights rise by 32% to £82 million ($130 million) in the last financial year, which reps 8% of its total revenue.

The success of BBC Worldwide’s sci-fi teen drama “Misfits” on Hulu in the U.S. in the firstrun window this summer, where it was the most viewed show for several weeks, shows how online players have become an important alternative to broadcast and cable. The show has now totaled more than 9 million views in the U.S.

Online play can be particularly useful for younger-skewing shows, since the websites’ demographics tend to be younger.

“The thing with ‘Misfits’ was that it is younger and maybe edgier than (those of) many of the cable networks that consider acquisition,” says Gary Woolf, BBC Worldwide’s VP of business development and digital media for sales and distribution. “Hulu attracts a largely 18-49 audience, cable tends to be more 25-54, so there is a (greater) subset of people that would be attracted to a show like this.”

One of the strengths of services like Hulu is that word of mouth has time to build, often aided by recommendations made via social media.

Such services also allow viewers to explore previous series, which increases the value of back catalogs, says Richard Broughton, senior TV analyst at IHS Screen Digest.

Adds Woolf: “VOD services make brands more discoverable, so people who may not have caught it on TV first time around will watch it in the VOD space, and be looking for the next series so I think it is all additive.”

So while VOD is adding to the value of hourlongs in the rights marketplace, it appears to be reinforcing, rather than diminishing, the value of the original broadcast window.

Data from Screen Digest and the BBC show that the vast majority of time-shifted (or nonlinear) viewing occurs within a few days of the original broadcast, and that this benefits primetime content most of all, and serialized drama in particular — making it even more important for streaming services like Netflix to own content rights to take advantage of such windows.

“There’s a lot of evidence that the greatest impact was on content in primetime, and more specifically shows that are in a serialized format — you can’t miss an episode, otherwise it’ll break up the flow of the series,” Broughton says.

Adds Woolf, “There’s value in those rights, and we intend to capture that value.”