Ratings by Rentrak?

A little more than a year ago, executives at interactive digital music network Music Choice were looking at ways to measure their growing audience of music lovers. The company was trying to track and report usage effectively, and it contemplated developing its own reporting system. "[Then] we started looking outside, and there weren’t any alternatives," says Christina Tancredi, Music Choice’s SVP of marketing advertising and sponsorship. Enter Cathy Hetzel, a cable industry veteran and former Music Choice executive now working for Rentrak, which made its name tracking the home video rental and theatrical box-office markets. Hetzel demonstrated Rentrak’s OnDemand Essentials, a real-time Web-based system that measures, analyzes and compares on-demand performance. The music programmer, which at that time was planning an on-demand music video service (which will launch this month to Comcast digital subscribers in Richmond, Va.), was intrigued. Music Choice executives wanted to be able to track on-demand ads and wanted to know whether ads that play with songs are being viewed; how many times a particular song is chosen; and what Music Choice channel people come from when they select an on-demand video or song. In August, Music Choice became the first network to sign a deal with Rentrak. Starting this month, the OnDemand Essentials service will begin collecting real-time audience data for My Music Choice, its customizable music service. Audience tracking for Music Choice’s on-demand service comes next. But it’s not only programmers who need to measure VOD usage. Cable operators are amassing thousands of hours of VOD content, and they need to present timely audience data to advertisers, as well as to their own marketing departments. "Rentrak…is consolidating data that we already had," says Page Thompson, Comcast VP marketing, new video products. "Right now there is quite a time lag between when a program runs on VOD and the time at which you get an accurate report on how it performs. It’s difficult to alter your programming schedule if you have to wait 45 days until you have any read as to whether people liked it or not." Competition Looms Rentrak chairman and CEO Paul Rosenbaum says moving into the on-demand audience measurement space was a natural extension of Rentrak’s other business lines. The company was tracking close to a billion transactions a year in the home video rental and theatrical markets in 2000, when Rosenbaum came aboard. Rentrak’s home video tracking system, he believed, could be scaled to other business lines. Although Rentrak has made inroads with Comcast and Insight, and expects more operator deals this year, the company is not alone in wanting to track cable’s VOD data. Nielsen Media Research, which has taken heat of late for its people meter system’s alleged undercounting of minorities, is developing a system to measure VOD. Nielsen’s VOD system will be based on its traditional methods of sampling and projection, while Rentrak will track every on-demand transaction for an operator. Nielsen’s advantage is in its relationships with practically every company in the TV business; it may be able to sell its VOD service as an add-on to programmers and operators that already subscribe to its ratings service. Rentrak’s business model for OnDemand Essentials will depend mostly on new subscriptions sold to programmers. "Many people describe us as providing the currency in the television business today," says Scott Brown, SVP, strategic relationships, for Nielsen. "So from that standpoint, it makes an awful lot of sense that the provider of the currency today would go down the path of expanding that currency to include video on demand and interactivity and other kinds of content that come into the home." Brown says Nielsen is working with every MSO to develop a VOD plan. Nielsen has relationships with SeaChange and the other big VOD vendors. Right now Nielsen’s system is capable of measuring the length of time VOD content is viewed in a home, but it still is working to incorporate the ability to track program titles. "The goal is certainly to be able to report by the title of the VOD event," Brown says. Open Set-Top Policy? Both Nielsen and Rentrak require cooperation from cable operators to obtain VOD data. As Kenneth Papagan, Rentrak EVP, business development and strategic planning, says, "He who owns the data sets the rules, so a cable operator will ultimately say what the [programmer and] advertiser can see and not see through our system." Getting that cooperation may be a challenge. There are concerns about consumer privacy, an issue Rentrak and its customers say is alleviated by the anonymity of the data. Some operators, such as Time Warner Cable, are working on their own proprietary systems for measuring VOD. The No. 2 MSO has a group in Charlotte, N.C., developing a VOD measurement system, which the company is keeping under wraps. No executive would comment for this story. Time Warner Cable is "collecting VOD data ourselves and is working with a number of parties to examine the data," says spokesman Keith Cocozza. The company has "developed, and is continuing to develop a data-gathering mechanism." Turning Data Into Paid Ads On-demand audience measurement will become even more important as on-demand advertising models are developed. "The opportunity to provide really quantifiable audience data at the set-top box level is going to be absolutely germane to how we package our products for our customers and how we actually quantify the value of that on their behalf," says Kevin Dowell, VP, Insight Media. "We historically have had this traditional model of television spot advertising that has relied on Nielsen and other sources for making assumptions based on formulas in terms of viewership. We feel that [quantifying the VOD audience] will demonstrate that people who buy cable services from Insight indeed watch the channels and watch VOD and utilize the digital set-top technology, and we will be able to demonstrate that to our advertisers." Right now Insight Media fields more questions about the impact of time-shifting and DVRs on advertising than about on-demand advertising, Dowell says. "But within the next 18-to-24 months, as DVR penetration starts to increase, as on demand and VOD-enabled homes begin to increase and people start to time-shift their viewing, I think you’ll have a lot more questions about it." Rentrak is optimistic other cable operators will sign on quickly. That will be the lure for cable programmers—Rentrak’s paying customers—to subscribe, says Hetzel, who heads up the OnDemand Essentials product line. "Our expectation is that if we are reporting on 50% of VOD-enabled homes, we’re in a very good position to be able to provide the means by which the content provider can see their data," she says. And programmers who sign up early, as Music Choice did, will have the ability to influence the development of OnDemand Essentials reports. Tracking a Movie’s Life Cycle When Rentrak decided to enter the theatrical gross receipts market last year, "we went to the studios and said, `How can we make your life easier?’" Rentrak’s Rosenbaum says. "It was a very important concept to us." The company is employing a similar strategy in developing reports and tools for OnDemand Essentials. As Comcast’s Thompson explains, "Rentrak has been very responsive to all comments…and working together I think we have created reports which are very effective at giving people a snapshot." One example he cites is Rentrak’s "Title Followup Report." Comcast wanted to track the relationship between free and pay content, Thompson says, since Comcast believes free content is a driver for pay programming. Comcast debuted on VOD both Court TV’s Mug Shot segment on Florida serial killer Aileen Wuornos (dubbed "The Real Monster") and the feature film about Wuornos, Monster; the MSO promoted both in one campaign. The Mug Shot segment was one of Comcast’s most-watched on-demand programs, Thompson says, and the movie was extremely successful. The Title Followup Report, in this case, would have allowed Comcast to see how many people who watched the movie also watched the documentary. A big plus for Rentrak is that it can, as Thompson points out, track the entire life cycle of a movie, from its initial release at the box office, through the home rental business and finally through its release on VOD. (Of course, Nielsen would be tracking ratings of initial broadcast and cable movie premieres.) Comcast’s recently announced joint VOD venture with Sony, which will give Comcast access to a trove of movie titles for on-demand viewing, will make this kind of tracking even more important. "We see that oftentimes with video on demand there’s a surprise—a movie that performed well at the box office but does extremely well on on demand," Thompson says. "And if we identify those movies the day after they’re released, and see they’re performing well, then the studios or the operators can allocate additional marketing funds to support those movies. I hope that this will help us prove that on demand is complementary and helps expand the total receipts that a studio can realize from a movie." The big question for Rentrak is whether it can overcome the well-established Nielsen brand. "Nielsen certainly has a strong name in the business," says Tancredi at Music Choice, but "programmers like Music Choice have really struggled with the economics of working with a company like Nielsen. I do think there is a place for more than one company in the marketplace." Comcast and Rentrak On the Trail of On-Demand Data Rentrak’s Web-based service allows a cable operator to generate summary, market or regional usage reports by total order, type of content, event buy rate, revenue and provider, while programmers can measure performance by title or date of availability, for example. Although operators collect this information on their own, compiling information from all video-on-demand markets is a lengthy and labor-intensive process. As on-demand viewing grows, operators hope to make it more profitable by selling advertising. Ad agencies will be more likely to make an on-demand buy if they can look at timely usage stats. Comcast initially met with Rentrak in August 2003 and shared a small amount of anonymous on-demand data. Two weeks later, according to Kenneth Papagan, Rentrak EVP, business development and strategic planning, Comcast was "blown away." Comcast then gave Rentrak three months’ worth of anonymous on-demand data. Papagan says Comcast was "instrumental" in developing the way the reporting works. Earlier this year, the two companies announced they would begin a trial in Philadelphia. Some 16 Comcast systems in that city are sending Rentrak anonymous VOD data on a daily basis. Rentrak recently announced a deal with Insight and expects be tracking and analyzing VOD data in all of its markets by year-end. Comcast "really saw this issue of being able to collect transactional data and report it in a timely manner to their content providers as being key to the success of video on demand," says Cathy Hetzel, SVP of Rentrak’s OnDemand Essentials tracking products. —Mavis Scanlon