According to analysis seen by The Times, increasingly popular video-on-demand (VOD) is challenging the business model of commercial television.
A report by PricewaterhouseCoopers (PwC), the accountant and business adviser, suggests that consumers’ growing appetite for VOD could lead to broadcasters losing a further £280 million from annual advertising revenues if they continue to focus their efforts on cost-cutting and fail to cash in on the boom.
PwC suggests VOD services needs to sell ads at 3x the CPM (cost-per-thousand) of television to break even. Coincidentally, The Simpsons pulls in $20 per thousand on TV and $60 per thousand on Hulu.
Back in June, Bloomberg reported CBS's David Poltrack saying, “The reason people are paying such a high premium for these ads on the Internet is they do have a captive audience,” Poltrack said. “You know you have eyes on the screen.”
After all, the point of video on the Internet isn't to replace TV. It's to have a two way, and measurable, dialog with each viewer.