PayTV operators may be leaving video-on-demand money on the table, according to a new report from market research and advisory firm TDG.

VOD provided by PayTV operators should be generating significantly higher viewing and advertising revenue, said Bill Niemeyer, TDG senior analyst. At the moment, total VOD use represents only 1 percent of all U.S. TV viewing. He estimates that in Q4 2011, Netflix U.S. subscribers watched 80 percent more streaming video hours than were viewed in the same period on all U.S. PayTV VOD services combined.

“Ad-supported VOD is a significant missed opportunity for PayTV operators,” he said. “They are investing significant resources in TV Everywhere but have ignored the fact they have a potentially viable ad- and revenue-generating on-demand platform already in place in over 50 million U.S. homes in the form of VOD.”

Two of the reasons for this lack of success, TDG says, are that VOD is given inadequate advertising support and suffers from awkward program guides. The company believes operators could triple VOD viewing and ad revenue by deploying dynamic ad insertion, implementing better measurement technologies, and improving the comprehensiveness and user-friendliness of program guides.

“Operators have failed to take advantage of VOD to build subscriber satisfaction, generate ad revenues, and head off competition from over-the-top (OTT) providers like Netflix,” Niemeyer said.

Related links:

TDG Research – Making Ad-Supported VOD Work