No Ad-skipping during VoD?

We’re intrigued by the news from May 8, 2007, where Cox Communications and ABC/Disney have agreed on a deal to offer more ABC and ESPN programming on Cox’s VoD platform (“ABC, Cox Bar Ad Skipping in Video on Demand,” Brooks Barnes, The Wall Street Journal, May 8, 2007.) One key provision in this agreement is that viewers will not have the ability to skip through commercials. However, we’re not sure that this would be a large impediment in greater uptake of ad-supported VoD services. For several quarters now, ABC/Disney executives have reported that their Web video experiments (mainly primetime programming offered at ABC.com) has been successful insofar as it has not led to primetime audience cannibalization, and viewers have a much-stronger association with the few ads that are shown. If consumers know that they’ll receive only a few ads during a VoD stream, we don’t think they’ll mind. It beats primetime programming today, where ads are shown about every five minutes, and there is very little to no measurability of their impact anyway.