By Liana B. Baker and Lisa Richwine
(Reuters) - Comcast Corp, the largest U.S. cable operator, is testing new advertising technology that inserts up-to-date commercials into past episodes of TV shows that are available on demand, a development that could help television networks generate additional revenue.
As people get used to catching up on or binging on older episodes of shows through online services like Netflix and Hulu, cable companies and TV networks are plying viewers with past episodes from current seasons that can be watched on demand through their cable set-top boxes.
The new technology is meant to give TV networks a way to earn ad dollars from earlier episodes. Currently, most advertisers only pay for ads watched live or within three days after a show airs. That could change if Comcast's technology, which it developed in partnership with Nielsen, is widely adopted.
With the new service it is testing, Comcast will take the same commercials that aired live and insert them into a show's older episodes that are watched on demand. TV networks can try to broker deals with advertisers to pay for the additional viewership, which will be measured by Nielsen.
For now, the technology only applies to shows on broadcast TV networks. Comcast subscribers cannot fast-forward ads when they watch on-demand shows from the broadcast networks.
Comcast is testing the new ad service with shows on NBC, the broadcast network it owns, as well as Walt Disney Co's ABC network, said Matt Strauss, Comcast's senior vice president of video services. CBS is also interested, Strauss said. The company aims to make the service available for the ad market next year.
"This becomes a new way for programmers to monetize not just the most recent episode, but every episode, which has pretty big implications," Strauss said.
The video on-demand market for ads totals about $1 billion year, according to research firm Rentrak and can grow with these new developments.
It is unclear if advertisers are on-board with paying networks for the new on-demand credits and it's up to the networks to pitch them, Strauss said. Comcast is the biggest cable provider with more than 22 million video subscribers, providing a large potential audience to test the idea with advertisers.
(Reporting by Liana B. Baker in New York and Lisa Richwine in Los Angeles; Editing by Matt Driskill)