Although audience measurements linked to the DVR have already seeped into the marketplace, doing that in the VOD world is starting to take several steps forward.

Some proof was on display at the recent National Association of Broadcasters (NAB) confab in Las Vegas.

There, Nielsen Media Research and tech partner Anystream Inc. demonstrated just how close VOD audience measurement really is and showed off the progress they have made since inking a non-exclusive arrangement last year.

Nielsen's VOD activity is an extension of a plan with digital TV that involves the use of audio "watermarking," which stamps programming with its source and how it should be applied toward viewing credits.

Nielsen presently uses two formulas to mark VOD content, explained Scott Brown, Nielsen's SVP of strategic relations, marketing & technology.

In the first example, dedicated real-time encoders apply the Nielsen watermark. That content is then transferred to cable operators, which place it into the VOD pipeline.

In the second case, where Anystream fits in to the equation, an HBO, Showtime or other network will watermark the digital files, rather than the linear feeds being sent to a satellite. Anystream and Nielsen have developed a piece of software to handle that marking, encoding and watermarking process.

While DVR audience measurements have been in local markets for almost a year, VOD represents "just another major stepping stone" in applying measurements to new ways television is viewed, Brown explained, noting that Nielsen is also gearing up to measure network-based DVR applications, including Time Warner Cable's "Start Over" service and the remote-storage digital video recorder (RS-DVR) Cablevision Systems Corp. is testing in Long Island.

The demo marked just the early elements of a four-stage plan Nielsen has enlisted for VOD audience data, which will be collected by Nielsen's Active/Passive meter. The A/P meter, designed for digital television, is a physical black box that, when hooked up to the TV, hunts for audio codes that pipe through the speaker or watermarks that are embedded in the programming.

The first phase, set to begin in August, will measure and report VOD content that was "recently telecast"—in this case, within seven days of the live broadcast date.

The second phase, to come online perhaps as early as this fall, will help networks better delineate whether a viewer accesses a program in a linear or non-linear fashion.

The third stage, set for the fourth quarter, will involve "library VOD," and help nets such as HBO, Showtime and Starz measure usage. Measurements will also be applied to other "pay" VOD content.

During the fourth and final stage, in early 2007, Nielsen expects to retool its systems for non-linear usage on a much broader scale, covering fare that is presently going unmeasured (i.e. lesser used VOD content such as guitar or cooking lessons).

Such measurement "will put VOD on a level playing field with linear television," Brown said.