Disney on Demand

Editor's note: An earlier version of this article failed to acknowledge the free video-on-demand offerings of CBS and NBC. The article has been updated. The Fool regrets the error.

Video on demand (VOD) really is the future. Now, it comes with mouse ears.

Walt Disney's (NYSE: DIS  ) ABC network will start streaming fresh episodes of hits including Desperate Housewives and Lost at the click of a remote, starting with Cox Communications' 6 million cable TV customers. OK, not all of them -- they'll need a digital cable set-top box to enjoy VOD -- so that cuts the number to 3.1 million. To put that in perspective, Comcast (Nasdaq: CMCSA  ) has 24.1 million subscribers, of which 15.2 million have access to VOD.

ABC is not the first to the free VOD party. CBS (NYSE: CBS  ) offers hit shows, including all three CSI versions and Survivor, for free thanks to the sponsorship of General Motors and others. General Electrics' (NYSE: GE  ) NBC offers a mix of pay and free content on demand. Currently content from both CBS and NBC is available to Comcast on-demand subscribers.

ABC has been testing the waters in select markets where it owned the local broadcast station, also through Comcast. The Cox deal will spread VOD goodness across the country, no matter who owns what broadcasting partner.

In fact, it even gets better. ABC's local affiliates get to control some of the advertising shown, giving them some incentive to actually market the new delivery option. In tests, 93% of the subjects didn't mind the commercial breaks; they'll be a lot shorter than what's on regular broadcast TV anyhow.

Why should I care?
VOD is a much bigger deal than you think, I think. It lets broadcasters like Comcast and Cox line up a library of fresh and/or back-catalog content from any of the major entertainment producers for customers to enjoy at their leisure and without having to set up cumbersome DVR recordings.

If everything were available on VOD, there'd be no need for a video recorder in your living room. That's the way it should be, and probably will be some day. VOD back-end systems providers, such as SeaChange (Nasdaq: SEAC  ) , Concurrent Computer (Nasdaq: CCUR  ) , and Arris (Nasdaq: ARRS  ) certainly hope so, too.

The Foolish takeaway
Everybody wins, for real this time. The content consumer gets added convenience and fewer commercials at no extra cost; advertisers will strut their wares to a captive audience that can't fast-forward through the ads and won't have time to get a snack; and the networks stay relevant in an increasingly diverse media environment.

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