Keeping pace with a major movement in future-viewing, Nielsen Media Research is starting to roll out a phased plan for bean-counting video-on-demand ratings in the U.S. by Q2 2006. As a first step, the audience measurement specialist has signed a non-exclusive partnership with Sterling, Virginia-based software developer Anystream to encode content using Nielsen’s proprietary VOD tracking system, which is built around audio watermark technology.

Anystream’s Agility VOD software speeds up the process of converting TV shows into a VOD-friendly format by automating steps that have traditionally been handled manually. Product marketing VP Fady Lamarr says automating this process means that significantly more content can be made market-ready in a hurry, which should meet the needs of cable giants like Comcast, which launched on-demand service Sprout in May and Vortex with Nelvana in July.

As VOD usage grows in the U.S., it remains unclear how advertising models could work in a medium that basically lets users skip commercials. Add to that the fact that many cable operators are offering as much as 90% of their VOD content for free in order to reel in new subscribers, and you have to wonder if this is ever going to be a money-making venture.

But Nielsen believes that in order to capitalize on any advertising opportunities that VOD might offer down the road, broadcasters and cable operators must first understand the medium’s usage patterns. And so the first stage of its audience measurement program will collect data on the viewing habits of on-demand users who watch shows within seven days of their original broadcast on linear television. The second phase, which should be in place by the end of 2006, will calculate ratings for theatrical movies, pay-per-view content and older TV shows.