Comcast Corporation ( CMCSA - Analyst Report ) has entered into an agreement with BlackArrow, which primarily specializes in dynamic ad-insertion for video-on-demand (VOD)/pay TV environments.

As the demand for VOD continues to grow, service providers are on the lookout for better monetization of the service, particularly since it is provided free of cost to viewers.

The implementation of BlackArrow technology will therefore help Comcast to regulate the service of ads, better target them and also provide it with the flexibility to include national as well as local advertisements alongside VOD content, adjusting suitably for time and geography. Moreover, it will also allow the company to swap national advertising slots with local ads.

A few days back, BlackArrow entered into a partnership with Time Warner Cable ( TWC - Analyst Report ) to help them add advertisements to their VOD services.

Research firm TDG reported that the present ad-based VOD market is worth $150 million and expected to reach $6 billion in the not-too-distant future. The research firm believes that technology enhancements will drive this increase.

It is apparent that service providers also recognize this lost opportunity, which is why they are increasingly opting for technology such as is provided by BlackArrow. With the increased effectiveness of advertisements, more advertisers will be attracted into the segment. Moreover, since Comcast serves 20 million households with a total subscriber base of 50 million, the opportunity for additional advertising dollars is huge. On the downside, it also expected that such dynamic ad-insertion process may affect the video quality, hence affecting the growth of VOD subscribers.

Currently, Comcast has a short-term Zacks #3 Rank (Hold) on the stock.

Based in Philadelphia, Pennsylvania, Comcast Corp. is the largest cable MSO (multi service operator) in the U.S. offering various consumer entertainment, information, and communication products and services to the residential and commercial customers.