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Cable Programmers Discuss VOD Obstacles

11 Dec, 2003 By: Holly J. Wagner

Cable companies make no bones about coveting the packaged media release window, but better windows alone won't solve the other obstacles to pervasive video-on-demand (VOD) over cable systems: lack of effective marketing and a seamless interface that lets users move from the electronic program guide to a VOD menu, cable programmers said recently.

“We would like to get the window shorter so we can see how well they do,” said Jo Holz, VP of research for pay-per-view (PPV) provider InDemand. The company's best performing title of 2002 was Shallow Hal, which had a 30-day window, she said, but InDemand has had shorter windows: Recently the network got Cradle 2 the Grave just 17 days after the video street date.

As with packaged media, sales are front loaded. InDemand research has found that buys are 50 percent higher when windows are less than 45 days than when they are longer.

To test the theory, the Independent Film Channel (IFC) aired four of eight homegrown titles this year day-and-date with the video release, said Gregg Hill, EVP at IFC.

“There's a huge, untapped audience for VOD,” he said. “The main differentiator of what a DVR can do and what VOD can do is original programming.”

Cable companies are eager to tap into the VOD audience because the service boosts customer satisfaction and reduces cancellations. It also creates evangelists, people who tell their friends how happy they are with the service.

“The more people use it, the more churn goes down,” said Andy Addis, SVP of marketing and new products for Comcast Cable.

But in targeting the mostly male PPV audience, cable operators may be looking for love in all the wrong places. The demographic for VOD consumers is split evenly between men and women, and women users order more.

In a survey of 1,000 VOD users between the ages of 15 and 65 who buy on-demand movies at least twice a month, InDemand found that VOD users skew young, with teens between 15 years old and 20 years old ordering most. Forty percent of those teens order on-demand movies three or more times a month, and 25 percent order four or more times per month. Families with children under 12 also tend to be heavy consumers of movies on demand.

Among InDemand's other findings: VOD users are frequent premium cable viewers and frequent PPV buyers, but infrequent renters; on the other hand, they buy as many movies on DVD or tape as other consumers. The research showed that about three in 10 VOD households have used movies on demand, and in some systems, the number goes as high as two thirds.

Those numbers and News Corp.'s pending purchase of 34 percent of DirecTV, which would create a more formidable competitor than satellite has been in the past, have cablers working hard to roll out VOD in as many areas as possible.

The next steps, panelists agreed, are to raise VOD's profile in markets where it is available and to link the typical electronic program guides for linear, time-anchored programming seamlessly to the VOD menu, so users can access the programs and features they want easily from the linear guide.

DVD may be the hot-selling item this year, but cable companies are planning to blitz the marketplace with the trifecta of cable killer apps: VOD, digital video recorders (DVRs) and high-definition (HD) programming by next Christmas.

“This time next year, in the holiday selling season, we want to come out swinging with all three products,” Addis said.

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