TVN's PPV Shift Irks Small Operators
By R. THOMAS UMSTEAD LINDA MOSS -- Multichannel News, 8/7/2000
Small and midsized operators are up in arms over TVN Entertainment's move to unbundle its turnkey digital near-video-on-demand service.
Several operators attending last week's National Cable Television Cooperative Inc. convention feared they would no longer be able to offer subscribers NVOD services after TVN's decision to transfer all billing operations to an outside company, Great Lakes Data Systems, and eliminate system headend technical support.
TVN's 34-channel NVOD package was perfect for small operators that couldn't afford AT & T Broadband's Headend In The Sky platform, because TVN covered the cost of upgrading and installing equipment, as well as all the service's marketing, promotion, billing and technical support.
TVN affiliates pay $280 to $290 for each digital box, and a $3 monthly fee for each digital subscriber. TVN kept an unspecified percentage of each PPV movie and event buy.
But a number of operators said TVN's switch to a new billing platform and the loss of headend support would cost them more money in the long run.
They also fear the move is just the start of TVN's plans to eventually discontinue the service, which they say is their best and least expensive option to offer digital PPV programming.
"It's apparent that their business plan didn't work out," said Midwest operator. "We feel abandoned and it's making our business very difficult."
TVN senior vice president of business development Jim Riley said the company has been transitioning operators away from the "turnkey" service the past year after seeing that more than half of its affiliates had already begun to handle operations on their own, including the pursuit of arrangements with other billing companies.
Riley said the shift would allow TVN to work on providing more digital programming and, eventually, video-on-demand programming that would be "cost-effective" for operators.
"Our turnkey product never required the operators to take all of the services that we provided," Riley said. "We've negotiated the costs for the operators and are bending over backwards to make it as easy for the operators to adjust. We're leveraging our infrastructure to provide the best service to our affiliates."
Riley also said TVN is providing operators with a greater split of the PPV revenue, although he would not reveal specific figures.
Sources close to the situation said TVN is offering 40 percent of the $3.99 wholesale price, instead of 40 percent of TVN's around-50-percent split with studios.
