Cable Operators

Strong Today, Gone Tomorrow?

1/13/2006 7:00 PM Eastern

Some of the biggest musclemen on the video-on-demand beach may be feature films and music videos, but the kids on-demand category isn’t letting anyone kick sand in its face.

Toddler-targeted shows like Barney, Dora the Explorer, Kim Possible and Ed, Ed and Eddy are generating millions of free on-demand orders from kids and their parents.

Networks including PBS Kids Sprout, Nickelodeon, Disney Channel and Cartoon Network are using on demand to give little eyeballs access to their favorite shows on a 24-hour basis while promoting content for their respective linear channels.

While VOD is currently the preferred platform toy for kids-targeted networks to offer exclusive content and sneak-peaks from popular, established shows, network executives say such programming could move to a more lucrative pay-per-view Internet model if operators continue to favor offering free on-demand product.

Proof in the Views
Comcast’s VOD results for December show the impressive strength of kids content.
VOD category Views
Music 30 million
Children’s 18 million
Free movies 15 million
NFL 7 million (full season)
Karaoke 3 million
Dating 1 million
Source: Comcast Corp.

As the VOD universe fast approaches 20 million households, operators such as Comcast Corp. say that the appeal of kids-targeted on-demand programming in general — and pre-K school programming in particular — ranks at the top of the popularity list along with movies from networks like Home Box Office and music programming from Music Choice.

Comcast On Demand vice president and general manager Page Thompson says that kids-oriented content represents more than 18 million on-demand views in the month of December alone. That’s a 50% increase over the category’s performance six months prior. Comcast offers more than 100 hours of kids-related content, more than double the amount a year ago.

“We’re fortunate to have great offerings. Almost anything we put in the kids category has had some measure of success,” he says. “It’s really parents putting their kids down to watch the programming.”

For the networks, VOD provides exposure for shows like PBS Sprout’s Calliou or Nick’s Go, Diego, Go! to kids and parents beyond the traditional early morning window for pre-school oriented programming.

“[VOD] is a loyalty program,” Nickelodeon Digital Television executive vice president and general manager Tom Ascheim says. Content from Nickelodeon and its sister service Noggin represent 40% of all kids-targeted fare on Comcast’s kids VOD lineup, even though it only makes up 20% of that lineup.

Comcast-owned PBS Sprout actually launched as a VOD service last spring before bowing its linear channel in September. The network, which offers such familiar titles as Barney, Sesame Street and Bob the Builder, still offers more than 55 hours of on demand content a month and has garnered approximately 50 million on demand hits since its launch, according to network president Sandy Wax.

Wax adds that Sprout on-demand viewers average about nine titles a month. “They’re not coming in just to watch one Barney show,” she says. “They’re watching nine or 10 different episodes, which shows how loyal the audience is.”

Network executives credit much of their on-demand success to operators for pushing VOD technology into more homes.

“It’s a testament to the content itself, but also consumers are getting more comfortable with the technology,” says Paul Condolora, senior vice president and general manager of Cartoon Network New Media. “Comcast along with Time Warner have been pushing VOD, and that has helped boost the business.”

But network executives say the operators’ insistence on offering VOD content for free to consumers may stunt the category’s future growth as networks seek to generate incremental revenue from other distribution platforms such as the Internet.

Disney — which offers a subscription VOD service to Cablevision Systems Corp. — says it is “encouraged” with results from its deal with Apple Computer Inc. allowing iPod users to download for $1.99 episodes from popular shows like That’s So Raven, although the company would not reveal specific figures.

Last November, both Cartoon and Nick began offering $1.99 downloads from shows like Foster’s Home For Imaginary Friends and Spongebob Squarepants, respectively, to consumers purchasing Hasbro Inc.’s Vugo portable media player. Neither company would reveal its revenue take from the venture.

But as such fee-based distribution platforms become more viable, Nick’s Ascheim says the network may begin to shift marquee content away from VOD if operators cannot come up with a better financial compensation business for the technology.

“I think we all need to find a model that works for everybody,” Ascheim said. “We will follow the money, because that’s important to us as company. We’re not abandoning VOD, but it’s certainly nice to go someplace where there is a business model. We hope our operator friends will work that out for us.”

Nevertheless, Condolora says VOD will always play a significant part in Cartoon Network’s overall alternative media distribution. Cartoon and sister service Boomerang offer a combined total of about 25 hours of on-demand content a month.

“The newer platforms will certainly have a role, because the convenience is so great. But on the other hand, the viewing experiences can be different for what you prefer,” he said. “There’s no substitute for having that remote and feeling comfortable knowing that I can find 20 hours of Cartoon Network on television instead of having to hook up a new device and download programming.”

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