Cable Operators

TVN Will Drop PPV Channels

11/07/2004 7:00 PM Eastern

TVN Entertainment Inc. will discard all but one of its 20 linear PPV channels early next year in an effort to focus more resources on its video-on-demand business.

As operators seek to regain valuable bandwidth — and with TVN’s PPV channels generating just 10% of the company’s transactional business — executives said the move is an acknowledgement of the realities of the burgeoning VOD marketplace.

“We are very excited about VOD and are seeing exciting numbers in the industry in terms of the growth of VOD-enabled homes and buy-rates,” TVN chief operating officer Doug Sylvester said. “There’s really starting to be great consumer acceptance of VOD, so we’re positioning our company for the future of the transactional business, which we believe is VOD.”

19 CHANNELS FADE

Beginning next month, TVN will begin eliminating 19 PPV channels — 10 movies, three adult slots, and six themed channels.

By April 2005, all that will remain is one generic PPV channel featuring live events and movies, according to Sylvester.

Executives at In Demand LLC, the competitor to TVN that is owned by Comcast Corp. Time Warner Inc. and Cox Communications Inc., have previously expressed plans to continue distributing 31 PPV channels to affiliates.

In Demand officials did not return phone calls last week.

For the mostly small and midsized MSOs carrying TVN’s PPV channels, the pullback will serve as a launching pad for VOD, said Sylvester.

“The economics of entering VOD have come down considerably,” he said. “When you see server costs down below $50 a stream, it becomes very affordable to roll out a stream.

“The overwhelming majority of our affiliates have been pushing for this transition and have been driving their business toward VOD,” Sylvester added. “In some cases, there are some affiliates that would like to continue to offer PPV channels next year, and in those cases we’ll support their transition.”

RCN Corp. director of programming John Murawski called TVN’s move “inevitable” as more operators move toward VOD. He said nearly all RCN systems had previously carried TVN’s full complement of PPV channels, but many had begun slashing them.

“We’re looking to maximize our bandwidth usage, and as part of that we were looking to take some of the [near-VOD] product anyway,” Murawski said. “There’s not a lot of need for NVOD, which was kind of a difficult thing to describe to the customer when you have real VOD.”

TVN also will save on satellite costs, although Sylvester would not reveal specific figures.

TVN also can focus more resources on developing and distributing VOD content to affiliates and the industry at large. Currently TVN offers 2,000 hours of VOD content through relationships with such providers as Here TV!, Anime Network, Varsity TV and Total Hollywood TV.

MORE VOD CONTENT

MSOs that take TVN’s VOD product include Comcast Corp., Insight Communications Co. and Time Warner Cable.

“We’re seeing more and more content companies coming to the market through VOD because you don’t have the same capacity constraints that you had in PPV,” Sylvester said. “We see quite a bit of activity and excitement in the programming community about rolling out new product and we’ll be able to provide them with the resources to make that happen.”

Studio and event providers also are supportive, Sylvester said.

“The studios have seen PPV revenue decline consistently over the last few years and they’ve seen VOD grow,” he said. “They understand this is the way the business is heading, and they’re enthused that there’ll be a more consistent marketing message to consumers.”

September
October