Movies Will Help Drive Digital Cable2/10/2002 7:00 PM Eastern
The digital revolution's impact on cable and satellite subscriber acquisition and revenues has been dramatic. Choice is the number one reason subscribers convert to digital, and increased movie offerings help drive growth. To this end, the typical digital system has over 100 channels of dedicated movie programming.
However, with increased choice comes the risk that subscribers will be overwhelmed. The industry is now faced with the challenge of helping them navigate and find value in this new expanded programming environment.
Movies, in all windows of release, are by far the entertainment industry's most prized currency. According to the Consumer Electronics Association, movies are responsible for the 63 percent growth in the sales of DVD players this year, establishing the platform as the most successful consumer electronics product of 2001.
Home Box Office, Showtime Networks Inc. and Starz Encore Group LLC have also seen their revenues rise because movies attract more subscribers. The story is similar for the pay-per-view sector. Movies are personal, and are the richest, most emotional programming subscribers can watch. They will also continue to be the prime driver of subscriber retention and subscriber acquisition throughout the cable and satellite universe.
According to Cable & Telecommunications Association for Marketing research, movies are the number one subscriber entertainment form, and the growth of digital and video-on-demand is sure to increase that preference.
Paul Kagan Associates Inc. predicts that by 2008, pay television movie revenues will more than double, so finding effective new ways to help your subscribers navigate through the multitude of expanding movie choices will ensure a growing share of this important new digital subscriber market.
Predictably, movies will drive the growth of digital deployment at the cable level. Most digital cable systems typically carry 40 to 50 channels of PPV, and 40 to 50 premium and dedicated movie networks, with half of the entire program slate devoted to movies. However, it doesn't stop there — many digital-cable models, driven by VOD will be primarily fueled by movies.
While at U. S. Satellite Broadcasting, we gathered a wealth of data through research to understand why and how subscribers choose movies. We learned that in the theatrical, PPV, premium, video and broadcast windows, consumers make movie selections based on titles that they are familiar with. Research (and common sense) also confirmed that subscribers simply passed on movies they didn't know.
We also learned that subscribers of 200-channel systems are overwhelmed with choice. Hollywood studios are now producing nearly 500 film titles a year (more than double the amount in 1980), with only a small percentage of these films — the perceived blockbuster titles — receiving significant marketing and promotional dollars during their theatrical release.
How many of these titles do consumers actually recall by title? By lead actors or genre? Again, research suggests that most subscribers are probably only aware of a handful per year, which means many non-blockbusters that are offered will simply be ignored and that means missed revenue opportunities.
Cable and satellite operators currently do not have the budget or resources to market and promote lesser-known titles. This dilemma multiplies in size for MSOs when the overwhelming choices provided via new digital premium tiers and PPV channels are considered. In addition to electronic programming guides, subscribers are increasingly demanding a friendly and contextually rich viewer experience to navigate through the myriad of titles available to them.
The subscriber's investment of time and money must be maximized through quality viewing to create a satisfied long-term subscriber. Equipping the subscribers with the entertaining information they need about titles is critical.
With increased choice becoming the number one factor in digital deployments — and with movies driving the number of selections — the key to success will be how effectively MSOs and local systems can provide new tools to assist subscribers to easily find what they want, when they want it.
Having witnessed a preview of the digital battle for the acquisition, retention and recapture of subscribers, all I can forecast is that the revolution will be televised and it will be fought with movies. And, the more movie titles your subscribers know about, the more movies they will watch on your systems.