Channing Dawson has spent a lot of time thinking about video-on-demand. As senior vice president of new ventures with Scripps Network, he's led the programmer's charge into VOD.
Content from Home & Garden Television, Food Network and Do It Yourself now dots the free on-demand platforms of both Time Warner Cable and now Comcast Corp.'s Philadelphia system.
Scripps was one of the first basic-network programmers to embrace VOD, in an attempt to learn what the technology could do. There's a lot to focus on as the service spins through its early stages, including pricing, marketing, packaging and data mining.
But there's one thing Dawson is now convinced will happen: Advertising, in new forms, will be a key part of the platform he's calling Scripps' "fifth network," after HGTV, Food, DIY and Fine Living.
"We decided we need an advertising base" of some type to make the economics work, he said. "We're looking at advertising within that space. We have to bring all thinking to bear."
Scripps launched on Time Warner systems with 10 hours of programming from HGTV, Food and DIY. About 20 percent of that content is refreshed each week.
Because of software issues, Scripps has not been able to monitor usage data. But that information will come eventually.
Once that happens, the information will help shape Scripps' VOD advertising initiatives.
At the moment, Kraft Foods is advertising within Food Network VOD content, while truck maker GMC is doing the same within HGTV's offering.
"We sell them in quarterly packages," Dawson said. "They buy a certain amount of time and they get billboards at the front of the show and a 30-second ad."
New commercial models
But Dawson is already thinking ahead, trying to determine which types of advertising might work better once VOD usage numbers can be analyzed. For instance, a company could use a billboard ad at the beginning of a VOD show to tease a product, and successively build on that through spots placed further along in the program, leading to a four-minute ad at the end.
Since each ad builds on the prior one, viewer interest could be sustained because the ad sequence itself might tell a story, he explained.
Another question with which Dawson is wrestling: determining "the perfect length of an ad in the VOD environment."
"Does a 30-second commercial work?" he asked. "It's hard to know when the viewer has their finger on the fast-forward button."
But the data generated by VOD also has some upside, in Dawson's view.
"This is performance-based media," he noted. "You know exactly who is watching. It becomes a great lab to test new forms of advertising and marketing, and that's very hard to do on a linear network.
"I look at this as a fifth distributed network," he said. "Consumers can have a real reaction to real ads. It's non-linear so it becomes a different behavior on the part of consumers. They are very much opting in, based on the topic."
On the programming front, VOD enables Scripps to take segments from different programs and package them together into a single offering. Seven different kitchen segments can be packaged into one VOD program, for instance.
"Compilations work," Dawson said. "They are a great idea."
VOD also gives Scripps a place to put its how-to programming. Once a staple of the network, how-to content, on the linear networks, has given way to more entertainment-oriented shows as the network has surpassed the 80 million-home plateau.
Another programming option Dawson is toying with is to take the more popular primetime programs and time shift them to VOD for those who missed it the first time around.
Dawson said Scripps will look at SVOD later this year, but he sees a number of hurdles.
"Many consumers consider HGTV to be free," he said, even though it's part of a large, single-price cable bill. "In their mind it is free. For us to push SVOD service, we have to convince them the convenience of VOD is worth $3 to $4. That's worth testing."
Marketing and SVOD
Another issue with SVOD concerns marketing. Because VOD launches are spread across the country, for a while campaigns will have to be local or regional in nature, Dawson said.
"And where does a business in subscriptions work? How many subscribers do you need?" he asked. Revenue would be split with the MSO, which retains the billing relationship with the consumer, he said.
"We don't have a direct relationship with the subscriber," he said. "It's fraught with problems."
And another idea thrown out by Dawson — advertising within SVOD content — would surely be anathema to cable operators. But people pay for ad-supported magazines, Dawson noted.
All in all, though, Dawson is happy with Scripps' position. He hopes the VOD content will be in 7 million homes by year's end.
Scripps is now halfway to that point, with Fine Living VOD set to launch in June.
"We've got a head start, and it's helped us," he said.