DBS Tries PPV Discounts, Downloads

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Hoping to keep pace with cable’s video-on-demand movie momentum, DirecTV Inc. and EchoStar Communications Corp. are stepping up promotion and marketing efforts for their respective pay-per-view movie services.

EchoStar, seeking to simulate the cable VOD experience via direct-broadcast satellite, last week began uploading up to 30 Hollywood titles a month to Dish Network subscribers with digital video recorder (DVR) receivers.

News Corp.-owned DirecTV, focusing more on jump-starting the traditional PPV-movie business, throughout May will offer one top Hollywood title a week for an unprecedented 50 cents per buy.

30 'DOD’ TITLES

EchoStar’s new Dish On Demand service, initially announced at last January’s Consumer Electronics Show in Las Vegas, was scheduled to launch last week with up to 30 titles downloaded to subscribers using the company’s DISHPlayer-DVR 625 receiver, corporate communications manager Mark Cicero said.

Consumers can click on the movie and watch it for an unlimited number of times over a 24-hour period for $4.99 — a dollar more than Dish’s traditional PPV-movie service.

The service is expected to complement the company’s 14 standalone PPV channels.

Dish would not release the titles to be offered as part of its VOD service, but some of the titles in the current PPV window that could be featured include The Incredibles, Fat Albert, Sideways, Finding Neverland and Bridget Jones: The Edge of Reason.

Cicero said the move will improve the viewing experience of the company’s 11.2 million subscribers.

“We always want to give our customers more options, and we feel that this provides them more options to get movies whenever they want rather than waiting a half-hour or hour for the PPV movie cycle to start,” he said. “It takes their experience to the next level.”

Currently only a minority of subscribers utilizing the 625-model boxes will have access to the movies, with a majority of subscribers gaining access by this fall.

Eventually, EchoStar hopes to automatically download 100 hours of pay and free movies and television programs to Dish Network subscriber set-tops.

DISH TAKEN TO TASK

EchoStar hopes to cut a slice of the $540 million that Kagan Associates estimated cable will generate this year through VOD movie and television-content transactions.

But cable operators at CES assailed Dish’s On Demand service as a VOD simulation, rather than the true two-way, headend-based offering cable is currently providing subscribers.

Jimmy Schaeffler, chairman of DBS analysis company the Carmel Group, said despite its efforts, Dish will face an uphill battle to compete with cable’s VOD offerings, due to its limited shelf space.

“If you can only offer people 100 titles and your counterpart can offer 4,000, it doesn’t take a bright consumer to realize there’s a substantial difference,” Schaeffler said. “I think the cable guys have the perfect storm in terms of what they offer to consumers if they offer VOD with a DVR type of device.”

Still, Leichtman Research Group president Bruce Leichtman said the DBS player can remain competitive with cable on the Hollywood-hits playing field because of the limited amount of titles released every month.

“About as many DBS subscribers think that DBS delivers on-demand as they believe that cable delivers on-demand,” he said. “[EchoStar chairman and CEO] Charlie [Ergen] has done a good job confusing the market for what on-demand is, because nearly half of DBS subscribers believe they get on-demand today. The message of cable’s on-demand to DBS subscribers hasn’t really gotten there.”

While EchoStar is the first DBS provider to offer downloaded movies for PPV viewing, DirecTV in 2002 started downloading content from Starz Entertainment Group networks as part of a subscription on-demand package.

Neither DirecTV nor Starz would provide empirical data on the tests, but Schaeffler said, “I’d be surprised if [the performance] it was robust.”

DirecTV officials said it will launch a “more robust” on-demand service that will tie in with its next generation digital video recorder.

DIRECTV’S DISCOUNTS

For now, DirecTV hopes to boost its current PPV business by offering a monthlong movie promotion that provides four 50-cent PPV titles during the month of May, according to DirecTV spokesman Robert Mercer. Titles already offered include Paramount Pictures’ Collateral, Buena Vista’s The Village and DreamWorks SKG’s Anchorman.

While DirecTV is still paying the studios nearly $2 a buy for each title, Mercer said the additional buys it expects to generate through the promotion will more than make up the company’s revenue losses.

“Whatever costs that we may have swallowed on this is more than made up on the front end with increased PPV buys both in discounted rates and eventual PPV movie buys at the regular rate,” he said. “The intent is to introduce customers who have never purchased PPV to the benefits of the service and increase awareness among our customers of our PPV programming.”

Along with the 50-cent promotion, the DBS provider in June will resurrect its 99-cent “premiere night” offer, through which consumers can buy a first-run movie for 99 cents during the title’s debut night on the service. DirecTV did not reveal which title it will promote through the offer.

Industry observers say DirecTV’s PPV business, while still a viable source of revenue for the DBS service, hasn’t been as lucrative over the past few years due to competition from other entertainment options, as well as the growth of cable VOD and digital video recorders.

Mercer would not reveal specific DirecTV PPV revenue figures, but said the company hopes to encourage PPV non-users to sample the product through the discounted promotions.

“Once they try it, they will come back for another look and another buy,” he said.

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