In Demand Fights Tough VOD-Content Battle

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Trying to maintain its position as cable's dominant video-on-demand content provider, In Demand LLC continues to acquire high-profile content for its VOD platform, even as product from most of the major Hollywood studios remains elusive.

The network's latest VOD grab is an extensive library of movies and miniseries from Hallmark Entertainment Distribution LLC and Crown Media Holdings Inc.

Under terms of the agreement, In Demand will gain nonexclusive access to Hallmark Entertainment and Crown Media properties such as Merlin; Gulliver's Travels; Noah's Ark; 20,000 Leagues Under The Sea; and Moby Dick, said In Demand president Steven Brenner.

The deal — financial terms of which were not disclosed — also features animated programming including He-Man and the Masters of the Universe
and She-Ra: Princess of Power, as well as specials such as Fat Albert Halloween
and Fat Albert Christmas.

The deal comes on the heels of a similar agreement with ESPN. Beginning in Jan. 2002, the 18-month, nonexclusive agreement will allow In Demand to offer such on-demand library fare as SportsCentury
episodes, highlights from past X Games
competitions, classic boxing matches such as Muhammad Ali vs. George Foreman and vintage collegiate football and basketball games.

Hallmark and ESPN join other basic programmers who've reached VOD distribution deals with In Demand, including Turner Broadcasting System Inc., Comedy Central, Court TV and Discovery Networks U.S.

"The Hallmark deal is terrific for us, "Brenner said. "It's a remarkably rich amount of product, and anything that comes from Hallmark is known to be family-safe, which further enhances our VOD programming offerings."

STUDIO QUEST CONTINUES

But the prime jewels of the VOD business — top film-studio product — remain largely beyond In Demand's grasp at this juncture. Though the network has VOD deals with such studios as Universal, Artisan and Columbia Tri-Star, it still has yet to reach arrangements with companies that represent nearly half of the major titles released each year.

Making In Demand's job more difficult, Metro-Goldwyn-Mayer Inc, Viacom Inc.'s Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. last August announced a joint venture to create an on-demand movie service for broadband Internet users that would feature both recently released and library titles. Each content provider would have control over release windows and pricing within the yet-unnamed service.

A month later, The Walt Disney Co. and 20th Century-Fox announced a VOD-over-broadband initiative of their own. The new Movies.com broadband entertainment service, slated to bow next year, will allow consumers to download films to a computer hard drive for playback on a television or computer display.

But unlike its competitors, Disney and Fox will also pitch the services to cable systems with digital VOD technology.

Brenner said the network continues to negotiate with studios for VOD deals, and in fact is "extremely close" to reaching an agreement with at least one — although he would not reveal any specifics.

Nevertheless, Brenner said the PPV purveyor will confront what he terms a major "challenge" from the studios with a very strong and secure VOD product.

"The studios' attempts to offer product directly to the consumer is not unexpected, but it remains to be seen whether their VOD technology is wise and practical," Brenner said. "What cable has built is a terrific, consumer proposition of taking the attributes of the video store without having to go to the store."

But at least one studio executive believes the broadband services can trump any VOD offerings from traditional cable operators.

"We're looking to maximize all VOD revenue opportunities, and while we're not turning our back on [VOD-over-cable], we think the [broadband VOD service] will provide a significant source of revenue," the studio executive said.

MAINTAINING ITS POSITION

Despite its inability to secure the rights to studio product, In Demand has been able to maintain its position as VOD product provider to most of the cable industry, including its four owners — AT&T Broadband, Time Warner Cable, Cox Communications Inc. and Comcast Corp.

But there have also been some defections: Adelphia Communications Inc. will receive its VOD product from TVN Entertainment Corp., in which it has made a financial investment.

Brenner said he's convinced that In Demand will remain the dominant VOD content provider, especially as the network finalizes deals with cable operators.

"It's challenging and it's a difficult category that no one has had a lot of success with for the last 20 years," Brenner said. "But we're confident that we will make it work for our affiliates and consumers."

With all of the network and production-company VOD content locked up, Brenner said the network is now working with cable operators to create a user interface that will make it easier for consumers to access the vast amount of programming.

"If you want to find a movie or a program, you'll be able to find it easily," Brenner said. "It's important for operators and us that VOD product it isn't hard to find."

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