On Demand Summit: VOD Key To ‘Nurturing' Cable Subscribers

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Cable's free video-on-demand services are an increasingly critical component that reinforces the value of the TV subscription, according to a panel of industry executives here at Multichannel News/B&C's On Demand Summit 2.0.

For Rogers Communications, offering free VOD is a key part of "sustaining and nurturing our customer relationships," said David Purdy, vice president of television and video product management -- particularly for those under 25, who see cable services as less relevant than older consumers.

The Toronto-based cable operator, the largest MSO in Canada, is offering every World Cup match on TV, mobile and broadband on-demand so customers should "not miss a single goal, a single red card," Purdy said.

"Everything we do at Rogers is about extending the existing customer relationship," he said.

Rogers generates $1.8 billion in television subscriptions annually, but less than $100 million of that is from transactional revenue, including VOD and pay-per-view events, Purdy noted. "The bulk of the future revenue will continue to be subscriptions," he said, and free VOD adds more value to those.

Bob Watson, Time Warner Cable's vice president of programming and new business development, agreed that free video-on-demand is a hugely popular element of the video subscription.

"People are looking for more value and they are getting that from that type of programming," he said. Time Warner Cable offers about 10,000 hours of VOD, which is mix of transactional, subscription and free content.

Univision Communications, for its part, is gearing up a huge VOD push for the World Cup, making hundreds of hours of coverage available free on-demand 24 hours after the matches appear on linear. "For us it's all about introducing VOD to our audience pretty much for the first time," said Tonia O'Connor, executive vice president of distribution sales and marketing.

At the same time, there's a prime opportunity for cable to increase transactional revenue from VOD for movies, especially as the physical movie-rental stores are closing, said Alex Fragen, Summit Entertainment's president of domestic television distribution.

"If the customer wants to watch something it needs to be available," he said.

Added Purdy, "There's a huge community out there that will never go to the cinema. But they're willing to pay a premium for that movie day-and-date... They'll pay multiples over what they currently pay for VOD."

But the panelists also said VOD interfaces remain a barrier to wider usage.

"The challenges are navigation," said Sandy Wax, president and general manager of PBS Kids Sprout. "We need to think about, how do we think about this holistically instead of these bits and pieces?"

Watson said cable VOD services have been set aside in "artificially defined" areas that are based on the technology. "Customers don't care about that -- forget about the walls whether it's linear, on-demand or on their DVR."

Cable operators should be providing an "E-ZPass" for customers to watch any video they want, Watson said, referring to the automated highway-toll payment system on the East Coast: "Just make it available to me."

The challenge is to make rights holders understand the benefits of making their content available across multiple platforms, to provide that seamless experience, Purdy said. "We should begin every conversation with, ‘What do customers expect today?'" he said. "If you're slow to the market that's when you see the bleed to piracy."

Purdy, in describing Rogers' World Cup multiplatform play, described the service as covering the "4A's": any content, anytime, anywhere, any device.

Watson later commented, "Since the Canadians took the 4A's, I'll say Time Warner Cable is delivering video to the ‘4C's'": cable, cell phone, computer and car. To which Purdy replied, "I like the 4C's better, in fact."

The panel, "Programming for Demanding Audiences," was moderated by Multichannel News programming editor Tom Umstead.