Forum: Its Time for PPV to Pool Its Resources

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Given the recent developments in technology and increasesin channel capacity, the pay-per-view industry is at the threshold of a potentiallyrevolutionary chapter in its history.

Since the creation of Viewer's Choice in 1987, PPV hasevolved into a viable entertainment outlet, and it has consistently grown as an industry.

Of the nearly 100 million television households in theUnited States, more than 40 percent can access PPV channels -- an average of six channelsfrom their cable provider and up to 60 from their direct-broadcast satellite provider.These numbers continue to rise steadily.

But we cannot allow ourselves to be satisfied with theseresults: We must challenge ourselves to actively seek ways to expand the PPV business.

In 1998, the PPV industry generated more than $1.2 billionin revenue from hundreds of Hollywood movies and special-event programs. With additionalchannel capacity, these numbers can and should increase.

But this will not happen on its own: We would all benefitfrom additional PPV activity, and we should begin to prepare for a not-so-distant futurein which we are able to provide a more complete stream of programming to our customers.

In order to fully capitalize on the multichannel universeof tomorrow, we must ask ourselves two questions: How can PPV packagers best grab theattention of consumers? And once we've got their attention, how do we ensureprofitability for all parties involved?

The mission is to provide innovative programming andtargeted marketing to an increasingly splintered population, and to do socost-effectively.

I propose that rather than individually searching for theright ingredients, we in the PPV industry pool our resources and work together to find theright solutions.

The industry should create a development fund that willallow it to test new programming ideas and marketing strategies -- without any one playerassuming undue risk.

Distributors, programmers, MSOs, packagers and marketersall have interests in the success and viability of PPV, and they would all benefit from acollaborative relationship formed to explore the potential of the industry.

A jointly managed fund -- backed by each of the players inthe industry -- could be used for a number of purposes that would benefit us all.

An investment in a PPV-development fund would pay dividendson a number of fronts. Research could be done into all aspects of PPV, such as thegeneration of new programming formats, the creation of more effective and targetedmarketing campaigns and the development of improved financial structures.

Historically, PPV offerings have fallen into twocategories: recently released movies and special events. Movies are by far the biggestdraw in terms of transactions, and the development of near-video-on-demand and VODtechnology should ensure that Hollywood films will be a staple on the PPV menu for yearsto come.

PPV special events, like boxing or professional wrestling,are also hugely popular and, due to their higher ticket prices, they account for adisproportionate percentage of overall PPV revenues.

Broadening the scope of the special-event category is thekey to PPV's future success. Rather than focusing exclusively on the high-dollarsuperevents, we must begin to supplement traditional PPV fare with a creative middleground of offerings that, when targeted to the proper audience and efficiently marketed,will provide strong revenue streams that are accompanied with only a moderate amount ofrisk.

While the big-ticket championship fights have beenconsistently successful, there is some evidence that midpriced events, like concerts, canbe profitable, as well.

For example, last month's offering of Showtime EventTelevision's Backstreet Boys concert required a smaller upfront commitment whencompared with ring events, but in the end, it was a fruitful event for all partiesinvolved.

As we continue to experiment with this type of programming,we'll be able to refine our operations to maximize the success of these events.

The programming can go far beyond concerts:

• Additional sporting events, such as figure skating,CART and NASCAR races, or special golf and tennis matches;

• Music and cultural events, like Broadway shows,opera and ballet; and

• Made-for-television entertainment events that couldonly be seen on PPV -- maybe stunt performances or variety shows could find new audienceson PPV, or children's programming, such as magic acts and circuses. We know thatchildren control a lot of entertainment dollars. What can we do to attract them and theirparents?

But the PPV industry must work together to ensure that niceprograms like these are marketed appropriately and efficiently.

Attracting the maximum interest in niche programmingrequires both knowledge of the target audience and a plan for the best way tocost-effectively reach them. Money from a development fund could be used to identifytarget audiences and to tailor programming and marketing strategies to reach them.

In addition, a PPV-development fund would create a vehiclethrough which new financial structures can be tested and put into practice. Development ofnew programming in niche categories will almost surely require a different financialstructure. Let's figure out what makes the most financial sense for everyone involvedso that we can move ahead quickly and productively.

To help our industry achieve its full potential, we mustpartner with other PPV packagers and distributors to develop this concept of industryexpansion. We must work together to determine which directions are in the best interest ofthe industry.

In the coming weeks, we will explore the concept ofconvening a meeting to discuss the future of the PPV industry and to develop strategies tobroaden its revenue streams.

We plan on hosting the first-ever Pay-Per-View IndustryRoundtable in May to jump-start all of these ideas before the cable-television industrygathers for the National Show in June. We will encourage and invite all of the variousparticipants in the PPV industry to present diverse programming ideas and to commit tofurthering the category.

In this roundtable, we can discuss the creation of a jointmarketing and development fund to explore and develop these new ideas.

We at SET are confident about the continued success of PPV,and we look forward to working with our colleagues in the industry to maximize itspotential.

Mark Greenberg is executive vice president of ShowtimeEvent Television and executive vice president, corporate strategy and communications atShowtime Networks Inc.

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