For Free or Not for Free? Execs Differ on Question - Multichannel

For Free or Not for Free? Execs Differ on Question

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Three executives from MSOs that launched video-on-demand shared their experiences — and their sometimes-divergent viewpoints — on topics ranging from content to pricing to marketing at a nationwide Cable & Telecommunications Association for Marketing Teleseminar last week.

Among the topics talked through: Should video-on-demand be transactional, or a bonus piece of an operator's digital offering?

Insight Communications Co., for instance, charges for 95 percent of its VOD content, whether it's in a subscription VOD package or through à la carte pricing for movies, said vice president of programming Terry Denson.

"The future in the on demand space is subscription," he said.

For its part, Comcast pitches VOD as an extension of digital cable platform, said Eastern division vice president of new product marketing Melanie Sommer. The Comcast offering is dominated by content for which subscribers don't have to pay extra.

"Our strategy is to just drive digital," she said.

Between 75 percent and 80 percent of the 1,100 hours of on-demand content Comcast offers Philadelphia-area subscribers is free.

"This is a risk-free opportunity to sample," she said.

Half of Comcast's 600,000 digital homes have tried the VOD service, Sommers said. The average home has viewed nine pieces of content across the paid and non-paid portions of Comcast's service — usage rates the MSO would be unlikely to achieve without a large amount of free content.

Cablevision Systems Corp.'s iO: Interactive Optimum digital platform offers a more evenly balanced mixture of à la carte movies, subscription VOD offerings and programs that consumers don't pay for, including its Mag Rack suite of specialty fare.

The average Cablevision viewer watches 5.5 titles per month across its VOD, SVOD and free on-demand offerings, said vice president of digital product management Kristin Dolan.

There were some hints dropped as to VOD buy-rates. For instance, rates in the flagship Philadelphia system are twice as high as in other Comcast VOD markets. Free content helps to draw users in, then "they are making the jump to transactional content," said Sommers.

Dolan said the same movie on VOD draws 10 to 15 times the buy rate as a movie on pay-per-view, even though hit movies are priced $1 higher on VOD ($4.95).

"People are willing to pay for the functionality," she said.

As an aside, some panelists took note of some hard-to-explain trends. Dolan said some VOD users have actually increased their PPV usage, even though the same hit movies — save for titles from Paramount Pictures Corp. — are available on both platforms. Denson said some movies produce more revenue for PPV than VOD, even though they are on both platforms.

"We need to be proactive in moving people to VOD," he said.

Denson said Insight planned to launch premium SVOD in April, mentioning a $3.99 a month price point for HBO On Demand.

Panelists also discussed their wish lists. Denson said it's important for MSOs to offer impulse SVOD ordering. "They can [order SVOD], but they won't get billed," he said. "We have to close the loop on the billing issue."

As more content is added to the VOD menu, the search function becomes more critical. Sommers talked about adding a search function that would let consumers find a program by typing the first three letters in its title.

"That would be a great enhancement to our user interface," she said.

Both Cablevision and Comcast are encoding broadcast content in real time for VOD distribution.

"That's a huge competitive advantage," Dolan said. "It's the first step toward headend-based" personal video recording capability, she said.

The CTAM teleseminar originated from QVC's West Chester, Pa. studios. The event was beamed to 14 chapter sites throughout the U.S.

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