"Where else does television have to go?" With that simple question several years ago, Cablevision Systems Corp. chairman Charles Dolan began cooking up the idea of highly personalized television programming.
The man who helped usher in Home Box Office and turned program packaging into a marketing art form was wrestling with how to deliver still more content to consumers.
And as technology costs dropped throughout the late 1990s, and video-on-demand economics looked palatable, it became feasible for Dolan to marry his personalized programming vision to yet another new platform.
The result of his vision hit the streets on Sept. 28, 2001, when Cablevision launched iO: Interactive Optimum, a suite of digital and VOD services that includes Dolan's new baby, Mag Rack. Launched with 10 "magazine" channels, Mag Rack now encompasses 18 VOD channels and 100 hours of highly specialized on-demand programming.
"Mag Rack is the first service that is solely branded and dedicated for VOD/[subscription-VOD]," said Josh Sapan, president and CEO of Rainbow Media Holdings Inc. The service is also exclusive to VOD. "It's content that is really not found on regular cable channels, not even on highly niche cable channels."
As such, Mag Rack's appeal is multifaceted, he said.
First, it allows narrow, and sometimes not-so-narrow, audiences to find programming appealing to them. For example, according to Mag Rack executive vice president and general manager Matt Strauss, 18 million Americans consider themselves bird enthusiasts. Mag Rack features BirdSight, a channel geared specifically for that audience.
Second, Mag Rack is designed to help operators sell digital set-tops, Sapan said. Cablevision packages Mag Rack inside its digital tier, paying Rainbow a small fee for the suite of VOD content. "We think this service can drive and retain digital subscribers," Sapan said. "Most operators want to make digital stickier."
With the proliferation of satellite personal video recorders, Sapan points out that Mag Rack is potentially cable's only exclusive VOD content. Satellite PVR users can achieve the same level of VOD functionality by storing pay-per-view movies or shows like HBO's The Sopranos, Sapan said. "Mag Rack is the only VOD content that you can't get on PVR."
Strauss is actively pitching Mag Rack to cable operators, and says a deal with another MSO could come soon. "The timing is really right," he said.
HERE'S THE LINEUP
Mag Rack's opening day lineup included Motorcycles Freedom, Wine World, Classic Cars, BirdSight, Maximum Science, Photography Close Up, American Catholic, Bridal, Club Vegetarian and Natural Health.
Strauss said the wine and classic car offerings "are two of the more popular video magazines." The first 10 were selected based on nationwide consumer research. But a recently added Shakespeare channel is also doing well, he said.
In that selection, theater experts discuss Shakespeare's plays. "This has one of the longest durations," Strauss said. "They stay longer than any of the other video magazines."
Individual content pieces within each magazine range from 20 minutes to 80 minutes in length. "We've designed the programming for VOD," Strauss said. "It can be chapterized."
For instance, a 50-minute science show will be broken into five separate 10-minute chapters, giving the viewer both short-term and long-term viewing options.
On average, users split their viewership 50/50 between long- and short-form programming, Strauss said. He declined to give further viewing statistics, although currently, the service is only in front of about 30,000 Cablevision subscribers.
But early focus research shows the editors who introduce the pieces in each Mag Rack magazine are critical. "The real value is having these editorial experts," Strauss said, because of the connection they make with the audience. Each new Mag Rack that will launch — 40 are due to launch by year's end — will have an editor, Strauss said.
About half the content is refreshed each month. With production and studio costs, programming Mag Rack is not a cheap proposition, and the highly niche nature of the audience presents a challenging economic equation.
"The cost model is the biggest challenge," Sapan acknowledged. "We are spending money. We don't want to compromise on quality." Sapan hopes other operators buy into the proposition that such highly specialized content will help push digital penetration higher.