Networks Still Trying to Build a VOD Model

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Some basic uncertainty about video-on-demand business models emerged last week at a conference panel featuring basic-cable network executives.

At the Kagan Associates VOD Summit, talk naturally turned to such on-demand platforms as Comcast Corp.’s, which offer much VOD programming free of charge.

Much of the content consists of library titles from existing linear channels, but network executives said they could also offer VOD-exclusive fare, such as outtakes of existing programs or previews of upcoming shows, similar to what’s offered on DVDs.

MTV Networks would look to on-demand as a potential first window for music videos and other programming in an effort to “draw younger viewers to VOD,” said senior vice president of business development and strategy Tony Dunaif.

The Viacom Inc. programmer committed to provide VOD fare to Comcast in its most recent affiliate agreement. MTVN already supplies music videos for VOD, plus five-minute segments of such shows as Punk’d and The Real World (dubbed “Bytes”). Last week, it premiered a get-out-to-vote “music video” simultaneously on VOD and on MTV: Music Television.

But that issue of building a business keeps cropping up.

At NBC Universal Cable, a VOD strategy for such networks as Bravo, USA Network and Sci Fi Channel would almost have to include some type of financial compensation, senior vice president of new media Jean-Briac Perrette said.

Offering original content for free — particularly from the Universal Studios library of Hollywood movie titles — could limit payback from home-video and DVD sales, he noted.

“We see [VOD] as a new window that has tremendous value,” he said. “It’s a new window that needs to be compensated as a new window.”

A&E Networks senior vice president of sales and marketing David Zagin said programmers have to encode and edit “free VOD” programming, so it’s not free to them.

And Scripps Networks senior vice president of emerging media Channing Dawson said it would be difficult to debut marquee programming on VOD, given the limited revenue returns. “It’s not a very effective marking environment, so I’m not going to spend a lot of money in original programming if I can’t market it correctly,” he said.

Still, Dawson said programmers need to encourage producers to think about programming that could generate unique versions on as many as five platforms.

Panelists agreed they need prompt viewership and usage numbers.

“The advertising interest has been enormous,” Zagin said. “We need the cooperation of the cable operators” to provide accurate usage data.

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