Op's Digital Push Squeezes Analog PPV

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The cable industry's aggressive marketing push for digital services has started to put a squeeze on promotion for analog pay-per-view programming, according to several industry executives.

While PPV programming executives concede the digital rollouts will ultimately provide more opportunity to distribute PPV events, many are worried that digital's future success will come at the expense of today's analog business.

For years, operators have used hundreds of hours of local ad avails to promote PPV programming, especially major sports events. It is not uncommon for an operator to run as many as 300 avails on various basic-cable networks to promote a major boxing match.

But over the past 18 to 24 months, as operators have rolled out such digital services as high-speed Internet access and video-on-demand, event providers said they've seen a shift. Much of the promotional inventory that had been allotted to analog PPV fare is now being used to tout the various digital offerings.

And though marquee boxing and wrestling events have retained their share of spot inventory, niche event programmers in particular have said they're beginning to see a reduction in promotional time.

"There's a little squeeze on analog channel space," said BRI president Mark Bruder.

"In the short term it hurts, but they're promoting the digital service, which will eventually provide more channels to distribute [PPV] programming," added Bruder, whose company distributes adult-oriented programming to PPV networks and operators.

But the squeeze isn't only related to marketing: Event distributors say there are fewer analog channels to distribute stand-alone programming. Innovative Sports Marketing general partner Dan Jacobs said a number of systems that had carried its stand-alone PPV sports events in the past have stopped, owing to the loss of PPV channels to digital.

"We're running into systems that can't do stand-alone because the digital platform has taken away a channel from analog PPV," Jacobs said.

For their part, operators said they're not ignoring the PPV business, even with an increased digital push. Cox Communications Inc.'s San Diego system allots one channel to analog PPV movies and events, even though its 35-channel PPV digital service has penetrated less than 30 percent of its subscriber universe, said product manager Marty Youngman. Nevertheless, those digital channels are generating as much as 80 percent to 85 percent of all movie buys.

Youngman noted that the system still carries the Sneak Prevue barker channel for its analog PPV business and continues to air radio spots promoting both analog and digital channels.

"You still have some subscribers who are buying events that don't buy digital PPV movies, so you have to make sure you're serving those viewers," Youngman said. "But our big push is going digital."

Other MSOs, such as Charter Communications Inc., aren't allocating more ad inventory or channels for digital and VOD services at the expense of the analog movie and PPV business. While digital may be the future of the industry, Charter vice president of programming and PPV Patty McCaskill said, the analog business should not be ignored.

"When you're looking at 98 percent of PPV buys coming from digital, then you can talk about reallocating analog PPV services," she said. "But when you're at 10 percent to 15 percent, I can't think of abandoning the analog business, because you're leaving money on the TV. We will continue to retain those channels until the majority of PPV users have upgraded to digital."

McCaskill also said the MSO is trying its best to balance "finite marketing inventory," aiming to grow the digital business while continuing to nurture analog PPV.

"The events will get the appropriate amount of spots relative to their potential cash flow and performance," she added. "We'll put more behind a heavyweight fight, for example, than a typical concert, but we're not consciously cutting back on the resources we use to promote the analog business."

Some event distributors understand the operator's dilemma, recognizing that digital growth is better for their long-term business.

"The loss of the systems due to digital is good in the long run, because those systems that didn't have channel capacity in analog, and subsequently didn't take my channel, will be able to offer those events once digital is completely rolled out," Jacobs said. "Short-term, we have to suffer a little; long-term, we'll be in better shape."

In the meantime, direct-broadcast satellite has taken up the slack for event providers.

"Whatever I'm losing in the analog cable market, I'm making up in the DBS market," Jacobs said.

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