PPV Execs Are Upbeat, Regardless

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Los Angeles -- Pay-per-view executives attending the CTAM
Digital and PPV Conference here were upbeat about the future of the business, even as it
faces some competitive and subscriber challenges going forward.

A Paul Kagan Associates Inc./Cabil Corp. study of a typical
PPV system showed that the industry still has a ways to go in reaching a majority of
consumers. The study -- which looked at the buy-rates of an undisclosed East Coast system
with about 50,000 basic subscribers -- revealed that an incredibly low 1 percent of basic
households represented 48 percent of the system's PPV buys.

Further, only 15 percent of subscribers accounted for more
than one-half of the system's PPV purchases.

The study, which was announced during last week's
conference, also revealed that 50 percent of the system's purchases came from the
adult-PPV category, with the majority of those buys coming from the heaviest PPV users.

Nevertheless, the news wasn't all bad for the
industry. Kagan senior analyst Larry Gerbrandt said PPV revenues will quintuple throughout
the decade to more than $9 billion by 2009.

"Those numbers do not include subscription
video-on-demand, nor do they factor in new competitors such as DVRs [digital-video
recorders] and PVRs [personal-video recorders]," Gerbrandt said. "But the
opportunity [for PPV's success] is cable's to lose."

While the industry hasn't taken full advantage of its
opportunities to fully develop its PPV business, outgoing In Demand president Mindy Herman
said the industry has a second chance to build its business through digital technology and
VOD.

By capitalizing on cable's national brands, including
the In Demand PPV brand, the industry can effectively market the value of VOD and PPV to
the consumer much like brands such as MTV: Music Television, Home Box Office and ESPN
helped to sell cable in the early 1980s.

"We have the next wave of truly innovative products,
but we have to aggressively market them to create cable's next generation of
'superstar' brands," Herman said.

Herman, who will become E! Entertainment Television's
president next month, proposed that the industry engage in a national effort beginning
this fall to sell the benefits of cable's brands, including digital and PPV, to help
thwart the competition.

"With digital cable, digital PPV and VOD, we can
propel the cable brand, renew and strengthen our connection to our customers and win the
competitive battles ahead," she added.

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