PPV Nets Target Original Programming

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Boxing, wrestling, theatrical films and adult movies continue to make up the lion's share of pay-per-view programming, but several PPV networks distributing such fare are beginning to diversify their schedules with their own original-and often exclusive-events in an effort to lure viewers.

While it's hard to discount the impact of boxing, wrestling and movies, PPV executives believe it's equally important to develop original programming to further increase revenue potential and widen PPV's appeal to nonusers-and to create a more habitual viewing experience among their most loyal users.

Boxing, wrestling and movies may generate more than 95 percent of all PPV revenues. But the categories-particularly boxing-are cyclical, and often suffer from droughts when big fights, major wrestling events or top-grossing films are few and far between.

Such irregularities in the schedule provide as many headaches for operators as they do dollars.

The first quarter of 2000 is a prime example. A lack of major boxing and wrestling events has left industry event revenues down 70 percent compared with the same period last year.

In 1999, the industry generated a record $206.5 million from three major boxing events and the World Wrestling Federation's WrestleMania. But this year, the industry saw only one major PPV-boxing event in the first quarter, subsequently earning only $61 million.

"Right now, you can look at whether we're having a good year or a bad year from the boxing category," In Demand executive vice president of entertainment Mark Sonnenberg said. "That's not a safe way to control your destiny."

NEED NEW GENRES

While Sonnenberg said the major event distributors are important, it's pertinent that the industry develop alternative programming to fill in the gaps and to build a habit among subscribers.

In Demand-which has already offered a New Year's Eve concert featuring The Artist (formerly known as Prince), as well as a niche-targeted "BattleBots" event-is seeking to develop at least five differentiated events this year in an effort to diversify its PPV schedule.

Sonnenberg is hoping that the development of new PPV categories will, through repetition, be able to attract a loyal audience.

"We want to minimize our dependence on third-party product. In case of situations beyond our control, where a fight doesn't happen, we want to be able to be out there to help sustain the industry," he said. "We want to continue to work with our current distributors and create some programming ourselves."

Even when boxing and wrestling events are fruitful, some industry executives argued that those events alone have not significantly expanded PPV's user base. A recent Paul Kagan Associates Inc./Cabil Corp. 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, providing evidence that a significant number of subscribers are not using PPV.

Executives argued that by offering differentiated programming, networks such as In Demand, Playboy TV and BET Action Pay-Per-View can expand their user bases while increasing revenues.

Playboy Networks Worldwide realized last year that it had to go beyond adult movies and "Playmate" specials to develop more cutting-edge programming that attracted audiences beyond its traditional older male demographic, president Jim English said.

The result has been an aggressive push by the adult service to create several interactive and informative adult programs over the past year.

"There was a time when beautiful women in pictorials was the hot thing, but now, you have to be more outrageous and cutting-edge to get the viewer's attention," English said. "Competition is fierce, so you have to do things that are over the top."

ORIGINAL AND INTERACTIVE

The network's live Night Calls series-in which two hosts take calls from viewers who want to see their fantasies acted out-has been a huge hit for Playboy. It has been so successful-the shows generate so many thousands of calls that the network's lines are often tied up during the hour-long show-that it has spawned a second, more erotic and ethnically tinged show, Night Calls 411.

The network will also debut in May an erotic, interactive feature film, Fast Lane to Malibu, in which viewers can alter the story line as the movie is running, English said. During the movie, viewers-via phone, fax, or the Internet-can determine how the main characters in the movie proceed during five different points in the story.

English said Night Calls and Malibu-along with other series such as Sex Court and Sexcetera-are part of the 22 original shows the network produces each month for viewers. "There's something new every day, and it keeps viewers coming back to see what's coming on next," he added.

Also looking to capitalize on the appeal of erotic programming, BET Action PPV has developed several adult-oriented original and exclusive shows for its service, which has drawn new adult audiences to its late-night schedule.

With its lineup made up mostly of urban-oriented movies and PPV-wrestling events, BET Action president Curtis Symonds said its late-night PPV block, which launched in February, allows the network to differentiate its PPV schedule in order to attract a wider audience base.

"The development of original programming is critical because if you don't have the things people want to talk about and see, they will look elsewhere for their entertainment," Symonds said.

Action's gritty and erotic shows such as The Peep Show, Exploring the Fantasy and Nubian Goddess-as well as raw comedy shows such as Step to the Mike and Uncut and Uncensored-give the network a loyal and consistent PPV-revenue stream, Symonds said, adding that it was too early to provide specific figures.

"What it does for us is help the network to make its mark as a programmer and increase PPV sales for our affiliates," he said. "Developing original programming also helps us in our branding efforts."

Given the roller-coaster revenue ride boxing has taken the industry on during the past several years, operators are welcoming differentiated original programming.

"It's a good idea to search out other varying types of entertainment other than boxing and wrestling," Comcast Corp. area PPV manager Priscilla Reilly said. "We need to have [other events] in the whole PPV mix; it's a customer-satisfaction issue."

One Action PPV affiliate who wished to remain anonymous said that given Action's diverse programming lineup, he would choose the service, rather than a fifth or sixth movie channel. "That type of content tends to do better than another movie channel, particularly in urban markets," the MSO executive added.

WELCOME, BUT MEAGER

But while alternative PPV programming can be looked upon as a complement to big boxing and wrestling events, industry executives said, the low buy-rate performances of such events don't come close to the marquee shows.

"Until we begin to see these shows consistently generate 100,000 to 500,000 buys, it will continue to be gravy over the meat and potatoes of boxing, wrestling and movies," one MSO PPV executive said.

But network executives said they aren't necessarily looking to hit a home run immediately. In Demand's The Artist concert was a surprise hit, with around 100,000 buys, but it still fell well short of the all-time PPV-concert performances.

BattleBots-which featured electronic machines fighting against each other in a Plexiglas ring-drew only 20,000 to 25,000 buys.

"None of these things replace a million-buy fight, but it helps to soften the blow if the bigger events are not as frequent as the industry would like," Sonnenberg said.

Also, English said, the original programs allow subscribers to identify with the network brand and PPV, which could ultimately lead to additional PPV buys for the network.

"If you can create a community of people who rely on you for entertainment, then you can count on them to watch it over and over again," English said. "People will always like the movies and the events, but the thing Playboy offers is that you can become a part of a unique community. It's an experience that you're looking to share, and it goes beyond one or two shows."

But subscribers have to know what's available to them in order to make a purchase. Industry executives said operators and networks would have to make a much greater marketing effort to build awareness for the mostly niche-oriented events.

While boxing, wrestling and movies benefit from heavy promotion from other media outlets, many of the original PPV niche events could go unnoticed by a majority of subscribers unless the industry commits to heavy promotion.

"I'm in favor of stretching the PPV genre in many ways, but if the industry decides to just throw the events on the air without a significant amount of promotion, it will be a doomed effort," PPV-consulting company Third Variation Strategies principal Ellen Notbohm said.

In an effort to promote its late-night original lineup, BET Action offers a sneak preview of its upcoming programs on sister basic-cable network Black Entertainment Television during weekend late-night hours, network executives said.

EVENTS ARE COSTLY

But the extent of network marketing and promotional efforts is inevitably tied to the overall cost of developing the event itself, which, executives said, can get very costly. Network executives said the revenues generated from such programs often don't cover the production, distribution and talent costs associated with original programming.

"While it's necessary to offer differentiated programming, such events only work if they're economically viable," English said, adding that Playboy's shows are developed "incredibly economically" so as not to hurt the bottom line.

But Sonnenberg said the economic structure of such events-including marketing-can work once all parties understand the nature of the event. "If we come up with the right ideas, the right artists and bring them to the table, I believe the economics will work themselves out and operators will enthusiastically promote the events," he added.

Also, network executives said, there's potential for ancillary revenue for many of these shows. For BET Action, its late-night shows provide an additional revenue source through domestic and international syndication sales, Symonds said.

BET Action is also beginning to offer the shows via home video, where the network expects to reach more viewers and promote the PPV brand.

Marc Bruder, president of BRI, which handles video and syndication sales for BET, believes the titles could sell as many as 100,000 units because such erotic and couples-oriented programming targeted toward the African-American community is rare. Also, target viewers will identify with the BET brand.

"The BET brand gives the videos credibility because the target market is urban and knows BET," Bruder said. "There is already a recognizable relationship between Action and BET, so viewers know what they're getting with the videos."

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