TVN Claims Higher Digital-Box Penetration

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TVN Entertainment Corp. said affiliates using its turnkey
digital-cable-marketing system are deploying digital-cable boxes faster than the average
operator is.

"With some affiliates, we've seen 10 percent [digital]
penetration in three months," TVN senior vice president of sales and marketing David
Sears said.

According to Sears, about 90 percent of affiliates that opt
for TVN's turnkey marketing package achieve penetration rates higher than the industry
average of about 10 percent to 15 percent after 12 months of active marketing.

TVN cited some examples. Colton Cable TV of Colton, Ore.,
saw 30 percent preregistration penetration prior to its launch last month. Monitor
Telecommunications Systems of Monitor, Ore., has reached 20 percent penetration since
April. And Machias Systems in Machias, Maine, has reached 15.47 percent digital
penetration since December.

TVN's digital pay-per-view service does business with small
and midsized systems with subscriber bases ranging from 3,000 to 50,000.

"Small operators don't have the depth of staff to do
everything," Sears said.

TVN ran a telemarketing campaign for Classic Cable's
northern region in Plainville, Kan., in April, three months after the system launched its
digital-cable service.

Prior to the telemarketing effort, "We spread our
advertising and marketing efforts out because we didn't know what kind of demand to
expect," regional manager Nita Basgall said. In its first several months, the system
achieved more than 7 percent penetration, she added.

Plainville is the first digital market for Classic,
although the operator plans to add a second in the third quarter of this year.

"Even smaller communities are asking for
digital," Basgall said. "Unfortunately, it's not feasible in some of our smaller
markets at this time."

TVN customizes its marketing messages for each system
because each one focuses on different types of programming. "Our goal is not to tell
them how to do this, but to work with them," Sears said, adding that targeted
telemarketing and direct mail have been very successful among TVN affiliates.

Carnesville Cable TV in Carnesville, Ga., asked TVN to
scale back its telemarketing efforts recently "because we got more takers than we
were able to handle in the field," owner John Williams Jr. said.

"Some customers were just rubberneckers," he
added. "They wanted to see what it looked like, then they turned the boxes back
in."

Small systems like his can't handle too much inventory,
Williams said.

TVN offers a leasing program through a vendor partner for
operators that are concerned about product obsolescence.

If Carnesville Cable asks TVN to run another telemarketing
campaign, Williams said, the system might segment its mailing list so that only
premium-movie subscribers are targeted.

"We don't want to put a digital box in the home of a
customer who's three months behind on their bills," he added.

Carnesville has achieved nearly 12 percent-penetration
since its digital launch last fall.

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