Monday

Video on demand's
high anticipation factor

Survey finds high consumer interest in pay to view

By Kevin Downey

   The idea of sitting on one's couch and downloading a movie for viewing on your TV set is certainly an attractive one. Because of price and availability, that option will not become commonplace in American homes for several more years.
   But video on demand has crossed one important barrier: consumer anticipation. Unlike so many promising technologies, VOD is one that consumers are looking forward to well before it is widely available.
   And some networks that already have VOD channels available are among the most interesting to consumers.
   That's according to a Beta Research study released last week that finds that a majority of people are interested in VOD.
   A few more than half those surveyed say they are interested in VOD, while nearly one-third say they are very interested.
   The on-demand networks of most interest include HBO and the History Channel, which are of interest to 34 percent and 30 percent of respondents, respectively.
   ESPN, Starz and Showtime’s on-demand channels were each mentioned by 26 percent of respondents, while HGTV on Demand was mentioned by 25 percent of respondents. All of the channels are already in existence.
   “Different sample groups have different needs,” says Andy Klein, president of Beta’s cable television division.
   “The Scripps Networks (HGTV and others), for example, rate very high among women, ESPN rates very high among men and, among current digital subscribers, the commercial-free movie services rate very high.”
   Although slow to make an impact, VOD has been around for a few years.
   The way it works is that digital cable TV subscribers can order a video by pressing a button on the remote control and agreeing to pay a fee, typically about $3.99 per movie. Monthly subscriptions are becoming more common. The movie can then be watched like a DVD, meaning it can be paused, moved backwards or forwards and stopped to continue watching at a later time.
   But for VOD to move from an intriguing concept to a viable alternative to the video store it has to become more widely available and, according to Sean Badding, vice president and senior research analyst at the Carmel Group, less expensive.
“Interest is one thing but to actually purchase and to become a consistent buyer of VOD is another,” he says.
   “When we can get down to pricing that is a buck or two, I think you will hit a bigger sweet spot than you are today. Heavy movie viewers are willing to pay $4 a title, but you have a large audience out there that feels $4 is too much.”
   Most forecasters don’t think VOD will be used by a substantial number of people for another five years or more.
   While VOD is growing, it was only in 2 million homes at the end of last year, according to PricewaterhouseCoopers, but is conservatively forecast to be available in 8.5 million homes by the end of 2003.
   “In terms of VOD’s growth, it has been significant over the past two years and they have done very well in niche markets,” says Badding.
   “But behind that is we don’t know what happens when VOD tries to be deployed in rural or suburban areas, where the take-rate has not been very high and where cable has not had a success story. When we try to scale it out nationally, the economics do not favor the VOD model, at least not today.”
    Beta, which surveyed 1,000 cable subscribers by phone and measured interest in VOD for the first time this year, also measured people’s interest in emerging cable TV networks.
   Among small networks of interest are Fox Movie Channel, Science Channel, DIY: Do-It-Yourself, Biography Channel, FamilyNet and History International, all of which are of interest to 40 percent or more of respondents.
    Among the mid-sized networks measured, the greatest interest is in networks like National Geographic Channel, Lifetime Movie Network and superstation WGN.
   “A couple of networks had big jumps in rankings compared to past years, the Science Channel and DIY in particular, and WGN among mid-sized networks,” says Klein.
   “They do not necessarily have to have a well-known parent company. If the concept is appealing you can generate significant interest among digital cable subscribers.”

-Kevin Downey is a staff writer for Media Life.

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