Access to more Hollywood-type content key to driving VOD penetration: Decima

Access to more Hollywood-type programming is a key to achieving higher penetration of video-on-demand (VOD), concludes a soon-to-be-released consumer research report from Decima Publishing Inc. and Decima Research Inc. "Canadian cable operators have only recently begun to sign VOD content deals with major Hollywood studios. Decima believes more agreements will have to be inked for VOD to achieve greater consumer takeup," reads The DIGITAL DOMAIN: Consumer Attitudes on Digital Television Services, Benefits and Features in Canada. Another major factor affecting the penetration rates of VOD is the release window for VOD product, numerous cable operators have told Canadian Communications Reports. More than one-third (37%) of digital television subscribers polled in a national telephone survey of more than 2,000 adult Canadians in May and June 2003 indicated that they were aware of the VOD feature, the Decima report states. Only about 5% of digital subscribers order VOD programs. The report also projects near-term growth of VOD among digital subscribers. Based on the description provided to them in the survey, the report estimates that VOD penetration will triple to 16% within the next year. The projection assumes that current market conditions will remain unchanged and that current users will continue to use VOD in the short term. The 5% VOD penetration figure is reflective of the relative importance that respondents placed on the feature. VOD ranked 11th out of 14 digital service attributes evaluated as part of the survey. The top three most important services, benefits and features as ranked by digital subscribers were "better picture and sound quality," "on-screen interactive TV guide," and "the ability to ‘pick and pay’ for only the TV channels you want" (CCR, Sept. 18/03). The number one choice of type of programming by VOD users was new releases of major motion pictures. Ninety per cent of VOD subscribers indicated they were interested in new releases of major motion pictures, while 65% indicated they were interested in major motion pictures that aren’t new releases, the second most popular type of VOD programming. It appears that a majority of digital subscribers have yet to embrace VOD not only because the amount of blockbuster programming available on the on-demand service is limited, but also because of the release date of the VOD content. Maggie Molloy, VP of programming at Federal Hill Communications, notes that the VOD rights to movies and other content lags months behind that of the home video market. Federal Hill is a U.S. company that facilities deals between distributors and content suppliers, and this month announced it would be providing VOD consultation services to Saskatchewan Telecommunications (SaskTel). The Los Angeles-based firm is also working with Cogeco Cable Inc. on VOD. The pay-per-view (PPV) release window is 35-45 days after home video release, which comes months after the film opens at the cinema box office and about three months after screening on airlines and in hotels, Molloy stated during a presentation at last month’s Canadian Cable Systems Alliance (CCSA) annual meeting. The VOD content will not appear before the home video release and probably not before PPV, she further indicated, and as a result consumers have already had a chance to see the movies in the theatre, on video and PPV. After the VOD release, the movies may go to pay TV channels, where they could stay for up to a year, and then be broadcast on TV networks. Small cable operators attending the CCSA meeting complained that the release window was negatively affecting VOD penetration. But Molloy responded that at this point the Hollywood studios will not do anything, including moving up the VOD release window, to jeopardize their $20-billion video and DVD market. However, the studios have worked out a better revenue split for themselves with VOD than with PPV, according to Molloy. Typically, she says the revenue split for PPV is 50% to the distributor and 50% to the content supplier, but with VOD 60% goes to the content supplier and 40% goes to the distributor. "If you are looking for growth, you are going to have to market and invest in VOD, and grow it with more studio deals," she told the CCSA meeting. She suggested that the CCSA work as a group on a single branded VOD service for all the small cablecos it represents. Canada’s largest cable operators so far are the only ones to have introduced VOD. These operators have announced some content deals. Shaw Communications Inc. has inked a long-term agreement with Alliance Atlantis Communications Inc. to supply movies for its VOD service, as well as coming to terms with Universal Studios (CCR Update, Oct. 8/03), 20th Century Fox (CCR, June 30/03), and Hallmark Entertainment (CCR, July 4/02). Rogers Cable Inc. has signed an agreement with MGM Home Entertainment (CCR Update, May 28/03) and also has deals with Alliance Atlantis, which represents Miramax, New Line and Artisan Films in Canada, as well as Lions Gate Entertainment, TVA and Corus Entertainment Inc. The Canadian Broadcasting Corp. also provides VOD content to Rogers (CCR, Sept. 4/03, May 8/03). Cogeco Cable Inc. receives VOD content from Alliance Atlantis, Hallmark Entertainment, Lions Gate, Videoville Showtime, Distribution S.E.L., Crystal Films, A&E and Corus (CCR, Nov. 22/02). Other smaller cablecos are expected to soon begin offering VOD as are the telcos that have launched digital TV services. Cableco Westman Communications Group, and telcos Telus Communications Inc. and SaskTel have been granted licences by the CRTC to operate VOD services (CCR Update, Sept. 10/03). The commission is also in the midst of considering a VOD licence application by Manitoba Telecom Services Inc. (CCR, Sept. 4/03) and Ontario small cableco Compton Communications, the latter of which has yet to be gazetted.

Access to more Hollywood-type content key to driving VOD penetration: Decima

Broadcast | October 16, 2003

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