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Basic Networks Explore VOD Options

Looking for new revenue opportunities, a number of basic cable networks are exploring the possibility of including their programming in operator video-on-demand tests.

Industry executives feel that offering content on a VOD basis could increase revenues for expensive programming investments as well as boost awareness for lesser-known or more niche content offerings.

While current VOD operations offer mostly Hollywood movie product, industry observers said that there is room and demand for differentiated product that has some familiarity with viewers.

"We think brands are important when it comes to consumer awareness of what's available," said In Demand executive vice president Rob Jacobson. His company offers a VOD service to operators. "We want to get people used to using the virtual video store, and offering well-known, branded content is a way to bring consumers to the technology."

"Everybody knows about the movies, but this is an opportunity to give subscribers a wide variety of content," said Federal Hill president Bethany Gorfine, whose company offers operators alternative VOD programming choices to cable operators.

"They are all looking at VOD to see how they are going to be part of it," Gorfine said.

While most cable networks haven't taken the plunge into VOD, Black Entertainment Television executive vice president of affiliate relations Curtis Symonds said it's a business that networks should not ignore, given its projected revenue potential. "It's another stream of revenue that we can't afford not to look at," Symonds said. "VOD is definitely the next wave."

Comedy Central is one network that is offering product to VOD. By offering 25 episodes of the adult animated
South Park

to operators, Comedy senior vice president of affiliate sales Brad Samuels said the company is testing the waters to see if the technology is viable for its programming.

"None of us know how well it will sell, but it's a wide-open marketplace," Samuels said. "It's an exciting, new technology and we thought we ought to be there."

Some network executives believe that offering popular shows on a VOD basis may eventually take a toll on the show's network ratings, thereby lessening the network's value to operators. Fans of a particular show who can access previous episodes on a VOD basis may be less likely to view that show again on the network.

"I think networks would have a tough time getting an audience for those shows on the network after it's run on VOD," Fox Cable Networks Group president and CEO Jeff Shell said. "I'm skeptical whether you can make the economics work-you're trying to slice the apple too thinly."

Nevertheless, Shell said the company hasn't ruled out some form of VOD distribution for its shows. "It's something that we've talked about and is something that the industry is evaluating," he said.

Along with revenue opportunities, Gorfine said that VOD could serve as a useful marketing tool for both networks looking to generate awareness of news shows or niches. "VOD is a fabulous focus test for a network," she said. "You could take that information to determine the potential audience for a particular show."

Gorfine said that such programming could give cable an advantage over competitors that don't necessarily have access to such product.

It could also help operators reach niche audiences in a community or region. "If you're in Texas, why not create a Spanish content area, or if you're in San Francisco, an Asian content service?" Gorfine said. "That would help separate cable operators from the rest of your competition."