In his first four months as president of pay-per-view network In Demand, former USA Networks Inc. executive Steve Brenner has quietly led the programmer's continued domination of cable's pay-per-view and near video-on-demand business. He's also positioned
the network to be
the industry's purveyor of programming content and
marketing support as operators launch VOD. Brenner sat down with
pay-per-view editor R. Thomas
Umstead to discuss a number of issues facing the network, including its relationships with Hollywood, event providers and operators.
MCN: You've been president of In Demand for four months and you've had a chance to get acclimated to the network and to the pay-per-view industry. What, in your opinion, are the network's strengths?
I think our primary strengths are the quality of owners and their commitment to building an infrastructure to do near video-on-demand and true video-on-demand. It gives us the opportunity to do a lot of things on a cost-effective basis. But we're in a good position. We can do a lot of these things with a tremendous quality of scale.
On the VOD side, we're finishing the process of choosing the vendor, delivering it via satellite to the cable headend. The idea is, it will work and connect seamlessly with whatever company's server is installed, so that you have a nice flow of product. It's a lot cheaper than trying to distribute it in any other way. So that's a tremendous economy of scale. You encode the product once. You deliver it once. We're in a wonderful position to do our other business.
MCN: How about your weaknesses?
We have not completed the process of aggregating all of the product that we want, but we should be concluding some major deals in the near term. We have the National Hockey League, National Basketball Association and ESPN [out-of-market] packages, but we don't have Major League Baseball, which we hope to have shortly, nor do we have the most important of these out-of-market packages in the NFL [National Football League]. We're hopeful that we will be able to start negotiations in earnest with them. It's something that's very important for the industry and the primary focus for those of us who are running the business.
MCN: In Demand has a virtual monopoly on the
cable PPV and NVOD business. But most experts
believe that the industry's future is VOD, where thereare a number of competitors out there vying for the sam
e consumer dollars. How
is In Demand going to
differentiate itself from its competitors?
There is a lot of smoke and mirrors about what these various entities have in the way of [VOD] product, but I don't think what they have is terribly different from what we're providing. In addition, we're the product of a number of companies that own us, so our function is not to be a big moneymaker. Our function is to do the work efficiently, so in terms of marketing and creation of materials, it will be hard for anyone to do it as well or as efficiently and with as much of a focus as we can.
We're finishing the process of choosing the vendor for what being termed as the "pitcher and catcher's mitt" for our VOD service: taking the encoded product and delivering it, via satellite, to the cable headend. The idea is it will work and connect seamlessly with whatever company's server is installed, so that you have a nice flow of product. It's a lot cheaper than trying to distribute it in any other way; you encode the product once, you deliver it once. You can control, from our database and video digital-asset management system, how long the product stays on the shelf.
MCN: When In Demand initially launched prior to your arrival, the mandate was to develop original
programming branded under that moniker. Is there still a mandate to have branded programs created, produced and distributed by In Demand?
It's not a priority focus of mine or of the owners right now. I think our primary focus is on making sure that we do all the other things very well. I'm not sure it's the best use of our time and resources. Maybe we'll look at it when we get all the rest of this stuff done and we're humming along and doing all the things we need to. Let's do all the blocking and tackling really well and then we'll see if we can come up with some trick plays.
MCN: For years, direct-broadcast satellite and home video have been perceived as PPV's biggest competitors. Now that we're moving into the VOD business, do you consider
new technologies like digital-subscriber line and the
Internet as major players, or are the traditional rivals still the biggest threat?
DBS is still a major competitor not just for PPV, but because of all of their other programming. But with the rollout of digital-cable capabilities and the ability to deliver true VOD, we feel that we'll have a better product over time. There's much more that consumers can do with the two-way nature of digital cable than DBS can do now. In terms of the PPV business itself, there will be some form of Internet distribution of some type at some point. Right now, it's certainly anything but secure; I don't think the quality is as good as it needs to be or should be, and certainly for the moment we have the best delivery mechanism via cable.
Some affiliates have mentioned some problems that they've run into in dealing with In Demand,
including collections. How are you
addressing that? Also, what do you say to
operators who still question whether In Demand is built to be an affiliate-relations company
or a programming company?
We've had our problems in recording buys, we've had our problems in collecting payments and it is a very, very important area for us to clean up. And we're in the process of doing that right now. Our organization has three primary components: the aggregation of materials, the economic delivery of those materials and the management of the assets themselves-the promotion and marketing of the product, the collection of the data and monies and the distribution of that to the appropriate parties. That's what we're here for. Our job is to make sure the category grows. But we're not there for the purpose of generating big money. The cable operator has made a tremendous investment in building out the digital cable system, not just with the boxes but also through the cost of the file servers. They're looking for and need to have a decent return on their investment. We can do these things with a tremendous quality-of scale.
MCN: Prior to your
arrival here, there were some conflicts between In Demand and event pro-viders over rate-card terms. One distributor,
Showtime Event Television, even pulled one of its Mike Tyson boxing events from PPV over a rate-card disagreement. Have you been able to smooth what some observers perceived as
ill feelings between In
Demand and distributors?
I've met with most of the program suppliers, and what we've tried to stress-and I think it's very self- evident-is that we're in this business together. The most important thing we can do is not haggle over small pieces of the pie, but rather find ways, together, to make the pie bigger. It's a complicated food chain, but there's room for everyone to eat.
MCN: Where are you specifically with studio VOD deals?
Do we have a major VOD deal with studios? No, but we should have some done in the next couple of weeks. We are moving along. You have conversations and learn the things that are important to a few of them and you let them know what things are important to you. From there, it's a matter of banging out the odds and ends until you have a complete deal, and that's where we are.
MCN: Does the industry get the concept of the In Demand brand and have they fully embraced it?
I think the industry has been great. To think that the brand didn't exist less than a year ago, I think the group and the industry have done a wonderful job with it. I think we have a great look and great marketing materials and there's an identification that they've built; the branding process has gone really well. I've been very pleased with its adoption by the MSOs.
MCN: In six months, where do you expect In
Demand to be? What will the network have accomplished?
I expect we'll have deals with the lion's share of the major studios. I expect we'll have better results from the NBA, NHL and ESPN sports packages. I think we'll be up and running with our satellite distribution of VOD product. I expect we'll have our direct-access billing project well under way, so that we're getting materials directly from the systems, and [we'll] be able to improve our reporting and our collections, which has been a problem for us in the past.
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