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A Conversation With Bob Benya

NEW YORK — Hanging on the wall in iN DEMAND President and CEO Bob Benya’s downtown Manhattan office is a poster for the “Road Runner” broadband-over-cable service. It shows the famous Warner Bros. Road Runner and the number 56 — as in exceeding the 55-mile-per-hour speed limit. Benya talks fondly about Time Warner Cable’s Road Runner rollout in the 1990s and the consumer excitement it generated. In his 35-plus year career in cable, he’s been instrumental to the rollout of such innovations as digital TV, video-on-demand and “Start Over” and “Look Back” for Time Warner Cable and its affiliates. He took the helm at iN DEMAND in 2010, after serving on the board of directors, and views the services iN DEMAND provides as another in a string of innovations that deliver benefits to consumers as well as iN DEMAND’s cable-operator owners, other affiliates and content-provider partners. He spoke about iN DEMAND at 30 — or iN DEMAND 3.0, as it’s known internally — and the company’s “make it happen” culture with Multichannel News Editor Kent Gibbons. Here’s an edited excerpt of the conversation.

MCN: Given that iN DEMAND is a company that provides services for affiliates and enables them to make money from selling movies on-demand and other content must put you in enviable position when dealing with your customers.

Bob Benya: We are fortunate to be in a unique position in the industry given our revenue-share model. Cable networks are trying to get higher affiliation fees. There’s tension and it can be a tough battle. The issue that we run into is that we hit speed bumps in terms of [video-on-demand] capacity, because our payload has gotten very big. There are definitely some trade-off decisions that our operators must make to manage their capacity planning. And several of the middle-tier — soon to be the much-larger — affiliates are expanding their VOD capacity, and embracing new technologies, just as we have been.

MCN: It feels like in this day and age, server capacity should not really be a problem.

BB: You would think. And for some, it’s less of an issue because of the way that they architect them. You probably have heard that Comcast and a few others have a hierarchical setup. Instead of putting all the content on the edge, they have it at the core and then they use Gigabit Ethernet to stream it directly to the home and it doesn’t even hit the edge. The only thing that comes out of the edge is the most popular content that is most used. And an algorithm supports pulling the long tail from the core.

So you can tell your customers, I’ve got 50,000 hours of content, but you might only have 10,000 hours on the edge. Everything is a big difference in the math and the [capital expenditures] and how you run the whole platform.

MCN: Stepping back a bit, what is the value model that iN DEMAND brings to affiliates and content providers that has kept it going for 30 years and with plans to grow in the future?

BB: We pride ourselves in our long-standing, deep, collaborative relationships across the industry, all driving efficiency and speed-to-market solutions. We bring national scale. If [the affiliates] all had to do it themselves, it would be more costly. We are up to 274 affiliates now, providing very efficient services.

It’s a lot about efficiency, and not just in terms of licensing from the studios. Those endeavors are not easy, especially in a world where we are trying to secure a growing array of rights through all the various platforms. Now we’re doing [electronic sell-through, or EST, of videos] on top of rental, which is important, because the consumer behavior is indicating that people want to own digital. There are still a lot of people who buy physical [media], which is amazing.

But there are a growing number of people who have embraced the cloud, want to own digital and love the convenience of ordering through the TV, which is what EST through the set-top is and why it’s been so successful. It actually caught us by surprise a little bit because we weren’t exactly sure if everybody was ready. Then, all of the sudden, we launched and then — whoo! — it just went through the roof. Now, we’re actively licensing more and more content and adding more functionality and features, so you can preorder, you can buy back seasons; all of those kinds of bells and whistles.

Content preparation has gotten a lot more complex. Once, we were only formatting for SD [standard-definition]. Now it’s HD 1080i, HD 1080p, 3D, all the different online versioning, EST. We’re doing MPEG-4 now for certain operators, versus just MPEG-2. And soon we’ll be doing HEVC [high-efficiency video coding] as those boxes come out, which is going to enable Ultra HD or 4K.

The name of the culture at iN DEMAND is, ‘make it happen.’ And when we say, ‘Hey, we want to do this, we want to do this right, it’s important for our future,’ we just don’t say it. We have an impressive number of employees active in various committees to help us understand what it’s going to take to actually do it. That’s the difference between just saying something and then making it happen. We’re doing so well, because we have a sophisticated, highly motivated team and great leadership.

MCN: Where is the increase in content coming from?

BB: From all the studios. The big studios give us more content. They’re giving us deeper library, because our affiliates want it, and we do a lot of stunting and merchandising. When there is a new release, we’ll add two or three companion titles to it. Plus, we now work with over 80 indie [studio] suppliers. What’s exciting about that is they need us, because they’re only going to get distribution in [cinema] art houses, and they give us theatrical day-and-date releases. The same day it’s in the art house, we are in turn giving them massive distribution. Because it’s fresh bread, theatrical day-and-date, the price points are higher than the traditional new-release price point — $8.99, $9.99 — and favorable [revenue] splits.

MCN: What other things are you making happen now in anticipation of future products?

BB: We continue to push HD. We want to make sure that we offer the best possible high-quality viewing experience.

Now, movie on-demand buys are closer to 70% in HD on an annual, per-title basis. That’s because we push to have HD versions of every movie in addition to SD. We are actually getting HD trailers now, as well, which were not previously available. That too enhances the viewing experience.

We are now ready for 1080p, and we will be ready for ultra HD/4K when is the market is there. Quality is huge. Library is also important, and we are up to 7,000 library titles this year. And now that we are using the cloud, we are able to store and prepare it more efficiently. We don’t have to do it all here and buy all the equipment here and then sit on that investment and then wait for the next thing to come.

Another new content arena is specialty VOD. One example is education content. It’s going to be a big part of our future. Right now, it is standard transactional VOD to gauge interest. The Comcast team is bullish about it — it’s exciting that they’re taking an active interest. We have other suppliers that will help us to fill out the portfolio.

We’re also carrying action sports, fitness, kids, comedies, concerts. For a long time, comedies and concerts were on live Pay-Per-View. But now we are adding top name musicians and artists to VOD and it is performing well. The other thing that’s driving usage, as you know, are the new guide platforms such as [Comcast’s] X1 and [Cox’s] Contour. Time Warner Cable has a new guide that’s enabled in part by a DOCSIS gateway that allows them to pull more powerful search. Plus, VOD is benefitting from better merchandising and better display using box art — think retail end caps — that drive impulse purchases.

MCN: What about VOD other than movie buys — free shows on-demand, the premium channels’ on-demand services? How do you see that developing?

BB: The entire VOD ecosystem is so much more robust that it is driving usage across all content categories, our movie and specialty content, SVODs, HBO, Showtime, plus all the catch-up content from linear networks.

And the free VOD offering is growing, because Nielsen is measuring it now [with] C3, C7 ad loads. Cable operators and others have disabled fast-forwarding, benefitting advertisers. The networks are getting [monetization] credit for it, and that’s unlocked the rights. And now you’re seeing a massive catalog available to viewers.

The good news is that VOD keeps growing like crazy in terms of users as well as hours of usage. And to the extent that consumers just think VOD and time-shifting is the norm, it’s good for all of us. It’s good for the cable operators because they’re going to keep their customers happy. The longer they have those customers, the more likely they are to buy one of our movies. We think it’s an improving ecosystem. While there might be some moving around across the VOD categories, the more they use it, the more they’re satisfied and more likely to stay on.

iN DEMAND at 30: By the Numbers

Owners: Comcast, Time Warner Cable, Bright House Networks, Cox Communications
Multichannel video programmingdistributor clients: 274
Hours of programming delivered: 360,000*
Movies delivered yearly: 26,000*
Content partners: 260
Homes reached: 60 million
Promotional video assets produced: 40,000*
Live sports feeds delivered: 10,000*
Employees: 150
Offices: 2
* Per year