Succumbing to the Hollywood studios' uncertainty over cable video-on-demand services, Diva Systems Corp. will shelve its content-aggregation business next year to concentrate on supplying VOD hardware and software.
Diva — which provides Hollywood movies, basic-cable programming and other on-demand entertainment to more than 500,000 Insight Communications Co., AT&T Broadband and Charter Communications Inc. subscribers — will stop offering VOD content to affiliates by mid-2002, Diva vice president of programming and marketing Bev Doughty said.
Diva's decision leaves the acquisition of VOD content primarily to In Demand LLC and Intertainer Inc., both of which said they're ready to shoulder the task.
Intertainer CEO Jonathan Taplin said his company is "looking forward to working with everybody who is using Diva. We think we can step in very easily and provide whatever is necessary for operators."
Said In Demand vice president of corporate communications Joe Boyle, "We have ongoing relationships with the studios to license and aggregate content, so this would be a natural for us."
Although Diva gained rights to VOD content from such studios as Universal Pictures, Warner Bros. and DreamWorks SKG — and from such cable networks as Cartoon Network, Discovery Channel and ESPN — the role of content aggregator became more difficult and less important, Doughty said.
"In the last year and a half, it's become increasingly clear that the studios would like to do deals directly with the MSOs, and the MSOs would like to have direct dealings with the studios," Doughty said. "At this point, we're no longer acquiring content."
Sony Pictures, The Walt Disney Co., Fox Entertainment and Paramount Pictures have yet to sign long-term deals with the cable industry for critical movie VOD product.
An executive at one content provider, who wished to remain anonymous, said he always believed Diva's role in acquiring and distributing VOD content would be temporary.
"It's a brutal business, but it was a way for Diva to kick-start its VOD business," said the executive. "But their core business model is built around hardware and servers."
As more MSOs move toward VOD deployment, Doughty said, Diva can focus on its core competencies: the distribution of VOD hardware and software.
Doughty said cable operators would determine whether to go to another content aggregator or directly to the content providers.
"Diva's platform is open to any platform," she said. "If they want to go to another content aggregator, we'll enable that, or we'll work with other third parties if necessary."
Representatives from Insight, Charter and AT&T Broadband could not be reached for comment by press time.
Though Diva will no longer pursue content deals, it will still work with programmers. Diva is in talks with video distributors about the possibility of integrating additional interactive applications into traditional movies and basic-cable programs, but Doughty would not reveal specific details.
"I think they understand our position and are willing to talk to us about other ways to work together from an enabling position," she said. "It's an exciting new turn for our company because the more applications you have running on the service, the more exciting the service is and the more revenue operators can generate from it."
