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Matt Stump
Will video on demand or the Internet be the best thing that ever happened to PPV? It's easy to look at the future and get carried away with the prospects of video on demand and interactive television.
You know the drill. Order any content, anytime from anywhere. Any movie ever filmed, any TV show ever made, any content that's ever been digitized.
Millions of dollars are pouring into middleware firms, software companies, content amalgamators, would-be VOD suppliers, broadband content folks on the web, all built on the premise that consumers will interact and order tons of viewable content from a TV or PC.
And for better or for worse, PPV is often considered the progenitor of these massive changes. Yes, the much maligned, never appreciated, hardly ever marketed, PPV.
As the Internet point and click generation reaches mature adulthood and has boatloads of cash in their pockets, it's easy to envision VOD being a revenue no-brainer.
Most major MSOs are either thinking about or actually testing VOD. Advanced digital set-tops boxes, capable of delivering VOD, are rolling off assembly lines. Hollywood, ever on the lookout for new revenue streams, is cautiously optimistic that VOD can wedge itself into the multiple window business strategy, without hurting home video.
More importantly, the cost of digitizing and storing VOD movies has dropped to the point that if systems can generate realistic 300% buy rates, the payback is there. This is not Orlando, circa 1994. VOD, today, is based on a cost/revenue proposition where the ends truly meet.
But let's not forget about today's PPV business. Over the past few years, I've heard more positive comments about PPV from those MSOs with digital rollouts than I've heard in a long time. Operators generating $15 to $17 per digital home are finding half that total, maybe more, is coming from PPV buys.
With digital, PPV is gaining respect among the MSO bean counters. That's a huge achievement. Second, the prospect of more digital rollouts across other MSOs only bodes well for PPV, in its digital reincarnated form.
We'll see many more plain old digital boxes in the next few years compared to fancy interactive digital boxes. Operators will be able to use the revenue generated from digital PPV to help fund future operations, including interactive set-tops.
PPV events have had a banner year. Boxing revenue, even without Mike Tyson as a major draw, has posted double digit increases in 1999.
And look what's one of the hottest new primetime television genre among broadcasters: wrestling. Born and bred by WCW and WWF, wrestling has done well on mainstream television, and even better on PPV. Plus we're seeing more music events and PPV originals today than in past years.
The Hollywood studios have increased their marketing of PPV movies. Despite drops in analog buy rates in some areas, despite industry consolidation, despite the focus on modems, the studios are getting a solid return on PPV market campaigns.
That's terribly important for cable. Maintaining and increasing that level of support will only help cable in a full digital/interactive environment.
The Internet is also presenting a welcome marketing opportunity for PPV. The netcast New Line is putting together for Austin Powers: The Spy Who Shagged Me starting Jan. 1 is probably the first of many such Web tie-ins we'll see.
Warner Bros. is promising the same type of Web content tie-in for Wild Wild West. It's new, it's different, it's a hip medium.
And perhaps the greatest irony of all is that broadband content creators looking at posting and streaming Web video talk about pay-per-view as a potential Internet revenue stream.
PAY-PER-VIEW. The same dreaded words cable tried to run from at various times in its history. The same phrase that often caused shrugs from senior MSO executives. The same name cable tried to change, unsuccessfully, throughout the years. Not quite Spam, but pretty close to it on some days.
That the much maligned PPV has lived until now, and will morph into VOD and as a payment mechanism on the Web is a testament to something: perhaps the American ability to find a niche if you stick around long enough.
Cable's top symbol of PPV is also getting on with change. Viewer's Choice will become In Demand on Jan. 1. It will be part PPV network, part VOD company, part marketing ally, part program producer.
And it sets the clear example of how PPV is transitioning from yesterday's analog world to tomorrow's digital broadband platform.
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