The Sizzle On VOD's Steak

Cable World, March 5, 2001 by Shirley Brady

Selling Porn Per View

As Cable World's parent company Primedia completed its merger with About.com last week, Primedia CEO Tom Rogers announced that he intended to clean up the company's content.

"Primedia to ditch porn!" trumpeted the New York Post, while Wall Street analysts hailed his decision to sell off the dot-com's sexual content sites in the wake of protests from watchdog groups.

Rogers' clean sweep came in the midst of the final day of Paul Kagan Associates' VOD Summit in New York, where panelists coyly fessed up that porn-on-demand pays the bills.

Dan York, SVP-programming for InDemand, noted with some irony his company's recent consumer survey of what VOD viewers want to watch. Some 43% of said music, about one-third said animation or biographies, and roughly one-quarter said they want documentaries and how-to/self-help programming.

When challenged by a questioner abut the gap between people's intentions and actions, York admitted wryly: "Everyone in a TV survey says they watch PBS, but then look at how few viewers PBS gets. They say they watch PBS, but it's really adult they're watching."

The panel's resident expert on the subject -- Bill Furrelle, VP-sales and marketing for the Playboy Entertainment Group -- acknowledged how the adult programming category serves as a virtual cash cow for their partners.

"In the VOD markets we're involved with now, we've seen server allocations of between 20% and 30% for Playboy content and adult movies, accounting for about 40% of total revenues," Furrelle noted.

Panel moderator and Kagan SVP Larry Gerbrandt remarked that adult content accounted for between 60% and 90% margins in some markets.

"In our pay per view study we found that it's a relatively small number of viewers who access adult content," he said, "but those who do are very, very high buyers of on-demand and pay per view content in the system."

Noting the past furor over the Hot Network on cable systems, Gerbrandt wondered whether standards were getting looser when it came to adult programming?

Without a doubt, said Furrelle.

"When we bought Spice two years ago we spun off the Hot Network to another company, partly due to double-X editing standards," he recalled. "Now, on April 1, we are launching three new triplex unedited channels."

It bears remembering that when it comes to VOD, the technology was practically invented to serve customers wanting to access on-demand moan and groan content -- in hotels. In recent years, adult annual PPV has tripled, raking in some $409 million last year according to Showtime Event Television's "PPV 2000" report.

With MSOs receiving up to 80% of revenues from adult content, versus 45% for Hollywood studio movies, it's clear that when it comes to selling a little sizzle for a stake in VOD, we ain't seen nothing yet.