New Networks Face The VOD Taste Test

Cable World, June 30, 2003

Byline: ANDREA FIGLER

The country's largest cable operator, Comcast Corp., may soon change the way new networks get launched within the cable industry, making them available first via video-on-demand before it allots them actual channel space.

Comcast started using VOD as a launch pad for emerging networks, particularly Anime Network and Atom Television, this year. Rather than launch Anime and Atom on its analog or digital lineup, Comcast used its free-on-demand platform in Philadelphia and is now expanding that to other markets.

Of the operator's 21 million subscribers as of March 31, only 6.7 million digital subscribers can access this on-demand platform if their particular system offers it.

If enough of these digital viewers demand Anime and Atom Television, then the networks may get their own channel, 24 hours a day and seven days a week, said Scott Tenney, VP of national marketing for Comcast's core video products, at a June 18 panel hosted by the Southern California chapter of the Cable and Telecommunications Association for Marketing.

Anime and Atom Television aside, Comcast is "leaning in the direction" of using a VOD test launch for every new network, Tenney told Cable World after the panel.

The emerging networks interviewed by Cable World - 11 in total - are not pleased with these new testing grounds. It makes it harder for them to get the eyeballs needed to bring in strong advertising revenue and licensing fees. Comcast does not pay a license fee or split revenue for Anime or Atom Television's content to date, according to the two networks.

Exactly how the operator uses the VOD data to determine which networks survive has yet to be decided.

Comcast spokesperson Jenni Moyer explained that it's still too early to determine if these networks deserve their own space. "We're encouraged by the usage rates that we're seeing," she says. "[Anime] is one of the more popular channels."

Cablevision is also using VOD as a launch pad. Starting this week, it will bring Anime to its subscription video-on-demand service, a Cablevision spokesman confirmed. It launched Atom Television via VOD earlier this year.

Unlike Comcast, Cablevision splits a portion of the revenue charged for on-demand content with Anime and Atom Television.

Of Cablevision's 2.9 million subscribers as of March 31, more than 400,000 subscribe to its digital platform, which gives them access to Anime or Atom Television on-demand for a fee.

Even if other operators decide against using VOD as a testing ground, Comcast's sheer size alone can make or break a new network with this approach.

Stephen Cunningham, CEO and president of start-up channel JokeVision, summed up his network's fate with, appropriately, a morbid sense of humor: "Have you heard the one about the cable programmer who paid no attention to a Comcast suggestion? He's not around any more."

Atom Television has about half a dozen VOD launch deals signed, including one with overbuilder RCN, and only one of those deals includes a commitment to a digital channel launch, says Andrew Tow, CEO of Atom Television.

Lynne Elander, VP of video product development at Cox Communications, is also considering using VOD as a launch vehicle. "I think it's a real interesting approach to think about incubating new program content on your on-demand platform," Elander says.

Time Warner Cable is exploring the VOD launch idea as well, TWC spokesman Mark Harrad says. But, he adds, programmers aren't too hot on the idea.

Some of the 25 or so emerging networks worry that they will be forever ghettoized in the on-demand world, according to the networks interviewed for this story.

Even with a full-blown launch, only about 10% to 20% of all start-up networks will make it in today's competitive environment, says Cathy Rasenberger of Rasenberger Media, a consulting firm for new networks.

And if emerging networks are to avoid a VOD launch they will have to prove from the outset that their particular niche is large enough to justify carriage of a full-blown channel.

"We believe that the Ice Channel will set itself apart because it is the only one of the emerging channels that has a fan base," says Michael Rosenberg, the channel's chairman and founder. "It's the No. 1 sport for women to watch on TV. So it's not a small niche network."

Similarly, Blackbelt TV chairman Larry Kasanoff argues that martial arts is not a small niche. "We realized that there was one genre in the world that was both sports and entertainment - it's martial arts," Kasanoff says. At this point, no operators have asked him to launch via video-on-demand, he adds.

Tennis is also broad enough to warrant traditional carriage, according to David Meister, the Tennis Channel's chairman and CEO. Since tennis is a year-round sport, both Time Warner Cable and Cox Communications have signed deals to launch the network, he says.

David Armstrong, president of start-up network iNetwork, says that his target demographic - women 18 to 24 - totals about 22 million, if you add the overflow interest from women 14 to 16. "If that's a niche, I'm happy with that niche," he says.