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WHAT VIDEO ON DEMAND CAN LEARN FROM PPV BETTER MARKETING AND PRICING MAY ENTICE MORE CONSUMERS

By Published on .

Cable companies believe video on demand will win over more consumers than pay-per-view has. But there are many marketing lessons to be learned from the pay-per-view experience.

"Clearly, it can be said that pay-per-view has not captured the imagination of the consumer," said Larry Smith, VP-worldwide pay TV for Columbia TriStar International TV, at Kagan Seminars' "Video on Demand: It's Not PPV Anymore" conference in Los Angeles earlier this month.

"There has never been a critical mass created [for pay-per-view TV viewing] in people's minds the way HBO created it" for premium cable channels, said Paul Kagan, chairman of Paul Kagan Associates.

But the benefits of video on demand-the capability to order a movie at any time and have full VCR-like control-may make it more attractive to consumers than pay-per-view, which many perceive as inconvenient and expensive.

Many cable systems-including Time Warner-are touting video on demand as the application that will drive interactive TV.

Seminar panelists said pay-per-view movies and events must be advertised more.

Cable operators generally promote programming on "barker" channels and bill stuffers, with an occasional media advertising campaign from a movie studio seeking to generate awareness for the pay-per-view debut of a particular film.

"This sporadic marketing of individual titles is just confusing the consumer," said Katherine Lewis, VP-pay-per-view and business operations for cable operator Time Warner Cable.

Lori Spagna, corporate pay-per-view manager at Falcon Cable TV, said consumer perceptions of pay-per-view must be changed. Falcon's research showed consumers believe pay-per-view is inconvenient, limited in variety, hard to order and priced higher than it actually is, she said.

Video on demand may also face similar hurdles at first, as cable systems gather programming and test various pricing and ordering structures.

Ms. Lewis called for ongoing local advertising, funded by cable operators and movie studios, as a way to overcome consumer perceptions and a standoff between studios and cable systems, each of whom blames the other for lack of marketing support.

"Pay-per-view is a regional, not a national business," Ms. Lewis said. "It's almost impossible to market on a national basis."

Request Television is considering national advertising for its services, including the Request and Viewer's Choice pay-per-view channels, said Jeffrey Bernstein, VP-programming and marketing for Request Television.

When the average cable home has access to five to 15 pay-per-view channels-compared with three or four now-mass marketing of pay-per-view programming will become feasible for movie studios, Mr. Bernstein said.

But Eric Frankel, senior VP-marketing, pay TV, cable and network features for Warner Bros., predicted only the impending threat of alternate entertainment delivery systems like Hughes Communications' DirecTv will spark cable operators to put more marketing dollars behind pay-per-view.

"It's not going to happen because of cable operators, but because of competitive business that will make cable operators step up to bat," Mr. Frankel said.

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