TORONTO – Call it the churn-buster
Subscription video on demand has, by all measures, been a stunning success for Astral Television, says the company’s senior vice-president of sales and marketing Domenic Vivolo (pictured). Usage rates, except in Quebec, have been extraordinarily high as people can thumb through and watch almost everything available that month from TMN and its multiplexes whenever they want, through TMN On Demand.
In the French market, though, Super Ecran does not fare nearly as well, for reasons you’ll read below.
However, with usage rates among TMN subscribers at 70% and pushing three million views per month (and with the hoped-for addition of HBO content on demand by spring – when new season of The Sopranos launches) after just a year in the market, dontcha just think the Astral spread-sheeters wish there was a more direct way of monetizing this kind of viewership rather than just seeing churn flatten out?
What follows is an edited transcript between www.cartt.ca editor and publisher Greg O’Brien and Domenic Vivolo, where he talks about SVOD, the web, HDOD, HBOOD and what’s coming next.
Greg O’Brien: Let’s start off with SVOD, where is that right now? Has it met your expectations?
Domenic Vivolo: It over-delivered on our expectations. I’ve launched a number of new products over the years, mostly in packaged goods (he used to work for meat company Maple Leaf), and if you got the results that we got on this product in packaged goods, I mean, it would be a grand slam success. To get penetrations of 70% so quickly after the launch is incredible.
It right off the bat, within the first three months, we jumped up to 60% and then from there, it’s been easing its way up to now passing 70%
GOB: Just so I’m clear, what does 70% penetration mean for TMN OD?
DV: That means of the people that receive (TMN) 70% of them are actually using the service (each month).
GOB: That’s across both cable companies which you’ve launched – Cogeco and Rogers, right?
DV: Cogeco was a couple of months behind Rogers, and we always use Rogers as kind of the flagship. They were the first ones out and everyone else is sort of following the pattern… you know you hit the golden vein with consumers when you basically listen to them, ask them what they need and want, deliver it – and this is exactly what they’re looking for – movies, convenience, fast-forward and pause functionality, and when you deliver that, they, in return, send a clear message back to you saying yes, you’ve delivered and I’m using it.
You know, penetration is one good story. But the number of views continue, month over month, to keep on creeping up. It was well over two million views and we’re now pushing three million per month and on top of that, they’re sustaining the number of views that they’re watching. They’re averaging anywhere between 10 and 11 movies per month. So, when you look at that from a value perspective, they’re getting their value by using the on demand product, not only the linear service.
GOB: Now do you look at that on demand demand and think “geez, I wish there was a direct way to monetize all these views”?
DV: In an indirect fashion, a lot of stuff that we do at the movie network is about the base subscription. In other words, we’re doing this because it reduces churn, because it increases satisfaction and it helps in acquisitions to our base. We launched high definition 24/7 channel in May – again, we did it to add value and continue to secure our base.
GOB: Do you anticipate adding a fee for SVOD?
DV: No. We launched Super Ecran sur Demande in Quebec because Videotron said “we prefer to go with the incremental model.” Down in the States, they’re fooling around with all different types of models but we went to our affiliates and asked which model they preferred – the added value or the incremental model.
GOB: So, Videotron is charging, then for SVOD?
DV: Yes. They said “our strategy is that we would prefer to go the incremental route. We said fine, it’s not the one that we’re recommending, but…
GOB: How has (Super Ecran sur demande) performed?
DV: It’s performed below our expectations. All the research coming back, and we did a lot of research… and one of the elements was the expectation of penetration on an incremental charge and the research came back and said, in general, that we could get about 25% penetration.
Unfortunately, it’s not penetrating that high. We’re in around 5%. So going the incremental model is a tougher slog because you’re basically subscribing on top of a subscription, so you’re potentially getting churn over churn.
GOB: Is Videotron charging much for it?
DV: $5.99… So, based on those results and the direction in the U.S., more and more the U.S. is going with what we call the Rogers/Cogeco model, the added value model, because it protects the base subscription and that’s what really this product is. It’s to enforce the value and satisfaction of the base service.
GOB: Speaking of (content), are you any closer to having Six Feet Under or The Sopranos on demand – or any other of the HBO content?
DV: We’re working diligently to try to bring that to pass, but dealing with any program supplier, they have their ownstrategies. We deal with all the studios to try to acquire SVOD rights and HBO is one of them. Now, comparing HBO programming with Showtime (Fat Actress, Family Business, Dead Like Me), with Showtime we have the rights and HBO we don’t have them. But, we are working closely.
At HBO, their strategy currently is that “no other service will have our product on an on demand basis.” We’re trying to show them that this will be good for their business and we’re inching closer, but we’re not there yet.
GOB: I remember talking to people there whenever the last season of The Sopranos was on and there was some hope then that it was coming.
DV: Like I said, we are constantly in discussions with them, we do get their high definition product which is really good for our high definition channel.
GOB: How close are you to high definition on demand?
DV: We’re constantly evaluating and keeping in tune with consumers’ demands for this product. Should we be adding more hours of content on (its all-HD channel)? Should we be adding more studios on this product? So, my mind is I think, down the road, hopefully this fall, we’ll have some high definition on demand programming.
GOB: As far as the studios themselves, are they all on board with SVOD?
DV: We don’t have all of them. On one hand, because we don’t need to have all of them, we’re picking and choosing which ones we get on board and through consumer research, we’ll have a good gauge whether people are getting tired of it, whether we need more studio product on it, that kind of stuff.
We don’t have all of them and right now, we don’t want all of them. We will be bringing them on as consumer satisfaction dictates.
GOB: From a pay programmer perspective – I was at the Canadian Telecom Summit recently and a real interesting thing shown there was full-motion video on a cell phone. Now, from a programmer point of view, can you envision people watching two-hour movies on their cell phones? Is there a market for TMN or MoviePix?
DV: Technology is really driving this industry and from our point of view, we consider The Movie Network leading edge broadcasting in that we’re there trying to capitalize on technology based on consumer wants and needs.
So, consumers in our minds are always first and foremost. When we believe that there is a definite want, we will go after it. There are always early adopters, but we’re always looking at what point do we actually go in with a business model. So, again, we’re always trying to stay ahead of the game, so high definition was one area, on demand was another.
Another one is the Internet and the whole notion of should there be a TMN on the Internet? Again we’re not going out there to kind of put out a TMN on the Internet, similar to what Starz Ticket is doing. Our notion will be “should the Internet play into or with out subscription, where, as a subscriber for instance, you’d have the opportunity to view movies on the Internet, as opposed to offering movies on the Internet and cutting out the affiliate and going directly to the consumer.
At the end of the day, that’s not going to benefit us or the industry.
GOB: How far away are you from that type of thing?
DV: I wouldn’t say long term like five years, but then I’m not looking short term like within six months. I would say I’d like to see something in a year to 18 months. But again, first you have to get programming, you have to get the content suppliers on board, you have to figure out a business model that satisfies the program suppliers as well as the affiliates as well as ourselves all work in a marriage.
This may be another good thing for our affiliates who have Internet and they want to continue to prop up the value of internet by combining video and Internet and content all in one.
