Video on demand to tap TV

Apr 23, 2001  •  Post A Comment

Video-on-demand service provider DemandVideo is negotiating potential programming acquisition deals with several cable and broadcast television networks, including A&E, ESPN, NBC, CBS and the Playboy Channel.
While some of DemandVideo’s competitors, such as Blockbuster and inDemand, have struggled to secure the content they need from the major film studios to provide audiences with a wide selection of accessible programs, DemandVideo is shying away from the obstinate film studios and is instead working to compile a library of television reruns.
“We don’t like the term `video on demand,”’ said Larry Coleman, DemandVideo senior vice president and general manager of content and products strategy at DemandVideo. “[VOD] implies just movies as an alternative to pay-per-view. We really see this as anytime television, where you can get what you want any time you want it.”
The company plans to offer a wide array of on-demand programming ranging from news to sports to adult content, refreshing its menu of shows several times each month. Viewers are expected to be charged between 99 cents and $3.99 per program, depending on the selection’s expected popularity.
In its content acquisition talks with several television networks, DemandVideo is proposing that the television studios receive between 10 percent and one-third of the revenues generated by an on-demand program, with DemandVideo and the broadband service provider splitting the remaining profits roughly equally.
Unlike competitor inDemand, DemandVideo hasn’t sought to reach cable subscribers with its VOD service. inDemand, which is jointly owned by multiple system operators AT&T Broadband, Time Warner Cable, Cox and Comcast, negotiates on behalf of its owners as well as Adelphia, Cablevision and Charter.
“Many of the MSOs were very much in trials, and there really wasn’t much commitment to roll out [VOD],” Mr. Coleman said.
Instead, DemandVideo is courting as infrastructure partners “overbuilders” or “broadband service providers” who sell cable television, high-speed Internet, and multiple-line telephone service in a single package. Telco insurgents such as WideOpenWest, which offers DemandVideo’s service to consumers in Colorado, have sprouted up in the wake of the 1996 Telecommunications Act, which sought to deregulate the industry and encourage widespread competition.
Still, DemandVideo isn’t ruling out potential deals with MSOs or other media mainstays. Although most of the approximately $25 million in venture capital the company has raised to date has come from Silicon Valley technology investors, it is now aggressively knocking on the doors of traditional media outlets for its third round of financing-a move that could open up new avenues of both content aggregation and distribution.