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Varsity Clinches VOD Deal

Apr 7, 2003  •  Post A Comment

On-demand television provider TVN Entertainment just announced an agreement with VTV: Varsity Television, a network targeting teens, for VOD distribution of approximately 30 hours of city- and region-specific programming.
The announcement comes on the heels of Austin, Texas-based VTV’s launch of a “linear” network of comedy, drama, reality, sports and entertainment distributed over Galaxy 11 and Comcast’s Headend in the Sky (HITS).
The VOD package features both VTV’s signature teen-produced programming and programming acquired from such production entities as ABC International, CBC, CTV, Granada, RDF International and Universal Television.
According to TVN Entertainment President and CEO Ian Aaron, a key factor of the deal is that VTV will provide TVN cable affiliates with a limited period of free carriage. “MSOs have two big issues-escalating programming costs and driving digital boxes,” Mr. Aaron said. “VOD is a killer application, and VTV has content to address a target market that is really going to help drive VOD. With a period of no-cost carriage it’s a big incentive for the cable operators to use that programming.”
For VTV founders Joe Shults and Kelly Hoffman, the chance to enter numerous U.S. urban markets with VOD content is also a way of sparking interest in the linear network. “The MSOs have said, `Congratulations on your linear network, but what’s your VOD network going to look like?”’ recalled Mr. Shults, a former member of the executive team that launched MTV, Nickelodeon and VH1 and an original management member for E! Entertainment.
“These cable deals don’t happen overnight. That’s why we’re rolling the dice on VOD.”
The VTV video-on-demand package will initially launch in four U.S. regions: the South, the West, the Northeast and the Midwest. “Our technology allows us to get very granular,” Mr. Aaron said. “We can deliver programming specific to New York City that will be different from that delivered to Miami. Market-specific programming is a unique aspect of what we do and the beauty of video-on-demand.”
Though teens are a notoriously difficult demographic to reach, Mr. Shults said his strategy is to position the content at the 17- or 18-year-old high school senior, bringing along younger teens who already aspire upward in their viewing habits. “Teen programming scares the TV production community but not the advertisers,” Mr. Shults said. “Brand loyalty starts at 13.”
Under the terms of the agreement, TVN Entertainment is giving VTV a crash course in VOD. In addition to providing sales and business development support to VTV for distribution of its VOD package to cable systems, TVN will promote VTV’s brand and its VOD and linear channels as well as provide distribution support to TVN VOD affiliate multiple system operators. TVN will also provide VOD education and training to the VTV sales and management teams and support operational issues such as integration with various VOD guides and scheduling and transport including encoding.
Though the company is new to VOD, VTV is no novice to the interactive space. Three years before the launch of the linear network, Varsity TV got its start online with its Web site, MyVTV.com, which thus far has streamed more than 30,000 teen-created videos. “We got millions of hits a month with no marketing,” said Mr. Shults, who added that the Web site was intended to build a community and a library of content for eventual transition to a 24-hour network. “Teens go to see themselves. As long as you keep it real, they come.”
“Video-on-demand has been a hot button among MSOs for a while, and progressive companies are vigorously pursuing it,” said Allison Dollar, co-president of the Interactive Television Alliance. “Varsity Television is a sound concept, and in partnering with TVN seems to be creating a smart model. But as usual the proof will lie in its execution and how well TVN helps them package and promote and how savvy the brand managers are that support the programming.”