VOD in Demand

Jun 16, 2003  •  Post A Comment

Cox in San Diego encouraged its customers to steamroll and sledgehammer videotapes last month at the San Diego Sports Arena after a football game and the result was smashing-a 78 percent increase in video-on-demand buys for the month.
Such innovative marketing stunts-destroying the video rental enemy in this case-will be key to driving VOD buy rates to the next level, say cable industry experts. With VOD no longer a novelty, cable operators will place more emphasis on the marketing and managing of VOD, said Adi Kishore, analyst with the Yankee Group. “From an MSO standpoint, VOD’s been an all-powerful weapon in the MSO arsenal. I think a lot are now looking for ways to push it,” he said.
The Cox promotion in San Diego last month is an example of innovative local marketing, and the industry will likely see more of it. The flagship Cox VOD system created a watch-and-win sweepstakes to give away a high-definition television each week for a month and generated more than 800,000 entries. (People could enter more than once.) The promotion included moving billboards hawking the VOD service that circled local Blockbuster stores and a local radio tie-in, said Joe Rooney, senior VP marketing for Cox.
Awareness of VOD was already high in the marketplace, said Mr. Rooney. That ‘s why Cox needed a fresh approach to ratchet up interest. “If awareness is high, what do marketers need to get people to trial the service? Make it fun, exciting, creative,” he said. “VOD is our key opportunity to show Hollywood we deserve day and date parity with video rental.”
It’s also important that Cox find creative ways to sustain the momentum from that May lift, he said. Mr. Rooney expects that other Cox systems would likely adopt similar types of marketing stunts. Movies on demand are generating an average of two to three buy rates each month and that’s a little lower than cablers expected initially, said Mr. Kishore. To push buy rates higher will require more aggressive local marketing, he said.
That’s exactly what industry leader Comcast is banking on. The operator’s On Demand service, launched in its flagship Philadelphia market late last fall, is being rolled out across Comcast’s Eastern region.
Comcast launched VOD in Boston in early June, a la the Philadelphia model, and will reach 2 million customers in New England by the end of the year, a full year ahead of schedule and triple the company’s initial projections.
The local marketing model is particularly appealing because it plays into the advantage cable has always had over its satellite competitors-the ability to drill down and get local. “It’s a competitive differentiator,” Melanie Sommer, VP of new product marketing for Comcast’s Eastern region, said.
Still, operators need to be careful about assigning too much weight to the competitive power of VOD, because digital video recorders are compelling, too, and many consumers don’t see a distinction between the technologies, said J.R. McKechnie, CEO of interactive TV research firm Brightline Partners.
Cable operators need to focus on defining and communicating the value of VOD, he said.