Despite its early push into video-on-demand, Scripps Networks is now taking a more measured approach to VOD while it fires off a series of new broadband initiatives this year.
Scripps was one of the first companies to leap into the world of free on-demand content from basic cable networks when it tested its service back in 2001 and launched it a year later with Comcast and Time Warner. Though VOD is still important to Scripps, it will stay on a back burner this year while broadband is on high heat.
Plans include the introduction this year of several video-centric Web sites from each of Scripps’ four lifestyle networks: Food Network, DIY, Fine Living and HGTV. Each Web site will offer five packages of video for two weeks at a time covering different themes, such as kitchen redesign.
“Where we are headed is broadband networks,” said Channing Dawson, the senior VP for emerging media at Scripps. “It’s still an experimental year, but also the year to learn how to program the broadband networks. The business model is more attainable than in VOD. We are just as interested in broadband as in VOD, and we see a business model emerging in broadband earlier than we see in VOD.”
In addition to the broadband networks, Scripps plans to launch in April original vignettes online on themed topics. The vignettes will run on the new video-centric sites, consumer brand Web sites and syndicated sites of Scripps’ partners. That includes a 13-episode weekly “show” for one of its brands developed specifically for broadband.
In addition, the company launched earlier this month a so-called “pro-sumer” site at HGTVpro.com, a dedicated broadband service for the contractor market and highly skilled do-it-yourselfers, with about 150 videos and plans to add 30 to 50 new videos each month to the site’s library.
Scripps’ strategy is noteworthy for many reasons. Despite the noise that VOD services have generated, a handful of content companies are also investing resources in the development of broadband video because of the very real advertising opportunities that exist to support it. Online advertising is expected to reach $11.3 billion this year, a 21 percent increase over last year, according to market research firm eMarketer.
While paid search is still the dominant portion of that money, paid search does not address the branding needs of traditional advertisers, who are more focused on “rich media,” or media that exhibits dynamic motion, said David Hallerman, senior analyst with eMarketer. Rich media advertising should rise to $1.02 billion in 2005, up from $796 million last year, he said.
Increase in Advertising
Scripps Networks saw a 31 percent increase in advertisers for its online, syndicated broadband and VOD properties in 2004 compared with 2003. “What we have seen now is this voracious appetite for video online,” Mr. Dawson said. The Food Network Web site, for instance, delivered 3.6 million video streams in December 2004.
In addition, last year Scripps began delivering syndicated online video content through a deal with MSN that calls for 120 clips per month, or 30 per brand. Scripps is pursuing other broadband syndication opportunities for its content and also plans to work with cable operators to offer packages of video bundled into their high-speed products.
While Scripps expands its broadband presence, it will simultaneously seek to craft a business model for VOD, which is one of Mr. Dawson’s missions in his new post as this year’s co-chair of the CTAM’s On Demand Consortium.
Of all the emerging media platforms, Scripps pursued VOD most aggressively early on because of the investment that cable operators made to deploy VOD, even before a user-friendly VOD interface was in place and before a business model existed for programmers, he said. “Now we are building this ship as we are sailing it.”
Scripps plans to continue sailing that ship. But measurement data on who’s watching what, where and when is needed for advertiser support for on-demand. Mr. Dawson said one of his goals this year is to standardize the data points that programmers and advertisers need.
When the initial measurement data arrives, programmers, including Scripps, will invest more money in original programming for VOD, he said. But Scripps will continue to hold back its marketing dollars for VOD until the business issues are resolved. Mr. Dawson would like to see branded environments for networks, improved navigation and a seamless way for users to jump back and forth between a linear network and its on-demand counterpart.
Scripps’ broadband push should pay off much sooner than VOD, said Tolman Geffs, managing director of The Jordan, Edmiston Group, a New York-based investment bank focused on the media and information industries. “Consumer uptake [of VOD] is still relatively modest,” he said. “And meanwhile, broadband is seeing terrific consumer demand for both broadband delivery and content.”
A key difference between the two platforms is that broadband represents a straight shot to the consumer.
That’s one of the reasons premium provider Starz! launched an online movies-on-demand service last summer called Starz! Ticket. While consumers currently pay directly for a subscription, Starz! is also exploring how to package the service with operators’ high-speed offerings.
ESPN is also particularly keen on the broadband opportunity. ESPN plans to offer a free preview the weekend of Jan. 29-30 of its customized broadband service, www.espn360.com.