FX Seeks Sole VOD Sponsors

Feb 6, 2006  •  Post A Comment

In a unique arrangement with DirecTV, FX is looking for individual advertisers to serve as sole sponsors of entire seasons of its original series when they become available on-demand this year.

Starting sometime during the first half of 2006, as previously announced, News Corp.-owned basic cable network FX will make episodes of its signature series such as “Rescue Me” and “Nip/Tuck” available for a $2.99 per-episode fee to viewers via video-on-demand on its sister satellite company before the episodes premiere on FX.

Now comes word that the VOD sponsorships are being sold separately from the basic run of the show.

The network’s ad sales executives are looking to sign single advertisers for each series’ VOD run on DirecTV. In exchange for a premium, individual show sponsors for the on-demand runs will be the only marketer associated with each show. One commercial per episode will run on DirecTV.

FX’s blended-revenue on-demand model stands out as unusual among most of the other on-demand offerings that have proliferated since ABC made its precedent-breaking deal with Apple Computer. For one thing, most on-demand models thus far have not incorporated advertising if they require a fee from viewers. In addition, most on-demand models also make shows available for download after they’ve premiered on their home network-not before.

The VOD sponsorship will consist of a single 30-second spot that will appear before the show, said Bruce Lefkowitz, senior VP of ad sales for Fox Cable Networks Entertainment Group.

Sponsorships will become available as FX original shows launch new seasons.

“The idea is to generate new revenue streams, to get information [about how VOD works] and then the third thing is to continue to drive support for the linear show,” he said.

FX will be asking about $15,000 per week to own the on-demand ad position for the entire season. As a point of comparison, spots on the “Shield,” which run in each of the show’s four weekly airings, cost from $65,000 to $70,000.

“What’s the value of it? If you ever do the [cost-per-thousand] on this thing, there’s no reason to buy it,” Mr. Lefkowitz said. “But if you can get that isolated exclusive position to a pre-qualified consumer or someone who is that voracious about the show that they are going to buy it two days before-hand and pay three bucks for it, that’s a pretty valuable consumer.”

While ad buyers have largely made peace with prime-time network shows being made available on-demand after they air, FX’s blended revenue model in its preview arrangement is raising some concern in the ad community.

“The previewing to me is a stickier issue,” said Ray Warren, president of Carat USA. “They’re putting the total viewership of the commercial broadcast at risk.”

Helping Episodic Shows

Mr. Warren said that in some cases, making shows available on-demand might help increase the audience from week to week on episodic shows like “Lost” or “24.”

“The real problem I have is with the iPod downloads that come commercial-free because I think all that does is make people less tolerant of watching commercials,” he said.

He likes that FX is putting commercials in its DVR package, but thinks there should be more ad space so that advertisers buying time in the show during its network run could also have a presence.

“I would be really upset if I didn’t have an opportunity to buy it,” Mr. Warren said. “I would have a big problem with that.”

Mr. Lefkowitz said he doesn’t think the DVR play should affect the value of advertising on the regular cable run. “First of all, it is a relatively small sample size” in the number of homes with the necessary DVR set-top box from DirecTV, he said.

He thinks the market for the previews is basically non-DVR homes. That audience could grow as FX makes deals to offer the previews to cable subscribers as well as satellite customers.

It’s likely that the advertiser that buys the VOD spots will already be an advertiser on “The Shield.” “Could someone buy this and not buy the show?” he asked. “The answer is yes, but they’d have to pay a significant amount of money. But it’s more likely to be served up in a package with the show and with other elements.”

Mr. Lefkowitz said that FX’s DVR advertising will be in a controlled, uncluttered environment. Those advertisers will also be getting information and learning about the brave new worlds of on-demand and DVR behavior.

“I think we’ll get a lot of interest,” Mr. Lefkowitz said.