Cable in Search of Best Web Model

Apr 24, 2006  •  Post A Comment

It seems like every cable network’s got a Web programming presence, but none is certain how to use it.

In the past month cable programmers SoapNet and Discovery Communications have introduced new Internet-based programming services much like the ones MTV, Comedy Central, Lifetime, ESPN, Court TV and others already have up and running.

But with most of the Web services being less than a year old, there’s no clear winner when it comes to which user experience executives should aim for or what business model they should follow.

In fact, cable network executives are pursuing a wide swath of strategies when it comes to setting up their broadband channels.

“There are a lot of different models in the marketplace right now and that’s because it’s a new business,” said John Lansing, president of Scripps Networks. “Nobody knows for sure what the best model is right now until they get out there and experiment with something.”

What is clear at this early juncture is that content providers for the most part are either cozying up to traditional distributors like cable operators or they are flying solo and enjoying the unfettered access to consumers that ad-supported broadband allows.

But even when they favor one approach, they are keeping a few eggs in other baskets.

Disney-ESPN networks, for instance, has planted its flag in the distributor camp with a so-called “gated” strategy for broadband sites Soapnetic, ESPN 360 and Disney Connection. The sites are only accessible via a Web portal of a partner such as Adelphia, Verizon and Charter. The content provider is paid a license fee and the service is usually a value-add for the distributor to offer to high-speed Internet customers. That also means the sites are not available to the public at large. So far, the gated sites don’t include advertising to any great degree.

“It’s a tool for operators,” said Deborah Blackwell, general manager for SoapNet, which launched its video-centric gated site last week with Verizon.

But Disney is busy with other broadband strategies too. In addition to its well-known iTunes prime-time content, ABC plans to experiment with ad-supported full episodes of several prime-time shows online starting next month. Also, the company’s ad-supported ABCNewsNow.com broadband channel is accessible on the Web.

Huge Appetite for Video

That’s the tack most content providers, including Scripps, MTV and Discovery, have chosen. That strategy has the added benefit of removing the gatekeeper-the cable operator or satellite distributor-and allowing networks to reach consumers directly for the first time.

Going it alone benefits a content provider through multiplatform ad sales opportunities, community-building and brand promotion, said Will Richmond, president of Broadband Directions research firm.

There’s also a huge appetite among advertisers and consumers for broadband video, he said. Scripps can testify to that demand. HGTVKitchenDesign.com has averaged about 1 million video streams served monthly, with about 500,000 ads in those streams. In addition, its interactive kitchen planner tool, which is sponsored by several advertisers, was viewed more than 1 million times in March.

“For us, we see tremendous upside already and support for our broadband vertical channels. Ad dollars for broadband [are] growing,” Mr. Lansing said. “Demand for broadband video is very, very high.”

Yet despite the early success with ads, Mr. Lansing said Scripps is open to other broadband business models and is working with operators to offer Scripps video content on their broadband portals as well.

Similarly, Discovery fired off the first two of five ad-supported broadband channels last week-for Travel Channel and Discovery Channel-but is also dabbling in other business models for broadband via its new subscription-based homework helper service Cosmeo, said Don Baer, senior executive VP for strategy and development at Discovery Communications.

“That’s the first of perhaps other services and models that are more of a gated environment,” he said.

Meanwhile, Disney and ESPN prefer the gated strategy, which follows the familiar route of licensing content to a distributor. “We are holding back to create an interface for cable operators’ broadband offerings,” said Ben Pyne, president of affiliate sales and marketing at Disney and ESPN Networks.

But one of the challenges with this model is the footprint is limited to broadband ISPs with whom the programmer has a distribution deal, Mr. Richmond said.

Still, the broadband market is likely to support many models, just as the TV business has evolved to encompass multiple business models for programmers, said Ed Forman, chief operating officer for ICTV, which offers services for programmers to deliver their broadband channels on the TV.

More Experimentation

It’s also far too early to declare winners, Discovery’s Mr. Baer said. “Anyone who tells you they know what’s working doesn’t know what’s working. It’s a period of experimentation and trying to find the right opportunities,” he said.

As evidence of that, Scripps will pursue a slightly different approach with its next site. In May the network plans to launch a woodworking broadband channel as part of the DIY brand. Since the network is in slightly north of 36 million homes, the broadband channel will be accessible through DIYnetwork.com and include episodes of DIY shows as a way to introduce new viewers to the network.

The episodes will have previously appeared on the DIY Network. Two new programs will premiere each week and will be served up into four- to five-minute segments. Scripps has been able to fast track this broadband channel and plans to get it to market in May, less than 60 days from start to finish, as opposed to six months or so needed for the other channels, which include more video but also shorter video that’s exclusive to the broadband channel.

The market will likely bring even more experimentation, said T.S. Kelly, VP and director of research and insight for Media Contacts, the interactive arm of media agency MPG. But the industry needs more precise measurement for viewership of online video from third parties. Advertisers are keen on broadband video, but to keep investing they’ll want more data, he said.