Indie VOD Nets Pitch to Carat

Jun 5, 2006  •  Post A Comment

It was speed dating for video-on-demand networks last week at a homespun upfront presentation to advertisers at the Carat media agency in New York.

One after another, eight independent VOD networks made six-minute pitches to Carat clients and media buyers, touting the size of their young audiences, which often rival those of competing VOD operations that piggyback on sister cable or broadcast networks.

Without a link to an established network-and excluded from the traditional broadcast upfront-the independent VOD channels opt for events like the Carat meeting to hook up with advertisers.

“We don’t have the big marketing budget that an established linear network will have to get the message out there,” said Christina Tancredi, executive VP of Music Choice, one of the networks doing the precision-timed elevator-ride presentations last week.

VOD networks are at a crossroads as ad sales increase and channels fight for viewers’ attention amid a profusion of new ways to watch TV. To demonstrate their value as a direct line to consumers, the networks at the Carat meeting presented research that showed their audiences are on par with those drawn by established VOD operations linked to cable channels including A&E and Discovery.

At the Carat presentation, Anime Network was able to boast 660,000 unique VOD views per month. Concert, a channel featuring music programming, said it attracts 900,000 unique views, and Havoc TV, which plays music and extreme-sports shows, talked up its 750,000.

Those numbers make VOD networks the television industry’s best-kept secret, Carat Digital Executive VP Mitch Oscar said. The participants in his VOD upfront, including Music Choice, Expo Television, Hollywood.com TV and the affiliated channels, Mag Rack and sportskool, need exposure,

he said.

Mr. Oscar created the quarterly Carat Exchange meetings as a forum for technology firms, advertisers, cable operators and networks to exchange ideas on new media tools for advertisers.

“They are important because they are another alternative to linear and it’s an uncluttered environment,” Mr. Oscar said. “People are choosing to go there and [the audiences are], in some cases, difficult-to-reach consumers.”

Advertisers are buying more time on VOD-only networks. For instance, Anime Network inked deals this year with new clients Paramount and Cingular, while Music Choice increased its number of ad partners to 14 from three just a year ago. The channel counts Cingular, 20th Century Fox and Dr Pepper among its advertisers.

Demand for VOD ads began to rise last summer, said Emily Olman, national advertising manager for Anime Network, now available in 24 million U.S. homes. To date, the network has sold 80 percent of its inventory for the year, she said. The network launched in 2002 and became profitable late last year. Now it counts seven advertisers, up from four last year.

Concert, which launched in 2003 and focuses on live music and documentaries, has landed five advertisers for its service, enabling the network to become profitable in April, said Jeff Shultz, CEO of the network.

The channel has operated on a shoestring so far, with Mr. Shultz taking no salary for three years and his business partner living in the back of the company’s loft office in New York. They ran the network on a little under $50,000 a month.

“We had to find a way to stick around before ad dollars showed up,” Mr. Shultz said.

Advertisers including Cingular, Warner Bros. and Paramount have recently signed up, enabling Concert to change its economic approach. The network plans to spend several million dollars developing original content and acquiring exclusive material over the next year, which should attract more ad money, Mr. Shultz said.

A VOD network should plan to spend at least $1 million a year to operate, said Tom Grams, an industry consultant who works with media companies to find new methods of distribution.

Marketing is still a tough proposition for independents. Concert has relied on its distribution partners and on industry forums, like the Carat Exchange, to get the word out. Anime works with its sister properties in print and the Internet and also markets at anime conventions.