After a dozen quiet years since its birth, the video-on-demand TV market is poised to get noticed. According to forecasting firm Jupiter Research, revenues from cable-based on-demand content in the US will grow from US$318 million at the start of 2004 to $1.2 billion by 2008. Providers of VOD say short-form, special-interest programming is central to drawing audiences, and they’re increasingly seeking material from non-fiction distributors and producers.
New York-based Mag Rack, a national VOD cable service launched by Rainbow Media in 2001, has more than two million home subscribers and through a deal with in-room entertainment technology providers LodgeNet and On Command, is available in 600,000 US hotel rooms. Mag Rack offers 20 themed channels that are updated monthly. The amount of programming on the channels varies from as little as one hour to more than four, which are broken into shows that run as briefly as three minutes to as long as 60 minutes (the average is eight to 12 minutes).
Suppliers range from established distribs such as London-based rdf Int’l, New Jersey, US-based Janson Media and Australia’s ABC Int’l, to start-ups. Mag Rack often licenses and cuts longer programming – mainly how-to lifestyle and hobbyist fare – into stand-alone eps that run in its own packaging. Short, frequently refreshed programs are key to the service’s rollout, says former Mag Rack EVP and GM Matt Strauss (who left the company in late April). ‘In many cases we produce wraps and intros…it is important that we brand it as Mag Rack.’ To that end, the company seeks editorial control as well as exclusive VOD rights for three to five years. Strauss notes that the fee for content is pegged to marketability. ‘Obviously, the more exposed, the less interesting it is to us. We are looking to create as much proprietary content as possible.’
Right now, demand exceeds supply.
‘We are on the lookout for new ideas and content,’ says Strauss. ‘There is a real demand [for these shows], and it exceeds what we’ve been able to find through acquisitions,’ he says, adding Mag Rack commissions some productions. The most popular channels focus on cars, weddings, photography and dogs.
And airplanes. In the fall of 2002, Mag Rack approached New York-based prodco Creative News Group to help launch a flight channel. Strauss asked co-managers Andrew Schmertz, a licensed pilot, and Guy Helson, a cameraman, to pitch proposals that would draw flying enthusiasts. CNG now provides two 10-minute shows a month, which are shot on Sony pd-150s and cut using Mag Rack’s editing suites. Schmertz explains that he and Helson maintain the back-end rights to the raw video and share revenue from any Mag Rack-produced dvds.
With TV VOD services struggling for consumer acceptance, the flat-rate license fees VOD providers offer suppliers are low by TV standards – below (sometimes, far below) $5,000 for an hour of content, or about $80 a minute. For an established company, vod can be a previously untapped ancillary market, and for a start up, it could amount to a toe-hold leading to bigger things.
Non-fiction content is also driving the penetration of VOD into alternative environments such as stores and businesses. bbc Library Sales has licensed a variety of shortened, BBC lifestyle productions to Denta Vu!, the Winnipeg, Canada-based Entara Dental Media’s VOD service that launched in February and targets North American dental offices.
Paul Maidment, BBC Library Sales’ director of sales and marketing, says the licensing of titles like the 12 x 5-minute Natural Remedies and Classical Inspirations to Entara is part of a wider drive to boost BBC Library Sales’ alternative revenues from approximately £500,000 (US$915,000) this fiscal year to at least £1.5 million (US$2.7 million) next year. Entara has also licensed content from Toronto-based Chum TV Int’l, Disney and Mag Rack.
BBC Library Sales is pursuing similar vod deals with London-based Applied TV, a content supplier to Tesco supermarkets in the UK, and I-Vu, a company targeting British beauty salons. Maidment says the push into ‘oddball’ VOD markets is a sound strategy in light of the leveling off of traditional alternative markets such as in-flight. ‘We’re having to think of delivering our content in a number of different ways,’ he says. Good advice, that.