In a battle between the two giant pay-per-view distributors, Viewer’s Choice will expand its service from three to five PPV channels for its 330 cable-system clients on Aug. 2, giving it a six-week jump on its competitor, Request Television.
Both networks are expecting a positive response from cable operators to their new five-channel PPV lineups because “these channels are unregulated,” said Hugh Panero, president and CEO of Request. “We’re getting calls every day from cable operators asking us to add more channels.”
The operators’ hope is that the revenue growth from PPV will help to offset the $ 1 billion or so they’ll be forced to give back to subscribers over the next year as a result of stringent cable reregulation of most of their ad-supported cable-network tiers.
As Jim Heyworth, president and CEO of Viewer’s Choice, puts it, “Reregulation is causing cable operators to evaluate all of their revenue sources.”
Both Viewer’s Choice and Request will try to pull cable systems into making all five channels available to subscribers right away by supplying free of charge the decoders that will allow operators to take the digitally compressed signal (which squeezes four of the five channels into one transponder) and decompress it at the head end so that the four PPV networks will go out to viewers on separate (analog) channels. Viewer’s Choice and Request will continue to send out the fifth channel as an analog stand-alone for cable systems that have the channel capacity for only one PPV network.
Although Request, with a Sept. 15 launch date, will lose out in the race to be first with digital compression, it has the advantage of being able to draw on the theatrical-movie output of all the major studios. Two majors, Universal and 20th Century Fox, still refuse to deal with Viewer’s Choice, mainly because they object to the distribution percentage V.C. skims off the top, according to sources. (Request charges a flat fee for its distribution services.)
“It’s an inconvenience for us not to have Universal and Fox,” Heyworth said. “But it hasn’t caused any significant difference in buy rates between us and Request.”
In structuring how they schedule their five channels, V.C. and Request will not differ in any significant way. The main, analog channel will play off all of the movie titles and PPV events in a given month on a staggered schedule. Another channel will focus on R-rated action/adventure movies, also with staggered starting times.
The three channels that could end up harvesting the biggest bucks from subscribers are what V.C. calls “continuous-hits” channels. Each of the three channels will be given over to one big-grossing movie, which will run for 24 hours a day for a full week.
From top 100 movies
“More than 90% of the revenue of pay-per-view comes from the top 100 movies,” Pinero said, citing a Request study covering 235 pictures scheduled between January 1991 and March 1992. The bottom 135 titles managed less than 10% of Request’s revenues for that period.
Pinero’s conclusion: As cable operators expand the number of channels they make available to their subscribers, the business will continue to become much more hit-driven than it is now.
Come next winter, if the operator has 20 PPV channels to play around with, don’t be surprised if 18 of them are running “Jurassic Park” and the other two “Sleepless in Seattle.”