CBS Internet-Video Subscribers Are Watching Twice as Much Content, Says Digital Chief Jim Lanzone

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CBS last fall launched a direct-to-consumer Internet TV service to deliver more content to “super-fans” of its content — and the Eye’s theory has been proven out, according to Jim Lanzone, president and CEO of CBS Interactive.

“People wanted more from us — they wanted it in more places, and they wanted it sooner — and they were willing to pay for it. So we built it for that audience,” said Lanzone, speaking at the Variety Entertainment Summit at the 2015 International CES trade show Wednesday.

Overall, people who have subscribed to All Access are watching twice as much as those who don’t subscribe, he said. “The super-fan theory completely proved true,” he said. “And it’s hitting a whole new audience.” Lanzone noted that about 10 million U.S. households have broadband but do not pay for cable or satellite TV: “We wouldn’t have had access to them otherwise.”

Lanzone declined to disclose how many subscribers CBS has signed up for All Access, which costs $5.99 per month. CBS.com has about 25 million monthly unique visitors. All Access includes access to 6,500 episodes, with next-day access to TV shows on all platforms and a library of in-season and classic series including “MacGyver,” “Star Trek,” “Cheers” and “Twin Peaks.”

CBS All Access could also serve as a place for the Eye to debut original programming, Lanzone said, although he didn’t offer details of what that might encompass.

In a separate session at CES on Wednesday, CBS chief executive officer Leslie Moonves also discussed the All Access service, emphasizing that the strategy is to reach as many viewers as possible.

Lanzone said CBS All Access has been a “Rorschach test” of where industry executives believe television is going. But he maintained that all along, the broadcaster’s goal with the over-the-top service was simply to cater to an audience that wanted to access more of the Eye’s programming, on more devices. Wall Street analysts have suggested CBS’ goal in launching the OTT service was to use it as leverage in retransmission-consent negotiations with pay TV providers.

CBS Interactive is the seventh-largest Web publisher overall, and the No. 1 content company on the Internet with about 400 million monthly unique users across multiple websites, Lanzone said. He noted that at other companies, “Media people raised their hands and said, ‘We want to be Internet people.’ We went the other way.”

Over the last two years, CBS Interactive has posted record traffic and revenue for many of its brands, according to Lanzone. The group’s properties include CBS.com, CNet, CBSSports.com, Gamespot, CBSNews.com, TVGuide.com, Metacritic, Download.com, Chow and TV.com. Previously, Lanzone was co-founder and CEO of Clicker.com, an online television guide, and was CEO of search engine Ask.com (formerly Ask Jeeves), now owned by IAC.

Lanzone acknowledged that CBS has stayed on the sidelines amid a frenzy of media companies acquiring or investing in YouTube multichannel networks. The biggest of those deals was Disney’s purchase of Maker Studios last year in a pact worth up to $950 million.

With MCNs, Lanzone said, “It’s not clear what business models will really be successful. There are not many companies that are truly profitable. The second they come on our balance sheet, we have to run them at the margins of a public company.”

He continued, “You’ve seen CBS be conservative when it comes to the Internet. We weren’t equity holders of Hulu… There are a lot of examples of CBS not jumping in with two feet until it’s clear what will work, what won’t work.”

If CBS had joined the Hulu joint venture with Disney, 21st Century Fox and NBCUniversal, it would not have had the flexibility to launch CBS All Access, Lanzone said. With its own OTT service, “We keep 100% of the revenue, not 25% of the revenue,” he said. In addition, CBS sets the terms for how and where its content is distributed. However, he noted, the Eye has licensed some TV shows to Hulu for the Hulu Plus subscription service.

As for whether it will step up its distribution on YouTube, the Internet’s No. 1 video destination, Lanzone said the Google-owned company’s revenue-sharing policies were an inhibitor. “If YouTube has a problem with PewDiePie, they’re certainly going to have a problem with a major broadcasting company,” he said.

Lanzone was interviewed by Variety co-editor-in-chief Andrew Wallenstein.