By March, five months after launching its “three bucket” expanded VOD model of free video-on-demand content, movies-on-demand and subscription VOD in Philadelphia, Comcast was faring pretty well with what was internally dubbed its Phillyvision model for the VOD future. As a leading partner in the trial, Scripps Networks hasn’t done badly either. Its content was available to about 600,000 VOD-ready digital homes in Philly; and it was mixed in with the growing pool of more than 1,000 hours of paid and free programming such as NBC newscasts and sports events on demand. According to Scripps, by March Philly’s expanded VOD content was seeing 35% of enabled homes using VOD and a 9% take rate for its content, with 60,000 takes in the first month for Scripps programming. But that was only a taste of what was to come. Scripps Networks SVP of new ventures Channing Dawson introduced a first for the industry, a local free VOD package called Philly on Demand, to lure Comcast’s area customers to sample even more of the service. “We launched right when Comcast was launching in October, although they didn’t actually run their marketing until the beginning of January, and that was going to run some eight weeks,” says Dawson. “And we had 30 hours of content with them through HGTV, Food and DIY, as we had yet to launch Fine Living on Demand, which we just launched on June 1 with Comcast.” The idea behind creating a Scripps-fueled Philly on Demand package was simple. “If we could find things that would bring viewers to on-demand in general, all boats would rise,” he adds. “We can’t market on-demand on a national level yet. If we were to put HGTV on linear television, ‘Call your local cable operator about video-on-demand,’ they’d shoot us. They don’t have it fully distributed across the country. So what we’ve got to do in the first 18 to 24 months is to work with local marketing opportunities and say, ‘If you could put together a package that is content-driven, that is local, you might be able to draw people’s attention to it.’ We all know that local content works in every environment. The idea is, could you do that in VOD?” The answer was a resounding yes. “We went back to our library and found we had a lot of content that was Philadelphia-based, and primarily drawing from HGTV and Food we had about 40 titles that were based in Philadelphia,” Dawson recalls. “So we went to the corporate group at Comcast headquarters in Philadelphia and said, ‘What if we did this — would you support us on the marketing side, give us some cross-channel avails and help us put this package together and see if this works?’” They won the support of the company’s Eastern division, which is responsible for marketing VOD in Philadelphia, for a pilot to run from April 21 through June 9. Scripps put up ten titles per network — such as Homes of Philly and Emeril in Philly — for two weeks and then started changing and refreshing them. “The results have been very successful in drawing increasing numbers of people every month to Comcast VOD in Philadelphia,” says Dawson. Although Scripps and Comcast decline to discuss the usage rates for the Philly on Demand test, which are still being assessed by both parties, a Comcast spokesperson says the entire VOD category in that market currently sees 35% of customers using VOD each month, while 50% have used it in the last 90 days. “Our content followed what their general traffic to VOD was [and] our programming has done as well as Comcast’s VOD has done,” comments Dawson. “In April, when the war [in Iraq] happened, VOD viewership went down, and it went right back up in May. We launched Philly on Demand in late April, and it climbed with VOD usage because the war had ended by then. But we were also competing with May sweeps, and it turned out to be fine, so we were happy with how we did.” Comcast is likewise pleased. “Initial results of the Scripps Philly on Demand trial have been encouraging, and we look forward to evaluating its overall impact on usage,” says Melanie Sommer, VP of new product marketing for Comcast’s Eastern division. The limited trial now behind them, both Comcast and Scripps are pondering what to do with the lessons. Dawson is exploring how and where it might make sense to next offer Scripps local VOD content packaged as a marketing tool. He’s also now happy to turn over Scripps’s local package to the local division, as they firm up their plans. “One of the great things is that this now belongs to Comcast. We were able to launch a new brand for them in their market, and they’re now able to populate it with content from their different sources. It could be local high school football games, could be local restaurant reviews, but we’ll continue to add our content in there where appropriate. It doesn’t make sense for us to own Philly on Demand, but it certainly makes sense for Comcast: It’s a great marketing tool for them in that market and basically a new VOD channel for them to run with and call their own.” He also wants more time to digest and track Scripps’s overall VOD usage trends. “It’s hard to know what people really want until you have a year to find out that people watch VOD differently than they watch linear networks,” he says. “The thing that draws people to our VOD content are our brands, not necessarily the individual show titles. We don’t have a Sex and the City, although we do have Emeril and a few shows that are big draws, but mostly it’s the Food Network and HGTV. So we have to make those our magnets.” For any future local partnerships, he hopes cable operators can really run with the marketing, which Scripps and Comcast co-funded for the Philly on Demand test with some creative work by local agency Red Tettemer. “There’s a limit to the amount of local marketing you can do on a national level,” says Dawson. “So we have to choose our efforts very carefully. The question now is, can we replicate the Philadelphia on Demand model? If there is a particular market that strategically we think is important, then we will do it again. In this case, it was the headquarters of Comcast so it did us well to do that. But at the same time, it’s not something that’s easily replicable, although it would be in certain markets where we have enough content. Now that we’ve added Fine Living on Demand, we have three networks — Fine Living, Food and HGTV — that really lend themselves to local content.” Among the possible markets he is weighing are Miami, Los Angeles, Atlanta — even a Big Apple on Demand-type offering for Comcast New Jersey, the company’s second expanded VOD rollout after Philadelphia. “We’re looking at all the big markets to determine if we have enough content, and if so, what’s it going to take to put together a local package? And we want to do it without the heavy marketing we did in Philadelphia,” he adds. “We need the cable operators to step up completely. It would be feasible to add more of these packages, as it’s additive to what we do every month but we have to be selective. I have a very small VOD staff.” The biggest challenge for any future local partnerships along the lines of Philly on Demand is its strategic value to the operator and to Scripps, says Dawson, noting that Comcast’s three-bucket VOD model is now also in Boston and Baltimore. “Each of Comcast’s expanded VOD markets will have to come up with their own marketing, but what I like about what they’re doing — and Time Warner is doing the same thing — is it’s one VOD package, and with that comes everything.” VOD is a new business at a critical point in its evolution, he adds. “It’s not only young, it’s an interesting and somewhat hard business to get off the ground because you’ve got to train consumers a new brand behavior. The industry has to get people to crawl before they walk and walk before they run. So we have to make it as appealing and easy as possible. And doing something local like Philly on Demand is a very strong magnet to bring people over to VOD.”

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