The Trouble With Selling VOD

Any doubts that competition for video customers has reached a fever pitch were put to rest last week when SBC and EchoStar Communications agreed to bundle their services on a single bill. In a deal in which EchoStar will receive a $500 million investment from the No. 2 local telephone company, SBC customers can now receive the triple-play bundle of voice, video and data — a direct answer to cable’s own bundled service offering. Video-on-demand is supposed to be a major weapon in cable’s arsenal to combat the threat of DBS. As Microsoft CEO Steve Ballmer pointed out in a keynote address at last week’s CTAM Summit, much of what the cable industry is doing with multiple product lines is about creating new demand. But MSOs still have a ways to go to increase awareness — and in turn usage — of the revenue-adding on-demand product. Part of the problem with VOD may be its marketing. Although cable has seen gangbuster numbers when it comes to digital and high-speed data, there appears to be room for improvement when it comes to drumming up consumer fervor for VOD. Leichtman Research Group last week released results of a survey taken in four markets where VOD is available. The survey found that while awareness of VOD is high, the percentage of people who realize that the service is available on their own cable system is far smaller. Through a telephone survey of 1,400 cable households (and a previous study of 1,250 households throughout the country) Leichtman found that 90% of digital cable subscribers in the four markets had heard of VOD, compared to 69% of digital subscribers nationwide. But about 25% of digital subscribers in those markets, and half of the analog subscribers, were not aware that the service was available to them. In the markets studied, usage rates for VOD ranged from 27% to 45%, with the average number of customers who have tried the service hovering at 30%. That moderate usage rate underscores the urgency with which operators need to get the word out about the service. Edmond Bruneau, president of Creative Consultants, an advertising agency that has created direct-mail pieces for the bundles sold by Cox Communications in several markets, says education is a key piece of the puzzle for any MSO looking to sell advanced services to subscribers. Further, the message, which will start hitting home only after a customer has seen it five to seven times, has to come from a variety of sources. “Clients can’t be educated with one medium at a time,” Bruneau says. “It takes a set of ongoing literature to bring them up to speed so they can understand the need.” In many cases cable systems have concentrated on the ability to put advanced services on the air and not the ability to create a market for it, adds Bruneau, whose display table was tucked away in the little-trafficked Creative Showcase section at the CTAM Summit. “Sometime we tend to forget that the people we talk to are not as sophisticated as the people in the [cable] industry,” he says. And that leads to a lack of understanding in consumers’ minds about what a product does or how it is used. The original advertising for TiVo is a classic example. Cable veteran Lee Hunt, of Lee Hunt LLC, says that when TiVo first began advertising, it “created a position people didn’t understand.” In a session that focused on promoting programming and services in the on-demand world, Hunt highlighted an ad from an upstate New York Time Warner Cable system that, in a straightforward but fun way, explained exactly what VOD is, how to find it and how to buy it. One thing that TWC is doing right, he noted, is creating a destination — Channel 1000 — that is firmly established for VOD. TWC’s spot shows real people using the remote to order and then enjoy VOD. A split screen highlights the actual buttons on the remote used for VOD functionality as different people talk about VOD capabilities, saying that it’s already in your cable box but you need to have digital cable to “get this kind of power and control.” The ad highlights the convenience and parental control. “You put all of these messages together and I begin to get it,” Hunt told those attending the CTAM session. One of the biggest things markets can do to pump up usage of VOD, he said, is to “break the educational barrier.” Echoing Bruneau’s sentiments, Hunt added “we tend to think viewers are as educated as us [when it comes to these services] but they are nowhere near.”