At first blush, selling Spanish-language VOD seems about as critical for MSOs today as the script for X-Men: The Last Stand was for the movie’s producers. With the telcos at the door, DBS seeking to match cable’s broadband firepower and executives struggling to figure out how to make significant money from VOD, putting resources toward a service that offers marginal short- and medium-term returns seems at best a distraction and at worst a poor choice of deploying limited resources. So why is Comcast preparing to add content for its Spanish-language free-on-demand VOD service, while Cox Communications says it will launch a similar service this year? While it’s well known that Latinos are becoming a massive consumer force in the U.S., it’s less known that on a relative basis their medium of choice is satellite. Among Latinos, 28% subscribe to a DBS service, compared to 21% of the total population. And only 20% are digital cable customers versus 28% at large. The situation gets worse among Latinos who prefer to speak Spanish—dubbed by marketers as "Spanish-dominant." Only 11% have digital cable compared to 28% for satellite, according to Horowitz Associates, a Larchmont, N.Y., research firm. DirecTV, with its seven-year-old Para Todos service, has a firm grip on Latino wallets with about 900,000 subscribers who pay $29.99 and upward monthly for the 55-channel service. VOD AS A DIGITAL BONUS For some MSOs and programmers, Spanish-language VOD is not strictly about revenue, but whether the industry is savvy enough to develop loyalty among the fastest-growing group in America, a population that favors satellite over digital cable and whose buying power is expected to reach $1 trillion by 2010, according to U.S. Census estimates, almost double the 2003 figure. Rather than a savior, cable executives see VOD as a constructive weapon to woo Hispanics and reduce churn, especially since DBS can offer personal video recorder services, but not yet VOD. "VOD represents a competitive advantage over what our competitor has, which is `virtual’ VOD," says John Figueroa, director of sales and multicultural marketing for Charter Communication’s 1.2 million subscriber Western division. The unit offers movies on demand from Mexico. "I don’t think customers will come on just for the VOD component, but you need more value in your package just as the general market has more value [with VOD] and customers have more choices." That’s similar to the thinking of Mauro Panzera, senior director of multicultural marketing at Comcast, which offers the most robust free-on-demand service in Spanish. "We saw this was a valuable service our Hispanic customers wanted to have," he says of repurposing content from the networks on Comcast’s Spanish-language digital tier. "We’re looking to obtain the best quality service for our customers so we can connect to what’s important in their lives." "When you have people watching the networks, plus seeking VOD, it’s reinforcing the value of the networks in the eyes of subscribers," says Colleen Glynn, SVP for OlympuSat, a U.S. distributor of eight Spanish-language networks. So far, just three MSOs—Comcast, Cablevision Systems and Time Warner Cable—are repurposing content from Spanish networks for free via VOD. Only Comcast has rolled out the service nationally; Time Warner has limited it to systems in Southern California and San Antonio, while Cablevision offers it only to customers in two Latino-heavy New York City systems and three in New Jersey. Comcast also sells movies on demand produced in Mexico and Latin America, as does Verizon’s FiOS service, Charter, Adelphia and smaller MSOs. Again, Comcast is unique in putting Spanish-language films on its VOD menu across the country. VOD CONTENT EXPANSION There certainly is room to grow. Comcast’s service drew 7 million views in 2005, a tiny fraction of the 1.4 billion the MSO logged overall for free on demand, but not surprising considering Comcast offers just 100 hours of programming in Spanish at a given time. The culprit is limited server space, Panzera says. But as storage costs continue to decline and the perceived importance of the Latino base rises, he says Comcast will expand its VOD menu later this year. Although he won’t disclose how large the increase will be, he promises, "We’ll be able to add even more genres" to the 21-month-old service. Cablevision’s three-year-old Latino World Picks On-Demand offers 20 hours of repurposed network programming from among many of the services offered by Comcast, including: Cine Mexicano, Gol TV, Sorpresa, Infinito, HTV Musica and a handful of American cable networks produced for the Spanish market by MTV, Fox Sports, Discovery Networks, The History Channel and ESPN. Besides offering movies on demand, Time Warner’s VOD menu includes Video Rola, HTV, Infinito, Exercise TV en Espa�ol and local broadcaster LATV. Some MSOs seem reluctant to discuss their VOD plans. Time Warner and Cablevision did not return calls or respond to e-mails requesting more information on their operations. Yet Comcast’s Panzera talked freely about VOD, saying films, sports, music, kids shows and documentaries generate most of the demand. In recent months, HTV and soccer channel Gol TV have peaked in interest, he adds. However, the platform is so new and limited, there is little hard data on usage patterns. The problem is inexperience, says Berke Berendes, a partner at Condista, which distributes 18 Mexican and Latin American-based networks in the U.S. "No one is doing VOD in Spanish-speaking countries," he notes. "We’re finally starting to look at" usage trends. One conclusion Berendes has reached from the San Antonio VOD trial of Infinito, a New Age/spiritual network, is that programmers need to refresh episodes of popular shows constantly. He also says Condista hopes eventually to launch newscasts from Latin American countries. Still, technical issues make it difficult to turn around topical programming quickly. That’s one reason why Gol TV does not carry live games on VOD, instead offering only a 15-minute weekly highlight show. FILLING A NEED FOR SPANISH-LANGUAGE CINEMA At Charter, VOD movies, not repurposed shows, are Figueroa’s only concern. He believes his unit has made its case to corporate to widen its horizons, noting the division has already proclaimed its confidence in the potential of VOD and its Spanish digital tier by making them part of the core marketing program. "We’re being more successful with branding ourselves in the market. Now we’re starting to build our subscriber base" with the digital network and VOD offerings. MSOs have introduced Spanish movies on demand and found them profitable, says Figueroa, who hopes to expand his division’s movie selection beyond the Mexican-dominated library from N.Y.-based Schramm Telemedia (distributed via TVN) through a deal with Venevision. "There is a shrinking market of Spanish cinemas. People have fewer places to go to see a movie," he says, explaining why movies generate cash. Overall, however, programmers are eager to expand their VOD offerings. The distributor Condista plans to add seven networks to its VOD lineup in the fall, offering three to five hours from each. "There’s definitely a market," Berendes says. "First we have to get our distribution set up, get a foundation of a [free] sampling to drive people to the [digital] tier. Based on what people are saying, the more content [available], the more they want to go out and find it." LATINO VOD’S HURDLES Despite activity in the arena, Latino-network VOD faces a number of challenges. Lack of Content: The cost of uploading, encoding and delivering signals to MSOs discourages programmers from offering more VOD. "The cost of getting content to MSOs has to come down," says OlympuSat SVP Colleen Glenn. "Right now it’s very cost-prohibitive." Buy-Through Restrictions: While some operators have eliminated the most onerous buy-through restrictions, at Comcast and Cablevision customers must purchase Latino tiers before they can access free-on-demand menus. Originally, Comcast offered Spanish VOD to all digital customers and may do so again. Comcast claims it suffered no loss in usage from installing the buy-through element. Business Models: Networks like Gol TV have established aggressive plans for advertising and sponsorships and are fearful that VOD will cannibalize core linear services, Gol’s CFO Rodrigo Lombello says. Spanish VOD Programmers Roundup At last count there were some 80 Spanish-language services trying to get a toehold in the U.S. Of those, about 20 are offering VOD to cable operators. Most are either units of U.S. cable networks or distributed by OlympuSat and Condista, American-based companies that handle satellite, marketing and affiliate relations for Mexican, Caribbean and Latin American services. Below is a sampling of these services. Excluded are U.S. networks that basically simulcast a Spanish feed of their domestic signal. CINE MEXICANO
: Cine Mexicano LLC
Format: Post-1994 movies from Mexico
Top U.S.-Based Execs: Tom Mohler, president; Colleen Glynn, SVP, affiliate sales & marketing; Kim Reed Fragione, VP, network development
U.S. Launch: November 2004
Subscribers: 500,000+
VOD Affiliate: Comcast GOL TV
: Gol TV Inc.
Headquarters: North Bay Village, Fla.
Format: Soccer, news and highlights
Top U.S.-Based Execs: Francisco Casal, president; Rodrigo Lombello, CFO; Eileen Montalvo, EVP, marketing and sales
U.S. Launch: February 2003
Subscribers: 9 million, including 6.5 million for the English feed
VOD Affiliates: Cablevision, Comcast SORPRESA
: Firestone Communications Inc.
Format: Kids programming
Top U.S.-Based Execs: Leonard Firestone, chairman/CEO; Christopher Firestone, EVP, operations, Firestone/Sorpresa
U.S. Launch: March 2003
Digital Subscribers: Nearly 1 million
VOD Affiliates: Cablevision, Comcast TV CHILE
: Television Nactional de Chile (TVN)
Headquarters: Santiago, Chile
Format: Family entertainment, including sports, soaps, news and nature shows.
Top U.S.-Based Execs: Same as Cine Mexicano
U.S. Launch: 1999
Subscribers: 2.4 million
VOD Affiliate: Cablevision INFINITO
: Claxson Interactive Group Inc. Backers include Cisneros Group of Cos. and funds affiliated with Hicks Muse Tate & Furst.
Headquarters: Buenos Aires, Argentina; Miami (Condista)
Format: Lifestyle-New Age/spiritual programming
Top U.S.-Based Execs: Berke Berendes and Jorge Fiterre, partners/founders, Condista
U.S. Launch: March 2003
Subscribers: 600,000
VOD Affiliates: Cablevision, Comcast, Time Warner Cable VIDEO ROLA
: Megacable
Headquarters: Guadalajara, Jalisco, Mexico; Miami (Condista)
Format: Regional Mexican music
Top U.S.-Based Execs: Same as Infinito
U.S. Launch: July 1, 2000
Subscribers: 500,000
VOD Affiliates: Cablevision, TW Cable DISCOVERY U.S. HISPANIC NETWORKS
: Discovery Communications Inc.
Format: Documentaries, lifestyle, travel and kids.
Top U.S.-Based Execs: Luis Silberwasser, SVP/GM, U.S. Hispanic Networks
U.S. Launch: Discovery en Espanol, 1998; Discovery Travel & Living and Discovery Kids en Espanol, June 2005.
Subscribers: 7.4 million
: Hearst Corp., NBC Universal, Walt Disney Co.
Headquarters: New York
Format: Documentaries
Top U.S.-Based Execs: Dan Davids, president, The History Channel-USA; David Zagin, EVP, distribution, AETN; Mike Mohamad, SVP, marketing; Marlene Braga, director, programming and production
U.S. Launch: June 2004
Subscribers: 750,000
: Fox Pan American Sports, LLC
Format: Sports news and events
Top U.S.-Based Execs: Bob Thompson, president, Fox Sports International; David Sternberg, EVP/GM; Tom Maney, SVP, advertising sales; Dermot McQuarrie, SVP, production and programming; Raul de Quesada, SVP, marketing, communications and creative services
U.S. Launch: 1996
Subscribers: 7 million
VOD Affiliate: Comcast MTV ESPANOL
: Viacom Inc.
Headquarters: New York
Format: Music/youth culture
Top U.S.-Based Execs: Christina Norman, president, MTV Music Television; Lucia Ballas-Traynor, SVP/GM, MTV Espanol
U.S. Launch: 1998
Subscribers: 13 million
VOD Affiliate: Cablevision

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