Source : Hollywood Reporter
TORONTO -- This year promises to be a crucial one for video-on-demand in Canada as industry players scramble to forge a business model that will resonate with footloose digital TV viewers.
Initially licensed for the Canadian market by the country's TV regulator in 1997, VOD has been slow to develop here. Broadcasters early on offered on-demand movies to reel in viewers and reduce subscriber churn.
"To remain premium in the consumer experience, we needed to move quickly in on-demand," said Andrew Currie of Corus Entertainment, which launched a subscription VOD service for its Movie Central premium pay TV offering in fall 2002.
Now Corus and rival Canadian broadcasters are beginning to secure on-demand rights for high-profile U.S. network and cable series as well as homegrown dramas -- albeit slowly.
Currie said adding on-demand series gives viewers that are committed to multiepisode shows a chance to screen episodes they missed or enjoy them in succession.
PricewaterhouseCoopers, in its annual "Entertainment and Media" report, released in October, predicts that the Canadian VOD market is "taking off" and by 2009 will generate more revenue than pay-per-view.
Astral Networks vp technology Chris Bell said the Movie Network, Astral's premium pay TV service, similarly offers at no charge an SVOD service to accommodate new patterns in viewership brought on by the personal video recorder, the Internet and other emerging digital technologies.
Bell added that securing on-demand rights to content is easier these days as the growing profile of content aggregators like YouTube.com has helped producers get over earlier reservations about the Internet.
"With the flood of video, you have to get your content out there and make it convenient for consumers, and they will tend to pay rather than pirate because it's inconvenient to pirate," Bell said.
Other Canadian broadcasters are similarly using VOD to navigate between linear channels and the Internet, cell phones and other nonlinear digital platforms increasingly used by Canadians.
Rival broadcaster Chum Ltd. offers increasing amounts of free on-demand content as a way to engage Canadians no longer tied to the living room couch for TV viewing.
Chum vp content business development Maria Hale said on-demand content allows the broadcaster to test Chum viewers on the new platform, find out what on-demand content they're consuming and how or whether they might want to pay for that content -- all the while deepening its connection with traditional TV viewers.
As elsewhere among Canadian broadcasters, the strategy is making more content available to Canadians when they want it and how they want it to ensure that they don't stray elsewhere in an increasingly multichannel world.
But monetizing VOD has proved challenging for Canadian cablers who use on-demand programming to compete against domestic satellite TV operators, which are experimenting with more interactive TV offerings.
Part of the challenge comes from regulatory rules that bar advertising in most VOD content as well as the fact that domestic broadcasters and cable companies must negotiate VOD deals with Hollywood and Canadian program suppliers beyond traditional broadcast rights.
For example, Rogers Communications Inc., Canada's largest cable provider, recently struck a deal with CBS Paramount International Television to add "Survivor: Cook Islands" to its on-demand service.
Each week's episode of "Survivor" is available to Rogers digital set-top box owners after the initial Thursday night primetime airing on Global Television, one of two parallel, over-the-air networks operated in Canada by CanWest MediaWorks.
Initially, Rogers wanted to bring CanWest Mediaworks in on the CBS Paramount deal by proposing to offer the "Survivor" episodes for free on its cable VOD platform with the same embedded advertising that aired on Global Television's Thursday night primetime run.
Such a move would have allowed Rogers to keep pace with U.S. cable systems already offering popular network shows for free to on-demand customers and to conform with Canadian regulatory rules that allow cablers to replay TV shows on their on-demand systems with embedded advertising only if VOD subscribers receive the content for free.
But CanWest Mediaworks pulled out of the CBC-Rogers negotiations at the eleventh hour, choosing instead to stream the "Survivor" episodes on its Global Television Web site for free.
On the international front, Canadian content producers are slowly negotiating VOD deals, particularly in the kids programming realm.
Nelvana Ltd., Corus Entertainment's cartoon division, has signed VOD licensing deals for select animated series with British Telecom's broadband TV offering and Comcast's Vortex on Demand service.
Doug Murphy, Nelvana's executive vp business development, said he is aggressively eyeing cable VOD deals but is being selective.
"There's all kinds of deals out there that have no money but instead are revenue-sharing deals. Those are not deals I'm interested in doing," he said, adding that he wants to see license fee payments on the table before deals are done.
Murphy said that producers devalue their content if they create relationships with consumers across a range of digital platforms and then move too quickly and give their product away for a song.
He added that cable and telecom giants looking to VOD as a retention tool to minimize subscriber churn have invested billions to build out their broadband networks. So content producers have to be patient with carriers who require high-quality VOD content to make their subscribers sticky.
Murphy added that the bigger money these days is found in digital sell-through, or charging for the downloading of content onto computer hard drives.
© Hollywood Reporter