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Pick-and-Pay Pleasure : Pay-per-view channels, still waiting to become next big time, say the future is . . . well . . . soon

August 13, 1989|JEFF KAYE

The studios, which are prohibited by law from owning anything collectively, agreed to rent satellite time from Request to send their films to cable systems. But they struck their own deals with the cable companies to distribute the programming. Rather than take a flat fee for leasing a film, as they do with broadcast television and pay cable stations, they arranged to take 50% of the income from each PPV sale.

But that move added to the simmering feelings of distrust between the movie makers and the cable industry. A group of major cable operators, concerned about having the fledgling PPV industry dominated by the studios, launched their own PPV network in 1987. It merged with Viewers Choice last year.

The factional split has caused tensions. "Half of Hollywood does not deal with Viewers Choice," says Jim English, that network's vice president of programming. Warners, Paramount, Universal and 20th Century Fox all sell films through Request, but not Viewers Choice. But the chasm between the two sides may be ending. Last month, the Walt Disney Co. broke the barrier, becoming the first studio to buy part ownership of Viewers Choice.

"Disney bought in," says English, "to demonstrate to the cable industry that Hollywood is not a two-headed monster and to demonstrate to Hollywood that cable is not a two-headed monster. The value for Disney is that they have a hand in both Viewers Choice and Request."

Although pay-per-view programming consists largely of movies, it's the boxing and wrestling events that have garnered attention and cash for the industry. Last April's Wrestlemania V grossed $22.8 million at $24.95 per home while the June, 1988, Spinks-Tyson fight brought in $21 million at $34.95 a pop. Sugar Ray Leonard, Hulk Hogan and their combative brethren are the carrots that have kept PPV moving forward. But executives realize it will take more than a few beefy guys duking it out to launch a revolution.

This summer, PPV will try to attract millions of viewers with special rock concerts, most notably the Who's guest-star-laden production of "Tommy" from the Universal Amphitheater on Aug. 24. The Rolling Stones also are negotiating to perform a special PPV show near the end of their upcoming U.S. tour. And PPV executives are looking for other types of events that could expand their muscle beyond sports.

What makes the whole PPV system possible is the new technology of "addressable" converter boxes that enable cable companies to add or delete services to particular homes without leaving the office. The old decoder boxes--which are still used in most cable households--require cable companies to dispatch a technician each time someone wants to change their service.

But although more and more addressable converters are being installed, many cable operators are still using primitive methods to take pay-per-view orders from their customers. Most require viewers to call an operator at the cable company well in

advance of the program they want. Customers are often placed on hold or find repeated busy signals--particularly for the most popular events. It's a system that prevents spontaneity and therefore discourages viewers from ordering programs, industry executives say. Warners' Bleier complains that PPV customers have to "work their way through layers of operators and give such esoteric information as their cable billing number. Who knows their cable billing number?"

"I called for the Tyson-Spinks fight three weeks in advance," recalls Tim Clott, executive vice president of video and pay-TV operations for Paramount. "And I had to wait 20 minutes on the phone."

The ordering problem is also being solved--slowly. Some cable operators are installing a system developed by AT&T called Automatic Number Identification (ANI), which enables cable customers to dial an 800 number that takes orders by computer. An even more advanced--and less widely used--"impulse" ordering system allows customers to order programs simply by pushing a few buttons on a special remote-control device. Programs are delivered within 10 seconds.

Customers who can order by push button are more likely to buy PPV programs than those who don't, research shows. Naturally, PPV executives are urging cable operators to blanket the country with impulse and ANI ordering systems. So are the film studios, who gain from each PPV purchase. But cable companies have been resistant because of the immense cost.

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