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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

Providing top-of-the-line pay-per-view equipment for all cable customers "is not a good business decision," says Bill Hoagland, vice president of marketing for United Cable, which provides cable service to nearly 90,000 homes in the Los Angeles area. Instead, United is trying to target those customers who are likely to be heavy pay-per-view users. The cable company, which offers PPV channels to all its customers, installs the advanced "impulse" ordering device in homes that subscribe to two or more pay cable channels. "Those are the movie lovers," he says. "They're the same people who are standing in line to see 'Batman.' " United provides impulse ordering to about 15% of its customers now and expects eventually to reach 30%. Not the best news for PPV, but a step in the right direction.

While the studios have worked to develop pay-per-view as another way to make money from their movies, they have been under pressure from home video retailers not to promote it too heavily. The problem has a familiar ring to it. Network television, pay cable and home video were all seen as threats to the movie business when they first appeared. PPV is viewed differently. No one thinks it will undermine the profits from theatrical film releases. The studios are extremely protective of that aspect of the business because it has the most profit potential--they make money on every person watching the movie. And research shows that moviegoers don't want to give up the pleasures of eating popcorn in a dark theater while they watch a new film. But while PPV is not considered a threat to theaters, home video retailers believe the fledgling industry could cut deeply into their profits.

Few outside of home video agree: "Pay-per-view will never kill anything," sneers one industry analyst. Nonetheless, home video lobbyists convinced the studios to delay the pay-per-view release of movies until at least 30 days after they have been released on video. When home video talks, the studios listen. "The reason is obvious," says Rick Karpel, regional director of the Video Softwear Dealers Assn. "We make more money for the studios than pay-per-view."

The studios can theoretically make more money from PPV than home video. With cassettes, they only make money on each tape they sell, not from the lucrative rentals. But until PPV companies can gain economic clout, they are not likely to get movies before they go to video.

Part of the video retailers' concern is that VCR users will record the films and not rent the tape. That has prompted the studios to experiment with anti-taping systems for cable companies. As part of the experimentation, two cable operators--one in Massachusetts and one in Wisconsin--are using an anti-copying device. In exchange, the studios are providing them with movies for PPV release the same day they debut on video.

If the obstacles hobbling pay-per-view are overcome, the payoff could be enormous for both the entertainment industry and viewers. Scientists foresee the day when viewers will be able to order from a seemingly limitless catalogue of programs. "Television sets will be more like computers," says Richard Solomon, research analyst at the Massachusetts Institute of Technology's Media Laboratory, where scientists are busily designing the TV of tomorrow. "Theoretically, one would be able to store all the movies and television programs ever made," says Solomon. A wealth of new kinds of programming may also be available. Narrowcasting--the notion of producing programs that interest only a small segment of viewers--could finally become feasible.

Although the technology to store and retrieve countless programs at will is not expected to arrive in the near future, pay-per-view executives expect to transform television soon. PPV will offer viewers a chance to go places they couldn't otherwise, predicts Reiss of Reiss Media Entertainment, such as "a major auction from Sotheby's." "They could bid by phone with a catalogue," he says. "They could see the opening of a Broadway show. Hundreds of thousands of people would like to be part of something like a World's Fair. If Prince Charles and Diana were getting married now, it would be on pay-per-view."

Krisbergh of Cable Video Store thinks NBC's plan to run portions of the 1992 Olympics over pay-per-view is a sign that the business has arrived. NBC is expected to offer viewers the chance to watch some sporting events from start to finish on PPV, since the network itself can only air selected portions of the competitions. Basketball fans, for example, might be able to watch hours and hours of the sport.

Pay-per-view is making headway "and clearly the networks agree," says Krisbergh. "The networks are actually facilitating it." He envisions 20 new PPV channels during the next 10 years. In addition to movies and event programming, the executive sees an avalanche of "niche product"--programs with limited target audiences such as bass fishermen, doctors or real estate agents.

He sounds almost giddy as he describes the future. "A lot of people say to me, 'That's great, Hal, but when's it going to happen?' I say it is happening. When NBC decides to put the Olympics on pay-per-view, that's a statement."

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