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Cable Operators

Kids Prove To Be Demanding

1/26/2007 7:00 PM Eastern

As Page Thompson, senior vice president and general manager of video services at Comcast, puts it: “Kids are growing up in an on-demand world.”

The number of video-on-demand capable U.S. homes grew to nearly 26.2 million — 86% of the country's homes with digital cable — in the first half of 2006, according to Kagan Research. And as VOD numbers continue to grow, kids and family programmers are looking for ways to leverage the platform.

“When you look at the genre ratings in VOD, kids are always No. 2 or No. 3,” Cartoon Network New Media vice president and general manager Paul Condolora said.

Two of Comcast's most popular kids on-demand programs — episodes of Nickelodeon's Dora the Explorer and Go, Diego, Go — “do about a million views a month,” Thompson said.

“Comcast had early data on this [trend] because they were one of the first with on demand,” PBS Kids Sprout president Sandy Wax said. Comcast has a stake in Sprout, which launched as an on-demand service in April 2005. “When [Comcast] saw the success of kids on demand and how it met the needs of families, that was a big driver of their decision,” Wax added.

“They're all telling us that there are three categories driving on demand: music, movies and kids,” said Wax, whose network notched 100 million VOD orders in 2006.

Disney Channel also is getting positive feedback from operators for its $4.99 per month subscription VOD service. “It's far and away the most-viewed SVOD offering they [Cablevision] have,” Disney-ABC Cable Networks Group vice president of digital media K.C. Estenson said.

“By premiering original movies and series on VOD anywhere from 24 hours to two weeks before they debut on [Disney Channel], we create value for our affiliates, as well as create big advance 'playground and mall' buzz for our programming,” Disney spokeswoman Karen Hobson said.

But telco TV operators are also stepping up video-on-demand offerings, including kids and family fare. Verizon Communications added Sprout and its VOD service in November.

“VOD usage shot right up,” said Tricia Lynch, director of FiOS TV programming. “We're really pleased with it.”

For kids and parents, on demand's appeal boils down to convenience, control and choice.

“We find that the view rates of family and kids programming on VOD are disproportionately better than the ratings on linear,” said Dan York, executive vice president for programming at AT&T.

“The VOD platform is on the rise with consumers and is ideal for this kind of programming,” said Heather Ross, director of corporate communications at Rainbow Media Holdings, whose Mag Rack VOD service includes Paloozaville and The Pet Shop. “The viewer is in control of what they watch and when they watch it.”

“VOD enables the family to have much more control,” The Inspiration Networks senior vice president of corporate communications and research John Roos said. Inspiration is set announce additional VOD deals that include more youth fare.

“In our [video-on-demand] test with Time Warner, consistently one of the top-viewed categories is kids and teens programming,” Roos said.

Even the youngest viewers are being targeted with on-demand content. “We've had great success with [the] Baby Boost [VOD channel], which has lots of neat shapes and colors and music,” said Comcast's Thompson. “It's doing about a million views a month. The nice thing about having it on-­demand is you never know when a baby is going to be awake. Babies don't conform to a lineup.”

One VOD limitation is that the service requires a set-top box. In households without a box or with a box only in the living room — because parents don't want to pay extra to put a box in their kids' bedroom or they want to control what their children are watching — that can limit the audience for on-demand kids programming.

“We wanted everyone to enjoy this [content] in every room of the house, not just where they have a VOD box,” said Steve Friedman, head of the cable division of Ion Media Networks. “So by having a linear channel, they get to enjoy this in every room of the house.”

Another issue is translating on demand's burgeoning viewership into revenue. Nielsen Media Research in December launched a VOD ratings service, which gives advertisers more data to work with.

Another factor will be the availability of dynamic video-on-demand ad-insertion technology. Currently, it takes as much as 90 days from when ad content is delivered to when it runs. Dynamic ad insertion is in major trials at Charter Communications and Comcast, among others. But the wild card is when dynamic ad-insertion technology will be widely available.

“Depending on who you talk to, it will be 2007 or 2008,” Cartoon Network executive vice president and general manager Jim Samples said. “We've seen progress in that area, but we all agree that there needs to be more. It will be essential to making VOD a self-sustaining proposition.”

(RE)FRESH IDEAS

When it comes to strategies for kids on-demand fare, how content performs on a network doesn't necessarily forecast how it will fare in the VOD space.

“There's not a direct relationship between ratings on the linear network and VOD,” Samples said. “I think that's because VOD provides niche, fanatical audiences with an opportunity to see their shows.” For that reason, “we don't have to be as mainstream on VOD,” he added.

Refresh strategies also vary, but networks tend to change around 25% of their content per week.

“Refresh is critical across all platforms,” said Paul Condolora, vice president and general manager of Cartoon Network New Media, which refreshes 100% every month. “We try to keep it as high as possible on VOD. The exception is the youngest end of our demo who like to watch the same thing over and over.”

That preference creates challenges for PBS Kids Sprout, which caters to the 2-5 set. “The struggle is that we want to have fresh content, but you also know that they want to watch an episode over and over,” Wax said.

Sprout typically keeps an episode up for eight weeks. Toward the end of its run, viewers see a last-chance notice to let them know it won't be around much longer. “We find that usage spikes again,” Wax said.

For linear networks that use original or exclusive programming as a market-differentiator, one challenge to VOD success is the programming rights. That can create an advantage for networks that produce shows in-house. Cartoon Network created a production unit in 1994 which has produced 29 original series.

“That has allowed us to be more aggressive in offering VOD to cable networks,” Samples said. “We control those rights. That's been one of the stumbling blocks for many networks: They don't necessarily control VOD and have the platform rights.”

September