Variety may be the spice of life, but it's also a
great marketing tool.
When it comes to premium multiplexing, there's nothing
like creating distinct channel identities to help lure new customers and retain old ones.
When done correctly, rebranding can reassure viewers that their investment in premium
services is worth the money because there will always be something new to watch.
Cable operators and premium-network executives are learning
that they must move beyond talking about the number of feeds when they promote multiplex
services. With expanded-basic lineups including dozens more channels than they did a few
years ago, additional multiplex feeds alone aren't enough to drive additional pay
television sales.
Besides branding efforts and high-profile
original-programming exclusives, pay networks are trying to ensure that cable customers
who are lucky enough to have access to multiple feeds of their services are rewarded with
more than just tonnage.
Home Box Office took the wraps off its new multiplex
monikers earlier this month, when it introduced HBO The Works to subscribers. Gone are
HBO2 and HBO3, which some had perceived as repackaged versions of HBO's main feed. In
their stead are HBO Plus and HBO Signature, each designed to capture the attention of a
different type of viewer -- or at least a viewer in the mood for a different type of
programming.
Earlier this year, HBO launched its new HBO Family feed,
and it plans to launch two more distinct brands -- HBO Comedy and HBO Zone -- next year.
Showtime Networks Inc. rebranded one of its mutliplex
channels earlier this year, as well, naming its action-adventure feed Showtime Extreme.
Such differentiation gives cable operators something
concrete to point to when they want to promote their multiplex pay services, either in
digital or analog environments. New messages are important in catching the attention of
cable customers, because so many have already churned away from premium services.
HBO's recent two-tiered consumer campaign to launch
HBO The Works -- which included customized marketing materials tied to the needs of local
affiliates -- gave operators an opportunity to tell their customers, "They're
getting more than the same old, same old," said Larry Peterson, vice president of
marketing and sales for Time Warner Cable's Kansas City (Mo.) division.
The Kansas City system currently offers three channels of
HBO, and that number will increase when it rolls out digital next year.
MARCUS' STRATEGY
In Southern California, Marcus Cable believes so strongly
in the draw of multiplex that premiums will shoulder most of the load in an upcoming
digital rollout.
The company's Glendale and Burbank, Calif., systems
will go from eight premium plexes in analog to 43 when the MSO launches its first
digital-video services, possibly as early as this month.
Marcus won't add any basic-cable channels to its
digital packages -- only premium networks, pay-per-view movies and digital-music channels
-- said Vince Maffeo, regional marketing manager for Marcus Cable's Southern
California division. Eventually, Marcus hopes to migrate all of its premium customers from
analog to digital.
"Ideally, we'd like to reclaim the premium
bandwidth on the analog side for basic channels," he said.
To get there, Marcus will aggressively promote the value of
its digital-multiplex premiums. In marketing its upcoming digital service, Marcus plans to
initially target subscribers who already take two premium packages. The extra cost to
those subscribers will be $2.70 per month -- the difference between renting an analog
converter and a digital terminal.
And once digital boxes are in the home, it opens up new
opportunities for increased PPV revenues and enhanced customer satisfaction, Maffeo said.
Operators are hoping that digital subscribers will be more
likely to retain their premium subscriptions. And it's not just the additional
channels and differentiated programming --although that's obviously a draw.
Interactive programming guides on digital boxes help direct
customers to shows that they may have otherwise missed. If they're actually watching
the premium feeds, the logic goes, they're less likely to churn.
WHAT OPS WANT
Premium networks are seeking more consistent promotional
efforts from their affiliate operators to help reduce churn. The operators, in turn, want
help from the networks to create campaigns that are relevant for their own markets.
It appears that the networks are listening. Operators
praised HBO for custom-tailoring its recent HBO The Works campaign around the needs of
different cities.
"Before they came to the market, they came to the
operator and got us involved, so we could get involved locally and do local tie-ins,"
said John Hauenstein, director of sales and marketing for Cablevision System Corp.'s
Cablevision of Massachusetts in Boston. "We wish others would do this."
Showtime plans to focus more closely on individual
operators, because "it's not one-size-fits-all anymore," said Jeffrey Wade,
executive vice president for SNI. "What works well in San Diego might not work at all
in Chicago."
Both HBO and Showtime have worked together in the past to
help operators market multipremium packages. According to Mike Hale, senior vice president
of marketing for Encore Media Group, Starz!/Encore will also participate in such multipay
campaigns starting next year, "based on affiliate requests."
In some ways, adding Starz!/Encore to the mix can
complicate a premium-movie offer, because its consumer prices are often lower than those
of other premium-movie services. Encore airs older films than HBO and Showtime, which
argue that they are more complete services than Starz!
Peterson said Time Warner's Kansas City system is
likely to add at least some Starz!/Encore feeds, even before a digital rollout. The
operator is still putting price points and package plans together, and it wants to make
sure that any Starz!/Encore offer doesn't erode the premium-subscription revenue that
it already has.
Hale said Encore's genre-based movie lineup can help
operators to push digital penetration by offering subscribers an alternative to video
rentals.
FIGHTING DBS
However they're approached, it is important for cable
operators to court multipay customers because they're the ones who are most likely to
bolt if they encounter a more attractive offer from direct-broadcast satellite.
Helen Brodie, vice president of marketing for
MediaOne's Midwest region -- where the company started offering digital service to
subscribers in its Westland, Mich., system last month -- called digital television
"the best thing since sliced bread to happen to cable."
In addition to multiplex-premium services, Brodie said, the
broadband plant opens up all sorts of other opportunities for cable operators, such as
data and telephony, that their DBS competition can't offer.
Barbara Sullivan, president of Denver-based B.G. Marketing
Inc., recommended that operators let their customers know that digital cable -- and the
multiplex services that it provides -- is on the way, even if the service won't be
available for a number of months.
"Even before their systems are upgraded, they should
be saying, 'It's coming, it's coming,' because that's a great
retention tactic," Sullivan said.
But not all operators have followed that advice to date.
"I know that a lot of MSOs go out way in front, before
they have the product, but we've been fairly conservative," said Virginia Gray,
vice president of marketing for Cox Communications Inc.
Gray added that Cox waits until an area is wired for
digital before it starts marketing, using direct mail, telemarketing and cross-channel ads
in areas where digital is available.
Cox charges its customers $10.95 per month for a digital
box, which opens up access to multiplex premiums and which includes several digital tiers
of newer basic-cable channels.
"We want to create as much demand as possible,"
Maffeo said, "but there's a manpower issue. We don't want to overwhelm the
technical people."
Maffeo said Marcus is sending teaser postcards several
weeks before digital-service launches, with a tag line reading, "Cable TV so powerful
you'll need seat belts on your sofa." A stronger acquisition mailer follows two
weeks later.
Wade warned against waiting for digital rollouts to begin
marketing the value of multiplex services. Operators should let potential customers know
just how many feeds they'll be getting with their premium services, and how that
translates into more viewing options.
"It's not something that the consumer knows
automatically," said Seth Morrison, vice president of marketing at CTAM. "One of
the risks that we face as an industry is that we know it too well."
