Pay-per-view (PPV) is a pay cable offshoot that allows cable television subscribers to access movies and special one-time only events and to pay a pre-announced fee only for the single movie or event viewed. Most cable system operators offer two or more PPV channels to their customers. The signal on each PPV channel is scrambled until the cable subscriber chooses to view programming on one of the channels. At such time, the subscriber contacts the cable system headend either by phone or by interactive hand-held remote control to order the PPV programming. Following the initial order, a computer at the headend activates a device near the subscriber's television set called an "addressable converter" that descrambles the ordered PPV program signal for the program's duration. All PPV "buys" are totaled by computer and added to the cable subscriber's monthly bill.

The history of PPV and pay cable shared a parallel course until 1974 when Coaxial Communication inaugurated the first true PPV service in Columbus, Ohio. The service, called Telecinema, provided movies priced at $2.50 per title. Telecinema shortly succumbed to pay cable's better revenue stream. Warner Cable introduced Columbus to another short-lived PPV service via its interactive QUBE system in 1978. Not until late 1985 did two satellite distributed national PPV services appear. Viewer's Choice was launched on 26 November 1985, and Request Television was launched a day later. By 1995, nine PPV networks were in operation in the United States. Several of them had expanded their service to multiple channels (called "multiplexing"). Viewer's Choice and Request Television remained the two leading PPV networks in terms of cable system carriage and subscriber count. More than 800 systems carried Request Television to over 11 million addressable subscribers, and nearly 600 systems carried Viewer's Choice to 12 million addressable subscribers. 1994 figures showed 22 million addressable PPV cable households (37% of all cable households) in the United States.

PPV programming falls into two broad categories: movies and events. Movies occupy most PPV network schedules, although most of the better movies that performed well at the box office are released first to home video following their initial theatrical run. Only after videocassette versions of the movies have been available for rental or purchase for a period (called a "window") ranging from 30 to 90 days are they then available for PPV.

The PPV event category may be subdivided primarily into sports and concerts. Sports, especially professional boxing and wrestling, occupies a commanding share of the category. Professional baseball, football, basketball and hockey and several college football teams all make some of their games available to PPV subscribers.

Pricing PPV events is a matter of what the market will bear. Prices for professional boxing matches in 1994-1995 ranged from $24.95 to $35.95. Rock concerts during the same period ranged in price from $14.95 to $24.95. Predicting what PPV subscribers will pay for an event and what the buy rate (the percentage of PPV subscribers who choose to buy a movie or event) might be are risky. For instance, NBC bet that five million subscribers would pay between $95-$170 apiece for access to daily live events of the 1992 Summer Olympics from Barcelona. The so-called "Triplecast"--for the three PPV channels that carried the events--proved a failure, however, and NBC eventually tallied its Triplecast loss at nearly $100 million.


Apart from such failures as the Triplecast, PPV revenues have risen annually and stood at $413 million in 1994. Boxing and wrestling PPV events accounted for nearly half of that total, and movies accounted for the other half. The PPV growth area, however, was adult programming with one adult PPV network, Playboy Television, averaging 900 thousand orders per month in 1995. In some cable markets, buy rates for adult PPV networks ranged between 20-25% of all PPV network services, and nearly 50% of PPV revenue for some cable system operators reportedly came from adult PPV.

The success of PPV cable has been and continues to be a function of promotion. One cable executive labeled PPV a "marketing-intensive business" that relies on an "impulse buy" strategy to attract subscribers. The PPV industry's future appears firmly in place, though, with predictions that nearly one-quarter of the 500 channel cable system of tomorrow will be occupied by PPV program networks. A test to determine how cable subscribers would react to such an assortment of PPV channels was conducted in Queens, New York in the early 1990s. Time Warner Cable's "Quantum" experiment provided subscribers with 150 channels of programming, 63 of which were PPV. A survey of "Quantum" subscribers indicated a 90% satisfaction rate with PPV and buy rates that, although somewhat low, still ranked above the national average.

The next step in the PPV evolution will be a technological leap called video-on-demand (VOD). VOD will be an interactive system that will allow addressable subscribers to order PPV movies at start times determined by the subscribers themselves. An array of movie titles will be digitally stored in a file server located at the cable system headend and distributed to subscribers as ordered. The movies will be converted from digital back to analog at the subscriber's household for viewing on analog-based television receivers. VOD testing in several U.S. cities began in 1994.

-Ronald Garay


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