NEW YORK - The cable television industry feels
under siege. It is facing growing competition for viewer attention
from the b oom in video cassette recorders, and as fewer new cable
systems are built, it is having trouble wooing and holding on to new
Those problems have cable programming networks seeking another way
to attract audiences, and some of them think they have found it in
Two cable networks, Showtime- The Movie Channel and The Playboy
Channel, announced plans last week for pay-per-view operations, and a
third company, called The Exchange, is developing a similar offering.
Pay-per-view allows cable subscribers to pay a small fee to see a
specific movie or other special programming. Subscribers can get
pay-per-view instead of, or in addition to, the continuous
programming they now receive for a monthly fee from so-called
pay-cable networks such as Showtime or Time Inc.'s Home Box Office.
""Of all the new developments emerging in the ever-changing field
of pay television, we feel that pay-per-view offers the greatest
opportunity for continued expansion and growth,'' said Que Spalding,
president of the Playboy Programming Distribution Co.
Not everyone is so optimistic. Cable industry skeptics say that
pay-per-view will just draw viewers away from pay cable. Others
contend that the necessary technology is not yet widely available,
and that getting sufficient high-quality programming will be
The systems would work like this: The network would advertise its
offerings to cable subscribers, and would broadcast the programming
via satellite to local cable operators at scheduled times. The cable
operator in turn would transmit the programming to those subscribers
who had called and requested it.
The viewer would be billed $4 to $5 for a chance to see a movie
well before it is shown on pay cable, and probably at about the same
time it becomes available on video cassette. Eventually, sporting
events, live concerts and other specials might also be offered.
Some industry executives see pay-per-view as a necessary response
to the slowdown in cable subscriber growth. In addition, it is a
reaction to the emergence of the video cassette recorder as a major
factor in home entertainment, and a direct rival to cable for the
time and money of viewers.
""It's a hedge against video cassettes,'' said Scott Kurnit,
executive vice president in charge of Showtime's pay-per-view
operations. ""We can take a real good piece of that revolution and
bring it into the cable industry.''
For its part, the video cassette industry believes that it is too
early to tell if pay-per-view will emerge as a serious competitor,
according to Carol Rogin, director of member services for the
National Association of Video Distributors.
Industry analysts agree that the system has potential, but warn
that it will not be a panacea. ""It's the electronic version of
going down to the tape rental store,'' said Alan J. Gottesman, an
analyst at L.F. Rothschild, Unterberg, Towbin. ""There will be the
same kind of groundswell, if they market and price it right, as there
was with HBO in the early days.''
Proponents of the plan argue that even though a $4 to $5 price is
a few dollars more than the cost of renting a tape, consumers will be
willing to pay it because they will avoid a trip to the tape rental
store, which is often out of the most popular movies.
But, Gottesman warned, the ""novelty factor'' of pay-per-view is
likely to wear off, just as it has for cable and VCRs. ""Look what's
happening to tape rental,'' he said. ""People aren't willing totake
just any old thing anymore. …