Cable's on-demand in high demand

Gloomy weather didn't dim the smiles of the two perfectly coiffed TV anchors as they bantered into their microphone headsets.

"The skies may be gray, but spirits are sunny and bright," one said with practiced, professional poise. "Good morning. I'm Janelle Wolfe and thanks for tuning in. It's going to be a long parade. I hope you have a bowl of popcorn or some beverages handy, because folks, we're going to be here a while."

Macy's Thanksgiving Parade? Not even close. It's the 2006 bicentennial parade of Pottsville, Pa. The town's population: About 15,000. Here's another surprise: The show wasn't produced by the local TV station but taped and edited by Comcast Corp. It aired on the cable company's statewide video-on-demand service, which is a bank of stored movies, television shows and other content that its digital TV customers can access at any time.

Comcast, based in Philadelphia, and other cable operators such as Time Warner Cable, Cablevision Systems Corp. and Cox Communications Inc., are quietly expanding their local news coverage of the communities they serve, offering an alternative satellite rivals can't match and tapping into demand for everything local.

While the quality of the shows varies from ESPN sophistication to simple footage of cheerleading, they're generally slicker and more diverse than those seen on public-access channels produced by the community. Many local on-demand shows are produced by the cable companies, using their own video crews and on-air anchors.

By offering local on-demand, cable operators hope to give subscribers one more reason to stay with them.

Parents who miss their kids' Tuesday afternoon baseball game can watch, pause, replay it on video-on-demand as early as that night. The video is stored on servers in the cable company's network. Customers make selections with their TV remotes and get nearly instant gratification.

"It's something satellite can't do," said Bruce Leichtman, president of Leichtman Research Group, a technology research and consulting company.

Meanwhile, phone companies are spending billions of dollars to blanket the country with their own TV service but aren't yet in a position to offer much, if any, local video-on-demand.

Besides staying a step ahead of telephone companies and standing out from satellite, video-on-demand also is being used to entice customers into upgrading to more expensive digital TV packages.

"They want to convert folks from analog to digital," said Todd Chanko, an analyst from Jupiter Research.

In a recent meeting with analysts, Comcast executives said customers who buy digital cable tend to stay with the company. Digital subscribers who use video-on-demand are even more loyal.

Most local shows - from high school sports and small-town parades to middle-school dance contests and community politics - are free, while newer movies carry a charge or require a movie channel subscription. On-demand movies are different from pay-per-view, where programming is broadcast on a schedule and usually only one viewing is allowed.

Last year, 54 percent of digital subscribers watched an on-demand program, according to the Cable & Telecommunications Association for Marketing. That's up from 35 percent in 2004. About 35 million U.S. households subscribe to digital cable, according to Jupiter Research.

There aren't any industrywide figures yet for local video-on-demand, but cable companies said the shows have turned out to be quite popular.

"It's become a hot category for us," said Michael Doyle, president of Comcast's eastern division, covering Pennsylvania, New Jersey, Delaware, Maryland, Virginia and Washington, D.C.

Just in the first quarter, Doyle's division recorded 2 million views for local video-on-demand. That compares with 3.7 million views for all of 2006 and 2.6 million in 2005. (A customer who clicks on an on-demand show and doesn't finish it but watches it again later would count as two views.)

While growing fast, local on-demand is still a small percentage of the half a billion total views the Eastern division recorded in 2006. Nationally, Comcast posted 1.86 billion on-demand views last year, up 33 percent from 2005.

Time Warner said viewership of its Wisconsin On Demand has at times exceeded those for the on-demand shows of Comedy Central, Nickelodeon and two premium channels, The Movie Channel and Playboy.

By covering community events, cable operators are becoming a source of hyperlocal news as television stations cut their news budgets.

"This was largely, at one time, the domain of local television," said Al Tompkins, who teaches broadcasting and online journalism at the Poynter Institute in St. Petersburg, Fla.

Cable's advantage over local TV stations is that it doesn't care about ratings, Tompkins said. Its strategy is to make the cable TV service more enticing to folks by adding local content.

"What you're trying to do is,

you're trying to provide a unique service that they can't get if they don't get cable," he said. "I can't get the Pottsville parade on CNN." *