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Movies on Demand, and Events on Demand, Are VOD Offerings

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Movies on Demand, and Events on Demand, Are VOD Offerings Michael S. Berman February 2,2007 Senior Vice President, Business Affairs & General Counsel Ms. Marlene Dortch Secretary Federal Communications Commission 445 12'h Street, SW Washington, DC 20554 Re: Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming (MB Dkt No. 06-189) Dear Ms. Dortch: iN DEMAND L.L.C. ("iN DEMAND") hereby clarifies the nature ofthe video programming services that it offers, including which services constitute national programming networks. We hopc this letter helps ensure that the Federal Communications Commission (the "Commission") has accurate and timely information about the number ofnational programming networks operated by iN DEMAND. In its Twelfth Annual Report on the status ofcompetition in the video marketplace, the Commission concluded that, in 2005, iN DEMAND provided "60 multiplexed iN DEMAND channels and two iN DEMAND HD channels."l iN DEMAND believes that those numbers significantly overstate the number ofprogramming networks it operates. In light of technological innovations and other marketplace developments, particularly the widespread availability ofvideo-on-demand ("VOD"), iN DEMAND's offerings have changed over the past several years, and iN DEMAND now offers far fewer "networks" than indicated in the Commission's last annual report, or any prior report. As the Commission is aware, consumer adoption ofVOD has increased rapidly, and this has changed the way iN DEMAND does business. In the past, iN DEMAND had to transmit multiple channels ofpay-per-view ("PPV") movie and event programming to enable MVPDs to meet the demands ofconsumers. VOD technology, however, allows iN DEMAND to dispense with many ofits PPV channels because consumers can access iN DEMAND's content (as well as thousands ofhours ofother providers' content) directly from their MVPDs' servers2 In fact, some ofiN DEMA1\TJ)'s most popular offerings, including INHD Concert Jukebox, Movies On Demand, and Events On Demand, are VOD offerings. The PPV programming that iN DEMAND continues to transmit is necessary for content that is not conducive for VOD, e.g., See In re Annual Assessment ofthe Status ofCompetition in the Market for the DeliveTy ofProgramming, Twelfth Annual Report, 21 FCC Red. 3876 ~ 157 & n.568 (2006). From an MVPD's perspective, VOD is compelling because, among other things, the MVPD need only set aside a limited amount ofchannel capacity on its systems in order for consumers to access all VOD content. movies OWDEIIIJ\WD live sporting and entertainment events, and to enable MVPDs to offer PPV movies to their customers who do not have access to VOD. Moving forward, as more consumers migrate to digital cable and have access to VOD, we anticipate that more PPV programming will migrate to VOD and that the number ofiN DEMAND's PPV programming channels will continue to decrease. In light ofthe migration ofmuch ofiN DEMAND's programming to VOD, as of January I, 2007, iN DEMAND operates only eight multiplexed programming channels and one high-definition CHD") programming network, INHD3 Three ofthe multiplexed channels-­ provided under the brand Events iN DEMAND -- carry "event" programming, e.g., live and repeat perfonnances ofvarious types ofPPV events, such as championship boxing matches, on a full-time basis. Five ofthe multiplexed channels -- provided under the brand iN DEMAI"<1) Pay­ Per-View -- carry PPV movies on a full-time basis. INHD features live HD sports and other general entertainment programming. In addition, as part ofcertain professional sports leagues' programming packages -- e.g., NBA LEAGUE PASS, NHL CENTER ICE, MLS Direct Kick -- iN DEMAND transmits live feeds ofcertain games carried by various regional sports networks with the rights to carry those games.4 These games are provided under the brand Sports iN DEMAND. iN DEMAND does not hold an ownership interest in any ofthese sports packages, does not control their distribution, and is not involved in the relationship between the leagues who produce these sports packages and other distributors. This programming is not transmitted on a full-time basis, and iN DEMAND does not produce or otherwise manipulate it. iN DEMAND simply provides a transmission medium for the sports leagues' content. Therefore, these sports packages are not attributable to iN DEMAND and should not be counted as iN DEMAND programming networks" In fact, the sports leagues offer these packages to a variety ofdistributors: • Through 2006, MLB EXTRA INNINGS has been available from DIRECTV, EchoStar, or iN DEMAND;6 When HD versions ofthe progrannning iN DEMAND transmits are available, which is highly infrequent, iN DEMAND also makes those HD versions available to its customers. iN DEMAND's agreement with Major League Baseball for MLB EXTRA INNINGS has expired. iN DEMAND also notes that it transmits MLB EXTRA INNINGS and NHL CENTER ICE on the same cbannel. Likewise, it transmits NBA LEAGUE PASS and MLS Direct Kick on the same channel. Thus. even if one were to attribute these sports packages to iN DEMAND, counting each ofthem as separate program networks would result in significant double-counting. See MLB.com. Official Info (instructing consumers who to contact ifinterested in obtaining MLB EXTRA INNINGS), at http:hvww.mlb.convNASApp/mlb/mlb/ofIicial infolbroadcasts/extra innings·isp (last visited Jan. 10,2007). - 2- • "NBA LEAGUE PASS is available on DIRECTV, DISH Network or on digital cable via iN DEMAND,,·7, • NHL CENTER ICE is available from DIRECTV, EchoStar, and iN DEMAND;8 and • MLS Direct Kick is "available on DIRECTV, Dish Network, [and] Digital Cable via iN DEMAND.,,9 Thus, ifthe Commission decides to attribute ownership ofthese sports packages to iN DEMAND -- a result that iN DEMAND believes, for the reasons described above, would be contrary to the facts -- it should also attribute such ownership to DIRECTV and EchoStar. Indeed, ifthe Commission were to pursue such an approach, logic would require it to treat other, SImI. '1 ar sports packages t h e same way. 10 iN DEMAND hopes this letter assists the Commission in accurately assessing the number ofnational programming networks in the video marketplace. Please direct any questions to the undersigned. Respeetfully submitted, t1 . rl·t;J1~ Michael S. BtrJrulll NBAcom, NBA 24/7, at http://www.nba.com/nbatv/leaguepass.htmI(last visited Jan. 10,2007). See NHL.com, NHL Center lee FAQ (instructing consumers who to contact ifinterested in obtaining NHL CENTER ICE), at http://www.nh1.com/nhlhg/centerice/(lastvisitedJan. 10,2007). MLSnet.com, Order the MLS Direct Kick Package, at http://www.mlsneLcom/schedule/tv.jsp (last visited Jan. 10, 2007). 10 For example, DIRECTV's NFL SIJNDAY TICKET, MEGA MARCH MADNESS, and its new NASCAR IIOTPASS are essentially no different than any ofthe sports packages iN DEMAND provides. - 3 -.
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