Cinema Canada (Aug 1976)

cation, it would not be impossible, nor would the conversion of some of the existing UHF transmitters to pay be inconceivable. Other than these areas, there is a wealth of spectrum space available. Not only can overthe-air broadcast extend Pay TV to the less settled areas, it could also provide something akin to the basic service now supplied by cable to the urban areas, helping to equalize services and possibly aiding in offsetting the continual migration to larger centres. Over-the-air Pay TV could also serve our urban centers as it will in the American major cities if it becomes impossible to arrive at some agreement with the cable operators. The financial damage done to the broadcasters in Canada by cable might to some extent be redressed through the granting of over-the-air Pay TV licenses. It is curious how few broadcasters have pursued this option. Pay-per-channel vs Pay-per-program With regard to the second assumption that the pay-perchannel strategy is better than pay-per-program, the following arguments are usually raised. The technology for pay-per-program is much more sophisticated and therefore more expensive than pay-per-channel which indicates a greater capital investment in hardware is required using money that should be available for programs; that the technologies are not properly operational; and that since Canadians do not seem anxious to watch Canadian programs they certainly wouldn’t pay for the privilege. The technical cost arguments have some truth. Without going into too much detail concerning the various technologies, the security of a payper-channel system depends on three options: placing a trap at the home of every non-subscriber so that they cannot watch the pay channel, placing a descrambler in the homes of those that do subscribe and putting a scrambled signal on the system; or using one of the midband channels (A, B, C, D, etc.) requiring the rental of a converter (which amounts to a very insecure system in Canada). Present trends would indicate that although the traps are relatively cheap initially they have to be installed at all non-subscribers’ homes and they are rather easily defeated, a practice becoming more prevalent. The unsophisticated descrambler has a number of weaknesses depending on the method used. The converter system has no application in our major cities which need converters in any case. There is a considerable expense involved in all of these and a poor or insecure system would have to be replaced. The move to pay-per-program viewing will probably take place in the not-too-distant future. Most experts agree that the consumer will probably prefer it; the available evidence indicates that gross revenues are markedly higher per subscriber; penetration will be higher, and that the program producers are becoming more militant about receiving an actual share of the box office generated by their programs. Not only does the evidence indicate that pay penetration will be higher with pay-per-program than pay-per-channel, the differential between the two will more than pay for the difference of cost due to sophistication of technology. There are other considerable advantages to pay-perprogram over pay-per-channel. The pay-per-program method is not restricted to one channel, but uses a multitude of channels. Contrary to the belief that pay-perprogram would lead to the same market forces that control conventional commercial television, that is, mass audience appeal, this simply isn’t the case. With a multitude of channels (since increase in number of channels is virtually without cost on a cable system), there is real evidence that a program which is bought by a total. of only 2 or 3% of subscribers in all its many ex pay-tv / 16 posures pays its way at least for the Pay TV operator. Expert opinion also indicates this could be as low as 1%. For example, if only 5% of the cabled homes in Canada paid just $2.00 to see a Canadian production, this would amount to a gross box office of $300,000. If our pay-TV system was designed to double or triple the producer’s share of this amount, the return would be very significant. Telecinema’ of Columbus (Ohio) is currently programming four channels and is experimenting widely with various program contents. One interesting trend is that the less-than-blockbuster feature film is showing significant results. Features that have been unreleased, or failed to receive prime distribution, when exhibited in the home have done surprisingly well. This bodes well for Canadian feature production. Without the constraint of limited prime time on a single channel or attempting to please everyone with a single menu of offerings over a single channel, pay-perprogram offers much wider diversity of choice and interest. Curiously, it also consumes less of the viewer’s time than pay-per-channel and therefore has less of an adverse affect in fragmenting audience. (This technical capability of metering the pay channels has been extended to the monitoring of all channels in 800 homes and some curious audience preferences have come to light. Of all television viewing on Sunday morning, for instance, it appears that soft pornography appeals to the greatest number of homes.) The Program-Centered Option How would the Canadian producers, artists, and performers fare? Probably better than in the protective wrapper of pay-per-channel. Although that seems a safe approach, the danger is that the pay-per-channel subscriber who buys the whole ‘“‘package”’ expects very little to displease him. The pay-per-channel operator would have to play it very safe. Conversely, while pay-per-view does demand that the producer appeal to some definite audience it need not be large. Surely the producer does have some obligation to demonstrably interest at least some segment of the population. We do expect our symphonies and ballets to show substantial other interest before granting subsidies. Within this system a formula could be devised which would greatly augment the financial returns to a Canadian producer pro-rated to some extent on the program’s success. From a financial point of view it becomes a highly leveraged investment and very attractive to the investor, yet all the monies are derived from within the system without call on the public purse. This program-centered option is worth some serious study. With the inclusion of over-the-air Pay TV and use of pay-per-program charging, the potential number of subscribers and the gross revenues rise considerably above the currently suggested models and can provide considerably more money for Canadian programs. Analysis shows there is also much greater opportunity for use of local and regional programs in this system and considerable incentive for them. It would be regrettable then, that if the United States is about to move toward over-the-air pay television and pay-per-view, we were to install a modified and soon likely to be obsolete system which probably would not offer the maximum potential returns to Canadian program production. We must also act in the best interests of the Canadian consumer while using the introduction of Pay TV as a beginning of an overhaul of our existing broadcast system. O august 1976