How Scary Can Pushing a Linear Channel Be?

FearNet hooks up with Six Flags thrill rides

Launching a new cable network can be like a roller coaster ride, with
lots of breathtaking highs and lows and surprising high-speed turns.

So it’s appropriate that FearNet has hooked up with Six Flags Entertainment
Corp. on a promotion that puts signage for the network next to one of the most
thrilling rides at each of the company’s 10 theme
parks. FearNet will also be promoted on jumbo
screens and marquees at Six Flags.

The general promotion is unusual for Fear-
Net, which has used its resources mainly when
it gets launched by a distributor or when it premieres
new programming, according to Peter
Block, president and general manager.

The horror genre gives FearNet a pretty dedicated
community of viewers. But FearNet now
must try to attract a broader audience because
it is embarking on one of the industry’s scariest
rides by trying to build a linear channel on the
back of a VOD network. That trick has been
successfully done so rarely that it’s frightening.

FearNet, owned by Sony Pictures Television,
Lionsgate Entertainment and Comcast,
launched in 2006.

“The VOD landscape looked very exciting
when FearNet launched,” says SNL Kagan analyst
Derek Baine, who couldn’t recall a successful
transition from a VOD network to a linear
one. “There has been no license fee and very
little ad revenue. So they just don’t have the programming
budgets of typical linear channels.”

Having Comcast as a part owner could be
a powerful asset, Baine adds. “If they give it a
wide rollout, it could be successful based on
that alone,” he says. “I doubt that they are making
any money on this now, but if Comcast gives
them a national rollout it could be pro! table.”

But Block, who joined FearNet two years ago, says so far, so good. FearNet’s
foundations are its ranking as the No. 1 free VOD movie provider, with 640 million
views since it started, according to Rentrak, and the top genre site online, according
to comScore. Block expects the linear channel to be in 10 million homes
by year-end.

The linear programming is different than the on-demand product, which is
mainly uncut for hard-core fans seeking the theatrical experience. The linear programming
complies with content rating demands and contains commercial breaks
with programs that are scheduled to start at the top of the hour.

“There are people who want to taste, but not order the whole entrée,” says
Block, who is also a well-known producer of horror films, including the Saw
franchise. “It allows us to give people movies that they otherwise wouldn’t dare
to see in a familiar format that they will feel comfortable with.” And with the most
shocking bits cut out.

The linear network is also designed to be fun, including its original program
Holliston, which is a sitcom. “Since we don’t have broad enough distribution to get
huge advertisers yet, we also don’t have to cater to anybody,” Block says. “So if we
feel like doing a stunt where we put three really weird esoteric movies on together
on the same day because it makes sense to us and it will please some people, we
can do it.”

Is FearNet a good business? Block says the channel makes money but would love
to spend more on original programming and promotion. “If we were executing a
different business plan, I might have to say to you, ‘No, we’re not making money,
but we have all these shows and all this great advertising,’” he says. “I don’t know
which story is better, but our owners certainly like it the way we’re doing it.”

Meanwhile, a new programming block is on the way. And Block is also hopeful
that with the advent of dynamic ad insertion, VOD advertising will become a more
meaningful revenue stream. Until then,
he says, FearNet will continue to underpromise
and over-deliver.

FearNet’s current advertiser base consists
mainly of companies in the motion
picture, DVD and video game businesses.
Video game company Capcom,
which makes Resident Evil, is both sponsoring
FearNet’s presence at Comic-Con,
and making a big linear buy as well. But
Block says media buyers and advertisers
can’t seem to grasp the fact that FearNet
viewers also “drink soda, drive cars and
wear clothes.”

Horror is a popular television genre.
Faye Walker, the FearNet VP of marketing
who came aboard three months
ago, asked Nielsen to look at horror
programming and found that 91 million
people tuned in to shows in the genre
on broadcast and cable networks this
season including The River, The Walking
, Supernatural, The Vampire Diaries,
Fringe, American Horror Story, True Blood,
Teen Wolf, Grim and Dexter.

“Virtually every major broadcaster and every cable channel is catering to our
audience right now,” Walker says. “The audience wants this entertainment and as
we gain in distribution, they’re there. They’re very vocally there with us right now.”
And not only are they vocal, they’re also well connected via social media; for fans,
the horror genre can be a lifestyle, Walker adds.

“They’re very rabid. They congregate at festivals and there’s a lot of conventions
that are in our wheelhouse. They’re just tons and tons of online sites and communities,”
Walker says. “We’re going to be starting a series of digital promotions
and digital campaigns, really aggregating our fan base to Facebook and other social
platforms. And we have the No. 1 genre site, and oh, by the way we’re a linear
channel. So it’s very easy to reach out and touch our audience in a way that I think
most networks can’t.”

Ironically, Comcast, a source of the majority of FearNet’s VOD homes, has
launched the linear network in relatively few homes. FearNet’s current fee for operators
covers VOD, linear and authenticated online services. “Most systems want
both channels,” Block says. “I think you’ll see that gap [between VOD and linear
homes] closing over time.”

Comcast also owns Chiller, which SNL Kagan’s Baine sees as a competitor, even
if Block doesn’t. Baine says Comcast is testing the linear FearNet in Philadelphia
and might be looking to see how it stacks up against Chiller: “If they are viewed
by operators as very similar there isn’t going to be much incentive for an operator
already carrying Chiller to agree to carry FearNet.”

Block says his channel serves horror fans, while Chiller exists to monetize parts
of the NBCU library. “I’d love to have their subscribers,” he says. “I think it’s like
the difference between McDonald’s having ice cream and Häagen-Dazs having ice
cream and I think we’re Haagen-Dazs.”

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