Wednesday, June 24, 2015, 10:45 AM ET|Posted by Will Richmond
With talk of cord-cutting everywhere these days, independent ad-supported cable TV network Tennis Channel is showing early signs of success with a compelling new model in which linear, TV Everywhere and OTT converge to super-serve audiences and reinforce the value of sports on pay-TV.
At the 2014 French Open, Tennis Channel launched "Tennis Channel Plus" which runs $12/month or $80/year. Tennis Channel Plus now provides access to over 650 live events per year and over 1,000 hours of on-demand viewing. This means Tennis Channel adds broader coverage of tournaments it already broadcasts on linear, plus streaming of tournaments it hasn't previously covered.
According to Adam Ware, the network's Head of Digital, 15 months post-launch, Tennis Channel Plus is already in month 48 of its revenue forecast and month 30 of its profit forecast. Twenty percent of new subscribers came in during the '14 French Open (when it was the second-highest grossing iPad app, after MLB), with the other 80% consistently added monthly since then.
Importantly, TC Plus runs in the same app as Tennis Channel's authenticated TV Everywhere app "Tennis Channel Everywhere," rather than prompting a second download. Both are available on iOS, Android, Apple TV and Roku devices. The all-in-one approach provides not only a seamless viewer experience, but also a powerful way for Tennis Channel to promote TC Plus to TC Everywhere app users.
Nonetheless, TC Plus still gains 70% of its subscribers from on-air promotions on its linear network. But, at a time when networks like CBS, HBO and Showtime are unnerving pay-TV operators by offering standalone OTT services that potentially undermine the traditional pay-TV model, Tennis Channel has gone to great lengths to use TC Plus as relationship-builder with pay-TV operators. It is clearly positioned as an augment, not a replacement, for the linear network that's part of the multichannel bundle.
In fact, Tennis Channel is actually providing a percentage of TC Plus's profits back to the operator once a certain penetration rate of TC Everywhere users is hit. Adam explained that the financial incentive is a way for Tennis Channel to tangibly demonstrate to pay-TV operators it has no intention to use TC Plus to go around them.
Adam said that yet another critical decision Tennis Channel made was to select NeuLion to power TC Plus (as well as TC Everywhere). The decision was based on the rationale that it would be too expensive and time-consuming to license an online video platform and integrate the various pieces required. NeuLion's demonstrated capabilities with live events and other sports rights-holders/networks were also important. TC Plus went live just 3 months after it was greenlit. Earlier this week Tennis Channel announced a multi-year renewal with NeuLion.
With its converged TV Everywhere - OTT model gaining momentum and data gleaned from its direct-to-consumer relationships, Tennis Channel is now thinking about additional services it might layer on, such as instructional videos. Tennis Channel's experience shows that online video delivery is not just a zero sum game where SVOD services potentially lead to cord-cutting. Rather, it can enable new, converged services that reinforce the value of existing ones too.