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COO: Time Warner Cable Upping VOD

11 Jun, 2008 By: Erik Gruenwedel

With 30% of its first quarter growth coming from video, Time Warner Cable Inc. is banking that video-on-demand (VOD) will help generate more than incremental revenue.

Speaking at this week's Deutsche Bank Media & Telecommunications Conference in New York, COO Landel Hobbs said to the cable company continued to “aggressively” seek out non-subscribers for its video business.

“It's all about getting our RGU (revenue generating units) yield up,” Hobbs said.

The cable division, which last month was spun off by corporate parent Time Warner Inc., has 14.7 million subscribers, of which 1.4 million do not watch video and 1.2 million are high-speed data only.

In the last quarter, Time Warner cable grew revenue 8% ($309 million) to $4.2 billion, which included 55,000 and 261,000 new basic video and digital video subscribers, respectively.

Hobbs said the company's Start Over service that allows viewers to watch programming in mid-stream, coupled with the placement of targeted ads that cannot be fast-forwarded, has made VOD an evolving technology.

He said the service, which is still being rolled out in select markets, has achieved 93% consumer satisfaction. Time Warner Cable has agreements with 122 channels and features 22,000 programs and movies.

The cable division had 130 million (mostly free) streams in March. Hobbs said the pay-per-view movie business is growing 25% to 30% quarterly.

“We are actually making some money on it,” he said. “Customers like it and are becoming accustomed to it.”

Hobbs said Time Warner Cable was continuing to phase in day-and-date new movies with Warner Home Video, a strategy that would evolve as the economics change.

The COO believed incorporating so-called “dynamic” ads in VOD programming, including movies, would mitigate potential fallout from competing DVD sales.

“We still see VOD as an opportunity,” he said. “It's where we're going in regards to interactive advertising and targeted advertising.”

Hobbs also said Time Warner Cable would double the number of HD channels to 100 in No. 1 market New York by the end of the year.

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