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Time Warner Cable to Top 1B VOD Streams in 2007

17 Sep, 2007 By: Erik Gruenwedel

Time Warner Cable Inc. continues to rev up its video-on-demand (VOD) offerings, including ongoing tests with same-day DVD releases of major studio movies.

Time Warner Cable and Comcast Corp. have been aggressively testing in Denver, Pittsburgh and Atlanta releasing major studio fare on VOD rental the same day as DVD.

TWC did about 126 million VOD streams in July and expects to exceed 1 billion streams in 2007. The company expects to generate $400 million in VOD revenue this year.

“We are seeing a huge uptake on our side and virtually no impact on [sellthrough],” Landel Hobbs, COO of Time Warner Cable, told analysts Sept. 17 at Merrill Lynch's Media & Entertainment conference in New York. “On some of our early tests we saw a 500% increase in VOD buy rates.”

To help implement same-day VOD/DVD releases, Time Warner is updating its user menu for streaming movies. Its so-called Maestro Navigator would allow users easier access to movies, scene selections, special features, payment options, etc.

Library titles will sell for $1.95 per stream, with newer movies starting at $3.95, according to Hobbs.

The New York-based unit of Time Warner Inc. reached 26.3 million homes, or 14.7 million subscribers (ended June 30), including 1.8 million in Los Angeles and 1.4 million in New York.

The company said 7.7 million of its subscribers utilize digital video, including VOD and pay-per view, which generated $13.4 million, or 24% of TWC's second quarter revenues. The service said it generates more than $1,000 in revenue per subscriber per year.

“We are making a lot of money on digital video,” Hobbs said. “This is an important part of our revenue.”

The COO said 2.3 million of its subscribers own an HDTV, which represents more than 30% market penetration. More than 2.9 million (37.8%) of its subscribers pay for digital video recording capability.

“We take a $7-to-$8 incremental service charge per DVR, so there is a great return on this product,” Hobbs said. “We are actually starting to make real money in this area and the consumer likes it,” Hobbs said.

He continued to extol the Time Warner's Enhanced TV platform, which enables consumers to watch ad-supported movies and TV programming, clips and previews and trailers on-demand.

“Consumers have told us they don't mind the ads if we give the convenience of [on-demand],” he said.

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