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Time Warner Exec.: Streaming Hurting TV DVD

17 Nov, 2010 By: Erik Gruenwedel

The ongoing proliferation of digital platforms offering repurposed content streamed to PCs, portable media devices and televisions is negatively impacting disc sales, a Time Warner executive said.

Speaking Nov. 17 at an investor event in New York, Doug Shapiro, SVP of investor relations, said the advent of online websites offering repurposed episodic TV programming is having a direct effect on TV DVD sales.

He said data indicated that programs with at least five episodes offered on Hulu suffered significantly at the retail level.

“That’s why we don’t make our content available that way,” Shapiro said, adding it was too early to determine the impact Hulu and other repurposed sites were having on TV syndication.

“We are very mindful of the risks of overexposure for these shows,” he said.

Indeed, Time Warner has aggressively sought to isolate its movie and TV content from what it considers lower-margin distribution channels emerging on the Internet and retail level. Warner Home Video was first studio to enact a 28-day window around kiosks and by-mail subscription services for its new release movies. It is now contemplating extending that window.

Shapiro said data show that sellthrough of windowed packaged media is up 10% to 15%, and 20% to 25% for transactional video-on-demand (VOD), compared with non-windowed content.

“It has been a success,” he said.

If there was any question where Time Warner stands on the issue of physical and digital media, it was put to rest by CFO John Martin, who reiterated the company’s resolve to drive the entire entertainment industry digital.

“Digital clearly enhances convenience, control and enhances the overall consumer experience,” Martin told a separate investor group in Spain.

He said creation of a cloud-based media storage system for consumer downloads and the rollout next year of premium VOD represented steps designed to harness the potential of digital distribution while maintaining control.

“It has to be approached in the right way,” Martin said.

He said the home video business continues to undergo a massive transition from physical to digital – a shift he said Time Warner is seeking to exploit.

“That’s a tricky place to be, but digital distribution transition is not happening to us … we are aggressively moving the industry in a direction where there are higher margin characteristics for the studios,” Martin said.

He said that over time, digital will prove to offer more opportunities than risks – underscored by a shift from digital sellthrough to rental.

“It’s not convenient [right now] to own digital content and move from device to device,” Martin said.


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