No Choice Left For Near Video-On-Demand
"...the announced merger of TCI and AT&T Corp. had no affect on the decision..."
[A Moment of Silence, Please]
August 17, 1998
Inter@ctive Week via NewsEdge Corporation : Two
days after announcing a service expansion, Your Choice
TV pulled the plug July 31 on its near video-on-demand
service, saying it will cease operations on Aug. 30.
Your Choice TV, a joint venture between Discovery
Communications Inc. and Tele- Communications Inc.,
cited unfavorable market conditions as the reason for
the decision to shutter the service, which had its
commercial launch in Los Angeles in October 1997.
Your Choice TV (www.yctv.com) is the only near
video-on-demand (NVOD) service now in operation.
On July 29, Your Choice announced a service expansion
that boosted the number of channels available for its
NVOD programming from six to eight. Your Choice also
announced that it was consolidating its satellite
broadcasts onto a single transponder on Headend in the
Sky (HITS), the satellite operated by TCI.
"We already had everything in place for the expansion,"
says Julie Lucas, vice president of communication at
Your Choice.
The move has left some industry watchers puzzled.
"This shutdown is very surprising," says Larry
Gerbrandt, senior analyst at Paul Kagan Associates Inc.
"Given that they've been steadily acquiring
programming and that they've improved their position in
HITS, this news is very unexpected. It sounds like their
buy rates were not high enough."
Lucas acknowledges Your Choice suffered from lack of
interest. "There's nobody to blame here except the
marketplace, which at this time really isn't conducive to
this type of business. The simple truth is that right now,
the numbers just don't work. This really was a pretty
straightforward business decision."
Better Days
After its commercial launch, Your Choice TV expanded
into 27 markets, delivering time-shifted cable and
broadcast programming 24 hours per day. The service --
presenting up to 30 different programs each day and
about 100 different programs per week -- drew content
from educational and documentary programs offered by
Discovery Communications' cable networks and other
sources. The service has been available to any local
cable system operator with an upgraded digital plant.
Your Choice TV has carriage deals with most major U.S.
cable system operators, including Cablevision Systems
Corp., Comcast Corp., Cox Communications Inc., Jones
Intercable Inc. and TCI.
"We've been in front of about 1.5 [million] to 2 million
digital-capable homes," says John McCoskey, senior
vice president of operations at Your Choice. "My best
guess would be that, right now, we have a digital
penetration in the range of 7 to 12 percent, which means
maybe 75,000 subscribers."
Just Not Enough
Revenue from these subscribers has not been enough to
offset the cost of programming and distribution, says
Jim Boyles, senior vice president of corporate
communications at Discovery Communications
(www.discovery.com). "The business plan will work one
day -- when digital shelf space is more widely available
for a bandwidth-greedy service like Your Choice TV,"
Boyles says. "But in the short term, current losses make
it unfeasible to continue." Boyles estimates those losses
as being in the tens of millions of dollars.
Your Choice officials downplay the impact of other deals
made by Discovery and TCI (www.tci.com) on the
decision to close down the service. Discovery's new
programming relationship with the CBS network does
not involve reallocating resources from Your Choice,
according to Boyles.
Lucas adds that the announced merger of TCI and
AT&T Corp. had no affect on the decision.
Closing down Your Choice was a "consensus decision"
among the service's partners, says Larae Marsik, a TCI
spokeswoman. "It was based solely on the fact that the
business model is not sustainable in this environment
today."
Part of the marketplace problem is the low early
penetration rates for digital cable services, Marsik says.
Rising programming costs also hurt Your Choice, she
adds.
Not Giving Up On NVOD
Even with the shutdown, Your Choice's backers say
they're not giving up on NVOD services. "The
time-shifting concept itself is viable," Marsik says.
"People want more choice and more control over TV."
"We've already proven the basic proposition that there
is a business here, " Boyles says. "The tests and trials
of Your Choice TV in dozens of markets since 1994 have
shown that access to time-shifted TV shows is an
excellent complement to pay-per-view movies and that
the revenue from NVOD TV shows could equal the
middle range of pay-per-view movie offerings."
Your Choice officials say the service will be relaunched
once market conditions become more favorable.
"Think of Your Choice TV as the Cadillac of the new
digital cable services," Lucas says. "The vehicle itself is
still powerful, but the road conditions are not yet good.
We're just going to park the Cadillac in the garage for a
few years and see what happens."
<<Inter@ctive Week -- 08-14-98>>
[Copyright 1998, Ziff Wire]
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