SFA CEO:
today operators must choose between two alternatives: whether to go interactive now or later. We offer our customers the ability to upgrade their networks today, before direct satellite takes advantage of their recently acquired expanded capabilities.
Now I will update you on our progress with digital deployments.
Initial subscriber reaction in areas where commercial deployments have begun has been very positive. The data to this point is early, but very upbeat. Customers like the video scaling function which allows them to use the interactive program guide while continuing to watch a movie in a window on the screen. They appreciate the speed of the interactive program guide and the brilliant graphics which are related to the speed of the processor we use and our 16-bit graphics. Our customers like the marketing data that is generated automatically as subscribers use the system. One customer told us that the interactive program guide and movies are so popular that it is not uncommon for subscribers who have one or two analog boxes to say they would like one Explorer 2000 and then call back within a day or two for a second box for their other TV. In one major system, the take rate was more than 80% where the Explorer was marketed to existing analog subscribers. Early market data currently available suggests that digital services will initially increase overall TV viewing by 10% and that results in $18 per month of incremental spending from the digital tier, additional premiums and higher pay-per-view buy rates.
We have shipped 63 systems to MSO customer sites and an additional 22 to customer labs, partners and applications developers. Thirty-three systems have been completely installed at customer locations. We anticipate installing another 30 to 40 systems this quarter.
Eight systems have begun commercial deployments to paying subscribers. Some of you who attended the Western Show in Anaheim CA last month had an opportunity to visit the Cox Communications system in San Diego, which began their commercial launch yesterday. As you will recall, this site has 490,000 subscribers. They launched Phoenix, last month. That's their largest system, with 580,000 subscribers and the fifth largest in the country. Their next launch is scheduled for Oklahoma City.
On Monday, Adelphia announced Tom's River, New Jersey, their second system launch. Buffalo was launched in December. They plan to launch several more systems by mid-February and additional systems in March.
In total, we have shipped more than 207,000 digital interactive set-tops. At the start of the fiscal year we estimated we would ship 400,000 to 500,000 digital interactive set-tops this fiscal year, of which we have shipped more than 180,000 year to date. We expect the digital rampup to continue to accelerate in the second half of the fiscal year.
I hope you saw the announcement on January 7 that Time Warner Cable took delivery of 100,000 Explorer 2000 digital set-tops in preparation for launches in multiple systems early this year.
Even more important, was the announcement of the Time Warner purchase of 32 Scientific-Atlanta digital network systems, so far. This is a major step towards Time-Warner's national rollout of their Pegasus real-time digital network and constitutes an unprecedented rollout of product for our industry. These systems represent about 70% of all Time-Warner subscribers.
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