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Technology Stocks : Concurrent Computer (CCUR) -- Ignore unavailable to you. Want to Upgrade?

To: D. K. G. who wrote (17764)	5/8/2002 3:18:38 PM
From: Rock	Read Replies (2) \| Respond to of 21142

On a more upbeat note from the studio camp: From Video Business Magazine... Cable mulls ingredients in VOD formula By Paul Sweeting MAY 8 \| NEW ORLEANS--Having spend $60 billion during the past six years upgrading their systems to offer on-demand programming, cable TV operators are now wrestling with how best to exploit their new interactive capabilities. At the National Cable Show, system operators and program suppliers agreed that some mix of free on-demand programming, subscription on-demand services and pay-per-view is necessary to get the bulk of cable subscribers to switch to the pricey digital service tiers. However, they are divided over what that mix should be, how to divide the revenue and how much control to put in viewers' hands. Also unclear was where movies should fit within the mix of programming and services. The announcement on the eve of the show that Fox would begin making new releases available for VOD through distributor In Demand was seen by cable operators here as a hopeful sign that the studios' long-standing reluctance to license pay-per-view VOD rights is starting to ease. "We've had a lot of challenges with VOD in terms of negotiating splits and windows with the studios and their withholding content, but I think we're at the tail end of that," said Insight Communications president Michael Willner. Studio representatives were not as quick to declare the floodgates open, however. "We will make new movies available on VOD; the question is when the window falls," said Peter Chernin, president of Fox parent company News Corp. "We have to do it without cannibalizing home video." "Video is still a growth business for us," added Disney president and COO Robert Iger. "I think you'll see some experimenting with windows, and we'll see how it develops." Still, cable operators are planning aggressive VOD launches this year. Beginning this summer, AT&T Broadband and Comcast, whose merger is pending before government regulators, will launch VOD service in Philadelphia and several other markets. In the wake of In Demand's deal with Fox, AT&T announced that it was dropping Diva as its VOD distributor and will switch to In Demand. No. 2 cable operator AOL Time Warner also plans several major launches beginning this summer, as does No. 5 operator Insight. As both a major cable operator and the owner of a major studio, AOL Time Warner has a foot on each side of the VOD fence. Asked about VOD's potential to cannibalize home video revenue, incoming AOLTW CEO Richard Parsons took a somewhat different tack than his counterparts at Fox and Disney. "I doubt Blockbuster ever goes away because people's habits don't change that way, but as VOD develops, its growth characteristics will begin to change," Parsons said. "The future is definitely in digital delivery." Studios and cable operators were more in synch on subscription-based VOD for movies. Unlike pay-per-view VOD, all studios have made movies available for SVOD through their pay-TV deals with HBO, Showtime and Starz Encore! For cable operators, SVOD is emerging as an attractive feature for selling subscribers on digital upgrades and premium programming packages. According to Time Warner Cable CEO Glenn Britt, monthly HBO subscribers jumped 10% on Time Warner's system in Columbia, S.C., after the operator began offering its HBO on Demand service. "Perhaps even more significant, the number of pay-TV homes increased by 5% at a time when overall pay-TV subscriptions have not been showing that kind of growth," Britt said. The most divisive issue at the show concerned the introduction of digital video recorder capability, particularly in an on-demand environment. While dedicated DVR devices such as TiVo and ReplayTV have been slow to take off, many cable operators plan to embed DVR capability in the next generation of cable set-top boxes, largely in response to similar moves by DBS providers. However, program suppliers fear that on-demand programming services, coupled with DVR capability, could make it too easy for viewers to avoid the commercials in TV shows, undermining advertisers' willingness to subsidize production costs. "I think it would be a mistake for cable operators to put DVR capability into set-top boxes," said Turner Broadcasting CEO Jamie Kellner. As more broadcast and basic cable programming becomes available on-demand on cable systems following its initial airing, Kellner said, the addition of DVR capability would only encourage viewers to skip a show's premiere and order it later so they could watch it without the commercials. A far better approach, Kellner said, was to build DVR capability into cable head-ends, so that even programs ordered after their initial airing could be served up with commercials. Other program suppliers found even that approach problematic. "The cable VOD systems I've seen have VCR functionality. That makes it less likely that the ads will be viewed than they would be in a live broadcast," Disney's Iger said. "I think that's a very dangerous idea. For this to work, we need to get paid for programming."