Veering from what many industry executives anticipated would be an
incremental, fee-based model, Adelphia Communications Corp. will offer
subscription-video-on-demand services on a premium basis in two markets.
The MSO's decision to offer SVOD services from Home Box Office, Starz Encore
Group LLC and Showtime Networks Inc. as part of the programmers' respective
premium packages -- and without an additional fee -- has some premium-channel
executives concerned that a precedent may be set.
Adelphia vice president of finance Jim Brown said the MSO would roll out VOD
service in Cleveland and western Pennsylvania during June. He added that the
company has inked SVOD arrangements with HBO, Starz and Showtime.
Adelphia is the first MSO to officially announce plans for SVOD services that
would allow operators to offer movies that debut within their premium windows on
a VOD basis.
Many industry executives had eyed a SVOD revenue model in which subscribers
would pay an extra $3 to $6 per month to access movies, complete with
fast-forward, stop and rewind capabilities.
But in an effort to stem subscriber churn, Adelphia will offer SVOD as a part
of its overall premium packages, rather than charging separately for the
'We're pretty good at selling HBO, but we're poor at retaining those
customers,' Brown said during an investors' conference. '[SVOD] will help in the
retention of these subscribers.'
Executives at the premium networks were careful not to criticize Adelphia's
approach, saying several models must be explored before determining the right
course of action for the new technology.
But the networks had planned to charge some type of subscription fee, for no
other reason than to cover technological costs associated with setting up and
maintaining the service.