DirecTV To Test Starz on Demand

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DirecTV Inc. Thursday announced plans for a six-month test of subscription video-on-demand with premium movie supplier Starz Encore LLC.

Starting this
summer, the SVOD service will be available to any subscriber who takes the Starz
Super Pak and the TiVo Inc. digital video recording service from DirecTV.

SVOD over a DVR device is direct-broadcast satellite's competitive response
to server-based SVOD programming packages from digital cable providers. Because
DBS customers invest in the set-top box technology themselves, it's somewhat
less expensive for DBS to deploy SVOD, DirecTV senior vice president of advanced
products and new media Brad Beale said.

He added that unlike cable, which must invest in storage at each system's
head-end, DBS doesn't have to invest in plant upgrades to deploy SVOD.

DirecTV subscribers would have to opt in to the SVOD service, Beale said. He
anticipates that at least 5 Starz movies would be available on demand at any
given time, although storage is dependent in part on how much other programming
a consumer actively requests from the TiVo service. TiVo set-top boxes in the
field typically have a minimum of 35 hours of available hard drive storage.

TiVo subscribers can already access VOD-like functionality, including pause
and rewind, from content they've chosen to store on their hard drives. Starz
chairman John Sie said the Starz on Demand service gives consumers an added
advantage because the programmer's rights allow it to introduce movies on SVOD
before they're available on the linear schedule.

Sie predicted that by 2004 or 2005, consumer hard drives would be available
with 400 hours of storage, allowing for more robust SVOD offerings over
time.

After the test is over, DirecTV will evaluate future plans for SVOD over hard
drives, Beale said, adding that the company could add other premium programmers
like Home Box Office and Showtime Networks Inc. to the line-up, as well as basic
cable networks like Discovery Channel.

In the future, SVOD services may be delivered to operator-controlled portions
of a DVR's hard drive, Beale said. But in the tests, the Starz on Demand content
will fall in priority under the consumer-requested content, but above the 'TiVo
Suggests' content that the service records using information gleaned from past
viewing habits. If a viewer reaches the 35-hour limit with personally requested
recordings, for example, there might be no room for the Starz SVOD content, even
if a subscriber opts in for the service.

DirecTV plans to promote participation in the SVOD test through the TiVo user
interface and other tactics, which may include direct mail, Beale said.

Sie and Beale both said they expect the SVOD service to help boost customer
retention for the premium movie service.

While Sie said it's ultimately up to cable and DBS providers to decide their
pricing and packaging strategies for Starz on Demand, he added that he would
prefer they bundle SVOD in with the monthly premium subscription cost.

Starz has held talks with EchoStar Communications Corp. regarding SVOD but
has not reached an agreement yet, Sie said.

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