Encore, HBO Step Up SVOD Plans

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Los Angeles -- Subscription video-on-demand was a hot topic
among cable and direct-broadcast satellite executives last week, as both Starz Encore
Media Group LLC and Home Box Office unveiled plans for the innovative pay TV distribution
service.

Starz Encore will team up with ReplayTV Inc. to create the
service, giving DBS the ability to offer both SVOD for Starz Encore "Super Pak"
subscribers and VOD.

Starz Encore chairman John Sie, speaking at last
week's The Carmel Group DBS 2000 Conference here, said the company has signed a
"letter of intent" with ReplayTV to use the vendor's
personal-video-recorder devices as replacements for digital-cable boxes, to store and
distribute movie programming.

Currently, the ReplayTV boxes can store about 20 hours of
programming, but that is expected to expand to 30 within a few months, ReplayTV executives
said. It's unclear how many movies will be offered via ReplayTV boxes in a given week
or month.

Sie said the development now allows DBS services to
effectively compete with operators to implement SVOD technology, which allows subscribers
to order VOD movies -- with full VCR functionality -- for a monthly fee.

He added that Encore is in discussions with both EchoStar
Communications Corp. and DirecTV Inc. for SVOD implementation.

"I am steadfast in my belief that in order to unlock
the revenue potential of VOD, the subscription-based component must be provided, in
addition to the transactional component, in order to overcome the hurdles that give
consumers pause before buying a pay-per-view movie," Sie said.

"We know that movies have immense consumer appeal when
delivered through a subscription model, whether it's analog, one-way, or two-way
digital technology," he added.

Meanwhile, HBO is moving ahead with its own plans for SVOD
with a service called "HBO On Demand," senior vice president of marketing and
business development Olivia Smashum said last Thursday at the CTAM Digital and PPV
Conference here.

The service plans to offer about 100 titles at any given
time, including a mix of 75 percent original programming and 25 percent theatricals,
Smashum said. The original titles would include family titles, which have a long consumer
shelf life, she added.

Top original hits like The Sopranos will continue to
premiere in a linear fashion, so that the show will still be aired first at 9 p.m.
Sundays, she said.

In HBO research, 90 percent of cable subscribers said they
want VOD and 50 percent said they want HBO On Demand, Smashum reported. She added that 63
percent of current HBO customers said they would buy such a service for $15.95 per month,
and 42 percent of non-HBO customers said they would buy it for the same price.

"We are ready to launch when you are," Smashum
told MSO marketing executives at a panel on retaining digital-cable customers.

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