Insight Taps TVN to Pump Up VOD Titles

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Insight Communications Co. is talking with content provider TVN Entertainment Corp. about providing additional content for its video-on-demand offering. It's also getting ready to launch a subscription VOD product by the end of the second quarter.

In a conference call with analysts to discuss fourth-quarter results, executive vice president and chief operating officer Kim Kelly said Insight is in talks and "working out the contracts" with TVN. The deal, in conjunction with current provider In Demand, should boost the number of available VOD titles.

Insight also plans to launch SVOD and is waiting for provider Diva Systems Inc. to implement new Cable Television Laboratories Inc. VOD-encoding standards, expected around April 1, Kelly added.

Unlike some other operators, Insight will not offer its SVOD product at no extra charge, Kelly said.

"SVOD will be a paid-for product," Kelly said. "It's not there to enhance our existing premium customers, it's there as a step-up charge and for us to make money on it since we've already spent money to deploy the technology."

Kelly did not say how much Insight would charge for the service.

Insight has been aggressive in rolling out VOD, making the product available to about 75 percent of its 1.4 million subscribers.

Only 15 percent of those customers are actually using the VOD service, Kelly said, but they are using it frequently.

Insight said VOD buys average about 1 per month per customer. But those who do use it are buying nearly 7 movies a month.

BIG UPSIDE

"We think there is tremendous upside to that product," Kelly said, adding that buy rates of two to three movies per month are achievable as more customers use the product.

Part of the reason for the low percentage of customers using VOD is the limited availability of product. Insight has about 350 titles available, down from about 500 titles at the end of 2000. But if the company reaches a deal with TVN, that number could increase.

For the quarter, Insight reported pro forma revenue growth of 6.1 percent and cash flow growth of 5.2 percent, including about 350,000 subscribers in Illinois that were included in January in its 50-50 partnership with AT&T Broadband.

Not including the Illinois systems, revenue growth was 11.3 percent and operating cash flow was up 7.4 percent.

Insight added about 28,000 digital customers in the period, ending the year with 258,000 digital customers. The product is available to about 89 percent of Insight's 1.4 million subscribers.

Digital penetration is about 22.5 percent, but the company said that should increase to 33 percent by the end of 2001.

High-speed-data additions were down in the quarter — to 3,200, compared to 11,600 in the previous period — mainly because of the bankruptcy of Excite@Home Corp., which limited Insight's ability to market the service and add customers. Insight has since completed the transition of its cable-modem customers to its own proprietary network, InsightBB.

Basic subscriber growth was about 0.4 percent in the quarter. Insight has about 1.4 million subscribers.

Insight also has virtually completed its rebuild, with about 97 percent of customers passed by 750-megahertz, two-way plant.

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