Time Warner Cable has a new deal to market Road Runner high-speed Internet service in Circuit City stores, and is working on an agreement to pitch digital-cable packages through the national retailer.
Under the strategy, which began April 1, Time Warner has set up Road Runner kiosks at Circuit City stores in the MSO’s 27-state footprint, where shoppers can surf the Internet through a live Road Runner connection and order the service.
Circuit City, which collects a cash bounty for each Road Runner customer it signs up, has similar agreements with Cox Communications Inc., Adelphia Communications Corp., Charter Communications Inc., Comcast Corp. and Cablevision Systems Corp.
Time Warner Cable vice president of sales-channel development Charles Haugabrook said the MSO hired a contractor to send staffers into Circuit City stores to help market Road Runner, and Time Warner might eventually place employees in the stores to help drive sales.
Haugabrook said that Time Warner is also talking to Circuit City about pitching digital-video packages, including HDTV and digital video recorder services, and that Circuit City might allow customers to buy those video services by July 1.
“We’re in deep discussions with them on that,” said Circuit City merchandise manager for digital services John Rowe. “We don’t have a deal done, but we have every intention of doing that this year.”
The biggest challenge for Time Warner and other MSOs might be motivating retailers such as Circuit City to pitch their customers on cable instead of satellite TV. DirecTV has been more lucrative for Circuit City, said Rowe, because in addition to collecting a bounty fee for every customer it signs, the retailer makes money from selling the satellite hardware.
He also said DirecTV’s key retail goal is to acquire customers and get them to sign 12-month programming contracts at Circuit City, while cable’s focus on retail has been on retaining customers and encouraging them to upgrade.
“So if you do the math on that, the value of a customer signing up at retail is greater to DirecTV than it is to digital cable,” Rowe said. “I have not seen any cable company willing to incent retail with the same economics.”
But Rowe emphasized that Circuit City has incentives to sell both satellite and cable services, and wants to cut deals with Time Warner and other MSOs that would allow customers to order video service at retail. “We’re very excited to push cable, but the reality is we want to offer the customer choice,” Rowe said.
He said Circuit City has been running a test with Cox Communications Inc. in which consumers who buy any digital television from Circuit City get one year of free HDTV service from the MSO.