PPV Execs: Digital PPV Can Work

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Los Angeles -- More than 870 pay-per-view and marketing
executives attending last week's CTAM Digital and PPV Conference here heard what they
have wanted to hear for years -- PPV can work in a multiplexed, digital environment.

For the first time, cable operators were able to confirm,
though early results from Cox Communications Inc.'s digital tests, that PPV buy-rates
will increase significantly if more choice and flexibility is offered to subscribers.

Cox's combined digitally compressed system, which
provides more than 38 digital PPV channels, is generating five times as many buys in
digital households than in analog households, said Joe Rooney, executive director,
marketing, sales and programming for Cox.

Further, digital subscribers are ordering PPV movies and
events three times as much as analog subscribers.

The MSO, which has a 3 percent digital-penetration rate, is
getting triple-digit buy-rates from former analog PPV users who have switched to digital,
while getting more than 80 percent of analog nonusers of PPV to try it in a digital
environment.

While Rooney admitted that the numbers are based on early
adopters of digital, or "digital truck-chasers," he termed the results
"positive" both for Cox and for the industry.

Doug Sesserman, vice president of marketing for
Tele-Communications Inc.'s TCI Digital TV Inc., said the industry should aggressively
market digital to PPV users and multipay households. The message, however, should be
thorough, so that consumers know how to use the product once it's in the house,
Sesserman added.

While the mood among attendees about PPV's future was
upbeat, Holly Leff, vice president of worldwide PPV sales for Universal Studios, warned
operators that the business needs to change if Hollywood is to continue supporting digital
PPV.

Although the progress and performance of digital PPV was
encouraging, Leff warned that studios could extend PPV windows, or even pull their movie
product in the near future, if the industry does not unilaterally conform to the highest
signal-quality standards and initiate some form of anti-copying technology for its movies.

"We have these concerns in the analog world, but it
becomes a much greater concern [with digital-quality signals], and PPV windows could be
greatly affected if things don't change," Leff said.

Operators should integrate cable service with the Internet
and other media to provide a better-branded, more complete entertainment package for
consumers, said Christie Hefner, chairman and CEO of Playboy Enterprises Inc. and the
conference's keynote speaker.

She added that integration could also help operators to
generate additional ad-sales revenue by providing more consumer-specific services.

"Your challenge is to create your vision of being the
pre-eminent supplier of entertainment and content into homes," Hefner said.
"[Cable is] especially well-positioned for that because of the infrastructure that
you have, because of where technology is going and [because of the industry's] real
commitment to being ahead of the wave of where the new technology can take us."

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