Time Warner Stocks VOD Shelves

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Time Warner Cable began stocking a virtual video store in the Greensboro, N.C., market Friday, and it could begin rolling out a “chain of outlets” next year.

Working with In Demand Networks, Time Warner Friday introduced More Movies on Demand in Greensboro. The service could house close to 2,000 titles by the middle of next year, and the nation’s No. 2 cable operator has an eye on outfitting a number of other its divisions throughout 2007 with the expanded title base.

At that level, Time Warner could compete more closely with traditional video outlets like Blockbuster and widen its competitive advantage over direct-broadcast satellite providers in the on-demand arena.

In Demand senior vice president of programming David Asch said other cable-operator affiliates will likely open their own virtual video stores, as well, beginning in the first half of 2007.

Supplementing the 200 or so recent movie releases the cable operator typically offers to its subscribers on-demand, the More Movies on Demand program added 400 incremental titles under the Family Movies and Classic Movies headings Friday, according to Bob Benya, senior VP of on-demand and interactive TV for Time Warner Cable.

Whereas current releases cost $3.95 per film, most of the additional titles will be priced at $1.95, with special themed movies going for 99 cents, as a means to stimulate impulse sales. Among the available titles: Ice Age, The Fast and the Furious, Dr. Zhivago and The Amityville Horror, plus the Rocky and Die Hard franchises.

Beginning in February, Time Warner Greensboro will then add approximately 200 more library titles per month through June, opening up new channel designations like drama, comedy or action. In the process, the operator’s movies-on-demand inventory will climb at that stage to somewhere between 1,800-1,900 films, Benya said.

“This is ultimately the vision the industry had for pay-per-view 10 years ago, to have a video store at its fingertips that it could offer to subscribers,” said Bruce Leichtman, principal of Leichtman Research Group. “With 2,000 titles, there is for all intents and purposes virtual parity with the bigger chains, and Time Warner would have more movies than many of the smaller video chains and independents.”

Asch distanced More Movies on Demand from comparisons with Netflix, which, he said, conceptually has “no limits” to the number of titles it can offer because it doesn’t have to concern itself with storage issues. Calling it “exponential expansion,” Asch noted that operators could have more titles at their disposal than some brick-and-mortar video-store competitors

Benya, although declining to specify where the service would roll out next, said it’s not a matter of other Time Warner units assessing Greensboro’s performance before opening up their own More Movies on Demand service. “A bunch of other divisions have already raised their hand,” he added.

And Time Warner doesn’t figure to be alone in this platform pursuit. Asch said the content aggregator has “spoken with several other operators” about helping them to open their own versions of the virtual video stores, which, he added, can be done in “a very scalable way,” depending on a carrier’s server space. “The product will be available, and we expect to see more traction in the first and second quarters,” he said.

In Demand is owned by companies tied to its cable affiliates: Comcast In Demand Holdings, Cox Communications Holdings and the Time Warner Entertainment-Advance/Newhouse partnership.

Asch said In Demand had been ramping up for the initiative for about three months after Time Warner gave the official go-ahead. Added Benya: “Once we decided to lock and load, it was a 90-day process.”

In Demand is handling the rights negotiations, encoding and packaging of the titles, as well as the “pitching” of the movies -- the uplink to the satellites. From there, Time Warner’s headends serve as “the catcher” for the films.

Asch said In Demand garnered the additional titles from such studios as Universal Studios, Paramount Pictures, 20th Century Fox, Metro-Goldwyn-Mayer and Lionsgate, via extensions of their extant deals.

New Line and Warner Bros. are slated to come on board next month. “And we’re in conversations with everybody else,” he added. “The studios are eager to get involved because these are incremental dollars to them.”

While Leichtman believes More Movies on Demand holds significant promise for cable, it’s not a panacea.

“The long tail here gives you a video store, and that sounds good, but [cable] is still at disadvantage in terms of windowing compared to the traditional video store because 50% or more of the video business comes from new releases,” he said.

He also emphasized that having significantly more product by itself doesn’t represent an advantage. “There are opportunities, but challenges, as well. You need to market these titles, be loud about letting subscribers know they’re available. You also need an elegant navigator. In many Time Warner systems, each movie is a channel onto itself. That’s obviously not going to work now.”

Benya said Time Warner’s plans call for an express menu in which viewers could pull up a mini review of a film while they were watching television. From there, they could go directly to the “aisle” of the store. Rich media -- manifesting in the form of text, box art and the ability to view trailers -- would also be in play when a new navigator debuts next year.

Benya didn’t provide a time frame for the new guide, saying only that the company is planning an extensive rollout sometime in 2007.

In the meantime, Benya said, Time Warner is trumpeting the grand opening of More Movies on Demand with a multiplatform campaign, including TV, print, online and “cable efficiencies,” plus an on-the-floor presence at payment centers and mentions in the operator’s monthly VOD magazine. In Demand will also provide its own marketing materials and ongoing support.

In Demand and Time Warner will also work toward developing creative characterizations for subgenres under broader channel designations. For instance, where Asch said video stores have an action aisle, More Movies on Demand could get more specific with identifiers such as “chases” and/or “heists.” “You want to give subscribers another incentive to take a look,” he added.

There will also be patterned plays: Subscribers could rent all of the Die Hard films or the entire Rocky franchise.

Benya said “the low price points would provide great value to our customers and give them more reasons not to gas up the car and drive to the video store.”

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