Virtual Video Stores In Bloom

Virtual Video Stores In Bloom
As Time Warner Cable Passes Halfway Mark, Cox Jumps Into Retail Game
By Mike Reynolds 3/26/2007

Time Warner Cable has opened “virtual video stores” in more than half of its 28 divisions and Cox Communications is also jumping into the on-demand retailing of large amounts of movies.
Time Warner Cable has made its “More Movies on Demand” service available to operating units serving Albany and Rochester, N.Y.; Portland, Maine; Raleigh, N.C.; South Carolina; Cincinnati and Northeast; Ohio, Milwaukee and Green Bay, Wis.; Kansas City, Mo.; San Diego; and Austin, Dallas, San Antonio and Waco, Texas, according to senior vice president of on-demand and interactive TV Bob Benya. The expansion comes after Time Warner Cable first began offering hundreds of titles on its Greensboro, N.C., system late last year.
For its part, Cox is offering an array of on-demand library films in systems located in Las Vegas, Cleveland, Oklahoma City and Tulsa, Okla., and Northern Virginia, said director of marketing for new video services Bob Nocera.
Both companies are creating their chains of on-screen video stores through In Demand Networks, an aggregator and distributor of pay programming and events to cable operators.
Video Shops
What’s on real and virtual shelves:
Mail-order service (Netflix): 75,000 titles
Retail store (Blockbuster): 5,000 titles
Virtual store (Time Warner Cable): 1,500 titles
Source: Multichannel News research
In augmenting their movie mix, Time Warner Cable and Cox are not only looking to build up a fresh revenue stream, but create an asset that could differentiate their services from those of satellite and telephone distributors. Over time, the operators can start to compete with video and DVD services such as Blockbuster Entertainment and Netflix.
Time Warner, which previously proffered around 200 or so more recent releases per month, began adding films under the “Family Movies” and “Classic Movies” categories on Dec. 15 in Greensboro. Since then, Benya said, the system has continued to add titles to its Movies on Demand package and is awaiting the delivery of even more films under In Demand’s “Action” channel later this month.
All told, Benya expects Greensboro and the other systems to build toward around 1,500 movies monthly this summer, a base that will continue to grow over time. By comparison, a Blockbuster store has approximately 5,000 titles; Netflix offers a choice of 75,000 titles available through the mail.
In Demand senior vice president of programming Dave Asch said that under the Action umbrella, operators will have access to the first two Mission: Impossible films, the Delta Force and Death Wish franchises, and such movies as Armageddon and Serpico. In Demand will offer “Comedy” and “Thriller” channels later this year.
“We’re selling [the video-store concept] to all of our affiliates and hope to have another operator in the second quarter,” said Asch.
In Greensboro, Time Warner witnessed a 20% gain in overall new video-on-demand users and a 25% increase in unique movies-on-demand buyers. “It’s great to have more people coming into video on demand and into movies. We think we can upsell them to the more current titles,” Benya said.
Time Warner charges $3.95 for recent entries and $1.95 for the library titles, which are sometimes bundled together in themed packages. More important, Greensboro has vaulted from the middle of Time Warner’s system pack to the top three in terms of percentage of monthly buys for movies overall.
“We’ve seen a sharp increase, up about 40%. There has not been any erosion of our feature film business,” he said. “It’s encouraging because we’re not completely loaded up yet in terms of categories and films. There’s still a lot of work to do here.”
Cox just got started a couple of weeks ago. The Atlanta-based operator had been offering 125 to 150 titles per month, which included the addition of multicultural films and the “IFC In Theaters” day-and-date package earlier this year. Thus far, its five participating systems have added 125 library films and will tack on another 75 or so over the next few weeks.
“We want to give our subscribers more reasons not to go to the video store,” Nocera said. “There’s good stuff like the Rocky, Alien and Home Alone franchises.”
The five Cox systems menus now feature “classic movies” designation, with further subset identifiers for action, comedy, drama, family and thriller. These are priced at $1.99, versus $3.95 for new releases and $5.95 for the IFC package. Nocera said the launch of other virtual video stores would be gauged by an analysis of customer satisfaction and usage performance, compared with server space allotments.
“We’re bullish on the service; we don’t expect any erosion for the current titles,” he said.