Originally created 05/04/01

Time Warner to offer video on demand



The digital revolution will make it even easier to be a couch potato. Soon you won't even have to get off the couch to go to the video store.

Coming this year: video on demand. The technology permits viewers to rent movies from their own living rooms. This is quite unlike traditional pay-per-view services. With VOD the movie is instantly available and you have full VCR functions - pause, rewind, fast forward.

Video on demand, now in about 10 percent of the nation, will be offered in late spring in many parts of the country.

Time Warner will march out VOD in late summer.

Many think consumers will find the service one of the biggest innovations yet in cable's digital revolution.

"The nice thing about it is we are never out of a movie. Everybody can rent the movie and everyone can have control over the movie," said Jim Stewart, senior vice president of operations for Insight Communications, a cable company in Kentucky. "And the best part is you don't have to worry about late fees. At midnight we'll 'pick up' the movie.

All the VOD services will work essentially the same. Subscribers will be able to rent a video through their cable system and pay a rental fee comparable to a video store rental. The show will be available for at least 24 hours, even though you don't possess the tape. Software for the system is built into the digital cable boxes, and no extra equipment is needed.

Cable companies will offer different packages and consumers can keep different accounts for each family member. Viewers can also see the movie's trailer before they decide to rent it.

It's also suspected that some cable network shows will be available. For example, you could rent the latest episode of the "Sopranos."

The technology for VOD has been in place for a couple of years. What's holding it up is copyright issues.

"From the technology perspective we have everything in place to roll this product out right now. It's just a matter of getting the contracts for the product," said Time Warner spokeswoman Jennifer Mooney.

Also, the studios are still trying to come up with a standard technology to prevent home taping, presumably far more convenient since only one VCR is needed.

"My understanding is the studios are working on a technology that would copy-protect their films to a degree. Their concern is this would be a digital quality print and they certainly have concern about that getting in the marketplace," Stewart said.

Ms. Mooney envisions a virtual library of hundreds of titles, including the latest video movie releases, classic films and an extensive children's selection.

While the service could conceiveably hit video stores hard, movie companies are expected to soften the blow because of cozy deals they have with the video store industry. It's expected that VOD releases will still lag a couple of weeks behind releases to stores, but a few weeks ahead of releases to traditional pay-per-view services.

Still, Blockbuster is one business that's already seen the writing on the wall. It's launched an effort to become a movie provider for VOD services.

To receive VOD, cable customers will need to upgrade to a digital tier, already the fastest-growing cable service. (That can cost $5-$20 more a month on top of your regular cable bill.) But once at the digital tier there's no monthly fee for VOD service and rentals will range from $1 to $3.99.

VOD is just one service made possible by the revolution in what the industry calls broadband, which allows the delivery of almost an infinite amount of information and channels. The groundwork has been laid by the upgrades in coaxial cable and other digital improvements that cable and satellite companies have been developing for several years now.

Time Warner and other companies have been pushing their new digital tier that includes up to 200 channels, plus exotic on-screen TV guides. Subscribers have found all sorts of additional fringe cable channels ranging from Tech TV and Noggin' to all-Western or all-romance movie channels, plus several subchannels for HBO and Showtime subscribers.

Many industry watchers think the convenience of video on the demand is what will really drive customers to upgrade to the digital tiers. Already, Ms. Mooney said, 80,000 customers subscribe to the digital tier out of 330,000 that Time Warner serves.

The industry is still feeling its way as to what kind of information and programming customers will want.

Cable companies like to push the digital service by saying the goal is to provide "control, choice and convenience." But it's also a case where consumers may be overwhelmed with more than 200 music and video channels.