Time Warner Cable Conquers Fear of Video-On-Demand

by: Herb Greenberg

What's taking 'em so long?:That's what I've been wondering with video-on-demand, and why there are woefully few titles available on my Time-Warner Cable (TWC) and why they're so dated (relatively speaking) to actual DVD release times.

The answer has been that movie studios are afraid video-on-demand will hurt DVDs and, therefore, revenue. But a report today by Thomas Weisel analyst Gordon Hodge says that in the wake of tests, executives of Warner Bros told a conference that they're moving closer to releasing video-on-demand at the same time with DVDs. They found in markets where this has been tested, there was a 50% lift in video-on-demand sales, while DVD sales rose by 10%.

No surprise that video-on-demand rose. Ever been to a Blockbuster (BBI) lately looking for a movie on a Friday or Saturday night? (Hint: They're often out. Not so for the nearby Hollywood Video, which always seems to be empty, though well-stocked!) Who needs either when you can flick a switch at home, which we do whenever the skimpy Time-Warner video-on-demand library has a movie we want to see?

According to the Weisel report, Warner says it plans to move to day-and-date release of video-on-demand and DVD in Belgium and Scandinavia. Hodge believe the winners will be studios, including Gaiam (NASDAQ:GAIA), Lion's Gate (NYSE:LGF) and Marvel (MVL). Losers: Netflix (NASDAQ:NFLX) Blockbuster and Movie Gallery (MOVI).