Coming Soon: Movies on Demand from Time-Warner

Cable subscribers in Tampa, Florida and Austin, Texas will be the first in the nation to get movies whenever they wish. Time Warner, the nation's second-largest cable company, is preparing to roll out video-on-demand to its subscribers in those cities by the end of the year, according to an October 15 report in the Atlanta Journal and Constitution.

Video-on-demand services have long been discussed, in primarily hypothetical terms, by movie fans, technophiles, and cable-industry executives and engineers. Time Warner is the first large cable operator to actually make a go of it. The service will let subscribers order movies whenever they want to see them. Where Time Warner goes, other large cable operators will follow—a wave of imitators is expected if the service has any degree of success.

Video-on-demand as it will be implemented in Tampa and Austin is the result of a marketing experiment Time Warner conducted five years ago with 4000 subscribers in Orlando, Florida, to determine the extent to which people might actually make use of interactive television. The conclusion researchers came to was that the two most desired features are movies on demand and the ordering of food—the latter, presumably, to be consumed while watching the former. Interactive games and shopping for consumer goods online were not nearly as compelling as movies and food, they found.

Without quoting a figure, Time Warner chairman Gerald Levin says he expects a "significant" number of subscribers nationwide by the year 2001. Currently about 13 million people subscribe to the company's cable service. (Now that it has acquired TCI, AT&T is the largest cable operator in the US.) Time-Warner's move to video-on-demand is no mere marketing experiment this time, Levin asserts. "This is not a trial, but a business. We know our future is in video on demand and DVD. This will be the first time we can say that it's real and cost-efficient."

The announcement was made in a press conference in Atlanta, home of Time Warner subsidiary Turner Broadcasting, which has accounted for a substantial portion of the parent company's recent upturn. Time Warner reported a net income of $360 million for the third quarter, or 27 cents a share, exceeding analysts' expectations. The company showed a net loss of $37 million, or 3 cents a share, for the same period a year earlier. AT&T is a passive investor in Time Warner's cable systems, with a 25% stake. Time Warner Entertainment also owns Warner Bros. film and television operations, making the linkage of content and distribution all the easier.