Time Warner moves ahead on premium on-demand

By Reuters
Posted Sep. 23, 2010 at 1:43 p.m.

Time Warner Inc. could offer premium video-on-demand as early as the first quarter for $20 to $30 per movie in a trial, the company’s CFO said Thursday.

Time Warner is considering making movies available for rent on pay television services shortly after their theatrical release and before their DVD release, Chief Financial Officer John Martin said at a Goldman Sachs investor conference in New York.

Several Hollywood studios are examining similar plans but have remained on the sidelines for fear of hurting box office sales.

Lions Gate Vice Chairman Michael Burns said at the conference that his company would not lead studios in pushing for premium VOD but predicted that studios such as Walt Disney Co. could likely lead the charge next year.

Reuters reported last month that Hollywood studios are getting closer to a deal to make new movies available to distributors, including Time Warner Cable Inc. and DirecTV Group, as early as 30 to 60 days after theatrical debuts for a premium price.

Martin also played down fears that Netflix’s rising power could lead viewers to cancel subscriptions to cable networks such as Time Warner’s HBO and pay TV.

Netflix’s popularity has soared since it began offering an online service that lets viewers stream movies and TV shows over the Internet and watched on television sets.

“I do think it’s a little bit overblown,” Martin said. “To the extent Netflix becomes a direct competitor, we are paying very close attention to how the competitive landscape is going to evolve.”

Last week, Credit Suisse analysts downgraded the U.S. entertainment sector to “underweight” on concerns that streaming video offers from Netflix, Apple TV and Google TV could catch on with consumers eager to cut the cable chord.

In the report, analysts estimated that 17 percent of Netflix subscribers have dropped cable.

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