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Time Warner's VOD in L.A.: It's Like FSN, Only Cheaper

For Tom Feige, Time Warner Cable's big video-on-demand rollout has a certain déjà vu quality — in a good way.

His 350,000-subscriber Los Angeles division launched VOD this summer, backed by one of the largest libraries to date. It contains recent theatrical hits and library titles from six Hollywood movie studios, premium subscription VOD from Home Box Office and Showtime, and free on-demand content from nine cable networks.

The architecture also broke new ground by using highly centralized server storage from nCUBE Corp. Each of division president Feige's three systems — in the West Valley, Garden Grove and the South Bay —boasts a capacity of up to 4,200 streams, as well as 3,400 hours of storage.

But architectural and content challenges are nothing new for Feige. Eight years ago, he was Time Warner's system manager in Orlando, Fla., and oversaw the launch of the MSO's much-vaunted Full Service Network.

Although FSN ended up as a costly research project — a model system that was never reproduced — what Time Warner learned in Orlando was fed into the production of today's more economically sound VOD deployments.

"What we pioneered is finally being rolled out today," Feige said. "The technology and what we're doing is every similar on what was developed at FSN overall. It's thrilling to finally see it."

The main differences: Capital costs have declined dramatically, while TWC's Interactive Services Architecture (see story on page 12B) has made interoperability much easier.

Add in digital video recording technology — which didn't exist eight years ago — and "together they are a very potent force, and it's huge convenience for the customer," said Feige.

Plant stats

Digital cable has penetrated 40 percent of TWC's 350,000 subscribers in the division. The West Valley system covers San Fernando and Santa Clarita. Its Los Angeles portion encompasses Torrance, Gardena, Lawndale and Hawthorne.

In Orange County (home to Anaheim, site of next week's Western Show), Time Warner serves Garden Grove, Huntington Beach and Cypress. Combined, the MSO maintains about 4,800 Southern California plant miles.

Vice president of engineering Jose Leon said the division completed a rebuild in 2001, save for a small portion of Garden Grove that was completed this year. The end of that work coincided with a drop in transport costs that allowed the division to implement a centralized server architecture.

For nCUBE, the chosen vendor, it represented an important victory for its technology in a space largely occupied by SeaChange International Inc. and Concurrent Computer Corp.

The move was a natural for Feige, a veteran of software challenges in Orlando. The use of nCUBE's centralized storage system made it easier to propagate content to remote hubs, Feige said.

"That issue [of propagating content] is huge and can be a real problem from a software perspective," he said.

The West Valley server distributes content to nine hub sites, each of which passes 20,000 homes, Leon said. The server can propagate 4,200 simultaneous streams and has 3,400 hours of storage capacity.

The Garden Grove/Orange server can send out 2,900 streams and has 2,400 hours of storage.

The server in the South Bay/Torrance system has capacity for 1,880 streams and 1,600 hours of storage. The system is built to handle a 6 percent rate of simultaneous usage.

TWC uses asynchronous serial interface transport from Synchronous Inc., now a division of Motorola Inc.'s Broadband Communications Sector, to send content from the nCUBE server to the Scientific-Atlanta Inc. quadrature amplitude modulation devices inside the system's S-A headends.

"We're using wave-division multiplexing with 16 wavelengths on one fiber," Leon said. "We have a lot of fiber in our backbone."

Set-top data

Time Warner uses set-tops from Scientific-Atlanta Inc. and Pioneer Electronics (U.S.) Inc. in the market, and plans to soon introduce a box from Pace Micro Technologies plc.

S-A's Explorer 2000 has been supplemented by the Explorer 3150 and boxes from Pioneer's 3000 series.

The L.A. system also is deploying S-A's HDTV set-top for an eight-channel high-definition service, and plans to add a Pioneer box with a built-in DVR next year.

TWC uses S-A's Passport interactive programming guide for both its linear-network and VOD lineup. Like other Time Warner divisions, the Los Angeles unit uses catchers from N2 Broadband to receive VOD content.

One catcher is used for content from In Demand LLC; the others catch content from California Video Corp., the Warner Bros. subsidiary that distributes the four premium networks' SVOD content, as well as the system's free on-demand content.

Server, transport and even catcher capacity "can be layered on fairly easily as needed," Feige said.

Added Leon: "We could build on more n4 cubes."

Likewise, adding ASI transport is fairly uncomplicated, he said. The current lineup of N2 catchers is also sufficient to capture more content, since its delivery can be scheduled during current off-hours.

"We don't think we've overbuilt capacity," Feige said. "The big dollars have already been spent. The incremental cost is relatively low."

The content

Pay-per-view programmer In Demand LLC supplies theatrical films, library movies and adult content. Hit films, priced at $3.95 apiece, include offerings from Warner Bros., Walt Disney Pictures, Metro-Goldwyn-Mayer Inc., New Line Cinema, Sony Pictures Entertainment, Universal Pictures and Twentieth Century-Fox Film Corp. Only Paramount Pictures Corp. is missing.

Time Warner carries about 50 hours each of library and adult content. Library titles are priced at $1.95 and adult at $8.95.

SVOD services from HBO, Cinemax, Showtime and The Movie Channel are also available for a $6.95 a month "gateway" price. A dual HBO/Showtime subscriber, for instance, could receive the on-demand content from both services for the same $6.95 fee, Feige said.

"We signed up 3,000 the first month and haven't promoted it yet," Feige said of the SVOD service. What's more, 90 percent of those users were self-provisioned.

"The 90 percent kind of blew me away," Feige said. "These are the early-adopter kind of folks."

One reason for the success, Feige said: "The user interface is easy and clear."

The free on-demand content includes programming from Scripps Networks channels Do It Yourself, Home & Garden Television and Food Network; BBC America; AOL Time Warner Inc.'s Cartoon Network and Cable News Network; Comedy Central; Golf Channel; music videos from Warner Music Group and local public-affairs programming.

Feige said his experience with the FSN backs up the notion that free on-demand content is necessary in helping consumers use VOD to its fullest, because such fare allows consumers to test the service.

"They want to see the value first," he said.

FOD can also help digital retention rates, in Feige's view. "It's smarter to offer it from this perspective," he said.

And what if consumers clamor for Starz, MTV: Music Television, Discovery Channel or ESPN on-demand, since other premium and basic network content appears on the platform? That's a problem Feige would like to have.

"If we start getting those kinds of requests, that would show the tremendous acceptance and acceleration for VOD. Our job is to provide the best service for the customer."

All the VOD content begins on channel 1,000, said system vice president of marketing John Trierweiler. Subscribers are just two clicks away from ordering hit movies when they are on the VOD barker channel, he said.

Hit 'channels'

On-demand movies are subdivided by genre, but popular films — like the Warner Bros. Harry Potter
series — may be assigned their own "channel." In Demand decides which movies are popular enough to command their own channel while in the VOD window, said Trierweiler.

The premium SVOD services then follow sequentially in the channel lineup. And each free on-demand service — whether it's from DIY or BBC America — also gets its own "channel."

"VOD can be extremely technical," Trierweiler said, so TWC "wanted to make it very simple" in its early marketing message.

"We tried to create awareness by trying to describe in a simple fashion as possible," he said, using radio, billboards, cross-channel [spots] and direct mail to explain the ordering and VCR functions.

What's ahead is more content from traditional providers, plus potential local and DVD-type content, Feige said. He could have added another coming attraction: realizing the business upside that VOD presented all those years ago in Orlando.