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Cablevision Won’t Disable Fast-Forward on RS-DVR

Cablevision Systems Corp. (NYSE: CVC) won't appease programmers and advertisers by disabling the fast-forward function on its new network-based DVR, MSO president and COO Tom Rutledge said today.

"Yes, we do have that option, but we're going to make it work as a consumer product the same as a physical DVR," Rutledge told analysts on Cablevision's first-quarter earnings call.

Rutledge said Cablevision recently launched its Remote Storage-DVR (RS-DVR) to customers in New York City, where it offers service in the Bronx and Brooklyn, allowing subscribers to pause live TV programming when a caller ID message is displayed on their TV screens. The company won't offer full RS-DVR functionality until later this year. (See Cablevision RS-DVR Gets Limited Deployment.)

Some cable operators and networks have disabled the fast-forward functionality in video-on-demand (VoD) programming. Cablevision would have the ability to disable the fast-forward feature in the RS-DVR, which could please some TV networks and advertisers that complain about viewers skipping commercials.

But such a move would likely cause a backlash among customers, and also hurt Cablevision's ability to compete with DVR products marketed by rivals like DirecTV Group Inc. (NYSE: DTV) and Verizon Communications Inc. (NYSE: VZ), which offer DVR receivers that allow fast-forwarding.

And since Cablevision has argued in legal battles with TV networks and studios that the RS-DVR should be protected by the same copyright rules governing VHS players and physical DVRs spawned from the 1984 "Sony Betamax" case, the company's legal stance could be damaged if it disabled the fast-forward function. (See Supremes Stand Clear of RS-DVR Case.)

Looking to avoid more legal skirmishes with programmers, Cablevision plans to store individual copies of each program recorded by a subscriber through the RS-DVR. Rutledge said the storage costs will impact Cablevision's capital expenditures for the RS-DVR, but downplayed how hard it would hit the MSO's bottom line.

"While it slightly raises the cost of the network DVR relative if we didn't have to make individual copies, the storage piece and the copying piece is not the major economic driver of the remote storage DVR feature," Rutledge said. "The main factor is streaming capacity in the network, and that doesn't change whether we make a single copy or not. The overall product is a more efficient product than distributed physical DVRs, and it's a more consumer-friendly product because you don't have to have trucks trips to install it." (See Cablevision Girds for Remote DVRs.)

Turning to other new products, Rutledge said Cablevision plans to begin testing its "PC to TV Media Relay" product in June. It's designed to allow customers with its digital video and high-speed Internet products to watch Web video on a TV using legacy digital set-top boxes. Rutledge said Cablevision expects to launch the product commercially by the end of the year. (See Cablevision Preps Network DVR, WiFi Phone.)

Cablevision is also testing new phone products that would rely on delivering calls through both WiFi and cellular networks. "We've been working with devices that switch back and forth between cellular and WiFi, and there's clearly an opportunity to build products there," Rutledge said.

The Cablevision COO didn't lay out a timeframe for launching a new wireless phone service.

Sub and finances
Cablevision added 900 basic video customers during the first quarter of 2010 versus the fourth quarter of 2009. Rutledge attributed that in part to an ad campaign aimed at winning back customers that had jumped to Verizon's FiOS TV service. But Cablevision's basic video count dropped 37,900, or 1.2 percent, when compared to the year-ago quarter.

The company also added 42,600 Optimum Online cable modem customers, 42,300 Optimum Voice phone customers, and 12,000 iO: Interactive Optimum digital video subscribers during the first quarter.

Cablevision said it grew net revenue from telecommunications services by 5.9 percent, to $1.4 billion in the first quarter, while operating income jumped 20.6 percent, to $354.7 million.

— Steve Donohue, Special to Light Reading Cable

SteveDonohue 12/5/2012 | 4:36:55 PM
re: Cablevision Won’t Disable Fast-Forward on RS-DVR

That is an interesting angle. Maybe if Cablevision makes it really easy and more affordable for all of its subscribers to have a DVR that allows them to skip ads, more networks  could be motivated to strike deals to distribute programming on Cablevision's free VOD lineup. Those free VOD shows, including the primetime series from the Big Four networks, would have fast forward disabled.


I'm curious to see how Cablevision prices the virtual DVR. It keeps saying the RS-DVR will perform exactly like a physical DVR; wonder if it'll charge the same for the service, or would it drop the price. Or it could even offer the virtual DVR function to all digital subs for free in order to boost subscriber acquisition and retention. Also curious to see what kind of marketing muscle it puts behind the RS-DVR. SD 


 

Jeff Baumgartner 12/5/2012 | 4:36:55 PM
re: Cablevision Won’t Disable Fast-Forward on RS-DVR

I wonder if this will be the case for all time. One thing we keep hearing is that Cablevision is using this approach not just to get STB capex down and to give customers a nifty new product, but also as a tactic to get the programmers to the negotiation table and to put together deals that would prevent Cablevision from having to make separate copies of the most popular shows.


So instead of dealing with that storage hit, the idea woudl be to allow for the streaming off a smaller number of copies, such as it is in the traditional vod world. The caveat in such a deal might include the disabling of the Fast-forward function (ala how TWC is appeasing programmers with products like Start Over) and maybe involve dynamic ad insertion. Or all of the above.


Too early to say how it will come together, but until CVC and the programmers find some common ground here, I don't expect Cablevision to move off the position on the FF question it reiterated  yesterday. JB

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