Time Warner Cable sees a drop in video-on-demand revenue, with adult films seeing the biggest decline.
Link to Money.MSN article
Why pay for adult films when the Internet beckons?
That’s a question Time Warner Cable (TWC) and other on-demand video providers are struggling with. The cable provider said recently that its video-on-demand segment, which includes its adult film collection, saw a revenue drop of 13.5%, or $14 million, in the second quarter.
“The biggest piece of the year-over-year decline was, in fact, in the adult category,” TWC president Robert Marcus said on a conference call with analysts, according to The New York Post.
The company didn’t explain why the business has gone soft, but there’s a pretty obvious candidate: the Internet and its plethora of free adult videos.
And it’s not just the adult film sector losing steam. Across the board, on-demand movies for TV are in decline, analysts say. That’s because there are a number of other options out there that cost less and offer more.
Netflix (NFLX) charges $8 a month for unlimited access to its streaming videos. Amazon (AMZN) gives its Prime premium customers free access to a growing video library.
But Apple (AAPL) may end up being the video-on-demand winner in the future. The company rents movies and television shows online, and one analyst told the Post the company could hit nearly 50 million paid rentals this year. That’s about half of whatComcast (CMCSA) will likely see.
So far, Comcast and other cable companies have refused to believe that many customers are ditching cable in favor of other online video options. But traditional video-on-demand could be the first victim, with other cable services following later.
“There’s no reason why the Internet cannot replace cable or satellite or even (over-the-air television) transmission of content,” a Wedbush Morgan Securities analyst told the Hartford Courant. “When the Internet as a TV platform really takes off, it will strain the cable companies’ current business model.”
