It's getting harder and harder to get customers
to submit to loads of porn purchases
DailyTech - Time Warner Goes Down on Porn Losses, Blames Naughty Internet UsersWhen it comes to its video on demand profit line, Time Warner Cable Inc. can't seem to get it up. The company's leadership blames the drooping figures mostly on a single culprit -- internet pornography.
While the company is going hard at trying to generate new revenue, it's finding an increasingly gaping hole in revenue that it can't seem to fill -- declining adult video sales. States CFO Rob Marcus in an interview with All Things Digital:
One of the things going on with VOD is that there’s been fairly steady trends over some time period now for adult to go down, largely because there’s that kind of material available on the Internet for free. And that’s pretty high margin. That’s been not just this quarter, but going on for some time period.
It seems rather than paying $9.99 to rent HD adult movies, dirty customers would rather find them online for free on streaming video sites or file-sharing sites/services. As porn was typically among the high margin items that dominated cable TV revenue, the decline has sent revenues into submission.
To be fair, porn sales isn't the only factor nailing Time Warner. While it accounts for a third of the drop in revenue, movie rentals and pay-per-view revenue (to events like boxing or the Ultimate Fighting Championship) is also down. The net result is that while cable subscriptions remain pumping in at a steady rhythm, declining revenue from the premium content back end is sticking it, overall, to profits.
When it comes to companies like Netflix, Inc. and Apple, Inc. taking movie rental sales from Time Warner, though, Mr. Marcus emphasizes caution. Unlike the porn sales, he says that decline may reverse its current position. He remarks, "I wouldn't draw any conclusions quite yet."
The question, though is whether Time Warn will truly be able to come up on top of such savvy competitors.