Charter 2001 Annual Report Download - page 16

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Our rapid deployment of VOD illustrates our confi-
dence in consumer appetite for interactivity. By the
end of this year, as many as half of the Charter digital
customer base will be able to select from an on-screen
menu an uncut Hollywood movie or special program series
– with the ability to start the movie whenever desired,
pause it at will and even rewind to repeat favorite
moments. Charter’s aggressive rollout of on-demand
television marks a turning point for a service that has
raised grand hopes and expectations since engineers
first began exploring VOD in the late 1980s.
Our early results indicate there’s strong enthusiasm
for VOD. Approximately 25 percent of our digital
customers in mature VOD markets
now routinely use the service,
even though marketing has
been modest. The average
VOD customer orders between
two and three titles per month
from Charter, producing $9
or more in monthly incremental
revenue. But there’s more to VOD
than the incremental revenues and cash
flow it produces. In the vast majority of our VOD markets,
Charter is the first and only provider of this innovative
service. This helps cement our role as the company
that makes exciting new communications technologies
available. And there’s more: in the markets where we
had introduced VOD by the end of 2001, customer
satisfaction levels increased 74 percent, and we halved
the ratio of customers that disconnected, or churned,
from digital service.
VOD is an early centerpiece of our interactive tele-
vision efforts, but it’s just part of our interactive service
suite. In November 2001, we introduced our new set
of interactive television channels – “i-Channels” –
to customers in Glendale, CA. Initial response to this
collection of on-demand weather reports, local movie
theater listings, news and more has been very positive,
with our monitoring systems tracking nearly two million
requests for interactive content weekly from a base
of more than 550,000 customers.
10
30
20
40
50
60
80
70
Monthly Revenue
per Customer
Percentage of
Digital Penetration
$63.86 $60.17
$52.82
68.3%
51.5%
32.5%
Los Angeles Gwinnett Company Average
Based on content created uniquely for Charter,
i-Channels represent our philosophy of introducing
easy-to-use, helpful interactive tools. These second-
stage interactive services encourage customers to
begin to sample on-demand information and to view
their television equipment as a resource for more than
just one-way entertainment and information. Our costs
to provide this sort of interactive content via our two-
way broadband networks are modest, yet we believe
we derive excellent results both in improved customer
satisfaction and in our ability to further develop our
brand as a communications innovator. The i-Channels
also acclimate customers to a new type of television
that could generate premium
subscriptions for additional
levels of services.
On the high-speed Internet
side, we now provide our own
branded Internet portal in
association with the Microsoft
Networks (MSN). With a rich compilation
of Internet content resources, our Charter Pipeline
portal gives high-speed Internet customers and their
families an easy to use, single point of entry through
which they can easily and quickly access a rich treasure
of information and services, including personalized e-mail,
instant messaging and buddy lists. The portal also sets
the stage for further enhancements including the ability
to provide personalized music subscriptions and other
premium content through the Charter Pipeline network,
and to cross-promote other Charter television services.
With careful consideration of interactive content
and deployment schedules, we are beginning to create
a national footprint for interactivity, topping off our
triple-play strategy. By ensuring that our interactive
platforms remain easy to use and highly intuitive, we
are encouraging our customers to adopt a new set of
television behaviors that will make digital media from
Charter Communications more personal and responsive
than ever.
Advanced Services Drive Penetration and Revenue
Charter believes that deployment of interactive
services such as Video On Demand (VOD) increases
penetration of digital service, reduces customer churn
and increases revenue per customer. This is evident
in our Los Angeles, CA and Gwinnett, GA systems
where VOD has been available 12 months or more.
Impact of VOD
(as of March 31, 2002)