The Race to be the Triple Play Provider Chuck Ellis CMO
Time Warner Cable Today 2 nd largest cable operator in U.S. 19 million homes passed 11 million basic video customers
Time Warner Cable Today $7.7 billion in sales 30,000 employees
Time Warner Cable Today Fully upgraded fiber backbone 42% digital penetration Highly clustered footprint
An Evolving Competitive Landscape
The U.S. telecommunications industry was once siloed CABLE INTERNET PHONE 22m subs $18 billion 32m subs $6 billion 140m subs $68 billion 11m subs $7.7 billion 8m subs $540 million 55m subs $41 billion 6m subs $6 billion 5m subs $1 billion 22m subs $23 billion
And then there was satellite
But even then Video was just video.
Internet was just internet.
And phone was just phone.
Today cable isn t just video anymore TRIPLE PLAY PROVIDERS VIDEO INTERNET PHONE + with + + + + +
Competitive Video
The Power of the Bundle
Why is bundling the right strategy? Competition and the marketplace demand it Bundling has significant benefits for TWC Consumers see value in it
Bundling motivates customers to switch providers Source: JD Power
Reduce churn, build value 6.0% The Cox Reality 5.0% 5.0% 4.0% 3.2% 3.0% 2.0% 2.6% 2.3% 2.2% 1.9% 1.4% 1.0% 0.0% Digital Cable Only (Kagan) Telephony (Kagan) HSD (Kagan) Video + HSD (Cox) Video + Telephony (Cox) HSD + Telephony (Cox) Video + HSD + Telephony (Cox)
Source: Leichtman Research Group, February 2003. And cable is the provider of choice Which would you choose for Broadband service? (Among Time Warner households interested in Broadband ) Don t Know 23% Don t Know 23% Cable Cable 32% 32% Wireless Wireless 3% 3% Satellite Satellite 6% 6% Phone Phone 16% 16% Current Current ISP ISP 13% 13%
We listened to our customers It would be great for Time Warner Cable to provide all three services. Then you don t have to worry about all three separately. Keep it simple, clear and plain. One company to deal with on one bill means less hassle.
Our customers were really looking for Convenience Simplicity Value
Digital Cable Delivering the Products That Put Customers in Control
Note: Digital Penetration is to Basic Subscribers; Represents managed subscribers Digital Cable Digital subscriber growth Subscribers in Millions Basic Subs Digital Subs Penetration 12 10 8 6 4 2 0 10.7 10.7 10.7 10.9 10.9 3% 0.3 14% 1.5 26% 2.8 34% 3.7 40% 4.3 10.9 42% 4.6 1999 2000 2001 2002 2003 Q204 100% 80% 60% 40% 20% 0%
Video On Demand VOD Roll-out December 2001: 5 divisions launched January 2003: Every Division capable of delivering VOD 31 Divisions 3,900,000 HH 5 Divisions 927,000 HH December 2001 January 2003 VOD Enabled Divisions
Video On Demand Movies On Demand Favorites On Demand Premiums On Demand Digital Video Recorder
VOD/MOD Roll-out In Q2 04, VOD revenue increased 40% from 03 Approximately 50% of digital customers bought an MOD in Q2 04, up 48% from prior year MOD users in Raleigh have increased over 75%
Movies On Demand Video
Digital Video Recorder DVR subscriber growth Subscribers in Thousands DVR Subs Penetration 13% 10% 8% 0% 1% 36 2% 91 4% 155 6% 251 369 458 591 Q302 Q402 Q103 Q203 Q303 Q403 Q104 Q204 Note: DVR penetration is to Basic subscribers; Represents managed subscribers Source: Various company and external research
Digital Video Recorder Video
High Definition Television HDTV subscriber growth Subscribers in Thousands HDTV Subs Penetration 7% 6% 328 5% 277 1% 34 2% 64 3% 100 3% 124 4% 157 210 Q302 Q402 Q103 Q203 Q303 Q403 Q104 Q204 Note: HDTV penetration is to Basic Subscribers; Represents managed subscribers
Answers On Demand icontrol Simple on-screen guide of help topics Getting Started Interactive video tutorials Learn how to use Answers On Demand. Press the PLAY button on your remote control now to start. Pause, fast forward and rewind Getting Started Remote Control Program Guide Parent
AonD Video
High Speed Online
High Speed Online HSO subscriber growth Dollars in Millions HSD Revenue Penetration of Eligible Homes Passed 17% 14% $1,422 10% $1,009 6% $536 $235 2000 2001 2002 2003 Note: Revenue represents consolidated subscribers; Penetration represents managed subscribers
Road Runner
HSO Tiering RoadRunner Premium Service Speed: Up to 6Mbps down/512kbps up Price: $64.95 to $84.95 depending on bundle RoadRunner Flagship Service Speed: Up to 3Mbps down/384kbps up Price: $44.95 a la carte, $39.95 bundle and current acquisition offer is 6 months @ $29.95 HSD Lite Service Speed: Up to 384kbps down/128kbps up Price: $22.95 to $29.95 Currently used as retention tool only
Digital Phone Telephone made simple
Simple offer, simple message All-in monthly pricing Unlimited calling Competitive rates Standard features
Key consumer considerations Easy to buy No catches
Phone Features Privacy & Security Premium Premium/ Enhanced Messaging Portal Feature Provisioning Portal Subscriber Provisioning Call Return *69 Speed Dial Anonymous Call Reject LD Dialing Customer Originated Trace (*57) Anonymous Call Control Selective call accept and reject Priority call ringing Distinctive ring Message Waiting on TV Voice Dial Busy Redial Choice of area code Wireless incoming intercept to home Three way calling E-mail notification E-mail receipt of voice mail Web based parental controls of features, mailboxes and other option selecting Polyphonic tone integration Call Screening Ring Back Tones Celebrity greetings Family mailboxes Add, Change Remove Features and settings Review features and settings Review of voice mail features, options and messages Customer can sign up for initial services or add and change services to existing account.
Rapid growth passing other VoIP offerings Every Division active by January 2005 Rapid growth in penetration Adding 1200 new customers per day High customer satisfaction 87% satisfaction in launch market
Who Will Win The Race
TWC is best positioned to win the race Consumers give TWC permission to offer video, high speed online and phone Migrating customers to a broader relationship with the company increases loyalty Convenience, simplicity, value
How TWC use to identify itself Identification of TWC Website Design Products and Services The strength of the TWC brand was diluted by inconsistent presentation of our brand Current naming practices were far too complex Our products and services lacked strong ties to the Time Warner Cable brand
Our Brand Architecture A framework for communicating with the market Answers key questions about our company, brand, and product portfolio Guidelines for future brand management
Our Visual Identity System communicates convenience, simplicity and value Keep it simple, clear and plain and don t get too technical. In this day and age we re bombarded by too many logos.
Visual Identity System in action
Visual Identity System in action
TWC has sustainable competitive advantage DBS s inability to offer on demand service DBS/Telcos -- cobbled together bundling Unique products and services across video, internet and phone
TWC is best positioned to win the race Reducing mental static is a benefit that can increase the value of a service
TWC is best positioned to win the race Reducing mental static is a benefit that can increase the value of a service
Ready & Waiting Video
What the future holds
Digital Navigator TWC Guide Main Menu (Access) Network Express (Shortcuts) Impulse Upsell Find Shows Keyboard Search Caller ID and Call List Impulse Upgrade Whole House MOD 1 buy/all TVs Multi-Room DVR 1 DVR/all TVs
Digital Navigator Video
News On Demand CNN QuickCast 1-2 minute On Demand clips Spotlight local and regional news Content is regularly updated Compliments broadband distribution via Road Runner portal Provides viewers the ability to get quick updates on the news and content that interests them most.
Promotions On Demand New Shows Networks can promote new seasons and shows New Movies New release theatrical trailers can be watched On Demand New Services Time Warner can market their new capabilities for cable, broadband and HD Advertising Networks and advertisers can present long-form promotions On Demand Networks have the option of including promotions to be presented On Demand.
On Demand Portals Entertainment Kids Sports Lifestyle New & Info Cable Favorites Music Cutting Edge International Easy access to On Demand Leverages traffic to effectively promote new TWC Video On Demand offerings and special events. Creates simple destinations for viewers to find topical entertainment.
DVDs On Demand Buy the Harry Potter DVD and watch it now! This service gives customers the ability to order and immediately watch a movie using On Demand, the same day it is released on DVD then receive a DVD of that film in the mail a few days later. DVD Categories: - Movies - TV Shows - Kids/Family - Sports & Fitness - Music - Special Interests Watch it and own it.
Start Over Restart The Wire This feature can only be accessed while the show is airing and offers the viewer one play until expiration. Limited Time-Shift Control No Ad Skip No Fast Forward TWC records schedule daily and all content is deleted overnight. Allows viewers to restart their shows during the broadcast window.
Mobile Phone Mobile Phone is Coming TWC has an active strategy for digital mobile phone service The product is in development The industry will move toward the quadruple play by adding mobile phone service
Cross Platform Products VOIP Home Networking Photo Sharing Interactive Video Games Music Customer Care VOD, SVOD DVR Digital PPV Photo Sharing Games HDTV
How we expect to deliver on the promise Innovation, not price Smart marketing Great customer care
Who will win the race? It s the company who makes it all about the customer. THANK YOU.