Time Warner’s Jeffrey Bewkes

April 2007

By Anna Carugati

Time Warner is the biggest
media company in the world. It is the home of such renowned worldwide brands as
Warner Bros., CNN, HBO, Cartoon Network, AOL and many more. Jeffrey Bewkes,
Time Warner’s president and COO, has been following the transition of all these
businesses into various digital platforms—from video on demand and
broadband to websites and mobile phones.

WS: How have the Time Warner on-demand services been
performing?

BEWKES: The first on-demand service in the world was HBO
on Demand. It is the only network that has the on-demand rights for all of its
programs, so it was not only first, but it also offers its entire schedule on
demand. HBO was also the first to put into place the precursor to on demand,
which was multiplex. So if you are an HBO subscriber, you have all these
scheduled channels to watch and then you have the VOD service, for whatever HBO’s
got that you’ve paid for, and you can watch whenever you like. HBO is the
number-one, most used VOD service on cable or satellite in the U.S. It’s got
almost half of all the VOD usage in all the U.S.

WS: What about broadband?

BEWKES: CNN has its VOD service, which you can get on
broadband, and it’s the most visited news site on broadband. That’s free to use
and you can see it right now. There is a second product at CNN called Pipeline,
that currently is a subscription offering. You pay a little money every month
and then you can watch video feeds and get interactive access to the stories.
That is available on broadband to your PC.

TBS has launched something
called veryfunnyads.com where you can watch funny commercials. And on Laugh
Lab, available through TBS.com, you’ll be able to see some stand-up comedians.
Over time we will add short-form programming, essentially interstitials related
to some of the shows we put on the regular TV screen, using some of those
scenes or some of those actors, or some of those writing environments. Cartoon
Network has a thing called Toonami Jetstream, which is free on-demand
full-length streaming episodes of action anime series, shows like Samurai
Jack and Naruto. We have them full length and they are free on
demand.

We have a massive
multiplayer online game at Cartoon Network coming in 2008.

WS: Which works better, the pay-as-you-go model or the
subscription model?

BEWKES: It depends on the service. If you take HBO, it is a
subscription model. The reason HBO on Demand has the lead usage in the U.S. is
that you can use it for no extra cost. If you go to the programming from
ad-supported networks, whether TNT or MTV, it’s not pay-per-consumption that
seems to win, it’s ad-supported video on demand. And we are moving there with
something called Start Over. Cable systems offer linear channels. They can also
offer them on a time-shifted basis—shifting the programs back or forth a couple
of hours. Start Over [was first] available to 150,000 people in Columbia, South
Carolina, and it’s launching in more markets this year. If you come home and
you turn on your television and you see a program that is in progress and you
want to start it over, you just push the Start Over button and you literally
start the whole program from the beginning. In order to do that you have to
have the rights from the channel and the channel is willing to grant those
rights, because when you watch the show in delayed time you can fast forward,
you can pause it, but you have to watch it with the commercials. So it
preserves all the economics that made ad-­supported TV networks so powerful, and it preserves
the incentives for the producers of the programs and the networks and the cable
operators to offer them just as they do on the linear channels.

What will happen over time
is, if the entire television dial were on a start-over or video-on-demand basis,
then you could watch anything you wanted, when you want it and you could pause
it and go forward, but you’d have to watch it with the ads—you couldn’t
automatically skip them. And it’s free. It’s a pretty powerful thing. And then
if someone wants to skip the ads we can offer that, too, but we need to have an
access fee. Pay a fee and you can skip all the ads on every channel and we’ll
send the money to those channels.

WS: And the engine behind all these digital
initiatives is content.

BEWKES: It’s certainly true that Time Warner has the
preeminent, by scale, library of electronic-media content. And we produce more,
so that’s good. But we have to be careful when we say, How does that content
function over broadband, cell phones, PCs? How are rights granted? How are
people getting paid, if they are getting paid? If it’s through advertising,
what is the model?