Cablevision Enters into Interim Agreement Regarding VOOM

[VMI]

Please try to understand getting subs will not be the problem. VOOM added 20,000 subs in the past 2 mos approximately and with what marketing. The infomercial at 2 am or the magazine ad. Their marketing sucks right now and yet because of only the improved offer and independent dealers and retailers pushing hard they pumped up their numbers.

If we bring on some heavy mass marketers and if VOOM does some real advertising the subs will be there. Trust me, we're not signing up just techies, its everyday people.

By the way, this nonsense about not enough HDTVs in the market is ludicrous. Plasmas and other HD big screens are selling faster than most can stock them with prices falling each month.

VOOM may not make it, but it will not be because there are not the customers out there.

 

[James Long]

Please try to understand getting subs will not be the problem.

KEEPING subs was Voom's biggest problem last year, or at least keeping them paying.

As of Sept 30th 26,000 subs with 39% of all who tried Voom either cancelled or 90+ days past due.​

All the math in the world (subscribers * subscription fee = money to operate and retire debt) doesn't help if the subscribers leave or the subscription fee isn't paid.

Plus a second problem: Voom's $1 offer is a very expensive promotion. Hundreds of dollars of equipment costs given in exchange for a dollar? Have you calculated the break even on each of those 20k new customers assuming they were all 1 room installs? $499 install cost / $75 average revenue per customer per month (based on 3Q04 revenue per customer) takes more than six months for each customer to just pay their own install cost. And Voom still has to pay program providers for their content during that time. Multi-room installs cost Voom even more and only add $5 per month in revenue.

So assuming Voom added 20k in Nov-Jan - that's just a bunch of expense that won't be paid for for at least 6-9 months.

Getting subs is a problem - they are very expensive to get.
Getting them to pay for thei installs and for their service is needed to survive.

JL

 

[cfarm]

KEEPING subs was Voom's biggest problem last year, or at least keeping them paying.

As of Sept 30th 26,000 subs with 39% of all who tried Voom either cancelled or 90+ days past due.​

All the math in the world (subscribers * subscription fee = money to operate and retire debt) doesn't help if the subscribers leave or the subscription fee isn't paid.

Plus a second problem: Voom's $1 offer is a very expensive promotion. Hundreds of dollars of equipment costs given in exchange for a dollar? Have you calculated the break even on each of those 20k new customers assuming they were all 1 room installs? $499 install cost / $75 average revenue per customer per month (based on 3Q04 revenue per customer) takes more than six months for each customer to just pay their own install cost. And Voom still has to pay program providers for their content during that time. Multi-room installs cost Voom even more and only add $5 per month in revenue.

So assuming Voom added 20k in Nov-Jan - that's just a bunch of expense that won't be paid for for at least 6-9 months.

Getting subs is a problem - they are very expensive to get.
Getting them to pay for thei installs and for their service is needed to survive.

JL

Among their list of problems is the billing dept at Voom. I don't think it's deadbeat customers as much as autopay not being implimented correctly. Then once the account gets to 90 days late, the customer becomes infuriated, is not willing to pay $200-$300 all at once and it becomes a lost sub. I have autopay and it was screwed up in the beginning. On the yahoo groups list there were many mentions of similar problems. I think they have slowly worked these out.

Multi-rooms add $14.50/mo(box lease + multi TV fee)

 

[VMI]

I couldn't agree more, getting the subs and keeping them. The first is worthless without the second. On an earlier post I mentioned another reason for VOOM's lack of success was essentially customer retention. And yes, it is very expensive to get customers which is why customer satisfaction has to be more of a priority than what it is at this point. They shouldn't spend another dollar if they aren't ready to step up to the plate and take care of the subs they get.

 

[bryan27]

We hear a clamor from the government to shut down analog TV broadcasts. If indeed the analog broadcasts are going to be shut down, isn’t there a responsibility to advise buyers of these analog receivers of the imminent obsolescence of their purchases?

Besides the mandated tuners, the stations already do just that. For the stations which have already ceased analog early the FCC said they must advise their audience that the analog would go away and what equipment would be needed to continue receiving the station.

This year stations in markets 1-30 were to cease analog transmissions. Many stations will because they either can't afford to run two stations or don't have the staff needed to run two stations. I have noticed that these stations are telling viewers the analog will be going away, how they can continue to watch the station, and if they need additional equipment where they can get it.

The only people that would need new equipment are the 25% of people that receive television OTA. Those with cable or the 3 satellite providers wouldn't notice a change at all. Some our local cable headends don't even receive the local stations OTA and are fed directly with links from the station's studios.

 

[GadgetRick]

???

How can anyone say getting subs has not been a problem??? Sure, you can point to them close to doubling their subs but that means NOTHING when you're starting at less than 30k subs! They would have needed to do MUCH better than that in order to convince the market to bear with them while they spent TONS of money to get going.

As you point out, it costs a LOT of money to start up a DBS provider. Not a lot of people are ready to step up and spend that kind of money. Isn't that kinda the problem here????

I remember when DTV started. They started somewhat slow. I don't know the exact numbers but they ramped up REAL quick. I remember reading about them going live. Then, the next thing I read says, "DTV reaches coveted 1,000,000 sub mark!" It wasn't all that long after they launched. It wasn't a few months but it wasn't years. That's the kind of growth Voom has NOT shown and MUCH show in order to convince someone to part with money to keep it going.

And you are correct in saying the whole Enron thing has caused the board of directors of corporations to become a bit gunshy. Isn't that exactly what I'm saying? Isn't this a MAJOR problem? You also forgot to mention how the .com busts have causes a LOT of the venture capital to dry up for things like this.

You mention the everyday person is signing up for Voom. I beg to differ. Most everyday people do NOT have an HDTV. Most people who have stepped up and bought an HDTV are a little more advanced than the everyday person. And, as has been pointed out, more HDTVs are being sold now than ever. So why is it all of these people with HDTVs didn't sign up for Voom? Ok, part of it is marketing but most of it is a comfort factor. I talk to people with HDTVs quite often (yes, I'm just a LITTLE involved in that area) and what I find (most of the time) is, if (and I do mean IF) they are viewing HD programming on their set they're using DTV or Dish or cable (with a sprinkling of OTA). They're not willing to change to a different provider. They don't even know of many of the issues many of us have experienced (OTA issues, various PQ issues, lack of channels, etc.). Many of them heard of Voom. They all know it costs nothing (basically) to install it but aren't willing to make that change.

That is the BIGGEST hurdle ANY new dbs provider must overcome in order to become successful. Most people perceive they already have what they want in a programming provider. No need to switch. I believe (I say BELIEVE) this is the single biggest reason for the measly numbers Voom has signed up. Not because they couldn't handle more. They can't get enough.

And, even though there were naysayers (still are) about companies like Amazon and Netflix it's still a VERY different situation. They already have customers. Voom doesn't have the customer base. The challenge was (for Amazon) and is (for Netflix) is how to keep growing the large customer base they've got while lowering they're costs to become profitable. That's (sometimes) much easier than having to go out and get more customers. Still no comparison there...

The Rickster

 

[r.jones1116]

Rickster, You spew alot of words with no facts to back them up, just what you believe to be true. Do you install satellite TV systems? Sell TVs at Bestbuy? Sit on the board at Cablevision? Here's a tip: You may need to research your statements before posting.

 

[drod]

The problem isn't getting subs. The problem is keeping subs. Anyone can gain thousands of subs but it will kill a company if they don't stay.

 

[kelljc]

The problem isn't getting subs. The problem is keeping subs. Anyone can gain thousands of subs but it will kill a company if they don't stay.

Again What Point :, What Point:

 

[cfarm]

How can anyone say getting subs has not been a problem??? Sure, you can point to them close to doubling their subs but that means NOTHING when you're starting at less than 30k subs! They would have needed to do MUCH better than that in order to convince the market to bear with them while they spent TONS of money to get going.

As you point out, it costs a LOT of money to start up a DBS provider. Not a lot of people are ready to step up and spend that kind of money. Isn't that kinda the problem here????

It's a problem when stockholders and investors start acting like $1.4B is a huge amount of money and out of line for the startup costs, yes. They haven't even reached what several people agreed years ago was a minimum investment requirement.

The bottom line is the first 18 mos here have been filled with mistakes. I see them working on those and it takes time to turn a ship. You don't do it in the course of a couple of months.

I remember when DTV started. They started somewhat slow. I don't know the exact numbers but they ramped up REAL quick. I remember reading about them going live. Then, the next thing I read says, "DTV reaches coveted 1,000,000 sub mark!" It wasn't all that long after they launched. It wasn't a few months but it wasn't years. That's the kind of growth Voom has NOT shown and MUCH show in order to convince someone to part with money to keep it going.

There are 130 million television households in the US. 295 million people. To say you've reached a million of those is not saying much. The pertinant question is how many are there today? How many are simply "digital ready" meaning they still need a STB of some type? My guess is 80-90% because the digital tuner requirement only recently went into effect. You still have to port those with a DBS box or a digital cable box.

The real problem with the digital TV transition will be that last 10-12% of the people who can't or won't buy converters. You can't simply abandon them and that's why we have proposals before Congress for subsidized converters.

You mention the everyday person is signing up for Voom. I beg to differ. Most everyday people do NOT have an HDTV. Most people who have stepped up and bought an HDTV are a little more advanced than the everyday person.

There's your marketing flaw right there. You don't want to market it to the elitest group of HDTV owners, you want to market it to the masses. Again, DBS controls only 18% of the US television market. Cable owns 70+%. Make your marketing pitch as "better quality digital". The general public is, for the most part, not really aware of the pending DTV conversion or aware of all the issues associated with it. It will take time for that educative process to gather steam.

You can't say you want to expand the marketing and then immediately hamstring yourself by saying you only want to market to HDTV owners. Major misstep.

One thing people forget is the networked DVR is planned to be much more than just a time shifting device. It will be an Intenet portal, a digital images storage station, etc. That's the new battleground in the next 5 years. The first vendor to get that "killer hardware" to market can grab a lion's share almost right away. Time to market is CRITICAL and much has been lost in the Voom confusion.

That is the BIGGEST hurdle ANY new dbs provider must overcome in order to become successful. Most people perceive they already have what they want in a programming provider. No need to switch. I believe (I say BELIEVE) this is the single biggest reason for the measly numbers Voom has signed up. Not because they couldn't handle more. They can't get enough.

Cable and DBS are doing battle in the marketplace every day. The telcos are about to jump in the middle of it as well. "Whole house media centers" is the buzz phrase and everybody competing for that pie understands the significance. Do you? This isn't just about HDTV.

I suggest there will be substantial switching between content providers due to the home media boom we are about to see. Voom can be a player and compete if they get their act together.

And, even though there were naysayers (still are) about companies like Amazon and Netflix it's still a VERY different situation. They already have customers. Voom doesn't have the customer base. The challenge was (for Amazon) and is (for Netflix) is how to keep growing the large customer base they've got while lowering they're costs to become profitable. That's (sometimes) much easier than having to go out and get more customers. Still no comparison there...

The Rickster

Amazon and Netflix didn't have a single customer when they started. They had to take them away from other vendors. You talk like they just opened the doors and had them lined up down the street. Not so. The comparison stands. Let's just agree to disagree.

 

[Vicki]

cfarm, I find your arguments sound and compellling. Particularly about the marketing aspects.

None of the people that I have switched to VoOm from cable and Dish already have HDTVs, but are thrilled with the PQ even on their SD sets, and were planning to get HDTVs down the road anyway. They just had not understood that VoOm would be any use to them without an HDTV, so they just stayed with the provider they had until I demonstrated for them.

I converted them. They are converting others. Synergism! Once the marketing starts playing this fact up...while still highlighting the HD quality and quantity issues, I think the customer base will expand far more rapidly than the naysayers predict.

The problem of retention will still remain, but I see signs that they are working on this, and hopefully will get it under control in time.

Vicki

 

[cfarm]

Thanks Vicki. The thread has started to go off topic as did my rant. The big picture of home media centers with HDTV as a piece of the puzzle needs a thread all by itself.

I'd bet money that this is a focal point of Dolan Sr's plan. It's not about butting heads with DirecTV and Echostar to carve out a third DBS player spot. That's a major uphill climb with limited rewards. His vision is surely bigger than that.

 

[James Long]

Amazon and Netflix didn't have a single customer when they started. They had to take them away from other vendors.

Fortunately they had a new angle for doing that. Make it MORE convenient for people to get what they wanted to buy or rent (respectively). And they did well.

D* and eventually E* entered a market where in some places there was existing vendors and in many places there was no other easy way of receiving the channels they offered. C-Band was an option but a motorized dish was bigger than many wanted to put in their back yard. DBS was a more convenient way of getting he service, and in town, competition vs cable.

Where does that leave V*? Years after E* and D* turned a profit V* comes in with their only hook being HD. They miscalculated that people didn't want SD as well.

We can talk about Amazon and Netflix, but where is Amazon2 and Netflix2? They did well against the existing market when they had something new and unique but where is the second MAJOR competitor? There isn't anyone who have reached their level. Which also reflects on Voom ... They are the third provider to attempt a nationwide all channels service. Unless they can find some uniqueness (beyond the draw of HD) they will be an also ran. And being an also ran isn't very profitable.

JL

 

[kelljc]

Fortunately they had a new angle for doing that. Make it MORE convenient for people to get what they wanted to buy or rent (respectively). And they did well.

D* and eventually E* entered a market where in some places there was existing vendors and in many places there was no other easy way of receiving the channels they offered. C-Band was an option but a motorized dish was bigger than many wanted to put in their back yard. DBS was a more convenient way of getting he service, and in town, competition vs cable.

Where does that leave V*? Years after E* and D* turned a profit V* comes in with their only hook being HD. They miscalculated that people didn't want SD as well.

We can talk about Amazon and Netflix, but where is Amazon2 and Netflix2? They did well against the existing market when they had something new and unique but where is the second MAJOR competitor? There isn't anyone who have reached their level. Which also reflects on Voom ... They are the third provider to attempt a nationwide all channels service. Unless they can find some uniqueness (beyond the draw of HD) they will be an also ran. And being an also ran isn't very profitable.

JL

You have a point??. I don't know what it is?. but it's a valid point:.
Voom is as of this date 2nd to none : and 1st in "HD" service, don't you agree.

 

[ripit]

.....We can talk about Amazon and Netflix, but where is Amazon2 and Netflix2?.....

Uhhh...ever hear of a couple of little companies called Blockbuster and Walmart? I think it is a safe bet that Netflix is more than a little concerned about their market share.

I'm pretty sure that if I were Amazon, I would consider BN, Borders, Circuit City, Best Buy, Walmart, Target, etc. pretty fierce competition.

First mover advantage only gets you so far If someone comes along and does it better, cheaper and/or more cost efficiently, you're toast no matter how much longer you've been doing it.

 

[elocs]

You mention the everyday person is signing up for Voom. I beg to differ. Most everyday people do NOT have an HDTV. Most people who have stepped up and bought an HDTV are a little more advanced than the everyday person. And, as has been pointed out, more HDTVs are being sold now than ever. So why is it all of these people with HDTVs didn't sign up for Voom? Ok, part of it is marketing but most of it is a comfort factor. I talk to people with HDTVs quite often (yes, I'm just a LITTLE involved in that area) and what I find (most of the time) is, if (and I do mean IF) they are viewing HD programming on their set they're using DTV or Dish or cable (with a sprinkling of OTA). They're not willing to change to a different provider. They don't even know of many of the issues many of us have experienced (OTA issues, various PQ issues, lack of channels, etc.). Many of them heard of Voom. They all know it costs nothing (basically) to install it but aren't willing to make that change.

That is the BIGGEST hurdle ANY new dbs provider must overcome in order to become successful. Most people perceive they already have what they want in a programming provider. No need to switch. I believe (I say BELIEVE) this is the single biggest reason for the measly numbers Voom has signed up. Not because they couldn't handle more. They can't get enough.

The Rickster

I totally agree with these points. I don't believe that your everyday person has a HDTV. How many people this year will buy a new tv if their old one works fine? A friend of mine is using my last two old ones, 8 and 16 years, and they still work fine.
How many people are going to switch their providers if they are satisfied with what they have now?
For people with analog tvs, give them the SD channels they now watch along with the HD and Voom HD exclusives for a price close to what they are paying for cable and they will be more likely go for it. Once they have a provider that give them HD along with SD, these people with analog tvs might be tempted to go out and buy a new HDTV to see what they are missing. I think there are subs out there that are getable, but it will take the right mix of HD and SD along with the right marketing.

 

[James Long]

.....We can talk about Amazon and Netflix, but where is Amazon2 and Netflix2?.....

Uhhh...ever hear of a couple of little companies called Blockbuster and Walmart? I think it is a safe bet that Netflix is more than a little concerned about their market share.

I'm pretty sure that if I were Amazon, I would consider BN, Borders, Circuit City, Best Buy, Walmart, Target, etc. pretty fierce competition.

Yes they do. But those mostly brick and mortar companies are not Amazon2 and Netflix2. They are basically the same companies Amazon and Netflix had in their targets when they began service, and in many ways Amazon and Netflix have forced their competition to take the web seriously and compete on the web. BTW, some of the companies named have PARTNERED with Amazon where you can buy stuff from their brick and mortar store via Amazon. Some competition when they are selling FOR them!

First mover advantage only gets you so far If someone comes along and does it better, cheaper and/or more cost efficiently, you're toast no matter how much longer you've been doing it.

And Voom has done that how?
Better? We can grant that on HD. 39 HD is better than anyone else, but their SD offerings make Voom an add on for many subscribers who need to keep cable or a competitor to get all the channels they want.
Cheaper? Voom's $1 offer helps get the service in the home at a reasonable price, but $50-90 isn't "cheaper" unless one doesn't care about the missing SD and is willing to put out the $$$.
More Cost Efficiently? No. Giving away hundreds of dollars in equipment is raising their costs through the roof vs the revenue from subscribers.

So does that make Voom toast? I hope not, but it certainly outlines a challenge for them.

JL

 

[HookedOnTV]

They need another "we have it and they don't". Make the set top box do more. Connect to a home network and play media files located on your pc.

 

[GadgetRick]

Rickster, You spew alot of words with no facts to back them up, just what you believe to be true. Do you install satellite TV systems? Sell TVs at Bestbuy? Sit on the board at Cablevision? Here's a tip: You may need to research your statements before posting.

What, exactly, have I, "spewed," which isn't true? Does Voom have somewhere in the neighborhood of 40k subs (with something like 5k waiting to be installed)?? Is Voom having problems gaining subs? Is Dolan trying to obtain funding to support Voom? What the heck are you talking about???

It's a problem when stockholders and investors start acting like $1.4B is a huge amount of money and out of line for the startup costs, yes. They haven't even reached what several people agreed years ago was a minimum investment requirement.

The bottom line is the first 18 mos here have been filled with mistakes. I see them working on those and it takes time to turn a ship. You don't do it in the course of a couple of months.

I'm not quite sure what you're aruging here. I have not said (anywhere) it's not an expensive proposition. What I've said/am saying is it's gonna be TOUGH to get someone to step up and put that kind of money out to see if Voom can make it.

There's your marketing flaw right there. You don't want to market it to the elitest group of HDTV owners, you want to market it to the masses. Again, DBS controls only 18% of the US television market. Cable owns 70+%. Make your marketing pitch as "better quality digital". The general public is, for the most part, not really aware of the pending DTV conversion or aware of all the issues associated with it. It will take time for that educative process to gather steam.

You can't say you want to expand the marketing and then immediately hamstring yourself by saying you only want to market to HDTV owners. Major misstep.

You have TOTALLY missed what I've been saying. I'm not saying they should market to only the high end. I've said all along this would not work--it HASN'T worked. I'm saying the average consumer doesn't care about HDTV. Isn't gonna make that jump...at least not yet. Will it happen? Yes. But it's just not happening right now and that's one of Voom's MAJOR challenges.

One thing people forget is the networked DVR is planned to be much more than just a time shifting device. It will be an Intenet portal, a digital images storage station, etc. That's the new battleground in the next 5 years. The first vendor to get that "killer hardware" to market can grab a lion's share almost right away. Time to market is CRITICAL and much has been lost in the Voom confusion.

Ok, how does this apply to the discussion at hand? A networked DVR will not make or break Voom or anyone else for that matter. How many people do you know (who aren't techies) who have a Tivo? More than2 years ago but probably still a very low percentage of people out there. I agree this will be something which will probably play a large role in home entertainment but not for a while.

Cable and DBS are doing battle in the marketplace every day. The telcos are about to jump in the middle of it as well. "Whole house media centers" is the buzz phrase and everybody competing for that pie understands the significance. Do you? This isn't just about HDTV.

I suggest there will be substantial switching between content providers due to the home media boom we are about to see. Voom can be a player and compete if they get their act together.

Again, you've missed what I've said. I'm not saying Voom CAN'T be a player. I'm saying, for Voom to be a player, they need money to gain subs. Right now they're having a tough time finding investors. I don't see that changing anytime soon. Now, had Voom signed up 100,000 (or so) subs and had some REAL momentum we might not be having this discussion. Investors may have found them more attractive. However, they did not and investors don't find them attractive.

Listen, one thing which has happened around here is, as soon as someone doesn't have that, "Voom is great and will survive," attitude that person gets jumped all over and beaten. I'm not trying to say Voom will or won't survive. I'm just looking at what's happened in the past, looking at the market and saying, "Voom is more likely to NOT survive than they are to survive at this point." My reasons are:

1. Not enough subs to have CVC continue to invest in them.
2. Not finding funding (not yet anyway) to keep them going.
3. The overall market not being interested enough in an HD service. (Yes Voom has SD, I know this but they chose to market themselves as an HD service.)

Now, people can point to other companies who lost/are losing a lot of money but it's not a fair comparison. Basic business is basic business. If a business costs you $x per day/month/qarter/year to run and it brings in $x-$y over that time. They cannot last forever. They must a) start bringing in $x+$y, b) have enough momentum to at least LOOK like they'll start bringing in $x+$y or c) have someone who will just invest in them indefinately.

There really is no other way to look at it. People can all love the service. People can believe Dolan is the second coming. People can sing from their rooftops but if they don't show any signs of getting to where they need to be financially someone is gonna pull the proverbial plug. In this day and age the amount of leeway companies get is a LOT less than it was 5 years ago.

Again, it's not about satellite, it's not about HDTV, it's not about a networked DVR, it's about business. Many people around her want to make it into much more than it actually is.

The Rickster

 

[cfarm]

I've posted this in another thread. Revenue and profit generating customers take a minimum of 8-9 mos of retention before they can start helping Voom's bottom line. They wasted the first 12 mos. of rollout, IMO. Since late last year they started aggressively addressing new sub acquistion, the billing issues, the install issues and the result is a doubling of the sub count in a short period of time. Those new subs do not generate profit for several months yet.

The DVR is mentioned because that's a huge issue to bring in customers. I can forward you messages from HDTV message boards posted within just the last two days talking about the Motolola 6412 DVR. People don't know how they lived without it is the common theme. You can read for yourself here how badly people are clammering for it. It will bring in a flood of new subs as long as it's introduced properly WHEN IT'S READY. So I disagree it will be "awhile" before it has any impact. It's making a big splash now, IMO and IME. I've had one since December. I agree with the comments made by others. Can't believe I was without one for so long. Wife feels the same way. There's your compelling need for a DVR.

I've suggested they move away from the exclusivity of marketing it as an HD only service, because it's not. Move away from marketing to DBS customers. Move away from marketing to HDTV DBS customers. All of those marketing approaches limit your customer reach. Market to the 130 million US TV households and get off the idea that it's all about HDTV. It isn't. Not today at least. On that point we agree.

Like justalurker, you harp on the money losing aspect without any point of reference. Do you feel like it should be profitable at this stage? At some stage in the near future? Pick a date or pick an acceptable monthly loss figure. Just provide some point of reference otherwise it just looks like you're complaining. That's why you get replies from me, not because you seem anti-Voom or neutral or anything else.

Yes it's losing money. Yes it will lose money for some time to come particularly if they dont' gain and retain new subs. Those are obvious. And your point beyond that is?