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Sinking porn sales have left a gaping hole in Time Warner Cable's revenue.  (Source: AP Photo)

Cable companies like TWC typically rely on video on demand (VOD) content like porn or pay-per-view sporting events, a profitable backend to their general services. But customers would rather find porn online than pay expensive fees to their cable provider.  (Source: AP Photo)
It's getting harder and harder to get customers to submit to loads of porn purchases

When it comes to its video on demand (VOD) profit line, Time Warner Cable Inc. (TWC) 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. (NFLX) and Apple, Inc. (AAPL) 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.

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whoa is the cable companies
By phatboye on 8/5/2011 3:15:17 PM , Rating: 5
So the cable companies are back at it. Whine about declining sales figures from a high profit margin area where for years they have been literally fucking over the customer harder than the whore in the X-rated movies that they scream about.

Who would have ever thought that one day customers would one day wake up and realize that paying 9.99 for a 4 hr VOD rental is such a shitty deal and that if they could only look to the internet they could find that exact same movie for cheaper. Now I am not advocating stealing movies from the internet but when your only other option from the cable company is something as ridiculous as what they are offering any sane minded individual would probably not pay for VOD either.

Cable TV is slowly being replaced by the internet and if these Cable companies want to keep from totally being replaced by the internet they need to stop screwing their customers, lower their fees and make their services more attractive.

Lately I've been thinking about cutting my Cable TV off as I rarely even have the time to watch it and half the crap that comes on isn't worth my time. There are only a few shows that I even watch so I won't miss much. And even with ISPs starting to throttle bandwidth or impose download caps it's still cheaper for me to have 2 internet ISPs in my home than is is just to have cable TV.

RE: whoa is the cable companies
By gorehound on 8/5/2011 3:49:39 PM , Rating: 5
great !!!
greed will bring down these asshole corps not their loss of customers.they just won't work with what is the new reality.
they are like dinosaurs.

RE: whoa is the cable companies
By Hyperion1400 on 8/5/2011 8:38:06 PM , Rating: 2
Dude, if you think those prices are bad, you should walk into an actual porn shop. The CHEAP ones are $30; good ones cost even more and even then you will only watch for like 5-10 minutes! And the porn industry wonders why we flock to Redtube?

RE: whoa is the cable companies
By runutz on 8/6/2011 1:45:57 PM , Rating: 2
Forgive my ignorance on the subject, but...

You pay by the hour to watch porn? Is that like the seedy whorehouse where you rent the room by the hour, except you are at home...alone?

RE: whoa is the cable companies
By Hyperion1400 on 8/7/2011 4:25:03 PM , Rating: 2
No, I was just pointing out that no one watches an entire porno; so paying $30 for a "movie" that you will only watch 10 minutes of is a bit ridiculous.

RE: whoa is the cable companies
By just4U on 8/8/2011 12:42:25 AM , Rating: 3
It's not only to do with porn though .. it's Video on Demand movies in general. Look at the pricing!! Used to be you could rent a movie from one of a 1000 places in your area for 2 bucks.. prices right now on VOD rentals are obscene.

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