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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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Seriou#*! ?
By shaidorsai on 8/6/2011 9:15:06 AM , Rating: 5
TW is complaining about falling revenue due to lack of porn sales? How about the lack of sales period.

4 things to fix the CATV industry and make it profitable:

1 - sell user defined packages and stop force feeding crap to people that they dont want to buy...example # 1 Spanish TV channels...example # 2 Oxygen...seriously let me pick my own channel lineup. I could really care less if Oprah's channel, or any other, would go under without forced revenue streams. If your customers don't want a channel then stop buying it and forcing it on them.
2 - stop over charging for movies on PPV...anything over 3 dollars is a complete rip off. There is no building, seat, bathroom, concession stand, employees or anything else related to an actual movie theater so stop charging like one. I refuse to pay you more than 3 dollars to watch a movie on my own couch using my TV and drinking my beer. Bugger off.
3 - stop over charging for internet service. The cable and all of the routing equipment was written off as a business investment and has been making you millions for years without you doing jack besides forging FCC bi-annual inspection reports so stop the BS and lower the price.
4 - Hire some people that actually speak English and use your service so when I call in a trouble they have some freakin idea of what I mean when I say channel 3 is out...again.

“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs

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