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C-Cor Expands Into VOD Market

Adding nCube strengthens company in new arena 1/16/2005 07:00:00 PM Eastern

Last week, C-Cor finalized its $89 million acquisition of
video-on-demand (VOD) technology provider nCube, a move that broadens C-Cor's
inventory. Now the company's offerings span everything from head-end
infrastructure to broadband and VoIP services. Dave Woodle, C-Cor chairman and
CEO, discussed the future of C-Cor and the industry with
B&C's Ken Kerschbaumer.

The nCube acquisition positions you for the VOD
market. What is the industry's challenge in getting VOD rolled out
successfully?

It is getting to the next level of technology implementation that gives
cost-effective flexibility to operators. How will they store tens of thousands
of hours of content so that every subscriber has access? If it costs $10 to
watch something at home but only $4 to pick it up at the video store, they'll
go to Blockbuster. But if the viewer can get what they want for $4 at home,
they will.

Free VOD seems more attractive to cable operators,
but what is the business upside?

The most important reason to do it: It is another value-added service.
To be able to see content you missed the first time is a great capability cable
provides that others can't. And it gets people used to VOD.

What should operators expect in terms of the cost
of a VOD system?

Historically, they've bought turnkey systems with prices of around
$130 per stream. The industry will be moving away from per-stream pricing to a
structure that includes the hardware for storage and/or software. Our goal is
to lower total cost per stream.

On the flip side, won't the DVR make VOD less
popular?

Not everyone will want DVRs because they don't want to plan. They want
the flexibility to go back and get something they might have missed.

Digital ad insertion seems to solve concerns over
DVR users skipping ads. Is that market evolving?

The first step is that ads will become just a mini on-demand viewing
experience. We can figure that out technically, but someone needs to figure out
the content side. I do think there will be more customized ads worked into an
on-demand environment. If the viewer fast-forwards through an ad, it shows two
or three key points instead of a blur.

Is it difficult to place that key-point clip into
the commercial?

Not if it's done with a digital ad. We control the fast- forward or
rewind; all we're really doing is jumping to a different clip. It is more of
a big deal operationally than technically.

Once cable operators do that, it sounds like
buying commercial time based on Nielsen ratings becomes unnecessary because
advertisers can reach whom they want.

That is the goal. This isn't being held up because of technology. It
gets down to privacy issues.

We could categorize 50 types of households, but it's coming down to
viewers' getting used to it and understanding what it means.

How do you get them to drop concerns over
privacy?

An operator will have to offer something to do with pricing. If you
agree to let the operator track what you watch, you pay $30 a month. But if you
want no targeted ads, it costs $65 a month.

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