May 21, 1997 8:50 AM PDT
MSN finds a place, @Home
The deal is part of @Home's bid to offer more content to enhance its cable-modem Net service. It represents the first so-called premium service, in which subscribers pay extra for content, and other similar arrangements are expected to follow.
The deal is MSN's latest attempt to strenghten its position in the cutthroat online services market dominated by America Online. In another part of its strategy, MSN is launching a campaign specifically aimed at winning over dissatisfied CompuServe customers. (See related story)
@Home's content strategy seems based on cable television, where customers get a basic service for a flat rate and pay more for such premium channels as HBO and Showtime. (@Home's owners include Cox Communications, ComcastTele-Communications Incorporated.)
But analysts say the jury is still out on whether consumers will find the content compelling enough to pay the extra cost. @Home's high-speed Net access already costs between $35 and $55 per month.
In the MSN deal, @Home customers will get a one-month trial subscription for free.
"We expect premium services to demonstrate the true benefit of our broadband service," said Dave Bagshaw, senior vice president of @Home's @Media division.
In the meantime, the company is generating sales but still losing money.
Today's announcement follows last Friday's filing for @Home to go public. The company plans to offer 8 million shares at $7 each for a total of $56 million.
In the filing, the company disclosed that @Home has just 5,000 paying subscribers. Its companion service for businesses, @Work, has only five, the filing said.
@Home lists its markets as Seattle, Arlington Heights, Illinois; Fremont, California; San Diego; Phoenix; Baltimore; Hartford, Connecticut; Sarasota, Florida; Union County, New Jersey; and Orange County, California.