Video-on-demand Video Networks is preparing to lay off up to half its 20-strong marketing department to reduce losses.
Last week the company decided to halve its workforce from 626, following a decision to limit customer growth until 2003 in order to control losses.
Marketing director Mark Springett says: “All departments in the company are affected and, as there is a 90-day consultation process, the total number of redundancies and number per department have yet to be finalised.”
In January, Video Networks recruited Merrill Lynch to help raise money to fund expansion and the launch of a 20-channel television service that would be delivered down the phone line. The service would enable Video Networks to take on cable companies with a broadband Internet, telephone and TV offering. New investors have yet to be signed up by the company, which includes Sir David Frost and Lord Owen among its original backers.
The company’s video network service, HomeChoice, has so far recruited 15,000 subscribers. They have a choice of more than 1,000 films, 2,000 TV programmes and 1,500 music videos. Video Networks chief executive and founder Simon Hochhauser claims that the company’s plans have been severely hampered by the high cost of renting network space, which reportedly costs the company &£50 per subscriber each month.
Hochhauser says: “We are disappointed that BT has not yet substantially lowered wholesale broadband video prices, as it did with those of broadband Internet.”