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Some analysts say AOL Time Warner and other cable companies have already stumbled by overestimating the nation's couch potatoes. Since 1996, cable companies have spent more than $55 billion on reworking their systems to be able to offer various two-way digital services. Time Warner, the second-largest cable company, has invested aggressively, upgrading more than 98 percent of its systems. But of the more than 70 million people with access to digital cable, only about 15 million subscribe, and only about 3.5 million Time Warner customers do.

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Industry analysts and executives say that the main reason for the slow demand is that, until the last several months, digital cable simply meant 150 channels, with no qualitative difference but more difficult to navigate. Time Warner and the other cable companies are betting that on-demand and video-recorder features will make digital cable irresistible even to viewers who turn up their nose at the smorgasbord of channels.

The cable companies are also fighting with fast-growing satellite services, which are courting subscribers with set-top boxes including built-in digital recorders like TiVo and ReplayTV devices, made by SONICblue. The recorders also make it push-button easy for viewers to store programs or movies to watch later as well as to fast-forward over the commercials. (AOL Time Warner and other media companies are suing ReplayTV for copyright infringement, in part because the device can skip all commercials automatically, without a viewer even pressing fast forward.)

To keep up, Time Warner Cable has made it clear that it will soon offer some similar services. "Our customers have been telling us they want movies and other entertainment programming when they want it, with full VCR functions like stop, rewind and fast forward," Mr. Britt said last spring.

Time Warner began testing the VCR-like digital recorder service in Rochester in late August, followed soon after by tests in Green Bay, Wis., and Austin, Tex.

Time Warner is selling pay-per-view movies on demand in 32 of its 34 markets. It also is offering monthly subscriptions providing access to all of films and programs of HBO, its sister company, on demand for about $6 in about a dozen markets. In many, Time Warner offers access to programs from certain networks, including Discovery, A & E and Biography, at no additional charge beyond a digital subscription.

Mr. Britt said that since the company began testing subscriptions to HBO on demand in Columbia, S.C., last summer, for example, half the digital subscribers with HBO have elected to pay an extra monthly fee to get HBO on demand. What's more, the number of digital subscribers rose more than 10 percent, far faster than elsewhere, he said.

Rivals have similar plans. In Philadelphia next month, for example, AT&T Comcast is to begin offering about 200 movies and 800 hours of programming on demand, including NBC news programs, local sports events and HBO movies and shows.

Some networks and studios are participating in part to make sure they do not get cut out as the services evolve. Mr. Kellner, of Warner's Turner Broadcasting division, said he did not think the networks and studios were worried enough yet. He warned that the race between the cable and satellite companies would spread commercial-skipping technologies much faster than normal consumer demand.

That could be devastating for the networks and studios, Mr. Kellner said. Until now, consumers have in effect paid much of the cost of network programming by watching the commercials, which account for all the revenue at the broadcast networks and more than half the revenue on basic cable. "If you take that away, who will pay for the programming?," Mr. Kellner asked.

What's more, networks depend on their schedules to build new shows, by putting them on after hits.

Mr. Kellner said the networks and studios needed to wrestle with the cable companies, satellite companies and others to make sure they get paid for the value they lose, perhaps through some industrywide fund.

Bruce Rosenblum, executive vice president for television at Warner Brothers, said he was eager to work with his sister company Time Warner Cable. As a big provider of network programs, including many hit shows like "Friends," "West Wing," and "ER," Warner's cooperation could eliminate an obstacle to offering its popular shows on demand and potentially increase AOL Time Warner's leverage with the networks.

But, Mr. Rosenblum said, he shared Mr. Kellner's concerns about commercial skipping, noting that Warner has responsibility to producers, writers, directors and actors who receive some of the revenue from its shows.

Still, Mr. Parsons, chief at AOL Time Warner, said he remained confident that networks and studios, inside and outside the company, would see the wisdom of working with cable. He explained: "It is a matter of saying, `people will pay for the convenience, people will pay for the choice. There is an opportunity for us both to enhance and grow our business. And, oh, by the way, if we don't do it somebody else is going to do it, and we are going to be the losers.' "