<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549


                                    FORM 10-Q


        [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934


        FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 
        Commission File Number 00-21315


                             ON COMMAND CORPORATION
      --------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



                DELAWARE                                        77-04535194
-----------------------------------------                    -------------------
(State or other jurisdiction of incorporation                 (I.R.S. Employer
            or organization)                                 Identification No.)


          6331 SAN  IGNACIO AVE,  SAN JOSE,  CALIFORNIA         95119
--------------------------------------------------------------------------------
           (Address of principal executive offices)           (Zip Code)


                                 (408) 360-4500
                ------------------------------------------------
              (Registrant's telephone number, including area code)



                                (not applicable)
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


        Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days

                                 Yes [X] No [ ]

        The number of shares outstanding of the Registrant's Common Stock as of
March 31, 1999 was 30,176,454 shares.



<PAGE>   2

                             ON COMMAND CORPORATION

                                    FORM 10-Q
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                     Page No.
                                                                                                     --------
<S>          <C>                                                                                     <C>
PART I.      FINANCIAL INFORMATION

      Item 1- Financial Statements:

            Condensed Consolidated Balance Sheets as of March 31,1999 and December 31,1998.              3

            Condensed Consolidated Statements of Operations for the Three Months
            Ended March 31, 1999 and 1998.                                                               4

            Condensed Consolidated Statements of Cash Flows for the Three Months Ended
            March 31,1999 and 1998.                                                                      5

            Notes to Condensed Consolidated Financial Statements.                                       6-7

     Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.   8-13

     Item 3 - Quantitative and Qualitative Disclosures About Market Risk.                               13

PART II.      OTHER INFORMATION

     Item 6 - Exhibits and Reports on Form 8-K                                                          14

SIGNATURES                                                                                              15
</TABLE>



                                     - 2 -
<PAGE>   3

                          PART I. FINANCIAL INFORMATION
                          ITEM I. FINANCIAL STATEMENTS

                             ON COMMAND CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)



<TABLE>
<CAPTION>
                                                                                   MARCH 31,        DECEMBER 31,
                                                                                      1999              1998
                                                                                   ---------         ---------
                                                                                ( Unaudited )
                                                    ASSETS
<S>                                                                                <C>               <C>      
Current assets:
  Cash and cash equivalents                                                        $   7,088         $   7,235
  Accounts receivable, net                                                            34,152            32,167
  Other current assets                                                                 1,066             2,633
                                                                                   ---------         ---------
     Total current assets                                                             42,306            42,035

Video systems, net                                                                   266,368           267,880
Property and equipment, net                                                           12,728            11,829
Goodwill, net                                                                         76,580            77,674
Other assets, net                                                                      3,162             3,550
                                                                                   ---------         ---------
                                                                                   $ 401,144         $ 402,968
                                                                                   =========         =========

                                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                                 $  21,835         $  23,443
  Accrued compensation                                                                 4,520             5,916
  Other accrued liabilities                                                           11,946            11,977
  Taxes payable                                                                        7,309             7,632
                                                                                   ---------         ---------
    Total current liabilities                                                         45,610            48,968

Other accrued liabilities                                                                791               995
Revolving credit facility                                                            171,000           163,000
                                                                                   ---------         ---------
    Total liabilities                                                                217,401           212,963
                                                                                   ---------         ---------

Stockholders' equity:
  Common stock, $.01 par value; shares authorized - 50,000 in 1999 and 1998
     shares issued and outstanding, 30,176 in 1999 and 30,171 in 1998;
     shares subscribed - 0 in 1999 and 2 in 1998                                         302               302
  Additional paid-in capital                                                         249,849           249,809
  Common stock warrants                                                               31,450            31,450
  Cumulative translation adjustments                                                  (1,979)           (2,539)
  Accumulated deficit                                                                (95,879)          (89,017)
                                                                                   ---------         ---------
     Total stockholders' equity                                                      183,743           190,005
                                                                                   ---------         ---------
                                                                                   $ 401,144         $ 402,968
                                                                                   =========         =========
</TABLE>


              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.



                                     - 3 -
<PAGE>   4

                             ON COMMAND CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                       MARCH 31,
                                                               -------------------------
                                                                 1999             1998
                                                               --------         --------
<S>                                                            <C>              <C>     
Revenues:
  Room revenues                                                $ 58,522         $ 54,246
  Video system sales / other                                      2,711            1,622
                                                               --------         --------
    Total revenues                                               61,233           55,868
                                                               --------         --------

Direct costs:
  Room revenues                                                  25,401           23,122
  Video system sales / other                                      2,059              798
                                                               --------         --------
    Total direct costs                                           27,460           23,920
                                                               --------         --------


Direct income                                                    33,773           31,948

Operating expenses:
  Operations                                                      7,418            8,421
  Research and development                                        2,062            1,688
  Selling, general and administrative                             6,075            5,965
  Depreciation and amortization                                  22,775           21,456
                                                               --------         --------
    Total operating expenses                                     38,330           37,530
                                                               --------         --------

Operating loss                                                   (4,557)          (5,582)

Interest/other expense, net                                      (2,282)          (2,282)
                                                               --------         --------

Loss before income taxes                                         (6,839)          (7,864)

Income tax expense (benefit)                                         23              (26)
                                                               --------         --------
Net loss                                                       $ (6,862)        $ (7,838)
                                                               ========         ========

Basic and diluted net loss per share                           $  (0.23)        $  (0.26)
                                                               ========         ========

Shares used in basic and diluted per share computations          30,174           30,118
                                                               ========         ========
</TABLE>


              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.



                                     - 4 -
<PAGE>   5

                             ON COMMAND CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                                 MARCH 31,
                                                                         -------------------------
                                                                           1999             1998
                                                                         --------         --------
<S>                                                                      <C>              <C>      
      Cash flows from operating activities:
        Net loss                                                         $ (6,862)        $ (7,838)
        Adjustments to reconcile net loss to net cash provided by
          operating activities:
            Depreciation and amortization                                  22,775           21,456
            Loss on disposal of fixed assets                                    2               77
            Changes in assets and liabilities:
                Accounts receivable, net                                   (1,911)          (4,164)
                Other assets                                                1,036              (13)
                Accounts payable                                           (1,602)           3,608
                Accrued compensation                                       (1,394)          (1,359)
                Taxes payable                                                 262             (993)
                Other accrued liabilities                                    (314)             134
                                                                         --------         --------
                 Net cash provided by operating activities                 11,992           10,908

      Cash flows from investing activities:
            Capital expenditures                                          (20,209)         (23,202)
                                                                         --------         --------
                  Net cash used in investing activities                   (20,209)         (23,202)
                                                                         --------         --------

      Cash flows from financing activities:
            Proceeds from revolving credit facility                         8,000           12,000
            Proceeds from issuance of common stock                             40               21
                                                                         --------         --------
                  Net cash provided by financing activities                 8,040           12,021
                                                                         --------         --------

      Effect of exchange rate changes on cash                                  30               49
                                                                         --------         --------

      Net decrease in cash and cash equivalents                              (147)            (224)

      Cash and cash equivalents, beginning of period                        7,235            6,287
                                                                         --------         --------

      Cash and cash equivalents, end of period                           $  7,088         $  6,063
                                                                         ========         ========

      Supplemental information:
            Cash paid for interest                                       $  2,482         $  2,210
                                                                         ========         ========
</TABLE>


              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.



                                     - 5 -
<PAGE>   6

                             ON COMMAND CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                   THREE MONTHS ENDED MARCH 31, 1999 AND 1998

1.      BASIS OF PRESENTATION

                On Command Corporation (the "Company" or "OCC") is a Delaware
        corporation formed by Ascent Entertainment Group, Inc. ("Ascent") for
        the purpose of effecting (i) the merger (the "Merger") of On Command
        Video Corporation ("OCV"), a majority-owned subsidiary of Ascent, with a
        wholly-owned subsidiary of OCC, after which OCV became a wholly owned
        subsidiary of OCC, and (ii) the acquisition of SpectraDyne, Inc., a
        wholly owned subsidiary of SpectraVision, Inc. Following the Acquisition
        in 1996, SpectraDyne, Inc. changed its name to SpectraVision, Inc.
        ("SpectraVision"). Ascent was a majority-owned subsidiary of COMSAT
        Corporation ("COMSAT") until June 27, 1997, COMSAT consummated the
        distribution of its 80.67% ownership interest in Ascent to the COMSAT
        shareholders on a pro-rata basis in a transaction that was tax-free for
        federal income tax purposes.

                The condensed consolidated financial statements have been
        prepared by the Company pursuant to the rules and regulations of the
        Securities and Exchange Commission ("SEC"). While the quarterly
        financial information contained in this filing is unaudited, the
        financial statements presented reflect all adjustments (consisting only
        of normal recurring adjustments) which the Company considers necessary
        for a fair presentation of the financial position at March 31, 1999 and
        December 31, 1998, and the results of operations and cash flows for the
        three months ended March 31, 1999 and 1998. The results for interim
        periods are not necessarily indicative of the results to be expected for
        the entire year.

2.      NET LOSS PER SHARE

                Basic and diluted net loss per share are computed by dividing
        net loss (numerator) by the weighted-average number of common shares
        outstanding (denominator) for the period. Common equivalent shares
        include common stock options and warrants and at March 31, 1999 and 1998
        approximately 9.3 million and 10.1 million equivalent dilutive
        securities, respectively, have been excluded in weighted-average number
        of common shares outstanding for the diluted net loss per share
        computation as common stock equivalents because their effect is
        antidilutive.

3.      COMPREHENSIVE LOSS

                Total comprehensive loss of $6.3 million for the three months
        ended March 31, 1999 is comprised of $6.9 million net loss less $0.6
        million net change in the cumulative translation account. At March 31,
        1998, total net comprehensive loss of $7.3 million is comprised of $7.8
        million net loss less $0.5 million net change in the cumulative
        translation account.

4.      DEBT

                On November 24, 1997, the Company refinanced its former credit
        facility and entered into an amended and restated agreement with its
        lender (the "Credit Facility"). Under the amended Credit Facility, the
        amount available to the Company was increased from $150 million to $200
        million, and certain other terms were amended. The Credit Facility
        matures in November 2002 and , subject to certain conditions, can be
        renewed for two additional years. At March 31, 1999, there was $29
        million of available borrowings under the Credit Facility, subject to
        certain covenant restrictions.

5.      LITIGATION

                In September 1998, OCV filed suit against Maginet, alleging
        breach by Maginet of a license agreement between OCV and Maginet, and 
        terminating the license agreement. OCV has also demanded the payment of
        license fees from Maginet, which OCC believes were due and payable under
        the License Agreement and have not been paid by Maginet. Maginet has
        counter-claimed against OCV, alleging that OCV breached the license
        agreement, and alleging various torts by OCV in its relationship with
        Maginet.              

                The Company is a defendant, and may be a potential defendant, in
        lawsuits and claims arising in the ordinary course of its business.
        While the outcomes of such claims, lawsuits, or other proceedings cannot
        be predicted with certainty, management expects that such liability, to
        the extent not provided for by insurance or otherwise, will not have a
        material adverse effect on the financial condition of the Company.





                                     - 6 -
<PAGE>   7

6.      NEW ACCOUNTING PRONOUNCEMENTS

                In June 1998, the Financial Accounting Standards Board issued
        Statement of Financial Accounting Standards No. 133, "Accounting for
        Derivative Instruments and Hedging Activities", (SFAS 133) which defines
        derivatives, requires that all derivatives be carried at fair value, and
        provides for hedge accounting when certain conditions are met. This
        statement is effective for all fiscal quarters of fiscal years beginning
        after June 15, 1999. On a forward-looking basis, although the Company
        has not fully assessed the implications of this new statement, the
        Company does not believe adoption of this statement will have a material
        impact on the Company's financial position or results of operations.




                                     - 7 -
<PAGE>   8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

        This Form 10-Q contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which reflect OCC's current
expectations and assumptions on those issues. Because such statements apply to
future events, they are subject to risks and uncertainties that could cause the
actual results to differ materially. The following should be read in conjunction
with the Condensed Consolidated Financial Statements (unaudited) included
elsewhere herein, and with the Consolidated Financial Statements, notes thereto,
and Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's 1998 Annual Report on Form 10-K, as filed
with the Securities and Exchange Commission.

                                    OVERVIEW

        OCC is the leading provider (by number of hotel rooms served) of
on-demand in-room video entertainment for the lodging industry. The on-demand
OCC system is a patented video selection and distribution system that allows
guests to select at any time, on a pay-per-view basis, from up to 50 movies on
the television sets located in their rooms. OCC also provides in-room viewing of
free-to-guest programming of select cable channels and other interactive
services. OCC (OCV prior to October 8, 1996) has experienced rapid growth in the
past six years, increasing its base of installed rooms from approximately 37,000
rooms at the end of 1992 to approximately 934,000 rooms at March 31, 1999. OCC
provides its services under long-term contracts primarily to business and luxury
hotel chains such as Marriott, Hilton, Hyatt, Wyndham, Doubletree, Fairmont,
Four Seasons, Loews, Stouffer, Embassy Suites, Holiday Inn and Harvey Hotels,
and to other hotel management companies and individually owned and franchised
hotel properties.

        At March 31, 1999, approximately 87% of OCC's 934,000 installed rooms
were located in the United States, with the balance located in Canada, Asia,
Europe and Mexico. Of these installed systems, approximately 90% had on-demand
capability.

GUEST PAY SERVICES

        OCC provides scheduled and on-demand in-room television viewing of major
motion pictures (including new releases) and independent non-rated motion
pictures for mature audiences for which a hotel guest generally pays on a
per-view basis. Depending on the type of system installed and the size of the
hotel, guests can choose among twenty (20) to fifty (50) different movies with
an on-demand system or among eight (8) to twelve (12) movies with a scheduled
system.

        OCC obtains the non-exclusive rights to show recently released motion
pictures from major motion picture studios generally pursuant to a master
agreement with each studio. The license period and fee for each motion picture
are negotiated individually with each studio, which typically receives a
percentage of that picture's gross revenues generated by the pay-per-view
system. Typically, OCC obtains rights to exhibit major motion pictures during
the time frame after initial theatrical release and before release for home
video distribution or cable television exhibition. OCC also obtains independent
motion pictures, most of which are non-rated and are intended for mature
audiences, for a one-time flat fee that is nominal in relation to the licensing
fees paid for major motion pictures.

        Under OCC's standard arrangements with hotels, OCC installs its system
into the hotel and retains ownership of all its equipment used in providing the
service. Depending on the size of the hotel property and the configuration of
the system installed, and if televisions are provided by the Company to the
hotel property, the installed cost of a new on-demand system with interactive
and video game services capabilities, including the head-end equipment, averages
from approximately $375 to $750 per room. If the Company does not provide
televisions to the hotel property, the average costs are $375 to $450 per room.
The hotels collect movie viewing charges from their guests and retain a
commission equal to a percentage of the total pay-per-view revenue that can vary
depending on the system, the hotel, and amount of revenue generated.

        The revenues generated from the Company's pay-per-view service are
influenced by occupancy rates at the hotel property, the "buy rate" or
percentage of occupied rooms that buy movies or other services at the property,
and the price of the movie or service. Occupancy rates vary by property based on
the property's location, competitive position within its marketplace, seasonal
factors and general economic conditions. Buy rates generally reflect the hotel's
guest mix profile, the popularity of the motion pictures or services available
at the hotel, and the guests' other entertainment alternatives. Buy rates also
vary over time with general economic conditions.



                                     - 8 -
<PAGE>   9

FREE-TO-GUEST SERVICES

        OCC also markets a free-to-guest service pursuant to which a hotel may
elect to receive one or more satellite programming channels, such as HBO,
Showtime, CNN, ESPN, WTBS, and other cable networks. OCC provides hotels
free-to-guest services through a variety of arrangements including having the
hotel pay the Company a fixed monthly fee per room for each programming channel
selected or having the price of such programming included in the Company's other
offerings.

        New Services. Beginning in 1997, OCC developed and selectively deployed
for market testing several new services to complement its existing offerings and
strengthen its growth strategy by creating new potential revenue sources. New
technology and services being tested by OCC include a digital server technology
and high-speed, TV-based and laptop connectivity Internet offerings. OCC is also
testing shorter and more targeted non-movie programming on a lower cost
pay-per-view basis. The initial categories of content include business,
lifestyle and kids-only. In addition, OCC is in the process of long-term testing
of a new sports category of programming that provides hotel guests with a
selection of out-of-market sports not televised nationally, or subject to local
blackout restrictions.

INTERACTIVE AND OTHER SERVICES

        In addition to entertainment services, OCC provides interactive services
to the lodging industry. These services use two-way interactive communications
capability of the Company's equipment and room availability monitoring.

        In addition to installing systems in hotels served by OCC, OCC sells
systems to certain other providers of in-room entertainment including
Hospitality Networks, a provider of pay-per-view services to the certain hotels
primarily in the Las Vegas, Nevada region.

                             ANALYSIS OF OPERATIONS

ROOM AND INVESTMENT ACTIVITY

        At March 31, 1999, the Company's installed room base was approximately
934,000, as compared to approximately 902,000 at the end of the first quarter of
1998. In the first quarter of 1999, the Company installed its on-demand system
in approximately 20,500 rooms, of which approximately 13,800 were new hotel
installations, and approximately 6,700 were conversions of SpectraVision
properties. Capital expenditures totaled $20.2 million during the first three
months of 1999 primarily in support of the new hotel installations,
SpectraVision conversions, increased inventory, and internal fixed asset
purchases. Following is selected financial information for the three months
ended March 31, 1999 compared to the same period for 1998.




                                     - 9 -
<PAGE>   10

                         SELECTED FINANCIAL INFORMATION
                  (In thousands, except hotel and room amounts)


<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                         -------------------------------------------------------------------
                                                                 % OF                                  % OF
                                         MARCH 31,               TOTAL        MARCH 31,               TOTAL
                                           1999                 REVENUE         1998                 REVENUE
                                         --------               -------       --------               -------
<S>                                      <C>                      <C>         <C>                      <C>  
Revenues:
    Room Revenues                        $ 58,522                 95.6%       $ 54,246                 97.1%
    Video Systems/Other                     2,711                  4.4%          1,622                  2.9%
                                         --------                -----        --------                -----  
Total Revenues                             61,233                100.0%         55,868                100.0%

Direct Costs:
    Room Revenues                          25,401                 41.5%         23,122                 41.4%
    Video Systems/Other                     2,059                  3.4%            798                  1.4%
                                         --------                -----        --------                -----  
Total Direct Costs                         27,460                 44.8%         23,920                 42.8%
                                         --------                -----        --------                -----  
Direct Profit                              33,773                 55.2%         31,948                 57.2%

Operations                                  7,418                 12.1%          8,421                 15.1%
Research & Development                      2,062                  3.4%          1,688                  3.0%
Selling, General & Administrative           6,075                  9.9%          5,965                 10.7%
                                         --------                -----        --------                -----  
                                           15,555                 25.4%         16,074                 28.8%
                                         --------                -----        --------                -----  
EBITDA(1)                                  18,218                 29.8%         15,874                 28.4%

Depreciation & Amortization                22,775                 37.2%         21,456                 38.4%
Interest/other exp, net                     2,282                  3.7%          2,282                  4.1%
Taxes                                          23                  0.0%            (26)                 0.0%
                                         --------                -----        --------                -----  
                                           25,080                 41.0%         23,712                 42.4%
                                         --------                -----        --------                -----  
Net Loss                                 $ (6,862)               (11.2%)      $ (7,838)               (14.0%)
                                         ========                =====        ========                =====  

CAPITAL EXPENDITURES                     $ 20,209                             $ 23,202
</TABLE>



<TABLE>
<CAPTION>
                                           AS OF                 % OF          AS OF                  % OF
                                         MARCH 31,               TOTAL        MARCH 31,               TOTAL
                                           1999                  ROOMS          1998                  ROOMS
                                         --------               -------       --------               -------
<S>                                       <C>                     <C>          <C>                     <C>  
TOTAL HOTELS                                3,249                                3,096
TOTAL ROOMS                               934,000                              902,000

ROOM COMPOSITION:
Geographic
    Domestic                              814,000                 87.2%        781,000                 86.6%
    International                         120,000                 12.8%        121,000                 13.4%

System Type
    Scheduled Only                         92,000                  9.9%        125,000                 13.9%
    On-Demand                             842,000                 90.1%        777,000                 86.1%
</TABLE>

----------

(1)     EBITDA represents earnings before interest, income taxes, depreciation
        and amortization. The most significant difference between EBITDA and
        cash provided from operations is changes in working capital and interest
        expense. EBITDA is presented because it is a widely accepted financial
        indicator used by certain investors and analysts to analyze and compare
        companies on the basis of operating performance. In addition, management
        believes EBITDA provides an important additional perspective on the
        Company's operating results and the Company's ability to service its
        long-term debt and fund the Company's continuing growth. EBITDA is not
        intended to represent cash flows for the period, or to depict funds
        available for dividends, reinvestment or other discretionary uses.
        EBITDA has not been presented as an alternative to operating income or
        as an indicator of operating performance and should not be considered in
        isolation or as a substitute for measures of performance prepared in
        accordance with generally accepted accounting principles, which are
        presented in the financial statements in Item 1 and discussed in Item 2
        under Liquidity and Capital Resources.




                                     - 10 -
<PAGE>   11

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31,1998

        Total revenues for the first quarter of 1999 increased $5.4 million or
9.6% to $61.2 million, as compared to $55.9 million for the comparable period of
1998. Room revenues increased $4.3 million or 7.9% in the first quarter of 1999
to $58.5 million, as compared to $54.2 million in the first quarter of 1998. The
increase was primarily due to higher total rooms being served during the period,
and a higher percentage of total rooms being served by higher revenue producing
on-demand equipment in the first quarter of 1999, as compared to the same period
of 1998. Movie buy rates in the first quarter of 1999 were generally consistent
with the first quarter of 1998. Video system sales and other revenues increased
$1.1 million or 67.1% to $2.7 million in the first quarter of 1999, as compared
to $1.6 million in the first quarter of 1998. The increase was primarily due to
increased ordering of video systems by a licensee.

        Total direct costs of revenues for the first quarter of 1999 increased
$3.5 million or 14.8% to $27.5 million, as compared to $23.9 million for the
first quarter of 1998. Direct costs associated with room revenue in the first
quarter of 1999 increased $2.3 million or 9.9% to $25.4 million, as compared to
$23.1 million for the same period of 1998, and as a percentage of room revenue
increased to 43.4% for the quarter ended March 31, 1999 from 42.6% for the
quarter ended March 31, 1998. The increase is primarily due to an increase in
hotel commissions and free-to-guest expenses in relation to the increase in room
revenue. Direct costs from video system sales and other revenues increased $1.3
million or 158.0% to $2.1 million in the first quarter of 1999, as compared to
$0.8 million in the same period of 1998, primarily due to the increase in video
system sales. Direct costs associated with video systems sales and other revenue
as a percentage of video system sales and other revenues increased to 75.9% for
the first quarter of 1999 from 49.2% for the same period of 1998. The increase
is primarily due to lower margins on projects where the Company will contract
with the hotel to provide wiring services prior to the movie system
installation.

        Operations expenses, which consists primarily of technical field support
for the hotels, for the first quarter of 1999 decreased $1.0 million or 11.9% to
$7.4 million, as compared to $8.4 million in the first quarter of 1998, and as a
percentage of room revenue decreased to 12.7% from 15.5% for the same period of
1998. The decrease is primarily due to the shut-down of the Company's Richardson
facility in the first quarter of 1998 and higher than normal spare part expenses
in the field in that period.

        Research and development expenses for the first quarter of 1999
increased $0.4 million or 22.2% to $2.1 million from $1.7 million for the first
quarter of 1998. The increase is primarily due to the continued development of
the Company's digital server technology and other new product offerings such as
high speed laptop connectivity.

        Selling, general and administrative expenses for the first quarter of
1999 increased $0.1 million or 1.8% to $6.1 million, as compared to $6.0 million
in the first quarter of 1998. The increase is principally due to higher expenses
in the areas of product management and marketing in order to support new
products and initiatives, largely offset by lower Information Technology
expenses due to internal project capitalization, lower corporate overhead, and
lower legal expenses.

        Depreciation and amortization expenses for the first quarter of 1999
increased $1.3 million or 6.1% to $22.8 million, as compared to $21.5 million
for the first quarter of 1998, and as a percentage of total revenue decreased to
37.2% for the quarter ended March 31, 1999 from 38.4% for the quarter ended
March 31, 1998. These expenses consist primarily of depreciation associated with
video systems that generate movie revenue. The increase is mainly due to capital
investments associated with the growing room base.

        Interest / other expense, net for the first quarter of 1999 remained
flat as compared to the first quarter of 1998.

        Provision for income taxes for the first quarter of 1999 represents tax
on income in certain domestic jurisdictions.

        EBITDA for the first quarter of 1999 increased $2.3 million or 14.8% to
$18.2 million as compared to $15.9 million in the first quarter of 1998. EBITDA
as a percentage of total revenue increased to 29.8% in the first quarter of 1999
from 28.4% in the same period of 1998. The improved EBITDA percentage is
primarily attributable to the decrease in operations expenses in the first
quarter of 1999 as compared to the same period of 1998.

        Net loss decreased to $6.9 million for the first quarter of 1999 from
$7.8 million for the first quarter of 1998 due to the factors described above.




                                     - 11 -
<PAGE>   12

SEASONALITY

        The Company's business is expected to be seasonal where revenues are
influenced principally by hotel occupancy rates and the "buy rate" or percentage
of occupied rooms at hotels that buy movies or other services at the property.
Higher revenues are generally realized during the summer months and lower
revenues realized during the winter months due to business and vacation travel
patterns which impact the lodging industry's occupancy rates. Buy rates
generally reflect the hotel's guest demographic mix, the popularity of the
motion picture or services available at the hotel and the guests' other
entertainment alternatives.

LIQUIDITY AND CAPITAL RESOURCES

        The Company's primary sources of cash during the three months ended
March 31, 1999 were cash from operations of $12.0 million, and borrowings of
$8.0 million from the Company's Credit Facility (see note 4 of Notes to
Condensed Consolidated Financial Statements). Cash was expended primarily for
capital expenditures which totaled $20.2 million for the first three months of
the year, primarily for the conversion of SpectraVision systems, the
installation of new hotels with OCV's on-demand system, increased inventory, and
internal fixed asset purchases.

        The amount of the Company's Credit Facility is $200 million. At March
31, 1999, the Company had $171.0 million outstanding under its Credit Facility
and had access to an additional $29.0 million of long-term financing. The
Company expects that the available cash, cash flows from operations and funds
available under the Credit Facility will be sufficient to finance its expected
investment in in-room video systems through at least the remainder of 1999. The
Company anticipates capital expenditures in connection with the continued
installation and conversion of hotel rooms will be approximately $60 to $70
million during the remainder of 1999.

RESTRICTIONS ON DEBT FINANCINGS

        Pursuant to the Corporate Agreement entered into between Ascent and OCC,
the Company has agreed, among other things, not to incur any indebtedness
without Ascent's prior written consent, other than indebtedness under the OCC
Credit Facility and indebtedness incurred in the ordinary course of operations,
as limited by Ascent. Ascent's limitation on such OCC indebtedness currently
stands at $182 million through December 31, 1999.

YEAR 2000

        The year 2000 issue is the result of certain computer programs being
written using two digits rather than four digits to define the application year,
such that computer programs that are date sensitive may recognize a date using
"00" as the Year 1900 rather than the Year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in normal
business activities for both the Company and its customers who rely on its
products.

        The Company is actively engaged in but has not yet completed, reviewing,
correcting and testing all of the Year 2000 compliance issues. Based on the
current review and remediation, the Company has determined that it will be
required to modify or replace some of its internally developed IT software
products. The Company utilizes embedded technology in all of its hotel system
design. The Company's engineering department has completed the majority of its
evaluation process and is currently developing solutions to the Year 2000 issues
affecting the hotel systems. In addition, the Company has also determined that
it will be required to modify and/or replace certain third-party software so
that it will function properly with respect to dates in the Year 2000 and
thereafter. The Company presently believes that with the proper modifications,
the Year 2000 issue will not pose significant operational problems for the
Company or its customers.

        The Company is currently on schedule to complete all Year 2000 issues by
September 1999. However, if such modifications and replacements are not made, or
not completed timely, the Year 2000 issue could have a material impact on the
Company and its customers.

        The cost to the Company for addressing its Year 2000 issues is estimated
to be less than $1 million with less than $100,000 incurred through December 31,
1998 and less than $50,000 incurred in the first quarter of 1999. The costs of
Year 2000 compliance and the date on which the Company plans to complete the
Year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous assumptions including third parties' Year 2000
readiness and other factors.



                                     - 12 -
<PAGE>   13

        The Company has and will continue to have communications with its
significant suppliers and customers to determine the extent to which the Company
may be vulnerable in the event that those parties fail to properly address their
own Year 2000 issues. The Company has taken steps to monitor the progress made
by those parties, and intends to test critical system interfaces, as the Year
2000 approaches. There is some unknown level of risk based upon the compliance
issue affecting a given hotel, and generally this should be limited to a
specific hotel. Conditions that make a hotel unable to take in guests would
affect the Company's revenue. A large number of the Company's systems are
interfaced with the hotel's property management system. If this interface fails
all movie charges will require manual processing. Processes to perform this are
in place in all hotels and are occasionally utilized at times when the property
management system interface is not functioning. This typically causes a slightly
higher number of lost charges, which could have a material effect if applied to
a large number of customers.

        While the Company has not completed a formal contingency plan for the
Year 2000 problem, it has evaluated several anticipated scenarios for failures
affecting both its critical business systems and hotel systems. It is
management's opinion that any of the potential scenarios can be managed by
manual means, although less efficient, while the necessary corrective action is
taken. However, there can be no guarantee that the systems of third parties on
which the Company relies will be corrected in a timely manner, that manual
processing of the Company's movie charges would be accomplished, or that the
failure to properly convert by another company would not have a material adverse
effect on the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company is exposed to market risk from changes in interest rates,
which could impact its results of operations and financial condition,
particularly, the Company's interest expense and cash flow. Revolving loans
extended under the Credit Facility generally bear an interest rate that is
variable and based on the London Interbank Offering Rate ("LIBOR") and on
certain operating ratios of the Company. At March 31, 1999, the Company had
$171.0 million outstanding on the Credit Facility and the weighted average
interest rate on the Credit Facility was 5.9%. Assuming no increase or decrease
in the amount outstanding a hypothetical immediate 100 basis point increase (or
decrease) in interest rates at March 31, 1999 would increase (or decrease), the
Company's annual interest expense and cash outflow by approximately $1.3
million.



                                     - 13 -
<PAGE>   14

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS:

     From time to time the Company has been, or may become, involved in legal
proceedings incidental to the conduct of its business. While the outcome of such
proceedings cannot be predicted with certainty, the Company does not believe any
such proceedings presently pending will have a material adverse effect on the
Company's financial position or its result of operations. (See note 5).

ITEM 2. CHANGES IN SECURITIES:

     None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES:

     None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     a.   An annual meeting of stockholders of On Command Corporation was held
          on May 13, 1999 for the following purposes:

          1.   Election of all directors.

          2.   Amendment of the 1997 Non-employees Director Stock Plan.

          3.   Action on such other matters as may properly come before the
               meeting.

     b.   The directors who were elected at the meeting are as follows:

              Charles Lyons
              James A. Cronin, III
              Richard D. Goldstein
              J.C. Sparkman
              Brian A.C. Steel
              J. David Wargo
              Gary L. Wilson

     c.   In connection with matters voted on at the annual meeting, the
          following results were obtained:

          1.   Election of Directors

<TABLE>
<CAPTION>
                                             FOR         AGAINST    WITHHELD  ABSTENTIONS
                                             ---         -------    --------  -----------
<S>                                       <C>             <C>          <C>       <C>
               Charles Lyons              26,159,733          --       690          --
               James A. Cronin, III       26,159,619          --       804          --
               Richard D. Goldstein       26,159,592          --       831          --
               J.C. Sparkman              26,159,619          --       804          --
               Brian A.C. Steel           26,159,933          --       490          --
               J. David Wargo             26,159,733          --       690          --
               Gary L. Wilson             26,159,933          --       490          --
</TABLE>

          2.   The 1997 Non-employees Director Stock Plan

<TABLE>
<CAPTION>
                                             FOR         AGAINST    WITHHELD  ABSTENTIONS
                                             ---         -------    --------  -----------
<S>                                       <C>             <C>          <C>       <C>
                                          26,120,383      37,340        --       2,700
</TABLE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:

     None

<TABLE>
<CAPTION>
EXHIBIT NO.                   DESCRIPTION
<S>                           <C>
   27.0                       Financial Data Schedule
---------------
</TABLE>


                                     - 14 -
<PAGE>   15

                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Jose, State of California on May 14, 1999.


                                        On Command Corporation


                                        /s/ Paul J. Milley
                                        ----------------------------------------
                                        Paul J. Milley
                                        Senior Vice President, Finance
                                        (Principal Accounting Officer)




                                     - 15 -
<PAGE>   16


                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO.      DESCRIPTION
-----------      -----------
<S>              <C>
27.0             Financial Data Schedule
</TABLE>