NEW YORK – As long-time regional monopolies which used proprietary technology that took ages to grow, develop and deploy, cable was not exactly known for its brisk innovative pace over the years.
Driven by competition and the desire to protect its customer bases and grow, that has changed, agreed the closing panel of industry leaders at CTAM in New York on Friday.
“There was a long period of time where cable did not innovate. It took competition… to make cable better,” said Jessica Reif Cohen, VP and managing director at Merrill Lynch. She noted that even cable’s earliest digital differentiator, video on demand, was not launched aggressively enough nor deployed in a way that was consumer friendly enough. If it had been done right, “Netflix should not exist,” she added.
With the age of broadband, however, the consumer can get their entertainment from all sorts of places and while cable can deliver the big pipe enabling that, it has been a long time since it was the only game in town. “The consumer doesn’t care. They will consume video no matter who it’s delivered by,” added Terence Kawaja, founder and CEO of investment banking firm LUMA Partners.
One of the real growth engines now finally warming up for cable, said Reif Cohen, is addressable advertising, where cable companies and cable channels can team up and target advertising geographically or demographically, providing greater value and earning more revenue in the process – even making the ads interactive.
Peter Stern, EVP and chief strategy officer at Time Warner Cable, noted the company serves over 300 geographic zones and that ability to target is important for national and local advertisers. Plus, the cable company can make it interactive – where viewers can hit buttons on their remotes to engage with the brands with longer form content or permission-based contacts. The company also sees a big opportunity in dynamic ad insertion into VOD streams, Stern added.
“We want to make it easier for the consumer and the advertiser,” said Stern, who later added: “We’re worried about whether we can actually pull this off.”
According to Reif-Cohen, Disney has experimented with targeted, interactive ads for its theme parks and it positively impacted sales.
As we’ve noted before though, cable is clearly at a crossroads when it comes to technology. The companies can do so much more with IP, but at the same time are bound to tens of millions of customers through digital set top boxes, which are technologically inflexible and difficult to upgrade. The companies are adding IP-powered options wherever they can, as quickly as they can.
“We provide set top boxes because we have to not because we want to,” added Stern, explaining that most customers still have “dumb” TVs that are just monitors and need something smarter like a set top in order to get content.
But while cablecos must continue to happily serve that segment, the industry is also moving towards network DVR solutions and TV Everywhere platforms where the smarts is in the network or in the “television”, however that screen is defined. It may be a connected TV, a smartphone or a tablet.
For TWC, deciding to provide content viable on an iPad, for example, was a no-brainer since all the brains is in the hands of the end-user, in the tablet itself. “You don’t walk around with a box under your iPad,” Stern said to some laughter. Customers viewing on their tablets are fully authenticate though. No one is giving content away, just enabling another screen.
These new devices have enabled a brand new level of choice for consumers and this is something they now expect everywhere, so cable must get better at providing more choice on all platforms, added Stern. For years, U.S. customers were only able to buy a few huge packages of cable channels – and that is still the case for many American cablecos (Canadian MSOs, with their theme packs and pick-packs, have been much more flexible than their U.S. cable brethren, btw).
While saying “the answer is not a-la-carte” which Stern said was both consumer and programmer unfriendly, he added: “we have to take some risks and offer more flexible packages.”
ABC/ESPN president and Disney Media Networks co-chairman George Bodenheimer told the audience that when it comes to all the new digital media, “I feel like we’re just in the bottom of the first inning,” and reminded everyone to welcome the challenges and opportunities and downplay the squabbles while expounding on the virtues of cable.
Look at the dollars spent per hours viewed and let people know what a great value cable is. “Cable operators add a tremendous amount of value to programmers and to customers,” he said and if the industry could get that message across, “we’d all be better off.”
Greg O’Brien is in New York this week covering CTAM NYC.
