CHICAGO – If U.S. cable operators and programmers are deathly afraid of Netflix, they’re sure putting up a brave front.
At last week’s Cable Show here, several top MSO and programming executives insisted that they don’t fear the rising power of Netflix, even though the Internet video giant recently passed Comcast as the largest subscription video provider in North America (by sub count) and now commands the lion’s share of web traffic. Instead, they claimed that they’re ready to do battle with over-the-top (OTT) video players and potentially make some money off them to boot.
Cable officials argued that they can fend off OTT video threats by rolling out multi-screen video services and putting their own video programming online. In one keynote session, for instance, Jeffrey Bewkes, chairman and CEO of Time Warner Inc., urged his colleagues to embrace technology and make all content available on all devices.
“Put the TV on the Internet,” said Bewkes, who coined the concept of “TV Everywhere” two years ago and has championed it ever since. “Don’t change the business model, don’t charge people to use it and present it in a way that people are accustomed to.”
Bewkes, whose company’s HBO Go product is already available on multiple video devices, also advised cable executives not to take the threat of OTT competition and potential cord-cutting all that seriously. He made the case that the cable industry has always managed to stay ahead of its rivals and continues to innovate.
“Let’s all cheer up,” he said. “This is not the music industry. This is the cable industry. The reason people can get things on tablets and smart phones is because of what people in this industry did.”
Cable executives also contended that OTT providers still can’t match the quality of cable’s video programming. For example, Robert Marcus, president and COO of Time Warner Cable, derided the quality of what Netflix can offer. Despite its recent foray into original content, he noted, Netflix still lacks live sports and other crucial content to compete.
"Part of the attraction is the cheapness of that service,” he said. But, he added, “cheapness and robust offering don’t go hand in hand."
In another keynote panel, Michael Willner, vice chairman and CEO of Insight Communications, contended that cable operators should view the emergence of OTT and the proliferation of multiple video devices as inevitable trends to leverage, not competitive threats to fear. He noted that the rise of such new connected devices as the iPad offer opportunities for cable because of their dependence on fast broadband connections and need for fresh video content.
“It’s [the iPad is] a cable service,” Willner said. “Consumers expect it today. That train is out of the station. You’re either on it or not.”
Comcast Cable President Neil Smit said his company’s subscribers are mainly using such devices as iPads, other tablets and smart phones as tools to improve their viewing experiences, not TV alternatives. He estimated that about 50% of the users of Comcast’s iPad app make use of it as a tool to do things like set their digital video recorders (DVRs) remotely.
“The iPad is an exciting tool to tie together various platforms,” Smit said. “But we [programmers and distributors] need to be flexible. We need to work together collaboratively.”
But that doesn’t mean that all is hunky-dory in cable land. Under questioning on the various show panels, cable operators and programmers conceded that they still must settle some critical issues for the industry’s multi-screen video initiatives to succeed, including content licensing rights, programming windows and business rules for accessing multiple platforms.
“We’ve been talking about authentication for two years, and we’re still talking,” said Chase Carey, deputy chairman, president and CEO of News Corp. He called on distributors and programmers to speed up those critical negotiations.
Viacom president and CEO Philippe Dauman said key copyright and ratings issues must also be resolved. In particular, he said, programmers need Nielsen to start measuring viewing on other video platforms so that ads can be sold.
“If we are ad-supported, then we need to have measurement systems in place so we can sell ads,” Dauman said. “We need to have the technology obstacles overcome and the monetization obstacles overcome.”
Alan Breznick is a Toronto-based senior analyst at Heavy Reading, part of the Light Reading Communications Network at UBM TechWeb. He was in Chicago last week covering the Cable Show for Cartt.ca.
