ST ANDREWS, N.B. – What are you doing? What do you need to do? What do you want to do? What stands in your way? These and various other questions were posed this year to a roster of Canadian Communications Systems Alliance member companies by consultants Broadband Success Partners, who presented their findings Monday at the CCSA annual convention.
Canada’s independent operators are obsessed with providing the best broadband experience, the best customer service and the best TV service, while knowing they want to compete on the TV Everywhere front, and to push fibre as deep as possible in order to future proof their networks, among other priorities.
The independents worry about millennials not wanting to pay for TV, that cord-cutting will threaten their existence, that both consumers and programmers are using the broadband they work so hard to make flawless to bypass their pay TV service – and about piracy and regulations that aren’t working and how to carve a niche in an oh-so- complex broadband, video and tech world.
The Alliance members also know significant opportunities are on their doorsteps as well when it comes to deep fibre deployment and that there is government aid in a lot of cases to build it; that if they are the network of choice, they can go the extra mile and troubleshoot Wi-Fi challenges in local homes and businesses, too.
There’s loads on the plates of these independents which was unpacked during an informative 90-minute panel session following the presentation. The session didn’t churn out a narrative, so to speak, so what you see below are some of the more interesting comments from the panelists (left to right in the photo above): Pierre Allard of Cooptel, Joe Tedesco of DHX Media, Donna Robertson of Novus Entertainment, Dave Purdy of Stingray Digital, Ian Stevens of Execulink and David Horton of Seaside Communications.
- Purdy disputed the consultant’s findings that millennials won’t pay for things. They will pay for all sorts of things that they want. Purdy worked at Vice Media for the past three years and explained: “I’m amazed at how many times people who were making less than… $50,000 a year were all ordering Uber Eats and never took public transportation, they were all taking Uber and they all subscribe to Netflix.” Millennials will pay for things, he added, “they just are not willing to pay for the same types of packaging and bundles their parents paid for.”
- Robertson, the co-CEO of Vancouver-based independent Novus advocated for far more flexibility in channel packaging than most programmers would care for. She fretted that in this age of low-cost programming, making someone pay for a $25 basic package before they can buy the video they want outside of that is untenable. “We need to give customers more ability to have a choice of single channels and we need to be able to negotiate for them on a channel by channel basis,” she said. “Cord shaving would not be as dramatic as it is right now if we could somehow give the consumer single channels and lower costs.”
- Purdy, Stingray’s chief digital officer, said he doesn’t think solutions are that simple. “I feel we’re transitioning into a period of time where the industry requires much more thoughtful and intelligent solutions. So, it requires a more comprehensive solution than ‘we need the right to sell a-la-carte channels’… It requires win-win deals.”
“We do need to offer consumers those a-la-carte options.” – Joe Tedesco, DHX Media
- Joe Tedesco, the EVP and GM of television at DHX Media pointed out that all is not lost on the TV side, despite so many media narratives about the death of TV. Television is still the number one source of video for people and “the vast majority of homes still want a fairly large, comprehensive bundle of programming,” he said, adding later: “We do need to offer consumers those a-la-carte options,” even though it’s “a very complicated and expensive way to buy television.”
- “There’s an opportunity for us to come together and support ecosystem-friendly solutions with customer-centric packages that will deliver a different outcome in Canada than in the U.S. But that requires real leadership on both sides and much more thoughtful negotiations than perhaps I did in the past or people in this room have done in the past,” added Purdy.
- Piracy, which is something most everyone in the room is battling – while also supporting the FairPlay coalition – can be impacted if video was sold in a more consumer-friendly way, said Execulink’s CEO Ian Stevens. Years ago, music CDs sold for $18 and had maybe 10 songs. Now people pay Spotify $10/month for access to all their favourite tunes and millions more they have never heard of. “People aren’t willing to pay the premium price for content, or said a little differently, they don’t value what we’re asking for. They don’t think it’s worth what we’re asking for to get access to the content that they’re interested in receiving.”
- “We have some broken business models,” added Stevens. “We have programming brands that currently have deep penetration and low viewership and there are revenue models tied to that… We’re in this really bad business spot where we’ve seen this story play out in the music industry and we’ve seen an outcome and Apple has got it all or Spotify and we have to figure out how to do that – and I don’t really want to become a record store.”
- “Maybe at the end of the day,” said Robertson, “we’ll just be a single point billing system. Maybe (OTT services like Netflix and Amazon) will ask us to be their central billing system and be an aggregator for the over the top services.”
- “We were the authors of our own misfortune” when it came to allowing Netflix to gobble up the OTT space in Canada, said Purdy. Five years ago, broadcasters weren’t letting rights for in-season programming and back season programming go to the carriers for on demand binge viewing and carriers weren’t spending money on the robust VOD playback technology anyway to store it all and play it back, even if they did get the rights.
- “The broadcasters were trying to hold onto them. They were trying to get two cheques, one from the traditional distributors and another one from the OTT SVOD players and the result was Netflix was able to swoop in and pick up those previous season look-back rights at a relatively low cost… If you’re going to be in the customer-centric TV space, you’d better be able to meet their binge-viewing requirements.”
“Grandma’s grid guide should be dead.” – Ian Stevens, Execulink
- However, as much as people like to say the industry’s lunch may already be eaten, the panelists all said no to that idea. “It’s not too late to work together to find the right solutions,” said CoopTel’s Allard.
- One idea Stevens wants to see the CCSA work on? “We need to invest in user interfaces that are much more consumer-friendly. Grandma’s grid guide should be dead.”
- “You need to figure out ways to add value to these premium subscription services, whether it’s merchandising or co-marketing, billing on behalf of… you need to get to a point where Netflix and the Spotifys and Amazon Primes are paying you or splitting with you a similar amount of revenue as the HBOs and Discovery Channels. But I think you can get there as an industry if you come together and figure out ways to really add value to that relationship.”
- However, there’s a ton of fear in that, given the sheer size of the Silicon Valley companies constantly threatening to devour the whole video business. “Whoever is going to fill the need is going to win the eyeballs. Whoever is going to continue to make it easy… to consume, are going to retain the eyeballs and I would always watch out for companies like Google who are 1,000 pound gorillas compared to the entire industry in North America and if they decide they want to get into it, we might all be out of business in terms of our video game.”
- Purdy shared an interesting anecdote on launching ethnic services noting that when he was with Rogers, they launched over 100 of them, thinking how super that all was for their multicultural clientele. “I got really upset because we were getting a really low number of subscribers (some in the single digits) and then someone asked, ‘Dave, you’re an English speaking guy, how many channels do you require to be happy?’ and the answer was something like 30 or 40 is the number of channels I would view in a month. So why, if you’re a Mandarin speaking guy or gal, would you be happy with two channels? Putting your toe in the water is not good enough. You need to figure out what’s the comprehensive Mandarin or Cantonese solution to really super serve one group, get it right and then move to the next one, rather than: ‘I gave you two channels, why don’t you guys love me’?”
- When it comes to keeping up with the much richer, much larger Joneses and getting into new technology or the Internet of things, it’s often about scale. The opening presentation mentioned one member who is serving a farm which is monitoring its chickens online, calling it the “internet of chickens.” This is a neat story, said Stevens, but “if you have one internet of chickens, you’ll nurture it and you can handle it. If you have 20, it’ll probably fall apart unless you’re planning to get to 200 or 2,000 or whatever the number is to get to scale. I love the story, but if it’s a single service, it’s a hobby until is becomes a process that you can repeat time and time again that’s embedded in your business.”
“(Broadcasters) don’t, for some reason, want us to be able to educate the customer about the fact that all of these bells and whistles actually cost more money and that is why they have to pay more.” – Donna Robertson, Novus
- Seaside’s Horton said he’s thankful his system has some built in buffer. “We’re a rural service provider with an aging demographic – which give us some more time to adapt to changes.”
- Robertson also promoted the idea to start educating the customer about how much things cost and why, but that her contracts with programmers don’t let her. “Quite often the programmer wants to charge extra for multiplatform rights but as a condition of the contract, you are not allowed to show the customer that as a line item. You’re not allowed to let the customer know that he or she is actually paying for that TV Everywhere and that is why their price has gone up. (Broadcasters) don’t, for some reason, want us to be able to educate the customer about the fact that all of these bells and whistles actually cost more money and that is why they have to pay more.”
- The almost last word here will go to an audience question, from independent BDU VMedia’s George Burger who noted that anyone who wants to watch Netflix can do so in minutes, but if they want to watch what VMedia is offering? “If you want to decide one day you’re going to get VMedia’s TV service, and you go to VMedia and download the app, we have to tell you to go to our web site, change your internet provider, wait a week and a half, get our set top box, and by that time, just forget it. It’s never going to happen… We need to uncouple TV from the wire into your house.”
- Of course, that doesn’t exactly help the CCSA members in the room do their business, as a few pointed out. Agreed, said Burger, unless they wanted to build their own TV app and then go ahead and take on the world outside their regulated regions and an MVPD. That, however, would take regulatory change. “Let us serve the market they way our market wants,” urged Burger, “without the artificial connections of closed, managed networks.”
- Purdy believes Comcast will eventually do just that, Stateside. “Comcast hasn’t pulled the trigger yet, but they have the ability to take Xfinity and launch it across all of the United States, whether they have facilities or not. They’ve loaded the gun, they’ve cocked the hammer, it’s just a question of nobody wants to go into their cable brethren’s territories yet.”
