THE QUESTION, “Whose customer is it anyway?” has always been a contentious issue between television distributors and the pay and specialty channels they offer to Canadians.
In short, the BDUs have long been adamant that the customer is absolutely theirs. It’s their network, they do the packaging and marketing and the customer pays them, of course. Simple, right?
Broadcasters have always countered that without their content, BDUs have nothing but a nice store with empty shelves, that the subscriber doesn’t care about the connection and pays the cable company to see their favourite shows. Simple, right?
Notsomuch. The answer is that they absolutely need each other and the customer is shared.
Specialty channels have for ages been sending a phalanx of trainers to the BDUs’ customer service rep centres, advising CSRs in the art of selling Family Channel, Vision TV, Movieola, World Fishing Network or any of the myriad services to the BDUs’ customers. CSRs get free swag and have had the opportunity to win trips and other prizes if they sold enough subscriptions to whatever specialty service was holding a promotion that month.
As the multi-billion-dollar Canadian TV business grew and grew over the years, as pay and specialty channels added ever more customers, this was a very good relationship where everyone benefited. But ever since the first cable channel launched, broadcast executives have lamented their wish to directly market to cable and then satellite customers – who are their viewers.
Instead, broadcasters were, and are, limited to mass-media buys, whatever U.S. local avails they can get (if any), the occasional flyer inserted into the BDU’s customer bills and best-guess niche advertising. However, if they had the data to actually target potential sales among their BDUs’ customers, they could bring more subscribers to their own services – and revenue growth to the BDUs.
No matter the explanation, the cable and satellite companies have always answered the same way: No way. No chance. No how.
As subscriber growth slows to a trickle and Canadians turn increasingly to other ways to get their favourite content, however, this is an outdated objection, especially when it comes to independent broadcasters. More open access to a useful level of customer data for broadcasters not owned by a BDU would give those smaller specialties a better chance to target-market and to not only raise their own sales, but those of their BDU partners as well.
Access to customer data was a somewhat overlooked discussion during the vertical integration hearing that the CRTC just wrapped up this week. As we and others have covered, a code of business practices, skinny basic and content exclusivity dominated the six hearing days.
But make no mistake, access to customer data would provide a dramatic boost to the fortunes of the independent broadcasters. In fact, noted Allarco in its appearance, it’s working already: “We have initiated a telemarketing program with a third party call centre,” said Super Channel’s president and COO Malcolm Knox. “We work with a BDU and get them onside to participate. The BDU will supply a list of their customers to the third party call centre. We don’t see it. It’s all confidential.
“Over the last 14 months, we have added 44,000 subscribers in this fashion, for a number of – particularly medium-sized BDUs. The cost is incredibly reasonable, and the sell-through rate, the take rate, is about 42% of calls completed. It’s remarkably successful.”
While we don’t know which carriers Knox is talking about, not all BDUs agree with such tactics.
Said Cogeco Cable’s CEO Louis Audet (translated from French) “Imagine if our customers could receive phone calls from each of the 150 channels of programming or other provider who wishes to address them, imagine the reaction of customers who would be harassed by all these requests,” he said,
Now, no one is asking for that and certainly no programmer worth his or her salt are going to deluge customers with calls. Plus, the broadcasters and BDUs would obviously work together on this to make sure nothing resembling “harassment” would occur.
But most BDUs are on Cogeco’s side here. “It is not the programming service that sells, but the dealer who sells the service, Cogeco Cable in this case,” said Audet. “Why should we have an obligation to provide… identifiable information about our subscribers to third parties?”
Why? Because the BDUs aren’t being asked to hand over data to the local vacuum salesman, but to vital business partners. Because a tide of more customers and happy customers, as the cliché goes, raises all boats.
I’m sure some are thinking our privacy laws will get in the way. Not so, according to Astral Television Networks’ president John Riley, who told commissioners last week his company has a legal opinion which says there are no privacy implications preventing a BDU from passing on the name and address of The Movie Network customers to The Movie Network.
Regardless, with the BDUs increasingly worried about broadband, telephony, wireless and defending their turf, selling TV channels is well down the carriers’ priority list and the best companies to take ownership of that promotion are the channel owners themselves. “Historically there has been a reluctance to provide that information on the basis of whose customer is it anyway,” noted Riley.
“The fact of the matter is as it is now and as we go forward, more of the weight of selling that service, of marketing that service, tends to fall on the programmer (and having some customer details) would allow us to speak to the people who watch our service whom we also think of as our subscribers more directly to maintain, to reduce churn and to keep those subscribers and to speak to them directly.”
And what good cable company CFO doesn’t like to hear about more ways to reduce churn?
Plus, added OUT TV’s COO Brad Danks when he appeared at the CRTC hearing on Tuesday, as contracts with BDUs get more complex, encompassing mobile and video on demand rights – and the ability to sell ads against that content, independent broadcasters, now more than ever, need to know exactly who their viewers are.
“When we are entering into BDU agreements now, they are trying to carve out VOD and mobile and all these areas where they are going to take the data and do dynamic ad insertion. We don’t know anything about the customer,” he explained. “We have customers that we drive to the BDUs, they sign up. But we don’t get any of the profile information… and that will become increasingly important when you are selling advertising where (agencies) are looking more and more at psychographic information, how old is this person, is it male or female, and all of those sort of details.
“We are cut out of all of that and that is a huge revenue opportunity for us and it is one that they are working very hard to capture and not share.”
Now, I’m not naive enough to suggest that the big vertically integrated companies be obligated to share such data. Bell is not about to let anyone with Shaw on their business card see any customer data. But this should be seriously explored for independent broadcasters. At the very least, the Commission should seek a legal opinion on whether such a regulation would stand up to Canada’s privacy laws.
Take ZoomerMedia as an example. If they knew the exact whereabouts of some of their Vision TV subscribers, they could surely boost the sales of their other specialty, One: Body, Mind & Spirit. This is good not only for Zoomer, but for the BDUs carrying One. What BDU doesn’t want their subscribers adding more channels, or maybe even the whole package where One resides?
Plus, with the new BDU regs (CRTC 2008-100) coming into effect September 1, 2011 and with so many in the industry so sure that Canadian BDUs will then set about cutting some costs by repackaging the many channels available to customers and cutting wholesale rates, the ability for independent broadcasters to let their viewers know just what channel they are now on, or which package they ended up a part of, will be crucial.
Finally, take a look at my own TV subscription experience. I subscribe to nearly all the channels. But every time a new channel is added by my carrier, I have to call them up if I want to get it. Now, my carrier knows I have nearly all the channels. Why on earth don’t they call me to make sure nothing is blank on my screen? If they don’t want to do that, surely the broadcasters whose channels I’ve seen for three months in preview and then disappear would love to give me a call to say, for example: “Hey Greg, we wondered if you liked the free preview of XYZ Network, and would you like to add it for $5?”
How is it harmful to let independent broadcasters do that?
