Cable Companies Are Working to Keep Up With the Consumer
How you consume media has changed. According to industry experts, while TV sets are still the number one way to consume video, watching content on a device other then TV is up 400% in the past 18 months. In fact it has been widely reported that in 2013 the number of cable subscribers dropped for the first time since cable TV launched.
Netflix and YouTube account for at least 50% of all streaming content online in the US.
So what does that mean for the cable industry?
The National Cable and Telecommunications Association held its annual meeting last week in Chicago. Interesting enough, The National Cable Show has rebranded and is now called The Internet & Television Expo, or INTX for short. Not only has the industry recognized the need to include the Internet, it got first billing at the show.
CableLabs is a non-profit research and development consortium that works with the large cable companies in developing technology at a rate that is affordable and meets the ever changing demands of the consumer.
Phil McKinney, President and Chief Executive Officer of CableLabs, says there is no doubt the industry is changing. “Cable providers are looking less and less like cable companies and more and more like IP (Internet Protocol) delivery providers.”
Worth noting, cable TV is still the largest form of delivery of content. Currently 90% of US Homes still pay for TV. But, as McKinney points out, more and more providers are using the Internet to delivery content.
Will there be enough bandwidth to keep up with the demand?
“Technology is pushing Internet speeds,” says McKinney. “We continue to see more bandwidth being developed than what is needed.”
Just last week Comcast announced plans to roll out multi-gigabit broadband service to its 2.4 million Chicago based customers. And SpectrumMax, a San Antonio based company, announced two new products that it promises will allow “cable operators to eliminate customer losses and successfully compete with cellular or wireless carriers.”
Will streaming content online verses cable or satellite save the consumer money? Is the Internet the answer to the demand for an “al a chart” menu of programming?
Yes and no to both questions.
By opening up content via the web, or what the industry refers to as “over the top,” meaning content delivered by the Internet verses the cable set top box, there are less bandwidth issues. Even satellite has a limit to the number of channels they can deliver. But the Internet, at least for now, seems to have an unlimited amount of bandwidth. More bandwidth gives smaller, more affordable programmers an outlet to deliver their content. This means the consumer has more choices to fresh new content at an affordable price.
Where the consumer will find cost going up is the more traditionally produced content they currently get through their cable provider. ESPN is the perfect example. Under the current cable model, the consumer pays about five dollars per month to get ESPN. Yet, set top box data shows less then 20% of consumers actually watch sports. NFL being the exception, drawing about a 30% audience.
So imagine the cost of ESPN in an “al a chart” world. Think Pay Per View. In ESPN’s defense it is not cheap to produce a live sporting event in HD. So if the cable industry moves away from traditional cable to an “al a chart” model, the cost would increase for those consumers who want the content.
“The cost for produced content continues to rise eight to 12%,” says McKinney. “The cable industry is absorbing most of the cost, knowing the consumer wants a cheaper monthly bill.”
Sudden Link Cable went as far as to drop all Viacom (CBS) programming because of the rising cost of produced content.
In truth the answer seems to lie somewhere in the middle. Dish’s Sling TV is perfect example. Sling TV offers consumers a package of channels they can watch on their mobile device, tablet or traditional TV through RoKu. Bandwidth delivery gives the consumers the freedom they want, and the package keeps the prices at a lower rate.
Channel Master rolled out its new IP box at the National Association of Broadcasters Convention last month. The box combines an over the air antenna, built in DVR and channel apps for additional content. The antenna helps Channel Master avoid retransmission fees, which are fees the big networks charge cable companies for the rights to carry their content. The content is free over the air, so that alone saves the consumer money. The built in DVR allows the consumer to watch the content on demand, and the built in channel apps gives access to additional content. Not currently offered on mobile devices, but another example of how the Internet can reduce the cost for the consumer.
Social Media Has Influenced How We Consume Media
Before social media, content on TV was used to drive an audience to a website. Social media has reversed that by using Twitter, Facebook and other social media sites to drive an audience to TV.
But the biggest issue with social media according to McKinney is spoilers, “where east coast viewers spoil the end of a TV program for the west coast viewers.”
Live programming has been the only answer to the problem, like a sporting event. Both east and west coast viewers are watching the sporting event live, so no spoilers.
Some networks are solving this problem by having viewers interact with live programming in real time on the east coast, and then playing back the interaction during the west coast feed. Youtoo America is a perfect example. In the interest of full disclosure, the parent company of BizTalkRadio and BizTV also owns Youtoo America.
The concept behind Youtoo America is that you, the viewer, can be on TV. The Network launched two live shows last week that discuss the trending topics of the day. The viewer or consumer can interact with the program by voting on the question of the day in real time, texting a message that scrolls across the bottom of the screen or even submitting a short video that could be played with in minutes on TV.
The idea is to use social media to drive an audience back to watching live content. The trending topics are first put out on social media. Viewers tune in live to see if their comments or videos made it on air, or to see how the rest of the country voted in the poll.
Interesting enough, the NBA is taking the opposite approach in its telecast according to McKinney. They find that sports consumers want to watch the game on TV without a lot of distraction on the screen. So the NBA is experimenting with an app that will provide stats, the score and social media comments. The app will run live during the telecast of the game.
Finally, is there any new TV technology to keep the consumer’s interest?
Yes, and it is called Ultra HD. But it is not what you think. Ultra HD is not about a higher resolution, like the first generation HD TVs.
Ultra HD is all about the amount of color it can display. Current HD sets only allows about 38% of colors the human eye can see. Where Ultra HD allows up to 70% of the colors the human eye can see.
“Resolution will not be as important as the color spectrum with the new TVs,” says McKinney.
The good news for consumers, the price of an Ultra HD TV is expected to come down in the next couple of years.
The Bottom Line:
Technology changes, and media has always been evolving and reinventing itself. Cable TV is the latest medium to use the Internet to deliver content. The biggest hurdle is not the distribution, but how the industry keeps the cost of produced programming down in the fragmented world of delivering the consumer the content they want, on the device they want, when they want to watch.
Scott Miller is the EVP of Centerpost Limited, a private media holdings company that owns BizTV, BizTalkRadio and Youtoo America. Miller recently attended the Internet and Television Expo in Chicago and reports on how the industry is dealing with the changing landscape.