Cable TV's Bold Play to Buy Loyalty (Analysis)
With subscriber growth stalled, major cable system operators look to new technology that personalizes the customer experience to reinvigorate their business.
WASHINGTON, D.C. -- When Comcast's Brian Roberts dazzled the crowd at the National Cable and Telecommunications Association’s opening session Tuesday with a preview of his company's X2 video platform -- which offers personalized programming recommendations -- the only surprise for Stephen Necessary was that the chairman and CEO of the largest cable TV provider seemed to bill it as an industry first.
Necessary is vp video product development and management at Cox Communications, the third-largest multisystem cable operator in the U.S. In December, Cox launched a very similar innovation under the brand name Trio on a limited basis that it plans to roll out across the country this summer with even more enhancements.
“I was glad to see he adopted our lead,” quipped Necessary.
What Roberts' presentation did signal was the next big step in the evolution of cable television, with the introduction of a host of new technological innovations that are designed to improve the user experience, take advantage of cloud technology and open the door to extending cable’s business model beyond the sale of video, broadband and phone services.
This comes at a time the market for cable TV in the U.S. has matured and begun to erode slightly, with most big multisystem operators (known as MSOs) actually seeing a small decline in the number of subscribers.
Those small declines are troubling because it could lower stock prices, make it harder to attract investments and even lead to further consolidation. There was a report last week on Bloomberg News that Liberty Media will use its stake in Charter to acquire Time Warner Cable and operate the two providers as one company -- although that speculation seems premature. Time Warner Cable won’t comment.
Glenn Britt, CEO of Time Warner Cable, warned during a panel this week that customers are already unhappy about their rising cable bills.
A veteran industry observer agrees. “If you charge the customer too much,” says Deana Myers, senior analyst at SNL Kagan, “if you try and raise rates every year, if you’re not really trying to serve the customer with true service, there are other options.”
Those options include cord-cutting, the practice of cable customers dropping paid services either for economic reasons or for streaming services like Netflix and Amazon Prime, or simply viewing content from hundreds, even thousands, of online channels available for free on any computer, or on home screens via Apple TV, a Roku box or other devices.
So cable is finally getting its act together on things that do matter to consumers. After years of talk, there were announcements that week that indicate the industry is finally ready to implement TV Everywhere -- making programming consumers pay the cable company for available on all their connected devices. Until now the implementation -- despite the hype -- has been slow and haphazard. Many customers have found it difficult and confusing to get content on their computers, tablets and phones even after they pay for it.
Myers says the key thing she picked up at the cable TV show this week was the “total acknowledgement that TV Everywhere needs help, that they need the content to get out there, that they need to better explain to the customer what it is, that they need to make authentication easier and give the customers more help.”
Offering faster connection speeds is a start, and the ability to move transactions to the cloud with nearly unlimited capacity make these changes possible; but with so much content, it is also crucial to sort out for the customer what is available and offer better ways to find what they really want. That is what Comcast and Cox are really talking about with personalized recommendation engines.
And Time Warner Cable says it is also working on the same kind of systems.
“We're developing an entirely new video guide with a simplified interface to help our customers enjoy TV even more,” a Time Warner Cable spokeswoman told The Hollywood Reporter this week. “The new guide, or hosted navigation system, will be cloud-based and work in concert with the deployment of new set-top boxes. … It will … provide a better, more consistent experience with other popular web-based portals and TV viewing habits.”
Translated, that means TWC, like Comcast and Cox, believe that by adding a personal touch, offering Wi-Fi hotspots all over the place whereby subscribers can connect and by making the entire experience more user-friendly, they can start to acquire more customers and do a better job retaining those they have.
“The reality is we offer hundreds of channels,” says Necessary, “plenty of content, tens of thousands of video-on-demand assets. We all know for consumers it is very difficult to find that content, so they all gravitate to the same channels they typically watch, or wander through video-on-demand searching for content. Quite often, they miss the content they have paid for and might enjoy if they had a better way of finding it.”