Cable providers and network heads agreed on two things in Tuesday’s session at The Cable Show 2014 in Los Angeles: they believe they have a better product than Amazon and Netflix, but they need to start cooperating with one another if they’re going to survive.
In the session “Brought To You By Broadband: The Faster, Better, More Entertaining Future,” TV execs discussed the growing threat from tech companies in the original content business. Host Betty Liu, editor-at-large and anchor of “In the Loop,” began by identifying the big competitors in Amazon and Netflix. And the problem for these content providers is that list of competitors is only getting bigger. The NewFronts this week help demonstrate how many companies are getting into the original content arena, bypassing networks like A&E and ESPN for their own operated video platforms. Yahoo announced its original slate this week, included in a lineup of companies like Xbox and “The New York Times,” only adding to the multitudes of video offerings in the year to come.
“People view video providers as threats,” said Rob Marcus, chairman and CEO of Time Warner Cable, who is also one of The Cable Show’s co-chairs. “I have a counter view of that - clearly over-the-top video is one of the things that highlights the value that Time Warner Cable can offer our customers.” And according to Marcus, highlighting those video programming plans can only heighten the value of companies like Time Warner Cable, which customers need to access that video in the first place.
John Skipper, president of ESPN and co-chairman of Disney Media Networks (as well as another Cable Show co-chair) added: “These platforms are competing for ad dollars, but they’re trying to get into our business. Shame on us if we don’t protect our value. We have a better product than those companies, and we’re allowing them to set the tone of the conversation.”
But as host Liu noted, Skipper is in the unique position of controlling live sports programming. While other panelists each have an original content value proposition, Skipper offers TV content associated with some of the highest costs in cable packages. So when the conversation turned to how these cable networks are to compete with video providers like Netflix, metrics and cost became the center of attention.
“We’d all like to be in a business where we don’t have to report our numbers too,” said Nancy Dubuc, president and CEO of A+E Networks. “They’re not sharing those viewer numbers. So how do you work with a creative entity when nobody has any metrics to base it on?”
“Netflix wouldn’t even exist if it weren’t for the cable industry,” added Jerald Kent, chairman and CEO of Suddenlink Communications.
But, as most of the panelists agreed, popular video platforms have a usability that TV Everywhere hasn’t quite wrapped its head around yet, which brought up the need for cable providers and programmers to begin truly working together to ensure that authenticated TV apps can reflect their content offerings.
“Competition is not a bad thing,” said Skipper. “We need to figure out together how to make authenticated television work and figure out how to let people find their content.”
“Let’s put the customers first, or a lot of technology companies will pass us by,” said Dubuc.
What is needed now more than ever, according to the speakers, is an easier process of authentication for TV Everywhere apps, so that content providers can get their programming to viewers in whichever way they choose to watch, and consumers don’t seek their TV elsewhere.
John Martin, CEO of Turner Broadcasting System, admitted: “I don’t have TV Everywhere because I can’t figure out how to use it.”
“Our customers are going to go to a Netflix and we want to make it easy for our customers, but we want to be the provider of choice,” said Kent. “The more content you view online, the more you’re going to want to come to the cable high-speed service, because it’s the best out there.”
According to the panelists, the call-to-action to the cable companies and TV heads out there is to begin working together to efficiently promote pay-TV as a premium offering, while not pricing people out of the market completely.
“There is a fundamental problem in the ecosystem” said Marcus. “At the end of the day, we’ve got to figure out a business model where our willingness to pay for this content is more responsive to what customers are actually willing to pay. It’s incumbent on all of us to tout the value of our video that we deliver every day.”
Marcus estimated that Time Warner Cable charges its customers about 20 cents per hour of video viewing, a number he touts as a high value when compared to some online platforms in the marketplace. The idea of promoting cable companies’ own video content as a major part of their value proposition should give cable a better place in the highly competitive marketplace that Netflix and Amazon are entering. And while all of the panelists agree that a la carte pricing is not a viable option, the cable industry needs to start thinking of ways to offer people more options so they don’t stray to these tech alternatives.
According to Dubuc: “The consumer has been given a la carte in some sense already, so the customers have choice [Netflix, etc.] and they’re still overwhelmingly choosing cable.”
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