Rutledge: Cablevision Will Tap E-Commerce
By Todd Spangler -- Multichannel News, 11/17/2006 12:24:00 PM
New York -- Cablevision Systems chief operating officer Tom Rutledge said one of the key growth opportunities for the company in the next five years will be acting as the go-between for commerce between retailers and cable subscribers.
Rutledge, speaking at the Future of Television conference Friday at New York University’s Stern School of Business here, said Cablevision sees two key drivers of future revenue: taking a bigger share of advertising dollars that businesses spend reaching consumers and to “save businesses money by fulfilling orders for them.”
Cablevision currently sells flat-screen television sets and other consumer electronics, offered through partners and shipped directly to customers, Rutledge said, adding, “That model will work whether it’s ordering pizzas or flat-screen TVs.”
Today, such transactions are “not driving our economics,” he said. But at some point, subscription revenue “will reach a saturation point, and then these softer economic models become more significant drivers for us in five years.”
Rutledge said spending on all forms of advertising is roughly $1,000 per home passed and Cablevision sees the chance to take more of that. “We have the relationship with consumers,” he added. “We have the ability through our network to build something that resonates with consumers.”
He conceded that bulking up cable’s e-commerce businesses won’t happen overnight, and it will require, for example, the development of more user-friendly TV portals. “It will be many years until cable advertising is the dominant form of advertising, but I do think it’s coming,” he said.
Cablevision is experimenting with new forms of advertising, he said, including interactive ads and dynamic ad insertion into video-on-demand content. In addition, Rutledge said, the operator could sell advertising against content stored in its planned network-based digital-video-recorder service, which is currently the subject of a pending copyright-infringement lawsuit filed by major TV networks.
With its RS-DVR (which stands for “remote-storage digital-video recorder”) service, Cablevision “could refresh the ads” in the content stored on its network, although Rutledge quickly added, “There are all sorts of copyright issues.”
“The only reason we haven’t deployed [RS-DVR] is because we’ve been sued by virtually everyone who owns a copyright,” he added.
When he was asked how long “over-the-top” Internet-based service providers like Vonage America and YouTube will get “a free ride” over cable operators’ broadband connections, Rutledge responded, “Probably for a long time.” But, he added, voice is a completely different animal than video.
“Voice over-the-top is easy,” Rutledge said. “I tell phone companies that voice isn’t a business, it’s just an application. Data is a business, I agree. But television, because of its bandwidth needs -- there’s more and more HD requiring more and more bandwidth -- will not be disintermediated by other products, at least not in the near future.”
In his closing remarks, Rutledge noted that when he started in the cable industry in 1977, the average revenue per subscriber was $4 per month, and Cablevision now generates about $115 per month.
In the next 30 years, Rutledge quipped, “I hope the average cable bill will be $2,500.”
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