Cable Operators

TV as Pandora-Like Box?

4/02/2012 12:01 AM Eastern

New York — Someday, you’ll turn on your TV and the
programming you’re most interested in will just play sequentially
— the way the Internet music service Pandora
works.

That’s a future scenario for cable TV as sketched out by
Peter Stern, Time Warner Cable
executive vice president and
chief strategy officer, who spoke
at Multichannel News’ “Breaking
Through: Innovating Cable TV”
event here last Thursday (March
29).

It will be “a very different customer
experience,” Stern said.
“You’re going to see a more Pandora-
like model, where customers
can consume television in a
passive way, so they don’t have to
plan ahead like they do with the
DVR model.”

Cable networks will still have
a place, but the emphasis will
be on the programming itself,
served up based on individual
preferences. Added Stern, “You
don’t have to subscribe to as big
a package, once we put the tools
in place to target the TV to you
based on your interests.”

Such an intelligent TV service
also will let Time Warner Cable
“learn what ads are relevant” to customers, Stern said:
“A lot of the work we’re doing with dynamic ad insertion is
around that.”

In the nearer term, Time Warner Cable is working to give
video subscribers access to more
“TV Everywhere” content across
more devices. As an example, Stern
pointed to the operator’s deal last
year with ESPN that gives its customers
access to WatchESPN on the Web, smartphones and
tablets.

“We are now seeing it happen,” he said. “It’s slower than
we’d like, because the negotiating cycles take longer. But I
think we all know it’s the right thing to do.”

Stern, who was interviewed by Multichannel News editor
in chief Mark Robichaux, described the earliest conversation
he had about the TV Everywhere concept with a Viacom
affiliate-sales representative in 2007.

“She was bemoaning the fact that she couldn’t put her
content online,” Stern said. “We got around to, How about we
as an industry open our billing system up to the programmers?
Something we never contemplated before.”

While some critics have argued TV Everywhere is anticompetitive
because it forces customers to subscribe to cable
TV service to get video on other devices, “I will tell you
it’s fundamentally competitive.
because it provides content to
people that they otherwise never
would have been able to access,”
Stern said.

Besides technology innovations,
Time Warner Cable has introduced
lower-priced video packages
to cater to what Stern called
“value shoppers.” The MSO’s TV
Essentials, priced at between $30
and $50 per month for about 40
networks, is designed to fill the gap
between a “cord-cutter” option on
the low end — with over-the-air
TV and Netflix or Hulu Plus — and
the average of $72 per month TWC
customers spend on cable TV.

“For us as a cable operator … we
have a very high fixed cost of infrastructure,”
Stern said. “So it’s
important to be able to deliver
something to everyone.”

On the broadband front, Time
Warner Cable also is aiming at
price-sensitive consumers with its
usage-capped Essentials Internet plan, currently available in
southern Texas. That offers a $5 monthly discount to users
who use less than 5 Gigabytes of data per month.

“There’s been a fundamental unfairness” in broadband
as the amount of consumption
among the heaviest users
outpaces Moore’s Law, Stern
said, which has resulted in the
cost of delivering broadband
growing faster. “If we keep raising the price for the lighter
users to compensate for the heavy users, they will be
more likely to go to [4G] wireless.”

Business services, meanwhile, represent a major opportunity
for Time Warner Cable and other MSOs, with the potential
for revenue to more than double over the next three
years, according to Stern. TWC bought cloud-computing
company NaviSite last year “to go after new opportunities
and build new platforms.”

October