Riding the Next Wave of Broadband Growth5/18/2003 8:00 PM Eastern
As we're preparing to bring CTAM's Broadband Opportunity Conference back to the NCTA's National Show in June, we've discovered that the cable industry is poised for the "next wave" of broadband growth.
While it's difficult to tell what might be aggressive or conservative in the broadband future, we do know that broadband will be both widespread, as it continues to gain momentum, and loved by consumers, as they become more experienced with its benefits.
One of our biggest opportunities is to strengthen the consumer proposition and build revenue, by developing services that extend the benefits of broadband beyond "faster" and "always on."
In order to grow the broadband business, we'll have to do a better job of segmenting the market and giving customers what they want, rather than a "one size fits all" approach. Specifically, some customers will want a combination of different offerings, including home networking, music services, home entertainment, virus protection, wireless access, premium content, unique applications, personalization, parental control, higher byte caps, different speeds, and tiered pricing. Cable companies will need to partner with a variety of content, application and hardware companies to develop easy-to-understand packages that will provide choice for the consumer.
New business models will develop, providing revenue from tiers, distribution fees from aggregators that pay programmers for the opportunity to offer content to their subscribers, and direct-to-consumer subscription revenue. Furthermore, broadband actually delivers on the elusive promise of interactive television, by marrying the persuasive power of video creative with the responsiveness of the Internet.
Another "next wave" opportunity is to generate incremental revenue through advertising. Every medium brings together consumers and marketers – and broadband will be no exception. As penetration grows, the opportunity to connect with consumers with segmented and targeted advertising will become more compelling to advertisers.
The content factor
From a content perspective, we are just beginning to see new and existing companies develop the first generation of packaged content, which leverages the benefits of broadband, such as RealOne's SuperPass service, Microsoft's XBox enabled multi-location gaming, and MovieLink. There's a lot of innovation from the cable programmers, as well. The best ones are leveraging their brands, their relationships with consumers, and their experience with producing both television and Internet programming and content to develop new products for broadband.
Programmers are betting that consumers will interact with broadband content in many different ways, and betting that we can all effectively monetize those interactions. We are now in a very good position to develop new products and services that leverage the technology infrastructure we have in place, as well as the combination of our video and Internet programming expertise.
Now is the time for cable companies and content providers to partner to expand broadband offerings. Partnerships are more likely to spur successful content development. Otherwise, MSOs will continue delivering high-speed Internet access and related applications, while separately others will lead delivery of content.
Tackling the challenges
Today, the incumbent telephone companies are formidable competitors, because they have deep pockets and they're beginning to work the kinks out of delivering digital subscriber line service. Cable operators can not afford to ignore this competitor. Instead, we need to be vigilant about reinvigorating cable's service and offering the best choice for each prospective customer.
For programmers, the competitive challenges rest in the fact that the broadband Internet environment is "frictionless" from a distribution perspective. Unlike cable television, anyone with the right organizational and technical capabilities can launch broadband content and make it available to consumers. This will spark tremendous innovation – and competition. In the end, those with solid brands, excellent consumer relationships, persuasive content, and the strongest value proposition will succeed.
This is an exciting and crucial time for the cable broadband business, and attendees at the CTAM Broadband Opportunity Conference will have the benefit of immersing themselves in the next wave – increasing market share and developing new revenue sources, creating profitable business partnerships, and nurturing innovative programming content.