News

Small Things Add Up As Cable Goes Retail

2/22/2004 7:00 PM Eastern

The cable industry's push into the retail environment looks like a fine idea, on paper, but it carries with it a host of tough issues to figure out, as exemplified by across-industry panel put together by the Cable & Telecommunications Association for Marketing's Rocky Mountain chapter last week.

But if there was one message that emanated from the panel represented by Best Buy, Panasonic Consumer Electronics and Time Warner Cable, it was do the small things right.

"You've got to be in the store on a regular basis," said Time Warner Cable director of retail alliances Jim Doolittle. "A bigger sign isn't victory. Victory is winning the hearts and minds of the sales associates."

Time Warner recently completed a nationwide HDTV promotion with Pioneer Electronics. Consumers who bought an upper-end Pioneer HDTV set received a $500 cash rebate from the manufacturer, plus free digital cable and free HDTV service for six months.

The promotion was rolled out to 1,300 retail stores, far beyond the 200 stores that serve as Time Warner's retail base.

"The Pioneer promotion went extremely well," Doolittle said. HDTV cable subscriptions for December and January surpassed the previous five months combined.

"It was a very aggressive offer," Doolittle said. But the key, he said, was getting retail sales associates to buy in.

Although direct-broadcast satellite have long held the retail high ground, Best Buy sales and performance leader Dave Ryan said cable has plenty of opportunity to make inroads. He said less than 10% of the HDTV sets that were sold during the holiday season went out with either a DBS or digital cable subscription attached to them.

"If a customer has cable, we should be upgrading them," he said. "We're counting on it as being incremental."

That incremental approach pervades other categories. Ryan said Best Buy is already selling cable bundles of video and data, and would like to add not only VoIP telephony, but Internet content services such as Rhapsody or Netflix.

"We need to work closely with cable on bundles," Ryan said.

Ryan and Dick Strabel, vice president at Panasonic Broadcast Group, also offered up several cautionary tales for cable.

Ryan said an anecdotal survey of his sales associates found that half have run into situations where a consumer entered the store and described how they had cable service, but that information did not show up in the national "Get Connected" database.

"The level of qualification data is worse in digital cable that in broadband," he said. "These operational issues are significant."

He also called for MSOs to form alliances to spur HDTV sales at retail. Dealing with eight or nine MSOs nationwide makes it tough to create a commercial spot to run nationally, he said. "There has got to be a way to have one combined message."

Panasonic has four CableCARD-ready TV sets today and will have 20 on shelves by August. But Strabel expressed concerns whether every cable system in America would be ready to handle TV sets with CableCARD point-of-deployment modules by this summer.

"Cable is a neophyte in the retail space," he said. "Is the cable system ready for that product?" He was referring to CableCARD, recalling the days where companies would obtain cable-modem certification from Cable Television Laboratories Inc. and begin selling their modems, only to find certain brands weren't supported by certain systems.

"Every system is going to have to be CableCARD-compatible," he said.

Strabel also warned MSOs about expecting manufacturers to drop prices on TV sets to spur HDTV set sales, for instance. Manufacturers have already met with retailers and lowered prices on TV sets when they hit the sales floor, he said.

"Come up with a promotion that isn't a lower price point," he urged.

One thing all sides agreed on was that more is better when it comes to the sales floor.

"Training is very difficult at retail," Ryan said. The more cable companies help train retail salespeople or even assist in in-store sales themselves, the better off the MSO will be.

Doolittle said he's seen an 80% lift in sales, in some areas, once Time Warner retail sales associates hit the streets.

And 30 minutes every two weeks doesn't cut it, they said. The cable sales and training presence must be constant, panelists said.

Because, among other things, basic subscriptions are at stake. Doolittle estimated DBS will sell 700,000 retail subscriptions just in Time Warner's territory this year.

"The question is, how much of that can you save?" he asked.

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