Comcast chief operating officer Steve Burke warned at a CTAM Summit '09 panel here Sunday that content providers and cable operators that don’t take heed to the shifting habits of video viewers to online and other alternative forms of viewing content, may wake up without a business in the not too distant future.
Opening the Cable & Telecommunications Association for Marketing’s three-day conference, Burke said initiatives like Canoe, interactive and addressable advertising. and TV Everywhere aren’t necessarily attempts to change the existing television ad model, but to get out in front of what he called “one of the biggest movements or social phenomena that I have ever seen.”
He pointed to his own children’s preference to watch content on their laptop computers rather than a television set.
“An entire generation is growing up with that preference,” Burke said. “If we don’t do something to change that behavior so they respect copyrights on the side of content provider, and cable subscriptions or satellite subscriptions or telco subscriptions on the side of the distributors, we are going to wake up with a lot of ingrained habits going the wrong way and we will see cord-cutting.”
Although Comcast is a major participant in Canoe and expects to roll out TV Everywhere through its entire footprint next year, Burke said interactive and addressable advertising would probably take at least five years.
“In one year it would be hard to tell,” Burke said. “I’m very confident it is going to be better.”
In the meantime, Burke said that the tools are there: 60% to 70% of all cable subscribers have a set-top-box, which means that not only could targeted advertising be sent to those customers, but that data about viewing habits and the like could be used to further target those consumers.
While Burke said that information has to be handled very carefully because of privacy issues, Starcom MediaVest Group CEO Laura Desmond said that is exactly the type of information that advertisers want.
Desmond said that one beef major advertisers have with mass media advertising is that there is a huge amount of wasted money spent on reaching an audience outside their core demographic.
“Let’s bring direct-marketing principles to the mass market,” Desmond said. “When you do that, you will see the demographics and dollars increase.”
At a National Association for Multi-Ethnicity in Communications Conference general session Wednesday, panelists said operators and programmers need to find a solution quickly, as consumer demand to access content on multiple platforms continues to grow.
Mark Garner, senior vice president of distribution, marketing and business development for A&E Television Networks, said the industry continues to face a challenge in finding the right business model to offer content on multiple screens. The current strategy taken by some networks to offer content free on their Web sites jeopardizes the current affiliate fee-based distribution model with operators that, he says, represents 45% of A&E Networks’ overall revenue.
“There’s a lot of enthusiasm for maintaining the current business model,” Garner said.
But the “TV Everywhere” model in which consumers have to sign-in to prove they are cable subscribers presents challenges in itself with regard to the consumer’s ability to access content easily and effortlessly, according to Albert Cheng, executive vice president of digital media for Disney-ABC Television group.
“The TV Everywhere model makes it difficult for us to understand how easy it will be for the consumer to access [content],” Cheng said “At the end it will be challenging for the consumer ... We don’t have a simple solution to get the content to the screen.”
If content authentication and distribution issues aren’t worked out quickly, Cheng said, the industry could find itself usurped by other technology companies that could secure deals to deliver content directly to consumers via the Web and other platforms.
Imagine Communications CEO Jamie Howard said companies like Netflix — which he said could be considered the “third-largest MSO” due to broadband delivery of movie content via the Web to millions of subscribers — could deliver valuable content to consumers around the cable operators.
Derrick Frost, founder and CEO of Invision.TV, an Internet video search engine, added that those issues have to be worked out quickly because the consumer’s appetite for content on numerous platforms will only become more voracious and they will find other ways — legally or illegally — to access it.
“The fundamental issue is that how consumers use media has forever changed,” he said.