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Chicago - Innovative products like online content authentication and packages that are mindful of customers' economic pressures will help cable maintain its competitive edge, a panel of industry analysts said here Tuesday.
Most of the analysts on Tuesday's Cable Show panel discussion - "Profits, Platforms and Projections: Investment Analysts on the State of the Cable Economy" - agreed that cable has weathered a slew of competitive storms - first from satellite, then from telcos and so far as been able to hold off threats from over the top services. But Cable must continue to innovate to keep a step ahead of that competition, Collins Stewart media analyst Tom Eagan said.
Eagan said that over the past few years, the development cycle of new products has shrunk significantly, which is a good thing for cable operators.
"Keep being innovative," Eagan said, adding that development cycles have shrunk from 18 months to about 6 months.
Morgan Stanley media analyst Benjamin Swinburne said that authentication, particularly products like HBO Go and ESPN Live, are game changers for the industry.
Eagan said that cable companies also can stay a step ahead of the competition by listening to their customers and identifying trends as they emerge. The analyst pointed to a common culprit for basic customer losses - sluggish new home growth. He added that while new home growth has been at its lowest point in years, single person households have also been affected.
"The market seems to think that the people that churn out of pay TV can't afford it." Eagan said. "About 14% [of that churn] are single person households. That rises to 16% to 18% in major cities who believe that cable isn't worth it."
That, Eagan said, is a segment of the market that cable has failed to address,
"On the base business, keep your variables open," Eagan said. "On video, offer different prices to keep single person households from going away."
Citigroup analyst Jason Bazinet agreed, adding that he has long proposed that cable operators develop pricing and packaging aimed at individual connections instead of households. That, the analyst said, would allow cable companies to charge more affluent households higher rates than those that are more price sensitive.
On the product front, the continued integration of cable content on networks is ongoing.
Swinburne said authenticated products like HBO Go and ESPN Live could prove to be game-changers.
"Having these two embedded authenticated product is a major step for the industry," Swinburne said. "Content and distribution have a critical relationship to move over the next 12 months into an exciting position."
Bazinet said that improving customer service also is a big hurdle for cable operators to clear.
"Most consumers don't like the way they are being treated by their cable company," Bazinet said. "You are not giving consumers reasons to love your companies.
Deutsche Bank Securities analyst Doug Mitchelson said that cable s biggest competitor hasn't shown its face yet.
"The biggest competitive threat is the competition you don't have yet," Mitchelson said, adding that at some point some company will figure out how to integrate online and pay TV content with a compelling navigation tool that will blow cable companies out of the water. The key, however, is to start the process of competing with such a product, or work on developing one of your own, before the competition catches you off guard.
"Cable is in a position to innovate," Mitchelson said. "And there are a host of reasons while the cable industry is in a great position to win. But if you wait until the competition has launched a product, you're not in as good a position as you are today."