Online initiatives are all well and good, but programmers and operators should focus most of their efforts and dollars on the products and services that make up the bulk of their business, rather than on "shiny objects," Time Warner Cable executive vice president and chief strategy officer Peter Stern said at the closing general session at CTAM Summit '09.
Stern said that Time Warner Cable is participating in online initiatives like "TV Everywhere" and the like, but said that instead of focusing on beating back the threat of the Internet on the traditional cable business, operators should focus their energies on giving customers what they want.
Stern said the focus should be "to deliver the best possible experience to the customers, rather than to deliver the next shiny object."
He added that the average person views four-to-five hours of television and two-to-six minutes of Internet video per day. And even the core 18-to-24 demographic only views about 6 minutes of online video per day. What cable operators should do is find ways to help consumers navigate seamlessly between the two mediums.
"It is incumbent up to us to give consumers a great navigation experience and enable those customers to get the content they want when they want it," Stern said. "And we should deliver it on the device they want it on. But we shouldn't lose sight of the 97% that is watching on TV."
Time Warner Cable has had success in delivering products that allow time-shifting on TV, including StartOver and LookBack and Stern said a new product being worked on is On Channel On Demand, which takes the "On Demand experience and puts it on the programmer's channel."
Other members of the panel session agreed. Turner Broadcasting Systems vice chairman Andy Heller said that programmers and operators need to pay attention to customer behavior. And he added that consumers who may be used to getting video content online for free are willing to pay for it as long as that content is compelling.
While some online services like Hulu have been criticized by distributors for threatening their business models by delivering free content online with few advertisements, Hulu CEO Jason Kilar said the content delivered on his service is different.
Kilar (who spoke with Broadcasting & Cable's Claire Atkinson after the session) said that about 40% of the content viewed on Hulu is short-form programming that never finds its way to the living room and 50% of the content viewed in a month wasn't available in the living room for the past year. Hulu offers viewers a choice, he said.
Heller said the popularity of Apple's IPod and ITunes services proves that given a compelling product, customers are willing to pay for what they had been getting illegally for free.
"Apple has taught us many things, not the least of which is the consumer isn't necessarily desirous of being a thief," Heller said. "If you give them a better product and reasons to do it in an honest fashion, they are more than willing to pay for what they get."
Heller said that Hulu and Apple are two can serve as models for ways to deliver compelling content for a fee to customers in the future.
"What we have are two relatively new entrants into our business that are demonstrating to us ways to satisfy consumers that we need to pay attention to and give them reasons to come back to the core," Heller said.