Perhaps not every East Coast CTAM-type showed up here last week for the association's annual summer Summit.
But the 2,361 Cable & Telecommunications Association for Marketing members who did show — just a tad under last year's crowd of 2,400 in Boston — heard from Internet players Microsoft Corp. and Real Networks Inc. about how those companies can help cable extend its broadband reach.
Microsoft Corp. CEO Steve Ballmer stressed the similar challenges that face the cable and computer industries, and the company's desire to build software for PCs and TVs to help operators innovate.
And Real CEO Rob Glaser urged cable operators not to rest on their cable-modem laurels, and to push penetration further by adding premium-content subscription packages in tiered products, to compete against digital subscriber line.
The biggest news might have been the return of competition to the interactive guide marketplace. Tribune Media Services, which supplies program listing information to Gemstar-TV Guide International Inc. and others, said it would buy iSurfTV, with the intention of getting into the IPG business.
At the same time, Ballmer confirmed two market trials for its IPG products. Building on a deal announced at the National Show, Microsoft said Comcast Corp. will test both TV Foundation Edition and the lower-scale Microsoft TV IPG in its Seattle system.
And Time Warner Cable said it will test the Microsoft TV IPG in Beaumont, Texas, an area that serves 100,000 subscribers. Both are Motorola systems.
Both developments point to increased competition in the lucrative guide space. In fact, a recent In-Stat/MDR report indicate that today's $500 million electronic and interactive program guide market will grow to $1.7 billion in 2007.
"With on-demand technology becoming more important, [IPGs] must be able to add new sources of program information," said Gerry Kaufhold, a principal analyst at In-Stat.
TMS: Ops want us
John Kelleher, general manager of electronic program guides for Tribune Co.'s TMS unit, said "cable operators have been asking us for a long time" to provide an IPG, because TMS already provides guide data, advertising and a passive guide channel, Zap2It. He said Tribune's IPG would emphasize flexibility in allowing operators to brand its own IPG.
In fact, Tribune is not that far away from being able to deploy a guide. Kelleher said the IPG has already been certified by Motorola's Acadia Application Center and is designed to work on that company's baseline DCT-2000 digital set-tops.
TMS would have a product available soon, said vice president of entertainment products Barbara Needleman.
The entry by Tribune — along with the momentum Microsoft is building — indicates growing competition in the guide space.
Gemstar-TV Guide is the dominant guide on Motorola systems. Companies that use the Scientific-Atlanta platform, like Time Warner Cable, use either S-A's imbedded SARA guide or Pioneer Corp.'s Passport.
And Digeo Inc. will get into the picture later this year, with Charter Communications Inc.'s deployment of its Moxi Media Center platform.
Tribune's guide isn't designed to work on S-A boxes, Kelleher said, indicating companies like Comcast and Charter would be likely targets for Tribune.
At the same time, a Time Warner executive said the MSO had no plans to push Microsoft to embed its guide within the Scientific-Atlanta platform. Save for a handful of systems that use Motorola — such as Houston and Beaumont — most of Time Warner's systems are on the S-A platform.
Kelleher said Tribune's selling points include the parent company's financial heft and 150-year history, along with TMS's strong operator ties — Cablevision is the biggest user of the Zap2it channel, for which it dropped Gemstar's TV Guide Channel.
Tribune's data savvy also can help shore up current VOD IPG weaknesses, he said. And iSurfTV's patents include the ability to give the guide a "3-D" feel, although one dimension is rather "flat" on the low-memory DCT-2000 boxes, he said.
Kelleher said Tribune planned to have a demonstration version of the guide ready in a couple of weeks in Chicago. He said Tribune would likely try to get some experience on cable systems, possibly with small operators, before expecting to crack big MSO accounts.
Affiliate deals would likely include subscriber fees and certain other fees, but said the deal economics would be flexible as well, he said.
One source said TMS paid about $5 million for iSurfTV assets, but Kelleher and Needleman said they couldn't discuss terms.
Ian Aaron, president of TV Guide Television Group, said he wouldn't be surprised if there was more competition in the guide space, but reiterated the strengths of his company's product.
"We have our guide in over 12 million homes," or about 60% of the digital subscriber base, Aaron said. "We've got a good base and we're building on that base with better products," which include further VOD, HDTV and DVR integration.
"We're hunkering down and focused on delivering new products."
Aaron said TV Guide looked at iSurfTV as an acquisition target, but declined.
"We felt it was not substantial enough for us to spend money. We have a broad spectrum of patents [already] based on IPG functionality. The key issue in this business is you need scale and you need a model that's more than just software. We leverage our technology to drive programming."
Ballmer: Spur demand
Calling Microsoft's guide the first product to help operators "target the next service to the consumer," Ballmer said that "most of our job is creating new demand for new services."
Ballmer ticked off a list of possibilities, ranging from upselling digital and broadband services within the guide to touting home networking, gaming and wireless devices.
Microsoft's new IPG can help sell new services with lots of video. "It's not just text," he said, adding that today's guides limit operators' marketing options.
"The overall experience needs improvement," he said, so operators can target promotions to individual homes based on user interest. "We address that every day on our Web portal.
"We see a huge opportunity with digital and online personalized experiences," he said. The marriage of cable and computer technology "puts us right at the sweet spot where our industries converge. It's all a software question."
The key challenge is the need to innovate, Ballmer said.
Ballmer also took on other issues. He acknowledged Microsoft's missteps in the past.
"We may have taken a few random swings up at the home plate," he said. But now, he said, "We are willing to be reasonable, appropriate and flexible."
That includes the company's .NET initiative, which is undergoing study as part of Cable Television Laboratories Inc.'s OpenCable process. Ballmer said Microsoft is not pushing .NET as an exclusive software standard.
Ballmer also said Microsoft did not plan any new equity investments in the cable industry.
"It's not the basic path forward anymore," he said. "We've made some good investments and we've made some less good investments."
Glaser took a different tack in his speech to the CTAM audience. The cable industry needs to build on the lead it has with high-speed data by adding new services and applications, including premium content services.
"Don't ignore than big green line," said Glaser, pointing to a slide showing that high-speed data was larger profit driver in 2002 than video.
"That's your growth driver in the industry today," Glaser said, rather than trying to jump-start other businesses.
Further, the growth in worldwide DSL will help lower equipment prices in that market, allowing U.S. DSL providers to keep prices low and perhaps gain share, said Glaser.
"If cable rests on its laurels, DSL will gain share, just as DBS did," he said.
With DSL providers lowering prices, cable "needs to have something that scoops customers so they start on the cable on-ramp," Glaser said.
"Cable has unique assets to leverage," he added, including local TV avails to promote Internet content, high-speed Internet portals and brand relevance.
Glaser showed off some parts of Real's portfolio, including Real Arcade, which Comcast is rolling out, footage from CBS's Big Brother
and PGA Tourcast. Glaser also showcased some new formats, including H.264, which can showcase vibrant HDTV-type experiences online, using Real Video 9.
"You have double- and triple-play bundles," he said. "Service integration is hard for DBS and telcos to do."
Glaser described a future in which operators could offer a basic high-speed broadband package that would include local news, sports and Internet radio at speeds up ton 256 Kilobits per second.
An expanded basic broadband package would travel at speeds of up to 1.5 Megabits per second and include RealOne Arcade or Rhapsody (Real's Internet radio service) or TourCast.
On top of that tier, operators could sell games, music and other services à la carte, he said.
"New services are here today that can drive the next wave of growth," Glaser concluded. "Cable is well-positioned as long as you focus on marketing and distributing these great new services."
Kent Gibbons contributed to this report.