The television has certainly come a long way. Dial back to 1922, when Charles Francis Jenkins was the first American to demonstrate TV technology by broadcasting still pictures. To follow was the first generation of television sets. These sets had a small motor with a spinning disc and neon lamp working together to provide a blurry, reddish-orange picture about half the size of a business card!
Now punch in 2003 on your remote and we find a majority of U.S. households have two or more televisions, and the number of those sets that are advanced digital or HDTV-compatible is growing exponentially. Consumers now demand a variety of programming and crystal clear images on screens that range from the size of a wall to a wristwatch. This is the age of advanced television services and HDTV is in the middle of the picture.
The time is now for HDTV. Cable program networks have been at the forefront of providing HD programming, and cable companies are ramping up efforts to deliver HDTV to customers. Since HDTV has moved from "what if" to "it's on," the time has come for marketing to take the lead in growing our video businesses in a digital world.
The Cable & Telecommunications Association for Marketing Pre-Western Show Luncheon, "HDTV (We're Watching)" (scheduled for Dec. 2 at the Anaheim Marriott), will bring together the brightest industry leaders to deliver the clearest picture on HDTV.
Much has happened since MSOs started launching HDTV in earnest in 2002, including retail relationships and new networks. Presenting case studies, facilitating industry committees and conducting forums like the Pre-Western Show Luncheon, CTAM is supporting cable's efforts in ensuring that consumers receive HDTV in the most convenient and user-friendly ways possible.
The Phoenix Example
In Arizona, Cox Communications Inc. recently took the lead by being one of the first Cox systems in the country to launch HDTV. Offering HDTV was of tremendous strategic importance for Cox when it was launched in August of 2002, in spite of the fact that it was a product that would not generate large volume.
Strategically, it was essential for Cox to position itself as a technology leader. Launching HD was an important way of doing this, because we provided more channels in HD at the time of our launch than the satellite offering — giving Cox a competitive advantage over direct-broadcast satellite providers. At launch, we offered six HD channels and plan to round out our programming to 10 channels by the end of this year.
Important to the success of this launch was to offer a variety of touch points of exposure for the Cox HD purchase. Forging corporate partnerships with retailers, such as Best Buy and a number of local retailers, afforded Cox additional exposure, credibility and a stronger visible presence in one of DBS's historically strongest performing sales channels. The HD product is also offered directly from Cox through our customer care center, Cox retail sites and outside sales agents.
We view each of Cox Arizona's 2,400 employees as a sales ambassador. For this reason, it was important to educate all employees on the new HDTV offering while creating excitement and enthusiasm.
The company developed written, electronic, visual and in-person communications tactics to reach out to its diverse employee audience scattered across multiple offices and field locations. Through presentations, an online training course, a launch manual, internal publications and in-house demos and displays, employees were well educated and well armed with the information they needed to promote and sell the new Cox HDTV service.
It is essential to note that the HD category is continuing to evolve and, as such, the business model we employ in this category has evolved to meet consumer needs in combination with shareholder aspirations. We launched HD by offering consumers the one option of purchasing the HD set-top. This made sense, given the fact that HD would sell in small numbers primarily to early adopters that own home theaters.
We correctly assessed that this was a higher-end consumer who tended to be very particular about their equipment and consequently had a high propensity toward equipment ownership.
HD For Rent
Today HD is experiencing product maturation and is consequently working its way down into the market as HD-compatible sets are selling in greater numbers. As such, our business model has also evolved, and we have shifted from a purchase-only approach to a set-top rental approach. While early adopters were very willing to pay $500 for a HD set-top, the majority is more interested in paying $10 per month for a set-top rental.
Offering HDTV to Cox customers in greater Phoenix has delivered on its goal of solidifying the company's position as a digital technology leader in the minds of the public, by providing a distinct competitive advantage over DBS. However, it is of paramount importance that the Cox HD product offering continues to evolve with consumer's needs and ensures we fully leverage HDTV's benefits in a competitive marketplace.
Indeed, we all need to know more about how to balance growing the core business along with the advanced products such as digital and HDTV, how to educate and entice customers and how to keep our edge on the competition. It's HDTV, and everyone is watching.
And we'll tackle it all in Anaheim in December.
Cox Communications Arizona vice president and general manager J. Stephen Rizley is chairman of the CTAM Pre-Western Show Luncheon, "HDTV (We're Watching)."