Anaheim – Video isn’t quite dead yet, it’s just taking a different train, according to a Monday (July 30) panel session at The Independent Show here. And small operators are finding ways to pair content offerings with broadband to satisfy changing consumer habits.
At the opening session, “Tackling the Challenge of Change… and Everything Else,” Multichannel News managing director, content Mark Robichaux and a panel of executives at top mid-sized and small operators picked apart the business, which has been dominated over the past few years by broadband and commercial services. The panel insisted that despite high programming costs and changing viewing habits, video is still an important arrow in cable’s quiver.
Video is taking a different form and instead traditional lineups packed with linear networks, smaller operators are offering the product through broadband apps and OTT services.
Schurz Communications vice president, cable Brian Lynch agreed that the video business has evolved, but added the industry has seen this before.
“The video challenge is a real one, but we’ve survived DirecTV and Dish [Network] in 1993 to 1995. The outcome of that was we got better and stronger,” Lynch said. “I think the same thing is going to happen with the onset of OTT. It’s a clear risk, we have time to solve this, but the main focus has to remain high-speed data.”
Fidelity Communications president John Colbert said while broadband and business services are the profit centers, less expensive forms of video are gaining traction with consumers.
“The challenge is to find how do we provide video and find a way to do it less expensively. I’m still long on this industry,” Colbert said. “We still have the best pipe in the house.”
Still, Colbert said most of Fidelity’s new customers are single-play broadband. In the last 36 months Fidelity grew broadband by 36,000 customers, half of whom were single-play broadband subscribers. He added that making it easier for customers to navigate between different OTT services has helped grow that segment.
“The ease of that transition supports the fundamental growth of high-speed data,” Colbert said. “Video consumption is going up.”
At Cable One, which was one of the first cable operators to move broadband to the front seat years ago, chief operating officer Michael Bowker said ease of use is essential for success.
“Our goal is we don’t view [video] as friend or foe,” Bowker said. “We want to enable our customers to have access to consume the video product however they want. If they’re doing that over my HSD pipes, then I win in that scenario.”
Broadband is fueling most of the growth of small cable and it doesn’t show any signs of letting up soon. Colbert said in some recently acquired markets, penetration rates are in the high 30% range.
“I don’t see why we can’t have 70% penetration,” in those markets, Colbert said.
Small operators are at an advantage in rural areas because the competition can’t always invest the capital to offer superior speeds. That has even been the case for newer players.
At Allo Communications, which has overbuilt several markets in Nebraska and Colorado with fiber, the company has captured 80% to 90% market share in business services in some locations. It is expecting similar results in Lincoln, Neb., when it completes its fiber build there later this year.
“The avalanche is coming,” Allo president Brad Moline said.