Today VideoNuze features a guest post from Ephraim Cohen, founder and managing partner of The Fortex Group, a public relations firm with many clients in the online video and social media industries. Ephraim has also become a good friend through his firm's work on past VideoSchmooze events and the upcoming ELEVATE conference.
As a VideoNuze reader, Ephraim was inspired to think about and share his own family's experience and changing behaviors with video. As you read it, you'll no doubt get the sense that this is still an early adopter's behavior pattern, with some technical knowledge required to make everything work. However, to me, a key takeaway is that for entertainment-only consumers, expanding choice will inevitably cause them to consider their video options and seek better experiences. Even more important, as Ephraim explains, this can actually be a surprisingly good thing for cable operators which ready to adapt to these new realities. Read on to learn more.
Guess What? This Cord Cutter Family Story Has a Happy Ending for The Cable Company
Sure, my home is a virtual consumer electronics lab - all the major game consoles on one main TV, two Rokus, Android and iOS devices and other gadgets. But other than me, we are, tech-wise, a normal family with three youngsters. So cutting the cord had to work for everyone, not just me.
And everyone is happy, mainly due to a well-designed system by our main OTT platforms, Roku and the Playstation 3, and viewing habits built around video-on-demand. Even our three year-old knows how to find her show using the Roku remote to watch the same Garfield over and over and over and over.
When we cut the cord a year ago, the older boys did miss a few programs on TV but only because their friends sometimes talked about what they saw the other night. They didn't miss the cable box or the fact that they could only choose from a few shows at any time. Instead, when they are ready for Star Wars: The Clone Wars, George Lucas is ready for them. If I were to tell them we are losing all this TV on-demand and going back to cable, I would not be having a pleasant Walton-like family evening.
The lesson learned here has been straightforward - make the interface easy, make sure the right content is there, and viewing habits will simply change.
Was it easy from a technology perspective? That's the challenge for the lay consumer. I know how to connect our cable router to a Netgear powerline system to ensure a strong signal across the house and wireline speeds to the main TV. I also knew which OTT platforms would make it easy for my family to watch TV with the shortest possible learning curve and time to video. They don't want to "discover" or search on TV, they just want to watch.
So what's this all mean for Cablevision, our cable company? Is my family's behavior good or bad for their business? Contrary to a lot of what's written about cord-cutting, I think it can actually be good for them and wonder if my habit might actually expand their margins. Our cable TV/Internet bill had been about $85/mo before. It's now $45/mo for Internet but in order to get shows to start faster and have a real "TV-like" experience (and return to channel flipping), we'll probably upgrade soon to the Ultra (101 mbps download) service, which is close to $100/mo. But all of that money goes to Cablevision. They don't pay any licensing fees to content companies since we don't have TV service. We will in turn pay another $8/mo each for Hulu (new shows) and Netflix (older shows/movies) and probably spend another $20-30/mo for TV and movies on demand from Amazon.
That tells me that the cable companies can quite possibly win and win big even as consumers' behavior shifts like mine already has. Imagine a bundle that included a Roku-like experience, hardware like Netgear's powerline system to make sure we can use it anywhere in the house, a higher speed connection (we have 30 mbps now, so perhaps 60-100)- all for around $80/mo. I might go for it. I would then have money left to subscribe to streaming sports channels (as more become available), Netflix, Hulu etc. Cablevision could even cut deals with these providers to offer these OTT programming bundles thereby taking a cut as a reseller and making money instead of spending it.
And the content companies? I expect them to make more as well. OTT means they can better target me for advertising and then make it interactive. So when I see that next great gadget advertised, I can simply click and order. Such targeted, interactive ads will command a major premium.
To be clear, we are an entertainment family. The kids watch some baseball and hockey so as they get older we have those channels on Roku and perhaps by that point we'll see OTT channels from the NBA and NFL as well. When that happens, our monthly TV budget will continue to climb, but so will our satisfaction of watching what we want, when we want and how we want.
Another lesson learned - cutting the cord is more about having a better TV watching experience than it is about saving money.
It seems like the hurdle to making this family experiment a true mainstream phenomenon is actually quite small on both the content and marketing side. There are still some licensing needs, especially in the sports area, and more live streaming channels for news. But they seem to be popping up every day. On the marketing side, I'm waiting for the cable company to bundle ultra-broadband service with a good OTT TV system and a bit of set up on-site support to make sure the house is well wired with a powerline-like system.
Perhaps next they'll take a lesson from the phone industry's smartphone push a two-year contracts to throw in a free or subsidized OTT TV, Hulu package, ESPN360, some sports leagues, and a few more content goodies like video games on demand. That's right, we'll get an OTT package with pre-packaged channels in a set top box or pre-configured OTT TV along with broadband for general use and TV service. In other words, the future will be just like the old days. But on demand.
VideoNuze is the authoritative online source for original analysis and news aggregation focused on the burgeoning online video industry. Founded in 2007 by Will Richmond, a 20-year veteran of the broadband, cable TV, content and technology industries, VideoNuze is read by executive-level decision-makers who need to get beyond the standard headlines and achieve a deep understanding of online video’s disruptive impact.