Yesterday I moderated the closing general session panel of the CTAM Summit, which included Paul Bascobert (Chief Marketing Officer, Dow Jones & Company), Matt Bond (EVP, Content Acquisition, Comcast), Andy Heller (Vice Chairman, Turner Broadcasting System, Inc.), Jason Kilar (CEO, Hulu), David Preschlack (EVP, Disney and ESPN Networks Affiliate U.S. Sales and Marketing) and Peter Stern (EVP & Chief Strategy Officer, Time Warner Cable). The session offered a prime opportunity to better understand the cable industry's strategy for success in the broadband video era.
In yesterday's post I asserted that the cable industry's main challenge is balancing its desire to preserve its highly successful subscription/ad-supported business model, while meeting consumers' increasing demands for flexibility. At a very high level the two goals are not incompatible; in particular the concept of TV Everywhere could well be a killer app in serving both. Rather, for me, yesterday's session reinforced my concern that the industry is still too focused on the TV platform, and not sufficiently acknowledging consumers' behavioral shifts to online consumption. These are not my sentiments alone; walking the halls of the Colorado Convention Center, various industry participants expressed their concern, in one way or another, that the industry is still not fully in synch with changing times.
On the panel Peter made great points citing data that a very high proportion of online viewing is in the home, and that the amount of time spent viewing online video is still tiny compared to traditional TV viewing. The latter point is one I often make as well, though I believe an equally important point is the remarkable rate at which online video's viewership has grown over the last several years.
On the surface, I agree with Peter's insistence that 80% of the industry's focus should be on improving the TV experience, as that's where consumers primarily watch today, and where the industry has its greatest strength. In fact in yesterday's post, I lamented the industry's underinvestment in VOD as resulting in gaps that competitors are exploiting. These gaps, whether in discoverability, content availability, ease-of-use or monetization desperately need to be closed.
Digging deeper though, a core issue I have with Peter's approach (which is common in the industry btw) is that it doesn't seem to acknowledge that online video is its own medium and should be prioritized as such. Online video is not something that should be thought of as being incorporated into the TV experience. Rather, I believe millions of users see online video as its own medium, with breakthrough benefits such as anywhere access, searchability, sharing, interactivity, personalization and so on.
These benefits help explain why online video's adoption rate has been so rapid. Consider that YouTube delivers almost three times as many streams (10 billion) in a single month as Comcast delivers VOD sessions (3.6 billion) in an entire year. Or that with more than 4.5 million of its subscribers streaming at least 1 program or movie in the 3rd quarter, Netflix already likely has more streaming users than any cable operator (except Comcast) has VOD users.
My conclusion is that the cable industry would be best served by understanding these differences and what they say about consumers' shifting desires and behaviors. Then the industry should aggressively embrace these differences to capitalize on this new medium in ways far beyond just providing the underlying broadband access, as it does today. TV Everywhere, as it is currently conceived, is just a starting point. To be clear, I'm not suggesting the industry should not also be optimizing the TV experience. But rather than devoting 80% of its energies to this, it should be equally balancing its investments so that it is concurrently trying to optimize the online (and mobile) video experience as well.
A point that Paul made seemed right on the money to me: when the WSJ thinks of different platforms, "context is key." Trying to serve their users' needs, given what they want at a particular moment and their physical situation drives the WSJ's product strategy. But note, just as the WSJ's online edition is the poster child for success in paid subscriptions (which the WSJ has now extended to paid mobile applications), it is also celebrating this week its new (and first-time) status as America's most widely-circulated newspaper. The takeaway for the cable industry: you can simultaneously invest and succeed in both new and traditional media, they are not mutually exclusive.
Prior to yesterday's panel, in an acceptance speech for receiving CTAM's 'Grand TAM' annual award, Bob Miron, the chairman of cable operator Advance/Newhouse, correctly acknowledged the rise of freely-available broadband video as a significant new challenge to the cable industry's traditional business model. Based on his 50 years in the business, his prescription for success was to remember the "customer is king." In myriad ways - some overt and some subtle - the cable industry's customers are telling it that broadband video is a new medium they highly value. To succeed in the broadband video era the cable industry must fully acknowledge, embrace and capitalize on this.
What do you think? Post a comment now.