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CES Takeaway #2: Don't Count Out the Pay-TV Operators
(Note: Each day this week I'll be writing about one key takeaway from CES 2011.)
If you've been thinking that pay-TV operators were imminent roadkill due to burgeoning "over-the-top" consumption and imminent cord-cutting mania, then important news from CES 2011 should cause you to reassess your assumptions. Instead of new technology undermining pay-TV businesses (which is too often how media characterizes things), the largest operators are starting to show how technology can be used to create compelling new value for their subscribers and enhance their competitiveness even as they relinquish a little control.
At CES, pay-TV announcements focused primarily on 2 areas: extending viewing to tablet computers and eliminating the set-top box by delivering full channel line-ups over broadband to connected TVs. Comcast, the largest U.S. pay-TV operator, made announcements spanning both: live, in-home access on iPads, with on-demand access outside the home, plus Xfinity TV access on certain Samsung connected TVs and on its new Galaxy Tab tablet. Time Warner Cable announced deals with both Samsung and Sony to deliver its line-up to certain connected TVs as well. Dish Network also unveiled its "Remote Access" service for Android tablets, allowing both live and on-demand viewing using the Sling Adapter (it had announced this for iPads in December). Last fall, Dish was also the first pay-TV operator to integrate with Google TV.
Meanwhile, other large pay-TV operators were busily rolling out new services in the weeks and months leading up to CES. In November, Verizon introduced "Flex View," its TV Everywhere feature, which allows FiOS TV subscribers to gain on demand access on smartphones, tablets and laptops. An important differentiator of Flex View is the ability to download, not just stream content, which is a boon to non-connected air travelers in particular. Verizon followed up Flex View with the FiOS Mobile app which turns iPads into virtual remote controls.
Similarly, last August AT&T unveiled its U-verse Mobile app for the iPhone, which lets U-verse subscribers download programs to their iPhone. The app also functions as a remote DVR controller and TV program guide. In October, AT&T started letting Xbox 360 owners use the console as a replacement set-top box and in late November it announced that U-verse subscribers could access HBO Go and related programming services through online authentication. Last but not least, DirecTV noted in December that its goal is to have 40% of its set-top boxes connected to the Internet by 2013. Also, Cablevision is planning to release its iPad app for own in-home viewing. No doubt there's plenty of other activity underway at other operators.
Taken together, the above initiatives show that the largest pay-TV operators recognize new technologies/devices let them add new value to their subscribers, generate capex/opex savings and improve their service delivery. Importantly, all of the above enhancements are being offered at no additional charge to subscribers (except in the case of Dish's Remote Access, where a $99 Sling Adaptor must be purchased). By offering them as value-adds, these pay-TV operators are taking a page out of the Netflix "Watch Instantly" streaming playbook, recognizing that in the current competitive environment, pleasing subscribers and retaining them is far more important than squeezing out a few more nickels of incremental revenue.
One key challenge pay-TV operators have with these moves is bringing their content partners along. Just yesterday, an article in Adweek observed how certain cable networks are already grumbling that current contracts do not permit mobile viewing. Then there's the challenge of accurately measuring non TV-based viewing, which is still in flux. Further, the high relative cost of digital pay-TV services will shut some economically-challenged households out of these services, also creating an opening for low-cost options like Netflix and Hulu Plus to take root. Lastly, there's the huge capex and increased customer care requirements pay-TV operators will encounter as deploy new technologies.
Still, as the nation's largest incumbent video providers - and the largest broadband ISPs - this group has a lot of inherent advantages. In 2010, the pendulum of media coverage swung strongly against them as the specter of mass cord-cutting dominated. But these new initiatives from pay-TV operators prior to CES and at the show itself, demonstrate that they're finally ready to flex their muscles, and to put their own spin on Mark Twain's famous quote, "the reports of my death are greatly exaggerated."
What do you think? Post a comment now (no sign-in required).Categories: Cable TV Operators, Devices, Satellite, Telcos
Topics: AT&T, Comcast, Netflix, Samsung, Sony, Time Warner Cable, Verizon
