Cable Turns Eye to Retail Market

Dec 8, 2003  •  Post A Comment

Cable operators are aggressively targeting the retail customers for the first time, boldly stepping onto ground that has been owned by their satellite competitors for nearly a decade.
Cox Communications, Time Warner Cable and leading high-definition programmers such as Discovery and ESPN this holiday season are capitalizing on the chance to drive additional revenue by pitching HD on the retail floor.
“HD is a great platform to ride into retail in a big way,” said Charles Haugabrook, VP, sales channel development, at Time Warner Cable. The operator on Nov. 26 launched its first retail marketing effort behind HD-a massive cash and services promotion that reaches 1,300 retailers nationwide.
The expectation is that the retail market, which cable operators have just begun to mine in earnest this year, will be a significant source of new revenue for multiple system operators. Customers gained on the retail floor are usually either entirely new to cable or win-back customers returning from satellite, he said.
HD customers are also unlikely to defect to satellite. “Once they get their meathooks into those people, they are not going to churn out,” said Clint Stinchcomb, senior VP and general manager, Discovery HD Theater, which recently rolled out an HD promotion with Circuit City stores and which is also one of the HD channels offered by Time Warner.
As part of the Time Warner retail offer, HDTV set maker Pioneer is offering customers $500 cash back on a Pioneer HDTV set. Time Warner then ponies up six free months of digital cable service, which includes HD content from Discovery, iN Demand, Fox Sports Net, HBO, Showtime and the broadcast networks. The offer is available in about 1,300 retailers across the country in Time Warner’s footprint, including Best Buy, Sears, Wal-Mart and Circuit City as well as regional and local audio and video stores.
Adelphia and Cox also said they will promote HD heavily this season in an effort to drive consumers into stores to purchase the service and equipment. Adelphia got an early jump and has been peddling HD in Best Buy stores since it first rolled out the service in October. Cox is banking on a variety of local HD promotions in its markets, such as free digital cable for a short period of time with the purchase of HD services, said David Pugliese, VP of product marketing and management at Cox.
One of the key components in smoothing cable’s retail path is Go2Broadband, a cable industry database and service locator that helps retailers identify for consumers which cable services, including HD, are offered in their area, said Andy Addis, senior VP, marketing and new products, at Comcast and a member of the Cable & Telecommunications Association for Marketing’s retail committee.
Networks are also targeting the retail landscape.
ESPN visits various affiliate markets with its “ESPN the Truck,” a semi truck that rolls into Best Buy parking lots and promotes ESPN HD. As part of the truck visit, ESPN offers giveaways of such items as ESPN books and CDs with the purchase of an HD set from Philips, said Jeff Siegel, VP, affiliate ad sales and marketing, at ESPN. “Our goal is to drive [customers] to the local Best Buy to experience HD. Our entire effort is to try to help our affiliates sell their HD service,” he said.
Discovery HD Theater struck a deal in November with Circuit City for the 24-hour HD network to be carried on HD displays in more than 600 Circuit City stores.
Cable’s entry into the retail space allows cable and satellite to compete head-to-head on the retail floor for the first time. Best Buy recently dropped commissions for its salespeople, so there is no longer a financial incentive to sell DirecTV over Comcast, for instance, Mr. Siegel said.
The fact that cable operators don’t require consumers to buy HD equipment helps tremendously, said Adi Kishore, analyst with the Yankee Group. Most cablers charge $5 to $10 a month to lease HD equipment, while DirecTV requires a $399 equipment investment.