As the cable industry rolls out a slew of new products and services, it seems clear that the sector has been motivated by the familiar saying, “Build it and they will come.”
But as many cable executives lamented last week, that alone might not be enough.
Leaders of several cable operators attending the annual CTAM Summit in Boston said their industry is still lacking coherent and cohesive messages about a flurry of new products designed to attract and retain customers at a time when alternative solutions are emerging to enable customers to watch TV, surf the Web and make phone calls.
As 2,600 cable industry members gathered for the event, a general consensus emerged that although multiple system operators have gotten better at providing the services they offer, they continue to miss the mark when it comes to promoting these services.
“Service is better than ever, but we have a long way to go with marketing,” said Glenn Britt, president of Time Warner Cable.
Among the examples: Failing to notify consumers of the availability of services such as video-on-demand, not adequately explaining what is required of consumers before they set out to purchase high-definition TV sets and an inability to sufficiently explain digital video recorders. Indeed, the DVR explanation has proved to be particularly tricky for cable operators, some of which describe the devices from a technological perspective while others focus the conversation on the convenience to consumers. Both approaches can leave consumers baffled and intimidated.
William Schleyer, chairman and CEO of Adelphia Communications, said, “We do a lousy job of explaining [new services to consumers].”
That will have to change quickly. Though analysts believe the cable sector is well positioned to dominate the video-on-demand, high-definition television and high-speed data spaces-already, Comcast is the largest provider of broadband services to residential customers-things are vastly different today from what they were as recently as a year ago.
“For many of us in this industry, we are experiencing a truly competitive marketplace for the first time in our lives,” said Michael Willner, president and CEO of Insight Communications.
Indeed, satellite operators have posted double-digit growth quarter after quarter, largely at the expense of cable, and are likely to keep the momentum going as they continue to offer local channels and HDTV. In addition, the Regional Bell Operating Companies are looking to spend billions on fiber-to-the-premises technology, which will enable them to offer their own video business to compete with cable.
The RBOC threat is one that Mr. Britt pays attention to when looking into the future. “They are very large, have great financial and political resources, and will come up with something” in order to do battle with the cable companies, he said.
And that will heat up further as cable operators step up their efforts to provide broadband services to businesses-an area now dominated by the RBOCs and other telecommunications companies. Indeed, Raymond Katz, a cable analyst at investment bank Bear, Stearns & Co., noted that a growing piece of the MSOs’ business is providing broadband solutions to businesses, with around $500 million of the large cable operators’ revenue coming from business data and voice services.
Part of the reason cable operators have failed to develop simple marketing messages to consumers lies in their focus on product development, Mr. Britt said.
“We have been maniacal in our launch of all of these products,” he said. “We launch and then it’s on to the next thing. We need to focus on the consumer benefits.”
The technology itself has also presented challenges. In promoting HDTV, cable operators find themselves having to walk a fine line, said Steve Stiger, group VP of marketing and business development at cable operator Bright House Networks.
“If you get too functional, people tune out; if you get too attributable, people tune out,” he said.