Wired for the Future
Apr 11, 2005
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Notes after a whirlwind visit to San Francisco for NCTA’s National Show:
It is appropriate that the word “cable” is not in the official title of the 54th annual gathering put on by the National Cable & Telecommunications Association, because it has grown into much more than just a cable TV show. After years of talk about convergence, it was happening on the exhibit floor and was being actively discussed in the seminars and general sessions. There were buyers and sellers from phone companies, satellite services, Internet TV, cellphone companies and other new media prowling about for intelligence, alliances, content and the latest in technology-mostly in hopes of beating cable at its own game.
My favorite piece of technology was the Promptu, a remote-control device with voice recognition navigation capability, from tech start-up AgileTV of Menlo Park, Calif., founded by entrepreneur Paul Cook. It has already been in field tests for a year, and Comcast is testing the device extensively in the Philadelphia area. It allows the user, by simply speaking, to get the kind of data offered by TiVo-lists of shows broken down by title, genre, star, network and more.
Consumers will love how simple it is to use. Cable loves it because it provides data on all channels and all video-on-demand selections, showing the consumer how much there is to access. It is a great way to get new programming services in front of viewers. It could be one of the next technologies to transform the way we watch TV.
It was a sweet moment for the Discovery Networks when the company toasted its 20th anniversary with champagne at its sprawling booth on the Moscone Center exhibit floor. Founder John Hendricks, President Judith McHale and others had much to celebrate. What began in the mid-’80s as an undercapitalized start-up has grown into 14 networks and myriad affiliated entities, from retail stores to educational services, which today are probably worth $10 billion to $15 billion (based on what Liberty Media expects to get by spinning off the half of Discovery Networks it owns). Mr. Hendricks was humble as always in crediting his employees, business partners and collaborators.
A number of politicians and Federal Communications Commission commissioners, including new Chairman Keven Martin, came to visit, and they were all on their best behavior. They soft-pedaled for the most part the threat to extend broadcast indecency regulations to cable. U.S. Rep. James Sensenbrenner (R-Wis.), who chairs the powerful Judiciary Committee, did grab a few headlines by suggesting he would support some criminal penalties for media indecency, but his real message was a reminder that lawmakers cannot replace parents when it comes to protecting children. Rep. Sensenbrenner, along with Sen. Ted Stevens (R-Alaska), Mr. Martin and other politicians, did come away dazzled by all the technological controls cable offers parents.
Mr. Martin was especially diplomatic in his very brief remarks and in an even briefer press call right after his first speech before the cable industry. Asked if he would be pro-active on the indecency issue, he noted that the commission is “reactive” to complaints it receives. Asked if he thought he could help shape the direction of the media industry, he said it was as impossible as “trying to herd cats.” Most industry insiders were whispering that the new chairman is very political and eventually will leave the FCC to run for office.
Kudos to the NCTA for a generally well-run and mercifully shorter show. The general sessions and panels as well as the Vanguard Awards were almost all well-attended and the two giant exhibit halls drew plenty of traffic. The shorter schedule seemed to make it easier for attendees to stay for the whole thing. Most exhibitors sampled in a very unscientific poll said they were satisfied with the number and quality of potential clients they met, even if they didn’t always do as much business as hoped.
Last week I wrote about the threat of telephone giants taking on cable TV MSOs by overbuilding systems in the most lucrative upscale areas. The reaction from cable, based on comments at the show, was barely a shrug. They either think the telecoms will again fall on their faces because they are late entrants and not very good marketers or they believe cable already has such an edge it will be too expensive to take those customers away. Though cable actually lost subscribers last year overall (mostly to satellite), it has gained so much in revenue per subscriber by adding services such as high-speed data and voice that nobody seems to care.
However, I had to wonder if the wired end of the industry (the MSOs) weren’t on a different growth curve than those selling video content services. To borrow an analogy from an earlier era, it may be a good business to sell razors, but it is an even better and more lasting business to sell the razor blades. In this case, content is the razor blade. There will never be enough (though there may well be an excess of channels).
That was a point made by Robert Iger, the incoming president of The Walt Disney Co., during his impressive performance at the closing general session. “Our focus,” said Mr. Iger, “is more on content because technology needs good product.”
News Corp. President Peter Chernin more than held his own during the closing panel, even though he was the only one who also oversees a satellite service, DirecTV, which he predicted would continue to grow in the coming year, mostly at the expense of cable.
Smart companies such as Time Warner, News Corp. and Comcast do it all and will benefit no matter how the market turns. As Discovery Network’s Mr. Hendricks said a long time ago, the one thing we know is that consumers like choice. And if all of the existing and new services are designed to do anything, it is to offer an unbelievable and growing number of choices. That is going to continue impacting the viewing habits and lives of American consumers for generations to come.