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Cable Companies Make Pitch for HD

Nov 9, 2008  •  Post A Comment

If a Comcast customer is unaware of a high-definition video-on-demand programming inventory that has grown fivefold since the beginning of the year, don’t blame the company.

HDTV Update

  • Cable Companies Make Pitch for HD . . . More »
  • Multiple Choice: Derek Harrar . . . More »
  • Price Conscious: TW Cable Touts ‘Free’ . . . More »
  • HD Spurs Cable’s Own Switchover . . . More »

“If they’re buying an HDTV, they’re most likely going to access VOD,” said Derek Harrar, Comcast’s senior VP and general manager of video services. “And we promote the bejesus out of it.”

Whereas satellite leaders DirecTV and Dish Networks have been playing a game of “top this” by periodically announcing another batch of linear HD channels available to customers, cable companies’ efforts to capitalize on the high-definition television boom have been as varied as the geographic regions they cover.

Hamstrung by bandwidth limitations that don’t apply as much to satellite providers and upstart telecommunications TV services like Verizon’s FiOS and AT&T’s U-verse, cable companies, whose services are used by about 60% of U.S. households, have preached features like video-on-demand choices and lower prices to lure HDTV owners or keep them from jumping ship.

Comcast, whose 24.4 million customers make it the largest U.S. cable service, has been the most aggressive at pitching its HD services. With about 40 linear HD channels—less than half what DirecTV and Dish offer—Comcast said in January that it would give its subscribers 1,000 HD “choices”—i.e., film and television titles on VOD, linear HD channels and music videos—by the end of the year. In October, the company said it reached that goal more than two months early.

Taking a different approach, Time Warner Cable, whose 45 HD channels put it slightly ahead of Comcast but whose 300 VOD titles in HD lag Comcast’s inventory, calls itself “Home of Free HD.” With more than 13 million cable customers, the No. 2 U.S. cable company has been highlighting how satellite operators charge subscribers with lower-priced packages about $10 a month for HD service, while TWC’s HD service is free of charge.

“We are successfully rolling out switched digital video across our footprint and have been expanding our HD options every week,” said Robyn Watson, spokeswoman for Time Warner Cable. “More important, it’s the channels our customers are telling us are most important and that they are the ones they want to watch.”

Meanwhile, smaller cable companies like Cox Communications and Charter Communications have been playing catch-up. Cox, which has about 6 million cable subscribers, has announced institutional agreements since June involving providing high-definition video-on-demand at Las Vegas’ Encore at Wynn and being the video provider at colleges such as the University of Florida.

Charter, whose 5 million-plus subscribers make it the No. 4 U.S. cable company, in August publicized an agreement to show Summer Olympics VOD programming in HD that was similar to Comcast’s. The company has as many as 40 linear HD channels in some markets and 350 VOD choices in HD, according to Charter spokeswoman Anita Lamont.

“While those of us in the industry think consumers are counting the number of HD channels, the reality is they just want to stay with what they’ve got,” said Bruce Leichtman, president of Leichtman Research Group. “So the messaging is much more about retention, saying, ‘Just stay with us and you’re fine.”

At stake are a growing number of U.S. households that have purchased HDTVs to take advantage of visually clearer technology while ensuring broadcast viewing after the U.S. switches over to all-digital broadcasts in February. By next year, almost 40% of North American households will own a 1080p, or so-called “true HD,” TV, up from just 18% last year, NPD Group unit DisplaySearch said in September. As a result, the number of satellite and cable subscribers receiving HD from their multichannel service operators doubled last year to about 24 million and may double again this year.

Whether the HD pitching strategies have worked remains in question. Comcast last week said it boosted the number of digital cable customers with either HDTV or digital video recorder service during the third quarter by about 300,000 to 7.3 million. And while Time Warner Cable said its digital video subscriber base during the quarter expanded 1.5% to 8.61 million customers, it didn’t disclose how many were receiving HD or DVR service.

Still, cable companies have had to gird themselves not only against DirecTV and Dish, which have more than 30 million subscribers combined, but also against telecommunications giants that have launched their own television services within the past three years.

Competitors Are Growing

Last month, AT&T and Verizon, the two largest U.S. phone companies, said their respective U-verse and FiOS services accelerated their combined third-quarter customer growth by adding 465,000 subscribers, up from a combined 346,000 in the second quarter. FiOS’ 100 HD linear channels and 800 VOD choices in HD appear to allow it to go toe-to-toe with both DirecTV and Comcast from a content standpoint, while U-verse’s 75 HD channels also trump the cable companies’ selection.

Such competition only figures to increase. Between now and 2013, the number of U.S. cable subscribers will be little changed, at about 64 million, while the satellite subscriber base will expand about 8% to 33.4 million, consultant SNL Kagan said last month. During the same period, the number of telco video subscribers will jump fivefold to more than 11 million, SNL Kagan said.

Still, as home sales slow and people cut back on spending, cable consumers are likely to give cable companies more time to increase their HD inventory toward the levels of their satellite or telecommunications competitors before taking the time and money to switch over, Sanford C. Bernstein analyst Craig Moffett wrote in a note to analysts last month.

“No company is ‘recession-proof,’” Mr. Moffett wrote. “Cable may be as close as you can get.”

25 Comments

  1. Mr. Moffett says cable is as “close to recession-proof” as you can get.
    Then could he please explain why Comcast lost more than 140,000 subs in the last reporting quarter, compared to 57,000 subs lost in the first quarter?
    Comcast’s telco and internet businesses kept revenues decent; but eventually, this churn is going to hit hard at the bottom line.
    And not all of that churn is going to fiber and satellite. The advent of broadcast digital TV means FREE broadcast HDTV channels for OTA viewers, who, in tough economic times, may be tempted to live without cable in exchange for free, uncompressed broadcast HD channels and crystal-clear reception, even on analog sets equipped with a set-top box.
    Meanwhile, many cable systems are using new compression technologies that degrade the quality of their HD channels. And Comcast still charges subscribers extra for HD converter boxes, as this story notes.
    As more DTV broadcast digichannels come on line, things could get worse for cable, along with fiber and satellite. Can cable afford to lose 5-10 percent or of its subscriber base and still put up decent numbers? Stay tuned.

  2. More HD! More HD!
    Can’t wait to see Barack Obama’s future speeches in HD! Ha ha.
    http://www.HopeWon.com

  3. In Feb We will have a NEW Standard of TV Broadcast. It is Called HD.. RIGHT!! I’m A DishTV subscriber They offer HD channels that you can pay Extra for..
    So Why in Feb will not this NOT Change for DISHTV and OTHERS Once HD become the NEW standard. Why SHould i have to Pay EXTRA for Something that is Standard. THe HD should be come the BASIC package.

  4. The new standard is DIGITAL (as opposed to analog) – NOT HD (high definition) as opposed to SD (standard definition). All companies are taking advantage of the consumers on this for this reason: consumer is told to buy a new tv with digital tuner and suckered into it (like a raccoon after a shiny object) because the flat panel seems so cool and well, its needed for the digital switch. Well the TV mfrs are making those flat panels in HD only, which means an awful looking SD picture (same as a low def picture on a high def computer screen looks). So now cable lets you watch HD and digital channels for a while on basic service so you get used to them and you go out and replace your tvs with new HD ones. Now they pull all the HD and even digital SD channels so you will have to go out and pay extra for HD service. Had I known this I would not have purchased my 2 flat panel tvs. This is a disgrace that the US Govt. has inflicted on the people – feeding them to the cable wolves – cause digital is just so much better it has to be mandated by law with no protections for the consumers. What a scam. I think I will be getting an HD antenna for my roof…

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