The Time to Embrace TVE Is Now
- View Original
- April 7th, 2015
In his editorial remarks for “Cablefax’s Guide to the Multiscreen Universe,” associate publisher Michael Grebb comments that, whether we like it or not, the world of digital video has changed dramatically over the past 10 years. However, as this special edition of Cablefax magazine goes on to show, developments such as over-the-top (OTT) services haven’t resulted in the doomsday scenarios some had envisioned. Instead, as Grebb observes, we are part of a multiscreen society where we can work together and “find ways to co-operate and co-exist.”
But as the industry’s past experiences with change demonstrate, we don’t always get to choose the pace for responding to new challenges. One of those instances occurred twenty years ago, with the dawn of the digital video era and the creation of hundreds of linear TV channels. While cable MSOs were calculating how much they would need to invest in launching digital video on a market by market basis, the DBS industry, after many false starts, seized on digital technology as a means to leapfrog the analog world and launch an all-digital lineup from one centralized location using satellite technology to reach virtually all of the continental U.S.
By launching digital tiers, cable operators were able to achieve some parity with their DBS counterparts. But they still needed something that would set cable apart as a better choice for the customer–thus came broadband Internet service. DBS providers responded by forging alliances with telecom carriers, giving rise to the industry’s embrace of VOD–video on demand–as a solution that could complement the industry’s offering of hundreds of linear channels with thousands of “long tail” video assets as well as a much more robust offering of pay-per-view content.
However, as I witnessed from the front lines view of this page in history, the industry was slower in embracing VOD than it could have been. I worked for DIVA Systems, which debuted on its first cable TV system in the fall of 1997. Despite the potential of VOD to be a differentiator from DBS, as well as serve as a source for re-energizing premium channel revenues and providing opportunities for selling advanced advertising solutions, it took ten years before VOD was available in half of cable TV households. During that same time, a number of VOD innovators, including DIVA, were forced to close their doors and DBS penetration grew to more than 30 million U.S. TV households.
Would cable have held on to more video customers had it embraced VOD sooner? If popular network TV shows had been added to VOD libraries a decade ago, as opposed only in the past several years, would more consumers be using VOD instead of their DVRs to watch them? There’s no way to calculate the incremental revenue data that would have accrued to the industry had it embraced VOD sooner. But given where we are today, it would have been significant.
That’s why I was glad to see VOD along with TV Everywhere (TVE), on Cablefax’s list of the “top ten multiscreen moneymakers.” In assigning VOD the top spot on that list, Cablefax pointed out that VOD isn’t an outdated technology. We are constantly reminded that viewers watch content not technology. From its inception VOD, a technology which has evolved significantly over the past 20 years, has demonstrated its ability to liberate customers from appointment television.
In fact, the term VOD is commonly used to describe much of the video content that’s available to online and mobile video viewers. And, OTT viewing is characterized as either live or on demand. It is the “anytime” component of the TV Everywhere experience.
Reminiscent of VOD’s role in fending off DBS competition, TVE, which ranks eight on the Cablefax top ten, is cited as “the way for the pay TV industry to retain customers and preserve the ecosystem.” Thanks to the work of CTAM’s TV Everywhere initiatives, we are already seeing progress on track to outpace the industry’s adoption of VOD. In 2014, the ratio of consumers who were aware they had TVE capability grew from 19% to 54%. CTAM has set a goal of achieving 75% awareness by the end of this year. It is also forecasting usage among TVE customers to climb from 55% to 65% by year end.
A senior engineer for a once major (and long since sold) MSO once told me that the challenge for a monopoly is to avoid over-investing. Cable is certainly not a monopoly now, if it ever was. And, as Cablefax’s Grebb points out, “the world five years from now won’t look anything like the world one we’re in right now.” To remain relevant in the rapidly changing multiscreen environment operators must embrace opportunities such as TVE and OTT to ensure their customers get everything they want. If not, those customers will vote with their feet and their (perhaps digital) wallets.