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The Internet TV Expo, or INTX for short, is the reincarnation of The Cable Show, and while there was plenty of virtual reality booths, basketball games and roping displays by rodeo cowboys, cable veterans and OTT honchos alike were rubbing elbows and talking smack—as much smack as TV execs could muster—about linear TV broadcasting shifting to multi-device, Internet TV and skinny bundles.
WHAT “SMACK”?
New multi-device OTT competitors are triggering major business strategy shifts for multichannel distributors, who are responding with new “skinny bundles” of television content paired with Internet content offerings.Cable operators are accelerating upgrades to make broadband speeds top out at 1 Gigabit per second, developing 4K & HDR content and spending millions of dollars on customer service. Our team met with media analysts, customers and technology partners while at INTX and distilled the essence of the show for you below.
“SKINNY BUNDLES”
One big trend that emerged during the show was the “skinny bundle”, a cable/internet package allowing users to pick and choose the content they want for a significantly lower price than a traditional Pay TV package. MVPDs (multichannel video programming distributors) are reacting to the cord-cutter/shaver/never phenomenon—yes, it’s beginning to sound like a barber shop—creating skinny bundles in an effort to attract Millennials and retain subscribers. As you might suspect, their behind-the-scene concern is whether a large number of customers opting for these offerings could cannibalize their traditional revenue model.
Peter Chernin, a former top Fox executive and video entrepreneur, told INTX that rather than destroy traditional channel packages, companies should offer skinny bundles to help consumers justify the cost of subscribing. “We’re going to see a tremendous explosion of new alternatives, largely IP-delivered,” he said. “That will ultimately force the bundle to justify itself, which is not the worst thing in the world.”
During the panel “Thin to Win: Choice, Change & the Rise of Skinny Bundles,” Kathy Payne, SVP and chief programming officer of Suddenlink said, “I think you’re going to see more experimentation around this from programmers as well as operators. It’s in all of our best interest not to lose customers.” She added that cable operators have to be nimble as new OTT market changes are making people question why they’re paying so much for cable when they have other choices.
COMCAST & CUSTOMER SERVICE?
Comcast announced huge initiatives surrounding voice-activated remotes, 4K-enabled set-top boxes, sleek high-speed routers, new customer service apps, their new “Always on Time” customer support offering, and the hiring of 5,500 new customer service reps over the next three years. Chairman and CEO, Brian Roberts, said they plan to spend $300 million on customer service alone. Roberts said that they’re utilizing any negative customer-care glitches in the past to rethink how to do business, including a new Uber-like app that would allow Comcast customers to track technicians and rate them via their mobile phones.
MSOs AS OTT PROVIDERS’ NEW BEST BUDS
INTX also highlighted the fact that cable companies are now not only acknowledging OTT but embracing it. This became even more evident after a handful of cable operators, including Cablevision and Mediacom, signed distribution deals with Hulu. Mediacom announced the addition of Netflix as an app on its TiVo-powered platform as the latest in a growing list of Pay TV providers to sign agreements that bring Netflix to their set-top boxes. Meanwhile, Comcast is promoting X1, their next-generation, Internet capable platform supporting integrations with multiple OTT services.
TiVo has long been evangelizing the value of TV and OTT, and the message appears to be getting through to its pay TV partners. TiVo’s president and CEO, Tom Rogers, believes cable operators should be more aggressive in blending their traditional TV service with OTT options. “The cable guys can own that; they should own it,” Rogers said. “Instead, what is going on is programmers are creating individual streaming services. People are then thinking they can put together their own bundles, and that’s happening outside the integration and single experience that the cable operator can offer.” “It is amazing to me that they aren’t just putting their stamp on it,” Rogers said. “The best possible way to get it all and get it on a great interface … is the integration of traditional and over-the-top TV the way that only cable can do it.”
4K & HDR… WHERE ART THOU?
4K was still front and center on the INTX show floor and operators were showcasing new High Dynamic Range (HDR), which supports a greater color palette and brighter images for 4K content. Because the technology can be used with HD video, many expect HDR to have a larger impact on the viewing experience than 4K. In addition, while 4K requires a very large TV screen, the enhanced image enabled by HDR can be seen from smaller screens and can be streamed to tablets and smart TVs. Comcast announced a HDR set-top box slated to launch next year. Netflix plans to offer 4K content with HDR while working with the UHD Alliance to integrate HDR into the 4K standard. Concurrently, major MSOs have already announced a 4K roadmap, with small and mid-size operators exploring cost-efficient ways to offer 4K.
WHEELER ON NET NEUTRALITY
In related news, the FCC announced controlled pricing of Internet distribution. FCC chairman, Tom Wheeler, keynoted at INTX, and he had every cable executives’ attention with the passing of the new Title II regulations. These new regulations will ensure there’s no discrimination against competitors, but MVPDs are concerned about the restrictive price regulations of the new rule. “I thought we operate in a different environment than he [Wheeler] seems to live in,” Time Warner Cable chairman and CEO, Rob Marcus, said at the start of the general session panel that immediately followed Wheeler’s speech. “In my world, broadband is very competitive.
Competition has, in fact, fueled a tremendous amount of investment, and it’s investment we continue to make to make our broadband better. I wonder what the problem is.” Wheeler told the crowd that the broadband industry was not competitive enough, and the FCC would be working to change that.
“[It] is important to understand that the tipping point from cable to broadband came while the transaction was under review,” Wheeler said of the now squashed Comcast-Time Warner Cable deal. “We recognized that the industry had changed, and we saw concrete evidence of the new competition and business models made possible by high-speed Internet access. You don’t have a lot of competition, especially at the higher speeds that are increasingly important to the consumer of online video,” Wheeler said. “By bringing competitive alternatives to television viewers, this industry did just that — and the video business was changed forever. Then, your industry went on to upgrade, compete with the telcos, and dominate broadband. Now the question is whether consumers will have competitive alternatives for broadband.”
