The cable value chain is being challenged as never before, Michelle Nowak, global head of strategy and solutions for cable, at billing systems provider Convergys, told attendees at the CTAM Europe EuroSummit this morning.
Taking part in a joint keynote session with Phyllis Harris, general manger, communications and media, Microsoft, with which Convergys has formed a partnership, Nowak said that IPTV providers were commoditising the market, while consumer electronics manufacturers and over-the-top service providers presented new challenges.
Nevertheless, said Nowak, cable could also take advantage of new growth opportunities. “Consumers want an in-home experience on any device wherever they go,” she said. “Cable providers need to look at their consumers as persons and create personalisation in everything they do. It really comes down to customer intimacy. The better you serve your customer, the more they like you.”
The increased range of choices that were available to consumers was hitting cable in the US, said Nowak. But cable operators’ ARPU was increasing, thanks to a switch of emphasis from being video providers to being broadband providers. Operators had not yet fully embraced a number of opportunities to monetise their network, for example by offering access to their network to third-party brands who could provide services targeting demographic groups for whom that brand had resonance, said Nowak. “Become a virtual network operator – become a CVNO,” she said.
“It’s very obvious that cable companies and media companies generally face a lot of threats and have to change,” said Harris. However, while OTT services seemed like a threat, users of such services would want to use very high-speed networks to deliver a quality experience, she said. That provided an opportunity for cable to provide the pipe over which such services were delivered. “OTT is a threat if you don’t want to change – it’s an opportunity if you want to get in the game,” said Harris.
During yesterday’s panel session on Building a Powerful 21st Century Brand, attendees were presented with a slightly different take on OTT, with the key theme being that cable operators will increasingly have to develop stronger interaction with their customers to deal with the entry of new brands such as Netflix or Lovefilm into the service provider space.
Speaking on a panel, David Hulbert, director, Ravensbeck and a former Disney executive, said that cable’s poor record in consumer marketing and the relatively simple business model of over-the-top entrants gave the latter an advantage. Cable operators had not been good at putting themselves in consumers’ shoes, he said. The key was to understand the market and identify the two or three things that were most important to the groups of consumers targeted.
Sigrid van den Houte vice-president, brand, media and communication, Telenet, admitted that cable had been focused on technology in the past. Van Houte said that cable operators nevertheless had the advantage of existing multiple touch points with the consumers, which gave it an advantage over new online entrants. One thing that would enable cable to differentiate, she said, was access to local content. She also pointed to Telenet’s launch of TV everywhere service Yelo and said that development of the product would be based on feedback the company had received from consumers.
Van Houte also said that one of the key issues facing service providers today was that customers could transmit negative views of what their service providers were delivering very rapidly via social networks. She said her company had taken a strategic decision to make sure it had put something in place for existing customers as well as making offerings to attract new ones.
Ed Palluth, senior vice-president, global distribution, AMC/Sundance Channel Global, said that the pay TV industry had faced threats before, with the launch of video stores. “If you can respond quickly to the consumer you gain credibility,” he said. “That’s something we have to do with social media.” He said that his company’s entry into social media had shown that interaction and a quick response to issues and concerns raised were vital.