Parks Associates Blog

Thursday, September 23, 2010

Urban Myths and Truths for the European Cable Industry

I'm at the CTAM EuroSummit'10 in Budapest, and had the chance to talk about some urban legends and myths on a panel session titled “TV Retakes Center Stage.” My job was to discuss five urban myths and the truths as it relates to TV service and the cable operator’s role:

  1. Urban Legend 1: “Online Video Cannibalizes Traditional TV Viewing” – not true according to our data, and the speaker from Liberty Global and Virgin Media had their own data that showed an increase in television viewing.
  2. Urban Legend 2: “People simply won’t ‘cut the cord’” – not yet, anyway. However, I showed our data that indicates that consumers who are active in watching online video through connected devices or configurations (game consoles and PC-to-TV connections) are 3x more likely to be a cord-cutting threat. I then showed some numbers for expected worldwide penetration of connected CE devices, with a comment that the operators can choose to work with connected CE and take advantage of it or try to fight it (and probably lose). A speaker from Solon (a consultancy in Munich) indicates that 36% of the TVs sold in Germany in the first half of 2010 were Web-connectable. So, that’s very similar to what we’re seeing in the U.S. (where close to one-third we expect to be sold as Internet-capable). When we get to 2015, we'll see household penetration of connected TVs worldwide at more than 200 million, not to mention the tens of millions of households with connected Blu-ray players, game consoles, set-top boxes, and other IP-video-receiving devices.
  3. Urban Legend 3: “Consumers don’t care about home networking” – I rephrased it to dispel the myth that consumers don’t see additional value in home networking to focus on video features such as whole-home DVR. After all, we already know that more than 250 million households (well over one-half of global households with broadband) have home networks in some way shape or form. Our data indicates a strong interest in whole-home DVR, and high percentages of consumers in Western Europe indicating willingness to pay a premium for such a feature. Verizon indicates that significantly higher than 25% of its FiOS TV customers are taking its Home Media DVR, paying a premium of $4 per month. So, there are in fact new revenue streams to be created from home networking, and I showed our estimate for the number of connected devices on global home networks growing to four billion by year-end 2014 – that’s an average of eight nodes per networked households, and it will include consumer electronics, mobile and portable devices, routers and femtocells, and nodes for home, health, safety, security, and energy monitoring. So, cable operators need to be considering more of a holistic approach to the connected home.
  4. Urban Legend 4: “There’s no premium to be charged for TV Everywhere” – Not true – our data shows that 16% of consumers in U.S. broadband households are willing to consider paying up to $5 additionally per month, and it was noted earlier this week at the Connected Home World Summit conference that operators are deploying TV Everywhere at a €5-6 premium.
  5. Urban Legend 5: “The connected TV causes little concern, because it’s all about video … and we do it best” – Not true – certainly, cable operators will have an advantage over many online video services because of the high quality video formats that they can deliver to the consumer. However, interest in connected TV applications is going to go beyond video, so cable operators need to consider features such as social networking, family calendaring, gaming, music, and other services that complement the television experience. They should also consider the ways in which they can leverage their networks, their billing relationships, and tools such as device discovery and management to ensure a high-quality entertainment experience across devices, even those beyond the set-top box. They can actually use dynamic provisioning and configuration tools to bring more devices into the video experience and use this to both reduce customer support calls and to build a more highly-valuable service.

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Blogger George Hines (mrthreeplates) said...

I'm glad that you are going after the urban legend that cord cutting isn't a threat.

While there was some initial buzz about cord cutting, the current batch of articles that dismiss it are IMO really missing the point.

Sure it could just be wishful thinking or PR from the Cable companies there is (like all good lies) an element of truth.

The truth is that it isn't simple to cut the cord (yet). It might not currently affect corporate earnings (significantly), but the individual savings are REAL. I save over $100 per month.

The trick is to do it without much (if any sacrifice). That requires a bit of effort (currently) and is what is working in the Cable companies favor. However, if you combine OTT video with OTA, you have a real threat.

I've just started a series showing people how they can cut the cord survive (no you won't die).

2:07 PM  

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