Comcast Corp.’s chief operating officer, Steve Burke, issued a warning to those content providers who sit by idly and complain about online viewing without doing something to change the TV business model. “An entire generation is growing up, if we don’t figure out how to change that behavior so it respects copyright and subscription revenue on the part of distributors, we’re going to wake up and see cord cutting.”
He said the current OnDemand Online trial - rolling out across Comcast’s footprint offering viewers access to cable channel shows in exchange for identifying themselves as subscribers – was not an effort to “change the advertising model or get a minute back from content providers,” rather it is a way to “get in front of the biggest social movement I’ve ever seen. Online video consumption is off the charts.”
Previously cable operators have played down the extent of cord cutting and some Wall Street analysts say they’ve seen little real evidence of a supposed phenomenon that has subscribers canceling their cable subscription to watch online for free.
Speaking at the CTAM cable marketing convention in Denver, Colorado on October 25, Burke described his fears if the industry does not move ahead to form new business models. The industry-wide TV Everywhere authentication project is a way to try to “take the cable industry and put it ahead of the Internet and try to not let it roll ahead of our industry,” he said. Burke also illustrated some frustration with those in the business who were not lending a hand. “Some people’s business models are going in the wrong direction,” he said, a likely reference to News Corp, Disney and NBC Universal who are partners in free online video site Hulu, that is considering putting some content behind a pay-wall. “I’ve yet to meet a content provider who doesn’t worry about cord cutting and doesn’t see the wisdom of trying to get ahead of that. Stop talking about how hard it is and start figuring it out,” he said.
Many content providers however aren’t keen to move ahead with the TV Everywhere plan until there is a discernible revenue model in place and that widely depends on an overhaul of video measurement across the screens. He said Comcast was willing to join the nascent group Coalition for Innovative Media Measurement, or CIMM, which is challenging data providers to come up with new ways of measuring video viewing beyond the services provided by Nielsen and others.
Commenting on how the ad load should look online, Burke said content providers were in charge of their own ways of scheduling ads, either running the equivalent ad load that accompanies shows on TV, which many are doing, or charging higher rates for less advertising. “People are less tolerant of online [ads] than they are on TV, but at this point they’re so happy to have the offering,” he said.
Laura Desmond, CEO of Starcom MediaVest Group, appeared on the same CTAM panel, titled, “The Future of Advertising,” saying that clients such as Procter & Gamble are well on their way to preparing themselves for a new world of media, one that gives them the same advantages in digital media as they receive from their long relationship with the mass media players. She applauded the efforts of aggregators such as Comcast’s Fancast and Hulu, which just received a big ad buy from Starcom’s MediaVest unit.
Desmond said addressability, the kind being prepared by the cable industry’s Canoe Ventures and others, would help advertisers minimize wastage. She suggested that around 40% to 50% of a typical primetime ad buy was wasted on viewers not interested in the product or service or outside of the advertisers’ target. However, she viewed it unlikely that addressability – targeted advertising to subsets of consumers – would happen within the next two years. In order for targeted advertising to become truly accepted by advertisers, “We need to have that platform rolled out and encompass all of the TV world, not just cable and a few networks. Advertisers such as P&G and WalMart are eager for this, to redeploy those dollars. There’s a real call for direct marketing principles to be adopted by the mass medium and the more you see that the more you’ll see demand and dollars increase. We’re waiting for a platform that truly goes scale." Canoe Ventures interactive capabilities are rolling out at the end of this year, with addressability much further down the line. No advertisers are yet on board.
On a separate note, Burke thinks the interactive capabilities of cable will apply equally to content creators not just advertisers. He envisioned a future where cable users might be able to vote for their favorite American Idol contestant thanks to EBIF, a software application being rolled out by Comcast to allow for interactivity. Such interactivity would be available system wide in 2010.