In many cable circles, the argument du jour is how we are going to kick-start HDTV into a real business — the kind with margins that will make Wall Street analysts purr. And retail is where the action is. It seems that the biggest obstacle to overcome is that we can’t sell a customer an HDTV tier if they don’t have an HD television set. Here’s a chance for MSOs to sip from the golden chalice used by only the highest end of cable consumers. That’s because an HDTV subscriber is likely to already be subscribing to an MSO’s full panoply of offerings. I can tell you firsthand — Pioneer sits at an interesting intersection in this equation because we manufacture everything from HD television sets to set-top boxes and on-screen navigation suites — that this challenge is perhaps cable’s greatest opportunity. And it may just be that the consumer electronics manufacturers like Pioneer will serve as the best gateway into relationships with retailers. Candidly, operators have been seeking a way to enter the retail business in a compelling way. But the challenges of serving both the retail consumer and retailer are infinitely different and more complex than our traditional cable business. Frankly, anyone who thinks retail cable modems or retail set-top boxes is a thriving business has simply not been to a consumer electronics store recently. For the first time, cable operators find themselves needing to partner with retailers because they are symbiotically connected. They need each other to realize the success of HD television sales and HDTV tier sales. This entirely codependent relationship is worthy of a scene from The Matrix Reloaded. It’s not about control; it’s about how we can work together. What’s truly exceptional about this equation is that the marketing success of HDTV is not exclusively the domain of retailers and MSOs. It’s also dependent on compelling content — not just the stuff the FCC is mandating broadcasters to deliver, but what our own cable-focused programming networks can dream up — and currently I count six cable networks entering this programming category in vastly different ways. But there is another piston that has to fire in order to make this engine run; it also takes a set-top box to build this business. Only the latest digital set-top box can unlock an HDTV signal, and once we talk about how to unlock the HDTV signal, we need to understand and anticipate the cable customer’s viewing preferences. This will mean exploring a range of issues, like how to build a set-top box that can be integrated into HD sets or how to sell our HD set-tops at retail alongside these HDTVs. It also means recognizing that HD content on VOD may just be as important a viewing option, and that the digital video recording function is as valued by the same high-end customer who wants to see HD programming. So we’d better integrate the DVR function into the set-top box, too. Then there’s the question of how to find all this great programming being offered. At Pioneer, we know it requires a very intuitive road map in the form of an on-screen navigation suite. Without such a suite, the consumer will be lost. It all needs to be seamlessly integrated. For the retail sales model to succeed, the MSO HDTV tier offering will have to be explained and featured along with all the technologies and content that makes it a simple, compelling and totally honest marketing proposition. The challenge is already being aggressively explored, tested and vetted by a number of our MSO partners. We have been delighted to be able to help develop and test some of these complex marketing models and serve as a bridge to the retailer. If our industry’s partnerships work, HDTVs will be as commonplace as clock radios. But right now, HDTV at retail is as exciting as a teenager’s first car in a high school where nobody has cars. And we are all driving the business to the same party, I hope. Dan Ward is director of marketing for Pioneer Electronics (USA) Inc., Cable & Communications Group.

The Daily



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