Cable Show Opening: Business Models vs.Technology

Two years ago, Time Warner CEO Jeff Bewkes spearheaded the concept of "TV Everywhere" to make cable programming available on three screens for cable subscribers. But in 2011, industry leaders are still trying to figure out the business models, and they’re no longer talking about just "three screens" but rather "multi-screens."

At the opening session of the Cable Show 2011, Bewkes still championed preserving the existing business model. "Putting the TV on the Internet is the first thing, and don’t change the business model," said Bewkes. "Make it easy for people to use the way they’re accustomed to."

But Philippe Dauman, president and CEO of Viacom, said, "It’s not just putting TV on the Internet. Consumers are influencing things. You need to have interactivity. You need to have more and more original programming. We have to shift our view of how we serve consumers and what the experience is."  Viacom has driven consumer engagement with content via social media technology such as Twitter and Facebook. "You need to provide that kind of interactivity," he said.

Bewkes is cautious about dismantling existing business models, and he has Time Warner pursuing multi-screen strategies that benefit existing pay-TV subscribers. "We think HBO Go is a pretty good example," he said. (For more see, Multi-Screen Boosts HBO, Says IHS).

The HBO Go app is available on the Apple iPhone and iPad, and also on Google Android devices, free of charge to customers already paying for HBO and Cinemax through a pay-TV provider, as long as the pay-TV provider has struck a deal with Time Warner to offer the service. Subscribers also have access to HBO Go content via the HBO Go website.

Multi-Screen Apps

Since the last cable show, the industry has made some real progress creating applications for multi-screen strategies, most notably iPad apps to use the Apple tablet as a remote control and as a second screen. (For more, click here).

Comcast Cable’s President Neil Smit said, "We’re finding with the iPad app, about 50 percent of users are using tools and, about 20 percent are watching content. The most sticky is premium content. What needs to happen next, we need to be flexible and work together collaboratively. The pace needs to increase."

But the business models for multi-screen TV are still unsettled. Viacom and Time Warner Cable are suing each other about distribution rights on TWC’s iPad application. Two of the panelists on the stage at the opening session represented those companies – Viacom’s Duaman and Glenn Britt, president and CEO of TWC.

When speaking of new business models, the topic of Netflix inevitably came up. There’s some consternation among operators as to why content owners would want to work with Netflix, considering how much less they get paid by Netflix in comparison to their cable revenues. Dauman said, "We had no syndication value in the 10-year-old Beevis and Butthead episodes. We’re making some money (from Netflix) that allows us to invest in more original content."

So, while the technologists have made a lot of progress in the past couple of years to enable TV on multiple screens, the business models remain the sticking point.

"When we look at future opportunity, there has to not only be great content, but a lot of infrastructure built," said Pat Esser, president of Cox Communications. "We have to agree on business models we all support. We have to figure out these business models."

-Linda Hardesty