It was obvious to all at NCTA’s The National Show No. 52 (June 8-11) that Chicago and its vast McCormick Place — allegedly the biggest building in the world under one roof — had outgrown the cable industry. After a visit to another gargantuan venue, New Orleans’ Morial Centre, in 2004, Bob Sachs and Barbara York will be taking us to San Francisco (thanks, guys!) and then to Las Vegas (yes!).
By then maybe we can all fit into the Rio Suites. That’s my obligatory joke about the show’s size, which I really think is a non-issue. The smaller the show the easier it is to make eye contact with someone from Comcast, which is the whole idea of going. That’s my last aside, because people will look back at this show as a watershed in media history. Operators in Chicago had their chests out and chins up, virtually asking satellite operators, telcos and program networks, “Do you want a piece of me?” They flew alphabet flags of HD, VOD, HSD, IP and DVR. And for the first time in memory, they sounded like they might launch all of them at once. Amid all the metal at McCormick, I kept looking for some wood to knock on. Still smarting from satellite’s taking of the video high ground with the first digital service nearly a decade ago, cable sees an edge in bandwidth, something high definition eats for lunch. The show’s HD Pavilion was a prophetic oasis in a desert of missing booths. Most consumers still can’t afford HD sets and screens, but that’s changing as we speak. Talking to Consumer Electronics Assn. president Gary Shapiro at the pavilion, in the glow of two dozen plasma pictures, it was obvious that cable and CEA’s members and display manufacturers have solidified the connection they made with plug-and-play late last year. Go into any Circuit City or Best Buy store and marvel at the growing changes in the digital household. Watch while prices plummet on big screens, thin screens, PCs, digital cameras and surround sound equipment (as much as half every two years), and you’ll see, up close, the invasion of new devices into large rooms and the migration of old ones to hideaways. Comcast’s Mark Coblitz, who led the industry’s effort to enable cable to plug its power more directly into media appliances, told one NCTA audience, “The consumer electronics industry spends $1.5 bil. in marketing a year, with none aimed at cable. But with DVRs, PCs, DVDs and Media Centers having a pod connection for cable, it’s just the beginning. Cable has a real commitment to retail. This is the first show where all the pieces have finally come together.” Another cable tech strategist, Dallas Clement of Cox, said, “Retailers will have products in Q3-Q4 in trial markets with July 1, 2004, the official rollout. But there needs to be a more customer-friendly process, since the subscriber has to report the device’s serial number [which comes up on-screen] to the MSO for billing purposes.” That’s not even step No. 1. MSOs have to decide which items in this toy box to promote first. For example: Some are thinking of pushing HD and DVR, because they want to catch up to, and pass, the two satellite ops who have launched both. But some think DVR is competitive with VOD (which it isn’t), so they may only trial the former while pushing forward on the latter. A possible blunder. There’s a marketing mind-share problem in all this, but the public is ready for affordable DVR and dish customers are getting them first. That’s something cable has to deal with, and it must learn how to market both VOD and DVR, besides HD and IP. Charter’s Steve Silva said, “With our new set-tops, we’ve reclaimed technological leadership. For many years we’ve known all these devices were possible. Now we can actually deliver them.” Amen. Coblitz later repeated his “beginning” remark. He said cable “is all about building a platform, getting paid for it and then we keep going and going. We built hybrid fiber coax, then digital, then IP. We just keep going.” Indeed, TW’s Kevin Leddy said, “We’re trying to figure out the next platform: Is OCAP the next generation of digital architecture?” How’s that for a watershed? Cable hasn’t even sold its newest boxes, and it’s already looking beyond them. Analyst Paul Kagan writes exclusively for CableWorld. He is an active investor and money manager and often owns securities mentioned in his columns. He owns shares of Comcast, AOL Time Warner, Cox and Charter. He may buy or sell before and after the columns are published, and his positions may change at any time. Information in his columns does not represent a recommendation to buy or sell securities, nor is it a solicitation of any securities transaction.