The Positive Side of Video Competition

The proliferation of video products signals more potential competition for legacy cable video, but also new opportunities for MSOs to expand their video footprint.

Take Internet TV. On the supply side, big media companies are announcing deals that are fueling Internet TV’s transformation into an alternative distribution outlet for mainstream video content. On the demand side, the leading Internet TV websites are attracting growing shares of consumers’ viewing time and of advertisers’ spending.

This merits close attention but is not cause for panic. For some time to come, MSOs’ core linear TV, VOD and HD products will offer superior video choice, quality and convenience relative to Internet TV.

At the same time, however, MSOs can tap new growth by buying and/or building Internet TV and other new video businesses. The cost of acting now is less than it will be later, when the market has consolidated with fewer, more established players. There are many options to consider, and some MSOs are already pursuing them. For example:

• Internet TV and multimedia Web presence. This is a no-brainer. Cable operators must be on the Web. This can be done via MSO portals and/or multiple specialized niche sites. Revenue will derive from advertising, subscriptions, pay-per-use or all of the above, as in core cable. Comcast’s acquisition of Fandango, a movie ticketing site, its plan to launch Fancast.com as an Internet TV guide and video distributor and its deal to distribute content from NBC Universal/News Corp. on Fancast.com and on Comcast.net are initial steps.

• Multi-platform content deals. As the largest multichannel video distributors, MSOs can push for multi-platform content deals covering Internet TV as well as linear TV and VOD. Content suppliers intent on directly exploiting the new platforms may resist, but these deals are worth pursuing.

• Cross-platform advertising. Dynamic cross-platform placement and management of advertising will help support growth of new cable ventures while enhancing the appeal to advertisers of legacy cable video products.

• Home networking. Deployment of cable-managed home networking of TV and other multimedia content will position MSOs to exploit video download business opportunities.

• Cross-platform EPG. Eventually, cable will want to offer guides with visibility into linear TV, stored DVR, VOD and Internet and mobile video content.

Cable’s direct multichannel video competitors — DBS and the telcos — are only part of the equation. Other stakeholders with starring roles in the disruptive changes in the video market include content suppliers, cable programming networks, Internet TV aggregators, Internet TV infrastructure providers, consumer electronics suppliers, investors and advertisers. These stakeholders’ interests need to be taken into account as MSOs sustain and grow their own historic role in video.

Peter D. Shapiro is an industry veteran and principal at PDS Consulting, a cable & telecoms consultancy (www.pdsconsulting.net). He can be reached at: [email protected].