Corky Roth made a house call at the CTAM Summit last month in Washington, D.C. His mission as an opening-day panelist: prescribe tactics to grow cable’s customer base in the face of multichannel competition.
As marketing and new product development director of Time Warner Cable’s San Antonio system, Roth gets a daily dosage of massive competition. Time Warner’s system, with more than 369,000 basic customers, marked a milestone last month — one full year of combat with AT&T in San Antonio, the telecom giant’s corporate home base. U-verse, AT&T’s multichannel overbuild using Internet protocol transmission technology, launched in July 2006 in San Antonio and, as of a month ago, was available in 23 markets nationwide, including Los Angeles, Dallas and Detroit.
What did Roth preach to CTAM’s D.C. crowd? New product leadership, triple-play bundles, multiple promotion strategies, a focus on the system’s attributes and an overall aggressive attitude make a difference. "Make the competition respond to you," Roth says.
"Bring the fight to AT&T" remains the system’s year-old motto, San Antonio system president John Owen says. Triple-play bundles, coupled with high definition and video on demand, are the system’s main attractions. Thus far, in neighborhoods where Time Warner and U-verse go head-to-head, the system’s triple-play penetration has increased 12%, from 17% in June 2006 to 29% as of June 2007, Owen says. System-wide bundle penetration reached 27% four months ago, up 90% from early 2006. Triple-play subscriptions cost $99 per month.
"The bundle is a great tool to inoculate you from the competition," he says. "When you get digital phone service in the home, you have the best avenue to roll out new products, because people value the quality of phone services so much."
U-verse, with more than 40,000 basic customers nationally as of March 2007, does not offer triple-play bundles in San Antonio. Bundles consist of digital video and high-speed Internet access, priced from $44 to $129 per month, depending on the tier of video channels and the rate of high-speed taken. Voice-over IP will be added later, U-verse promises on its website. AT&T doesn’t divulge market-by-market results, and U-verse’s San Antonio executives did not respond to interview requests.
About 25.6% of the 800,000-plus households in San Antonio are DBS customers, according to first-quarter 2007 statistics from CentrisBRIDGE, the joint research project of Centris and Bridge Data Group. Two independent overbuilders — Grande Communications and Guadalupe Valley Telephone Cooperative Communications — also operate in the area.
The Manu Factor
Owen and Roth credit opportunistic marketing strategy for the bundle’s success in San Antonio so far. That strategy incorporates mass media campaigns, e-mail blasts, cross-channel promotion and more than 500 outreach events per year. Many of those media and cross-channel efforts highlight one local notable — San Antonio Spurs guard Manu Ginobili.
Ginobili, whose clutch shooting contributed to the Spurs’ fourth National Basketball Association championship within the last 10 years this past June, appears regularly (in live action shots and animated renderings) in Time Warner’s radio, newspaper, direct mail and TV ads wearing a Time Warner basketball uniform and using one of the system’s services. Images showing his dexterity with high-speed and digital phone also appear on channel lineup cards and service brochures and on pictures hanging in the system’s headquarters, located one mile from San Antonio International Airport.
During the Spurs’ latest playoff run, Time Warner had local radio disk jockeys tout "Go for 3" testimonials on-air, tying patter on triple-play bundles with Ginobili’s third chance at an NBA championship ring with the Spurs.
Ginobili’s campaign participation "has become a brand within a brand," Roth says. "He’s a rising star and, because he hails from Argentina, Manu connects with both our audience in general and with our Latino community even more."
Inside AT&T Center — the arena the Spurs call home — fans can see U-verse services on display at several kiosks. AT&T’s chain of retail outlets, acquired from Cingular Wireless last year, features U-verse demonstrations. Also, U-verse sends an ice cream truck into various neighborhoods as a promotional showcase and stages events at local recreation centers. Mass-media marketing is on hold until U-verse becomes available citywide.
Cable’s HD Advantage
Time Warner’s moxy for taking every promotional advantage possible over the last year paid a big dividend weeks after U-verse’s launch. When system management confirmed that AT&T’s U-verse set-top boxes could not process HD signals due to technical complications, Owen and Roth approved a blitz of cross-channel spots, website banner placement and subscriber e-mail. The messages highlighted Time Warner’s 19 HD channels in San Antonio without mentioning U-verse’s HD troubles.
AT&T suspended U-verse marketing in late October, after the local press reported the company had signed only 3,000 customers, due in part to the HD snafu. The suspension ended after Thanksgiving, when Motorola came in as the venture’s converter provider, and the earlier set-tops (made by Tatung) were replaced. When CableWorld reported on the story in January, Roth wouldn’t say how many HD customers were added as a result of Time Warner’s ad blitz (CableWorld, Jan. 22). But Roth said that total revenue-generating units in San Antonio increased 12% in the last three months of 2006, compared with fall 2005 results.
Currently, U-verse offers 26 HD channels, one more than Time Warner, and both services want to launch HD VOD programming this fall. There have been no further technical disruptions since last fall in San Antonio or elsewhere, according to an AT&T official.
As for VOD, Time Warner offers more than 3,000 hours of content a month in San Antonio, 75% consisting of movies available for 99 cents to $1.99 per title. In May, VOD drew 5 million views, up 20% from May 2006. Separately, Start Over — which enables subscribers to stop a program, then watch it again from the beginning — was used 500,000 times in May. Owen deems that result impressive, given that Start Over launched last October and received heavy promotion only a few months ago.
Pivot in Play
Three projects are on Time Warner’s late summer/early fall front burner in San Antonio. First is a major marketing push for Pivot, the wireless phone service introduced in May as part of the MSO-Sprint joint venture. "We’re not far enough out of the gate to say how well this will eventually do," Owen says (he declined to cite how many customers have subscribed to Pivot). "Based on the early feedback, there’s reason to believe the potential is tremendous, and reason to think we can get a side benefit of new digital phone and high-speed users."
Also coming up is the implementation of switched digital video, intended to generate more bandwidth for enhanced services. At least 160 digital networks will be transmitted after the switched technology is fully deployed this fall. "This is the biggest bandwidth rabbit we’ve pulled out of our hat so far," says Norrie Bush, the system’s engineering VP.
Third, and critical: deploying the Open Cable Applications Platform, which will open the door for more interactive services. When OCAP gets activated, Time Warner Cable will upgrade its electronic program guide with the next generation of navigational features.
Time Warner Cable San Antonio by the Numbers >
HOMES PASSED: 740,239
MILES OF PLANT: 8,465
BANDWIDTH: 783 MHz
PERCENT OF PLANT UPGRADED: 100%
BASIC SUBS: 369,625
BASIC PENETRATION: 50%
DIGITAL PHONE SUBS: 140,000
DIGITAL PHONE PENETRATION: 19%
HDTV: 25 CHANNELS, INCLUDING A&E, CINEMAX, DISCOVERY HD THEATER, ESPN HD, ESPN2 HD, FOX SPORTS NET HD, HBO, HDNET, HDNET MOVIES, HD SHOWCASE ON DEMAND, MHD, MOJO, NBA TV, SHOWTIME, SPECIAL EVENTS HD, STARZ, TNT, UNIVERSAL HD AND LOCAL ABC, CBS, FOX, NBC, MY NETWORK TV AND PBS AFFILIATES
AD INSERTION: 50 CHANNELS
SOURCE: TIME WARNER CABLE