MSOs Blame Set-Tops For Their OTT Problems

Some top executives made comments about over-the-top (OTT) video, and specifically Netflix, at UBS’s 39th Annual Media and Communications Conference in New York this week.

Glenn Britt, chairman, president and CEO of Time Warner Cable disparaged Netflix’s streaming service.

"If you buy their online service today – not the DVD service – most people find the content to be fairly thin," said Britt. "That’s why it’s so inexpensive. I think there are very few people buying Netflix today that don’t also buy another TV service. My friends that use it are old-movie fans."

Britt mentioned more than once that he’s been in the cable TV business for more than 30 years, and that the average American household has a TV turned on for up to eight hours a day, so Netflix or other OTT providers are not able to compete with that demand.

"The reality is the (Netflix) content isn’t that great," he said. "If you want to watch old movies or network shows that were on a couple days ago, fine."

He did, however, concede that OTT providers offered better user interfaces.

"Some of these services have a really good user interface," said Britt. "I would not sit up here and say our user interface is really good. It’s not as good as theirs. They’re using the PC, which has a great deal of power and intelligence. We’re using a set-top box, which has less. We intend to work with consumer equipment companies and computer companies to be on every device."

Britt wasn’t the only executive to bemoan the set-top box.

Edward Rogers, deputy chairman and controlling shareholder of Rogers Communications said, "We realize that the evolution of these boxes has been a little slower than what we need."

Rogers is facing increasing competition from Bell Canada, which is expanding its IPTV footprint in Toronto, where Rogers has traditionally dominated the cable TV market.

"Bell has been the company who launched satellite and has been the other choice in TV for 12 years," said Rogers. "As they build up their IPTV, I think it’s definitely a better product than their satellite product. We continue to make a number of investments to try to make our TV a better product. We’re looking at the evolution to eventually some sort of IP television ourselves."

Rogers also said the MSO is beefing up its VOD service. This has been a trend across North America in 2010. (For more, see Dynamic VOD Ads Advance).

But, Blake Krikorian, former CEO and founder of Sling Media, who participated on a panel entitled "Over the Top Video: Value Destroyer or Value Creator and for Whom?" said, multichannel providers were facing competition from OTT because they had been "asleep at the wheel."

"Cable and satellite is the best means of delivery, hands down," said Krikorian. "The reason other services have started to crack in, is because they (MSOs) have not provided a great user experience. Netflix should not exist if the cable guys actually did VOD really well."

Neil Smit, who left Charter Communications this year to become president of Comcast Cable, said, "We’re getting more value from our programming. VOD is opening up. We have about 166 day-and-date movies available. Three years ago, it was 16. We’re getting more value from the programmers. We’re going across more platforms."

Smit’s successor at Charter, Michael Lovett, president and CEO of Charter Communications said: "We’re looking at what’s going on from an OTT standpoint. How do we embrace some of those new services? It’s really about migrating to a new platform that brings simplicity to the consumer. I don’t think that the set-top boxes we have today put us in a position to do that. I actually think this is the Achilles’ heel of the industry today. We have this robust capability that comes right up to the set-top boxes. (The set-tops) really put some barriers in place. We’re exploring next generation capabilities, and it starts with the user interface on the set-top."

-Linda Hardesty