ATLANTA – Although the Apple iPad is not yet two years old, consumers are already beginning to treat it like a smaller TV set, at least in their video viewing patterns.
Matt Zelesko, senior vice president of web services for Time Warner Cable, made that observation during the SCTE Cable-Tec Expo show here earlier this week. Speaking on a breakfast panel hosted by Multichannel News, Zelesko said subscribers to Time Warner’s new iPad app tend to leave the application running as if the tablet were a mini-TV, keeping it on as background entertainment while they carry out other tasks.
“People do leave the iPad on,” he said, while declining to reveal actual viewership numbers. “
Steve Necessary, vice president of video product development and management for Cox Communications, said he worries about the impact that new video display devices like the iPad could have on MSO DOCSIS networks and bandwidth costs. “For the moment,” he said, “that’s the great unknown.”
In the short term at least, Zelesko said the proliferation of new viewing devices will lead to greater bandwidth consumption in the home, higher costs to support each customer and video transcoding and formatting headaches. “The real challenge here is that we find ourselves coding to all these different ecosystems,” he said. “Right now we have a Noah’s Ark of formats.”
The three MSO executives on the panel — Zelesko, Necessary, and Gregg Grigaitis, vice president of advanced technology for Suddenlink Communications — agreed that it’s still tough to gauge the financial benefits of delivering cable services to new video platforms. Although they believe multi-screen service should cut customer churn and reduce subscriber acquisition costs, both beneficial impacts are difficult to prove right now. “It is ultimately a very thorny issue,” Necessary said. “At the moment, we don’t factor those into our business plan.”
The extra costs of multi-screen service, however, are becoming easier to calculate. In the near term, Necessary said the incremental cost of each new downloaded application comes from a number of different sources, ranging from greater bandwidth (i.e. higher DOCSIS usage) and transcoding requirements to additional customer support training and provisions for new closed captioning technologies.
The three senior MSO executives disagreed over whether it makes more sense to transcode the video in the home or in the network. Speaking for Suddenlink, Grigaitis said his company thinks it will be much more economically feasible to transcode content in the home using new IP-enabled video gateways.
But Necessary argued that in the longer term, it comes down to where subscribers will actually consume the new video services. If video usage shifts substantially outside the home, he said, then a network transcoding approach might make the most sense.
Taking a stance somewhere in the middle of the two, Zelesko contended that the question is probably not an either/or proposition. He argued that cable providers will likely adopt a hybrid system of transcoding that evolves with the economics over time. He noted that cable operators have started launching new video services and applications much faster in recent years. Even though they face many unknowns in doing this, he said cable operators must continue speeding up their cycles of product development and introduction and adapting quickly to customer feedback and market shifts to compete.
“Instead of a few product cycles a year, we’re moving into a world of new cycles in months or even weeks,” he said. “It takes a fair amount of courage to launch in that world.” He said that’s how Time Warner Cable handled its iPad app launch and how it continues to build on that product now that it's in the market.
Cable executives agreed that they have learned that customers want access to their content everywhere and don’t care how they get it. But they disagreed over whether MSOs should provide access to the same cable content on competitive devices or services, potentially undercutting their own on-demand services. For instance, they split over whether to allow subscribers to access the HBO Go app via Roku. Comcast, Time Warner Cable and DirecTV have blocked it, but other pay TV providers have permitted it.
Grigaitis said Suddenlink allows subscribers to access the app because it's what they want. Necessary agreed, arguing that the gain is worth the pain. "We get paid to distribute content," he said. "Branding folks may not like it so much, but I'm here to please my customers."
Alan Breznick is a Toronto-based senior analyst at Heavy Reading, part of the Light Reading Communications Network at UBM TechWeb. He covered the 2011 SCTE Cable-Tec Expo for Cartt.ca.
