Cable Execs See Trouble, Opportunities in Changing Ad Market
BOSTON -- New advertising routes are both a challenge and opportunity for the cable industry, a number of pay-TV industry chief technology officers said on an INTX 2016 panel Wednesday. "The idea we can just interrupt your show [with a commercial message] is going by the wayside," Comcast CTO Tony Werner said. Discovery CTO John Honeycutt said he's increasingly bearish on the prospects of interactive and advanced advertising and data monetization: "I am struggling with the path. If anyone can tell me another way to make money in this business other than subscriptions and [traditional] advertising, I am all ears."
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
"I agree it's a little murky, but the tools are there," Werner said, pointing to advertising coming on its X1 platform. When X1 rolled out, "no one cared we weren't doing advertising in the guide," he said, saying Comcast is on track to have half of its cable subscribers on X1 by year's end, so advertisers "have been doing the limbo under our door to get ad spots in there." He also said the future lies increasingly with targeted advertising. But the notion of targeted ads "is still in the nascent stages," said Darcy Antonellis, CEO, Vubiquity.
Roku General Manager-Content and Services Steve Shannon said advanced advertising is one of the company's fastest-growing revenue streams. Citing its targeted ad deal with Viacom (see 1604280038), he said cable access to Roku's data allows pay-TV to make ads more interesting and also to enable running of fewer ads.
High-dynamic-range imaging (HDR) and 4K don't appear to mean as big a shakeup to the industry as the adoption of HD, panelists said. Werner said HDR is a bigger opportunity than 4K: "4K's great, 8K will be better, then 16K." But HDR is a more noticeable difference in viewing quality, he said. More HDR content is needed, and Comcast will begin shipping HDR set-top boxes in July, he said. But HDR "isn't what I see as radically changing our business -- it's interesting, not something I consider super fundamental." Shannon said Roku began shipping a 4K product last year that's not much more expensive to produce than regular HD products, indicating 4K likely will become pretty ubiquitous eventually since it won't have a notable price hurdle.
HDR "is not going to sell as many sets" as HD, Werner said. Honeycutt said along with the HD transition came the introduction of the 16-by-9 screen ratio, better resolution and surround sound, all of which helped its adoption. If HDR is accompanied by better resolution or frame rates, "it will be a nice addition," he said.
Out-of-the-home content delivery is a growing area for Comcast, though "the TV isn't going anywhere," Werner said, saying the company sees 7.5 million unique remote viewers a month. He said mobile viewing is accretive rather than displacing some other form of viewing, as viewers increasingly will watch part of a program on a TV and part later on a tablet. Mobile viewing does create some content challenges, with some stories needing to be told differently on smaller screens, Honeycutt said: "There is a pace and framing that is sometimes different." The growth of mobile and PC viewing platforms has been considerable because those have been connected longer, but now that connected TVs are becoming more commonplace, TV "is roaring back," Shannon said.
Asked to identify the biggest business disruptions the industry will see over the next year, predictions ranged from Antonellis forecasting more direct-to-consumer programming offerings to Shannon saying that beyond Comcast and Charter his company sees a variety of other pay-TV operators making their content available through Roku.