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Quote/Counter-Quote: tensions remain between programmers and pay-TV industry

There is a lot of tension between the programmers and cable these days. Some of that tension was highlighted in The Programmers Panel at The Cable Show on Tuesday, but so too was the agreement that they were better off together.

In this piece, I have curated some of the best quotes from the conversation to compare and contrast how programmers and operators viewer some of the most pressing issues facing the industry. I’ve also inserted an appropriate data point to highlight the issue.

On the success of Netflix

Factoid: Since it introduced streaming services in 2008 Netflix has grown from 9.4M subscribers to over 48M and become a $4B business.

“The fact that someone came up with an interesting technique of aggregating and reselling other peoples content over the cable infrastructure is in no way a failure of the cable industry.” Rob Marcus, Chairman & CEO, Time Warner Cable Inc.

“It’s (Netflix) a beautiful looking platform and I do wish our cable partners would take a closer look at how do make the consumer experience better and better.” Nancy Dubuc, President & CEO, A+E Networks

On the problems with TV-Everywhere

Factoid: 21.6% of pay-TV subscribers have downloaded their operators TV-Everywhere app to their connected device. Of those, just 30% use it more than once a week.

“Authentication is a barrier to usage. I bet half the audience doesn’t know what their user name and password is. I have three homes with three cable providers and I don’t know any of them, so I don’t have TV Everywhere because I can’t figure out how to use it.” John Martin, Chief Executive Officer, Turner Broadcasting System, Inc.

“Our TV Everywhere app has been downloaded 11 million times. But the authentication of the app is not that good!” Nancy Dubuc, A&E

On the escalating cost of programming

Factoid: In 2013, programming costs at DirecTV grew 6.6% while ARPU increased 3.8% (both numbers corrected for inflation.) This was better than in 2012, when programming costs increased 7.5% and ARPU 1.9%.

“We create great value with our product. The single greatest buttressor of the pay-TV package is ESPN. 115M people consume ESPN each week. 86% of people consumer ESPN in a quarter.” John Skipper, ESPN

“We have a disconnect now which is for the most part that John’s (John Skipper, ESPN) not going directly to end customers, so he doesn’t have that feedback loop to guide what he’s willing to pay for product.” Rob Marcus, TWC

On pay-TV’s value for money

Factoid: Looking at Comcast video ARPU between Q2 2012 and Q2 2013, we see an increase of 4.3% to almost $80 a month. Over the last 5 years video ARPU has increased, on average, 4% a year for a whopping 22% total increase.

“It’s not unreasonable to assume that roughly, essentially we charge customers 20 cents a viewing hour. That is a staggeringly good value by any measure.” Rob Marcus, TWC

“I’m concerned we are reaching a tipping point. Where we begin to price some customers out of the market” Jerald Kent, Chairman & CEO, Suddenlink Communications

On the threat from OTT providers

Factoid: Hulu plus now has 6 million subscribers, double the number just 15 months ago.

“The speeds, robustness of our HSD offerings are made special by virtue of the fact that there’s a whole lot of creative people out there delivering their content over those pipes.” Rob Marcus, TWC

“We have a better product that is cheaper on a per hour basis than those companies <OTT providers like Yahoo!>, and we are allowing them in some ways to set the tone of the conversation.” John Skipper, ESPN

On attracting the best content to cable

Factoid: A majority of brand marketer and advertising agency executives expect original digital video programming to become as important to their business as television advertising within the next 3 to 5 years.

“I worry a lot about where the next generation of creators is going to come from … that next crop of creators is opting to go to YouTube, Vice, different avenues. How do we attract them to our platforms and our story telling systems? I worry a lot about that.” Nancy Debuc, A&E

“There’s an arms race for programming and there’s more and more outlets for people to express their individuality” John Martin, Turner

 

This was one of the most interesting discussion between programmers and operators I have seen. It is well worth the 35 minutes of your time to watch the whole thing.

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