What I Took Away From The Cable Show (other than the tsotchkes)
- Part 2 of 2
Bill Niemeyer, Senior Analyst
May 17, 2010
A continuation of my previous post on attending The Cable Show (also known as NCTA) in LA - the annual gathering of the cable industry. Part 1 featured some of my topline takeaways. Here are a few more.
Where did linear addressable (aka targeted) TV advertising go?
In 2008 and 2009 it got a lot of talk from CEOs on the general sessions and cable execs on the panel sessions. In 2010, it was as if it didn't exist. But, early trials have shown it improves advertising efficiency and advertisers really want addressable TV. So what's up? I spoke to a number of industry insiders and consensus opinion is early field trials indicated linear live addressable on today's cable plant is just too technically challenging to be deployed in scale.
Given that advertisers really want addressable TV advertising, where is the demand likely to go? First, it may go to the satellite TV providers as they have declared they are moving forward with it. And it could go to VOD addressable, provided the operators deploy the means to do it. Finally, it will probably go to broadband video, where standard web tools make it much easier to target ads, even though it is more difficult to gain the demographic data to base the targeting upon.
A further note on addressable TV advertising - a demo of DVR-based ad insertion
I saw a very interesting demo at the NDS suite. It was a NDS/BlackArrow demonstration of DVR-based addressable advertising insertion into timeshifted or live TV viewing. (Full disclosure - I was part of the team when BlackArrow was founded and spent four years there so I'm prone to be in favor of this concept.) TV ads are stored on the DVR hard drive, selected by various demographic criteria and inserted into a program as it is viewed.
While this was technology demo and not a fully productized offering, it was running seamlessly on a Cisco Explorer DVR set top that cable operators are currently buying, providing a plausible path for rollout. DVR-based insertion seems to be a very scalable way to deploy addressable advertising. And while it is limited to households with sufficiently capable DVRs, those are likely to be households more desired by advertisers because of their demographics and they are more "at risk" for ad exposure because they have DVRs.
Fox Cable announced the first online diginet from a major cable network family that isn't ESPN
(A diginet is a TV network without a linear TV channel shown via broadband or VOD or both - ESPN's diginet being ESPN3.com)
It's Speed2 - a broadband-based live streaming and on-demand network offering motorsports programming not seen on the Speed linear TV channel (namely no NASCAR and a lot of European race series not available on TV in the US). It will have a "beta" launch in June on Time Warner Cable in Charlotte, NC and then rollout in other markets and operators over the summer. It does have a TV Everywhere like aspect - you have to be getting the Speed linear channel to be authenticated to watch Speed2. Speed2 will have both SD and HD content and include some of Speed's back library of shows on-demand.
So why is it a big deal to be the first non ESPN diginet? First, ESPN is such an outlier because their enormous carriage fee revenue stream (SNL Kagan estimated at $4.08 per subscriber in 2009) gives them the financial headroom to launch ESPN3. By comparison, Speed was estimated to get $0.20 per subscriber. And, to me, ESPN3 has seemed like an extension of ESPN rather than a new network. Admittedly, Speed2 feeling like a separate network could well be a function of my being a huge European motorsports fan and my getting excited about access to racing with acronyms few understand (like BTCC, WTCC and FIA GT1 / GT3). At any rate, I'll be tracking the business model implications of Speed2 closely.
This is a related offering to that described in the TDG report I co-authored with Colin Dixon - The Economics of Over-the-Top TV Delivery - How Television Networks Can Shift to Online Content Delivery. Speed2 is similar to the model proposed in the report in that it will offer live streaming and on-demand online content in SD and HD, and (while not noted by Fox Cable) undoubtedly contain advertising. There's no mention of pay per view or subscription fee based services. Time will tell if those are on the Speed2 roadmap.
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