You love TV. You love the Internet. So, says Jeff Bewkes, you’ll love watching all TV networks all the time on … video-on-demand.
“We should take the whole industry and put it on that basis,” the chief operating officer of Time Warner told attendees of the first general session of the CTAM Summit this morning.
Why?
Because cable operators gain a tangible, long-term competitive advantage over (a) satellite TV companies; (b) telephone TV companies and (c) the digital video recorder.
Let’s start there.
So far, 17.2% of U.S. households have installed digital-video recorders, according to Nielsen Media Research.
Each of those recorders can, of course, store any show at any time of the viewer’s choice. And allow the viewer to skip past ads, when the show gets played back.
Bewkes wants to head that off at the pass, before DVRs get more entrenched. The advertising that undergirds all of broadcast TV networks and a big part of basic cable networks gets wiped more and more away, as recorders get more and more use.
The Time Warner answer is something it calls “enhanced TV,” which it is testing with a relatively small set of Time Warner Cable subscribers.
Using the “select” button on a TV remote control, the Time Warner customer has five options of how to watch “enhanced” TV.
The fan who gets home in the middle of The Closer on TNT can pick the “Start Over” choice, to go back to the beginning of the episode on air; “Catch Up,’’ to see if a previous episode of Closer is available, which maybe should be watched first; “Look Back” to see if there was something on TNT in the past 24 hours that would be more appealing instead; “Quick Clips,’’ to see highlights, out takes or background; or, none of the above.
A “Coming Soon” option lets you see, say, the premiere episode of a new series, perhaps Saving Grace,’’ with Holly Hunter, also on TNT. In all these cases, the ads are kept intact. The whole competitive-advantage premise rests on mandates – technologically enforced – that all-VOD, all-the-time TV is free and supported with ads in the same breaks in programming as they are now.
No ad-skipping. No fast-forwarding. What viewers want, Bewkes contends, is time-shifting, not ad avoidance.
If “enhanced TV” is better than DVR-TV, then that “preserves the economic model for every participant” in TV as viewers know. Contractual agreements and revenue splits continue as is, between writers, producers, networks – and cable system operators.
Even if different ads are inserted into programs, from interactive on-demand servers, the model stays intact, he says. The new ads get inserted in the same places and the revenue gets split the same ways as before.
Time is the biggest enemy of the Time Warner model, though. The digital recorder in the home is gaining ground quickly, but it has limited storage capacity. Meanwhile, the Internet is well on its way to becoming as the Blog Maverick, Mark Cuban, puts it, “the ultimate DVR for video.”
Which is why Bewkes is pushing cable operators to move to all-VOD on all networks all the time, now. “If you don’t put it on TV, it’ll go to computer screens,’’ he said, in the hallway afterward.
The carrot: If operators do go all-VOD all-the-time, they give viewers what they want: Control over what they watch and when they watch it, for everything they watch.
And, infrastructure-wise, it’s a proposition that satellite and telephone TV companies can’t match. Satellite services can’t send 300 million different video streams down to customers in North America. Telephone companies won’t have 100 percent coverage of America’s 100 million viewing households for five or 10 years, if then, that can serve up all network content on demand.
For cable, Bewkes contends, it’ll take a thin layer of additional servers; but the distribution piece is already in place, down to the 200-household node in the neighborhood. All TV free and on demand can be rolled out now – using HBO On Demand, as a model, in the Bewkes playbook.
“Start Over,” “Quick Clips” and other enhanced features might satisfy 150,000 customers or so in South Carolina.
But maintaining the ad world order while fundamentally changing how TV gets watched will be not be easy. Time Warner will have to get the entire cable industry ecosystem to follow this model.
And time waits for no one. Not even Time Warner.
