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Why Cable Needs a Personalization Playbook

Gemini Waghmare
12/31/2013
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Personalization has got to be the most overused yet under-delivered term in the entire video space today. Yes, the future of video will be personal, but what does that really mean? Let’s be crisp about it.

Personal means something that’s unique to me -- a person. Currently, that doesn’t compute with anything I do with my cable subscription, because everything that's offered to me is on the basis of a group entity, which happens to be my household. What is unique to my household as a group (we can all agree on eating cheese pizza and watching WALL-E) is not necessarily unique to me. (I prefer anchovies and watching WALL-E just once, while my son has viewed it 30 times.)

I would like to get a more tailored video experience. A more direct discovery and recommendation guide, bookmarks that I can carry from one device to another, and the blending of personal content like music, photos, and stock information. I won’t go as far as to say that I want to make my TV viewing more social, but that, as you could say, is a matter of personal preference.

One of our board members, the former CFO of a leading operator, once told me, “You know why the cable guys hate the wireless guys? Because the wireless guys have four times as many people to whom they can sell their services.” Indeed he was right, because everyone in a given household has a smartphone, but typically shares one (rather expensive) video subscription. While cable will never make four times its current revenue from a household, even a small upside opportunity should drive cable operators to try and deconstruct the household into its individual members.

The fact that virtually no cable operator has successfully developed one-to-one relationships with users doesn’t mean that it's not critical. In fact, I’d argue that it is a roadblock to many things that simply won’t materialize unless operators can bridge this personalization gap.

Take big data as an example. The promise of big data, and the ability to analyze mountains of usage data to drive intelligent recommendations, targeted advertising, and better discovery are rendered moot without the ability to tie interactions to a specific individual.

The Netflix Inc. (Nasdaq: NFLX) recommendations algorithm is a prime example. Despite the company's sophisticated, lauded, and impressive engine, countless articles have been written about how household-based recommendations are not only useless, they are annoying. Yet now that Netflix offers household user profiles, we won’t see a recommended list that has Thomas and Friends alongside Bowling for Columbine.

With Netflix now creating unique relationships with users, why are cable operators not following suit? Good question. Chalk it up to complexity. Deconstructing established account models can be technically complex, especially when one person pays for the bill and the rest just use the service. Should there be a hierarchy of privileges? How would privacy work? Do users have to log in or can they just enjoy video as an anonymous entity and skip the whole personalization thing from time to time? Most importantly, how can a friction-less experience be implemented so that users actually want to make the leap and create sub-accounts within their household?

These are big issues, and paradigm shifts always create big issues. Most large cable operators are quietly contemplating personalization initiatives, but some operators insist that people simply don’t want to go through the process of creating sub-accounts. My take on that is that if you don’t give people the incentive to personalize, they won’t. Introduce a friction-free process and provide a host of personalized features from social media to personal content, intelligent recommendations to personal TV everywhere, and people won’t go anywhere without their sub-accounts handy.

I sit in the camp that personalization is the linchpin to the next generation of video, and once the foundations of deconstructing the household are put into place, we shall never look back. While that may just be my personal opinion, I would contend that it’s something not unique to me.

— Gemini Waghmere, Founder & CEO, UXP Systems

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albreznick
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albreznick,
User Rank: Blogger
1/6/2014 | 8:19:59 PM
Re: Great post
Interesting, Gemini. Any guesses on how those business relationships wll change? Do you think it will it shift the balance of power between programmers and operators?
geminiwaghmare
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geminiwaghmare,
User Rank: Blogger
1/2/2014 | 11:03:32 PM
Re: Great post
Dan,

Good question about content rights.  I know from our discussions with MSOs that programmers / content owners want to begin to govern viewership at a user level, and naturally, MSOs want to understanding individual viewership as well.  My guess is that business relationships between operators and content owners will change, but I'm not sure that will mean more or less dollars will eventually change hands.  We'll see!


Gemini
DOShea
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DOShea,
User Rank: Blogger
12/31/2013 | 4:14:48 PM
Great post
Agree this is a big, complex issue for cable operators to overcome, but not insurmountable. Would becoming more personlized or more focused on individual users also affect content rights deals and business relationships between operators and content owners?
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