iPad Apps Add to Video Delivery Costs
According to Zelesko, subscribers to the new Time Warner iPad app are apt to leave the application running the same way consumers turn on a TV set and keep it on as background entertainment. Cox Communications Inc. 's Steve Necessary asked about how consumers would treat the iPad as a way of assessing the impact of linear television on Docsis networks and bandwidth costs. For most operators, the impact is still unknown. For Time Warner Cable, as its iPad app gains traction, the iPad app-as-a-TV will lead to more bandwidth consumption and a higher cost to support each customer.
The MSOs on this morning's panel were in agreement that the monetary benefits of delivering cable services to new platforms is difficult to measure, but the expenses are becoming easier to calculate. In the near term, Cox's Necessary said the incremental cost of each new application downloaded comes from a number of places, including everything from new bandwidth (i.e. greater Docsis usage) and transcoding requirements to additional customer support training and provisions for new closed captioning technologies.
On the IP transcode question, moderator Todd Spangler asked the panel if it makes more sense to transcode video in the home or in the network. Suddenlink's Gregg Grigaitis stated that it is much more economically feasible for his company to transcode in the home today using gateways -- an approach that vendors such as Arris Group Inc. (Nasdaq: ARRS) are counting on. However, Steve Necessary pointed out that in the longer term the question comes down to where operators think subscribers will use their services. If usage moves outside the home, then MSOs need a network approach. Time Warner’s Zelesko added that the answer is probably not an either/or proposition. Operators will likely use a hybrid system of transcoding that evolves with the economics over time. (See Arris's $100M Opportunity.)
Zelesko also noted that the speed of cable service and application launches has picked up significantly in recent years. Even with a lot of unknowns, operators have to get to a model where there is enough confidence to launch a new product knowing that consumers will rapidly provide feedback. Then operators have to learn, and learn quickly from that response. That was how Time Warner Cable handled its iPad app launch and how it continues to build on that product now that it's in the market. (See TWC's iPad App Launches With (Some) Live TV.)
One thing operators have learned is that customers want access to their content everywhere. In one of the final panel questions, Todd Spangler asked how operators should handle allowing the HBO Go app on the Roku. Comcast Corp. (Nasdaq: CMCSA, CMCSK) and DirecTV have blocked it, but other MSOs haven't. Suddenlink's Grigaitis said his company allows access because it's what subscribers want. Steve Necessary said offering that access speaks to the greater good. "We get paid to distribute content," said Necessary. "Branding folks may not like it so much, but I'm here to please my customers."
— Mari Silbey, Special to Light Reading Cable