Optical/IP Networks

Execs Downplay Web Video Threat

NEW YORK -- Despite the broad content choices offered by Web video sites such as Hulu LLC and over-the-top (OTT) providers such as Boxee , cable and satellite TV service providers won't lose their lock as the top video advertising option, executives said here today at a Media Summit panel session on the future of advertising hosted by Bloomberg BusinessWeek.

"I think that cable stays firmly in charge. We have an everyday relationship with the consumer," Cablevision Systems Corp. (NYSE: CVC) executive vice president of advanced platform advertising sales Barry Frey said in reference to TV's continued importance as an advertising vehicle.

"If you look at Hulu, yes, it is an over-the-top service, but there is no revenue there yet. There is no business that's making a profit," added Frey, who also pointed to a study from Nielsen Media Research that found 99 percent of viewing of TV programs comes on TVs, with Internet video and mobile options accounting for less than 1 percent of viewing.

Dismissing concerns in some industry circles about "cord cutting," Rovi Corp. vice president of advanced advertising Scott Rosenberg said he expects that OTT video platforms could impact the distribution of premium content through distributors like Netflix Inc. (Nasdaq: NFLX)

"A lot of the dialogue is simplistic speculation that people will get rid of their set-top boxes. We don't think viewership migrates that way. We think over the top will steal some of the premium consumptive habits that people have," Rosenberg said.

Walt Disney Co. (NYSE: DIS) senior vice president of corporate strategy and business development Marty Yudkovitz, whose company is an investor in Hulu, said programmers must distribute content on new platforms, ranging from Web video sites to new pay-TV entrants such as Verizon Communications Inc. (NYSE: VZ)'s FiOS TV and AT&T Inc. (NYSE: T)'s U-verse TV service. But he also touted the strengths of current pay-TV distribution models.

'We like the business model, and the system that distributes our programming as it currently exists with cable and satellite and telcos. While there are... disputes over what the appropriate value should be paid for that programming, the entire industry recognizes that there is value and it should be recognized, and it should be paid for," Yudkovitz said, alluding to a recent retransmission consent battle between Cablevision and Disney's WABC-TV station in New York.

"Other systems provide other advantages and other paths," Yudkovitz added, referring to Internet video platforms.

While Frey touted Cablevision's planned PC-to-TV media relay product, which will allow digital cable and high-speed Internet subscribers to more easily watch Web video content on a TV, he emphasized that the TV production business relies on cable and satellite subscription fees. (See Cablevision to Deliver Net Content to Set-Tops, TiVo Building tru2way Version of New Interface, and Cablevision Shows Its Innovative Side .)

"To produce the high-quality television that people want to consume, to produce that high level... they need the 90 percent of the US [households] that are paying their subscription fees every month. There's no revenue model for an Apple TV or a Boxee or a Hulu to support that level of production," Frey said.

Also worth noting from Thursday's panel, which also featured The Nielsen Co. senior vice president of media strategy and development Scott Brown, Canoe Ventures LLC senior vice president of corporate development Warren Schlicting, TiVo Inc. (Nasdaq: TIVO) vice president and general manager of content services Tara Maitra, and Media Storm LLC managing partner Craig Woerz:

  • Brown said Nielsen will introduce next week a new content identification system that will help track viewing on Web video and mobile platforms. He also said Nielsen is working on helping cable operators and networks with measurement of "TV Everywhere" programming. "The ability to measure the TV Everywhere core products and programming that is available on the Internet is going to be key," Brown said.

  • TiVo is looking at ways to allow viewers to choose which ads they would see in a program. "Soon you'll have the ability to have a certain genre of commercials available to you, or have the ability to choose from a set of three commercials you want to see [thoughout a program]," Maitra said

— Steve Donohue, Special to Light Reading Cable

Sign In