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Cablevision Eyes T-Commerce Launch in 2010

Cablevision Systems Corp. (NYSE: CVC) plans to launch "t-commerce" services to its subscribers next year, allowing them to buy products advertised on TV with a click of a remote control.

"We're going to pursue it [t-commerce] vigorously," David Kline, president and chief operating officer of the MSO's Rainbow Advertising Sales Corp. (RASCO) unit, told Cable Digital News.

Cablevision has been laying the groundwork to offer advanced services like t-commerce and interactive advertising for more than a decade. In the late 1990s, it sold systems in Ohio, Michigan, and Massachusetts in order to focus on the New York metropolitan market, where it built a fiber ring connecting customers in New York, New Jersey, and Connecticut.

Earlier this year, Cablevision struck interactive advertising deals with Unilever, Gillette, and other firms, allowing subscribers that were prompted by an interactive overlay running during a commercial to receive a free product sample in the mail by pressing the "select" button on their remotes. Beginning next year, customers of Cablevision's digital TV service, called iO: Interactive Optimum, will also be able to buy products advertised by sponsors directly through the set-top box. (See Cablevision Gets Interactive and Cablevision Shows Off Interactive Ads.)

Kline wouldn't detail the types of products Cablevision plans to offer, or how the MSO will fulfill orders for products purchased through its t-commerce system. But the RASCO chief said the company is bullish on the prospects for the offering.

"Being able to buy things off of the TV is as much a consumer product as it is an advertising product. You're going to see a lot more of it," Kline added.

Adding commerce to Cablevision's triple-play offerings of digital video and high-speed data and phone service has long been a goal of Cablevision CEO Jim Dolan. In March 2000, Dolan drew attention at a Kagan World Media conference when he predicted that deploying commerce products and other new services would one day see the MSO generate more than $150 in monthly revenue per subscriber.

"It's not unrealistic to assume that you could see $500 per month [per subscriber]," Dolan told conference attendees back then.

The road to Dolan's vision
Fast-forwarding to today, Cablevision, in its continued bid to boost ad revenue, has been more aggressive than any major MSO about selling targeted and addressable, interactive advertising to customers. Its portfolio includes dedicated advertiser channels from companies like Mattel, which markets Barbie DVDs, and Walt Disney Co. (NYSE: DIS), which markets its theme parks through a Travel On Demand channel.

Among other recent examples, Cablevision viewers thinking about joining the military can request U.S. Navy brochures on its dedicated advertiser channel. Several Cablevision advertisers also share space on Cablevision's "market showcase" interactive channels, including the Sands Casino in Bethlehem, Pa.; Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s G4 channel; Saint Francis Hospital and Health Centers; Raymour & Flannigan Furniture; Cirque Du Soleil; and the Cablevision-owned Radio City Christmas Spectacular. Cablevision subs can request catalogs and enter sweepstakes from advertisers on the channels.

Cablevision also makes money by supplying sales leads to automobile dealers and real estate firms that advertise on its respective Optimum Autos and Optimum Homes channels. Subscribers are prompted to press the select button on their remotes when visiting the channels in order to receive more information about a car or a home.

Kline wouldn't say how much incremental revenue Cablevision has generated from interactive advertising, but he said the MSO's interactive advertising products have driven increased volume from media buyers.

"I will tell you they buy a lot more advertising from us, and that's how it's monetized," Kline said. "We get paid not only for our lead generation, but also for the awareness advertising."

Cablevision generates 3,000 to 5,000 leads per month from Optimum Autos, and 4,000 to 5,000 leads monthly from Optimum Homes, Kline said.

Cablevision won't be the first cable operator to allow its customers to buy products through t-commerce. Comcast and HSN are now selling products through the home-shopping network's "Shop By Remote" application. The service is available in more than 8 million homes, and runs on Enhanced TV Binary Interchange Format (EBIF) -- the technology Comcast is banking on to enable a wide array of interactive TV and advertising products. (See Comcast Rolls Remote Shopping.)

And this later this month and in January, Buckeye CableSystem , MetroCast Cablevision , Sunflower Broadband , and other small operators that use the HITS Advanced Interactive Services (AxIS) suite of interactive TV applications plan to sell books, DVDs, CDs, and other products through a deal HITS owner Comcast Media Center (CMC) struck with t-commerce firm iCueTV Inc. . (See Tier 2 MSOs Tee Up 'T-Commerce' .)

iCueTV CEO Patrick Gates said his company has held discussions with Cablevision about the MSO's t-commerce service, but Gates, the former president of Discovery Communications Inc. (Nasdaq: DISCA, DISCB, DISCK)'s commerce unit, said iCueTV hasn't signed Cablevision as a customer.

While Cablevision has advanced further than other operators in the interactive advertising sector, its pace of deployment hasn't been welcomed by some of its fellow MSOs.

Comcast COO Steve Burke threw some water on Cablevision's interactive and addressable ad deployments in October while speaking on a panel session at the Cable & Telecommunications Association for Marketing (CTAM) Summit in Denver. (See Comcast COO: Nat'l Platform Key to Interactive Ads.)

"I don't think it [Cablevision's rollout] can be a watershed event unless it's national, and I don't think people like Procter & Gamble or Johnson & Johnson want to do things at 10 percent or 20 percent or even 30 or 40 percent of the country. They really want a national platform," Burke noted then.

Kline took the remarks in stride. "In terms of whether it's a watershed event, we are the first cable operator to get it working, functioning, with customers paying money and implementing addressable advertising." [Ed note: Although Cablevision's initial interactive advertising foray doesn't use CableLabs -specified EBIF technology, the MSO reportedly is getting ready to support it using an EBIF player from Zodiac Interactive , one of the MSO's long-time set-top box software partners.]

While Comcast, Time Warner Cable Inc. (NYSE: TWC), Charter Communications Inc. , and other Canoe Ventures LLC partners are focused on rolling out their first interactive advertising product -- allowing subscribers to request more information about a product advertised -- Cablevision is hitting the accelerator with its interactive advertising rollouts.

"We can go a lot further. It's not like we're dabbling in it," Kline said. "You're going to see more and more interactive and advanced advertising products on our platform in the coming years. It's going to become more of the norm. We see it as a very significant way to grow the advertising community and the cable business."

— Steve Donohue, Special to Cable Digital News

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