CASBAA: Pay-TV and the digital consumer

While not recession-proof, pay-TV, and in particular the subscription revenue model, have fared much better than other media platforms. “Cable networks are experiencing less impact than print and the traditional broadcast networks,” said Jack Wakshlag, chief research officer at Turner Broadcasting.

Key to maintaining this growth, however, will be the ability of the pay-TV industry to respond to developments of new digital distribution platforms. Jeffrey Cole, director at the Center for the Digital Future at USC Annenberg, noted that consumers are not going to give up their pay-TV subscriptions, but only as long as there are no free alternatives.

The panel agreed that digital technology is opening up many new and interesting opportunities for pay-TV, but the problem the industry faces is how to turn these into commercially viable business models.

Wakshlag pointed out that the two biggest online video operations in the US — YouTube and Hulu — have still yet to make money. Similarly, Lee Bartlett, MD of global content at ITV, cited the example of the Susan Boyle, whose Britain’s Got Talent video clip received over 100 million hits on YouTube yet failed to generate any money whatsoever. “Everyone understands that [online] is an important revenue stream,” he said. “But no-one is yet quite able to figure out how to make money.”

Jonathan Spink, CEO of HBO Asia, said that so far the idea of online content supported by ads is just not viable. “People are not going to create content specifically for online,” he said. “The economics simply don’t stack up to invest US$100 million in a movie and just show it online.”

The panel ended on a lively discussion of another technological development — pay-TV’s ability to deliver targeted advertising. Wakshlag had begun the session with an introduction to Turner’s TV in Context initiative. By cataloguing its movie database, Turner is aiming to be able to place a specific brand in a specific place in a specific movie, which, Wakshlag argued, will amplify the ad message and increase emotional engagement.

The initiative, he said, is about impact rather than ad impressions. “it closes the loop, connecting people with messages at the right time and place for the first time in history.”

Returning to the theme, Patterson said that the data from such initiatives reinforces what the industry has always known – that ads work best when in the right context — but pointed out that the problem, particularly in Asia, is how to scale the technology. “Pay-TV still suffers from not being able to get the basic data, never mind contextual data,” he said. “Let’s not run before we can walk.”