WASHINGTON – After years of making money providing Internet service, cable TV companies are now tapping the power of the Internet to improve clunky program guides that are a relic of the 1990s.
Over the past year or so, Comcast Corp., Cablevision Systems Corp. and other cable providers have introduced new program guides on television set-top boxes. These improved guides act more like websites, making it easier to find movies, live TV shows and on-demand video.
It’s important progress for cable TV companies, which are often criticized for providing hundreds of channels that customers don’t watch. Making shows easier to find helps them justify all those channels. And that could help stave off defections to satellite and telephone companies, which have lured cable customers away with cut-rate TV services that use fancier interfaces.
Retaining and winning back those subscribers — while defending against a new batch of Web video challengers such as Netflix and Hulu — will be the focus of the industry’s annual gathering, The Cable Show, which starts in Washington on Monday.
Although using the Internet might seem like a no-brainer to the billions who use it worldwide, cable TV operators have been slow to adapt. For years, guides used the old X-Y axis, with channels on the left and times across the top. These were installed directly onto the set-top box. There was no way to change the format without replacing the box, which could take a year or more for all customers.
By using Internet programming language and other tools common to the Web, newer boxes are far more flexible.
These guides can now access software running on more powerful machines located elsewhere. They can make recommendations rather than simply show reams of show titles. Faster keyword searches are possible, and cover art brings life to what once were text-only program listings. The use of Internet programming language means smartphones and tablets can also be used to control the box.
As important, updates can be done from afar and redesigns are as easy as changing a website. That means new features can be created and popular ones given more prominence. Comcast says it has already updated its guide 1,200 times since introducing its X1 set-top box in May 2012.
Marcien Jenckes, general manager for Comcast’s cable TV services, says the difference between the old box and the new one is like the difference between an old IBM computer that ran on a text-based DOS system and today’s Google Chromebook, a laptop computer that gains most of its functionality from being able to access services online.
“The prior boxes were limited by what they could carry on them,” he says. “The current boxes are essentially limitless in terms of what they can access remotely.”
Since the X1 came out, Comcast says viewing time for video on demand has increased nearly 20 per cent among users who have it, partly because it’s easier to find things to watch. Comcast says customers are watching more channels and discovering more shows. Comcast isn’t saying how many subscribers now have the new X1 boxes, but it did say that half of its 21.9 million TV subscribers are eligible, with the rest expected by the end of the year.
Although the company still lost a net 359,000 TV subscribers in the 12 months through March, according to the latest figures, Jenckes says that when more customers are more engaged with their TV service, they should stick around longer.
“It’s still early but every indication is positive,” he says.
Time Warner Cable Inc., the second-largest cable TV provider behind Comcast with 12.1 million subscribers, is also planning to unveil an improved guide this year through new set-top boxes that also use Internet tools to make them more versatile and adaptable.
“Traditionally each box generates its own guide and navigation,” says Mike Angus, Time Warner Cable’s senior vice-president for video. “That’s been one of the shortcomings of the native guide technology.”
In November, Cox Communications Inc. updated its Internet-enabled Trio guide to include personalized recommendations for up to eight members of a household. The service adds diamonds to programs in the channel guide that individual users might like, based on which movies and shows they’ve watched in the past and whether they clicked to “like” or “dislike” them. Another screen shows recommended videos, whether they are offered on demand or live. Some past episodes can be viewed right away, while viewers can choose to record future ones when they air.
The company says that more than half of the 400,000-plus subscribers now using the guide say they became aware of content they didn’t realize was there before. Nearly a third of users say they enjoy watching TV more. Cox plans to offer the improved guide to more of its subscribers, estimated at around 4.5 million.
“They’re asking for the experience to be much more personalized,” says Len Barlik, executive vice-president of product development at Cox Cable. “This is focused on attracting new customers but also retaining the base.”
Customer retention is seen as increasingly important for the cable TV industry, which has lost about 10 million TV subscribers over the last decade — down to 56.4 million in 2012, from 66.9 million in 2001, according to research firm SNL Kagan. Most of them have switched to satellite companies such as DirecTV or Dish, or gone with TV services from phone companies including Verizon and AT&T. Overall, the number of pay TV subscribers across all providers is unchanged at about 100 million homes.
A small proportion have “cut the cord,” or dropped pay TV service entirely, though about 50 million homes rely on cable companies for high-speed Internet service, a figure that is growing.
The Nielsen Co. says about 5 million U.S. households had a TV but didn’t hook it up with a traditional pay TV provider or even an antenna last year. Those households are opting instead for Web video from Netflix and other providers. Nielsen calls these homes “Zero TV” households. Although online viewing generates advertising revenue on services such as Hulu, cable TV providers will lose TV subscription revenues if this group grows in size.
In a saturated market that’s not expanding, the best strategy for cable TV providers is to hold onto its paying customers for as long as possible, says Bruce Leichtman, a TV consultant and head of Leichtman Research Group.
“Retention becomes very important,” Leichtman says. “That’s really what Comcast and the other operators are looking at — adding value to subscribers in order to retain them.”
Many cable TV companies also offer hundreds of live TV signals and on-demand programs over mobile devices using Internet technology. These apps — such as Time Warner Cable’s TWC TV, Comcast’s Xfinity, and Cablevision’s Optimum — turn mobile devices connected to home networks into virtual TV sets on smaller screens. But customers have to be home to use these services, and many aren’t aware of them.
Brett Sappington, director of research at Parks Associates, says the lack of awareness could be caused by the failure of cable TV operators to advertise such services, known as TV Everywhere. After all, such services do not generate extra revenue, as they are part of a monthly subscription.
Sappington says the people who make use of TV Everywhere are also video lovers who already tend to be higher-spending, loyal customers anyway.
That’s partly what makes improved program guides more important. One key strategy in preventing customers from dropping service is having a greater breadth of programming, an advantage that isn’t apparent when guides are difficult to use, he says.
“Pay TV has been trying to compete on the premium end forever with more content and more first-run content,” he says. “The problem is if you can’t find it, you might as well not have it.”