Figuring Out Balancing Program Costs, Cable Bills Is ‘Billion Dollar Question,’ Powell Says
The “billion dollar question” facing the pay-TV industry is figuring out how to handle rising content rights fees without pricing services too high for customers, NCTA CEO Michael Powell said on an episode of C-SPAN’s The Communicators that was set to air Saturday. “The operator has very little choice to either absorb [the costs], which they have been doing to some degree, or pass them on to consumers who are still recovering from a recession,” Powell said when asked about rising sports rights fees.
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"We all ought to wake up and be careful … programmers and operators, about how we manage our relationship with each other,” Powell said. If the industry fails to answer the question on its own, it risks having the government come in and sort it out, he said. Sports programming costs are rising fast, but certain customers have shown they are willing to pay a premium for access to sports, he said. “I can’t control that the NFL has the power to demand a 73 percent increase for Monday Night Football, which I find astonishingly insane,” he said. But among sports fans, money can be no object, he said. Powell said he has family in New York who would pay “half their mortgage” to see the Yankees play in the World Series.
As industry adopts new technology, cable operators and networks will retain their role in packaging and distributing content, Powell said. “The art of curation and editorial discretion is still worth fighting for,” Powell said. “I don’t believe, like the sort of techno-orgasmic view does, that somehow just infinitely massive amounts of chaotically available information is nirvana,” he said. “I think we have actually lost the art of curation in some of our zeal around the Internet."
Social networks and new video technology will play an important role in the pay-TV industry. As cable operators move away from hardware-based systems and toward software, the pace of innovation available to it will increase, he said. That means more content will be increasingly available to watch on more devices, he said.
But as technology and viewing habits change, so must traditional advertising, he said. “I think the TV ad has to become more entertaining,” he said. Marketers are beginning to bring the Super Bowl ad mentality to the rest of the year. “The Super Bowl is as much a parade of TV ad experiences as it is a football game,” he said. And marketers will need to put that same kind of development into all ads in order to capture viewers’ attention, he said.
Targeted and behavioral advertising, similar to what most websites now use, is technically possible on cable, but may not happen there in the same way, Powell said. “It will just be a behavioral decision whether to not to do that,” based on whether cable operators and customers are comfortable with that type of relationship, he said. “At some point it crosses a dark chasm in which you feel a discomfort over the degree to which you're being watched and being tracked,” he said. “Where’s the balance before you get to the creepy factor?”