I try to keep up with the cable industry as much as possible especially when changes start affecting cable warehouse management. From what I can tell, over the last year or so technology changes, social attitudes, content wars and net neutrality issues have begun to shift and possibly forever alter cable warehouse management.
Although some people key on one particular change more than the others, it is the combination of all these factors that is leading to a CPErevolution. To better understand the change let us take a look at these four opportunities that have stimulated this change.
Cable MSO Changes
How Technology is Impacting CPE Management
Technology changes seem to be the root cause of the changes that are beginning to sweep the cable MSO industry. Advances in cable technology include the ability to view content using an Xbox, Apple TV, Hulu, Netflix, IPads and Smartphones.
Although none of these devices has become an industry standard, their combined use is lowering the demand for proprietary set-top CPE as well as enabling disgruntled social attitudes, content wars and net neutrality to gain greater press.
As technology is opening doors for new products and services, cable MSOs are adjusting their business models to become more vertically integrated. For example, Comcast’s purchase of NBC Universal was done to secure content. Other examples of grouped content include:
Larger Cable Channel Ownership Groups and Disney
- Cablevision – AMC Networks: AMC, IFC, Sundance, IFC, WE tv
- Disney – ESPN, Disney channel
- Comcast – USA, MSNBC, Bravo
- Time Warner – TNT, TBS, CNN, HBO
- FOX – Fox News, FX, Fox sports
The quest to control content is also driving up programming. ESPN for example charges $4.69 per subscriber thanks largely to its popularity and the fact ESPN purchased NFL broadcasting rights for a record amount. This is more than any other station by a huge margin.
“Dissent is growing within the media business over the rising cost of sports programming, even as the NFL is negotiating new agreements that are expected to boost broadcast networks’ fees by 60% to about $3.2 billion a year…..
ESPN charges the highest per-household subscription fee of any cable channel, according to SNL Kagan, which estimates its monthly per-subscriber fees for the flagship channel have risen 42% to $4.69 since 2006. The average cable channel fee rose 24% over that same period to 26 cents a month.”
Source: SNL Kagan
The rising costs of programming/content has the public questioning the real value of cable TV but just as importantly, it has set the stage for issues of who is controlling the content that you see and is it being done fairly. This is the root of net neutrality issues.
At the heart of cable net neutrality are issues that cable MSOs have the right to operate as they see fit versus the rights of subscribers to have unfiltered, unrestricted access to the content they want to have.
Complicating the net neutrality fight is a pattern of some cable MSOs to block content of competing programming or throttling (slowing down download speeds) to targeted viewers/users in an effort to promote their own content.
The net result is that subscribers are getting being less tolerant and expressing their frustration by looking for new alternatives.
Changes in Social Attitudes
All of the above have led to subscribers feeling that they are being being taken advantage of by cable MSOs. The short and long term impact is a continued rise in cord cutting, increase in a la carte choices, public/government debates on net neutrality, possible government intervention through anti-trust legislation.
With a little thought, all of these issues can be mitigated when cable MSOs realize that without subscribers their core business will suffer. The first law of business is knowing what your customers want.
Changing Cable Warehouse Management
With this being said, Cable MSOs must recognize the changes and adjust their operations model accordingly. Fewer subscribers, more set-top choices and rapidly changing technology means a lower demand for traditional CPE.
If not as much CPE is needed, cable warehouse management and purchasing decision makers need to better understand their supply chain models and look to solutions that facilitate this ever changing portion of the MSO operations.
The resources once spent on managing massive amounts of CPE, repair logistics and serialized reconciliations can be now be adjusted and allocated toward retraining the sales force and installation staff with knowledge of networks, how to hook up an Xbox, programming an Apple TV or other content delivery systems. The future is about service!
The battle for content supremacy and legislation changes may take years. This gives cable MSOs plenty of time to make sure their CPE management systems are in place and are flexible for the impending changes.