Two years ago James Dolan, Cablevision CEO, said that broadband would be the cable company’s leading service. Unlike other cable companies that have said the same thing, for Mr. Dolan this was not just rhetoric. He is reinventing Cablevision before our eyes.
In August of 2013, James Dolan shocked the pay TV world with his statement that he foresaw a time when Cablevision might not provide cable TV service. He went further, saying that the company would be focusing on broadband as the lead service. Today, Mr. Dolan is reshaping his company’s strategy around broadband, and video is increasingly taking a back seat.
Mr. Dolan is amassing an impressive array of OTT video services which he can resell to his broadband customers. Last week, he struck a deal with CBS to offer the company’s standalone OTT subscription services CBS All Access and Showtime, to Cablevision’s broadband customers. HBO Now and Hulu can be purchased with a Cablevision Optimum broadband connection under similar agreements.
While these deals are really nothing more than co-marketing agreements, since Cablevision customers can already subscribe to and use Showtime and CBS All Access on Optimum broadband, it does bring some modest value to customers. When signing up for these SVOD services through Cablevision the subscription charges are bundled with the cable bill, making it easier for consumers to manage them.
However, the value to Cablevision is much more. Some of the OTT services will likely pay Cablevision a bounty (something in the range of 2X the amount of the monthly subscription rate) for each new customer signing up through the cable operator. It also makes Optimum broadband harder to cancel. If consumers end up with several SVOD services on their cable bill, it makes switching providers a lot more difficult. And signing up through Cablevision affords the company an opportunity to market other SVOD services, broadband upgrades, phone service, and even traditional television services.
The Hulu deal is particularly interesting because it goes beyond just a simple broadband co-marketing agreement. Cablevision has agreed to allow its customers to access Hulu through the pay TV set-top box. Even more important, Hulu will be in charge of the experience on the set-top, not Cablevision. Speaking at INTX earlier this year, Hulu’s Tim Connolly said:
Our brand is linked to great experience and great content. We are very sensitive about how we integrate to all partner interfaces. We will have the Hulu application resident on the set-top box. When I search for Empire on that Cablevision set-top box and launch that episode to start from the beginning …it will fire up the Hulu application that sits on the set-top box. The consumer then comes into that (Hulu) experience and all the things that we have in that experience.”
Ceding control of the STB interface to an OTT provider is something other operators are just not willing to do. Yet it is exactly where a broadband first strategy leads. Mr. Dolan understands that for consumers continuity of service across all screens is essential. For Hulu subscribers, the personalized service they receive through the interface is an essential part of the experience. Cablevision is supporting that experience, whether it be through broadband on a tablet or on an Optimum TV set-top box.
And so this is model Mr. Dolan has for his company going forward. Cablevision’s Optimum network is a platform for any video service. Optimum TV is just another video service that stands side-by-side (as a peer) with Hulu, Netflix and HBO Now.
Why it matters
Several cable companies have said they now have a broadband first strategy, but have done little to re-orientate their company’s actions to support it.
Cablevision is the exception. The company is treating OTT video services as peers to its own cable TV service, and embracing its broadband future.
It is finding value, for itself and for customers, in new marketing and service arrangements that leverage its investment in broadband.