TV’s new world: How cable companies plan to keep pace

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Television distributors are tweaking their business strategies to compete against a plethora of competitors as content becomes increasingly available in the online world.

Consumers are demanding more control over what they watch. There is pent-up demand for slimmer TV packages and niche content of all kinds. Beyond Netflix, a number of "over-the-top" online services offer specialty content such as sports. As a result, TV service providers are girding for a fight for eyeballs as overall subscriber growth slows. Keeping consumers loyal hinges on ensuring that fickle consumers can easily view content on multiple screens.

Here's how four companies are adapting:

Rogers Communications Inc.

The media company has recently declared that Internet, rather than cable TV, is its anchor product. Broadband video consumption is accelerating, fuelling demand for high-speed Internet. "We certainly don't have a fortress mentality, because we can't stop over-the-top consumption. We have to embrace the change," said David Purdy, senior vice-president of cable and content.

But Rogers provides more than Internet and cable connections – it also owns content. Its media business is trying to bolster revenue by beefing up its online and on-demand selections for services like Sportsnet, FX and City. "One great example is our Sportsnet World product – we have the channels but we're limited in how much programming we can show in a day. But online we can show way more games – and we can make that available as an extension of our cable subscriptions," he said.

There is also an effort afoot to provide more "niche" content via its cable set-top boxes – a strategy that is essentially designed to "bring the Web to TV." Even so, obtaining content for "experimental platforms" remains a challenge.

"The VOD [video on demand] platform we built was ready 24 months in advance of any real content. We launched VOD with Harlequin as our marquee and literally had black and white Three Stooges content up there because that's all we could get," Mr. Purdy said. "What we should be doing is bilateral negotiations with the other vertically integrated companies to figure out how to trade and make each other whole. Customers want access to Sportsnet and to TSN. They want full access."

Cogeco Cable Inc.

The cable company's strategy is also centred on evolving the video delivery in the "connected home." That means the linear TV experience now more closely resembles the Internet, said Ron Perrotta, vice-president of marketing and strategic planning, with the on-screen guide functioning as more of a "store of content." Digital video recorders give consumers more control over how they consume, making them less likely to stray. Moreover, its Cogeco on Demand platform is available both on TV set-top boxes and online.

"We don't own a sports team. We don't own content. What we do do, we are very focused intently on, and that is providing a superior customer experience," he said.

Even though consumers are increasingly motivated by the Internet, Mr. Perrotta argues that worries about cord-cutting are largely overdone. That's because consumers are still unable to access key live events, such as sports games, on the Internet. Moreover, finding niche content on the Internet still takes effort. "A lot of these online options, you really gotta work hard and people are time starved," he said. "And there is a benefit to receiving linear television in the home – just sit back and stumble upon things."

"This is still a passive, relaxation, discovery mode as opposed to: I'm sitting in front of a blank screen, I am going to open up my PC now and I am gong to search for something that I want to watch. That's a lot of work."

BCE Inc.

The telecommunications giant learned a key lesson during the 2010 Olympic games: Consumers want the convenience of watching content on the screen of their choice. As a result, Bell provides content to consumers on multiple screens – TV, laptops, tablets or even smartphones. By controlling both the pipes (wireless and wired networks) and the content, its aim is to own the "TV anywhere" trend.

"We are exploding in TV – Bell as a whole," said Wade Oosterman, head of wireless and residential services.

At a time when the broader industry is grappling with slowing subscriber growth, its Fibe service is growing. BCE had 248,000 Fibe customers at the end of 2012, but has a service footprint that covers 3.3 million homes. It also expects to have more than a million mobile TV subscribers by the end of this year.

Allowing consumers to "pick a screen" also prompted the company to begin offering unlimited usage on all Internet plans for an extra cost. Although that move could pressure margins, BCE is able to offer it because it has cut other costs, Mr. Oosterman said. For instance, customers are now able to change their TV packages online rather than through a call centre.

Savings are also gleaned through automated services, such as call routing, and simplified pricing has also allowed the company to reduce what it spends on training and support. Overall savings have topped $1-billion since 2008 and additional operational savings of $170-million are expected this year.

Telus Corp.

Years ago, Telus decided to focus on enhancing its networks and paid television service instead of buying content. It has spent roughly $30-billion since 2000 on modernizing its core infrastructure. "Quite simply, you could never possibly buy enough content," said chief marketing officer David Fuller. Consequently, Telus's strategy has centred on improving the viewing experience on multiple screens. Over-the-top content is not viewed as a competitive threat.

"We actually embrace a lot of the over-the-top services because we think they are complementary, and our goal is to try to embed as many of them as we can inside the Optik service in a way that's fairly easy to use."

For example, TED Talks is now a menu choice for its Optik TV service. Telus has also struck a similar deal with the Quebec major junior hockey league in Quebec, which allows them to broadcast roughly 20 games per season and some playoff games. Customers can also watch those games on Apple or Android-based smartphones or the league's full lineup of games on the Web.

As for the Internet, Telus technically uses bandwidth caps, but does not charge overage fees.