• by Michael Kokernak , September 16, 2009

I look at TV the same way I look at any product: be it hard goods or a digital download, it is ultimately the consumer that drives sales. The cable and telco companies are gatekeepers to digital products (TV, Internet, mobile, etc.) and when I look at their distribution system, it reminds me of how the big-box business model works. 

Big-box retailers over the past 10+ years have required marketers to extend their product lines in order to increase critical shelf space and satisfy the bargain hunter.   In what is a relatively new phenomenon over the past couple of decades, consumers have come to expect a large selection of competitively priced products when they go shopping. 

In a similar way the digital age has begun to adapt to bargain hunters.  As an example the media sector introduced the DVR so people can watch more TV content (partly through skipped commercials) and thus generate a greater value to the end user. Competition in all digital products is heating up, similar to the maturation of the big box industry, and increased selection is putting pricing pressures on distribution.

Today, in direct competition to incumbent cable providers, (according to The Bridge http://mediabiz.com/thebridge/), nearly 33.1 million cable subscribers have the ability to switch to either Verizon FIOS or A. T. & T. U-Verse.  This environment has forced each party to develop their own mass customized road map across all TV, Internet, wireless, and telephony products. 

Similar to how the consumer has come to expect greater selection on the store shelves digital distribution platforms are now creating consumer customizable digital products off the strengths of their "big box" technical facilities (which took over 10 years to design and build). 

Just in the past week, for instance, Comcast announced the deployment of its own Web-based DVR scheduling tool that will match its DBS and telco's similar DVR technology.  New consumer driven products are being announced every day as the battle matures and economies of scale take hold.

All distributors are growing HDTV content -- and as a natural progression, they will link HDTV cross platform to the Internet either through a video experience or per click advertising (as recently announced by Cablevision).   By introducing cross-platform technologies, not only will marketers benefit by reaching their customers on their terms, but it also fits with the mass customization strategy of each platform. 

For marketers, Cablevision's announcement of a future cross-platform strategy for advertising speaks volumes about the tangible retooling that is unfolding in the media sector.  The real challenge for the TV industry is how to develop long-term strategies that will deliver consumer customization while also allowing advertisers to continue to reap the cost benefits of mass media distribution. 

Each digital distribution platforms' (cable, telco, or DBS) fundamentals are driven by a strategy of subscriber acquisitions and growth of revenue per generating unit.  As the industry struggles with the national measurement debate, we should also be in lock step and deliver to consumers what they want from today's TV ecosystem. Our future isn't going to be just "Internet-centric" -- rather, we will find growth through the tailoring of our own solutions to the mass customization mentality of the platforms.