A study released by MRG last spring said that cable system operators believed
that quality was a major factor in customer retention, second only to price.
Despite the current economy, there are a number of cost-effective solutions that can help cable system operators grow their businesses and improve their competitive position. For example, systems that migrate some of their analog channels to digital video formats can reallocate that bandwidth to video and broadband services that can generate a near-term return on their investment (ROI).
Another cost-effective strategy for reclaiming bandwidth involves migrating digital tiers from 64 QAM to 256 QAM. Enhancements to MPEG-2 compression allow systems to take advantage of more efficient statistical multiplexing for increasing their HD and SD channel capacity, while continuing to offer a high quality of experience (QoE) to their customers.
QUALITY KEEPS CUSTOMERS
Quality is increasingly important in acquiring and retaining digital video customers. In fact, a study released by MRG last spring said that cable system operators believed that quality was a major factor in customer retention, second only to price.
The focus on quality can’t be limited to what happens from the headend to the set-top box or display device. A competitive customer experience requires an end-to-end commitment to QoE that extends from the studio or sports arena to the set-top.
We can only expect the importance of quality to increase as more of our customers purchase high-resolution video and audio systems. As CED recently reported, the number of HD households climbed by more than 50 percent last year, bringing HD penetration to more than one-third of all TV households, and HD adoption will continue to accelerate, climbing to 80 million HD households within the next four years.
CUSTOMERS WANT HD ON-DEMAND
This data underscores the importance for many systems to reclaim some of their analog bandwidth in order to offer more HD programming to their customers. A recent CTAM report found that most HDTV owners prefer a package with 50 HD channels and extensive HD on-demand. HD also represents one of the ways cable systems can quickly achieve an ROI on their bandwidth reclamation activities. According to recent research from Pike & Associates, 58 percent of cable HDTV owners subscribed to an HD tier, and that level is expected to rise to 77 percent by 2012.
In addition to video-on-demand’s (VOD) value in attracting and retaining HD households, launching or expanding a video-on-demand service is one of the greatest near-term revenue opportunities for reclaimed bandwidth. Systems launching a managed VOD service can generate as much as $4 per sub, per month, not including increased SVOD and retention value, and can recover their investment in as little as 12 to 18 months, according to recent analysis of the CMC’s Hits On-Demand affiliates.
MORE SPEED, PLEASE
Systems can also re-allocate bandwidth for residential and commercial broadband services. Offering customers the choice to upgrade to higher speeds improves customer satisfaction, as well as represents an additional revenue opportunity for the cable system operator. As CED recently reported, $6.7 billion is spent on T1 connectivity by companies in smaller markets. Cable systems serving these markets have the ability to offer comparable speeds for Internet connectivity and partner with commercial services providers to layer additional broadband services, such as VoIP and hosting services.
Given the breadth of options for re-allocating bandwidth, the value of an analog channel has probably never been greater. One place cable operators can turn to for seizing these opportunities is a centralized approach through platforms such as the Comcast Media Center’s Hits, which provides linear solutions for reclaiming bandwidth, as well as opportunities to grow revenues through advanced services.
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