Cable, MSOs, OTT TV Strategy: What we can learn from Department Stores?

When I joined the media & cable industry almost 20 years ago, it was the vision for many MSOs to become a kind of department store for the consumer. It was the heyday of digitization; offering multiple TV channels and maybe even first VOD type services were en-vogue. Cables dreamed of growing beyond their status as a pure utility provider. They wanted the consumer to ‘visit the cable store’ and get all their entertainment needs served. The consumer was – so was the hope and aspiration – supposed to get all kind of media services at his cable (or broadband) provider. And over many years this dream seemed to come to reality. Until digitization went a step further and disrupted the industry….

Digitization also disrupted the real world departments stores. In the past one had all his purchase needs satisfied when he went to Sears, Debenhams, Harrods or Lafayette. It was the place of choice for many consumers to get everything: from daily produce to fashion to household equipment. You could book your  holidays or even buy your pet there. But along came the internet and with it ‘online shopping’. All of sudden department stores faced a competition that was not another building down the road, but something virtual; with maybe better products, prices and service. As we all have witnessed: it meant disaster for some of these stores. Unless they did reinvent themselves they were seen as dinosaurs and faced extinction.

Department Stores reinvented themselves: and so must TV platforms

What did they do though to survive? They redefined the shopping experience: they made shopping an event, an experience – rather then a necessity. If you visit modern department stores nowadays, you see that they are inviting, full of entertainment features, making the visit most pleasant and joyful. They have events, they have fun elements and they want to make your visit special. Furthermore, they moved away from the old concept of lining shelves along the wall and putting products in them. They now work with the major brands as partners. It came long for them to realize the power of brands. Now you find a lot of shop-in-shop offers in a department store. Strong, relevant brands  have their own dedicated presence within a store. It is almost like a shopping mall now rather than an unified department store feel. People come to the store for these unique brands, for the experience but also for the comfort of knowing all basic shopping needs are satisfied, too.

This is the learning that cablers can draw from the Department Store development. They also have to offer more, exciting experiences for their subscribers. Starting from the unique, special products they can offer to – most of importantly – the service experience. For consumers it must be fun and comfortable to subscribe to a cable or MSO system. They want and demand to be serviced well. They want choice, they want special events and offers.

Furthermore, cablers need to learn to work with brands and their products; and include them smartly in their service bundles. There have been such offers already when, for instance, cablers created a branded bundle of TV channels  as a special subscription service (e.g. Disney / ABC package or the MTV channels). Also, initially it was also popular to have branded segments within VOD services, for instance. But the industry has further evolved: and especially OTT TV services offer both a threat and an opportunity for cablers. This is were the shop-in-shop concept can come into play. We see some cablers who embrace the idea and offer certain OTT TV services (Netflix, most prominently, of course) as part of their cable services now.

The future: basic cable offers and branded OTT TV in the same service

That is the future: cablers will likely reduce some of their services to serve the basic need only. Skinny bundles and similar approaches come to mind in that context. Everything else will be in an a la carte mode or even better as a branded ‘shop-in-shop’. This is more relevant now: the OTT TV landscape evolves into a more fragmented one. You have large flagship OTT TV services such Netflix, Amazon Prime, Wuaki, etc. who are complemented by niche or thematic offers. In addition, the more diverse audiences demand also different ethnic-centric offers. As in a department store, where you nowadays find your dedicated section for different foreign foods, you will have different OTT TV services in your cable system for ethnic communities.

MSOs still want to be the consumers digital department store. But they have to learn from the lessons that real stores had to encounter. Otherwise they will be utility only again.

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