Cable executives on Tuesday downplayed the impact of Netflix on their businesses, arguing that it is simply another provider in a crowded market, though they were forced to acknowledge that consumers are no longer satisfied with just a cable box and a remote.
Execs from Time Warner, Viacom, Comcast, Cox, and News Corp. sat down this morning for a panel discussion at The Cable Show in Chicago. When asked about Netflix's recent decision to air original content, Philippe Dauman, president and CEO at Viacom, warned that "it's not easy to get into the content business; it's a tough exercise."
"That's not really their fundamental business," Dauman said of Netflix. Viacom, on the other hand, is "100 percent focused on content," he said. Netflix is just one cog in the content wheel, he said, pointing to the "incremental money" Viacom has made by repurposing its older shows, like "Beavis and Butthead," on Web-based services like Netflix.
Jeff Bewkes, chairman and CEO of Time Warner Inc., meanwhile, said Netflix "adds to competition," but talked up the online offerings of HBO, a Time Warner company. HBO has long refused to provide its content to Netflix's Watch Instantly streaming service, but it recently launched HBO Go, which allows subscribers to stream HBO shows and movies to their iPad, laptops, and smartphones.
Nonetheless, the executives can't ignore the growing presence of Internet-based streaming services like Netflix, which at last count had 22.8 million subscribers. Panel moderator Liz Claman from Fox Business Network pointed to a recent guest who said his 9-year-old son had urged him to ditch cable in their new home.
"Don't be afraid of your kids," Bewkes joked. He argued that content on the Web is essentially "TV on the Internet," something with which Dauman disagreed.
"It's not just putting TV on the Internet; you need to have interactivity as part of the TV experience," he said, pointing to the wide-ranging Twitter and Facebook engagement seen with viewers of BET's "106 and Park."
The execs also dismissed the notion of "cord cutting."
"Our perspective is—let's never give a customer a reason to cord cut," said Neil Smit, president of Comcast Cable Communications, pointing to the company's Tuesday Skype video call deal. If users want to watch on a tablet or smartphone, they should be able to do that, he said. "We need to be flexible [because] the pace of that change is only increasing."
Glenn Britt, chairman and CEO of Time Warner Cable, said he viewed Netflix as "another programmer." Right now, the "instances of people disconnecting their big video package [for services like Netflix] is barely measurable," he said. "But clearly, if there's something that makes consumers not want to buy the big package that we're selling, that's a threat to all of us, [so] we have to work together on the functionality."
Throughout the day, meanwhile, cable execs stressed that the Internet would not be where it is today without the contributions of cable.
"We super-sized the Internet [by pushing] aside dial-up [for an] always-on experience we now take for granted," Michael Powell, newly appointed president of the National Cable & Telecommunications Association, said in a separate speech. "Our continued investments ... have made it possible for great Internet companies like Google, Amazon, and Facebook to come of age."
Time Warner's Bewkes voice similar sentiments. "The reason you can get things on tablets [and] smartphones is because of the infrastructure that was ... led by people in this room," he said. "If you think of the content that people want to watch on the Internet-delivery devices, the best stuff premieres on cable."
Netflix, meanwhile, said during its April earnings report that it expects its subscriber growth to level off, but talked up recent content deals. Its deal to carry "Mad Men,"for example, "will not be available to other broadcast or cable networks," Netflix said. Movie additions from Paramount, meanwhile, "are exclusive to Netflix against broadcast, cable and other over-the-top services," Netflix said.