Cable's move to absorb the online video threat

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Samantha BookmanThe Cable Show last week may have just as well changed its name to "The Online Video Show." It seemed like online video was almost all anyone was talking about on the show floor.

And from the official viewpoint, that appeared to be just fine. NCTA Chairman Michael Powell told Fox News in an interview last Monday from the show floor that the main topic of conversation was the theme of what one can do when they put television and the web together. It was, in his words, "the romance of pleasurable entertainment mixed with the magic of the web."

Cringe-inducing quote aside, the main program's focus on how to blend traditional cable programming with web technologies, including how to bring online video into the fold. Powell felt, as he told FierceCable in a pre-show interview, that online video is still more a complement than a real substitute to cable service. But making online video complementary to cable may be a more difficult task than multichannel video providers (MVPDs) realize.

When almost all people can talk about at a cable convention is online video, it doesn't matter that the MVPDs are telling people that online video is not a threat. By the attention paid to it at the show, and the product announcements and web-geared activities, it's clear that online video is a disruptive element in the market play--one that cable operators desperately want to get control of.

Nathan Ingraham of The Verge saw cable's move as a way to get back to doing business the way they've always done it. "(B)eneath the acknowledgement of the rapid changes underway and cable's need to evolve along with them was a strong defense of providers and networks continuing to do business exactly as they have done for the last four decades or so," he said in a post-show wrap.

The cable industry is acknowledging that changing technology can't be ignored. At the show's Imagine Park section, there was a hackathon, with teams of college students vying for the best app, and a discussion of the future of television featuring debate teams from Columbia and Harvard. It was a signal that cable is ready and willing to compete for subscriber attention.

Michael Powell told Fox that "competition is healthy in my mind because it says, look, this is something that consumers want to be able to do, you need to serve them or you're going to lose them."

He continued, "The real test, though, of a quality industry is how does it respond? As you can see here at The Cable Show, it's responding in a pretty big way. We now can drive our content to iPads and iPhones and smartphones as well. It's really a test of how we're going to respond to those kinds of things and not be afraid of the competition."

But cable's focus on the online video segment is all about control and monetization. For example, Comcast (Nasdaq: CMCSA) officially launched its Infinity X1 streaming service at The Cable Show. The product is clearly trying to give Comcast's subscribers what they want--a streaming option--but the fact that X1 doesn't allow Netflix (Nasdaq: NFLX) streaming is a signal that the operator wants control of what crosses the IP side of its network as much as it controls its traditional video service.

How successful will traditional operators and content providers be at controlling how viewers receive their content? It will be interesting to watch. Online video technology and innovation has been largely consumer-driven, with traditional cable paying little attention to the multiscreen market until recently. The cable industry has definitely got the bucks behind it to affect change--an SNL Kagan study for NCTA reported the industry saw $97.5 billion in revenue in 2011, up from $93.7 billion in 2010.

But catching the attention of today's audience will not be easy. Perhaps the best sum-up of what cable is up against came from Conan O'Brien during a Cable Show appearance opposite Piers Morgan. O'Brien was directly affected by today's new type of audience, in a good way, when he left traditional television only to see "The Conan O'Brien Show" resurrected thanks to a web audience, one that he's gotten to know much more about. "The days of, 'I only want people to experience me at 11, on TBS'--those days are over," O'Brien said. "The audience is too fragmented, they're too distracted, and a whole generation is growing up that doesn't watch television that way."-- Sam