IBB Chief: Content's Getting Pricier

Dr. Imran Shah IBB Consulting Group, a 75-person consulting firm based in Philadelphia, serves as convergence specialists to cable, media, wireless and technology companies, helping clients
pioneer new products and services, develop business models and execute business plans. Consulting magazine caught up with Dr. Imran Shah, Managing Partner and co-founder of the firm, to discuss the ever-evolving role content and entertainment plays and how it impacts consumers and providers.

Consulting: This industry changes so fast. What’s going on in this space?

Shah: Well, from an entertainment perspective we’re still seeing the evolution of the ability for consumers to get entertainment where they want, when they want and on device they want. We refer to it as the ‘four anys.’ The ability to consume any content, any time, any place on any device. The technologies have evolved, the business models have developed and the customers have shown that they really want to consume media in many different forms.

Consulting: There was some hesitation on the part of the providers, initially. Still?

Shah:  In the early days, there was a lot of conversation about free content vs. advertising-supported content. But what’s really happened is the content companies have evolved their business models to better serve their costumers. They’ve responded quite well to this desire to consume content where they want it, when they want it and how they want it within the existing business value proposition. If you have a subscription to HBO, for instance, once you authenticate yourself as an HBO subscriber, it is quite liberating as to what you want to enjoy and when you want to enjoy it through the HBO Go app. In some cases, you can even download shows to your laptop or tablet and enjoy them later. It’s all about adding value to the subscription and adding value to your relationship with the provider. From the provider perspective, it’s all about taking the relationships they have with you and expanding it.

Consulting: That seems like a pretty tall order.

Shah: Well, there’s still a lot of fragmentation. It’s still not ubiquitous for consumers. For instance, some of the content is available for download while some is not. Some providers allow you to stream live content, like ESPN, while others do not. There is still a potpourri of options available and consumers can be easily confused. But the good news is that both sides are feeling more comfortable with the business model that allows this to happen. Often in the past, providers have tried to prevent new technology shifts from happening, but not this time around.

Consulting: What are some of the industry’s other big challenges?

Shah: Cable companies have done a very good job and the numbers show it. They continue to have costumer-focused innovation and have always had a service-provider mentality and not a big transporter mentality and, as a result, have always been open to change. That being said, right now they are dealing with the increased costs of content. They don’t control all of those costs, by the way, many of the costs are up and down the chain, but costs are increasing fast. As a result, there are many challenges in content negotiations between cable companies and content companies. At some point, it will become a big problem. That ability to pay for content and then to pass that price increase onto the consumer will become a bigger challenge for the cable companies.

Consulting: Is there a price point consumers won’t cross?

Shah: I think there is, but I think what you’ll see happen is the price point will remain the same but what’s included within that price point will become less. Cable companies continue to come up with slightly lighter packages, such as sport light packages that don’t have the expensive sports programming. It’s not a secret, but $89 to $99 for, let’s say, triple play packages—phone, internet and cable—is probably the magic price point. They don’t want to go above that.

Consulting: So, what’s next? What can we expect to see over the next 12 months or so?

Shah: You’ll see much better and faster Internet speeds, for one. If you go back a few years ago, the number of high-definition channels used to be the big battleground and the big differentiator among the cable companies. Well, the new battleground will be high-speed data. Speeds will keep getting faster and faster at the same price point. The other thing you will see is the cable industry rolling out the next generation desktop boxes and infrastructure, including much better navigation. Your Guide, for instance, will improve and
will have much better and more thorough search and discover. As more and more content is available, it becomes harder and harder to find. You’ll also see much better performance from your television with the introduction of multi-screen capabilities and ID services.