Communications trends increasingly place power in hands of consumers, says Audet

Louis Audet, president and CEO of Cogeco Inc., spoke about "The Internet, Video on Demand, and Rising Consumer Power" before the Board of Trade of Metropolitan Montreal on January 27. Below is an excerpt from his address. Today, I suggest we take a look at the trends in the world of communications, which, beyond ever increasing competition, have placed the balance of power into the hands of consumers. I will suggest avenues available to post-industrial economies such as ours, Montreal being a living microcosm, that must wager their prosperity on intellectual property. …Since the arrival of the Internet in 1991, customers have grown accustomed to surfing the Internet wherever they please in the world and whenever they desire. They have free access to powerful search engines, unbelievable databases and a large range of photographs as well as audio and video clips. And, slowly but surely, the idea set in that everything is available instantly and, above all…at no cost. Thus, the consumer’s Internet experience contributes to defining and increasing his expectations towards video services, thereby precipitating the introduction of television on demand. At the same time, the rate at which access to content equipment becomes available to consumers has never ceased progressing. The storage capacity of content has also progressed tremendously. Memory capacity, which allows for the storing of several hundreds of feature films on servers located in each of our cable networks, has been available since 2002, at very affordable costs. This is what allows us to offer video-on-demand. The consumer can then choose a movie on simple impulse by using his existing digital box remote control. …We are witnessing a slow and inevitable shift from scheduled television viewing (at fixed times) to on-demand television viewing (when the customer is ready to watch). Within the next few years, it will no longer be several hundreds of feature films that will be available, but rather several thousands of hours of programming. We can already predict that many television channels that offer programming that is not attractive or not differentiated will simply disappear. Only the channels that offer added value and bank on immediacy or exclusiveness will continue to prosper. Before the transition to video-on-demand is completed, the well-known Tivo type digital video recorder (DVR), which can record between 80 and 160 hours of programming on a hard drive, will play a transitional role. Certain versions, which differ from the ones we will be offering our cable clients this spring, can systematically skip commercials. Even if for now, market penetration for this type of specific device does not exceed 4% in North America, the public interest of the Canadian broadcasting system is at stake. Indeed, our system is designed so that certain general-interest channels are offered "at no cost" to the public since it is advertising that allows the production of this programming. On the other end of the spectrum, other channels rely solely on fees paid by cable or satellite clients -this is called the subscription model. It goes without saying that if the practice of systematically skipping commercials should spread, and if the trend continued, channels that rely on advertising would have no other choice but to move to the subscription model. Many will argue that we live in a free market system, that it is inappropriate to limit innovation in electronic products and that it is up to the consumer to decide. All right then. If that is the case, then what we call "free" television could very well disappear. Is that what the consumer truly wants? Is that what we wish for our society? I believe this issue must be the subject of a public debate, at least here in North America. Indeed, this subject greatly exceeds the scope of a simple punctual consumption decision because television plays a unique role in shaping the identity and unity of a country’s population. This being said, no matter the scenario that prevails, rest assured that our television companies will adapt and continue to prosper.

Communications trends increasingly place power in hands of consumers, says Audet

Broadcast | January 30, 2004

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