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CABLE CONFAB EMBRACES CONVERGENCE AROUND INTERNET

NCTA Conference Looks to Broad Alliances With Web Portals and Hollywood

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SAN FRANCISCO (AdAge.com) -- Cable TV's continuing success will depend on new kinds of alliances with giant Web portals and Hollywood, Comcast's chief operating officer told the National Cable & Telecommunications Association national show here yesterday.
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Interactive utilities
In a keynote address opening this year's event at the Moscone Center, Comcast's Steve Burke said, “Cable companies account for a third of all Internet usage. That's why Google, Yahoo and Real Networks are joining us for the show.” His remarks were just one sign that a medium that used to think of itself as another form of TV is now assuming the identity of an interactive utility whose hottest products include high-speed Internet access and video-on-demand services.

The first session of the three-day cable industry event focused on a new type of convergence that involved forming alliances built around consumer demand for convenience -- as opposed to promoting corporate synergies.

'Lot of convergence'
“A lot of the convergence is just around the corner,” said Microsoft Corp.'s co-founder, Paul Allen, who is also chairman of investment firm Vulcan Ventures and Charter Communications, the nation's No. 4 cable company, with 6.2 million subscribers in 40 states. Mr. Allen has said alliances with the consumer electronics industry will also be crucial to the cable business. He was at the convention demonstrating Digeo Moxi, an interactive service that functions as an Internet interface-like directory and control center for all cable-based programming.

Tom Rutledge, chief operating officer of Cablevision Systems, said, “The cable industry has been involved in a massive construction project. Now it can be focused to take advantage of the marketplace for voice and video. We have an opportunity to focus on the marketing and developing relationships with customers. It is the most exciting time.”

Cablevision provides cable service throughout the New York City metropolitan area and is a 60% owner of Madison Square Garden.

Digital games
Bing Gordon, executive vice president and chief creative officer at Electronic Arts, the No. 1 U.S. digital game publisher, predicted a huge explosion in online gaming. He issued a challenge to the cable companies: “In 2010 we’re going to need broadband 2.0. If cable doesn’t give us that, its wireless or phones.”

Mr. Rutledge responded, “We’ve got 2.0 in the bag.”

On the question of how the executives could capitalize on new technology, Mr. Gordon said the Internet was three times more valuable than TV to teens, saying that “people are going to pay $150 for Internet applications.” He joked that cable companies should think of putting 15-year-olds in their boardrooms to better understand how to work with subscribers.

When asked to predict the year ahead, Yahoo co-founder Jerry Yang said to expect "a lot of action in the next 24 months.” He said his company would be focused on building an Web-driven cable community by adding content. He said Yahoo was working closely with Rogers Cable in Canada to build Yahoo-branded high-speed Web services.

Advertising impact
All these changes will have an impact on advertising, and when asked how the advertising model changes, Mr. Gordon replied, “They have to get away from the Vance Packard persuader model ... and produce ads that people want to watch. TV advertisers haven’t figured that out yet.”

Mr. Packard was a newspaper journalist who wrote the best-selling 1957 book The Hidden Persuaders, which chastised the advertising industry for using the emerging science of psychology to manipulate consumers into purchasing products they neither wanted nor needed.

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