The New Local Heroes: How Cadent Is Helping Regional MSOs Make The Shift To Streaming

I recently sat down with Paul Ranger, SVP of Platform Sales at Cadent to discuss their newly announced partnerships with leading regional MSOs Hotwire, Midco and Mediaco that provides the MSOs with access to the Cadent Aperture Ad Management solution, and how the shift to streaming is impacting these regional MSOs.

ALAN WOLK (AW):  Let’s start with the strategic impact of this deal. What is the significance for the industry?

PAUL RANGER (PR): We’ve been working with MVPDs and MSOs for years. Our platform business, which began with the acquisition of Black Arrow around a decade ago, has always been focused on helping these operators monetize their video services. Historically, we’ve worked mainly with tier-one operators across the US, Europe, and Canada, where it’s easier to build a business case around new addressable TV use cases. However, for regional MSOs, we’ve developed a solution that helps them migrate from legacy cable QAM platforms to new IPTV environments, enabling them to support more flexible and profitable addressable TV models.

The regional MSOs are crucial in the local markets they serve, providing both broadband and video services. As streaming gains traction, there’s been a shift back towards aggregated services or bundles of video and broadband, and the MSOs are well-positioned to offer these. They’re starting to recognize that video can be a valuable part of their overall offering, contributing to their bottom line and allowing them to be more creative with their service packages. What we’re bringing to the table allows them to monetize their advertising side more effectively, increasing the overall stickiness of their proposition in these local markets.

AW: How is the shift to streaming/IPTV affecting the current MSO landscape?

PR:  For end users it means that the TV they get from their provider is now being delivered via a broadband connection rather than QAM.

For regional MSOs, this migration means they can offer streaming-like services while maintaining control over the user experience. They’re moving away from traditional set-top boxes, which were costly and required significant maintenance, to more lightweight streaming devices or even apps that subscribers can download onto their smart TVs and connected devices. This dramatically reduces customer acquisition costs and makes it easier to deliver a wider range of services.

AW:  Addressable advertising has been around for a while, but it seems like it’s gaining more traction now. Why is that?

PR:  Addressable advertising is indeed becoming more prominent, and MSOs are in a powerful position because of the quality of first-party data they possess. With increasing concerns over data privacy and the potential deprecation of cookies, MSOs can leverage their data to offer highly targeted advertising in a secure manner. This is a significant advantage, especially as the market shifts towards more audience-oriented targeting.

AW: What role does Cadent play in this, especially for regional MSOs?

PR:  At Cadent, we support both direct-sold and programmatic campaigns, allowing MSOs to maximize their yield. Additionally, we enable programmers to extend their addressable reach into local markets through partnerships with regional MSOs. This benefits the MSOs by offering new revenue streams and the programmers by reaching audiences they might not otherwise access.

AW:  From a consumer perspective, how are you addressing issues like frequency capping and ad relevance?

PR:  Frequency capping and the overall user experience are key considerations for us. There’s a noticeable difference in expectations between video services provided by traditional MSOs and those by vMVPDs or other streaming services. For instance, as a vMVPD subscriber, you might see the same ad repeatedly, which can be frustrating. With regional MSOs, there’s more control over ad frequency, which is crucial because their subscribers tend to be more vocal about their viewing experiences.

We also focus on making ads more relevant through addressable advertising. Studies have shown that addressable ads lead to lower tune-away rates because viewers find the ads less disruptive. While most of the research has been conducted outside the US, the results suggest that addressability enhances both direct and indirect revenue by improving the user experience and supporting better negotiations with programmers.

AW:  Given Cadent’s experience working internationally, are there lessons from outside the United States that could be applied here?

PR:  Absolutely. There’s far less disruption happening outside the US, and traditional players still dominate in regions like Europe and Canada. One key difference is the level of collaboration between broadcasters and pay TV operators, which has been more effective outside the US. In the US, there has been less collaboration, with both sides often taking entrenched positions.

Data privacy is another area where the US is starting to catch up. We’ve had to design our services to comply with stringent regulations like GDPR, which has put us ahead of the curve as similar laws begin to take shape in the US.

Finally, addressing the fragmentation in the US market is crucial. In Europe, we’ve made strides toward offering national reach across multiple pay TV platforms with a unified workflow, which makes it easier for advertisers to plan and execute addressable campaigns. The US market could benefit from a similar approach to reduce fragmentation and unlock the full potential of addressable TV.

AW:  Why are regional MSOs in such a strong position to capitalize on the growth of addressable advertising in the US?

PR:  The regional MSOs are starting to enable addressable advertising, and we’re working with some of the larger ones. We’re helping them create a substantial base of subscribers that can be uniquely targeted. This audience is difficult to reach, which allows these MSOs to maintain high CPMs in their local markets. By enabling them to sell both locally and programmatically, we’re helping them monetize their video platforms more effectively, which, in turn, increases the stickiness of their overall proposition.

It’s a good market for the programmers because they can extend their addressable reach, and it’s beneficial for the MSOs because they can monetize their video services in a way that strengthens their position in local markets. This creates a win-win situation for both parties, which is why we’re so excited about the potential of addressable TV for regional MSOs.