Facing Continued Churn, U.S. Cablecos Turn to Silicon Valley for Innovation Ideas

The U.S. cable industry is looking to set up an innovation center in Silicon Valley—even as third-quarter results show continued losses in basic video subscription levels.

Lead by industry standards organization CableLabs (News - Alert), Time Warner Cable, Comcast Corp. and the rest of the MSO crew are looking to engage with leading universities in the region such as Stanford and mind the braintrusts of startups as they go about finding The Next Big Thing.

The activity will focus around a research center, according to Reuters. The industry needs to "get re-energized," explained Jerald Kent, chief executive of Cequel Communications and co-founder of Charter Communications (News - Alert). "Part of the message is this is not your grandmother's cable business."

The cable industry, which saw a nice round $97.6 billion in revenue last year, claims around 60.7 million video customers in the U.S., according to research firm Parks Associates (News - Alert) – the lion’s share of pay-TV subscriptions. However, basic cable subs continue to leave, migrating to satellite and in particular IPTV, which is expected to see healthy growth for video going forward. In contrast, the cable video sector is expected to shrink.

In fact, by 2017, cable's share will fall to 52 percent (56.1 million subs), while IPTV's (News - Alert) will rise to 18 percent (18.6 million subs, up from just 8.8 million today).

Of course, the cable sctor is making up for lost revenue on the video side with healthy gains for broadband—a trend that over-the-top (OTT) video could prove to aid. The new research facility will look at the challenges and opportunities facing cable as consumer consumption trends shift.

Scheduled to debut in mid-2013 in San Francisco, it will create "an innovation funnel," Phil McKinney, CableLabs' CEO, said in a news briefing unveiling the plan.