Posts for 'Cable TV Operators'

I'm pleased to present the 194th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. First up this week we discuss CBS CEO Leslie Moonves' remarks on CNBC essentially declaring victory in the company's retrans dispute with Time Warner Cable because it had preserved its ability to license its programs to Netflix and Amazon. Listeners will recall that 3 weeks ago on the podcast we talked about how OTT licensing was at the heart of the dispute and the consequences for TV Everywhere.

Next we transition to questioning whether there's any real benefit for TV networks and pay-TV operators to stream linear channels to connected TVs. Colin observes that recent data from the BBC indicating very low levels of linear streaming on connected TVs appears to question the value of the Disney-Apple TV and Time Warner Cable-Xbox 360 deals. We speculate that these are mainly meant for 2nd or 3rd TVs that don't have pay-TV set-top boxes.

Last, we chat briefly about the massive 3-part series that the NY Times ran just before Labor Day on ESPN's dominant role in college football - a long, but fascinating read. As I wrote, it's well worth the time for anyone interested in the influence of big time TV money not only on college sports but also on the broader American higher education system.

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I'm pleased to present the 192nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

In this week's discussion, we talk more about the unexpected role that Netflix and Amazon are playing in the CBS-Time Warner Cable retransmission consent dispute, which has knocked CBS off the air in major markets like NYC, LA, Dallas and elsewhere. As I wrote earlier this week, though "retrans" disputes have become commonplace, a new wrinkle in this particular one is that digital distribution rights are actually the main sticking point.

Having made lucrative digital deals with both Netflix and Amazon, CBS is justifiably reluctant to simply throw digital access to its programs into a deal with TWC, as it has in the past. The standoff highlights the uphill battle that pay-TV operators are having gaining content rights for their TV Everywhere services, which remain like Swiss cheese, with major holes in program availability. It also underscores the transformational role OTT powerhouses like Netflix and Amazon are having on the broader TV industry.

Further, Colin believes there's an opportunity for new market entrants (e.g. Intel Media, Sony, Apple, Google, etc.) to bid for both digital and linear rights, and then package access for consumers in inventive new ways. Colin sees broadband's lower cost of delivery creating a big advantage for these new players. I'm skeptical however, noting that the huge expense involved in licensing content and promoting a service from scratch would more than outweigh delivery savings. But, with so much change happening in the market these days, nothing can be counted out.

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Disputes between broadcasters and pay-TV operators over so-called "retransmission consent" fee payments are a dime a dozen. Broadcasters, seeking their slice of the monthly fees pay-TV operators pay cable TV networks, have bargained hard for this new revenue stream. In this sense, the current CBS-Time Warner Cable retrans standoff is business as usual. What is new, however, is that digital rights - and more specifically the huge licensing fees that OTT's richest players, Netflix and Amazon, are now paying - have taken a central role in this particular drama.

As the WSJ reported last Friday, the real obstacle between CBS and TWC isn't what TWC will pay to retransmit the CBS signal, but rather what digital rights will be included, and at what incremental cost. Five years ago, these rights were a virtual throwaway, but now it's a totally different situation. Here's what changed:

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A fortuitous confluence of events could give Aereo a nice bump in visibility and adoption in New York City this week. First, CBS went dark for hundreds of thousands of NYC subscribers last Friday afternoon, as the broadcaster and Time Warner Cable were unable to agree on retransmission consent compensation. Then over the weekend, Tiger Woods - by far golf's biggest TV draw - smoked the field to win the WGC-Bridgestone golf tournament, which was televised by CBS (though not seen by New Yorkers). The win makes Tiger the odds-on favorite to win the fourth and final major golf event of the year - the PGA Championship, being played in upstate New York starting Thursday.

CBS has the weekend afternoon TV rights to the PGA, following TNT's Thursday/Friday and weekend morning coverage. Tiger is gunning for his first major win in 5+ years, since his infamous infidelity scandal knocked him off his game. If Tiger is leading or among the leaders going into the weekend, it would set up intense interest and very strong CBS viewership. But with CBS blacked out - and the network blocking TWC New York subscribers' access to online programming - New Yorkers wouldn't get to see Tiger in action.

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I'm pleased to present the 188th edition of the VideoNuze weekly podcast with my weekly partner Colin Dixon of nScreenMedia. This week rumors were once again flying about Apple and Google looking to enter the pay-TV industry, which Colin and I separately wrote about here and here.

In our discussion, Colin notes that any potential move would be expensive, given the need to carry many networks in a typical bundle. Colin also believes that Apple's rumored plan to compensate networks for ads skipped in a premium service it may offer has some merit based on his back-of-the-envelope analysis. But Colin is skeptical the networks will be interested in shifting their model away from advertising.

I see it the other way around; given high DVR penetration, networks could be intrigued by the idea of moving more of their economics to fees. The problem is I just don't see how the economics would work for Apple or consumers.

Regrettably, all of this is based on rumors so we readily admit we don't have solid facts on which to base our arguments. And that's why I consider Apple and Google's pay-TV aspirations to be the industry's longest-running soap opera.

Listen in to learn more!

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It's time for the latest episode of the industry's best and longest-running soap opera, "Google, Apple and the Mission to Disrupt Pay-TV." New reports this week (here and here) suggest that the two tech giants are once again angling to get a piece of the pay-TV industry, which, despite already being under attack from all sides, appears to be holding its own.

As in the past, the current episode is based only on "people familiar" with the discussions Google and Apple executives are each having with pay-TV industry players. Google and Apple executives as usual are offering "no comment." The new episode features twists to keep all of us engaged. Apple is reportedly contemplating a "premium" version of its service that will allow users to skip ads, with Apple compensating TV networks for lost ad revenue (not to spoil the drama, but it's awfully hard to see how the math would add up on such a plan or why the networks themselves would go for it). And Google has reportedly even demo'd its product (shocking!), though no details on what it is or how it is different were released.

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Investment firm Needham & Company has released its latest Future of TV report, with lead analyst Laura Martin concluding that the biggest current risk to the TV industry's economics is unbundling of subscription TV channels. Martin asserts that if consumers had the option to choose their channels on an a la carte basis, rather than the multi-channel bundles that pay-TV operators currently offer, approximately 50% of today's TV revenue would be eliminated with fewer than 20 TV channels surviving.

The draconian forecast adds a financial dimension to the ongoing debate around whether the TV industry will need to radically re-think its business approach if - and it's still a big "if" - cord-cutting gains momentum. To date cord-cutting (and "cord-nevering," where younger viewers simply don't subscribe to pay-TV as in the past) have been relatively muted, with estimates for 2012 in the 500K range. However, several key industry trends such as the escalating cost of pay-TV, changes in consumer behaviors, proliferation of connected and mobile viewing devices, the surge in OTT SVOD adoption (e.g. Netflix) and DVR-based ad-skipping all suggest that the industry's traditional bundled model could be tested over the next few years.

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Remarkably, it's already been 4 years since the CEOs of Time Warner and Comcast unveiled the concept of TV Everywhere in a high-profile press event. Since then numerous successful services have launched (e.g. HBO GO, WatchESPN, etc.), yet the prevailing consensus - which I agree with - is that TV Everywhere hasn't yet been adopted at nearly the level anticipated.

I've written in the past about the 5 key things I believe are holding back TV Everywhere and 1 of them is "authentication" - the process of verifying a user and providing rights to watch programming covered by their subscription. Picayune as it might seem at first blush for pay-TV subscribers to remember and input their user name and password to be authenticated, it has turned out to be a genuine barrier to adoption.

That's why Comcast's announcement yesterday of "Home Pass" which auto-verifies and logs in dual Comcast video and broadband subscriber when accessing Xfinity TV (the company's branded TV Everywhere initiative) is significant. Rather than fumbling for their credentials, users can simply visit the Xfinity portal and begin watching nearly instantly.

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Though online video has become a hugely popular source of on-demand video for consumers, it's not the only one available. Pay-TV operators have invested heavily in deploying their own on-demand systems through set-top boxes, which have gained strong acceptance. Comcast, for example, now reports 400 million on-demand sessions per month with about 40K TV show episodes and movies available.

However, when it comes to monetization, there's a significant difference between pay-TV VOD and online video. Whereas online video advertising has developed a robust ecosystem that will drive around $4 billion in revenue this year, pay-TV VOD advertising is nascent, as it has suffered from years of underinvestment.

More recently, though, companies like BlackArrow have developed dynamic ad insertion (DAI) capabilities for VOD, which have been deployed to around 30 million homes. In a fascinating discussion at the June 4th Video Ad Summit, Ashley Swartz from Furious Minds led a deep dive discussion of pay-TV VOD DAI and its relationship to both TV and online video with executives from BlackArrow, Comcast and OMD. For anyone trying to better understand these platforms and their monetization potential, the discussion provides great learning and insights.

The video is below and runs 31 minutes, 22 seconds.

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I'm pleased to present the 184th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. This week we discuss the cloud's impact on video delivery. First, I share thoughts on Comcast's X2 platform, unveiled this week, in which the cloud plays a central role.

Colin notes that with Comcast's approach, there is still a fair amount of client-side processing happening, so it's not fully capitalizing on the cloud just yet. Colin draws a distinction between Comcast's approach and that of ActiveVideo Networks (which I recently wrote about), whose CloudTV moves all the processing to the cloud, allowing services to run on older set-top boxes and newer CE devices.

It's still early days in the cloud's deployment with different models at work, but there's no question it's going to become a bigger part of the video delivery landscape.

Listen in to learn more!

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At the Cable Show yesterday, Comcast's CEO Brian Roberts showed off "X2," the latest generation of its cloud-based X1 entertainment platform. Beyond a slew of UI improvements, X2 offers at least three things that are very important and I believe, indicative of key future trends in video delivery: cloud-based DVR, an inexpensive IP set-top box and a unified cross-platform experience.

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Digitalsmiths is taking video metadata to the next level, unveiling its Unified Data Service, a one-stop shop for pay-TV providers to access multiple, pre-integrated data feeds.

Digitalsmiths CEO and co-founder Ben Weinberger explained to me last week that as pay-TV operators have rolled out their own on-demand services and video apps, they're striving to make them as rich as possible. This includes adding the kind of related data (e.g. actor, cast info, schedules, merchandise, etc.) and social tools (e.g. Twitter/Facebook feeds, etc.) that are commonly found in entertainment-oriented web sites and apps.

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If you've recently visited the guide provided by your pay-TV operator, chances are you were pretty underwhelmed. Never known for its usability, the typical guide increasingly looks like a relic from another age, as rich apps and online video services have continued to raise the bar on program discovery.

One company looking to change all of this is ActiveVideo Networks, which leverages cloud-based processing to deliver sophisticated HTML5 experiences to even the most humble, low-end digital set-top boxes. The result is a pivotal change in bringing pay-TV providers' guides up to par, cost-effectively and with low operational impact. Late last week, ActiveVideo gained momentum for its approach, announcing that big U.S. cable operators Charter and Cablevision are using its "CloudTV H5" platform for cloud-based UI and interactive applications, respectively, and that Sumitomo will help roll out the platform in Japan and Asia.

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I'm pleased to present the 182nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Apologies in advance for audio quality this week as Colin was dialing in from a London hotel room and his audio level is low.

In today's podcast Colin leads off by sharing key takeaways from Cisco's latest Visual Networking Index (VNI) that was released this week. Cisco has been forecasting strong online and mobile video growth for years and this version continued the trend. Colin also wrote about it here.

Then we move on to discussing BlackArrow Linear, a new product announced yesterday that enables pay-TV operators to dynamically inserts ads into live and linear video viewed on devices. Colin and I agree that it should move the TV Everywhere ball forward, helping programmers monetize better and therefore help catalyze broader video distribution.

Listen in to learn more!

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Advanced ad technology provider BlackArrow is unveiling "BlackArrow Linear" this morning, which enables pay-TV operators to dynamically insert ads into live and linear streams viewed on connected and mobile IP devices. BlackArrow has traditionally focused on video-on-demand streams to TVs.

The move is significant because BlackArrow Linear broadens pay-TV operators' flexibility to offer and monetize live and linear TV Everywhere streams. TV Everywhere began as an on-demand only offering, but a move is now underway to expand into live as well. In just the past month, both ABC and Turner have announced linear streaming to devices (more here and here), with TV Everywhere authentication. While I have questioned how broad the appeal of linear is in an age of time-shifting and ad-skipping, I believe it will become widely adopted by other broadcast and cable networks over the next 12 months as they race to embrace devices.

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The explosion of online video viewership is presenting pay-TV operators and broadband ISPs with big challenges and opportunities managing all of the increased traffic across their networks. To help address these, Akamai is introducing new capabilities in its Aura Network Solutions line of operator content delivery network (OCDN) technologies. The goal is to help operators deliver traffic more flexibly and cost effectively while also opening up potential new business models such as TV Everywhere.

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New industry data compiled by Leichtman Research Group shows that broadband ISPs that account for 93% of the U.S.  market added over 1.1 million subscribers in Q1 '13, nearly 6 times the 194K pay-TV subscribers that were added in the period by pay-TV operators that account for 94% of the market.

Broadband subscriber additions have outstripped pay-TV's for years, but the 6x ratio is more than double the average of 2.8x from the prior 2 years. The 194K pay-TV additions in Q1 were down 56% vs. the 445K added in Q1 '12, while the 1.1M broadband additions were off 15% from the 1.3M in each of the prior 2 years.

On the surface the data suggests that cord-cutting - a shift from viewing video via pay-TV to via broadband - may finally be taking hold. But while LRG's Bruce Leichtman has indeed found an uptick in his calculations of cord-cutting (up from .2% of U.S. homes to .4%-.5%), he sees a far more nuanced picture of what accounted for Q1's swing, plus lots of uncertainty going forward.

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Yesterday's victory by Aereo in federal appeals court is certain to have at least one consequence: it will put retransmission consent fees into the spotlight. For those unfamiliar with "retrans" as it is known, these are fees that broadcast TV networks and stations have negotiated from pay-TV operators. Much like the fees pay-TV operators pay to carry cable TV networks (e.g. MTV, USA, ESPN, etc.), retrans allows operators to carry broadcast networks.

Retrans fees are already a billion dollar plus revenue stream for broadcasters and by some estimates, could be a multiple of this in several years. Broadcasters see the payments as vital to keeping them on parity economic footing with cable networks. Conversely, operators see retrans as a broadcast subsidy, effectively inflating their already bloated programming costs. Retrans has been at the heart of most of the blackout battles between broadcasters and operators over the last several years.

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I'm pleased to present the 173rd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. This week we focus on the rising cost of content to pay-TV operators and the rising quality of content found online.

In a post yesterday, Colin validates pay-TV operators' complaints about programming costs, noting, for example, that at Comcast they rose from 34% of video revenue in '08 to 40% in '11 (at Time Warner Cable they were 41% and at DirecTV they were 45%). As we discuss, these escalating costs are eating into operators' profit margins as subscriber rate increases haven't kept pace. As VideoNuze readers know, sports is a major culprit in all of this, though entertainment networks have raised their own rates as well.

Against this backdrop, the quality of content available online is improving markedly. For example in just the past couple of weeks, we've seen Netflix announce another new series, with the producers of The Matrix films and Babylon5, Amazon Studios announce new shows "Betas," "Zombieland" and "Sarah Solves It" and Crackle a second season of "Chosen."  Further, anime network Crunchyroll disclosed it's now up to 200K paying subscribers, TheBlaze (Glenn Beck's online video network) is raising $40M. Even the BBC, one of the most traditional TV networks, announced it will be premiering shows on its iPlayer.

In short, the quality of programming online is getting better all the time, while the cost of content to pay-TV operators is escalating, in turn putting pressure on subscriber rates. All of this means viewership patterns are bound to change and with the broader video industry.

Reminder: sign up for "Sizing Up Apple TV" a free video webinar, next Tuesday, April 2nd featuring Brightcove's Jeremy Allaire and me.
    
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Flipping through yesterday's Best Buy circular, I noticed an ad (see below), which I believe is indicative of the type of pitches that are going to become increasingly prevalent to prospective cord-cutters and cord-nevers. The ad offers a packaged discount to an over-the-air ClearStream HD antenna from Antennas Direct with a TiVo Premiere and highlights logos from Netflix, Hulu Plus and Pandora. While the ad doesn't explicitly say "Dump your expensive pay-TV service now!," it has several key messages that might as well.

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