Posts for 'Cable TV Operators'

Colin Dixon, senior partner at The Diffusion Group and I are back for the 148th edition of the VideoNuze-TDG podcast.

First up this week we discuss Microsoft hiring former CBS Entertainment executive Nancy Tellem to develop original content for the Xbox platform and other devices. Colin thinks it's a odd choice because of the apparent mismatch between the type of programming CBS has excelled at vs. the type of programming that will likely resonate with Xbox owners. In particular, Colin notes that 40% of Xbox owners are age 18-24, whereas Nielsen has found that CBS's average viewer's age is 55. Clearly Microsoft is betting that Ms. Tellem can extend her significant programming skills to different formats, audiences and devices.

Speaking of confusing, we then turn our attention to comments that Time Warner Cable's COO Rob Marcus made this week in reference to the company potentially working with Apple on a set-top box. On the one hand he said that TWC is "open to giving up control of the user experience" to new devices, but on the other, that this does not mean it is willing "to give up the customer relationship." Both Colin and I find the two objectives at odds with one another, particularly when introducing a UI powerhouse like Apple into the living room. As I wrote a couple of weeks ago, if cable operators partner with Apple and its set-top, it will be akin to allowing the fox into the henhouse. We know how that story ended.

Lastly, as frequent flyers, both of us were excited to read about Delta's new in-flight VOD plans, and JetBlue's forthcoming high-speed WiFI rollout. We discuss implications briefly.

Listen in to learn more!


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Several weeks ago, after the WSJ reported that Apple was talking to cable operators about building a set-top box, I wrote in pretty absolute terms that I could not envision this coming to reality ("Apple to Make Cable Set-Top Boxes? Not. Going. To. Happen."). Given the shifting sands of the video landscape, I'm generally reluctant to argue so one-sidedly. But, as I wrote, with so many reasons for cable operators not to foolishly outsource living room innovation to Apple, I asserted that the odds of cable operators getting in bed with Apple were next to zero.

Well, three short weeks later, this morning Bloomberg wrote that Apple's set-top box dreams have gone essentially nowhere, buffeted by a laundry list of cable operator requirements and concerns. Among them: control over the user interface, whether the boxes should be sold direct to consumers or leased by the operator, concern by operators that a superior Apple set-top could undermine their multichannel business model, and access to content among others.

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I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 144th edition of the VideoNuze-TDG Report podcast. In this week's podcast Colin and I first discuss Google's recently-announced changes to how its search results are determined. Google will now factor in instances of copyright infringement to demote bad actors in its results. Colin sees the change as due to Google's interest in deepening relationships with Hollywood, where YouTube's business is increasingly pointing. However, there has been some dispute about just how much impact Google's change will have on results in YouTube.

Next up we discuss the idea of Apple building set-top boxes for the cable TV industry, which the WSJ wrote about yesterday. I add some further detail to my post ("Apple to Make Cable Set-Top Boxes? Not. Going. To. Happen.") which Colin mostly agrees with, however noting that Apple could add real value to cable's anemic VOD navigation. It's been fun to read all the coverage of the Apple-cable development; I'm clearly among the strongest skeptics. Perhaps I'm missing something big here, though I don't think so. Listen in to learn more!


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(as noted in the podcast, we were each using new microphones this week and Colin's audio setting is a little low; we'll adjust next week)

The Wall Street Journal's lead story this morning is that Apple is meeting with large U.S. cable operators about building an Apple set-top box that would deliver cable programming and other content. Typical of all rumors relating to Apple, no credible source is cited (just "people familiar with the matter") and an Apple spokesman declines to comment. My take on this? Barring cable industry executives taking complete leave of their senses, the likelihood of this actually happening is next to zero.

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Since Q2 '11, when the pay-TV industry lost video subscribers for the first time, there has been a debate raging over the impact of "cord-cutting." Flash forward a year, and anyone hoping for some clarity on this critical question would arguably be even more confused. Read certain media coverage of the pay-TV industry's Q2 '12 results and you'd conclude cord-cutting was gaining traction; read others and you'd conclude it wasn't. A key reason for the murkiness: somehow over the past year the definition of "cord-cutting" has become very squishy.

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I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 143rd edition of the VideoNuze-TDG Report podcast. In this week's podcast Colin and I discuss the prospects for Google Fiber, and specifically whether incumbent pay-TV operators and broadband ISPs should be "very, very afraid," as a report from industry analyst SNL Kagan asserted earlier this week.

Google's innovative spirit and willingness to spend heavily on Google Fiber is terrific, but as I said last week, I think its big challenge will be penetrating beyond a core early adopter audience. While uncapped gigabit broadband service is indeed compelling, more mainstream audiences will weigh its benefits against the costs of its missing features, being a guinea pig for an unproven service and increasing their monthly bills for TV and phone service, among other things.

In a sense, Google Fiber feels to me a little bit like Time Warner's Full Service Network pilot in Orlando in the mid-90's, with its high deployment costs, disruptive innovation, untested consumer premise equipment, lack of scalability and massive hype. That's not to say Google Fiber will end up like FSN as a complete flameout, but it's still not clear to me what the real impact of the project is going to be. I think incumbent operators need to be vigilant, but there's no real cause for fright, at least not yet anyway. Colin is a bit more bullish on Google Fiber, though I suspect that's because he's so enticed by the idea of a having a gigabit connection himself (being the early adopter that he is!).

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In the past 2 weeks, Netflix delivered tepid Q2 results and a cautious forecast, while Comcast reported strong broadband numbers and an improving video subscriber picture. That's a big reversal from a year ago, when Netflix was flying high and talk of cord-cutting hung over the entire pay-TV industry. So what might we learn from these 2 companies' experiences over the past year? Though I'm sure there are plenty of lessons, here are 4 that come to mind:

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I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 142nd edition of the VideoNuze-TDG Report podcast. In this week's podcast Colin and I first discuss NBC's Olympics video streaming. Despite some high profile criticism, we agree that NBC has actually done a pretty good job and has laid a foundation for live streaming to be an expected part of all Olympics coverage in the future.

Next we review Q2 '12 results from some of the largest pay-TV operators. Video subscriber losses continue, although Q2 is historically a soft quarter. Colin notes that recent TDG research shows the pay-TV value proposition is increasingly challenged and he believes that means higher churn is ahead, with bigger opportunities for OTT options.

Speaking of those options, Aereo announced new low-cost plans and both Colin and I agree that they're a clever way to reduce entry barriers and increase viewing flexibility. It's still early, but we like Aereo's odds of success.

Last up, we note the early demise of the Nexus Q media streaming device, a product that both us called a dud a couple of weeks ago.  

Listen in to learn more.

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Comcast reported strong 2nd quarter results this morning, adding another 156K broadband subscribers, while losing 176K video subscribers, an improvement over the 238K it lost in Q2 '11. It's the seventh straight quarter Comcast has improved its video subscriber losses, while driving the average monthly revenue per subscriber up another 8% to $148.57.

At the recent VideoNuze 2012 Online Video Advertising Summit, I did a fireside chat with Matt Strauss, Comcast's SVP, Digital and Emerging Platforms, who articulated Comcast's strategy for meeting consumers' ever-higher video expectations. Matt observed that "you have to envision a world where video will be everywhere." This seems to be the rallying theme for all of Comcast's recent video efforts. Matt describes how the company has reorganized itself to collapse traditional boundaries between linear, on-demand and online groups, including now having just one user experience team.

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There's a major breakthrough in the TV Everywhere landscape to report - Comcast is "auto-verifying" its Xfinity subscribers' access to NBC's online and mobile video streaming of the Summer Olympics. A Comcast spokesperson confirmed that this is the first time TV Everywhere content is being made available to its subscribers without them having to submit their user name and password credentials to gain access.

This is a real milestone as authentication has been widely viewed as a cumbersome process step for subscribers. That's because many people have not created user names and passwords with their pay-TV operator and/or can't remember them. In addition, authentication systems are not yet stable, often requiring repeated log-ins to the same app, and also across different apps (I've had to repeatedly log-in to every TV Everywhere app I've ever used). Exacerbating things, so much online video is freely available that the TV Everywhere login process feels intrusive for users accustomed to immediately being able to watch.

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One of the big side effects of the current Viacom-DirecTV and Dish-AMC carriage disputes has been a renewed questioning of the durability of the traditional multichannel TV bundle by many industry observers. But while outsiders and consumers may be looking for the pay-TV industry to reinvent the way it packages and prices its services,  attending the NECTA cable industry conference last Friday was yet another reminder of how committed the industry is to preserving the multichannel TV model.

To be fair, for many households (particularly heavy viewers), multichannel service is optimal and a great value. But consumers aren't monolithic, and it's time for the pay-TV industry to get real about multichannel's limits. Operators' main approach continues to be promoting an entry level tier of digital TV that has grown ever more expensive (moderator Bruce Leichtman pegs the mean monthly spending on multichannel TV service at $78.63, 7% higher than in 2011). This has, in turn, created a well-documented affordability issue for the industry.

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Comcast has been letting me test-drive its new "X1" platform on a second TV in my house for the last couple of weeks. X1, which was recently announced at the Cable Show, is the company's new state-of-the-art set-top box, built by Pace, that delivers video via traditional "QAM" technology along with apps and other content via web-standard IP technology. The latter allows X1 to create a richer, more web-like user experience.

X1's biggest leap forward vs. the traditional Comcast digital set-top (which I still have on my main TV) is its speed and responsiveness. X1 is amazingly fast, unlike any other pay-TV set-top I've ever used, and easily on a par - or better - than any web site or iPad/mobile app I've recently used (it actually feels faster than many web sites I visit given their increasingly bloated pages). X1 also blows away my Samsung connected Blu-ray player's abysmally slow performance.

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I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 137th edition of the VideoNuze-TDG Report podcast.

First up this week, Colin and I discuss this week's news that the Department of Justice is investigating whether cable TV companies are acting to suppress online video. As I wrote on Wednesday, it's good for the government to be vigilant, but for now anyway I don't believe online video providers or consumers are being impacted (rather I suggested if the DOJ wants to address a REAL way consumers are being harmed it should look into the multi-billion dollar per year subsidy non sports fans are forced to pay for expensive sports networks).

Colin disagrees with me. As he's stated in the past, he believes the use of "private networks" to deliver video traffic to connected devices that doesn't count against data caps creates preferred broadband lanes and are inappropriate (Colin believes Comcast is doing this with its recent plan to deliver video services to the Xbox).

Wrapping up, Colin shares observations from Cisco Live a big analyst event he attended earlier this week and I do some shameless plugging for next Tuesday's VideoNuze Online Video Advertising Summit.

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Peter Stern, Chief Strategy Officer of Time Warner Cable, the second-largest cable operator in the U.S., spent time with me at the recent Cable Show, explaining a concept guiding the company's content distribution strategy he calls the "4 Any's." This refers to any content, any device, any time and anywhere. In the interview, Peter discusses how TWC is executing against each of the 4 any's and why they're so important.

In particular, Peter notes that all 255 linear cable networks TWC carries are now available for streaming within subscriber homes to certain devices. Next up is layering on VOD and out-of-home access. Peter talks about the roles of TWC's app for aggregated viewing experiences vs. how "super-fans" will gravitate to the networks' own apps (e.g HBO GO, WatchESPN, etc.).

Beyond content distribution, Peter also describes the strategy behind "CableWiFi," a new roaming collaboration announced at the Cable Show among 5 cable operators, totaling 50K hotspots nationwide (note WiFi usage is uncapped, which TWC believes is a real differentiator relative to wireless services) as well as why business services is a growing part of TWC's services portfolio.  Watch the interview (7 minutes, 34 seconds).

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The WSJ has broken a big story this morning that the Department of Justice is apparently pursuing an antitrust investigation into whether cable TV companies are taking steps to limit the rise of online video usage. The DOJ is primarily looking into the role of data caps, the use of private networks for delivery of certain programming to connected devices, the use of TV Everywhere authentication, and even the model of most-favored nations clauses between cable TV networks and pay-TV distributors.

While it's generally a good thing for the government to keep an eye on how business is conducted (the recent financial crisis demonstrates what happens when it doesn't), to my mind none of these issues are really hurting consumers, yet anyway. Rather, if the government truly wanted to focus on an immediate, huge, and worsening consumer problem in the pay-TV business, it should be focused squarely on sports, and more specifically the multi-billion dollar annual subsidy that non-sports fans are required to pay due to current cable network bundling practices.

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If you've ever used video-on-demand from your pay-TV operator, you no doubt agree that trying to find and then navigate to what you'd like to watch feels like a Soviet-era experience. The problem is the set-top box's processing limitations have hamstrung pay-TV operators from delivering a more web-like VOD experience.

The company looking to change all that is ActiveVideo Networks, and yesterday it got a big boost as Comcast, the largest pay-TV operator in the U.S., licensed ActiveVideo's CloudTV H5 platform for a trial in its Chattanooga, TN market. If the trial goes well and Comcast rolls CloudTV H5 out nationally, the VOD experience is going to dramatically improve for millions of viewers, in turn making it more competitive with web-based OTT VOD providers.

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At the recent Cable Show, I had the great pleasure of doing a video interview with Craig Moffett, who is SVP and senior telecom, cable and satellite TV analyst at the investment firm Sanford Bernstein. Craig is likely the most widely-followed Wall Street analyst of the pay-TV industry - both video and broadband - and someone whose work I have long respected.

Craig generously spent almost 45 minutes sharing his views on practically every pressing industry issue. A key recurring theme: that the pay-TV industry is so "ossified" and inflexible that true innovation with TV can only come from outside the industry. I have split the interview into 2 video segments below. For anyone who wants to better understand where the pay-TV and online video industries are heading, and what the key drivers are, I highly recommend these.

In Part 1, we discuss:
- Pay-TV industry's overall health
- Why cable isn't really a video business, but rather an infrastructure business
- The truth about cord-cutting and cord-shaving
- What role online original programs will have with younger "cord-never" viewers
- Why young people already think of pay-TV as a luxury service and settle for "good enough" alternatives
- How expensive sports programming is driving pay-TV's affordability challenge
- What will happen with Aereo
- And more

In Part 2, we discuss:
- The role of usage-based pricing by broadband ISPs
- Why the threat of Netflix is far lower today than a year ago
- Nickelodeon's ratings problem and the role of Netflix in creating it
- Whether cable networks will cut back licensing to OTT operators
- What will happen with Dish Network's Auto Hop feature
- Why TV Everywhere will remain on a slow rollout
- What disruptive roles Google and Apple might play
- And more

Watch the video interview

If you watch TV programs via VOD from your pay-TV operator, then you've probably had one or both of two curious experiences I've had: either the same, untargeted ad plays repeatedly at the breaks, or no ad (and therefore no monetization for the content provider) plays at all. With over 600 million monthly VOD views occurring these days, the lack of dynamic, targeted ad insertion in VOD diminishes the user experience and leaves lots more money on the table.

There are multiple reasons to explain all of this, but one of the main ones is that there are very hard technology problems involved to solve it, as the pay-TV infrastructure (notably the set-top boxes) vary widely in their capabilities. Creating a platform that runs across pay-TV operators' different infrastructure, at scale, to enable advertising, has been a very tall mountain to climb. Now, after years of hard work and investment, BlackArrow, the company that decided to address the situation, looks like it has finally arrived at the summit.

In this interview at the recent Cable Show, BlackArrow's CEO Dean Denhart explains that the company now has agreements covering 30 million subscribers, with Comcast, Time Warner Cable and Rogers, which are all rolling it out. He walks me through a handful of slides that explain exactly how the BlackArrow system works and the progress programmers, advertisers and pay-TV operators are making. And importantly he discusses how the online video and on-demand TV worlds will converge over time. Watch the interview (15 minutes, 18 seconds)

Watch the interview

I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 134th edition of the VideoNuze Report podcast, for May 25, 2012. This week's topic: Comcast's new "X1" TV platform and experience. Yesterday I posted a video interview I did with Comcast's SVP, Digital and Emerging, Matt Strauss discussing details of X1, and today Colin and I get into the details of what it means for Comcast and for the larger TV industry and future landscape.

Two other quick notes related to prior podcast topics. On last week's podcast we discussed Dish Network's "Auto Hop" ad-skipper and the likely legal backlash from broadcast networks. Sure enough yesterday CBS, Fox and NBCU filed their lawsuits. And back in Feb. we discussed Aereo's disruptive potential. This week the company won a minor battle in its legal wrangling with broadcasters, while looking ahead to a big day in federal court next Wed.

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Comcast made a very big splash at the Cable Show this week, officially announcing "X1" a new web-like TV platform and user experience it has been developing for the past 2 years, along with "Dayview" a console for customers to manage all of their Comcast services.

In this video interview, Matt Strauss, Comcast's SVP, Digital and Emerging Platforms, explains the company's strategy behind these initiatives and why it believes in unification of experiences across devices (TV, online, mobile) is so important. X1 is a major step forward for Comcast as it provides a platform where product/feature cycles are dramatically accelerated from the traditionally cumbersome process of dealing with set-top boxes. X1 is scheduled for release in the Boston area shortly, with a nationwide rollout to follow. As you'll see in the demos, the experience is quite slick and sets a new standard for pay-TV operators.

In the wide-ranging interview, we also discuss how TV Everywhere rollouts are progressing (and the key challenges that persist), Comcast's new C3 measurement project for tablets with Nielsen, how Comcast views the role of programmers' own apps (e.g. HBO GO, WatchESPN) vs. its own XfinityTV app and how it decides which connected devices to support, among other topics. Watch the interview and demo (17 minutes, 22 seconds).

Watch the interview and demo