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Clearleap and Roku Partner, Blurring Traditional Video Distribution Boundaries
Clearleap, a web-based TV technology platform, and Roku, maker of the popular digital video player, are announcing a partnership this morning that blurs the boundaries between traditional and broadband-centric video
distribution. The partnership enables incumbent Pay-TV providers to deliver premium content, including their own video-on-demand (VOD) libraries, plus supplemental online video, to their customers via Roku boxes. As a result, instead of Roku being thought of as one of the "over-the-top" disruptors of the existing video ecosystem, the Clearleap deal will help it - and other connected devices to follow - potentially find a role working with Pay-TV providers to extend their services.
For industry analysts like me, the deal is a bit of a mind-bender; when I got a sneak preview of the implementation at the Cable Show in LA last month I had to ask more than once about the context and motivations of the parties involved. I refreshed my understanding earlier this week in phone calls with Braxton Jarratt, Clearleap's CEO and co-founder, and Jim Funk, Roku's VP of Business Development.
Braxton explained that several of Clearleap's cable operator customers have acknowledged the expanding role of online video viewership (e.g. Netflix, YouTube, Amazon, MLB, etc.) via connected devices and are growing concerned that they pose a double negative: diminishing the importance of operators' own video services while also generating additional network traffic, but no incremental revenue upside (assuming the broadband user stays beneath their data cap and doesn't need to upgrade their service tier).
Categories: Cable TV Operators, Devices, Partnerships, Video On Demand
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VideoNuze Report Podcast #65 - June 18, 2010
Daisy Whitney and I are pleased to present the 65th edition of the VideoNuze Report podcast, for June 18, 2010.
This week Daisy and I return to the topic of cord-cutting, with Daisy tamping down some of what she reported about possible momentum here. Daisy cites new research from Nielsen and from Leichtman Research Group as evidence that in fact cord-cutting isn't actually happening (at least not yet). For my part, as I've said going back to my post in Oct, '08, I don't see much cord-cutting happening any time soon, both because viewers would lose cable TV network programs they love and because it's still not mainstream to connect broadband to TVs.
We then discuss my post early this week about ABC doubling the ad load on its iPad app, and soon on ABC.com as well. As I said earlier this week, it's tough from a consumer standpoint to see more ads, but the reality is these programs need to be effectively monetized, or well, these programs will cease to exist.
Click here to listen to the podcast (15 minutes, 29 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Broadcasters, Cable TV Operators, Podcasts
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Rogers Pushes TV Everywhere; Where's Everyone Else?
A piece in Light Reading this week noted that Rogers, the largest cable operator in Canada, now has approximately 100,000 of its subscribers registered for its TV Everywhere service, and is on track for getting a few hundred thousand out of its total 2.3 million subscribers using it by the end of the year.
The success at Rogers raises the question of where things stand with TV Everywhere in the U.S. Recently Comcast's Amy Banse told me a million people are regularly accessing its Fancast Xfinity TV service, but she declined to provide any further details. I just read yesterday in B&C that Time Warner Cable has "a small number of subscribers" in a trial in New York.
I've been bullish on TV Everywhere from the start, but have noted repeatedly that execution is key. The world is moving fast toward convergence, and incumbent video service providers need to prove that they can innovate and roll out these new services. Whether it's Netflix, Google TV or others, there are plenty of people outside the ecosystem that want a piece of the action.
What do you think? Post a comment now (no sign-in required).Categories: Cable TV Operators
Topics: Comcast, Rogers, Time Warner Cable, TV Everywhere
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Hollywood Considers Squeezing Theatrical Window
An article in the WSJ.com this past weekend, "Hollywood Eyes Shortcut to TV," describes how some Hollywood studios' appear ready to further squeeze their bread-and-butter theatrical relationships in the name of accelerated electronic distribution to viewers' TVs.
The article cites proposals that Time Warner Cable, America's 2nd largest cable operator, is discussing with studios to offer movies to Video-on-Demand (VOD) just 1 month after they open in theaters, instead of today's typical 4 months. The idea, dubbed "home theater on demand" ("HTOD" for short) would mean a movie would be available on HTOD while still playing in theaters. Adopting such an approach would be akin to Hollywood sticking its finger in the eye of its theatrical partners, who would obviously suffer some degree of diminished ticket sales.
Hollywood studios surely know the firestorm an HTOD move would create. In the past 6 months, plans to overlap theatrical and electronic distribution - with Disney's "Alice in Wonderland" and Sony's "Cloudy With a Chance of Meatballs" - met with stiff resistance from theater owners. With the new HTOD concept, studios seem intent on pushing further into this perilous territory, motivated by a desire to get movies into viewers' hands earlier than ever before.
In general I applaud studios willingness to experiment, but I think the value of HTOD and other early release plans is overestimated and more likely to backfire on studios than produce any tangible financial benefits.
The first issue is cannibalization. It's hard to imagine, given all the marketing effort around a movie's premiere, that the aggregate short-term audience for a particular movie can be expanded all that much. Certainly few people who just paid to see the movie in the theater will pay again to see it at home so quickly thereafter. And if you really wanted to see a movie, wouldn't you have made it to the theater in the first place?
Instead of tempting people to not bother going out, studios should be giving consumers more reasons to actually do so. Studios have so many new opportunities with social media, local-based services and user-generated content to add excitement to movie premieres. This is particularly true for younger audiences critical to box office results. Some of these new efforts can extend all the way through a movie's DVD and electronic release, adding downstream value as well.
In addition, even with movie ticket prices now approaching or hitting $20 apiece, in my opinion, HTOD's proposed fee of $20-30 is way too high. Most VOD movies today cost around $5-6; trying to justify a multiple of that price for HTOD, for the sole benefit of earlier in-home access, is a huge stretch. In reality, consumers seem plenty willing to wait in exchange for lower prices. That's the key takeaway from Netflix's willingness to do the 28-day DVD window deals with major studios. If a consumer can pay a paltry $9/mo they'll be just fine waiting until the movie becomes available on DVD or for streaming. Hollywood needs to be careful not to overestimate the value of its product.
Last but not least, HTOD is a risky play because cable-delivered VOD itself is going to be coming under intensifying competition. Recently I explained how competition for movie rentals is intensifying, making VOD just one of many, many choices for consumers. Initiatives like Google TV undermine VOD because when a consumer can just as easily access movies from various online outlets directly on their TVs, VOD usage will inevitably suffer. Though I'm skeptical about new efforts from retailers like Wal-Mart and Best Buy, they will add more on-demand movie choices and will further turn up the pressure on VOD.
Electronic distribution is a hot topic these days, and studios are right to explore their options. But while studios' relationships with theater owners are far from optimal, in my opinion studios need to be very careful about jeopardizing them further. Rather than undermining theatrical release with ever-earlier electronic distribution plans, studios should be figuring out how to build more value into them.
(Note - if you want to learn more about how Hollywood succeeds in the digital distribution era, make sure to join us for the upcoming VideoSchmooze breakfast in Beverly Hills on June 15th! Click here to learn more and register for the early bird discount)
What do you think? Post a comment now (no sign-in required).Categories: Cable TV Operators, FIlms, Studios, Video On Demand
Topics: Disney, Netflix, Sony, Time Warner Cable
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Comcast's Amy Banse Provides an Update on TV Everywhere Rollout
While at the Cable Show early this week, I had a chance to sit down with Amy Banse, President of Comcast Interactive Media, which is driving the rollout of Fancast Xfinity TV - what Comcast calls its TV Everywhere service. After a lot of PR build-up last fall, Comcast officially launched FXTV (my shorthand) last December. As a Comcast triple-play customer myself, I was able to give it a try, and I thought the initial effort was respectable, even though the content selection was limited.
Flash forward 5 months and curiously, Comcast hasn't said a peep about how things are going with the FXTV rollout. Amy explained that with the NBCU deal's approval process underway, the company has chosen to maintain a relatively low profile on FXTV, something she hopes will change in early fall. Amy said about 1 million people are accessing FXTV regularly, with engagement time a lot higher than with the open Fancast portal. Subscribers to premium channels like HBO are the heaviest users and like FXTV the most. Primarily people use FXTV to catch up on missed episodes and past seasons.
Still, Amy noted that the authentication process needs to be improved substantially, reducing the number of steps from its current 8-10 (though I have to say, I just authenticated on my new Mac and it really wasn't that painful). Amy's eager to introduce a universal ID approach, so users don't need to scramble to remember their Comcast login information. And the company is working on getting more content; the key issues to doing so are proving in authentication, building trust with content partners and enabling measurement.
I was an early fan of the TV Everywhere approach and believe it is key to blunting cord-cutting's appeal. I recognize that nothing ever happens as fast as you'd like it to, but Comcast - and other operators - need to hustle more on rolling out TV Everywhere initiatives. As I noted recently, Netflix is banging it out of the park, gaining more mind-share and disruptive potential. They're just one of many new competitors the industry needs to worry about.
What do you think? Post a comment now (no sign-in required).
Categories: Cable TV Operators
Topics: Comcast, Fancast Xfinity TV, TV Everywhere
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VideoNuze Report Podcast #61 - May 14, 2010
Daisy Whitney and I are pleased to present the 61st edition of the VideoNuze Report podcast, for May 14, 2010.
In today's podcast Daisy and I share observations from the Cable Show in LA, where we both were this week. Daisy reports on a panel she moderated that focused on social media and how companies need to develop policies to make sure all company representatives work consistently. We also talk about 3D, TV Everywhere and the new Comcast iPad prototype app I wrote about yesterday, and what it might signal for the cable industry going forward. Listen in to learn more.
Click here to listen to the podcast (14 minutes, 28 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Cable TV Operators, Podcasts
Topics: Cable Show, Comcast, iPad, Podcast
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Comcast's New iPad App is Full of Surprises
Here's something to get your head around: yesterday at the Cable Show, Comcast CEO Brian Roberts did a short demo of a Comcast Xfinity "remote control" prototype app for the iPad, video of which is available on YouTube. I'll get to the app in a minute, but first, if you're a long-time cable industry watcher like me, you'll immediately be struck by several surprising things:
First - when (if ever?!) did you see a cable CEO do a hands-on product demo? Sure, they'll periodically narrate a demo of something, but actually navigating through the experience themselves, a la Steve Jobs? Not in my memory. While Roberts doesn't exude the gusto that Jobs does for his products, the CEO touch is still very meaningful (Jobs's personal touch is arguably what makes Apple so special, turning its product introductions into genuine events). And credit to Roberts - he executes the demo admirably, with no errant moves.
Second - speaking of Apple, a cable CEO demo'ing an unaffiliated third-party's device? And that third party happens to be Apple, which is tacitly sworn to disrupting the cable industry's hegemony over the video ecosystem? Going a step further, Roberts highlights the iPad's virtual keyboard, which allows title-by-tile searching, as addressing "the missing link" with existing set-top boxes (later Roberts says "this liberates us from the cable box"). The iPad's pixie dust knows no bounds!
And third - the irony that the video of the demo is available on YouTube (see below). YouTube! Not Comcast's Fancast portal nor in its VOD menu. Think about it - not long ago YouTube was derided as a copyright infringing haven and collection of user-generated schlock. Now, when the CEO of America's largest cable operator wants to get the word out beyond the audience at the Cable Show about its sexy new iPad app, the vehicle is YouTube. My how the world changes.
Meanwhile, the app itself, which "pairs the iPad to Comcast's set-top box" using EBIF (Enhanced TV Binary Exchange Format, the cable industry's spec for delivery interactive app to set-top boxes), allows the user to navigate through the full channel lineup and zero in on categories like sports and movies, and also drill down on specific shows and VOD selections. When a show is chosen to watch, voila, the app changes the set-top's channel, just like an over-sized remote control. You can also choose to record if you prefer. Lastly, in a nod to social viewing, Roberts shows how he can invite a friend to view the same program. The friend receives a notice on his iPad and with one touch, can tune in as well. Comcast sees lots of upside in the iPad app, with users eventually able to view the programs themselves right on the iPad. The app is both surprising and neat.
The logical question to ask is why is Comcast relying on Apple's latest innovation in order to deliver some of its own innovation? I mean, Apple had nothing to do with video until a few years ago, and arguably is still a nascent player in the space, while Comcast is the largest cable operator in the land. If it wanted to deliver a tricked-out remote control years ago, why didn't it?
There are many different ways to answer the question, but I think it boils down to 2 things: first, while most cable companies have invested heavily in behind-the-scenes infrastructure to deliver broadband and other advanced TV services, relatively few new on-screen services have been created because cable is largely a closed environment for application developers. Cable has been closed because cable operators have it in their DNA to be focused on control of what goes into their subscribers' homes. Letting "a thousand flowers bloom" is not in the average cable executive's mindset.
Second, and as a byproduct of this, most developers have ignored the cable environment. While Apple's App Store boasts of hundreds of thousands of innovative apps, the cable world has lumbered to deliver a tiny fraction of this amount, and at a glacial pace. It's not for lack of interest by developers; going back to the mid-90s there has been interest in interactive apps. But between the technology impediments and the cart-before-the horse negotiations over revenue splitting that cable operators inevitably get into, most developers have simply moved on to the open, flexible Internet. That's been a huge missed opportunity for cable, which could have been an intensely appealing platform for interactivity. Instead the door has been opened wide for others like Apple and Google to rush in.
All of this makes the iPad app from Comcast look like an important, yet admittedly small step forward. It's just one prototype, from just one operator, but it should be a strong signal to the cable community to embrace the technology advances happening all around them, to deliver innovation to their customers. That's what winners like Apple and Facebook are doing, and that's what cable must do as well.
What do you think? Post a comment now (no sign-in required).
Categories: Cable TV Operators, Devices
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Comcast's Roberts: "We Didn't Pick Up on Content Early Enough"
At the Cable Show in LA, Comcast CEO Brian Roberts conceded that Comcast "did not pick up on content early enough and that it is starting later than it should have." He said that Comcast missed opportunities early on - for example with Discovery to play a larger role in content, but noted that it's been working hard to catch up since. His remarks came in a one-on-one discussion with Peter Chernin, former head of News Corp.
Prior to the session Roberts did a short update on Comcast's VOD efforts, disclosing that to date it has delivered 15 billion views, with 350 million new views per month. The average VOD user accesses 20-25 times per month with TV series and kids programming the most popular genres. Comcast offered 100 day-and-date movies last year, compared to just 13 in 2007; in Q1 '10 it already had more than 60. Day-and-date releases on cable are a key strategy for Hollywood studios looking to buttress falling DVD sales and increase margins on digital delivery.
Regarding the pending NBCU acquisition, Roberts said that there are "No plans to Comcast-ize NBCU, particularly because there isn't just one culture at Comcast anyway, with each brand having its own culture." Chernin pressed Roberts to explain how editorial control will work when Comcast owns NBCU. Chernin wondered what Comcast would do in the instance of another controversial film being made like Martin Scorsese's "The Passion of Christ" or when MSNBC host Keith Olbermann blasts the same Republican senators that Comcast might also be courting on any number of regulatory-related matters. After joking resolving these issues is (Comcast COO) Steve Burke's role, Roberts said that since the company's early days in cable it has had to balance the fact that it doesn't agree with everything it distributes, and tries to offer flexibility to customers to opt-out or block certain channels. He resisted getting any more specific, saying the company will find its way after the deal closes.
Chernin also noted that with NBCU, the company will effectively find itself on both sides of the negotiating table when it comes to rates, and wondered how Comcast will decide "what's fair?" Roberts pointed out that there are lots of other players in the market who will contribute to answering the question, so it's by no means Comcast's alone to address. On the topic of content's value, Roberts sees multiple new distributors emerging, which should serve to increase content's value in the future.
Lastly, related to the FCC's net neutrality efforts, Roberts says he doesn't believe the government is "trying to turn the clock back" on cable, saying its actions are "a worry, but not a big worry."
Categories: Broadcasters, Cable TV Operators
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ActiveVideo Lights Up 2 Dozen Interactive Channels for Cablevision
Cablevision, the 5th largest cable operator in the US and dominant provider in the NYC metro area, and ActiveVideo Networks, provider of "CloudTV" interactive solutions are announcing this morning that Cablevision is now delivering over 2 dozen interactive channels to its entire digital video subscriber base. The offerings include hyper-local sports and news, advertising showcases and "Quick View" mosaic navigational channels. Plans are to roll out additional channels.
For those not familiar with ActiveVideo Networks, its focus is enabling video service providers to bridge web-based content, including video, directly to the TV. ActiveVideo provides a content developer's kit (CDK) set of set of
standards-based tools (Javascript, XHTML/DHTML) so customers can develop web-based content and deliver it to a digital set-top box as an MPEG stream. The CDK allows much faster development cycles plus lots of flexibility. As the name implies, content is delivered from the cloud, with a thin client in the digital set-top box.
All of this is important because as convergence devices (e.g. game consoles, TiVo, Roku, Blu-ray devices, boxee, etc.) consumers' expectations are growing that they'll be able to get web content on their TVs. That's turning up the heat on service providers to make the TV experience more interactive and engaging. Whereas "TV Everywhere" initiatives are about bringing TV content online, convergence efforts are about bringing web content to the TV, complete with interactivity and constant updates. Games are another important application and just last week ActiveVideo acquired TAG Networks, a gaming platform that will allow service providers to deliver casual games through their set-top boxes.
I've seen various ActiveVideo implementations and they are remarkably web-like and responsive. The interface is similar to what you experience online. And using your remote control you're able to quickly navigate around. I expect that as the pressure mounts on incumbent service providers to deliver more web-like content to TVs, but with minimal client or network upgrades, the addition of CloudTV services will make more and more sense.
What do you think? Post a comment now (no sign-in required).
(Note - ActiveVideo Networks is a VideoNuze sponsor)Categories: Cable TV Operators, Technology
Topics: ActiveVideo Networks, Cablevision
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Cable Affiliate Fees Matter. A Lot.
Over the past week or so, several people have forwarded me a post that Bill Gurley, partner at the Silicon Valley venture capital firm Benchmark Capital recently wrote titled, "When It Comes to Television Content, Affiliate Fees Make the World Go 'Round," in which he correctly observes that "over-the-top" disruption of cable/satellite/telco delivery of premium TV programming isn't going to happen very quickly due to the importance of affiliate fees. His main argument - that cable networks receive $32 billion in annual affiliate fees from cable/satellite/telco distributors that they are loath to jeopardize - is right on the money (no pun).
This of course has been the central reason that cable, as opposed to broadcast, programs have been scarcely available online. I've argued the same point for a while now, going back to "The Cable Industry Closes Ranks" in which I tried to explain how the cable industry works and why it would fight tooth and nail against disruption. Gurley further notes how TV Everywhere cleverly defends the industry against free distribution, which I agree with as well.
While there's plenty of media hype around the prospect of "cord-cutting," it's essential to understand the business dynamics in play and what impact they'll have in slowing this trend. It's rare to see a Silicon Valley VC take such a sober approach to potential disruption (because funding exciting tech start-ups is largely about funding disruption after all), so I thought Gurley's post was both refreshing and worth the read.
What do you think? Post a comment now (no sign-in required).Categories: Cable Networks, Cable TV Operators
Topics: Benchmark Capital
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Comcast and Netflix in the Context of Cord-Cutting
There's likely no hotter debate in the online video world right now than how big "cord-cutting" - the concept of consumers dropping their pay TV service in favor of online-only options - might be in the future. To the extent that cord-cutting or "cord-shaving" trends develop (and despite some recent research findings, these are still highly uncertain), no company is in a better position to both drive and benefit from them than Netflix.
Netflix cannot be considered a pure substitute for today's pay TV services for many reasons, primarily because there's no live or sports programming, and also because it offers just a fraction of what's available on TV. However, Netflix can be
considered a key building block for consumers motivated to cobble together multiple sources to meet their video needs (for example, viewers can augment Netflix with Hulu/YouTube, over the air antenna, iTunes/Amazon downloads, out-of-home viewing, etc.). This is the more likely scenario for would-be cord-cutters than a one-for-one replacement of current pay TV services.
If cord-cutting or cord-shaving did take off, then Comcast, with the largest number of video subscribers of any pay TV provider, would likely be hurt the most (though as the largest broadband ISP, it could actually benefit on that side of its business as users upgrade for more bandwidth).
In this context, and with both companies reporting their Q1 '10 earnings in the past week, it's interesting to look at their performance to consider what to expect going forward.
The natural place to start the comparison is purely the number of video subscribers each company has. Netflix has been on a tear, more than doubling the number of its paying subscribers from just under 7 million in Q1 '07 to just under 14 million in Q1 '10. The biggest chunk of that growth has come in the last 2 quarters alone, when Netflix has added 2.9 million subscribers. Conversely, in that same 3 year time period, Comcast has lost approximately 1.5 million video subscribers to end Q1 '10 at 23.5 million. At the current rates, Netflix could have approximately as many subscribers as Comcast by end of next year.
However, the companies' subscribers are very different. On the one hand, Netflix is seeing its strongest growth in its least expensive $8.99/mo tier, which is a compelling value since it also allows unlimited streaming. Netflix is using this tier to entice many new subscribers and also to defend itself against $1 DVD rental competition from Redbox. As a result its average revenue per subscriber is declining. On the other hand, Comcast has been steadily increasing the penetration of additional services its subscribers take, primarily through "triple play" bundling of video with voice and broadband Internet access. This is reflected in the growth of its average revenue per video subscriber from $107.20 in Q1 '08 to almost $123 in Q1 '10. This, plus other lines of business like advertising, business services and its own programming networks contributes to Comcast generating $9.2 billion in revenue in Q1 '10 compared with Netflix's $494 million.
The flip side of Comcast's drive to increase its ARPU is that it potentially opens up higher cord-cutting interest. Some subscribers who open their
billing statements to see a monthly tab in the $200 or more range when premium channels, DVRs, additional set-top boxes, VOD purchases and the like are all added up are inevitably going to get "sticker shock" and start asking the question how much value do they get from their cable subscription? While the cable industry has always made a strong argument that the sheer volume of programming available each month makes it a great subscription value, my sense is that with the massive number of alternative viewing options consumers are now accessing, it's not pure volume that matters, but rather actual cable use, in particular relative to other options.
For example, consider a home with a couple of teenagers who rarely watch live TV any more and instead spend a lot of their free time on Facebook, YouTube, Hulu, etc. Say Dad is only a light sports fan and doesn't consider ESPN or Fox Sports essential, and has long since moved the bulk of his news consumption to online sources. He loves Jon Stewart, but is content to catch his jokes online the next day when he has a few minutes of downtime at work. He also loves some of the broadcast network shows, but can watch them sporadically on Hulu. Mom is into the shows on HBO, plus some favorites on ad-supported cable channels like USA, Bravo and Food Network. Still, she's been having less time lately to actually watch these recently and has also started to gravitate to back seasons that are now available on Netflix. Since the family's Nintendo/Blu-ray player/Roku allows streaming to the TV, it's as simple as cable to use. Net it all out and the family's cable usage has declined markedly in the last couple of years.
Does this example sound familiar to you? I believe this is the kind of situation where cord-cutting or cord-shaving starts to gain some interest. Families faced with the real opportunity to save a few bucks each month, though with clearly reduced program options and convenience, will have decisions to make in the coming years. How they make them and how Comcast, Netflix and others react will have huge implications on their performance.
What do you think? Post a comment now (no sign-in required).
Categories: Aggregators, Cable TV Operators
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NDS Leads $20 Million Investment in BlackArrow for Advanced Advertising
Amid all the coverage that online video advertising receives, it's also important to remember that advanced advertising in on-demand and pre-recorded TV continues to evolve. News today that NDS, one of the largest technology providers to multichannel video programming distributors
("MVPDs") is leading a $20 million Series C round in BlackArrow, a provider of advanced advertising solutions, is a reminder of progress. Last week I spoke to Todd Narwid, VP of New Media for NDS and Dean Denhart, BlackArrow's CEO, to learn more about the deal.
To put the deal and its upside in context, it's important to first understand there's a big difference between how online video advertising against free streams in the open Internet works vs. how advertising against VOD and DVR programs in paid, subscription-based services run by MVPDs works. In the Internet world, there are pretty well-established standards, allowing significant interoperability among sites and ad servers. While measurement challenges persist, the act of getting video ads inserted where they're supposed to be is now pretty straightforward.
Conversely, in the MVPD world, the first challenge is just getting ad serving systems approved and deployed. Because ads are served from within the MVPD's own infrastructure, new ad servers must be tested and integrated with existing video delivery infrastructure residing in distribution centers often called "headends" in the cable world. Unlike MVPDs' broadband deployments, much of MVPDs' TV delivery architecture pre-dates the Internet and therefore is heterogeneous and often difficult to integrate with. In addition, there are the tens of millions of deployed set-top boxes which also differ in their capabilities and openness. MVPDs have made significant progress in creating their own standards and in deploying advanced services, but as anyone who's ever tried to implement any kind of advanced service in the MVPD world can attest, it's hard work and has ground down many promising technology start-ups.
When I first wrote about BlackArrow, on its launch in Oct, '07, I liked its vision of delivering advanced advertising in VOD and DVR programs, but I noted the above challenges gave it a steep hill to climb. Since then, BlackArrow has made progress, deploying with Comcast in Jacksonville, FL and with other operators (though Dean isn't able to mention them due to MVPD restrictions). Still, MVPDs have so many priorities and their resources for testing and integrating new technology are limited. Further, there's a lingering sentiment that MVPDs have only made a half-hearted attempt to really monetize VOD and DVR.
Given these circumstance, the NDS deal appears to offer BlackArrow a lot of
upside. As one of the largest technology providers to MVPDs globally ("conditional access" systems that provide secure MVPD video delivery are its main product line, among others), NDS immediately gives BlackArrow both credibility and significantly improved sales and support reach, particularly outside North America. The companies also announced a joint solution offering, which will be key to realizing actual sales Importantly, NDS gives BlackArrow improved financial footing for what promises to be a very long-term process of deploying advanced advertising by MVPDs. Conversely, for NDS, as Todd explained, BlackArrow provides the monetization piece of the puzzle that MVPDs need to create business cases to help them justify NDS's advanced technology delivery systems.
For MVPDs, who are witnessing the rapid adoption of online video and the threat of cord-cutting down the road, it is essential to be able to offer subscribers more flexible viewing options like VOD and DVR and to give their content partners opportunities to effectively monetize these views. This has been the Achilles heel of VOD and DVR to date, and the scarcity of ad-supported programs in VOD (particularly relative to what's available online) is a direct reflection of this.
Going forward, the challenge for MVPDs will only intensify as content providers face escalating choices about where to optimally monetize their programming. This is where BlackArrow fits in. Plus the company has always had a multi-platform vision, so once it's enabled for TV and DVR, BlackArrow could also provide a pathway to online monetization, which given MVPDs' TV Everywhere initiatives, is also a growing priority.
What do you think? Post a comment now (no sign-in required).
Categories: Advertising, Cable TV Operators, Deals & Financings, DVR, Satellite, Technology, Telcos, Video On Demand
Topics: BlackArrow, Comcast, NDS
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Is "Cord-Cutting" a Big Deal or Not?
"Cord-cutting," the idea of disconnecting your cable/satellite/telco video subscription service in favor of online viewing only, got renewed attention this week as new research from a Canadian firm named Convergence Consulting Group said that 800,000 U.S. households have unplugged in the last 2 years. Though that number is a teeny-tiny fraction of the population that still takes subscription TV, the question begs, is this an early indicator of rampant cord-cutting to follow, or a blip that's unlikely to get that much bigger over time?
Back in the fall of '08 I asserted that for most people cord-cutting isn't going to be happening any time soon for 2 key reasons. First, that it's still relatively hard for most mainstream users to connect broadband to their TVs, which is an essential ingredient to long-form viewing. There's no question that this has gotten easier since, and will only get easier still. Eventually broadband to the TV will be ubiquitous. But until it is, cord-cutting raises technical and comfort challenges most people don't want to confront.
The bigger obstacle to cord-cutting is the loss of cable-only programming that isn't available for free online. Back in '08 the concept of TV Everywhere wasn't yet around. Now that it's beginning to rollout (albeit painfully slowly), it's evident that the cable ecosystem is determined to see cable programming remain accessible only to those who maintain a paid subscription.
My take is that cable programming is the key firewall against cord-cutting. For some, losing cable programs won't matter. But my guess is that for most, losing their favorite cable programs by cutting the cord will be a non-starter. As Conan's move this week to TBS illustrates, increasingly the most distinctive shows are on cable. And note the "firewall within the firewall" is marquee sports programming on channels like ESPN, TNT and Fox Sports, which isn't going online for free ever. This precludes virtually all true sports fans from cord-cutting.
Net-net, the debate about cord-cutting's potential needs to focus on how much value audiences place on their favorite cable programs. If it's a lot, then little cord-cutting will ensue; if it's a little - and there are suitable free online substitutes - then we'll see lots more cord-cutting.
(Note - all of this is fodder for our VideoSchmooze panel discussion on April 26th "Money Talks - Is Online Video Shifting to the Paid Model?" Early bird discounted registration expires today!)
What do you think? Post a comment now (no sign-in required).Categories: Cable Networks, Cable TV Operators
Topics: Convergence Consulting Group
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VideoNuze Report Podcast #54 - March 26, 2010
Daisy Whitney and I are pleased to present the 54th edition of the VideoNuze Report podcast, for March 26, 2010.
This week Daisy starts us off by reviewing new research on the iPad's appeal as an ebook reader. Daisy also reviews sobering forecasts suggesting that the iPad is unlikely to change people's willingness to pay for content (regarding video specifically, Daisy and I agreed a while back that for now its impact for video specifically is likely to negligible). I'm not convinced the iPad will trigger a wave of people willing to pay for content, but I do believe any iPad research is still very preliminary. It's only when users get their hands on the device that we'll really start to learn how impactful it is. The iPad is of already available for pre-order and is set to debut in stores late next week.
We then shift topics and discuss my post from earlier this week, "Here's How Google TV Will Work - And What It Might Mean," in which I described Google's new set-top box and the company's strategy for entering the market. Google's move is likely to set off a fascinating negotiating dynamic with incumbent video service providers, and Daisy and I get into some more of the details.
(Note, Daisy's mic isn't working that well on this podcast, so please be patient)
Click here to listen to the podcast (14 minutes, 13 seconds)
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Categories: Cable TV Operators, Devices, Podcasts
Topics: Amazon, Apple, Google, iPad, Podcast
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Here's How Google TV Will Work - And What It Might Mean
Last week, the NY Times shared some details of "Google TV," the new set-top box Google is developing in partnership with Intel and Sony. The article provided a good outline, and now, based on additional information I've gathered, I'm able to provide new details on the box and also explain what it might mean.
The first and most important thing to know about Google TV is that it is not being positioned to induce users to "cut the cord" on their subscriptions to
existing multichannel video programming distributors' ("MVPDs" like cable, satellite or telco) services. Or at least that's Google's initial positioning; whether it's genuine or really just a Trojan Horse game plan is another whole matter. For now anyway, Google is taking a "friend of the industry" approach, telling MVPDs that it's briefing that it is looking to complement their businesses by bringing the full Internet to the TV (this follows the same convergence theme as the new Kylo browser).
Google is contemplating an entirely novel strategy for its set-top box, seeking to insert it alongside the existing MVPD's set-top box by daisy chaining them together via HDMI connections. In other words, the MVPD's set-top's HDMI output would be connected to the Google TV set-top's HDMI input, and then its HDMI output would be connected to the TV. The authorized TV channels would still be delivered, but Google TV would collect data from the MVPD's set-top and introduce an entirely new UI for users to control their TV experience, to include searching and browsing channels. It would also add a host of new interactive web-type capabilities around the content.
Since the Google TV box would have a full browser and connect to the Internet via the user's WiFi or wired access, it would also bring all of the rest of the Internet to the TV as well, including the full breadth of online video (yes, that would mean one more thing for Hulu to block). My understanding is that on the whole, the Google TV experience is extremely impressive and well conceived. In short, it will get the attention of any MVPD executive who has a look at it and will certainly get them to thinking about how able - or unable - they are to deliver a similar experience themselves to their subscribers.
A key reason that Google is planning to insert its box this way is because it believes that in order to deliver a compelling Internet experience on TV requires a new web-based, and open platform. For Google that of course means Android, which it is vigorously proliferating on smartphones as well. Throw in Google's Chrome browser that it is promoting for online usage and you get a glimpse of how Google's multi-platform strategy comes together. While Sony would be making the box, you have to believe it will have Google branding on it, a first for the company in the living room too.
Categories: Cable TV Operators, Devices, Satellite, Telcos
Topics: Comcast, DISH Network, Google, Google TV, Intel, Sony
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VideoNuze Report Podcast #53 - March 19, 2010
Daisy Whitney and I are pleased to present the 53rd edition of the VideoNuze Report podcast, for March 19, 2010.
This week Daisy and I dig into my post from this past Wednesday, "The Battle Over Movie Rentals is Intensifying" in which I described a new $30 million ad campaign that launched this week to promote consumer awareness of movies accessible through cable TV operators' Video-on-Demand (VOD) initiatives. The campaign is being funded by 8 Hollywood studios and 8 cable operators and will run for the next 12 weeks.
In the post I noted how the so-called "day-and-date" availability of movies on VOD (simultaneous with their DVD release), plus the consumer convenience of immediate viewing on the TV, are key VOD differentiators. In today's podcast Daisy and I explore how compelling these differentiators actually are, and how other options such as Netflix, Amazon and iTunes compare. After trying to explain the nuances a bit further, Daisy's reaction was that this stuff is so confusing that "her head is swimming."
Daisy's hardly an amateur, so if that's her reaction, one can easily imagine how many consumers will react as well, as they are bombarded with movie rental offers. Trying to figure out what movie viewing option(s) best meet their needs is going to take some work. But hey, nobody ever said that having a lot of choices is necessarily a lot of fun! Listen in to learn more.
Click here to listen to the podcast (14 minutes, 45 seconds)
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Categories: Cable TV Operators, Podcasts, Video On Demand
Topics: Podcast, Video-on-Demand
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The Battle Over Movie Rentals is Intensifying
News this morning of a $30 million advertising campaign being launched by 8 Hollywood studios and 8 cable operators promoting "Movies on Demand" is fresh evidence that the battle over movie rentals is intensifying. According to the press release, the 12-week campaign, dubbed "The Video Store Just Moved In" is meant to raise consumer awareness of the convenience and affordability of renting movies on cable.
Cable Video-on-Demand (VOD) has been around for a long while (in fact 20 years ago my summer internship for Continental Cablevision was studying the ROIs for VOD's precursor, "Pay-per-view"). What's new more recently is the growth of so-called "day-and-date" availability - which means movies are released to VOD at the same time as they become available on DVD. The other recent phenomenon is the widespread adoption of digital set-top boxes and other technologies which makes selection, ordering and delivery easier than ever.
Day-and-date availability is a key competitive differentiator for cable vs. other options, though on the surface it seems somewhat incongruous that studios are on board with this considering their desire to protect DVD sales (this was the key goal of the 28-day "DVD sale" window Netflix and Warner Bros. recently created). Yet Kevin Tsujihara, president of Warner Bros. Home Entertainment Group said that apparently research has shown that simultaneous VOD release doesn't hurt DVD sales. All titles Warner Bros. releases to VOD this year will have day-and-date availability.
The day-and-date advantage is evident at least vs. Netflix for the 9 movies the press release cited as the opening slate being promoted: "Precious," "New Moon," "Ninja Assassin," "Pirate Radio," "Astro Boy," "Bandslam," "Did You Hear About the Morgans," Fantastic Mr. Fox" and "The Fourth Kind." A search on Netflix for the 9 revealed that 5 are listed as "Short wait," 1 becomes available on Mar 20th, 1 on Mar 23rd, and 2 on April 13th (none are available for streaming). However, it's a different story for Amazon - all of the cable VOD movies are currently available for rental from Amazon (except "Mr. Fox") and for purchase. The Amazon rental price is $3.99 for each, whereas the rental price from Comcast (my service provide) is $4.99.
For now anyway, it seems Hollywood studios have decided that cable VOD and online rental firms get day-and-date access, while subscription services like Netflix wait longer (btw Redbox too is being pushed into the "wait longer" category). According to the NY Times article, this is likely because VOD and online rental give studios a 65% share of revenue vs. lower percentages for other outlets.
For consumers, the cable VOD option is likely the most convenient and instantly gratifying. There's no new box to set up or pay for as with Roku, TiVo or another, which would be needed to access Amazon VOD, for example, on TV. For those that haven't bridged broadband to their TV with such a box or a direct connection, on-computer viewing only would be a limitation in the experience. Still, while the day-and-date option is key for those consumers who just have to see a particular title right then, because it's a la carte, it's a far more expensive option than a monthly Netflix subscription, which starts at $8.99/mo. Convenience clearly has its price.
Consumers aren't monolithic though; there isn't one right or wrong model. Each viewing option offers pros and cons and consumers will choose which one, given the particular moment or circumstance, best meets their needs. With the battle for movie rentals escalating, the real winner here looks like the consumer who is being presented more choices than ever.
What do you think? Post a comment now (no sign-in required).
Categories: Cable TV Operators, FIlms, Studios, Video On Demand
Topics: 20th Century Fox, Armstrong, Bend Broadband, Bright House Networks, Comcast, Cox, Focus Featu, Insight, iO TV, Time Warner Cable
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Government to the Rescue in the Retransmission Consent Quagmire?
Earlier this week, in "Will Nasty Fee Fights Fuel Consumers' Cord-Cutting Interest," I conjectured that last weekend's WABC-Cablevision retransmission consent fee fight (the most recent of many fee fights) would ultimately sow consumers' interest "cutting the cord" in favor of free, online-only alternatives. Obviously that would be bad news for multichannel video programming distributors (MVPDs), but it would also be bad for the whole video ecosystem that depends on consumer payments for its economics to work.
In this context it's only mildly surprising that subsequently this week a group of MVPDs including Time Warner Cable, Cablevision, DirecTV, Verizon and others petitioned the FCC to intervene and revise the retransmission consent rules (for what it's worth, I can't remember the last time MVPDs asked the government for anything, except to stay out of their business). In a sure sign of who currently has the negotiating leverage, broadcasters sent their own letter saying the playing field was level and in no need of a review.
With broadcasters intent on getting paid for their signals, there are many chapters yet to be written in the retransmission consent story. The big risk here is that the parties' jousting will ultimately kill the proverbial golden goose, with consumers getting fed up and deciding they'll make do with whatever they can get through the combination of good old-fashioned antennas and a cheap convergence device that hooks their broadband connection to their TV. Cord-cutting has lacked a strong catalyst to date, but history shows that a wronged consumer is a motivated consumer. The TV industry as a whole needs to figure out the retransmission morass before consumers take things into their own hands.
What do you think? Post a comment now (no sign-in required)Categories: Broadcasters, Cable TV Operators, Satellite, Telcos
Topics: Cablevision, DirecTV, NAB, Time Warner Cable, Verizon
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Will Nasty Fee Fights Fuel Consumers' Cord-Cutting Interest?
Another weekend, another high-stakes fee fight between a multi-billion dollar media company and a multi-billion dollar cable operator. This time around it was Disney's WABC station in the New York City market in a standoff with Cablevision, which has 3.3 million subscribers there, with the Oscars broadcast the main hostage (WABC, which was pulled late Saturday night, came back on the air at 8:44pm subject to an initial agreement between the companies).
This fight, like recent ones between Time Warner Cable and News Corp, Cablevision and Scripps, plus others, is a no win PR situation for its combatants, and in my mind will lead to one inevitable result - heightened
consumer disgust with the hyper-corporatized TV business, where CEOs who are paid tens of millions of dollars per year accuse each other of not being sufficiently focused on satisfying their customers. Inevitably, consumers' disgust will translate into interest in finding alternatives, particularly those that are cheaper. While the WABC/Cablevision brought out switching enticements from Verizon, the real competition is increasingly going to be "cutting the cord" and getting programming from online-only sources.
Generally I don't believe that there's latent cord-cutting interest waiting to explode (even as monthly subscription fees have grown and the amount paid to cable networks is readily available). The fact is that popular cable programs are so diffused across so many channels - and that most of these programs are not available online (the very issue TV Everywhere aims to address) - that cutting the cord is a practical impossibility in most American homes. Sports alone is the ultimate firewall in a huge percentage of homes. How many sports fans would willingly say goodbye to ESPN, Fox Sports or TNT?
That said, more fee fights, affecting more consumers, are certainly in the
offing. While fee fights in the past have focused on amounts paid for cable networks, future fee fights are more likely to look like the WABC-Cablevision one - squabbles over how much cable operators should pay for broadcast stations. These fights are related to "retransmission consent" payments and reflect a very different dynamic unfolding between broadcast stations and cable operators.
In the past broadcast stations were plenty happy to have cable operators take in their feed directly, and then position the station on a low channel number, enhancing visibility. Now, however, with broadcast economics under extreme pressure, and intense broadcaster envy for cable networks' dual revenue model (monthly fees + advertising), monthly retransmission fee payments are the new normal. Never mentioned in broadcasters payment demands is the fact that they still have government-granted access to free broadcast spectrum which should likely be returned to the government if they want to operate more like cable networks. To the contrary, in fact broadcasters are arguing that government efforts to reclaim the spectrum for higher value mobile data uses are off-base. But that's a subject for another day.
Even as big media companies and cable operators are poised for future skirmishes, the online universe marches on. Convergence devices that bridge broadband to the TV are gaining further traction. And services like Netflix, iTunes, MLB and others are increasing consumers' expectations for what's expected and possible. As I've pointed out before, big media companies and cable operators have a mutually shared interest in defending the current subscription-based model. Nonetheless, how that model's riches are apportioned between the parties is what's being hotly contested. As they do this though, they risk killing the golden goose.
What do you think? Post a comment now (no sign-in required).Categories: Broadcasters, Cable TV Operators
Topics: ABC, Cablevision, Disney
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TiVo's New Boxes are Very Cool But Old Challenges Persist
The two new boxes TiVo unveiled last night - the Premiere and the Premiere XL - go right to the top of my list of most impressive devices that handle both broadcast and broadband content in one seamless experience. The new boxes continue TiVo's pattern of always being one step ahead of the competition in delivering an outstanding user experience. All of that is the good news. The bad news is that unfortunately, nothing I learned in my briefing earlier this week with Jim Denney, TiVo's VP of Product Marketing, suggests that these boxes will find their way into any more than the relatively few homes that prior TiVo boxes have.
First the boxes themselves. The key Premiere innovation is that TiVo now elegantly recognizes broadband sources such as Netflix, Amazon, Blockbuster, YouTube and hundreds of others as bona fide content options, right alongside the customary broadcast and cable channels. That means that when you do a search for a specific TV program or movie, TiVo returns all the viewing options. Say for example it's Saturday night and you search for the classic movie "Raising Arizona." It may be on a cable channel the following Tuesday, but you want to watch it now. Well it is also available from Netflix's Watch Instantly. Assuming you've linked your Netflix account to the Premiere, a couple of clicks of the remote and you're watching right then. That type of all-in-one-box convenience isn't available elsewhere.
The TiVo browse and recommendation experience is tremendously improved also with a new "Discovery bar" - a strip of artwork and images from the programming that adds a lot of zip to the previously text-heavy browsing UI. Selecting an image triggers an expansion window with relevant details (program description, air time, cast, etc.) You can then immerse yourself in a "6 degrees of Kevin Bacon" IMDb-like experience by subsequently selecting an actor, subsequent movies, co-stars, etc, all in a rich, graphical interface. You can also select "Bonus Features" and immediately start reviewing accompanying clips from YouTube.
TiVo is also introducing "Collections," a set of curated categories like "Oscar Winning Films," "Sundance Award Winners" and "AFI's 10 Top 10" which, with accompanying artwork that are another quick, fun new way to browse for what's on (again these collections tap all broadcast and broadband sources). The gorgeous user experience is all built on Flash and is formatted for HD widescreen, to maximize the amount of real estate used. Another first for TiVo is a full QWERTY keyboard that slides out of the remote control for enhanced navigation.
That's a lot of new goodness from TiVo, which as expected comes at a price. The Premiere, with 320 GB of storage (enough for 45 hours of HD recording) is $299 and the Premiere XL, with 1 TB of storage is $499. Best Buy is again highlighted as a key marketing partner. Then of course there's the $13.95/mo TiVo service charge.
These are basically consistent with previous prices, suggesting that yet again TiVo will bump up against the brick wall of most consumers' resistance to buying expensive hardware. No matter how cool TiVo's boxes have been over the years, this is TiVo's traditional Achilles heel and it doesn't seem likely to lessen with the Premiere. When I highlighted this issue Jim allowed that the purpose of the standalone box is to be a "crucible of innovation" and that it is intended mainly for "discerning customers" (my interpretation: TiVo itself doesn't plan to sell a ton of Premiere boxes).
To address the sell-through problem, TiVo has worked hard to develop "TiVo-inside" relationships with video service providers, so that it can become more of a software and services company. For instance, I've been getting my TiVo service as part of my Comcast set-top box for a while now. With the Premiere announcements, TiVo said that RCN, a smallish American "overbuilder" and Virgin Media, a significant U.K. operator would include the Premiere features in their new set-top boxes, which is great.
However, no plans were revealed for what Comcast, by far the largest operator with TiVo inside, will do with the Premiere. In fact, one sticking point for Comcast is almost certainly the very access to broadband content that TiVo is trumpeting with the Premiere. My Comcast box frustratingly disables all of the previous "TiVoCast" broadband features I used to enjoy on my Series 2 box as Comcast seeks to maintain its "walled garden" approach. While RCN may be aggressive about providing access to 3rd-party broadband sources, I'm doubtful that Comcast will be given their own extensive TV Everywhere plans. That raises doubts about whether Comcast's TiVo customers will ever see the Premiere's full range of features.
And so all that brings us back to where TiVo always seems to find itself - with market-leading devices that have serious hurdles to widespread consumer adoption. I really hope there's a forthcoming breakthrough this time around for TiVo. Otherwise history will repeat itself yet again and TiVo will continue to be a well-respected, but relatively marginal player in the digital media landscape.
What do you think? Post a comment now (no sign-in required).
Categories: Cable TV Operators, Devices
Topics: Comcast, RCN, TiVo, Virgin Media
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