TV Reinvented

Local Media Companies Can Use OTT to Reinvent Themselves

Local radio and print media companies have been threatened by the disruptive forces of the Internet for some years now. Many have survived by jumping into the digital pool and finding ways to remain relevant to their local online audiences and reinvent their businesses over the Internet. Local TV broadcasters are now seeing disruption coming their way like a bullet train, thanks to over-the-top (OTT) video. Consumers, especially younger millennials and Gen-Xers, are consuming their "TV" on mobile devices and many are avoiding the television and TV content altogether. Cord-cutters and cord-nevers are certainly a disruptive force any local broadcaster needs to pay attention to or risk demise. Now, the national broadcast networks (CBS, NBC, PBS, et. al) already have or are planning to take the "over-the-top" plunge with new direct-to-consumer OTT video services, which may leave the local affiliate broadcasters behind. Moreover, local "appointment" TV news and local programming has been left to an increasingly old and diminishing audience.

It all sounds daunting, but the very thing that seems to threaten local media can also be turned into opportunity. OTT video and digital consumer engagement strategies can be a foundation for local media companies to reinvent themselves and remain relevant to their communities. Here's a great story from Ohio about a local media company doing just that, with some other examples from across the country.

I'd like to offer up 3 high-level strategies that can help local media companies in the digital world: over-the-top video (OTT); multichannel networks (MCN); user-generated content (UGC).

Probably the most obvious strategy for local media companies looking to re-expand their audience reach, remain (or become) relevant and create new revenue streams, is to take local news and programming over-the-top (OTT). Many local media companies have been streaming or publishing their content online for many years, but may need to consider expanding beyond their websites to mobile devices, smart TVs, iSTBs (like Roku) and game consoles. Premium content can be monetized through subscription revenue, sponsorship and programmatic ads (advertising dollars are increasingly migrating online). In addition to streaming channels, the OTT audience has become much less interested in "appointment" TV and more interested in "anytime, anywhere" viewing. Therefore, going over-the-top means more than just streaming local channels online. By taking local content over-the-top, not only are you providing more ways for your local audience to engage with and consume your content, but you are also expanding your market reach, perhaps globally, to those people who have an interest in local news, sports, events and other content.  A solid OTT strategy includes multiscreen distribution, great user experience (UX), community engagement and interaction, and of course high-quality, relevant content.

Another strategy that may help local media companies reach younger audiences, differentiate and stay relevant, and create new revenue, is to create OTT multichannel networks. There is a new universe of high quality, original video content emerging outside of the "TV" ecosystem. Variety recently published some findings that teens consider more YouTube celebrities to be their favorite stars compared to traditional TV and music celebrities. Obviously this doesn't represent the "TV" audience overall, but it certainly is an ongoing trend that local media companies should not ignore. 

A new generation of original video content is being created, outside of the traditional TV ecosystem, and billions of dollars of revenue and market value has be created by multichannel online networks in just the last couple years. Local media companies have an opportunity to leverage their own firmly-implanted local community brand and audience to partner with original video content seeking distribution, through a multichannel network model. An over-the-top MCN model can be extremely valuable for both content creators and "local" OTT networks.

Lastly, great content is being created from many different sources, including individual mobile users. This year, Periscope and Meerkat quickly emerged as the big "social video" story - anyone can be a video broadcaster. Individuals have been empowered with high-quality video recording devices in their pockets, from smartphones to GoPros, which opens the door to engage people to produce local event content. There is no place like local communities where user-generated mobile content is more relevant. Here's a group I found that gets it, "Local Characters, Global Appeal". Local media companies are very well positioned to engage local crews and community to contribute the type of sports, news and event video content that can be aggregated, curated and distributed in a way that is hugely relevant and valuable to its community audience, whether local or global. Local media companies have the opportunity to reinvent how they aggregate, produce and distribute high-quality UGC as an important component of an overall OTT strategy. 

These are just a couple ideas that may help local media companies rethink and even reinvent themselves in an era of disruption caused by digital content production and the Internet. Of course, I am happy to discuss how to implement and execute these strategies in more detail, if you'd like to contact me directly by commenting or connecting on LinkedIn or Twitter @phamm3736.

That's how I see it. Your thoughts?

- Paul D Hamm   

 

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2015 Setting Up to be Great for OTT

2015 Setting Up to be Great for OTT

We've hit the ground running already with DISH announcing its new $20 per month OTT-TV service for cord-cutters, called Sling TV. DISH indicated last August that it would be pursuing this strategy and now will reveal the new OTT service during CES this week. AND IT INCLUDES ESPN!! Wasn't live sports the last defense for traditional pay TV? 

Side note: I'd like to know if or how the new Sling TV and Sling International services affect DishWorld's lock on international content on Roku. This weird arrangement severely limits good international content on Roku. 

Anyway, this is just the beginning for OTT in 2015... We'll be awaiting the launch of HBO's much-anticipated OTT service, which was announced last fall. If you remember, the very next day, CBS also indicated they will offer an OTT subscription service, called All Access, which is already released. Plenty more to discuss in coming weeks, like Sony and DirecTV.

It certainly seems as though the stars are aligning for OTT in 2015. The pay TV networks and even service providers are taking the plunge (or at least dipping their toes), which may or may not be more of a defensive strategy than anything. But either way, it's a clear acknowledgment from the old guard that Internet-delivered TV and film is a real and growing threat to the traditional TV business models. It should be a good thing for consumers. Notice how many new original series are now being delivered on Netflix and Amazon Prime? I admit I drink the kool-aid, but in my humble opinion, House of Cards, OITNB, Mozart in the Jungle, Alpha House - just to name a few - are very entertaining TV programs I and my wife both enjoy binge watching. Other than live sports, I think my Amazon Fire TV and my Roku boxes are beginning to get equal playtime as my DirecTV boxes. Not sure if Sling TV might throw some "cord cheaters", like myself, over the fence to 100% over the top cord cutting. 

But again, I think this is only the beginning, and 2015 will see the tipping point for OTT-TV. Consider that Roku has now sold over 10 million devices (with over 2000 channels) and Amazon Fire TV is now gaining serious steam. Meanwhile, mobile video viewing is continuing to grow as consumers (especially millenials) increasingly watch "TV" on tablets and smart phones. I expect this to continue to steam ahead this year as more high quality content becomes available OTT and user experiences only get better from here.

And what about the content itself? Obviously the big networks and service providers will continue to fight over mainstream traditional TV content, with sports at the epicenter of that "battle of the five armies". In the meantime, new and seasoned content creators alike are beginning to look at alternative forms of distribution, building on the success of Netflix and Amazon original programming. Even the financing models for producing movies and shows are changing. Consider that 3,846 film and video projects were successfully funded on Kickstarter alone in 2014. 

In my observation, much of the pay TV industry - technologies, networks, service providers, even content owners - are still looking out from the old traditional models, trying to defend against OTT and maybe even trying to figure out how to get a piece of the action without killing their golden goose (funded by force-bundled customers). At the same time, there is a new world growing underneath them - consumers, technology and content - that is not constrained by "old TV". Here is where the opportunity really exists, and it's very exciting!

In 2015, I expect more premium content and services to emerge over-the-top than ever before, now that the floodgates (i.e., consumer wallets) are opening for OTT services. At Endavo, we are already supporting innovative OTT service providers, who are either expanding out from broadcast TV or even starting entirely new OTT-TV networks, even with new content being produced just for these networks. Indeed, we expect 2015 to be a very good year.

Oh, I can't close without mentioning the movies! Did Sony crack that dam too, just a little bit, by successfully distributing The Interview online in parallel with limited theatrical release? Did the Korean cyberattacks and threats cause some unintended consequences by catalyzing the OTT movie model, at least a little? Sony reported $15 million in online sales after the first weekend! Things that make you go "hmmm!"

That's how I see it. Your thoughts? 

- Paul D Hamm

 

What HBOver-the-Top Really Means

As I write, I can hear the stampede coming in the distance. And, it’s being led right now by HBO. What stampede, you may ask? The stampede of the next generation of TV. The stampede of the democratization of television and film.

As the industry debates whether or not a $15 HBO over the top service will be a success, there’s a much more important point to acknowledge. The importance of the HBO announcement to go over the top, direct to consumers, isn’t how many OTT subscribers it can get outside of the cable bundle.  Of course, the traditional TV industry would have us believe this move by HBO will never make it and it signals the death of The Golden Age of TV already. I think it’s just the beginning.The importance of HBO’s decision to go over the top, direct to consumers, is that this is a major, significant, earth-shattering, industry-redefining moment when a major cable TV network has decided to seriously circumvent traditional TV distribution (Hulu doesn’t really count) and join the “next-gen TV” revolution that is taking place thanks to broadband video. “Cord cutters” are for real. Even more importantly, “cord nevers” are for real – might as well also mention “cord shavers” and “cord cheaters”, what the heck. To ignore them is to stick your head in the sand so you don’t see the stampede coming to trample all over you. I’ve written and talked a lot about Netflix. Netflix was the first major, significant, earth-shattering, industry-redefining TV Rebel. HBO is on the traditional TV team – and they held out as long as they could IMHO.

So, I am not here to predict whether or not HBO OTT (or CBS OTT, or Showtime OTT, or ESPN OTT) will be a successful business model for them per se. I suspect there are some very smart people in those companies who will figure it out. What I am here to say, is that HBO OTT is another major, significant, earth-shattering, industry-redefining moment proving that TV is being democratized - like music, news and books - thanks to the digital broadband revolution.

OK let’s pretend today is throwback Thursday. The music industry. Video killed the radio star. OK, not that far back. The digital revolution was proclaimed to be the death of good music. Back then, the record labels, the gatekeepers for music distribution, had some of us believing that the music industry will never be able to stay in business without them. However, the Internet and digital media took the control of the music industry away from the record labels and “big media” and handed it to the people. It was disintermediation at its finest! The music industry became democratized. And guess what? They made money too - lots of it. The gatekeepers no longer controlled who got let in, promoted and exposed. The choice became ours. Now, anyone can be famous in the music industry. And we consumers have more fantastic music choices than ever. We can still go buy a mainstream artist’s CD at WalMart (when is the last time you did that?), or we can discover and purchase a single track from a band that started up yesterday.  And digital revenue is real, and there is a lot of it being earned.

Well the same thing is now happening to TV. The traditional TV gatekeepers are beginning to lose their grip, just a little. It’s just the beginning. In addition to the inevitable breakdown of traditional distribution channels, the infrastructure (including financial infrastructure – thanks crowdfunding!) required to produce and distribute high quality video programming has also experienced incredible changes in the content creator’s favor. Have you seen “House of Cards” or “Transparent”? Good stuff. Not controlled by “cable”. Now any show can be famous in the TV industry. And they will be able to make money too. Lots of it. Sound familiar? Say it again with me, “disintermediation”. In full disclosure, I have an interest in the democratization of TV. I am happy about it. My company can even help facilitate it, and we’re doing it already. We’ve been doing it for a while. And I’m not saying traditional TV will die. I don’t think it will. But it will change. Those who change with it can survive and thrive.

Just like with music, we, the "masses," will soon have access to create, distribute, discover, promote, share and watch any “TV” we want. HBO apparently recognizes this (unless this is some kind of Jedi mind trick to make us appreciate the “cable bundle”, as some would have you believe). The next generation of TV will inspire us, make us think and open doors and minds to new experiences we choose, not what a corporation or media outlet decides we should want. The crowd, not a corporation will get to decide what is bad and good. I suspect I’ll have a lot to write about, over the coming months and years, regarding the reinvention and democratization of TV and Film. For today, thanks HBO!

That’s how I see it. What are your thoughts?

Paul D Hamm

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Was Aereo Decision a Deal Killer for OTT-TV Industry or Speed Bump?

This past week, the US Supreme court ruled that Aereo is infringing on copyright laws by redistributing free over-the-air (OTA) TV channels to subscribers over the web. The Court basically deemed Aereo’s service to be a “public performance”, similar to a cable TV service. Therefore, Aereo is legally subject to retransmission fees to be paid to the Broadcast TV networks, such as ABC and CBS, which Aereo allows its customers to access over cloud-based antennas. According to Barry Diller, a major Aereo stakeholder, this decision basically kills the Aereo business model. For what it’s worth, I don’t agree with some of the basic principles of the SCOTUS decision. I don’t believe Aereo conducted a public performance and I don’t believe Aereo really “looks like cable TV.” I do think this is a “win” for continued big media dominance and it likely means higher cable prices for consumers.  But it is what it is, so what do we do now?

What are the implications of the Aereo decision for the “OTT” TV industry and consumer television overall? Will this decision basically solidify the “cable TV bundle” for years to come, and stifle the innovation of alternative TV technologies, and digital media overall for that matter? Will retransmission and content licensing fees accelerate with this decision? Many analysts now say to expect 2-3x rise in retrans fees in next 3-5 years, which is bad for consumers. At the same time, consumers are effectively left with fewer TV choices, also bad.

But despite the Supreme Court’s decision against Aereo, won’t consumers ultimately get what they want, one way or the other? Doesn’t the music industry give the TV industry fair warning that you can’t just keep cramming the “old way” down consumers’ throats forever? They will find a way around you if they don't value you. Cable companies are some of the most poorly rated companies by consumers. Why is that?

Is there any question that consumers are, in fact, finding new and better ways to access and consume their “TV”? Isn’t the very idea of what “TV” means changing before our very eyes? The technology, the networks, the content, the business models, ultimately consumer viewing behavior, all changing. And, people are beginning to figure out they CAN live without cable TV. 84% of cord cutters, people who have cancelled their pay TV service, are happy with their decision and do not miss their pay TV service, according to a recent nScreenMedia study. Then there's the next generation of adult consumers. Millenials strongly prefer digital media over traditional TV. They are much more likely to subscribe to Internet subscription video services to get their TV. As this shift toward the Internet is happening in a massive way, doesn’t that naturally disrupt the old traditional TV model, whether Big Media or the government like it or not, in our "free market economy"? 

One of the very reasons broadcast TV fought so hard against Aereo is because they need to protect retransmission fees, which on the surface is understandable. This is interesting because retrans fees are on the rise due mainly to declines in broadcast TV advertising revenue. The broadcast networks have to make up for the dollars disappearing from the advertisers, who are in turn allocating more and more  of their ad spend to online channels. Doesn’t this say loud and clear that consumers are migrating online? Doesn’t this also say that the Aereo decision goes against the paradigm shift that is occurring in consumer "TV" viewing? If so, the Court decided for big media and not for the people.

So with this ruling and possible demise of Aereo, is the OTT-TV model (in particular, the redistribution of OTA channels) now dead or is this a speed bump that the industry (and consumers) will be able to get over?

What are the alternative strategies for current and would-be OTT service providers, in light of the Aereo decision? Here are a couple ideas that require further investigation and creative thinking...

Legislation – Is it time to review and change TV copyright and distribution legislation that dates back to 1976? Do “big media” opponents have the money and clout to cause change at the legislative level? The law eventually will need to catch up with technology and market conditions, but it’ll be tough to put down a bet that this will happen any time soon.

Compulsory License Fees - Are companies who want to redistribute TV channels online able to obtain lower cost compulsory licenses that are available to cable companies under Section 111 of the statute? Does this require the provider to be declared a MVPD, and therefor also bear the additional burdens of such a classification, in order to qualify for compulsory licenses?

Free Services - Within the law, is it possible to provide technology that will help deliver an individual’s own OTA TV signal over the Internet, for free? If so, and within context of the entire ecosystem of OTT content and technologies, isn’t there a solution and business model that can work here? This will require some creative thinking and may be very tough to defend in the lower courts with the Aereo decision in place. 

Technology – Even though the Supreme Court basically decided that how the technology works doesn’t matter, is there a technology solution that legally allows for OTA channels to be authenticated and delivered over the Internet and broadband networks? Can the market come up with a delivery method that is not considered a public performance? That probably just got more difficult to do, although the Aereo ruling did not make this case clear.

Content - Netflix has proven that you can build a very large audience of "TV" viewers without the big broadcast networks. Granted, Netflix has invested hundreds of millions of dollars on exclusive content, but there is an emerging universe of content that is seeking alternative distribution and I believe there is a world of opportunity opening up for deals that make sense for smaller operators and OTT distributors. Other than for live sports, the broadcast networks are losing their vice grip on consumers. 

So, is the Aereo decision a TV innovation killer or speed bump? Time will tell, but the market is telling us it’s time for innovation, even though the government and big media apparently want to stifle it.

 

That’s how I see it. What are your thoughts? 

- Paul D Hamm

 

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OTT Better Opportunity for Pay TV Providers than TVE

Many pay TV providers have adopted TV Everywhere (TVE) as a strategy to help retain pay TV subscribers. I suspect in only a few cases (maybe very few) have pay TV service providers been able to increase ARPU with TVE. And I certainly don't see any data that shows subscribers are sticking with their pay TV subscriptions due in any significant part to their TVE service. For MSOs and Telco, TVE might be used as an indirect strategy to motivate broadband subscribers to buy more bandwidth. However, studies are showing that broadband consumers are using their bandwidth more for OTT services, such as Netflix, Hulu and Amazon Video, than they are using it for TV Everywhere provided by their pay TV provider. In the end, TV Everywhere is being used mostly as a defensive strategy by pay TV providers - they do it because they think they have to. This defensive posture has resulted in poor promotion of TVE by service providers and therefore poor awareness and uptake by subscribers. Digitalsmiths' recent study, "Video Trends Report" (Q4 2013), concluded that over half (52.4%) of pay TV subscribers don't even know if their cable/satellite provider offers a TV Everywhere app. Moreover, only 21.6% of surveyed subscribers have downloaded their provider's TVE app and 60% of those who have downloaded it use it less than once per week. 

Also according to the survey, 45.3% of respondents use OTT subscription services and 28.8% use third party pay-per-rental services. Based the on the millions of pay TV subscribers in the market, this makes up an enormous audience who needs to be presented with new offers to increase the value of their current pay TV services.

So what's my point? TV Everywhere may simply be the wrong strategy for pay TV providers if they are seeking to increase revenue, expand their subscriber base, give people what they want and address "cord nevers", "cord cutters" and "cord cheaters". A more innovative strategy for providers to seriously consider might be to develop premium OTT video service models that can help accomplish these goals. Here's a couple reasons why OTT is a better opportunity for providers than TVE... 

1. OTT is a better strategy for increasing subscriber revenue.

OTT video services can be used to expand subscribers and revenue, in addition to being used as a tool to motivate more bandwidth consumption. We are seeing network service providers beginning to package OTT-TV as a starter service for broadband subscribers not also subscribing to traditional pay TV services. OTT can even be used as an "on ramp" for cord nevers, giving the service provider an open door to up sell pay TV services in the future vs. losing touch with the next generation of TV consumers. In any event, OTT can represent a lower cost revenue generator on its own, but also create more demand for bandwidth, opening the opportunity to up sell broadband services.

2. OTT addresses "cord cutting" better than TVE.

Some operators may consider this one a bit scary, but OTT video services can also be positioned as an "off ramp" for cord cheaters and cord cutters. There are defensive strategies to fight the consumer trends we all know are real - forced bundling, long commitments, network throttling, TV Everywhere, etc. - but perhaps beginning to adopt and integrate OTT into an overall pay TV strategy could be much more forward-thinking and represent offensive positioning to address cord cutting. 

3. OTT can reach beyond fixed network subscribers, TVE does not.

OTT can reach beyond the pay TV footprint and on-net subscriber base. The opportunity for a "virtual pay TV" operator is evolving quickly. Pulling together a service that includes programming, such as linear TV, nDVR, on-demand, community TV and OTT content providers - all packaged in a lower cost subscription, or a la carte, under a local, trusted service provider brand - can represent an attractive product in today's "anywhere, any time" consumer TV market. Service providers can leverage competitive advantages such as consolidated billing, customer service, brand awareness, and additional services to attract customers. 

4. OTT is a better business model for the future of TV. 

OTT is a more cost effective TV distribution model compared to traditional pay TV +TVE networks, while also serving as a "future proof" strategy longer term, if you believe current consumer viewing trends will continue. Many, including myself, expect TV to ultimately be delivered over the Internet. Cloud TV will eventually replace fixed TV networks. The good news is the cost of working into an OTT-TV strategy now - even in the midst of complex TV programming rights battles that are occurring - is relatively low and can adjust with the success of the service. Technically speaking, "cloud" TV infrastructure is inherently much more flexible and "future proof" compared to inflexible pay TV and TVE network infrastructure. Therefore, making some smaller investments now to create an appropriately positioned OTT service, of course being careful not to cannibalize existing traditional pay TV revenue, simply makes a lot of sense and will get service providers strategically positioned to better maneuver in a quickly evolving TV business. 

Like they say in the stock market, "don't fight the tape". Fact is, consumers are spending more time watching video over the top. Fact is, TV content rights models are being disrupted and the universe of high-quality content being produced outside of the traditional broadcast networks is growing rapidly. Pay TV providers must begin thinking outside the box if they are to survive in the long term. Some, such as DISH Networks are beginning to do just that. DISH recently signed a highly-publicised deal with Disney to secure OTT rights. Charlie Ergen, head of DISH Network, said, "We’re losing a whole generation of individuals who aren’t going to buy into that model because they only want one particular show or they want to watch the show wherever they can or they want to watch it on their schedule and so that generation is not signing up to satellite or cable or phone video today."

That's how I see it too. What are your thoughts? 

Paul D Hamm

 

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TV Reinvented, 'Cord Never' Buzz

There was a bit of media buzz over the past week regarding "cord cutters" and "cord nevers". Next-gen TV providers need to be in tune with TV consumer viewing behavior, so I thought it would be helpful to summarize and share some thoughts about some of the articles I read this week on the subject.

GigaOm published a piece entitled, "Meet the Newest Cord Cutters: College Campuses". In this article, they wrote about Northwestern University's recent decision to discontinue its cable TV service and allocate those TV service funds instead toward improving their Internet services for students. The primary reason for this decision? Non-use by their students. The article went on to explain that many universities are now questioning the investment in on-campus cable TV services, when students much prefer streaming TV services, such as Netflix. So by definition, such colleges pulling their TV services are becoming "cord cutters". But the most interesting thing here is that these schools are reacting to emerging market forces that are beginning to surface as a result of Millennials (Generation Y) now growing up. Many of these Millennials are characterized as being "cord nevers" - they have never subscribed to a cable TV service and don't intend to, as they have streamed their content over the Internet on their desktops, laptops, phones and tablets since they were children. At least on college campuses around the U.S., cord nevers are now beginning to impact the pay TV market. 

Slate published a similar article this last week, declaring, among other things (from a very informal survey) that exactly ZERO of the writer's 25-30 year old colleagues subscribe to cable TV. Slate suggests that a growing amount of young adults go to off to colleges where Internet connectivity is usually reliably good and TV is not always. As a result most incoming students see Internet as a necessity and TV as a luxury at a basic level. They are instead getting all the content they want online through various streaming services, such as Netflix, Hulu, YouTube, etc. I can say from personal experience - my son is a freshman in college this year - that college students are rarely parked on a couch channel surfing. They are either on their PC or mobile devices, socializing, gaming or watching content. The TV in the room is the screen for Roku and XBox. They can get wi-fi anywhere on campus, so they are definitely not tied to their dorm rooms to "watch TV". The question is, will these cord nevers remain cord nevers after they graduate college? There are signs that the answer may be "yes".

Last week Advertising Age profiled a 23-year old "cord never", Miranda Henely. Miranda is now a young professional and she remains a "cord never" who gets her shows through Netflix, Amazon, or directly from broadcasters' websites. She says, "Most people I know are either not watching TV or they're doing it this way." The article referenced plenty of data to back up the argument that "cord nevers" are a significant force that can change the pay TV markets as they enter their professional (i.e., consumer) lives.

Compelling alternatives to pay TV are growing daily it seems. Companies like Netflix and Hulu deliver increasingly great content and user experiences at an attractive price, especially compared to cable bundles. New next-gen TV entrants are on the rise, like Crackle and Amazon Prime. Even smaller, independent content producers and broadcasters can deliver a compelling video service and user experience, and they can get easy access to tools that help them target and engage with their audiences directly, with fairly low barriers of entry. Of course, pay TV is hanging on to live sports with a death grip - isn't it just a matter of time? 

What does all this "cord never" talk mean? Well, I am not 100% sure, but it sure will be interesting to see this generation continue to grow up and become the heart of the pay TV consumer base. Traditional TV has been fighting off cord cutters for some years. Indeed, this may be the first year we'll see an actual decline in pay TV subscribers in the U.S. since the beginning of pay TV. The argument has been that "cord nevers" will eventually become cable TV customers once they enter into the work force with disposable income and crave more of a "lean back" TV experience. I am not sure that's a very strong argument as TV is being reinvented. OTT providers can provide premium programming and an amazing user experience. Bottom line, cord nevers look to be setting up to accelerate the erosion of cable/satellite TV's subscriber base. TV is being reinvented. Traditional pay TV will have to adapt or die.

That's how I see it. What are your thoughts? 

Paul D Hamm

 

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TV Reinvented Follow-Up. flareWatch goes OTT to Attract Cord-Nevers

As a follow-up to one of my recent posts, there has been more discussion about Cox's flareWatch OTT video service. flareWatch stands to represent the first significant "over-the-top" TV* service that is being offered by a traditional pay TV (cable) operator and it's completely decoupled from their cable TV service as a standalone service offering. IHS has done some research on the new Cox offering and offers up some insight that I thought might be valuable to smaller cable and telco service providers in the US, and globally for that matter.

IHS sees flareWatch as Cox’s attempt to regain business being lost to a new generation of cord-cutters and cord-nevers – consumers who have avoided traditional Pay TV in favor of Netflix, Amazon and other OTT video services. According to IHS, "because of these types of consumers, growth in U.S. pay-TV subscriptions has stalled, and penetration has begun to decline, and is expected to fall to 81 percent in 2017, down from 86 percent in 2009."

flareWatch will be offered for $39.99, compared to an average $63.99 spent monthly on Cox's cable services. However, flareWatch subs will not get premium cable channels or "TV Everywhere" services (although I presume flareWatch.com will be accessible on iOS and Android devices via browser). It must be noted that apparently flareWatch is being forecasted by IHS to be a low margin business, at least at first, primarily due to the carriage fees Cox will have to pay tier one content providers. I think that can change over time as the disruption of the old TV business models continues in this new era of TV over the Internet.

It's likely that Cox intends to offer this service to an audience outside its traditional pay TV footprint and unlikely to become cable subscribers. So it sounds like they are being careful not to canibalize their higher margin pay TV business. I could see Cox treating flareWatch as a customer acquistion vehicle that also gives them the opportunity to upsell services to flareWatch customers. Either way, Cox must see OTT as a mechanism for expanding their video subscriber footprint and for increasing revenues through flareWatch itself and then again by cross-selling other services.

You can quickly see in flareWatch marketing who they are targeting, a younger demographic which, by in large, includes the "cord nevers"... 

Erik Brannon of IHS stated, "Cox’s flareWatch is likely to be the first of a new generation of products from other cable operators that will take a ‘if-you-can’t beat ‘em-join-‘em’ approach to tackling the OTT challenge." I tend to agree that Cox is treating OTT as an opportunity to reignite video subscriber growth through careful strategic rollout of next-gen TV services. They likely also know that the future of TV is over the Internet. In any event, cable and telco operators should pay attention to innovative services, like flareWatch, being rolled out by their industry peers, as they themselves decide if and how to approach TV being reinvented. 

That's how I see it. What are your thoughts? 

Paul D Hamm

 * Technically, flareWatch may not be a true "over-the-top" television (OTTtv) service, if Cox only delivers the service over their own broadband networks to their own broadband subs - maybe we can call it "through the middle (TTM) TV". However, if Cox offers this service to other broadband providers' subscribers, then flareWatch could certainly then be considered a true OTTtv service. Some may argue that flareWatch is delivered over unmanaged Internet, even if over Cox networks, therefore it is an OTT service.  

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TV Reinvented part 3, TV Technology Game Changers?

I tend to spend more time here talking about content and service providers who are changing the "TV" game (or adapting to changes), especially going "over the top". This week, I've seen a flurry of media coverage related to technology companies releasing new products and services that may (or may not) further enable the reinvention of TV that is taking place before our eyes. I thought it would be helpful to summarize some of this news this week and, more importantly, look at how new OTT technologies might impact the ability for small-mid sized or independent content distributors or OTT service providers to enter into or expand their own OTT service strategies.

Intel TV "OnCue" (?)

Wall Street Journal did an article this week about Intel's plans for a streaming device with a "catch-up TV" service that allows users to "rewind" live TV channels, going back at least 3 days. The idea is that users won't need worry about recording programs if they can just go back and watch anything on Intel's device. Not sure if this is a game-changing service on it's own, but it will be interesting to see if Intel uses this platform to secure it's own content rights or even produce/secure exclusive programming to become an OTT service provider. In any event, I don't see any sign yet that the Intel OTT-TV platform will provide a 3rd party developer ecosystem that would enable independent distributors or service providers to reach their viewers via the Intel device. Possibly operators could view this device as a value-added service to provide to their customers, in addition to or as alternative to DVR.

By the way, Endavo already delivers multiscreen catch-up TV services (48hr lookback) for Dubai Media, launched last month. This service is available for our clients today.  

Google Chromecast 

Google got a lot of buzz this week after unveiling its $35 Chromecast device last week, which is already sold out. This is Google's 3rd try at getting to the TV and maybe this time they got it right - time will tell. As for what Chromecast does and what makes it different, it's not a standalone OTT-TV platform like Roku and it's not just a device for mirroring what's displaying on your tablet or phone, like Apple's AirPlay. Rather, Chromecast allows users to navigate programming from participating content providers on a smartphone, tablet or PC, and then play the video on a TV with an HDMI port occupied by the Chromecast. Once a stream is started, the device used to queue up the content is freed to be used normally (or as second screen), as the Chromecast then streams the video directly from the Internet using an architecture built on the platform behind the Chrome browser and operating system. WSJ did a review of the device if you want to check it out. 

I am not quite sure yet if Chromecast is a game-changing technology, but it is interesting especially for $35. It certainly rides (and maybe pushes) the trend of more people interacting with their mobile devices while they are watching TV, especially tablets. I am not sure yet how independent content distributors or service providers can use this technology to further their OTT strategies, unless Google is going to open Chromecast to independent developers who want to enable viewing video programming from their websites/apps on the TV through Chromecast. That could be interesting way to get OTT video services to the TV - right now I believe the best ways are on Roku or just via AirPlay. We'll be looking into this more as the Google ecosystem, especially Android OS, is an important OTT player. 

Microsoft Xbox

Microsoft is positioning its Kinect platform to enable voice and motion recognition for broader home entertainment purposes. Through Xbox One, due out this fall, it's expected that users can navigate available programming by commanding the Xbox to "Go to ESPN" and the system will respond. Also, some Xbox apps can be used while watching TV, such as Skype. So, again, not sure this is "game changing" stuff, but it does point to the investment being made in the paradigm shift that is occurring in how consumers access TV and media. Xbox has not been an extremely friendly platform for smaller, independent content distributors and service providers to try to get on, so I'm not too sure how much all this matters to the smaller OTT player, but we keep our eye on the Xbox since it represents such a significant installed base. My son says gamers buy game consoles to play games, not to watch TV.

 

In other recent Microsoft news, they finally announced the September 30 shut-down of MSN TV, which was the successor to WebTV. Not sure too many people care....

I would really like to see the Smart TV and OTT-TV device players open up more to 3rd party developers. I don't want see a "free-for-all", as I appreciate and value a controlled user experience, like Apple manages via their iTunes store for iPads and iPhone, and Roku manages closely for their platform (but too bad Roku doesn't allow independent int'l content). Among the platforms in the news this week, maybe Chromecast is indie OTT's best new chance.

That's how I see it. What are your thoughts?

Paul D Hamm 

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TV Reinvented part 2, a new blog series?

Leading up to and since my last post, TV Reinvented, I regularly see news about TV game changers and how the TV game is changing. So much so, I'd like to begin a regular series of posts that highlight news around the U.S. (and globe) of the TV and film industry being reinvented as a result of paradigm shifts in consumer behavior and changes in the way video programming is being delivered to consumers. Of course, I'll have particular focus on "over-the-top" (OTT) providers and content. Undoubtedly, changes are happening very quickly, so I believe MVPDs and digital media companies (broadcasters, networks, producers, etc. who are becoming MVPDs in their own right) might benefit from a regular summary of what's happening in this area, maybe once or twice a month. So I'll provide a series of "TV Reinvented" posts here, highlighting "game changers" and "how the game is changing", as long as I see a continued stream of relevant news and events.

No better time than the present... 

How the Game is Changing: Cox is targeting "cord cutters" with OTT-TV service being tested in Southern Cal.

Looks like Cox Communications is launcing a beta OTT service, called flareWatch, in Orange County. It's a broadband-only TV service of 97 channels and 30 hours of cloud DVR service for $34.99 per month. This channel lineup looks to be targeting cord-cutters, since it includes ESPN, Disney, CNN, CNBC, and many other top cable channels. With flareWatch, Cox certainly looks like an incumbent provider adapting to the changing TV game. As TDG points out, FlareWatch might also become a game changer if Cox is flirting with a "forbidden fruit", preparing an online-only service to deliver outside of its own territory and competing with other MVPDs. 

 

Game Changer: Crackle finds a hit series with Comedians in Cars getting Coffee. 

Crackle, owned by Sony Pictures, has been a bit of an "also ran" behind Netflix and Hulu. But recently their traffic has doubled in large part to a Jerry Seinfeld series played on Crackle, "Comedians in Cars getting Coffee". As Eric Berger, exec vp of digital networksat Sony Pictures Television stated in an interview posted by AdWeek, Sony views Crackle as a global next-gen network for premium long form content. He compares Crackle to AMC and FX, yet Crackle is an OTT-only network. I certainly would consider Sony a game changer, if they continue to come up with high quality programming exclusive to their OTT network, Crackle. If you click on the link to the AdWeek article, and haven't seen Seinfeld's series yet, there is one there to watch there, definitely worth a few minutes of your "TV" time!! 

 

 

Can't forget about Netflix - Game Changer!

Wall Street Journal did an article this week entitled "How Netflix Is Shaking Up Hollywood", describing multiple examples of Netflix buying up exclusive programming rights for its OTT service. I've talked about "House of Cards" and "The Killing", but apparently Netflix is not slowing down....now to the point that Hollywood is changing the way it looks at Netflix. 

Series like "House of Cards" and "The Killing" have story arcs, which seems to be a focus of Netflix's buying spree. Some new examples of Netflix licensing are PBS's "Super Why" and "Orange is the New Black", debuting this week. Hollywood used to think of story arcs as riskier bets due to future syndication limitations. Netflix is changing that, because "binge" consumption lends itself to story arcs and catching up via OTT on-demand, subscription service model. Studios are actually talking about changing production models based on the "Netflix" effect. Talk about a TV game changer! :-)

So, I hope you find this summary of TV "game changers" and "how the game is changing" useful, especially if you're a broadcaster, content producer/owner or MVPD. I'll keep posting and hope to hear from you. 

That's how I see it. What are your thoughts? 

Paul D Hamm

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TV Reinvented

Television as we know it is being reinvented before our very eyes. The paradigm shift in consumer video viewing habits, due mainly to continued emergence of Internet-delivered video and social media, is causing the film and TV industry to find new and innovative ways to catch the wave. If you're a MVPD, content producer or digital media distributor and whether you believe in cord cutting or not, you'll have a very difficult time ingoring the changes that are occurring, particularly if you want to be successful in engaging audiences with your video services in this new media world.

There are some notable examples, written up this week, of how TV is being reinvented:  

---- The Wall Street Journal published an article today, "A Reality TV Show, Without TV", about a new video series being produced by Peter Chernin called Summer Break. This multimedia series, follows the daily summer life and experiences of a group of soon-to-be-college-bound teenagers in California. It's being captured and filmed daily, in part by the teens themselves and in part by professional producers. The content for Summer Break is quickly being produced, edited and distributed through social media outlets, such as Twitter, Instagram, Tmblr, YouTube, Vine, rather than TV. (They even use Dropbox for content collection and collaboration.)

Summer Break seeks to leverage the shift in teenage video consumption toward mobile devices and the producers want to stay relevant in a world where teens increasingly create and consume stories through social media. As Peter Chernin states, "This is on a level so much further than anybody has ever done - it is real life in real time on multiple platforms."

Here's a link to a WSJ video that summarizes the Summer Break project nicely - CLICK HERE embed video not working on typepad :-(

--- Another great example of TV models being reinvented is AMC's unkilling of The Killing. Charlie Collier, AMC's president and GM, posted an essay on LinkedIn explaining what AMC (and Fox Television Studios) has done to revive this show.

In a nutshell, AMC killed the The Killing after 2 seasons when viewership disappointed for multiple reasons (some were AMC's own doing, as Mr. Collier explains). But FTVS struck a deal with Netflix to redistribute the show, which has been extremely popular and hence has led to AMC to actually begin airing the show on its broadcast network once again. As TDG put it in their blog "Opinions" this week, "The writing is on the wall and its message is clear: on-demand subscription services will have a growing influence on original programming."

There are plenty of examples out there of TV models being reinvented and new TV networks emerging, like Yahoo!. Anyway, the signs are clear... TV will never be the same as it was. Producers, distributors and service providers should pay attention, try to stay ahead of (at least with) the curve and definitely do something to catch the wave!

That's how I see it! What do you think? 

Paul D Hamm

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