Next Content Wave Coming on a Sea of Mobile Devices

June 14th, 2011

Premium content from HBO, Showtime and others used to be locked up in hefty subscription-based networks available for – well premium dollars. The problem is most target young viewers – a big target audience – don’t want to consume TV in a conventional cable/satellite model anymore. That limits exposure and ad revenue of this premium content to 20th century distribution models-and audiences.

Now, out of the box thinking (no pun intended) from content providers like HBO, and Cinemax (in development) are looking to change this with fresh new models that help preserve subscription revenue while granting access to these new mobile delivery devices. Even full Cable MSO, Time Warner Cable (TWC) is turning to mobile devices as the platform de jour to get their top-selling shows to a younger demographic who prefer anywhere/anytime content delivery for laptops, and now Android and iOS based mobile devices.

TWC seems to be leading this charge, as the company has come out in full support of the mobile device representing a simple extension of the living room TV (albeit in the palm of your hand)… a position quite unpopular with some contentment providers like Discovery, FOX and Viacom. Here’s how Franklin McMahon put it in a May Broadcastengineering.com blog, “TWC completely tore down the stand of these non-progressive networks stating that they were, in a sense, holding back the customers from the future of television.” McMahon characterized the e-mail the company sent to subscribers as “refreshingly spirited and blunt.”

The new mobile device app TWCableTV, offers up to 30 standard package channels to subscribers of both TWC Cable and their broadband service, allowing viewing on iPads in HD (720p widescreen.) TWC was careful to select programming that would be hot with cutting-edge mobile users including, CNN, E!, MSNBC, A&E, Bravo, Bio, Food Network, FX and more. But notice the catch – you need to subscribe to their cable and broadband service – this is not offered stand alone.

Premium content provider HBO is also getting into the act. They offer HBO Go, through Time Warner and are gaining traction with over 1M downloads for both Android and iOS devices. Driving this popularity is HBO’s deep content library, and the service so far, has opened up a whopping 1400 shows to mobile users through this set of mobile apps.

The HBO Go app, targeting mobile devices is taking a page out of the Netflix playbook, who targeted mobile devices in 2010, and went on record as morphing the company into an Internet streaming “network” (not just a consolidator of cable TV content) with 2M subscribers and plans for their own original programming in the works.

We think the premium content “cat” is finally out of the bag, in no small part due to the success and growing popularity of Netflix, a service McMahon has upgraded to a full network status, since the company announced it will produce original programming, to its nearly 2M subscriber base. Now the growing popularity of tablet and smartphone apps ensure the delivery of this premium content to a new generation of viewers (and a few of us 20th century old dogs) on the mobile devices that seem certain to carry forward television into this young, next century. And who would have seen this coming just one generation ago? – Steve Sechrist

Is the Set-Top Box Going Away?

May 31st, 2011

“Evolve or Die…” the famous words uttered by Michael Powell at NAB more than half a decade ago (April-2004) continue to haunt broadcasters as they struggle for ways to avoid trading “TV advertising dollars for Internet pennies” in the inevitable move to Over the Top (OTT) or IPTV delivery. In a world where the Internet is “changing everything…”, some believe one of the biggest casualties will be the humble set-top-box (STB) as IPTV-ready and Wi-Fi enabled TVs gain in popularity. They see analogies to the impact “cable-ready” TVs had during the height of the analog era. Others aren’t so sure.

“Set-tops are clearly moving to the point where they are either a piece of software that lives in another device or they’re virtualized totally in the cloud,” said Ken Morse, Cisco’s CTO in the service provider technology group, at his keynote address a recent (April-2011) Light Reading event in New York City. In 2006 Cisco purchased STB provider, Scientific Atlanta.

The STB device has been around since the 1950’s, but first entered the mainstream in the US along side cable TV (pay TV.) They were more commonly known as a cable converter box and were primarily used to bridge the inbound cable signal from the “cable head-end” to an analog RF signal required by the subscribers TV set.

Companies like Motorola, General Instruments, and Scientific Atlanta were major providers of these STB solutions as well as innovations like digital cable that enabled 2-way communication (for VOD services) and dramatically extended channel range delivered to subscribers using data compression.

As traditional broadcast distribution is undergoing a sea change, the slack is being taken up by a host of new Internet providers. Recent analysis from media information providerSNL Kagan (Charlottesville, VA) indicates broadcasters are now having to contend with a global move towards IPTV service adoption, which is being driven by a handful of telcos. The top five operators account for 44.3% of the global IPTV subscriber base at year-end 2010. In fact, ten years after the Powell warning to broadcasters, IPTV subscriptions are expected to grow to over 70M (by 2014) with adoption increasing at a whopping 92.4% compound annual growth rate (CAGR) over the past six years.

SNL Kagan’s media and analyst, Julija Jurkevic, said: “Telcos often provide the spark igniting consumer interest in multi-screen services, HD and VOD, generating in parallel support for investment in next generation broadband networks.”

“Spark” indeed, word on the street is new Android powered STBs were the hot item at the CeBIT show in Hanover Germany this past spring. More important, the Android platform can help existing IP-STB companies like Seagate, WD or Roku offer “…a platform that’s far more extendable than their current media player offerings, and it could help them to sell inexpensive devices that go far beyond what Apple TV & Co. currently offer,” according to Janko Roettgers of Gigaom.com.

So is the traditional STB really on its way out? Even with “cable ready” TVs there was still a market for hybrid devices that added services like VOD and later, cable cards for security. The popularity of AppleTV is another example of a new age STB deployment strategy that includes a wireless mini-computer that links content back to the TV, from diverse sources like PCs, iPods, -phones and -pads. As evidenced above at CeBIT, the trend in China and other regions also seems to be moving in the direction of more advanced (computer sans keyboard) STB to extend TV connectivity.

While the STB may be changing it still has a long healthy life ahead. As long as consumer’s TVs keep their extended lifecycle, the changing pace of technology will continue to drive demand for the STB, offering the hottest connectivity options to broadcast programming distribution du jour. – Steve Sechrist

Note: for expanded version of this story, see the upcoming June issue of Large Display Report.

NBC Live Looks to “Bust DVR Viewing”

April 19th, 2011

We got wind of a Friday memo from NBC Universal Senior VP of Affiliate Marketing and Development Scot Chastain to all NBC Affiliate stations in the US. According to sources familiar with the e-mail, the group launched the beta version of its interactive web site NBC-Live offering social networking with friends and fans in the same time zone while the program is airing. Chastain believes the iPad application “…busts DVR viewing,” with an offer that “…will entice television fans to watch our key shows as they air live. In an environment overloaded with social media, we all know what a challenge it is to get those eyes tuned into any show while it’s happening.”

In the press release, Vivi Zigler, President of NBCUniversal said of NBC-Live, “It creates a live viewing experience that they can’t get anywhere else.” NBC-Live site is described as a having special attractions where:
* Fans interact with fellow fans and the NBC Live staff
* Moderated social stream
* Fans share comments across Facebook and Twitter
* Fans “follow” other users
The site/app also offers enhanced content that features:
* Polls, trivia, insider commentary, fun facts
* Character quotes that run synced to the (live) broadcast
* Actors, writers, and other insiders will host special events
* Users will be able to vote for their favorite contestants on another program called “The Voice”

This sounds like NBC is building a shadow social networking site, built on its popular shows fan base. But will the strategy work? Or to put it another way, will “fans” of a popular TV program, some who view via DVR and a growing percentage over the web, change viewing habits to get what the site is offering beyond just real-time viewing?

First, we think the term “challenge” used to characterize the network TV environment, is putting it mildly. Network TV has been eroding viewership since the good old days of the big three (NBC, ABC, and CBS) and a September 2010 valuation of the NBC/U empire placed the network piece at a negative $600M. Wunderlich Securities analyst Matthew Harrigan called it, “the weakest among its peers.” Facebook on the other hand is valued by some estimates at somewhere north of $50B (WSJ Blog-Jan 2011.) And if that’s not enough to show Chastain is swimming up stream of the trend, ABI reported today by 2016, more than 3B Internet connected devices will have shipped-adding to network TV’s “challenge” to bust DVR viewing habits.

More importantly, the DVR viewing that Chastain is looking to “bust” is just the tip of the viewership iceberg. His future key demographic is not really DVR users anyway, but the teens who mostly access TV programming over the top, like the NBC Hulu site. They NEVER see a program when it airs. Most of NBC (and all other network’s) future viewers want al la carte viewing on their schedule, not a return to the glory days of viewing based on a schedule designed by network executive.

But not all is wrong-headed about the NBC-Live web site. First, they are doing something right by acknowledging the importance of the second screen (iPad and hopefully other tablets) to engage and interact. They recognize the social networking component, and its value to viewers. And they are looking to broaden the viewership experience with added content from show stars, writers and others in the pipe.

We think this is a good first-step for the company looking to figure out their place in the Web-connected world. More importantly, Chastain is genuinely looking for feedback both from viewers, and the network affiliates, an excellent sign of a willingness to improve through iteration. Also, the site is in Beta, perhaps a long way from being officially launched.

We think long-term, most of the NBC-Live content will migrate to Facebook either with or without the help of NBC, and the company will eventually get back to focusing on the creative side of programming, rather than go head-to-head with social networking sites. To paraphrase Brian Cooley of CNET in his recent NAB presentation at the Radio Luncheon last week, he said …be the subject of discussion on the social web sites, lead the parade with your content, don’t try to be the social networking site. – Steve Sechrist

Broadcast and Edison’s Iterative Experiment

Ask any child of school age and they may be able to tell you the story of Thomas Edison.  How he achieved great success in discovering / inventing the light bulb, fulfilling a life-long dream of light without fire.  It’s a great lesson in iterative achievement, as the Edison experiment required over 10,000 attempts, before finding the one combination of materials and conditions that brought about a sustained glowing lamp we call the light bulb.  As the story goes, midway through the process, a reporter asked Edison why he simply didn’t give up after literally thousands of failures.  Edison reportedly said, “Young man, you simply don’t understand how the world works, I have not failed at all, rather, I have successfully identified thousands of ways that do not work.”

2-21DD

This long introduction serves to illustrate just where we are in this broadcast age of uncertainty.  And like Edison, the broadcast industry is in this iterative time now identifying the ways that don’t work, on the path to a viable model that does.  Recently, Netflix provided a spark of inspiration, as did Hulu.  Both companies showed remarkable promise in over-the-top content delivery, as Netflix claimed 166% net subscriber growth in 2010 over 2009, and Hulu said its company earned a whopping $500M from Internet advertising.

But like the experimental bulb that flashed bright and burned out for Edison, both business models are in danger of going away as many in the industry say they are not sustainable.  Netflix subscriber growth and profitability are based on content deals made years back that grossly undervalue the content, and the video streaming model is coming under fire from ISP (Internet Service Providers) dealing with constrained bandwidth issues, and Netflix growing use of the pipe, particularly during prime-time hours.  Hulu, having proven that Internet users will indeed consume Internet ads, claim a 47.1% ads per viewer (or frequency rate) 4 times greater than their next competitor, and the highest in the industry.  But even original backers of this site, like NBC are said to be pulling back some of its premium content, over concerns of diluting value of the programming to its prime satellite and cable carriers.

In the meantime, CE makers like Samsung, LG, Sony and Vizio are moving ahead with various SmartTV strategies that include new technology widgets and an Apps store to access Internet content like programming (including Netflix) Weather, Social networks and games.

They are also embracing new trends like the second-screen.  This solves many of the lean-back / lean-forward issues faced by early WebTV adopters when the technology that could bring the browsing experience to the living room hit barriers like consumers aversion to keyboards and mice (lean forward computing) in the living room.

Think about it, you lean back while channel surfing, and while texting.  Now smart phones and tablets can establish a one to one (ad-hoc) connection to the TV with a smartphone or wired tablet.  This preserves the community experience of TV viewing, while empowering complex search and social activities associated with the Internet—on the second (personal) screen that also serves as a sophisticated remote—you always have with you.

Other set-top-box (STB) solutions only add to the convoluted market space.  Boxee, Roku, AppleTV, and GoogleTV all take unique spins on Internet content delivery, as does upgraded versions of conventional game platforms like Xbox and PS3.

The one certainty in all this is consumers will always choose the economics of free, over subscription fees, and the highest perceived value wins.  Case in point, the Netflix offering of $7.95 per month for unlimited video streaming is a killer deal, and its subscriber growth proves this out.  Hulu offers primetime TV programming for the cost of watching a commercial up front and dominates the ad driven space on-line because of this.

Both sparks of inspiration that point the way in the search for the perfect solution that will eventually keep the light bulb burning.  – Steve Sechrist

Wi-Fi Direct Fills Display Connectivity Void

Korean wireless provider SK Telecom (SKT) is calling it “N-Screen” (short for numerous screen) according to the Korean Herald’s coverage today of its new Samsung Galaxy S phone with support for a service it calls “hoppin.”  This service allows subscribers to port media content, from TVs to Tablets, even to Smartphones with the touch of a button.  Part of the trick is to store the content not in the home server, but stream it from the “SKT cloud” (for a one-time service fee.)

GoogleTV Knows Old Habits Die Hard… Unless You Don’t Have the Habit…

October 26th, 2010

In a world where old habits die hard, some now think a hybrid content delivery approach can create a new sweet spot between traditional linear broadcasting and over the top IPTV. By hybrid, we’re talking about a blend of live TV broadcast and internet-based on-demand content. The linear broadcast schedule helps to create “demand”, while time shifting and Internet delivery offer convenience.

Why Samsung Pushes “Smart TV”

August 31st, 2010

In the latest chapter of the ongoing drama “Net TV swallows Broadcasting,” big kid on the consumer TV block Samsung is declaring the new era of “Smart TV.” They are holding a “Free the TV Developer Day” at an ISD (independent software developer) event in San Jose. Never mind that most folks on the street don’t know what a “TV Developer” is—let alone the fact that these poor souls need to be “freed.” But the Samsung plan that is unfolding at the Fairmont Hotel brings together some industry luminaries, including The Woz, and a cadre of potential software developers. The goal is to introduce the concept of unique applications that will run on the next generation “Smart TVs.”