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Friday, April 18, 2014

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  • 6 Video-Related Takeaways from D: Dive Into Media Conference

    I attended the D: Dive Into Media conference earlier this week for the first time. It is mainly a series of one-on-one interviews with senior executives from a variety of media and technology companies, plus networking. Overall it was a great conference, and it's hard to beat a couple of days in beautiful Dana Point, CA, especially when coming off a blizzard in Boston.

    My main interest was the video-related sessions, and from those I had 6 takeaways which I share below (along with selected session video clips), in no particular order:

    1. Microsoft wants to be a player in original video, but it's hard to discern its overall strategy
    In the conference's opening session, Microsoft's Yusuf Mehdi and Nancy Tellem discussed the company's original video ambitions and how they relate to the Xbox. They zeroed in on interactivity that would leverage the Xbox's capabilities as how they intend to differentiate their programming from others' and already have 150 people working at Xbox Studios in Santa Monica.

    However, their approach seemed to lack focus: new programming could be included in the current subscription service or cost more; it could be ad-free or ad-supported, it could be exclusively on Xbox or available via other connected devices, it could be produced by Xbox Studios or by production partners, etc. It may just be early days here, but some narrowing of focus seems required for Microsoft to succeed in this intensely competitive area.



     

    2. HBO stays focused on pay-TV distribution only
    HBO's President and COO Eric Kessler provided an update on HBO and its HBO GO TV Everywhere service. There's been a lot of excitement around HBO GO, but Kessler put its usage in context: just 2% of HBO's viewership is via HBO GO, while 16% is via its VOD service and 82% remains via the linear channel.  

    Kessler once again provided a tutorial on how pay-TV operator partners are so critical to HBO's success (driving 10 million transactions per year), and why the universe of broadband-only homes is too small to be worth pursuing with a standalone HBO GO service. The network's main focus is penetrating the 70 million US households that take pay-TV service but not HBO. In this regard, the 2 million US HBO subscribers it added in 2012 (the most in 15 years) was a clear win.

     

    3. Lots of skepticism about Intel Media's upcoming OTT/pay-TV service
    While Intel Media's Erik Huggers confirmed the company will launch an OTT/pay-TV service later this year, he disclosed little else, and in the process, created a lot of skepticism among conference attendees. Rather than leverage the existing universe of connected devices, there will be a new, Intel-branded device which will include a camera that would recognize the viewer and potentially tailor programming/ads.

    Huggers talked a lot about improving the TV experience with more "flexible programming bundles" but didn't say whether Intel's been able to actually strike deals with big programmers allowing such flexibility. Huggers did say that consumers should not expect to save any money by switching to Intel's service as it's not meant to be a "value play." In my view, that decision alone puts the service in the unlikely-to-succeed category as cost/value is the number 1 complaint by pay-TV subscribers and therefore where they're most open to new offers.



     

    4. Aereo on the big screen looked gorgeous; broadcasters beware
    I've seen Aereo's service on an iPad a number of times and have been impressed with its high quality video, but, taking things up a notch, in a demo, CEO and founder Chet Kanojia transferred the Aereo feed to 2 screens that must have been 12 feet by 12 feet - and the video looked gorgeous. It was a striking reminder of just how far online delivery has come from the days of postage stamp-sized video windows.

    It was also a reminder that, with the right marketing, Aereo's inexpensive, flexible alternative to pay-TV could really resonate, particularly for cord-nevers. If it does, then broadcasters' whole framework of retransmission consent fee payments really would be at risk. Aereo continues to be one of the most disruptive companies in the video ecosystem.



     

    5. Netflix may be mum on viewership data for House of Cards, but clearly has Hollywood's attention
    Other than Netflix's Chief Content Officer Ted Sarandos saying that House of Cards has attracted the most hours of viewership of any program on the streaming service, he has no plans to divulge any actual numbers, not even to his production partners. Sarandos only sees downside from doing so, and given there are no advertisers or distributors to please, it does seem like the right approach. That said, lack of numbers will shroud Netflix's original content efforts in even more mystery. As its original content investments grow to be more material, it's hard to see Wall St. not insisting on some transparency regarding the ROI (e.g. more subs, lower churn, etc.).

    That aside, seeing Sarandos comfortably on stage with Arrested Development's creator Mitch Hurwitz and actor Will Arnett, one thing that became apparent: Netflix really is transitioning from being purely a distributor to also being a producer of high-quality original programming. It is very much on Hollywood's radar screen, not just for its willingness to write checks, but also for its resistance to micro-managing projects (Sarandos: "I'm not going to tell David Fincher how to make a better show."). For creative professionals, that approach is a breath of fresh air, which combined with Netflix's willingness to experiment, is going to win it a lot of fans in the creative community.

     

    6. Charlie Ergen's next act could be as a dinner theater host
    Last but not least, by far the most entertaining session was with Charlie Ergen, Dish Network's chairman and co-founder. His good 'ole boy from Tennessee act had the audience in stitches, but in more serious moments - whether discussing generational changes in TV viewership behaviors, leverage in the pay-TV ecosystem or his vision for TV advertising, he was far more candid and realistic than any TV executive around.

    Ergen also took some tough questions about Dish recently being named the "Meanest Company in America" by Businessweek and his Marines/ Navy SEAL references were a bit confusing and unsettling. Still, his reputation for being willing to experiment and go his own way in an industry famous for its clubbiness were on full display.

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