Altitude Digital - leaderboard - 6-9-15

Analysis for 'Cable TV Operators'

  • VidCon vs. Pay-TV: A Modern Tale of Two Cities

    "It was the best of times, it was the worst of times…"

    If you’re looking for a stark illustration of the diverging fortunes of the online video and pay-TV industries - as well as the generational attention/passion gap between the two - then comparing the buzz out of last week’s 6th annual VidCon with the poor early Q2 video subscriber numbers from big pay-TV operators is about as good as it gets.

    For those not familiar with VidCon, it’s the annual convention of YouTube creators, fans and increasingly advertisers that want to weave themselves into this community. This year VidCon drew somewhere between 20K-30K attendees (up from 1,200 just 5 years ago) to the Anaheim Convention Center, with the vast majority being teenagers seeking to get up close to their favorite YouTube celebrities for a coveted selfie.

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  • VideoNuze Podcast #283: Comcast’s X1 Shines in Q2, But OTT Apps Are Still Missing

    I'm pleased to present the 283rd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    Yesterday Comcast reported its Q2 ’15 results, including the best Q2 video subscriber numbers in 9 years. Comcast lost just 69K subscribers, vs. 144K in Q2 ’14. Comcast’s performance is in contrast to Verizon’s dismal Q2 video subscriber results. I’m eager to see what trend emerges from the whole pay-TV universe in Q2, given Netflix’s breakout Q2 U.S. subscriber performance and whether cord-nevering is accelerating.

    Comcast gave a lot of the credit for its Q2 subscriber improvement to its X1 set-top box. Comcast said it is now shipping 30K X1 boxes per day and expects to ship 6 million in 2015.  Comcast noted that X1 improves churn, viewing time, DVR penetration and other metrics.

    As VideoNuze readers know, I’ve been an X1 subscriber for 3 years now, and continue to be very impressed with its modern web-like experience. But as I discuss on the podcast, the big missing piece in X1 remains access to OTT apps like Netflix, Amazon, Hulu and others. In fact, the app section of X1 is devoid of video options, instead offering utilities like horoscopes, weather, traffic, stocks, photos, Pandora and Facebook (note Comcast recently announced a new gaming service for X1 with EA).

    This lack of OTT access stands in stark contrast to TiVo (which we use for our primary TV), where all major OTT apps are integrated, and searching for a TV show returns results across all services. Comcast has a huge opportunity to please its X1 subscribers with OTT integrations. Last Fall I noted the timing seemed right for a Comcast-Netflix partnership and it’s mind-boggling to me there’s been no visible progress on OTT in 3 years since X1’s launch.

    Listen in to learn more!

    Click here to listen to the podcast (21 minutes, 23 seconds)


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  • VideoNuze Podcast #282: With Strong Q2 Results, Netflix's Disruptive Potential Increases

    I'm pleased to present the 282nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    This week we dig into Netflix’s Q2 ’15 results. As I wrote yesterday, the big number for me was the 900K subscriber additions in the U.S., breaking out of the narrow 530K-630K range over the past 3 years. If pay-TV video subscriber additions are soft for Q2 when reported over the next few weeks, then it will suggest accelerated cord-cutting and cord-nevering.

    Colin also explores Netflix’s big international gains, its emerging movie strategy and its endorsement of the Charter-Time Warner Cable deal. While Netflix may well be negatively impacting the video side of the pay-TV business, we also discuss what impact it is having on the broadband side.

    Listen in to learn more!


    Click here to listen to the podcast (22 minutes, 25 seconds)

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  • Here's the Most Important Number in Netflix's Q2 '15 Earnings Report

    Netflix released its Q2 ’15 earnings late yesterday, adding 3.28 million subscribers globally, almost twice as many as the 1.69 million it added in Q2 ’14. Everyone knows that Netflix has been expanding fast internationally, but what was most intriguing about the Q2 report was that Netflix added 900K subscribers in the U.S. vs. its forecast of 600K. The 900K compares with 570K U.S. adds in Q2 ’14, 630K in Q2 ’13 and 530K in Q2 ’12.

    In other words, in Q2 ’15 Netflix significantly broke out of a relatively narrow growth range it had been in over the past 3 years in the seasonally-weak second quarter. The 900K add is even more noteworthy because Netflix has almost twice as many U.S. subscribers (42.3 million) now than it did 3 years ago (23.9 million). The law of large numbers suggests the bigger a company gets, the harder it is to achieve even comparable unit growth, much less greater growth.

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  • Comcast's New Stream Service Bets On Broadcast TV's Value, Just Like Aereo Did

    Comcast has announced a new $15/month online video service called Stream, offering yet another choice to consumers not interested in the full multichannel TV bundle.

    Stream will be available only to Comcast’s broadband subscribers on a no-commitment, monthly basis, with no equipment required. Stream will include broadcast networks and HBO plus Streampix and a cloud DVR. It will be available only on laptops, tablets and smartphones, so no TV access. And the linear feeds will only be available in-home, though it sounds like recordings will be viewable out of home. Stream will debut in Boston in late summer, then Seattle and Chicago later this year and elsewhere in 2016.

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  • 67% of Pay-TV Subscribers Don't Cite Sports As Justifying the Multichannel Bundle

    Here's some data that contradicts conventional wisdom: in a new survey from Clearleap, 67% of pay-TV subscribers said sports are not the reason they maintain a subscription, citing viewership of programs on other TV networks instead. Even sports fans didn't express a lot of enthusiasm for sports as justifying the multichannel bundle, with almost half citing other programs they watch as requiring a subscription.

    There has always been a strong industry consensus that live sports were the firewall for pay-TV's multichannel bundle. Even as entertainment programming has proliferated in OTT services and elsewhere, the only place to get marquee sports programming was on pay-TV. Therefore, the reasoning went, sports were the "glue" keeping subscribers on board.

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  • Scale and Innovation Drive Charter-Time Warner Cable Deal, But Challenges Abound

    Charter Communications will acquire Time Warner Cable in a $78.7 billion deal, while also continuing its plan to acquire Bright House Networks for $10.4 billion. Assuming the deals close, Charter would become the 3rd-largest pay-TV operator/broadband ISP in the U.S. with a total of approximately 23.9 million subscriber relationships.

    Like the prior Comcast-TWC transaction, these deals are driven by the desire for greater scale which supports the huge investments required to innovate in video and broadband services. In this morning's analyst call, Charter CEO Tom Rutledge repeatedly referenced the ability to spread investments over the larger subscriber base as a key benefit of the deals.

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  • Cord-Cutting Accelerates in Q1 '15 as Pay-TV Operators Lose 31K Subscribers

    U.S. pay-TV operators lost 31K video subscribers in Q1 '15, compared to a gain of 271K in Q1 '14, according to analysts MoffettNathanson. The loss was the first time the industry has ever lost subscribers in a first quarter, and signals an acceleration of cord-cutting (or cord-nevering, since it's hard to pull the two apart), contributing to a .5% industry contraction over the past 4 quarters (461K subscribers).

    MoffettNathanson has always tried to put pay-TV results in context with both occupied housing net additions and new household net additions. In Q1, the former declined by 407K, but the latter increased by 1.3 million, suggesting around 900K households were added in the U.S. Despite the gain the industry still lost subscribers.

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  • VideoNuze Podcast #272: Comcast's Blizzard of Innovation at INTX

    I'm pleased to present the 272nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    At INTX (the re-branded Cable Show) in Chicago this week, Comcast announced a blizzard of innovation, showcasing how its heavy technology investments are resulting in new products and features (see here and here for roundup). In today's podcast, Colin and I discuss the range of announcements Comcast made, which impact its video, broadband and home services.

    Importantly, Comcast also announced a new "customer experience transformation" plan, which includes the hiring of 5,500 new customer and technical service staff. The renewed emphasis on customer experience is ironic, because, as I asserted on Monday, had the company done this 5 years ago, and transformed itself into a "most admired" company, it may well have gotten approval for the Time Warner Cable deal. NCTA head Michael Powell seemed to agree with my assessment.

    Colin attended INTX and also shares thoughts on his session and broader trends of how pay-TV operators are evolving into broadband service providers and how OTT services fit in. For example, Comcast revealed this week that it now has more broadband subscribers than video subscribers, an important milestone for the industry.

    Listen in to learn more!



    Click here to listen to the podcast (22 minutes, 16 seconds)

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  • Perspective What's this? As Competition Goes Global, Operators Must Rethink Strategies In A Post-Cable Era

    The post-cable era is upon us. At INTX this week, key industry players discussed the trends that have ushered in this new age. Consumers are no longer tethered to living room TVs and set-top boxes. Technology that was once proprietary and took years to deploy is now virtualized, able to scale quickly, anywhere. Traditional video delivery is under pressure from over-the-top (OTT). 
     
    Also consider the now global nature of competition and sizable price tags accompanying the biggest content deals. Netflix says it will expand into 200 countries within two years as it spends more than $3B per year on content. ESPN is shoring up rights to popular worldwide content like the Cricket World Cup and the Indian Premier League games via the Web, without requiring a cable package. Liberty Global is spending $2.5B per year on content as it continues to eye expansion in worldwide markets.

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  • Hulu Gets Distribution With 5 Pay-TV Operators, Signaling Further Market Evolution

    Hulu has announced that it has distribution deals with 5 small-to-mid-sized U.S. pay-TV operators: Armstrong, Atlantic Broadband, Mediacom, Midcontinent and WideOpenWest (WOW!). The deals follow last week's news that Hulu has signed up Cablevision as the first U.S. pay-TV operator to distribute its service.

    Like the Cablevision deal, there weren't a lot of specific details shared about pricing or packaging. The 5 operators will be able to offer Hulu's content on their advanced set-top boxes. While the set-tops aren't identified, a number of these operators use TiVo DVRs as their advanced set-tops to offer integrated OTT/pay-TV/VOD experiences.

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  • Comcast-TWC Deal Floundered Amid Rise in Customer Experience Expectations

    On last Friday's podcast, Colin and I discussed the failure of the $45 billion Comcast-Time Warner Cable merger. I asserted that a key reason the deal didn't get approved was due to the rise in customer experience expectations. Today I'm going to flesh that out further, and describe why customer experience is becoming key to defining the video industry's winners and losers.

    First, it's important to understand that the traditional notion of "customer service" has been supplanted by the far broader concept of "customer experience" - the TOTAL perception of ALL of our touchpoints with any company we do business with. Because we now live in an unprecedented time for humanity - when everything we need or want is just a handful of clicks away, anytime we choose, the bar has never been higher for our expectations of customer experience.

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  • VideoNuze Podcast #271: Revisiting Comcast-TWC Deal Failure; Verizon-ESPN Spat

    I'm pleased to present the 271st edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    We had recorded last week's podcast just prior to the news that Comcast was dropping its merger bid for Time Warner Cable, so first up this week we share thoughts on why the deal collapsed.

    In my view, the perception of the deal transformed from being cable-centric to being broadband-centric, largely due to the rise of online video usage. As a result, Comcast, post-merger, having 57% of American broadband connections under the new 25 mbps definition, became a sticking point (never mind that it actually has 56% on its own, reflecting its aggressive broadband infrastructure upgrades).

    This is a key irony of the deal's failure - Comcast has invested billions in technology, but its woeful customer service ultimately undermines these investments and defines its reputation. In a hypothetical world where Comcast was a "most admired company," (like Apple, Amazon, etc.), I think it's quite possible regulators would have actually welcomed the Time Warner deal.

    We then turn our attention to Verizon's "Custom TV" packaging and ESPN's lawsuit. As I explained in Has Verizon Put ESPN Into a Public Relations Headlock Over Opaque "Sports Tax?" I think Verizon is making a brazen move to reign in sports costs. Colin and I agree it's the most startling thing yet to happen in a tumultuous year for the pay-TV industry.

    Listen in to learn more!



    Click here to listen to the podcast (21 minutes, 6 seconds)

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    The VideoNuze podcast is also available in iTunes...subscribe today!

     
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  • A Netflix Distribution Deal With Cablevision Now Seems Virtually Guaranteed

    Today Cablevision announced a first of its kind distribution deal with Hulu. The deal follows the introduction of Cablevision's new low-cost "cord-cutter" package (broadband plus a free OTA antenna) last week and its agreement to promote the new HBO Now OTT service. Given all of this I think it is now virtually guaranteed that Cablevision will soon announce that it will also distribute/promote Netflix.

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  • VideoNuze Podcast #270: Debating Whether Netflix is Friend or Foe to TV Industry

    I'm pleased to present the 270th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

    (Note, we recorded prior to the demise of the Comcast-Time Warner Cable deal; we'll discuss that next week.)

    Early this week, in "Is Netflix Friend or Foe to the TV Industry? It's More Confusing Than Ever." I laid out both of the arguments. In today's podcast, Colin and I flesh out the debate further, bringing in additional perspectives and data. Importantly, Colin adds his thoughts on how Netflix should be seen internationally.

    It's a fascinating debate, which our friends at MoffettNathanson coincidentally weighed in on this week as well. Using Nielsen data, they believe Netflix's audience size is already 6% of all of TV's, double its level from 2 years ago, and has accounted for 40% of TV's audience declines. They also see Netflix's share rising to low double digits over the next 4 years.

    Listen in to learn more!



    Click here to listen to the podcast (22 minutes, 50 seconds)

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  • Is Netflix Friend or Foe to the TV Industry? It's More Confusing Than Ever.

    One of the great riddles of the past few years is whether Netflix is friend or foe to the U.S. television industry, including broadcast TV networks, cable TV networks and pay-TV operators. Over the years, Netflix has downplayed in many ways its disruptive potential to the TV industry (my personal favorite is when CEO Reed Hastings would say "We're more of a bicycle to their car" in comparing Netflix to pay-TV).

    But with Netflix tacking on another 2.3 million subscribers in the U.S. in Q1 '15, bringing its total to 41.4 million, the question is taking on increasing urgency. How should the TV industry REALLY think of Netflix? Below I share what I think are the best "friend" and "foe" arguments, concluding with my own assessment of what Netflix really is now.

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  • Perspective What's this? Where Watch Apps Can Go Next

    Over the past year, a strong wind has blown in the sails of the TV Everywhere market. More content owners are making programming available on this increasingly popular platform and the content is finding an audience on programmer and operator apps across platforms. Adobe reports TV Everywhere and online video consumption is up 146% in the last year. Ad server company FreeWheel noted that 38% of all ad views on long-form and live content came from behind authentication walls. NBCU made a push for TV Everywhere education with its Super Stream Sunday that offered open access to its Super Bowl-related programming.

    Riding high on this growth, the industry should now focus on how to make the opportunity even bigger.  Based on our ongoing work with programmers and MVPDs on authenticated video, as well as our data analysis of sources such as watch app reviews, below is a sample of the strategies we think will help take watch apps to the next level:

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  • HBO's Goldilocks Pricing Challenge

    HBO's upcoming launch of its "HBO Now" OTT service is unquestionably one of the biggest variables for the future of the pay-TV ecosystem. Because of its marquee original content and ubiquitous brand, HBO is unique among all entertainment-oriented cable networks in having the power to attract millions of OTT subscribers.

    While that's an opportunity for HBO, it's also a massive threat to the larger pay-TV industry. The ability to subscribe to HBO standalone will almost certainly make cord-cutting and cord-nevering a more appealing option for some viewers. HBO Now, coupled with other OTT options, like Netflix, Hulu, Amazon, or even Sling TV (for ESPN fans in particular) would be very enticing.

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  • VideoNuze Podcast #263 - Debating Cord-Cutting: Is the Glass Half-Full or Half-Empty?

    I'm pleased to present the 263rd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

     

    Today we return to the cord-cutting debate, discussing fresh data showing that the largest pay-TV operators lost approximately 125K subscribers in 2014, slightly worse than the 95K subscribers they lost in 2013. There's both a "glass half-full" and a "glass half-empty" way of looking at the results, and we explore both positions. You decide!

     

    We then turn from pay-TV to broadband, where the trend was quite different. The largest broadband ISPs added 3 million subscribers in 2014, up 15% from 2.6 million in 2013, with cable operators accounting for a remarkable 89% of all additions.

     

    With 87.3 million broadband homes in the U.S.at the end of 2014, there is no question that broadband is the foundation on which all online services now stand (a key reason why the FCC's intervention is a risky proposition, as I explained last week).

     

    Listen in to learn more!

     

     

     

    Click here to listen to the podcast (22 minutes, 1 second)

     

    Click here for previous podcasts

     

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    The VideoNuze podcast is also available in iTunes...subscribe today!

     
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  • Cord-Cutting Remains Negligible As U.S. Pay-TV Operators Lost Just 125K Subscribers In 2014

    Despite all the talk of massive cord-cutting being just around the corner, evidence continues to demonstrate that the U.S. pay-TV business remains relatively healthy. The latest, from Leichtman Research Group, shows that the 13 largest U.S. pay-TV operators, which together account for 95% of the market, lost just 125K subscribers in 2014. That was basically even with the 95K they lost in 2013 (see chart below).

    LRG president and principal analyst Bruce Leichtman noted that the 220K subscribers lost over the past 2 years represents just about .2% of the operators' total subscriber base. Of course no business ever wants to lose customers, but given the dramatic rise in OTT usage and subscriber levels, along with the vast array of viewing options, losing just .2% over 2 years seems like a pretty good level of stability (consider that Netflix alone added 5.7 million U.S. subscribers in '14).

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