I’m pleased to present the 361st edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week Colin and I discuss TiVo’s 16th quarterly Video Trends Report, which we both covered this week (here and here). We agree that the pay-TV industry has painted itself into a high-cost corner. The consequences of this are increases in cord-cutting, cord-shaving and adoption/use of SVOD, reduction in perception of per channel values and budding interest in new skinny bundles.
All of this is bad news for the industry and the report illustrates the specifics of each of these trends.
The report is available as a complimentary download here.
Listen in to learn more!
Click here to listen to the podcast (20 minutes, 38 seconds)
TiVo has released its 16th quarterly Video Trends Report (previously published by Digitalsmiths, which was acquired by TiVo in 2014) and the key takeaway is that pay-TV’s high cost is creating huge industry vulnerability that is already showing up in increased cord-cutting/cord-shaving and higher penetration and use of SVOD services. It also looks possible that interest in skinny bundles could be fueled by their low cost compared to traditional pay-TV.
TiVo found that in Q4 ’16, 17% of respondents didn’t subscribe to a pay-TV service, and of this group, 19.8% cut the cord in the last 12 months. No surprise, “price/too expensive” was the top factor influencing respondents’ decision to cut the cord, cited by 80.1% of them. But in second position was using a streaming service such as Netflix/Hulu/Amazon, which was cited by 48.3% of respondents.
There is an unmistakable trend taking hold in the wireless industry: video is quickly becoming bait for big carriers to lure and retain subscribers. All 4 of the biggest U.S. carriers have not only launched unlimited data plans, which are being explicitly promoted for video viewing, but in addition 3 of the 4 (T-Mobile, AT&T and Verizon) are also tying in aggressive discounts on video services. As I wrote recently, all of this carrier activity will drive more widespread mobile video use.
The start of the trend can clearly be traced to November, 2015 when T-Mobile launched its Binge On program, which now allows users to watch 120+ video services without impacting the user’s data plan. T-Mobile upped the ante in late 2016 by offering AT&T subscribers who switched to T-Mobile a full year of DirecTV Now for free (a $420 value). In January, T-Mobile further tweaked AT&T by adding a free year of Hulu for these subscribers because of the launch problems DirecTV Now experienced.
YouTube’s app will be added to Comcast’s X1 set-top box later this year, the companies announced this morning. The partnership is a win for both companies and for X1 users. YouTube gains seamless access to millions of X1 users who no longer have to switch inputs to a connected TV device to tap into YouTube’s massive video library on their TVs. For Comcast, integrated YouTube further expands X1’s value proposition as an all-in-one TV/video device.
Of note, the companies said that X1 users will be able to search the YouTube catalog with the X1 voice remote control. Searches for a favorite actor’s clips, a specific music video, recipes, workout routines and more will all be available when users add the word “YouTube” to their voice search request. The YouTube app will bring up relevant results in the same way as, for example, doing the same search on Siri with an iPhone.
I’m pleased to present the 356th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week we explore the concept of “TV as an app,” which represents a paradigm shift in how TV is accessed by viewers. Of course the rise of Netflix, Amazon, Hulu and others has paved the way for app-based viewing, but an entire TV lineup being delivered via an app to a connected TV device is still a significant change from conventional set-top box-based viewing.
“TV as an app” got a boost this week with Comcast’s beta release of the Xfinity TV app for Roku. I’ve given it an initial try and provide some observations. In addition, Colin was moderating a panel on video apps this week and shares further insights he heard.
We then shift focus to this Sunday’s Super Bowl, which will once again feature multiple free streaming options as well as localized dynamic ad insertion in the streams, which is a first. I’m keeping an eye on the ads to see if they offer any meaningful viewer engagement.
Listen in to learn more!
Click here to listen to the podcast (23 minutes, 8 seconds)
Comcast has announced that its Xfinity TV app is now available for beta use on certain Roku streaming devices and Roku TVs, with broad rollout planned for later this year. The partnership was initially unveiled in April, 2016. The Xfinity app for Roku is the first deployment of the Xfinity TV Partner Program, which Samsung also joined.
The “TV as an app” model means that Comcast subscribers will be able to get full access to linear and on-demand content plus DVR functionality via Roku, without having to take a Comcast set-top box, a first for the cable company. Comcast has positioned the Xfinity TV app on connected devices as beneficial for subscribers who want choices in how they access their subscriptions. The screen shot below shows a clean implementation reminiscent of what Comcast X1 users already see.
In an interview at Lionsgate’s first investor day, Liberty Media chairman John Malone praised Netflix as having a “nirvana business model” while calling out traditional pay-TV distributors for being “asleep at the switch” as their legacy “toll gate” video business models were disrupted. Malone highlighted Netflix’s direct-to-consumer, global scale and complete control as key benefits.
However, Malone wasn’t all doom and gloom about traditional pay-TV distributors, which he sees as morphing from being “video delivery businesses” to “connectivity businesses.” Malone thinks this change in mindset will lead to distributors breaking with tradition and offering premium networks such as Starz in combination with broadband, as opposed to being available only on top of multichannel bundles. But he would not provide any timetable for when this shift might occur.
According to industry data compiled by Leichtman Research Group, cord-cutting remained relatively modest in Q3 ’16, with the top 11 pay-TV operators, which account for approximately 95% of the market, losing 255K subscribers vs. 210K lost in Q3 ’15. As has been the trend in recent quarters, cable operators performed better than satellite and telco operators, which are disprorportionately bearing the brunt of the overall market’s slow, but ongoing, contraction.
Topics: Leichtman Research Group
Comcast announced on Friday that the integration of Netflix into its X1 set-top box would launch this week. But when I checked my X1 on Friday evening it was already available, so I spent some time over the weekend giving it a test drive. Below is a 12-minute demo video I created that highlights the key benefits of the integration and how expertly it was done.
As VideoNuze readers know, I’ve had the X1 since its debut, back in July, 2012. I was immediately enthusiastic about its clean and highly responsive web-like UI as well as its ability to quickly retrieve on-demand content. More recently, the voice-powered remote control has delivered even more value. But the biggest potential benefit I’ve always envisioned for X1 was its ability to handle IP apps, giving Comcast a breakthrough way to provide a seamless experience between its own video services and those delivered over-the-top via broadband (e.g. Netflix, Amazon, YouTube, etc.).
If you want a vivid contrast of one company succeeding in the real world vs. another flailing in its own dream world, there’s no better example than what’s currently happening at Comcast vs. what’s currently happening at AT&T.
With Comcast, which just reported its impressive Q3 ’16 earnings this morning, the company has not only devised a clever strategy for competing in a highly disruptive environment, but is also executing on it masterfully. Conversely, AT&T is a company that has already made a backward-looking $50 billion acquisition of DirecTV, is trying to make a new $85 billion acquisition of Time Warner whose rationale its CEO cannot clearly explain and is now planning to launch a new $35/month DirecTV Now video service that is guaranteed to lose money and could do serious harm to the industry.
The pay-TV industry has undergone a seismic shift since the introduction of OTT streaming. Although broadcast TV viewing remains robust in the U.S. with TV’s weekly reach remaining steady at 86 percent in Q4 2015, according to Nielsen viewing figures, both online video and subscription video on demand (SVOD) services, like Netflix, are growing. SVOD penetration rates in the U.S. are currently around 20 percent but are expected to reach 30 percent by 2020. Online video streaming is on the rise as well. As YouTube points out on its own website, consumers watch “hundreds of millions of hours” of its content on a daily basis.
New research from consulting firm Altman Vilandrie & Company highlights the major challenges that current and pending “skinny bundles” face. Skinny bundles - which are scaled down, customized and less expensive groups of TV networks - have become a hot industry topic, and are perceived as valuable in pulling cord-cutters and cord-nevers back into the pay-TV ecosystem.
But AV&Co.’s 7th annual consumer video survey, which is the most extensive research that I’ve seen yet into the prospects for skinny bundles, paints a picture of how narrow the opportunity may in fact be. VideoNuze readers know that I’ve been very skeptical of skinny bundles, whether from Sling TV, PlayStation Vue or soon Hulu and DirecTV Now. The AV&Co. research largely confirms my concerns (see here and here).
Topics: Altman Vilandrie
Music services are omnipresent, but pay-TV operators haven’t had much of a role. Seeking to change that, data provider Gracenote, a subsidiary of Tribune Media Company, has announced a suite of music data and services to enable pay-TV operators to launch their own music video channels and services, identify music on TV and search for artists’ on linear and on-demand programming.
Noting that 72% of YouTube viewership is music videos (according to Statista), Gracenote believes pay-TV operators have an opportunity to launch various services that bring music videos to HDTVs and home media environments.
Major pay-TV operators made it through another quarter without any substantial acceleration in cord-cutting, according to industry data tallied by analysts MoffettNathanson. In Q2 ’16, pay-TV operators lost an estimated 757K subscribers, compared with a loss of 683K subscribers in Q2 ’15. Note also that the second quarter is always the seasonally weakest. When estimated Sling TV subscribers are added in, the loss declines to 708K in Q2 ’16 vs. 613K lost in Q2 ’15.
In a continuing trend, cable operators again picked up market share at the expense of telcos and satellite providers. Cable’s loss in Q2 ’16 declined to 242K subscribers from 404K lost in Q2 ’15, while telcos swung from a gain of 5K subscribers in Q2 ’15 to a loss of 526K subscribers in Q2 ’15. AT&T accounted for the vast majority of that loss (minus 391K) as it transitioned U-Verse subscribers to DirecTV. Verizon had a loss 41K vs. a gain of 26K a year earlier as it experienced an employee work stoppage.
Topics: MoffettNathanson LLC
Comcast reported its Q2 ’16 earnings this morning, once again showing strong improvement in video subscribers and keeping cord-cutting in check. The second quarter is always seasonally slow in the pay-TV business, but Comcast reduced its video subscriber loss to just 4K in Q2 ’16, its best performance in over 10 years. The trend in just the past 4 years is impressive; Comcast has steadily reduced its subscriber loss from minus 69K in Q2 ’15, minus 144K in Q2 ’14 and minus 162K in Q2 ’13.
I'm pleased to present the 330th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
Colin and I were both very enthusiastic about news earlier this week that Comcast will integrate Netflix into its X1 set-top box, a move we’ve been advocating for a while. In this week’s podcast we discuss how complicated this negotiation must have been, and why joint subscribers will be the big winners.
Surely a motivating factor for Comcast was the acknowledgment that viewers are spending more time on SVOD, which new research from IBM Cloud Video highlighted this week.
More specifically, the research showed how important video has become for Amazon Prime members, with 75% of them now watching. By not charging for video in Prime, Amazon is potentially a big disruptor in the video/TV industry down the road.
Listen now to learn more!
Click here to listen to the podcast (24 minutes, 9 seconds)
Yesterday, Recode reported that Comcast will integrate Netflix into its X1 set-top box. Loyal VideoNuze readers know that I’ve been advocating for this type of partnership for almost two years, back to when I articulated the benefits in “Why the Timing is Now Perfect for a Netflix-Comcast Partner Deal” in October, 2014. There are lots of benefits to Comcast and Netflix by partnering (as I’ll further explain below), but the biggest winners once the integration is complete later this year, are the companies’ mutual viewers.
I'm pleased to present the 323rd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
Colin and I were both very impressed by the demo that Comcast CEO Brian Roberts did at INTX earlier this week of how the X1 set-top box will blend linear TV and online video streams from this summer’s Rio Olympics into one experience.
We both believe this will be a truly breakthrough viewer experience, showcasing X1’s broadband capabilities and the value of the two-way interactive network. We envision Comcast launching a massive marketing campaign in the months leading up to the Olympics highlighting how experiencing the Olympics will be “best on X1,” in turn driving new subscriber acquisitions and upgrades.
More broadly, we discuss how valuable X1 and Comcast’s back-end infrastructure are as a platform for launching new features and services. We touch on how Amazon too is leveraging its platform for its Streaming Partners Program, underscoring the anticipated competition between big video platform owners. The role of a robust platform in determining the ultimate video winners is becoming increasingly clear.
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After a long and arduous regulatory review, earlier this week Charter Communications closed on its $55 billion acquisition of Time Warner Cable and its $10.4 billion acquisition of Bright House Networks. Following the closings, Charter plans to phase out the Time Warner Cable and Bright House brands, re-branding its entire new footprint Charter, with service name Spectrum.
Many TWC subscribers will gladly bid adieu to a brand that has had one of the worst rankings, as measured by the American Customer Satisfaction Index, in an industry that itself endures rock bottom scores. Of course, simply changing a company’s name isn’t sufficient to effect real change; rather, it’s the underlying service that must tangibly improve, a point that Charter CEO Tom Rutledge clearly stated in this interview with Bloomberg.
I'm pleased to present the 320th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
As both Colin and I wrote this week (here and here), Comcast delivered very strong video and broadband subscriber gains in Q1 '16. Despite all of the rhetoric around cord-cutting and the fact that SVOD services - which were considered a potential substitute for pay-TV - have boomed, Comcast had its best first quarter in 9 years, adding 53K video subscribers vs. a loss of 8K subscribers in Q1 ’15.
As Colin and I discuss on the podcast, Comcast is benefitting from weakening competition, its own investments in product/content/user experience, and triple-play bundling, powered by broadband adoption. As has been the case for a couple of years now, the X1 set-top box, now in 35% of video subscribers’ homes, continues to be the linchpin in video, driving up ARPU, VOD and DVR usage, reducing churn, etc. In an era of rising viewer expectations, X1 delivers a superb, differentiated, web-like experience.
Given all of the above, I think Comcast has a strong outlook at least through 2016 if not beyond. Colin is a little less sanguine and we discuss our differences.
Listen now to learn more!
Click here to listen to the podcast (23 minutes, 4 seconds)