I'm pleased to present the 205th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
Colin is in London this week and shares observations on the intense battle for broadband subscribers in the U.K. BT has been aggressively laying fiber in a bid for broadband subscribers. It recently spent about 1.4 billion pounds on soccer rights to supply its BT Sport channels. Colin says BT has seen lift in both broadband and pay-TV subscribers as a result. One wonders whether Google could try something similar here in the U.S. by bidding for NFL and other rights somewhere down the road?
Speaking of the NFL, it and Major League Baseball were in the news this week for filing a brief with the Supreme Court urging review of broadcasters' challenge to Aereo. The leagues basically asserted that if Aereo is deemed legal, more of their games will migrate to cable, which of course has been happening anyway. Meanwhile Aereo's lead investor Barry Diller said this week he could see a 35% adoption rate for Aereo long-term, primarily driven by millennials. This would be hugely disruptive if it were to happen.
Listen in to learn more!
Click here to listen to the podcast (18 minutes, 11 seconds)
There is a lot of talk these days about pay-TV cord-cutters and cord-nevers and how OTT providers can leverage this group to build their businesses. But a data point from research firm Leichtman Research Group last week that caught my eye suggests this market may be smaller than many people think and also not growing very fast. LRG noted that just 9% of U.S. homes subscribe to a broadband Internet service, but not a pay-TV service, up just slightly from the 8% level in both 2011 and 2012 (see graph below).
Further, Bruce Leichtman of LRG told me that of the broadband/no pay-TV group, just 37% get their broadband from speedier and pricier cable or telco fiber deployments. That compares with 75% taking these services among other broadband subscribers (remember than cable and telco fiber are by far the most prevalent broadband services).
Topics: Leichtman Research Group
The explosion of online video viewership is presenting pay-TV operators and broadband ISPs with big challenges and opportunities managing all of the increased traffic across their networks. To help address these, Akamai is introducing new capabilities in its Aura Network Solutions line of operator content delivery network (OCDN) technologies. The goal is to help operators deliver traffic more flexibly and cost effectively while also opening up potential new business models such as TV Everywhere.
New industry data compiled by Leichtman Research Group shows that broadband ISPs that account for 93% of the U.S. market added over 1.1 million subscribers in Q1 '13, nearly 6 times the 194K pay-TV subscribers that were added in the period by pay-TV operators that account for 94% of the market.
Broadband subscriber additions have outstripped pay-TV's for years, but the 6x ratio is more than double the average of 2.8x from the prior 2 years. The 194K pay-TV additions in Q1 were down 56% vs. the 445K added in Q1 '12, while the 1.1M broadband additions were off 15% from the 1.3M in each of the prior 2 years.
On the surface the data suggests that cord-cutting - a shift from viewing video via pay-TV to via broadband - may finally be taking hold. But while LRG's Bruce Leichtman has indeed found an uptick in his calculations of cord-cutting (up from .2% of U.S. homes to .4%-.5%), he sees a far more nuanced picture of what accounted for Q1's swing, plus lots of uncertainty going forward.
Investment firm Bernstein Research has released the results of a proprietary door-to-door survey of 204 Kansas City households which reveals strong interest in Google Fiber service among early adopters, with potentially strong adoption rates among mainstream audiences longer-term as well.
Bernstein found very high awareness of Google Fiber, with 98% of respondents being aware of the service, no surprise given the level of local coverage it has received. Of the 204 respondents, 52% said they would definitely or probably buy Google Fiber and 25% said they may.
However, recognizing the difference between what people say they'll do vs. what they'll actually do, Bernstein forecasts that 15-20% of homes will in fact subscribe to Google Fiber in the first phase of its rollout. Given the uncertainties around competitive responses to Google Fiber, Bernstein is less clear about longer-term adoption, though it is suggesting 40-50% is possible eventually.
Categories: Broadband ISPs
I'm pleased to present the 172nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. This week we first discuss Google Fiber, which Google announced this past Tuesday would roll out to a second city, Olathe, KS. Nonetheless, as we discuss, it still feels like Google Fiber is a hobby for Google, though its executives recently asserted otherwise. Neither Colin nor I quite understand what Google Fiber's actual market impact or game plan is, and we are skeptical that there's a business case to support its broader rollout.
We then turn our attention to another Google-related item, which is that YouTube announced this week it is now attracting 1 billion visitors/month, even as (according to my analysis), its U.S. online-only traffic has dropped by 32% year-over-year. But, because comScore doesn't measure mobile access, this isn't an accurate portrayal of YouTube's reach, which is clearly expanding. Colin has further data that adds color to the situation.
Separate, Colin has released his excellent new white paper, "Second-Screen Apps for TV" (free download here)
And a reminder to sign up for "Sizing Up Apple TV" a free video webinar on April 2nd featuring Brightcove's Jeremy Allaire and me.
Listen in to learn more!
(update - the correct pronunciation of Olathe, KS is "O lay the" (thanks Frank Hughes!).
Click here to listen to the podcast (18 minutes, 57 seconds)
Google announced late yesterday plans to extend its Google Fiber service to a second city, Olathe, KS (population 125,000), in Johnson County, about 30 minutes from Kansas City, where Google Fiber has been initially deployed. With the news, the question once again arises, if Google Fiber isn't a "hobby" (as Google executives recently stated), then what is it exactly? And by extension, what are its real implications for broadband ISPs, consumers and over-the-top video?
Categories: Broadband ISPs
I'm pleased to present the 158th edition of the VideoNuze-TDG podcast with my weekly partner Colin Dixon, senior analyst at The Diffusion Group. Colin and I each back in the office, after being together at VideoSchmooze in NYC.
(Apologies in advance, the audio quality this week is diminished because we couldn't get Skype working on both ends, so I had to use a cell phone connection.)
On the opening session at VideoSchmooze with the 3 Wall Street analysts, Laura Martin, Craig Moffett and Michael Nathanson, Craig made a point that cable operators are, in his opinion, "infrastructure providers," not video providers. He means that because they now supply both video, broadband and other services over the same networks, their real business is maximizing the ROI derived from subscribers' total payments for all services delivered.
To the extent that large numbers of video subscribers may cut the cord at some point down the road to use OTT services instead, cable operators would respond by trying to recapture lost revenue and margin via increased, "usage-based" pricing on broadband for heavier OTT users. Craig believes there's approximately $50/month/video subscriber of video profit margin that would need to be recouped.
In our discussion, Colin and I discuss the concept generally, and in particular whether this type of revenue shifting is feasible. Colin is skeptical whether this can happen, pointing to competitive, regulatory and consumer demand obstacles. I'm more in Craig's camp, and believe that operators would certainly try their best to accomplish this, as it's a natural thing any business would try to do.
Putting all of this into context however, it's still a largely hypothetical discussion. There isn't yet cord-cutting to an extent that operators feel the need to recoup profits through broadband. And where data caps exist they're still high enough that few subscribers need to buy more bandwidth to accommodate their OTT viewing.
Still, it's interesting to speculate on the topic, as higher broadband pricing would make OTT services like Netflix, Hulu and others relatively more expensive, therefore making them less attractive relative to pay-TV video services.
Click here to listen to the podcast (18 minutes, 18 seconds)
I'm pleased to present the 156th edition of the VideoNuze-TDG podcast with my weekly partner Colin Dixon, senior analyst at The Diffusion Group. Google is all over the online video industry and today is an "all Google" podcast, as we focus on updates related to Google TV, Google Fiber and YouTube.
First up is Google TV, and Colin discusses new features including voice-based search, the PrimeTime TV/movies app and updated YouTube app, as well as a new AirPlay-like app that allows users to watch video through their Google TV that was discovered on their Android devices. Colin views all of these as the continued evolution of Google TV, which long-term he believes will become an interesting device.
Next up, the first installations of Google Fiber occurred this week in Kansas City. The much-hyped project promises to deliver 1 gig speeds for $70/month, though a profile of an early customer indicated actual speeds around 600-700 mbps. Still, that's a huge jump from typical broadband ISP service and Colin shares scenarios of what may happen when speeds and bandwidth caps are no longer constraints.
We finish up with YouTube, which this week revealed that it will re-invest in 30-40% of the original channels it helped launch, meaning 60-70% won't get additional funds. Like TV networks, YouTube is learning what works and what doesn't, and re-upping accordingly. It's also worth noting that the YouTube app launched on Nintendo Wii this week, further spreading YouTube's reach into the living room.
Click here to listen to the podcast (16 minutes, 39 seconds)
If you were trying to tune out last week, whether lying on a beach or on a family getaway, you didn't miss all that much exciting online video-related news. However there were some items worth noting and below I've highlighted five that caught my eye.
I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 143rd edition of the VideoNuze-TDG Report podcast. In this week's podcast Colin and I discuss the prospects for Google Fiber, and specifically whether incumbent pay-TV operators and broadband ISPs should be "very, very afraid," as a report from industry analyst SNL Kagan asserted earlier this week.
Google's innovative spirit and willingness to spend heavily on Google Fiber is terrific, but as I said last week, I think its big challenge will be penetrating beyond a core early adopter audience. While uncapped gigabit broadband service is indeed compelling, more mainstream audiences will weigh its benefits against the costs of its missing features, being a guinea pig for an unproven service and increasing their monthly bills for TV and phone service, among other things.
In a sense, Google Fiber feels to me a little bit like Time Warner's Full Service Network pilot in Orlando in the mid-90's, with its high deployment costs, disruptive innovation, untested consumer premise equipment, lack of scalability and massive hype. That's not to say Google Fiber will end up like FSN as a complete flameout, but it's still not clear to me what the real impact of the project is going to be. I think incumbent operators need to be vigilant, but there's no real cause for fright, at least not yet anyway. Colin is a bit more bullish on Google Fiber, though I suspect that's because he's so enticed by the idea of a having a gigabit connection himself (being the early adopter that he is!).
Click here to listen to the podcast (20 minutes, 2 seconds)
Comcast reported strong 2nd quarter results this morning, adding another 156K broadband subscribers, while losing 176K video subscribers, an improvement over the 238K it lost in Q2 '11. It's the seventh straight quarter Comcast has improved its video subscriber losses, while driving the average monthly revenue per subscriber up another 8% to $148.57.
At the recent VideoNuze 2012 Online Video Advertising Summit, I did a fireside chat with Matt Strauss, Comcast's SVP, Digital and Emerging Platforms, who articulated Comcast's strategy for meeting consumers' ever-higher video expectations. Matt observed that "you have to envision a world where video will be everywhere." This seems to be the rallying theme for all of Comcast's recent video efforts. Matt describes how the company has reorganized itself to collapse traditional boundaries between linear, on-demand and online groups, including now having just one user experience team.
As exciting as Google Fiber's next-generation, gigabit per second broadband project in Kansas City is, last week's launch details underscore how out of synch its rollout plan is with the realities of typical consumer technology adoption. That's not a big surprise given Google's famously engineering-centric culture. However, it likely means that Google Fiber is going to fall well short of its objectives.
As it stands, Google Fiber is very much a classic early adopter service. It offers a discontinuous benefit of 100 times the average 10 megabit per second speed of incumbent ISPs, appealing to heavy users' appetite for the cutting edge. It is also unproven, therefore requiring early users to be guinea pigs, dealing with first-time installers and plenty of inevitable service bugs.
Categories: Broadband ISPs
Topics: Google Fiber
I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 137th edition of the VideoNuze-TDG Report podcast.
First up this week, Colin and I discuss this week's news that the Department of Justice is investigating whether cable TV companies are acting to suppress online video. As I wrote on Wednesday, it's good for the government to be vigilant, but for now anyway I don't believe online video providers or consumers are being impacted (rather I suggested if the DOJ wants to address a REAL way consumers are being harmed it should look into the multi-billion dollar per year subsidy non sports fans are forced to pay for expensive sports networks).
Colin disagrees with me. As he's stated in the past, he believes the use of "private networks" to deliver video traffic to connected devices that doesn't count against data caps creates preferred broadband lanes and are inappropriate (Colin believes Comcast is doing this with its recent plan to deliver video services to the Xbox).
Wrapping up, Colin shares observations from Cisco Live a big analyst event he attended earlier this week and I do some shameless plugging for next Tuesday's VideoNuze Online Video Advertising Summit.
Click here to listen to the podcast (20 minutes, 36 seconds)
The WSJ has broken a big story this morning that the Department of Justice is apparently pursuing an antitrust investigation into whether cable TV companies are taking steps to limit the rise of online video usage. The DOJ is primarily looking into the role of data caps, the use of private networks for delivery of certain programming to connected devices, the use of TV Everywhere authentication, and even the model of most-favored nations clauses between cable TV networks and pay-TV distributors.
While it's generally a good thing for the government to keep an eye on how business is conducted (the recent financial crisis demonstrates what happens when it doesn't), to my mind none of these issues are really hurting consumers, yet anyway. Rather, if the government truly wanted to focus on an immediate, huge, and worsening consumer problem in the pay-TV business, it should be focused squarely on sports, and more specifically the multi-billion dollar annual subsidy that non-sports fans are required to pay due to current cable network bundling practices.
I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 135th edition of the VideoNuze Report podcast, for June 1, 2012. This week we cover 3 different topics: Verizon's announcement of ultra-fast new broadband service tiers (up to 300 mbps); TiVo's new "Stream" companion device which will allow 1-click video downloading to iOS devices and the fresh rumors around Apple introducing a television following CEO Tim Cook's interview at the D10 conference this week. We wrap up on a light-hearted note - the hilarious video from Funny or Die for Under Armour, "Tom Brady's Wicked Accent."
Click here to listen to the podcast (20 minutes, 11 seconds)
At last week's Cable Show, BTIG's media analyst Rich Greenfield and I sat down for a wide-ranging discussion of what's happening in the online video, broadband and pay-TV industries. If you're not familiar with Rich's work, his blog posts (note: registration required) are required reading for anyone in the business. I'm a big fan and always learn something new from them.
In our discussion we talk about a number of topics that Rich has written extensively about: why broadband ISPs should price on speed, not usage, why TV networks should get over it with Dish Network's new Auto Hop feature, why Aereo is so disruptive and yes, legal and why we'll see a "virtual" multichannel distributor emerge soon. Rich also shares thoughts on TV Everywhere's challenges, Disney/ESPN's big out-of-home opportunities, the role of escalating sports rights fees, Apple's plans for a TV, and what's ahead in the video industry. Watch the video (26 minutes, 47 seconds).
Categories: Broadband ISPs
Categories: Broadband ISPs