Following HBO's announcement of HBO OTT last week, a lot of the media coverage has focused on how disruptive it will be to the pay-TV ecosystem. But on today's Comcast Q3 '14 earnings conference call, company executives threw cold water on these prospects, highlighting the challenges and risks that HBO faces in going direct to consumer.
Responding to analysts' questions, NBCU CEO Steve Burke said:
If your head is still spinning from last week's HBO/CBS/potential cord-cutting news, then buckle up, because here's another doozy that seems ripe to be right around the corner: a partnership deal between Netflix and Comcast. You heard that right - two companies that have been sniping at each for years now have a perfect moment to strike a partnership deal with significant upside to both.
First, as far as the deal itself, it would roughly follow the template Netflix has already established with large pay-TV operators in Europe and smaller ones in the U.S. All those deals' details aren't known, but at a minimum they include operators integrating Netflix's app into their IP-based set-top boxes'/devices' UI, certain co-marketing arrangements, and some type of revenue sharing by Netflix (i.e. one-time new subscriber bounties and/or ongoing revenue sharing).
As devices continue to proliferate, reaching viewers across multiple screens is becoming an imperative for advertisers. At the recent Video Ad Summit, one of our sessions focused on how advertisers are beginning to do this and what challenges remain. Participants included Larry Adams (Mindshare), Josh Chasin (comScore), Rob Holmes (Comcast), Chuck Parker (Brightcove), Katie Seitz (Tremor), with moderator Jeff Lanctot (Mixpo).
I'm pleased to present the 231st edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week we explore the concept of the "appification of TV," which means accessing TV programming and experiences via apps on a set-top box or connected TV device vs. through a typical linear or even on-demand/DVR model. Of course apps are already hugely popular on tablets and smartphones, but not nearly so on TV, as they require either a connected TV device or a set-top box that can run apps.
In the latter category is Comcast's new X1, which the company is aggressively rolling out and which currently has a limited assortment of apps available (back in February I shared a video demo of how the NBC Olympics "Live Extra" app works on X1). This week Colin saw a demo of another example - CNNx - a recently announced app from CNN, which we use as a jumping off point for our discussion.
As we discuss, the appification of TV raises a slew of questions, including whether it's a net positive for the broadcast/cable network, the pay-TV operator and the viewer. Colin believes that competitive pressure from online providers will spur the appification process forward, though I think caution will be the watchword particularly given uncertainties around monetizing apps on TV. We raise more questions than we have answers around this provocative topic, but it's all great food for thought.
Listen in to learn more!
Click here to listen to the podcast (19 minutes, 42 seconds)
Binge-viewing is surely one of the most notable cultural phenomena of the past few years. Barely registering as a concept less than 3 years ago, many recent research reports now cite binge-viewing as having been adopted - if not regularly practiced - by a majority of TV viewers (examples here, here, here, here, here, here).
The shift toward binge-viewing has immense implications for the TV and video industries, touching everything from the creative process to programming/distribution decisions to monetization approaches. Some companies are fully embracing binge-viewing and riding its wave, while others are taking a more cautious approach.
Stepping back though, how exactly did binge-viewing become such a cultural phenomenon? I believe there are at least 5 key contributing factors, with the relationships among them creating a perfect storm of growth.
I'm pleased to present the 227th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week we dig into the Turner-Comcast deal from earlier this week, under which Turner is providing past seasons' and full current season's episodes to some of its most popular programs to Comcast for viewing on VOD and TV Everywhere. As I wrote earlier this week, a key enabler of the deal is Turner's ability to dynamically insert ads in the on-demand streams.
Colin and I agree that, to the extent the deal becomes a template for others, it could have a wide-ranging impact on the ecosystem. To date, Netflix and other OTT providers have been able to aggregate huge libraries of past seasons' episodes, which have fueled binge-viewing.
But as advertising in VOD/TVE grows and improves, it could become the financial foundation for operators to gain far greater content rights. That in turn could change the negotiating balance for content and perceptions of pay-TV operators. Colin and I explain what could be ahead.
Listen in to learn more!
(Note also Colin is hosting a free webinar next Tuesday on Fox Sports Go TVE app. Sign up here.)
Click here to listen to the podcast (19 minutes, 49 seconds)
Turner Broadcasting will provide Comcast with VOD and TV Everywhere access for some of its most popular programs across all of its cable networks, under a deal announced this morning. A significant aspect of the deal is that it gives Comcast rights not only to past seasons' episodes, but also to all current season episodes - what's known as "stacking rights." The deal is a big win for Comcast and also underscores the emergence of dynamic ad insertion in VOD/TVE streams as an important new revenue driver.
The traditional narrative around online/over-the-top video is that it will incent cord-cutting and cord-nevering. But now, in a twist, instead of a looming battle between OTT and pay-TV, it could well be that we're on the brink of a new era of cooperation between the two, which could have profound implications for everyone in the video ecosystem.
Stepping back for a moment, pay-TV operators have always been in the business of improving the delivery of available video and packaging it into bundles. Initially operators distributed broadcast channels and then in the 70's and 80's, with the advent of satellite delivery, operators began bundling "cable" channels as well (e.g. ESPN, MTV, CNN, USA, etc.).
I'm pleased to present the 224th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. This was an unusually busy week with many industry announcements, so today's format is a roundup discussion of four items that seemed most significant to us.
First up is HBO's exclusive new licensing deal with Amazon, which is the latest evidence of the surging value of high-quality content libraries. Second is Apple's reveal that it has sold 20 million Apple TVs to date, making it more than just a "hobby." Next, we turn to Netflix, which reported stellar Q1 results earlier this week. Finally, we look at Comcast's Q1 and Time Warner Cable's Q1 results. Both companies reported healthier video subscriber numbers (though Verizon reported a much smaller quarter for FiOS video subscribers). The question still looms how meaningful cord-cutting is in reality.
(Note, we had major technical issues with Skype this week, so in the last one-third of the podcast I sound like I'm in a fish tank. Apologies in advance.)
Click here to listen to the podcast (17 minutes, 46 seconds)
I'm pleased to present the 223rd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. This week we dig into the strong performance of Comcast's recently concluded 2nd annual "Watchathon" on-demand week and more broadly, how viewing behaviors on linear, on-demand and OTT are becoming intertwined.
Comcast revealed that Watchathon week drove 61 million views and 50 million hours watched, with "Game of Thrones," "The Walking Dead" and "The Good Wife" topping the list of most popular shows. Of note was the increase in live ratings for shows that were available on Watchathon. For example, Game of Thrones' season 4 premiere was up 17% in Comcast homes, "The Mindy Project" was up 83%, "Archer" was up 78%, "Parks and Recreation" was up 49%, etc.
Colin and I discuss how this appears to support the idea that allowing easy catching-up via on-demand can be an effective tactic for networks (and pay-TV operators) to drive audience to live viewing. In fact, in a prior survey Comcast did, it found that 82% of U.S. adults are binge-viewing now, with 55% saying they preferred to do so with current season programs. By enabling both, Comcast seems to be finding a sweet spot.
One other related data point we found interesting was from Rentrak, which said fully 66% of viewing of broadcast primetime programs on demand occurred after the C3 window. By Colin's calculations, that could mean for certain shows, 20% or more of total audience isn't being counted for advertisers today.
Click here to listen to the podcast (18 minutes, 27 seconds)
Signs of online video's growth and vibrancy are everywhere these days, but certain startup content providers still believe the surest road to success is by landing old school distribution (or "carriage") deals with large pay-TV operators. That was the message at last week's Senate Judiciary Committee hearing on the Comcast-Time Warner Cable merger from Jamie Bosworth, Chairman and CEO of golf lifestyle focused Back9 Network.
When asked at the hearing why Back9 Network couldn't just operate as an online video service, Bosworth said that "while online viewership is increasing, the average American still watches 20 times more video content via television and the advertising rates mirror that as well." Bosworth's issue is that because Comcast's NBC Sports group owns and distributes Golf Channel, the big cable operator has little incentive to add another golf-oriented network. Further, if the TWC merger were approved, it would stifle TV competition to a vast part of the American population.
I'm pleased to present the 220th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. First up, we discuss the WSJ report from earlier this week that Apple and Comcast may be collaborating in some way to deliver video through a "managed service" from Comcast. Neither Colin nor I can understand why Comcast would enable anything in its territory that would be remotely competitive with its own video services, but since the WSJ was thin on details, we don't know enough yet to fully judge.
We're also dubious about the fit for Apple given the company's emphasis on global scale for its products and also its premium positioning. And we're both struck by the regulatory red flags a "managed service" would raise for Comcast, at the very time they're trying to gain approval for the TWC deal. More of my thoughts are here.
We then turn quickly to Aereo's Supreme Court filing this week. As expected, it paints the case as being about cloud services in general, not just copyright specifically. We agree it's a clever strategy that positions Aereo as pro-innovation and pro-consumer, making it harder for the Supreme Court to rule against Aereo this summer.
Click here to listen to the podcast (19 minutes, 58 seconds)
The Wall Street Journal reported last night that Apple and Comcast are discussing a partnership for Apple to launch a streaming TV, VOD and DVR service, including dedicated Comcast bandwidth (a "managed service" as opposed to one delivered with typical "best efforts").
On the surface, it's a sexy-sounding deal, especially for those who have long-harbored a vision of Apple moving beyond its modest Apple TV device. However, scratch the surface just a little and you'll quickly find many reasons to be skeptical anything will result. Here are my top 5 (I'm sure there are others as well):
The 17 largest broadband ISPs in the U.S. added over 2.6 million subscribers in 2013, down almost 105K vs. the approximately 2.7 million subscribers they added in 2012. These ISPs now have 84.3 million subscribers, with cable TV operator ISPs having 49.3 million (58%) and telco ISPs having 35 million (42%). The data comes from Leichtman Research Group.
I'm pleased to present the 218th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Both of us have continued to observe signs of how online video is coming of age, and today we discuss some of them.
We start with news that Comcast will begin selling episodes of "House of Cards" in its Xfinity online store. Putting aside the question of why someone would buy an episode for $1.99 when they could binge-view all 26 episodes in a month for $7.99, both of us thought it's noteworthy that the largest cable operator believes an online-only series is worth selling (and note too, the deal was done with Sony Pictures, and that Verizon also has been selling the series).
Then there was the report that Disney might acquire Maker Studios, a pure-play online video / YouTube content provider. While Colin and I get a chuckle out of the idea that the Disney flag could fly over Epic Rap Battles and PewDiePie, we agree it would be a smart bet to gain reach into the all-important millennial segment.
Then we turn to the $18 million investment by Warner Bros. in Machinima, an online video gamer-centric content creator also targeting millennials. The 2 companies already had a successful collaboration with the "Mortal Kombat: Legacy" web series. No doubt the new investment will spur more gamer-centric originals for distribution by Warner Bros.
We wrap up by discussing just how important millennials are to the video's future. Recent data suggest this group is still pretty glued into the pay-TV ecosystem, but their behaviors are changing fast, in turn leading established media companies to focus on online video more than ever.
Click here to listen to the podcast (17 minutes, 38 seconds)
Do millennials want pay-TV or don't they? This is one of the most hotly-debated topics in the video industry today. The "don't" camp is well-represented by Charlie Ergen, head of DISH Network, who recently said, "We’re losing a whole generation of individuals who aren’t going to buy into that model because they only want one particular show or they want to watch the show wherever they can or they want to watch it on their schedule and so that generation is not signing up to satellite or cable or phone video today."
Last week, Ergen and DISH took an important step toward re-imagining pay-TV to make it more relevant to millennials by securing OTT distribution rights to key Disney/ESPN channels. Bloomberg reported that a new OTT service from DISH could sell for $20-30/month, far less than today's typical pay-TV bundle. BTIG's Rich Greenfield subsequently fleshed out what a new lower-priced personal subscription service or "PSS" could look like: a limited access one-stream-at-a-time model geared to single-adults or light TV viewers.
Comcast has acquired video ad manager FreeWheel for $375 million cash, validating reports that have been circulating since the weekend, but at a higher valuation than rumored. The deal is subject to customary regulatory approvals and is expected to close in a couple of weeks. FreeWheel will become an independent operating subsidiary within Comcast, comparable to how thePlatform and STRATA, two prior Comcast acquisitions, function. FreeWheel's 3 co-founders, Doug Knopper, Jon Heller and Diane Yu have signed multi-year employment agreements.
I'm pleased to present the 216th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. In today's podcast, we first discuss Disney Movies Anywhere, which launched this week. Both of us like it a lot (more of my take here). Colin believes it could also become a huge threat to UltraViolet if one other major studio were to adopt Disney's KeyChest technology.
Then we turn our attention to the Netflix-Comcast interconnection agreement, which has taken on a life of its own this week. It's rare when Colin and I see the world completely differently, but in this case, we do. Colin believes the deal sets a dangerous precedent because Netflix is being provided "extraordinary access" to Comcast's network and also that, going forward, if a content provider wants to get good performance on Comcast's network, it would have to do a deal with Comcast.
I don't see it this way. As I wrote earlier this week, the deal strikes me as business as usual, with the joint press release specifically saying "Netflix receives no preferential network treatment." Netflix made a business decision to negotiate directly with Comcast and manage/deliver their content themselves rather than work through a CDN which is what the vast majority of content providers do. This path obviously made sense for Netflix, but remember, it's in a somewhat unique situation because it accounts for 1/3 of all Internet traffic at certain times.
Because Netflix and Comcast said so little about the deal themselves, and because there is so much suspicion of Comcast (and other broadband ISPs) regarding net neutrality, market power, etc., a lot more has been read into this deal than I believe is warranted.
Colin and I have a very vigorous debate on these issues and ultimately agree to disagree :-)
Click here to listen to the podcast (30 minutes, 27 seconds)
There's lots of ink being spilled about yesterday's Netflix-Comcast interconnection agreement with some saying this is basically just "business as usual," while others are proclaiming that this is the "end of the Internet as we know it" and "evidence that net neutrality is required."
I'm not a network engineer, but since I've worked in the space long enough, I know enough to be dangerous. And from my vantage point, it seems like this is an appropriate, market-driven solution to a problem that is somewhat unique to Netflix, which now drives around 30% of the Internet's traffic during primetime hours.
Since Comcast announced its plan to acquire Time Warner Cable, there have been a number of articles about how broadband is really the main driver of the deal. No doubt broadband is very important, but Comcast still believes there's a lot of life left in its video service. To that end, the company has invested heavily in its X1 set-top box platform.
X1 is a hybrid box, delivering video via traditional "QAM" technology, while including a guide and other interactivity/content via web-based IP technology. Comcast said that X1 played a significant role in Comcast adding subscribers in Q4 '13, for the first time in 6+ years.
I've had an X1 since July, 2012, and to give a sense of its potential, I've shot an 11-minute demo of how X1 handles the NBC Olympics "Live Extra" authenticated app which is tightly integrated with its Xfinity on Demand service for highlights. First, for a little context, I show how "Live Extra" and the NBC Olympics apps work on an iPad.