Cord-cutting accelerated in 2015. Once again, It dominated headlines about the pay-TV industry, portending its imminent demise, as SVOD awareness and original content investments skyrocketed. But despite all of that, top Wall Street analyst Craig Moffett of MoffettNathanson (who has participated in many VideoNuze events) issued a bullish note this morning on cable TV operators’ prospects in 2016.
Craig’s analysis highlights the subtleties of the pay-TV industry’s dynamics that are too often glossed over in generic media coverage about cord-cutting’s ascent. The nub of his argument is that while the overall pay-TV industry is indeed pressured in many ways, cable operators’ distinct product and technology advantages vs. its primary competitors (satellite and telcos) have led to cable operators taking market share, helping insulate them from macro issues.
Categories: Cable TV Operators
I'm pleased to present the 296th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week we discuss our first impressions of YouTube Red, and then turn to Q3 earnings reports from top cable operators, which are defying cord-cutting.
For YouTube Red, Colin and I agree that the service’s primary value proposition of ad-free viewing is diminished by the fact that the ad experience on YouTube is already quite viewer-friendly and non-intrusive (as I wrote last week and yesterday). Further, the download feature, which could be quite appealing, is underwhelming on iOS, though it’s slightly better in Android. Net, net, neither of us sees much upside for YouTube Red, at least for now.
We then turn our attention to Q3 earnings from 3 big cable operators, Comcast, Time Warner Cable and Charter. Each has reported very strong video subscriber results, bucking the cord-cutting paranoia. Colin notes that for Comcast, broadband profit contribution actually exceeded video’s profit contribution. I see the combination of cable’s robust broadband and hybrid set-top boxes like X1 as the key to ongoing success.
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Comcast continued to defy the cord-cutting boogeyman in Q3 1’5, losing just 48K video subscribers, compared with a loss of 81K in Q3 ’14 and a loss of 127K in Q3 ’13. Comcast said it was the best third quarter for video subscribers in 9 years.
Once again, Comcast attributed the improvement mainly to its X1 set-top box, which is now in one-quarter of video homes and accounted for 60% of video connects in Q3. On its earnings call, Comcast noted X1 subscribers have lower churn, use VOD and DVR more heavily and subscribe to more additional outlets than non-X1 subscribers. As a result of X1’s success, Comcast has increased its deployment, now installing 40K X1s per day, compared with 30K per day in Q2. Comcast also said it has deployed 1.5 million voice remotes which further enhance the X1 experience.
The line between TV and online video is blurring still further, as Comcast has announced that it is adding short-form online video content from 30 broadcast and cable TV networks to its X1 platform and online at Xfinity.com. The beta launch means that millions of X1 customers will be able to surf the Web tab of the On Demand section on X1 to access the clips.
thePlatform’s co-CEO Marty Roberts has left the company, GeekWire first reported yesterday. Comcast, which owns thePlatform, confirmed the move subsequently in a statement (see below). Roberts had been with thePlatform for 9 years, beginning as VP, Marketing, then as SVP, Sales and Marketing, and finally as co-CEO, with Jamie Miller. Both were appointed in May, 2014, upon prior CEO Ian Blaine’s departure.
I'm pleased to present the 287th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week Colin and I dig into the idea of Comcast launching a curated video service called Watchable, which was initially reported by Business Insider. Colin is extremely skeptical of the plan and outlines 4 key reasons why. I’m a little less skeptical, but as I explained earlier this week, believe there’s a lot more upside for Comcast in integrating major OTT services into its X1 offering.
Regardless of the specifics, we both believe that Comcast and other pay-TV operators need to move more deeply into online video as the traditional TV and pay-TV businesses come under increasing pressure.
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There’s been a lot written in the past few days about Comcast’s reported plan to introduce a new platform called “Watchable,” that will curate short-form online video content from various providers for viewing on its X1 set-top boxes and eventually on mobile devices. The initiative is seen as helping Comcast increase its appeal to millennial viewers and drive additional online video advertising revenue.
On the one hand, I applaud the company’s desire to dive more deeply into online video, which has many synergies with Comcast’s broadband and TV businesses. Without knowing any of the details, the biggest issue to me with Watchable is that it’s hard to understand why Comcast would prioritize it as a current initiative when a far more significant opportunity would be integrating popular OTT services into X1, which would have huge subscriber acquisition and retention benefits.
"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.
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.
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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.
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.
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.
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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.
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.
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With the FCC voting 3-2 to enact net neutrality regulations under Title II of the 1934 Communications Act, the focus now shifts to how Comcast proceeds on its planned Time Warner Cable acquisition. The $45 billion deal, combining the two largest U.S. cable TV operators, was announced in February, 2014, and has been in the regulatory slow lane for months as net neutrality took center stage.
Once perceived as virtually guaranteed to be approved given Comcast's formidable lobbying apparatus, the deal is now seen as having no better than a 50-50 chance by many analysts. While Comcast continues to express confidence the deal will be approved and close in early 2015 (and even internally circulated a combined company organizational structure), the dynamic regulatory, political and industry landscapes make any bets on the deal's outcome a total crapshoot.
I'm pleased to present the 261st edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. This week we return to the topic of TV Everywhere, which we've discussed on previous episodes. While TV Everywhere's challenges are well-understood, this week Comcast released encouraging adoption data, which we dig into.
Comcast also announced it now offers over 70 linear networks via TVE, in addition to on-demand choices. Related, NBC said this week that it will offer authenticated access to its linear feed via its app, but only in its O&O markets. Colin notes that's a very different approach than CBS is using for linear, which is only available via its All-Access service that costs $5.99/month.
Aside from improved content for TVE, Colin and I also observe that monetization is also improving, with technology providers BlackArrow and This Technology, as examples, recently sharing product updates on dynamic ad insertion (here and here).
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Comcast said that in 2014 over 30% of its Xfinity TV subscribers used its TV Everywhere app ("Xfinity TV Go") on a monthly basis, representing a 20% year-over-year growth rate. The average Xfinity TV Go viewer watched over 7 hours per month via the app, up 40% vs. a year ago. Comcast said the Xfinity TV Go app for iOS and Android has been downloaded over 11 million times.
I'm pleased to present the 256th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week Colin and I share our predictions for the video industry in 2015. In addition, we look back at our predictions for 2014 and share how we did (yes, accountability!).
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This has been a significant year for TV Everywhere growth and no question, live sports has been the biggest driver. At the recent VideoSchmooze, one of our sessions explored how sports is playing a pivotal role in introducing TV Everywhere to millions of viewers and in turn, is creating a path to using TVE for entertainment programming as well.
The session featured Brian Dutt (FreeWheel), Vito Forlenza (Comcast), Dina Juliano (NBCU) and Clark Pierce (FOX Sports), with Colin Dixon (nScreenMedia) moderating.
The full session video is included below.
According to a recent study by Nielsen, 15% of viewers said they enjoyed watching television more when social media was involved. By now, we know that consumers are using these screens to browse the web, talk on social networks about what they're watching or access complementary content that enhances their experience. So what new and different opportunities does this activity create for pay-TV operators and programmers to leverage the second screen for increased tune-in, engagement and ad revenues?