VideoNuze Posts

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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We've seen a lot of surprising moves in the pay-TV industry in 2015, but at the top of the list has to be how Verizon is trying to put ESPN into a public relations headlock with its new "Custom TV" packaging plan.

If you haven't been watching this closely, Verizon announced "Custom TV" last week. Under the plan, Verizon FiOS subscribers can take a base package of 45 channels, including the 4 broadcast TV networks, for $54.99 per month, and get 2 "channel packs" which are smaller groups of genre-based such as lifestyle, Entertainment, News & Info, Sports, etc. Additional channel packs are $10 per month.

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2,400 industry executives and fans packed the Madison Square Garden Theater for YouTube's Brandcast NewFront Wednesday night that was part 10-year birthday celebration, part evangelical commercial about online video/YouTube's ascendance and part pure entertainment spectacle.

The evening began with YouTube CEO Susan Wojcicki noting that hours watched are up 50% year-over-year and that YouTube now reaches more 18-49 year olds on mobile ALONE, than does any single cable network reach on TV. YouTube daily viewers are up 40% vs. 2014. And in a pitch to how advertisers can succeed on YouTube, Wojcicki said that 4 out of 10 of the top trending videos in 2014 were actually ads, not content.

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On its Q1 '15 earnings call this morning, Time Warner executives provided the first color on the rollout of HBO Now, HBO's recently launched standalone broadband service. HBO CEO Richard Plepler said the company is "seeing absolutely no intrusion into people inside the (pay-TV) ecosystem, none at all. It's all additive."

Plepler and Time Warner executives have asserted from the start that HBO Now is solely targeting the 10-15 million broadband-only homes in the U.S., although they have periodically alluded to wanting to address ALL 70-80 million non-HBO subscribers (who of course are already pay-TV subscribers). I have argued in the past that, because of how compelling HBO Now is, it will almost certainly drive some level of cord-shaving and cord-cutting and is actually a substantial threat to the sports ecosystem.

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Hulu held its NewFront on Wednesday, highlighting its growth, which includes approaching 9 million subscribers, up 50% vs. 2014, with 700 million hours of video streamed in Q1 '15, up 83% vs. Q1 '14. Hulu CEO Mike Hopkins said that 61% of Hulu's viewers no longer watch on a computer. 82% of Hulu's audience is in the 18-49 year-old age range, with a median age of 33 years-old.

I have long wondered whether Hulu was going to be the odd man out, sandwiched between Netflix, OTT's 800-pound gorilla, and Amazon, with its unlimited resources. But Hulu is clearly investing heavily in both licensed and original content, and seemingly carving out its place in the OTT landscape.

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AOL hosted its NewFronts presentation Tuesday night, with the key highlights including a new strategy dubbed "Content 365" structured around a screen-based content development approach, a new slate of 16 different programs, and a deal to obtain clips from NBCU's entertainment and news programs.

Content 365, the new mantra from AOL, describes an expansion from a NewFronts "season" to a NewFronts "year." AOL's content development strategy is to focus on 3 formats: short/snackable for smartphones, 5-7 minute mid-form "storytelling" for tablets and desktops and longer-form for connected TVs. In all, AOL plans to produce over 3,600 pieces of video in 2015.

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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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