VideoNuze Posts

Today, a deviation from my typical VideoNuze post. Peering into my crystal ball, I foresee a slew of mainstream media articles about HBO Now coming as early as May, just a month following its launch. These articles in the NY Times, USA Today, WSJ, etc. will highlight individuals who have subscribed to HBO Now and how the service is impacting the pay-TV ecosystem.

Importantly, these articles will underscore how, despite HBO's assertion that HBO Now is targeted solely to broadband-only households and is supposed to be beneficial for pay-TV/broadband ISP partners, in reality the service has much broader consumer appeal and hurts HBO's traditional partners.

Below I'm sharing an example of such an article. In it you'll read about Kristin Holter, the Gehls and Bill Aiken. They are fictitious people, but are meant to be very representative of the kinds of people who will subscribe to HBO Now and how their decisions will affect the pay-TV industry.

Using the framework for assessing the potential of new OTT services that I shared last week, HBO Now scores by far the highest for me. Assuming it works as I expect it will, I continue to be very bullish on HBO Now, which I see as having far-ranging ripple effects, especially for non-sports fans. I recognize I'm going a little out on a limb with the below article, but I'm pretty convinced that directionally it's a great example of the type of media coverage HBO Now will be receiving very soon.

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Just A Month Old, HBO Now is Already Roiling the Pay-TV Industry

May 3, 2015

It wasn't supposed to be like this.

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I'm pleased to present the 265th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. There's been a lot of buzz this week about a WSJ report that Apple could at last be planning to enter the TV business, by offering a so-called "skinny" bundle of around 25 TV networks this Fall.

In today's podcast, Colin and I debate whether Apple can succeed with this approach. Colin is relatively sanguine, and believes that if Apple ties the TV service's launch to a new device, it could get a lot of traction. Colin sees Sling TV's skinny bundle as a model for Apple to follow.

I'm much more skeptical about the skinny approach, and despite Apple's formidable assets, I'm challenged to see how it works. My main issue is that by definition, skinny bundles result in a "Swiss cheese" channel lineup that is unsatisfying for many viewers (this was supported by Bernstein research I wrote about earlier this week). Another issue for Apple, which reportedly wants to include broadcast TV networks (which Sling doesn't include), is the near-certainty that it won't get full linear rights in all U.S. markets, undercutting the service's ubiquity.

At a minimum it will be fun to watch what Apple does, along with everyone else. Reminder, to help us all gauge these new OTT services' potential, check out the handy scoring framework I shared yesterday.

Listen in to learn more!

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As the pace of new OTT services has ramped up, I've been asked by a lot of industry colleagues and press which ones I believe have the most and least potential. It's a great question, and while I don't pretend to have a crystal ball, I certainly have my own opinions (as VideoNuze readers know!). But even as I've been sharing my thoughts, I've increasingly been asking myself - why is it, for example, that I'm more bullish about some (e.g. HBO Now), more skeptical about others (e.g. Sling TV) and more willing to be open-minded about still others (e.g. Apple's and Verizon's TV services)?

That's led me to think more rigorously about the criteria that I'm personally using to evaluate the potential of these new OTT services. It may be obvious, but when each of us makes judgments about a product or service, we're doing so against some implicit set of criteria. The challenge with all these OTT services is that a lot is still unknown about them and about consumers' reactions to them. On top of this the market is very dynamic. Nonetheless, I think it's still possible to create a set of criteria against which these new OTT services can be more explicitly evaluated (and re-evaluated as more information about them is known).

With that in mind, below I have shared 9 proposed criteria that I think are important in assessing these new (and existing) services' potential (there may be other criteria too!). By scoring each OTT service on a 1-5 scale against each criteria (i.e. 1 meaning "weak" or "not distinctive" and 5 meaning "strong" or "highly distinctive," their respective total scores emerge, forming a picture of potential winners and losers. If you're interested in using these criteria to do your own scoring, I have created a handy Google doc. Feel free to access, export to Excel, modify, etc. I'm interested in your results and comparing notes.

Here are my 9 proposed criteria:

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It turns out that where's there's smoke there isn't always fire. If you were to believe the media's rampant attention to cord-cutting, you'd think it was poised to skyrocket. But new research from Bernstein reveals that while there's interest in cord-cutting among actual pay-TV subscribers, their plans to actually do so are quite minimal.

In the first of a series of focus groups of pay-TV subscribers, held in New York City, Bernstein surfaced a variety of reasons why pay-TV is stickier than a lot of people may like to believe. Even those participants who had identified themselves as "highly likely to cut the cord in the next 6 months" concluded that doing so would not be advantageous. Practically all the participants currently subscribe to OTT services like Netflix, Hulu and Amazon.

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TubeMogul and Videoplaza, an Ooyala company, have announced a partnership to build a premium programmatic ad marketplace, which will enable brands, agencies and trading desks that use TubeMogul's buying platform to access inventory from international broadcasters and publishers that use Videoplaza's sell-side programmatic solutions Karbon and Konnect.

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A reminder that early bird discounted registration is open for the 5th annual VideoNuze Online Video Advertising Summit on Tuesday, June 16th in NYC. All early bird registrants will be entered to win a 55-inch TCL Roku TV, graciously provided by Roku.

There is a ton going on in online video advertising, and the Ad Summit will dive deeply into all of the hottest topics such as programmatic, viewability, convergence, mobile, branded entertainment, innovation and much more. The Ad Summit will once again be a must-attend day of learning and networking with industry leaders from brands, agencies, content providers, technology companies and others in the ecosystem. Last year's Ad Summit drew over 420 attendees, featuring 40+ speakers.

There are 10 terrific industry-leading companies on board so far as sponsors, including Premier Partners DashBid, FreeWheel and Pixability, Headline Partners Altitude Digital, LiveRail/Facebook, Ooyala, Teads.tv and TubeMogul plus Branding Partners Brightcove and Roku. I'm grateful for their generous support!

Learn more and register now!

In last Friday's podcast, Colin and I covered a lot of ground in assessing HBO Now's opportunities and risks. One of the points I raised, which I believe deserves much more attention in understanding HBO Now's disruptive potential, is how it threatens pay-TV's multi-billion dollar "sports tax" on non-fans.

I've been writing about the sports tax - how non-fans effectively subsidize the cost of super-expensive sports networks such as ESPN and regional sports networks (RSNs) that they don't watch - for almost 5 years now. In a back-of-the-envelope analysis I did following a panel I sat on with Mark Cuban back in 2011, I estimated the annual tax on non sports fans amounted to at least $2 billion per year (4 years later, it's now much higher).

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