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Even Microsoft Can't Afford to Break Into the Pay-TV Business
Here's just how expensive it has become to break into the pay-TV business: even mighty Microsoft can't afford it. Reuters reported late yesterday that Microsoft has put on hold its plan to create a pay-TV meets Netflix type
subscription service, after getting sticker shock over the cost of content distribution deals. When you have $52 billion of cash and equivalents on your balance sheet and still can't figure out how to make the numbers work, that's a pretty significant statement about how expensive licensing linear content has become.Categories: Cable Networks, Cable TV Operators, Satellite, Telcos
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Comcast's New "AnyPlay Device" Provides Air Cover for iPad Streaming
Comcast has unveiled AnyPlay which allows subscribers to stream linear TV channels to their iPads and soon Motorola Xoom tablets. AnyPlay is initially
available in Denver and Nashville, with other markets to follow. AnyPlay follows similar initiatives from Cablevision and Time Warner Cable last year, which immediately landed those operators in hot water with a number of cable TV networks. At issue was whether the appropriate rights were in place to offer tablet streaming, even within the home.
Meanwhile Comcast laid low last year, only making on-demand programming available through its Xfinity TV iPad app. It was inevitable that Comcast would also launch linear viewing on the iPad, but I've wondered for a while how it would avoid similar rights challenges. Now it seems the workaround is the "AnyPlay device," a box which connects to the subscriber's wireless home network.
Categories: Cable Networks, Cable TV Operators, Devices
Topics: Comcast, iPad, Motorola, Xoom
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Disney, Comcast and Why TV Everywhere Alone Is Not Enough
Yesterday's press release from Disney and Comcast, announcing a comprehensive new ten-year distribution agreement covering over 70 different services is a testament to the idea that improved access to programming is key to maintaining the appeal of the traditional multichannel pay-TV business model. The deal grants Comcast sought-after multi-platform streaming and on-demand rights for 70 different Disney, ABC and ESPN programming services. This is the essential vision of "TV Everywhere" - anywhere/anytime/any device access to the full range of cable and broadcast programming, with the caveat that you have to be an authenticated subscriber to pay-TV services.
Categories: Cable Networks, Cable TV Operators, TV Everywhere
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VideoNuze Report Podcast #114 - Sports Rights Fees and OTT
I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 114th edition of the VideoNuze Report podcast, for Dec. 16, 2011. In today's podcast Colin and I discuss the escalation in sports rights fees, player salaries, sports networks' affiliate fees and pay-TV rates.
Earlier this week I wrote about the massive, $254 million contract baseball slugger Albert Pujols signed with the Angels and how a new 20-year, $3 billion deal with Fox Sports enabled the team to afford the deal. But that's already old news, because since then the NFL signed $28 billion worth of deals with CBS, Fox and NBC (on top of the $15.2 billion renewal with ESPN agreed to in September), and ESPN forked over another $500 million for broader rights with NCAA.
Why does all this matter? Because as I've said repeatedly throughout the year, these deals are largely funded by non sports fans, through their ever-higher monthly pay-TV bills. As Colin and I agree, it's an unsustainable trend that's largely being enabled by consumers' ignorance and inertia about what they're paying for. Coincidentally, just today the NY Times has an article on this topic, the first one I've seen from a mainstream newspaper. The byproduct of escalating pay-TV rates is that they're opening the door for OTT alternatives to thrive. Listen in to learn more!
Click here to listen to the podcast (16 minutes, 11 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!Categories: Cable Networks, Podcasts, Sports
Topics: CBS, ESPN, FOX, NBC, NCAA, NFL
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Why Albert Pujols is Over-the-Top's New Best Friend
When baseball great Albert Pujols signed a staggering 10-year, $254 million deal with the Los Angeles Angels of Anaheim last week, he became
over-the-top's (OTT) new best friend. That's right, everyone including Netflix, Hulu, YouTube and Amazon, plus countless online-only content producers, should have been celebrating Pujols's new riches. Why? Because the Pujols deal is the latest example of how pay-TV seems determined to price itself out of reach for certain segments of the population, opening up a huge window for OTT to succeed.
Categories: Cable Networks, Cable TV Operators, Indie Video, Satellite, Sports, Telcos
Topics: Albert Pujols, Angels, ESPN, FOX, Liberty Global, TNT
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Video Interview: HBO Co-President Eric Kessler at VideoSchmooze
A highlight of last week's VideoSchmooze:NYC Online Video Leadership Forum was the leadoff fireside interview I did with Eric Kessler, HBO's co-president. Our conversation focused on HBO GO, the streaming app that HBO officially launched on May 1st, which has received approximately 5 million downloads to date.
In the interview, Eric offers a comprehensive explanation of how HBO's business model works and the value-added role that HBO GO plays in extending subscribers' life-cycle. He provides a slew of new data points on HBO usage by content type and device, as well as how it's changing subscribers' perceptions of HBO. Eric also notes that the most critical decision HBO made was to include virtually all of its programs' episodes in HBO GO, although the move undermined its lucrative home video/DVD business for a segment of buyers.
Categories: Cable Networks, Events, People
Topics: HBO, VideoSchmooze
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YouTube's Redesign: The Long-Term Siege on Pay-TV Begins
Yesterday YouTube launched its most significant redesign yet, with a strong emphasis on channelizing the site, deeply personalizing the experience, and integrating social interaction throughout. As the introductory blog post says, the redesign is all about helping users "discover a broader range of entertainment on YouTube." And though YouTube would never admit it, I think the redesign marks the start of a long-term siege on the traditional pay-TV model. YouTube is squarely focused on would-be cord-cutters and especially the younger generation of "cord-nevers" for whom the web has already become a bona fide alternative to expensive pay-TV services.
Categories: Aggregators, Cable Networks, Cable TV Operators, Satellite, Telcos
Topics: YouTube
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HBO GO: 98 Million Streams to Date and Staying Exclusive
In an interview with me at yesterday's VideoSchmooze, HBO co-president Eric Kessler said that HBO GO has delivered 98 million video streams to date. HBO GO is offered at no extra cost to existing HBO subscribers as long as their pay-TV provider and HBO have agreed to make the service available. Eric also noted that HBO intends for HBO GO to remain the sole streaming outlet for its programs as it believes this type of exclusivity is a key differentiator vs. aggregators like Netflix, Amazon and others, most of whose content is non-exclusive. Clearly this is what HBO GO users want: over 70% of viewership has been for HBO's original programs.
Categories: Cable Networks
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Google To Go Over-the-Top and Compete With Pay-TV Operators? Don't Bet On Success.
Is Google planning to go over-the-top and compete with pay-TV operators for subscribers? That's the tantalizing possibility the WSJ is reporting this morning, though its article is long on speculation and short on hard facts and on-the-record sources (as best I could tell, the only concrete thing
reported is that Google has hired Jeremy Stern - a former colleague of mine at Continental Cablevision - who's "spearheading talks with media companies"). Regardless, the possibility that Google could be looking to disrupt the pay-TV business, using its own high-speed fiber network in Kansas City and maybe elsewhere, deserves attention if for no other reason than the fact that its deep-pockets and robust ad model would potentially allow it to cause trouble for incumbents.
"Potentially" is the operative word however, because any subscription TV service Google would offer would only be as good as the channels it could deliver (see Sezmi's recent retreat for proof of that). As such, the critical question here is whether the most important cable network owners - Disney, NBCU, Viacom, Time Warner, Fox, Discovery, Scripps, A&E Networks, AMC Networks, numerous regional sports networks (RSNs) and others - would agree to deals with Google. Though they would no doubt be enticed by Google as another well-funded buyer, barring some huge unknown, I'd bet that most would say "Thanks, but no thanks," effectively stymieing the search giant's ambitions.
Categories: Cable Networks, Cable TV Operators, Satellite, Telcos, TV Everywhere
Topics: Google
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5 Things Holding Back TV Everywhere's Rollout
It has been almost 3 years since the term "TV Everywhere" burst onto the scene as the pay-TV industry's response to threats from over-the-top competitors. Yet while TV Everywhere is as tantalizing as ever, it remains a vaguely defined concept and a mishmash of disparate efforts. On the positive side, efforts like HBO GO, WatchESPN, various Turner apps, Comcast's Xfinity TV app and others are already gaining traction and illustrating how valuable TV Everywhere services can be.
However, there's still no consensus in the industry about what TV Everywhere really is meant to be - a new way of viewing programming in-home or out-of-home or both? A new delivery mechanism for live/linear channels or for on-demand archives only or for both? A value-added opportunity to retain subscribers or a new way to generate incremental revenue with additional fees and/or with conventional TV-style ad loads? And so on. Talking to executives throughout the industry and following all of the media coverage I'd suggest there are at least 5 things that are currently holding back TV Everywhere from achieving its full potential:
Categories: Cable Networks, TV Everywhere
Topics: TV Everywhere
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As Viacom-Google Appeal Begins, Question Remains Why Can't They Make a Deal?
Remember Viacom's $1 billion copyright infringement suit against YouTube initiated 4 1/2 years ago, which was decided in Google's favor last June? Well, it's alive and well, and this morning the parties will appear for short oral arguments in the U.S. Court of Appeals for the Second Circuit in New York, as Viacom begins its appeal of the decision. Of course Viacom has every right to keep pursuing the matter, but what I've wondered about from the beginning of this case is why haven't the parties been able to make a mutually beneficial business deal so that they can put the litigation aside. As the online video market has matured over the past 4 1/2 years, with the potential dollars up for grabs growing, it's become an even bigger mystery to me.
Categories: Aggregators, Cable Networks
Topics: Google, Viacom, YouTube
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Inside Starz's Netflix Quandary
Here's a thought experiment: Imagine you're running a major cable TV network and your fastest-growing distributor (and largest, by number of subscribers) offers to license your content for approximately $300 million each year, a sum that is about 10 times the amount it has been paying under the current deal struck less than 3 years ago. The new deal would have a very material impact on your P&L as your company's operating income last year was about $400 million. Seems like a pretty tough offer to turn down, right?
However, there are certain catches. First, this distributor is considered a disruptive competitor by all of your other long-time distributors (who collectively paid you about $1.3 billion last year). If you proceed with this new deal, you're concerned that these other distributors may retaliate by paying you less when they renew their deals in the future. Second, this distributor wants a degree of exclusivity that limits your ability to make incremental deals with companies it deems as competitive. Third, key suppliers of your content have escalation clauses that entitle them to incremental payments if you proceed with this new deal, which would in turn erode your margins. And last, but not least, the manner in which this distributor wants to compensate you would alter the way you are positioned in the market - from a "premium" to a "basic" channel - consequently risking a perception that your content will be irreparably devalued by consumers and other distributors.
Got all that? If so, then you grasp the quandary that Starz's executive team found itself in as it evaluated a huge license renewal offer from Netflix. Last Thursday Starz announced its decision, choosing to rebuff Netflix's rich offer, at least for now. But as the math below shows, combined with what I've learned from individuals familiar with Starz's economics, Netflix's putative $300 million/year offer was far more than Starz could generate otherwise, making its decision to walk away all the more difficult.
Categories: Aggregators, Cable Networks
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Expensive Regional Sports Networks Are Becoming Pay-TV's Achilles Heel
An article in the NY Times over the weekend, "Regional Sports Networks Show the Money," highlighted the mega-profitable and symbiotic relationship between marquee sports teams/conferences and the regional sports networks (RSNs) they have spawned. RSNs aren't new, but as the article pointed out, teams and conferences are getting increasingly creative and aggressive about their TV rights, in turn driving up the fees pay-TV operators and ultimately subscribers are required to pay. All of this suggests that RSNs are becoming pay-TV's Achilles Heel especially when it comes to non-sports fans.
This is a topic I covered back in January, in "Not a Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year" and subsequently in "Time Warner Cable-LA Lakers Deal Is More Bad News For Pay-TV's Non-Sports Fans," in each case noting that as sports programming fees drive pay-TV rates ever higher, some portion of non-sports fans will eventually defect for lower-cost entertainment-centric options (e.g. Netflix, Hulu, over-the-air/ antenna reception, etc.).
Categories: Cable Networks, Cable TV Operators, Satellite, Sports, Telcos
Topics: LA Dodgers, LA Lakers, Pac-12, RSNs
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Turner Sports Tees Up Online/Mobile Video Coverage of PGA Championship
The 93rd PGA Championship, the final major tournament of the season, gets underway tomorrow and Turner Sports, which has exclusive broadcast rights, has teed up significant multi-screen and social media initiatives. As the Olympics, NCAA March Madness and other high-profile sporting events have previously shown, online and mobile video have created an immersive, up-to-the-minute experience for fans.
Aside from its Thursday-Sunday live broadcasting schedule on TNT, Turner Sports has a full slate of online video coverage on PGA.com, which Turner powers and through mobile. Among the highlights:
Categories: Cable Networks, Devices, Mobile Video, Sports
Topics: PGA, TNT, Turner Sports
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Viacom is Bullish on Digital Distribution Opportunities
Add Viacom to the list of established media companies benefiting from digital distribution. In its fiscal Q3 earnings call today, Viacom wouldn't break out specific digital distribution revenue but noted that it is "significant" and will contribute to "high single to low double-digit revenue growth per year for the foreseeable future." BTIG's Rich Greenfield estimated digital revenue in the quarter was $70 million, which Viacom executives didn't comment on. Viacom sees multiple drivers for digital growth: an increasing number of digital distributors, international expansion and strong demand for Viacom's content in particular, which skews younger and is geared to digital users.
Categories: Aggregators, Cable Networks
Topics: Viacom
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ESPN3.com Attracted A Record 548,000 Unique Viewers for Women's World Cup Final
ESPN3.com attracted 548,000 unique viewers on Sunday afternoon for the USA-Japan Women's World Cup Finals, the highest the network has received
for a women's sporting event, and the 8th-highest of all events streamed on ESPN3.com. Total viewing time on ESPN3.com, ESPNnetworks.com and the mobile WatchESPN app was 38.6 million minutes, or an average of just over 70 minutes per unique viewer. The iPad was the most popular device for using the WatchESPN mobile app, with 38 minutes average time spent viewing.
Categories: Cable Networks, Devices, Mobile Video
Topics: ESPN
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Cable Flexes Its Muscles (Again) With ESPN's Wimbledon Win
Score another sports programming victory for cable, as ESPN announced today that it has acquired all of the U.S. TV rights to Wimbledon tennis in a12-year deal beginning in 2012. ESPN's win was NBC's loss, as the broadcast network's 43-year association with the tournament comes to an end.
For ESPN, and for cable TV networks in general, it is another step in a steady progression of using their economic supremacy over broadcasters to obtain television rights to marquee sporting events. While ESPN is the undisputed leader, numerous other cable networks like TNT, USA, Versus, Golf and of course the regional sports networks (RSNs) such as Comcast SportsNet and Fox Sports Net have staked their claim to early round or full coverage of high-profile sports events.
Categories: Broadcasters, Cable Networks, Cable TV Operators
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VideoNuze Report Podcast #102 - HBO GO's Opportunities - July 1, 2011
Daisy Whitney and I are pleased to present the 102nd edition of the VideoNuze Report podcast, for July 1, 2011.
In this week's podcast, Daisy and I discuss HBO GO, the online/mobile service from HBO. As I said in my review yesterday, I'm very impressed with HBO GO, and believe it is a strong new asset for the company. The big question is what exactly will HBO do with it - maintain it as a primarily defensive value-add to subscribers, or pivot to broader online distribution partnerships and possibly even direct-to-consumer initiatives? Daisy and I contemplate the options and risks.
Click here to listen to the podcast (11 minutes, 13 seconds)
Click here for previous podcasts
The VideoNuze Report is available in iTunes...subscribe today!
Categories: Cable Networks, Devices, Podcasts
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HBO GO Is Terrific; The Question is How Aggressively Will It Be Deployed Longer-Term?
I've been testing HBO GO for the last couple of weeks and my reaction is overwhelmingly positive. The service is easy to navigate and incredibly responsive. Importantly, the video quality (particularly in the iPad app) is top-notch - you'll quickly forget the video is actually being delivered over the Internet and a WiFi network). And with over 1,600 pieces of content, there's no shortage of what to watch. Though I'm not an HBO subscriber, I've watched a number of HBO programs on DVD over the years (e.g. Entourage, The Wire, The Sopranos) and so the ability to get both past seasons, as well as current season episodes, in one space is highly convenient.
Obviously I'm not alone in my reactions as there have been over 3 million downloads of HBO GO just since its May 2 official release. Considering HBO has 28 million US subscribers, that's an impressive penetration level (even more so because HBO doesn't yet have agreements for HBO GO with all pay-TV providers, so some HBO subscribers can't yet access the service).
For now HBO has positioned HBO GO as a value add for existing subscribers. That's a fine place to start, but as the video landscape becomes ever more competitive, it's hard to see how HBO will be content to deploy such as strong asset mainly in a defensive manner, and not be tempted to start using it more aggressively. If and when that happens, that would be a major change in the pay-TV model. Though I questioned HBO's future in "Could HBO Be the Next BLOCKBUSTER?" HBO GO creates scenarios for how the company thrive in the online video era.
Categories: Cable Networks, Devices
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Time Warner Cable Promoting WatchESPN App for Wimbledon Viewing
Time Warner Cable is sending the below email to subscribers promoting the WatchESPN app for anytime/anywhere Wimbledon viewing. The email is the first consumer-facing example I've seen of a cable operator promoting a specific cable programmer's TV Everywhere app.
The email's copy hits the right messages nicely, emphasizing free access for existing Digital TV customers, anytime/anywhere/anyplace access on mobile devices and tablets, and easy app download instructions. The email is a winner in terms of getting the message out that TWC understands its subscribers' new viewing expectations and that it delivering a service that meets them.
Categories: Cable Networks, Cable TV Operators, Sports
Topics: ESPN, Time Warner Cable, Wimbledon
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