Oct 20, 2014

The Great Unbundling

With the announcement that CBS was offering a $6/month a la carte package coming directly on the heels of HBO’s announcement that it, too, was offering an a la carte solution, it’s tempting to think that we’re seeing the start of the unraveling of the TV industry, a point in time similar to the launch of iTunes and the dramatic effect that had on the music business.

And while that may turn out to be so, I’d say it’s far more likely that we’re seeing a lot of testing of the waters.

Let’s take a look at CBS. They’re a broadcast network, which means that technically their live offering is already free to anyone with a TV and and antenna so they’re essentially giving you something you already have. (It’s also worth noting that the app actually only offers live viewing in certain markets, the ones where CBS own the local affiliate.) So the value here is in the On Demand content which includes both current shows and old-time favorites like The Brady Bunch.

What’s significant about CBS’ VOD though is that CBS is the only one of the majors that’s not hooked up with Hulu. That leaves them in the enviable position of being able to offer their current catalog without bumping into rights issues. Because depending on how the deal with Hulu has been negotiated, those other networks may not have the rights to put most of their more popular programming up on their own freestanding app.  (It’s not just Hulu either, the other broadcast networks also have deals with Netflix and Amazon.)

This is one area where CBS was smart not to have jumped on the bandwagon.

Or were they?

Because it will be interesting to see how many people are going to sign up for this new app. The actual market for it is sort of murky: of the ten million broadband subscribers without pay TV service, how many are in that boat by choice and how many are there as the result of a temporary financial setback?

So the question becomes how many in either bucket will be wiling to spend $6/month on an app that lets them watch CBS back catalog? Especially given that the networks’ biggest hit, Big Bang Theory, is not included. And that there will be commercials, something not found on the $9/month Netflix.

It’s an interesting question because it places a lot of weight on the value of CBS content. Will cord cutters see their palette as $9/month for Netflix, $8/month for Hulu, $8.25/month ($99/year) for Amazon and now $6/month for CBS? Or have they reached their breaking point in terms of how much they’re willing to spend?

The result will influence how the rest of the industry plays its next hand, whether they’re going to bank on an endless sea of a la carte options or if they’ll decide the consumer has a breaking point and begin to consolidate their efforts around existing OTT players like Netflix, using those platforms as the way to maximize profits from their existing catalogs.

Once again, time will tell.

Oct 15, 2014

5 Questions From Today's HBO Anouncement

A lot of unanswered questions from today’s announcement during an analyst call. Here’s my top 5

How exclusive is Amazon’s agreement for HBO’s back catalog? If it is exclusive and only Amazon can stream the back catalog they recently bought, then the new app is going to feel like HBO GO Lite since all they'll be able to show is current season programming.

How are they going to make the MVPDs happy so that they keep the HBO gravy train flowing? The answer might be by telling them that the new OTT app is just HBO Lite and not as full featured at HBO Go. Or they may just be betting on the fact that the MVPDs need HBO more than HBO needs the MVPDs.

How does this affect CineMax which, with shows like The Knick, is also starting to have quality original content? Right now they are bundled with HBO in most MVPD packages. Will HBO throw Cinemax in on the new app?

How large is the audience really? If people don’t currently have HBO on their pay-TV package, why would this push them to sign up and of the group that does not currently have pay TV, how many of them made that decision for moral rather than economic reasons? In a similar vein, is HBO hoping that a low priced package can convince millennials to sign up rather than using their parents passwords?

How soon before another network follows them? The problem with assuming this is the opening of a floodgate is the convoluted rights equations in the US. Given how much of their back catalog is currently on Netflix, Amazon and Hulu, the other networks may not have a whole lot beyond their current seasons to throw up on an OTT app, thus greatly diminishing the appeal of launching such an app. Remember too that few other networks have the cachet of an HBO.

Listen to me discuss HBO's announcement on NPR's Morning Edition with Neda Ulaby

Oct 14, 2014

The Dawning Of The Rise of the Next Golden Age

For most of its relatively short life, television has been resigned to being background noise. While there were occasional shows that captured our attention, for the most part the television served as the soundtrack to our lives, filling the void so things didn’t seem so lonely.

That’s changing though, and television is now being consumed a lot more like books or movies: as a conscious choice, at a set time, with the concurrent expectation of quality inherent in that sort of decision.

It’s a combination of several factors: the internet has become our new background noise, a combination of websites and YouTube videos and tweets and Facebook posts splayed across multiple screens, providing us with the electronic hearth the television once did.

At that same time (and partly because of the new delivery methods enabled by the web) the quality of television has improved and the number of outlets for quality programs has grown along with it. Networks that began life as background noise (AMC, FX) or delivery systems (Netflix, Amazon) now have top quality programming. And the list is growing.

That’s changing the way we watch TV, but more importantly, it’s changing the way we think about TV. Decisions are now in the hands of the viewers and what they want to watch, not broadcasters and what they want to serve up. That’s a huge change and it’s soon going to be reflected in television’s business model, whether the industry is ready for it or not.

That change is going to hit the current ad supported model smack dab in the gonads.

Because no one wants to watch ads. Least of all a generation raised on Netflix. Where, in case you needed reminding, there are no ads. So look for the television equivalent of branded content or native advertising to replace interruptive advertising. Something that’s the diametric opposite of the sixty second pharma commercials with their tai chi’ng seniors and the 5 minute ad blocks that mark the waning days of commercial TV.

Change is also going to hit the idea of where the borders of a series lie. Because it’s no longer just about a seaon's worth of 22 or 44 minute scripts, cranked out week after week. It’s about creating an entire world around a show via second screen and social and gaming and other media and understanding that the ultimate viewer of those experiences may not actually see them during the lifetime of their creators. That’s creating something for perpetuity and the ensuing pressure is going to help ensure that the quality programming we’ve seen blossom is not just a passing fad.

Because as watching TV becomes more like reading a book, viewers are going to be able to choose what series they plow through from an increasingly broad and varied selection of current and prior favorites. Such is the blessing of the second golden age of TV.

It means that showrunners (or someone on their staff) must have an understanding that the strength of that entire experience is what’s going to take someone from being the person who watches just one episode in passing to someone who watches the entire series in full. And most likely pays for the privilege.

Shows will need to engage current and future viewers, to bring them into the show’s world wherever they may encounter them and help them to stay engaged. They must account for varying levels of fandom from the obsessed “shippers” on Tumblr and Reddit to the multitasking chatters on Twitter to the between-friends masses on Facebook and everyone in between. This is going to require a new set of skills, people who understand that driving live tune- in is only the first step and that every show has to be viewed as a long term project.

This world will be on us sooner than we expect it because if we’ve learned one thing since the dawn of the industrial revolution, it’s that change happens gradually and then all at once. The good news is that most players will be the better for it. Viewers will have better and more varied programming and above all, choice. Actors will have better roles, more opportunities and more ways to earn royalty fees. Writers, directors and producers will have similar opportunities re: royalty fees and will also be freed up to explore the boundaries of what’s possible in transmedia experiences.

The only losers here might be print media and the movies. Because as serialized television takes a more prominent role in our culture, those media will either have to step up their game or risk losing a piece of a finite audience. Though given their lackluster performance over the past few years, I can’t but think a little competition would be a good thing.

Oct 9, 2014

New On Digiday: Facebook May Want To Become Your Pay TV Provider

While Twitter has been receiving most of the buzz around live television and tune-in, the launch of Facebook’s new video ad serving platform, Atlas, has the potential to radically change that conversation. Atlas gives Facebook the power to index users’ behavior both on and off Facebook, functionality we believe will be a huge boon for the television industry...  READ THE REST ON DIGIDAY

Oct 1, 2014

It's All About The Showrunners

For all the debate around who should be in charge of second screen and social TV efforts, one thing is becoming very clear: the key to success rests with the showrunners.

That’s because when the showunner is involved, along with the actors and the writing staff, it seems like the second screen experience is an actual part of the show, not some sort of bolted-on afterthought. In fact, a recent study from Twitter, Fox and the Advertising Research Foundation revealed that 40% of viewers prefer to see tweets from cast members versus 18% who wanted to see tweets from the official show handle.

This stands to reason on many levels: the type of viewer who is fan enough to want to tweet about a show is the type of viewer who’s likely formed some sort of connection with the actors and wants to read their tweets. It gives the sense of having a conversation with the actor and if the actor responds to or favorites a tweet, even better.

But success is dependent on more than just a cast that’s willing to tweet: it depends on having a long-term, well-planned strategy that takes more than just Twitter into account. Depending on the type of program and the type of audience it’s aimed at, the production company needs to have thought out everything from how the show translates on a gaming platform (as an actual video game), what sort of content to feature for behind-the-scenes, backstory or alternative story lines, how to film all of it, when and why and then of course figure out who is going to supervise all of it.

It’s a lot more complicated than just pulling together a couple of stills for the website and letting an intern wander around with a camera shooting “behind the scenes” footage.

But it’s worth it because when it’s done right it feels authentic and even more importantly, it feels organic— like everything is a part of the same show.

It’s worth it because the people who watch the show months, maybe even years, after it first airs are going to want a way to engage with the show, to talk about it, learn about it, to essentially recreate the water cooler chatter they long missed out on. And the strength of that second screen engagement is going to play a big role in propelling them from watching just one episode to watching the entire series

It’s worth it because second screen creates an additional advertising platform and thus an additional revenue stream, which more than makes up for the time and effort spent on creating that second screen experience.

But it’s got to start with the showrunners. Third party apps and network apps have their place, but they’re only as good (and desirable) as the content that’s on them. If the experiences around the shows are things fans want to engage with, then they’ll take off. But if it’s just IMDB, Rotten Tomatoes and a Twitter feed, that says “we don’t really care about you” and fans will take their loyalty to a show whose second screen experience indicates that they actually do care about their fans.

Your call showrunners.

Sep 2, 2014

Big Changes Afoot

A whole bunch of exciting changes this month. The main ones being that I am leaving Piksel to relaunch my own consulting service and that as of today, I am taking over as Chairman of the 2nd Screen Society.

The parting with Piksel was quite amicable— they are actually one of my first clients— but there’s just so much going in the Future TV space, it seemed like the right time to pursue some of the opportunities I'd been seeing. I’ll be offering a range of consulting services to companies in the media and entertainment industries through Toad Stool Consultants. The primary focus will be on digital/future strategy, product marketing and thought leadership. You can see the complete list here.

One of those great opportunities I was referring to is that I am taking over as Chairman of the 2nd Screen Society. (Chuck Parker becomes Chairman Emeritus.) There’s a real revolution happening in the broader 2nd screen space with social TV, multiscreen and everything in between, and S3 will play a crucial role in helping this nascent industry gain traction. Among the ways we'll be doing that is by introducing standards, by getting both content creators and advertisers more involved and by promoting the actual success stories our members now have. It’s thrilling to be riding this wave of change as it becomes more and more mainstream-- I have been very involved in the 2nd Screen Society since its inception and the people who run it are incredibly smart, passionate and (most importantly) just plain good people.

So I’m really looking forward to hitting the ground running.

The final announcement for this morning (and one that should come as no surprise to many of you) is that I’ve written a book about the TV industry and it’s due out later this fall. Called Over The Top: How The Internet Is (Slowly But Surely) Changing The Television Industry it’s comprised of three sections. The first details the current business relationships in the TV industry: who pays who for what, why and when. The second section deals with the changes currently buffeting the industry, everything from the rise of binge viewing to streaming services like Netflix to second screen and social TV to the empowerment of fan communities. 
The final section are my predictions about where we’ll wind up in the next ten years and why it’s a lot better than where we are now.

Writing the book chewed up much of my evenings and weekends over the past six months, but it's finally done and I’ll be sure to keep everyone posted on the publication date.

Thank you all for your support these past 7+ years and I look forward to having you along on the next part of the journey.

Aug 28, 2014

The Mobile Web Still Matters. A Lot.

The mobile web only seems like an anachronism. Because seriously, who actually opens up Safari or Chrome on their phone and goes searching for a website, particularly one that already has an app.

I say “seems” because the thing about those apps, particularly the ubiquitous ones like Facebook and Twitter is that any link you find in them gets opened up in either the app’s own browser… or in Safari or Chrome. So a New York Times article found on mobile Facebook gets opened in a mobile browser. Not the New York Times app. Ditto video. In fact the more popular an article or a video is (see how I successfully avoided the “c” word there), the more likely it is to be seen via the mobile web.

That’s why it’s so important for sites to be optimized and designed for the mobile web. No matter how many smartphone apps they have. Because until Facebook agrees to link to your iPhone app, you’re going to have millions of Facebook users watching on their iPhone’s Safari browser. And if the experience is suboptimal, you’re the one getting dinged. Not Facebook. Not Apple. Not Safari.

It’s an obvious thing, but I’m always surprised by how many times I hear people say “but we already have an app” as they dismiss the need for a well-done mobile website, particularly for video-heavy sites. No quicker way to lose your audience than ignoring the mobile web.

Aug 25, 2014

HBO GO: Still Not Netflix

Last week Barclays analyst Kannan Venkateshwar put together a report that attempted to show the various ways HBO GO could launch as a web service and impact Time Warner’s market cap without destroying the network’s extremely profitable relationship with the MVPDs.

Venkateshwar laid out two possible scenarios:

  • An $11/month option that forces digital-only subscribers to wait for a six-month window before being able to watch new shows. (This offers a $4/month discount from the $15/month the average MVPD charges for HBO.) He assumes that 20% of HBO’s current audience would cut the cord if this model was available.
  • A web-only version with no windows that sells for a premium price of $18/month and is aimed at people who don’t currently have HBO or pay TV.

He assumes that HBO could make $600 million revenue by launching both these options simultaneously.

It’s a premise that makes for good headlines, but I don’t see it working for a number of reasons.
  1. The Cost Factor: Netflix, for $9/month, has thousands more movies, hundreds more TV shows. In comparison, both proposed versions of HBO Go look pretty light, especially the “full” version at double Netflix price.
  2. The Homeland Factor: HBO and Showtime are usually bundled together. So HBO benefits every time someone decides they want to watch “Homeland.” That also means viewers aren’t all that aware of how much HBO costs on its own via their MVPD, and it makes the paying for both HBO and Showtime into a much more expensive proposition. While HBO is more popular than Showtime, I’m not sure how many viewers are willing to drop the latter for a marginally better experience on the former.
  3. The Hassle Factor: HBO would have to set up a billing system and track down millions of dollars every month. Similarly, viewers would have yet another bill to keep track of and pay every month. While this doesn’t sound like a deal breaker, it’s one more factor that would keep people from making the switch.
  4. The Cheapness Factor: It’s not the $15/month for HBO that’s got people concerned about their cable bills, it’s the other $150 worth of other charges. Given the ease-of-use HBO currently provides pay TV customers with both linear TV and HBO GO, it’s going to be a tough sell to get them to excise just HBO from their cable bills…. especially if the resulting service isn’t superior to what they have or (more importantly) any less money. Cutting the cord and keeping HBO is certainly an option, but I suspect that HBO fans also enjoy watching AMC, ESPN and other networks that require a pay TV subscription. What’s far more likely is that if HBO chose to go it alone, the MVPDs would roll out variations on the low-cost basic cable + HBO packages that Comcast, Verizon and others tested last year.
  5. The Watercooler Factor: I’m still trying to wrap my head around the audience for 6 month old HBO content at a savings of $4/month. People who’ll pay money to watch HBO want to watch their shows live— or at least close to live— so they won’t be left out of the water cooler buzz (real or digital) around shows like Game of Thrones. Waiting six months to join the conversation seems counterintuitive.
While it seems logical to the digerati that HBO Go should be unbundled, the realities of the marketplace make it highly unlikely, at least in the near future. Right now, the prospect of going direct to consumer is a good negotiating tactic for HBO to use with the MVPDs, but the audience for such a product seems rather limited.