Jan 30, 2013

Vine's Dim Prospects


Vine, the new video microblogging service from Twitter (it allows users to post videos of 6 seconds or less) is an interesting idea, but I suspect it has too many fatal flaws both in the concept and in the execution, in order for it to take off in the time frame we’ve come to expect from overhyped technology.

Vine’s biggest initial hurdle-- the spate of bad publicity it’s getting from the fact that it’s taken over Chatroulette’s position as the Penis Network can easily be overcome by the institution of some stricter TOS policies and more active policing. But Vine’s problems run deeper.

To begin with, videos, even six second videos, are a big time investment. Psychologically, you need to make a commitment to watching a video. You can’t scan it the way you scan a page of text or even photos. That’s slightly less true with 6 second videos than with longer pieces, but it's still going to be a huge issue for Vine in the early days, when most of the videos are going to be banal experiments.

The other issue weighing against Vine is the learning curve. The traditional method of shooting and editing video is to overshoot and then edit: 60 seconds of video becomes 6. 

Vine is not set up that way. You can't edit, so you need to pick your 6 seconds carefully. It’s a skill and a challenge, more difficult than limiting messages to 140 characters (where you can always use abbreviations), more artistic than picking one of 10 photo filters.

That alone will prevent most people from using it: there’s no room in their already busy lives for yet another piece of technology, particularly one whose functionality is limited to artistic expression in a medium whose techniques are still not innately familiar the way photography is.

When adoption and use drop precipitously after the initial honeymoon stage (and they will) Vine will be branded a failure. Which is too bad, because it’s a fascinating concept and there are people who’ll see shooting video in six uneditable seconds as a challenge and they’ll start to create something interesting, a whole new video language if we’re lucky.

That may take a year of two to happen, which is forever in internet time. Let’s hope that Vine is able to hold on that long. Or if not Vine, then something a lot like it.
 



Jan 28, 2013

Social Recommendations: No Surprises There - New On VideoNuze

This is the first of what promises to be a regular column on VideoNuze:

There’s a firmly held belief in the world of social TV and social media that our social graphs-- the people we are friends with on Facebook and Twitter and other social networks-- are the best source of recommendations for anything from restaurants to movies to TV shows. (Witness this week’s Facebook Graph Search announcement.)
Let’s take Facebook, the most personal of the social networks. While it is considered good form by many on Twitter and LinkedIin to connect with relative strangers, our Facebook friends are generally people we know in real life.
Or knew.

READ THE REST AT VIDEONUZE


Jan 25, 2013

The TV Business: A Primer For The Uninformed



It’s a relentless drumbeat: the TV industry is dead. It’s just like the music industry. 20somethings are avoiding the cord.  I want HBO a la carte. YouTube will kill cable. The TV industry is dead.

And yet, if there’s a common thread to all these articles and blog posts, it’s that so many of the people writing them have a limited idea of how the television industry actually works, particularly from a business perspective.

So here’s a little primer on how the US television industry works (there are significant difference in other countries), just to clear the air.

The Players:
This is step one - knowing who is who and what their relationships are. We are going to look at the 7 key players, circa 2013: The Networks, The MVPDs, The Premium Networks, The OTT Networks, Smart TVs, Third Party devices and Social TV.

PLAYER #1: The Networks: The networks (ABC, CBS, MTV, et al) provide content and right now, they are the most powerful force in the industry.
How Do They Make Money?
Networks have two revenue streams:
1.  Ad Sales - networks sell national advertising on their shows; local advertising is sold by the carriers.
2.  Content Deals - networks license their content to the various cable companies, satellite providers and telcos (collectively known in the industry as MVPDs.-- Multichannel Video Programming Distributors) The price is determined by the value of the network (number of viewers, potential revenue from local ad sales) multiplied by the number of subscribers the MVPD has. These deals are renegotiated every few years, which is why you sometimes see battles where say, Verizon is threatening not to show AMC programming because the post-Mad Men/Breaking Bad AMC wants more money than Verizon is prepared to give them. Here’s Where It Gets Tricky: Most of the larger networks own multiple channels. And they sell them to the MVPDs as an airtight package: You want ESPN? Well then you need to take the Badminton Channel and the Dodge Ball Channel and all 30 of ESPN/Disney’s other channels too. Right now, the MVPDs don’t have much wiggle room since they compete with each other and not being able to offer ESPN to potential subscribers would put them at a huge disadvantage. But Wait! There’s More! The networks know that you probably don’t want to watch the Badminton Channel, so they forbid the MVPDs from letting you do things like making your “Favorite Channels” list the default view, lest you leave the Badminton Channel off of that list. Networks also pay to have a good spot in the channel line-up and so they’re not about to give that up and let you, the viewer, start creating your own order... at least not as the default view.
What You Need To Know - Comcast, Verizon, Time-Warner et al are not forcing you to take thousand-channel bundled packages. The networks are more or less forcing them to offer it. The MVPDs would love to be able to sell unbundled packages since they’d make more money by signing up more subscribers while simultaneously cutting their own content acquisition costs.
When Will This Change? So here’s the current thinking: at some point, someone will launch a virtual MVPD (e.g. internet-based) with a beautiful interface and all the bells and whistles of advanced TV systems (any device, any place, any time.) This will be a premium priced system and will be very popular. Popular enough, that it will be in the best interest of an ESPN to allow this new MVPD to break up their bundle. And then the wall will crumble. This is what Apple has been trying to do (the mythical Apple TV) and they are not alone. So far, no one’s gotten any traction-- there’s no compelling business reason for any of the networks to play ball with them, but at some point this will change. (UPDATE: Read The Meteor Cometh for some thoughts on how Cablevision's lawsuit against Viacom may just be what brings about this change.)
“A Beautiful Interface?” The interface is the main pain point in today’s TV viewing experience. That giant, unwieldy grid was designed for about 7 channels and is now being forced to accommodate 700. A new interface would need to be free from the stranglehold of bundled content, which is why you haven’t seen one yet. But look at XBox or Roku for an idea of what’s possible.
What Happens In Asia, Stays In Asia: The networks also have an incredibly lucrative business selling their shows overseas: it's a win-win as those markets have a limited amount of home grown content and economies of scale make it hard for them to rival US production values. What's interesting here is that having licensed the content to a third party, the networks are much less concerned with things like TV Everywhere rights, which is one of the reasons why overseas markets are ahead of the U.S. in that regard.

PLAYER #2: The MVPDs
Comcast, Verizon, DirectTV and the rest.  The United States is the only country where MVPDs --  Multichannel Video Programming Distributors (e.g. the cable, satellite and telcos who bring you your pay TV) are regional rather than national.
How Do They Make Money?
MVPDs have two revenue streams:
         Local Ad Sales on the programming they run
         Subscription fees So here’s the thing to remember here: the vast majority of MVPDs don’t just sell pay TV packages. They sell broadband and landline services too. The old “Triple Play.” It’s an incredibly lucrative system for them and an incredibly bulletproof one too. How Many Cords Can You Cut? It’s bulletproof because what pundits forget when they talk about “cord cutting” is that the cord that brings you television is generally attached to the cord that brings you internet. And if you’re cutting the one, you’re still going to need the other. (To put this in perspective, over 90% of FIOS and Uverse subscribers get TV and broadband from the same provider.) So here’s where the genius of this set-up kicks in: the MVPDs will give you two options - get the pay TV service and get unlimited bandwidth (free unlimited bandwidth, in the case of Google Fiber), or, get broadband only, but face bandwidth caps. If you’re a heavy TV watcher who plans to get content off web-based services like Netflix and iTunes, you probably won’t wind up saving any money. MVPDs Are Not Blind They see where the market is going, understand the effect of Netflix and iTunes. And so they are busy cutting deals to include them in their offering. It’s already happening in Kansas City, where Google Fiber TV has Netflix baked into the program guide with more OTT (broadband) channels to come. Other MVPDs are not far behind. 
What Happened To TV Everywhere? The lawyers squashed it. Not the MVPDs lawyers - they’re the ones trying to get it off the ground. Rather, it’s been the lawyers for the networks and other content providers. They don’t want users watching shows outside the house unless they can get retrans fees from the MVPDs (retransmission fees-- they are claiming that a Comcast subscriber watching a live show on her iPad on the train is watching a different transmission than the one her husband is watching at home and the MVPD should reimburse them accordingly, because there's no way to count the iPad views for ratings (and eventually advertising purposes.) In February 2013, Nielsen announced its intention to begin counting internet views, so this too may change.  But Dish Is Bringing It Back To Life: At CES 2013, Dish unveiled a new set top box called the Sling Hopper that essentially blew TV Everywhere out of the water. The Slinghopper, which is a mash-up of the Slingbox and the Hopper, gives viewers the ability to watch shows off their home set top box anywhere there's an internet connection.That is likely to open up the door for the other MVPDs to roll out their own TV Everywhere systems, lest they lose customers to Dish.
What You Need To Know - Convenience usually trumps price and the MVPDs will soon be offering all the services viewers were cutting the cord for. Add in disincentives like bandwidth caps, and cutting the cord starts to seem like a bad idea.

PLAYER #3: THE PREMIUM NETWORKS
HBO, Showtime, Red Zone and other sports networks.
How Do They Make Money?
Subscriptions The subscriptions are sold via the MVPDs who collect the money for them and keep a percentage for themselves as a profit. HBO GO The success of HBO GO took the network by surprise: they did not expect it to become such a runaway hit and are still figuring out what to do with it. What they do know is that it’s a great bargaining chip with the MVPDs: give us a bigger share of the subscription fee or we’ll start selling directly to consumers. We’ve already got it up and running in Scandinavia. Why That’s Not Going To Happen Anytime Soon: Ever had to collect money for a co-worker’s birthday party? Remember how painful that was? Multiply that by 29 million and you’ll get a sense of what HBO is going to be up against if they try selling HBO GO on their own. 29 million bills each month. Call centers. Online help. Chasing down the deadbeats. Meanwhile, under the current system, the MVPDs collect the money for them and provide a steady income stream every month. They run specials like “three free months of HBO when you join” that bring even more subscribers on board. They even handle authentication on HBO Go. So why would HBO ever want to give that up? Especially since the MVPDs would drop them like a proverbial hot potato if they ever tried? Bottom line is that HBO is not “leaving money on the table” by not giving you an a la carte subscription. They’re just making sure the money stays on the table.
So No A La Carte, Ever? Not directly through HBO. But probably through your MVPD, who’d love to sell a combo basic cable/HBO subscription to all those recent college grads. It’ll happen at around the same time the bundles get unbundled.

PLAYER #4: THE OTT SERVICES
Netflix, Hulu, Amazon, Vudu, iTunes and all the other streaming services. (OTT = Over The Top, a reference to how web-based video is delivered, e.g. without a set top box. Like MVPD, this is another industry term that’s good to know.)
How Do They Make Money?
Subscriptions (Netflix, Hulu and Amazon Prime)
Sales and Rentals (Amazon, Vudu, iTunes)
Subscription services have the edge here. They may not have the selection their counterparts have, especially in terms of new movies, but they have ease of use. Rentals are tough: rights issues limit the rental period to 48 hours and forbid renewals making it a tough sell. So is having to pay $3 or $4 every time you want to see a movie: with a monthly subscription, the viewer is less aware of the financial transaction.
Where Are They Headed: Industry expectation is that the various OTT services will all cut deals with the MVPDs, where they’ll either be just another premium channel (Netflix) or a Pay Per View option. It’s just easier all around, particularly for consumers, who won’t need to add an extra device to watch OTT networks on their main TV. It’s also better for OTT networks as it expands their base of potential viewers.


PLAYER #5: SMART TVs
Samsung, Sony, Panasonic and other manufacturers
How Do They Make Money?
Direct sales to consumers. The additional “smart” features were used to justify higher prices than “dumb” HDTVs, though eventually everything goes on sale
Most Consumers Don’t Hook Them Up While the advantage of a smart TV is the ability to use an app-like button built into the set’s interface as an easy way to connect to Netflix or Facebook, several studies in the US and UK show that most consumers don’t bother hooking up the Smart TVs to the internet. Difficulty of set-up is the most likely reason for that, though lack of interoperability between different brands, and lack of demand for non-TV-centric apps (e.g. Facebook) also figure prominently
Future Prospects Not very bright for the app-based Smart TVs, but the notion of a “connected TV” - a TV that connects to the internet via a second screen device is where the industry is headed. Connected TVs will enable cloud-based systems capable of serving up millions of hours worth of programming. (That's a lot of reruns.)


PLAYER #6: 3RD PARTY OTT DEVICES
Roku, Apple TV, Boxee, Google TV
How Do They Make Money?
Direct sales to consumers. Though Roku is moving into Pay-Per-View specials (think 1980s HBO) and they’re all looking for licensing deals with TV manufacturers and MVPDs (similar to the ones Cablevision and TimeWarner inked with Roku this month)  particularly in developing countries, where TV is likely to skip the cable-to-the-house phase.
Long Term Prognosis: Roku recently introduced a device the size of a thumb drive that plugs into the TV’s USB drive and draws power from the TV set. All the more reason to believe that all these third party devices and their operating systems will get snatched up by MVPDs and/or TV manufacturers who will incorporate the technology and interfaces into an all-in-one device.


PLAYER #7: SOCIAL TV
Zeebox, Viggle, NextGuide, Fanhattan, Twitter, Facebook, et al. “Second Screen apps” is the industry term for what’s also known as Social TV
How Do They Make Money?
They don’t.
Not yet anyway. They don’t even make the networks and MVPDs any kind of demonstrable money beyond a possible viewership boost on a handful of shows and specials. (True Blood, The Grammys, Pretty Little Liars)
Changing The Channel Is The Killer App Time shifting (watching a show via catch-up, DVR or On-Demand) makes chat less relevant and discovery more relevant. The problem with discovery-based apps is that you still need to find the remote in order to change the channel. That’s not a very good user experience and it’s why we’re starting to see apps adding that functionality (Zeebox and Sky in the UK.)
2nd Screen Apps Will Likely Come From The MVPDs The most likely evolution of the second screen app is as a combination remote control-program guide with an overlay of social functionality that lives on a 7 or 8 inch tablet (iPad Mini or Nexus) and is provided by the MVPD. (Full Disclosure: KIT makes such a product, the white-label SPG.) The apps will be able to accommodate a range of second screen content, programming and discovery features,as well as an “ad locker” - a screen where users can do deeper dives into ads they’ve seen on TV at their own convenience. Google Fiber is giving voice-enabled Nexus tablets to users of its Google Fiber TV to use as remote controls and the rest of the industry is expected to follow suit over the next year or two. As current thinking has tablet-based apps replacing set top boxes (tablets are cheaper to provide and apps are easier to update) this is going to happen pretty quickly.
Making Money Off The Second Screen: The second screen is likely to become a major revenue source for the MVPDs. With more content than ever before, discovery will become critical. Unable to rely on on-air promotions to drive interest in new shows, networks will pay to have their properties featured in second screen recommendation engines. That opens the door to brand tie-ins and related ad vehicles. Look for the second screen ad market to eventually rival the first screen one.

SUMMARY
Change Happens Gradually And Then All At Once. The TV industry is in the same place the cell phone industry was just before the introduction of the iPhone: all the pieces are there, it’s just no one’s bothered to put them together. There’s no pressure on anyone to innovate because no one’s disrupting the market and so there’s no business reason to be an innovator: it’s risky and most companies are risk-averse. Eventually, someone will toss that bomb into the crowd and blow things up, the way the iPhone blew up the cell phone market. It may be Google or Apple or Intel or someone you’ve never heard of. Whoever it is, it has to be someone who feels their current market position is tenuous enough to make a risky move worth it. And what's important to remember is that right now there's no one in the TV industry who fits that description: profits are up, not down. But it will happen, and once it happens, change will come quickly. And everything you've just read will be completely and hopelessly out-of-date.

Further Reading:



Jan 23, 2013

New on Digiday: TV Everywhere Just Got Blown Open



Charlie Ergun sure knows how to keep things interesting. The Dish CEO poked his finger in the eye of the TV networks last year with his ad-skipping Hopper device. He just jabbed them again when he introduced the SlingHopper at CES — and blew TV Everywhere wide open.

READ THE REST ON DIGIDAY.COM


Jan 13, 2013

New on Beet.tv: Interview From Second Screen Summit At CES

Here's an interview I did with Beet.tv's Megan O'Neill right after my panel at the Second Screen Summit at CES Worldwide. It touches on what's going on with KIT digital's Social Program Guide product as well as where second screen devices are likely headed.




Jan 11, 2013

10 Questions About The TV Industry 2013


All the upheaval in the TV industry (and we're just at the beginning) leaves us with lots of questions that can only be answered over time.

Here are ten of the big ones we'll be watching in 2013:

1. Will Anyone Cave? Meaning, will any of the networks give in and start selling content to a third party disruptor like Apple, Google or Intel, opening the door for the complete dismemberment of the current economic structure? Right now that seems unlikely: the TV industry is not like the music industry or even the cell phone industry - none of the major players are losing money. But stranger things have happened and it's worth keeping an eye on, particularly because until someone actually does cave, innovation is pretty much a pipe dream.

2. How Many Hours Until The Other MVPDs Start Pressuring The Networks Over TV Everywhere? As I mentioned in yesterday's post, the Sling Hopper pretty much blows the whole TV Everywhere scenario wide open in that it not only lets Dish viewers watch their shows outside the house (which was the big battle the MVPDs were hoping to win this year or next) but it even lets them watch their shows outside the country (so much for geoblocking.)  Dish is the nation's third largest MVPD, something many in the industry will soon be reminded of: in a classic case of NASCAR Blindness, Dish's decidedly downscale demographics have led many to dismiss their impact. Reality: Dish has 14 million viewers, FIOS has just under 5.)  That number may prove even more shocking now that Dish has a distinct competitive advantage to reach more upscale viewers and that should lead to a tougher stance from their competitors. Or not.

3. When Will The Networks (Finally) Sue Dish Over Sling Hopper? Soon, because if the other MVPDs start pressuring them about Sling, they're not likely to sit quietly and give up all that uncounted ad revenue. Granted, Slingbox has been around for many years, but my assumption is that it was such a niche product, it wasn't worth hassling about. Since Fox and CBS are already suing Dish over Hopper, they're probably thinking, what's another lawsuit?

4. When Will TV Manufacturers Give Up On Apps?   You'd be hard-pressed to find anyone other than the manufacturers themselves who thinks that Smart TVs with dozens of apps are a good idea. Least of all consumers who don't seem to be connecting them to the internet or using any of the apps-that-aren't-the-one-that-instantly-connects-to-Netflix. I saw a glimmer of hope at CES - a piece of demoware from Panasonic that had an iPad app that controlled search, discovery, social interaction and channel changing and interacted seamlessly with the big screen. It was very nicely designed and it was actually quite intuitive (I got to play with it some.) The switch is inevitable, it's just a matter of when.

5. How Long Before A Non-OTT Network Adopts The Netflix All-At-Once Approach To Program Release?  A lot of that is going to depend on the success of the post-modern storytelling technique adopted by Arrested Development's writers: the revived season tells each episode from the POV of a different character. If it's a hit, you'll be seeing dozens of clones and semi-clones who rely on the release-all-episodes-at-once format. If it dies, it'll be a while before the mainstream networks take that approach.

6. How Do Actual Consumers React To Google Fiber TV? My buddy Rich Greenfield was mighty impressed by Google's offering, which includes Netflix and other OTT networks fully integrated into the interface, a tablet-based remote control with voice and gesture commands along with unlimited 1 gigabyte internet. How well is this going to go over with your average technophobic consumer? I'm thinking pretty well, since Google seems to be putting a lot into the marketing of this product and taking cues from Apple and from Microsoft's successful relaunch of Xbox. But it's still an uphill battle for them and the other key thing to watch here is consumer adoption of the newfangled products, the tablet-based remote in particular.

7. Will The Other MVPDs Follow Google's Lead And Integrate OTT Services Into Their Services? From a consumer standpoint, it makes sense for the MVPDs to treat Netflix, Hulu, Amazon and Vudu just like HBO and Showtime: it's one less hassle for the folks at home to deal with, one less Input device switch they have to grab the remote for. This is another one of those instances where the technology is there but the impetus is not: since none of their competitors had this feature, MVPDs  weren't at risk of losing business because of it. Now that Google Fiber's introduced it, if it proves to be a popular feature,  it won't be long before we see the other MVPDs following suit.

8. Which Of The Second Screen Apps Will Be Left Standing This Time Next Year? The consolidation and the fallout started last year and will only continue in 2013. Who remains is anyone's guess - but easy bets for roll-up are apps like Miso that don't enable discovery and are limited to one key function. Who will be doing the buying is a more intriguing question: the MVPDs, STB manufacturers, TV manufacturers, networks and other 2nd Screen apps are all likely suspects.

9. Will 2013 Be The Year MVPDs Get Into The Second Screen Business? I've been preaching this for a couple of years now: MPVDs are the logical owners of second screen apps, and those apps will mainly serve as remote controls and EPGs, with some social and recommendation engine functionality thrown in. MVPDs control the data and the holy grail of second screen app-dom: the ability to change the channel, so they're the logical choice. They can get there by buying up a lot of the current crop of apps, none of which need to actually be free-standing apps as much as functionality on a larger app (e.g. make NextGuide the search and recommendation engine for the Cablevision app.) It's a logical next step, one that Dish already seems to have put in place with their Sling Hopper apps, and that may just cause the rest of the crowd to more strongly consider following suit.

10. How Will SmartGlass Evolve: Everyone is very impressed with the automatic content recognition capabilities of SmartGlass - the way it immediately populates the second screen with relevant content once it senses what show/movie/song is on. The trick is going to be figuring out how to make sure that extra content doesn't feel intrusive or distracting, something that will be a distinct problem if advertisers get involved. Second screen is a great thing, but if it becomes an annoyance, consumers have a secret weapon: they can just put it down. The other thing to watch here is how much more content becomes available on the XBox: will FIOS and Comcast expand their offerings to include channels that are popular with viewers? Will other MVPDs join in? How the entire XBox/SmartGlass ecosystem evolves is one of the more important trends to watch this year.

These are just 10 of the issues the industry will confront this year. There are many others, from the use of voice commands, gestures, natural language recognition, the future of TiVo, the impact of the cloud, bringing social in during production... more than enough to make 2013 a very interesting year.

And we'll be following every minute of it here at the Toad Stool.


Jan 9, 2013

Dish's Sling Hopper Finally Takes TV Everywhere... Everywhere



Go Charlie Ergen.

Ever since EchoStar bought Slingbox in 2007, I've been wondering when he was going to do something with their truly groundbreaking technology.

(For the uninitiated: Slingbox is a device that takes your home set top box and gives you complete access to all the content on  it - live TV, the contents of your DVR, even your MVPDs On Demand line-up -- wherever you are, even outside the US. That's why it was initially a niche product popular with those like myself who traveled a lot and wanted to be able to watch their home teams and favorite shows. Slingbox is completely legal, well for now anyway.)

But back to Ergen and the the new Sling Hopper, which is exactly what it sounds like: a mash-up of Slingbox service and the Hopper that will allow Dish customers to literally watch all their content everywhere. Not just in their house. Not just in the presence of the Dish internet connection. Not just in the US.

Everywhere.

This is huge because no MVPD has been able to make this happen since the networks have not been willing to let them offer any sort of TV Everywhere solution. After some lawsuits in 2011, they slowly gave in and allowed TV Everywhere in your own house. Which meant you could bring the iPad onto the porch and watch a bunch of (mostly uninteresting) channels on it.

Dish completely circumvented that dynamic in a way the networks can't legally attack. (Though I suspect their lawyers are already busy at work looking to change that.)

And that is huge and completely and unalterably changes the dynamic around TV Everywhere. Expect Dish's competitors to follow suit shortly or to at least push back on the networks a whole lot harder. Both in the boardroom and in court.

Not to pile on the kudos, but I was very impressed with the three iPad apps Dish had on display at CES.

Dish Anywhere™ is a basic remote control/EPG/social content and data app that bears a strong resemblance to the KIT SPG - probably why I liked it. It even offers data-based recommendations, e.g. "7508 people are watching this show now.

The Hopper Transfers™ app lets you actually download shows onto your iPad from your SlingHopper so you can watch them on the plane or other places without a WiFi connection.

Dish Explorer is a discovery app that gives you recommendations based on what's popular among other Dish viewers and/or your social graph. (The algorithm, I learned, is based on some Twitter info gleaned from Trendrr along with Dish's own data on what shows are. currently popular. So very top line recommendations, though the "what's popular" feature should prove to be, well, popular.)

If the networks weren't already furious with Ergen for the Hopper, they will be now.

Love to see how this one plays out.

PS: Found this story from BusinessWeek, circa 2011: Big Cable Resists A Slingbox Solution


Jan 5, 2013

The Lost Boys: How The MVPDs and Hollywood Missed The Streaming Revolution


So Amazon, to no one’s real surprise, just struck a deal with A&E to purchase untold hours of that network’s programming. It’s the first of what is presumed to be many deals to beef up Amazon’s catalog of TV content.

It’s a plan that’s worked well for Netflix: their catalog of TV content has kept them afloat as their movie catalog shrinks, and there’s no reason to suspect that Amazon won’t both profit and steal market share from Netflix with this strategy as well.

What’s remarkable though, is that this market exists at all: the MVPDs are basically sitting idly by while Netflix and Amazon buy up content that should by all rights be theirs and the movie studios cling to UltraViolet in a way that prevents any of the online streaming services from having any sort of valid catalog offering.

So how did this happen?

For the MVPDs it’s all about the focus on live TV, which fits into their current ad revenue based money-making model. Catch-up TV was okay - having a couple of recently run episodes available via On-Demand was seen as a nice customer service feature-- but no thought was given to making the the full Law and Order oeuvre available as there was no way to monetize it and it might cut into the audience for USA, TNT and other networks that are heavy on the Law and Order. 

HBO Go should have been the first warning: part of what made the app so popular was the extensive back catalog, something viewers were clearly interested in. 

But again, unable (or unwilling) to see any kind of monetization option, the MVPDs largely passed.... as did the networks themselves, who could have pushed the MVPDs to adopt some sort of money making scheme for showing old episodes. Which actually turned out to be a wise decision, given the money they’ll be making from Netflix, Amazon and the like.

As for movie studios, they are still clinging to the notion that people want to own movies, rather than rent them. This was once true, but a whole spate of research, like this February 2011 report from Screen Digest, shows the trend moving rapidly in towards renting, with consumers citing iVOD (internet video on demand, aka streaming aka Netflix, Amazon, iTune et al) as a major reason. 

By keeping release windows in place that favor buying over renting and insisting on all other sorts of “rights issues” shenanigans (e.g. renters are limited to a 24 or 48 hour non-renewable viewing window), they’ve only succeeded in cutting into their own revenues while making television more relevant than movies for both the streaming services and their customers.

The streaming services are far from fully evolved at this point: conventional wisdom has them all eventually being absorbed by the MVPDs in one form or another and integrated into the overall offering, and so it will be interested to see where they wind up.