Hulu’s Interactive Ad Play: Is This The Dawn of the Post-Advertising Era?

This week we saw the first sign of what the post-advertising era might look like when Hulu announced that they would start running interactive ads using technology from recent Fox acquisition TrueX. Viewers would have the option of watching a 30-second interactive ad at the beginning of a show that would allow them to then skip the two-and-a-half minutes of interruptive advertising that would otherwise follow.

The TrueX ads will initially be introduced on all Fox programming on Hulu, and advertisers like Mondelez are already on board.

So is this the future of advertising or is it just a case of Fox trying to find an audience for a company in its portfolio?

Interactive ads are likely a future of advertising — one of several formats that will replace interruptive advertising, rather than the future of advertising. The TrueX/Hulu formula of showing the ads before the program airs allows viewers to watch the show for free without interruption, while still ensuring that the content owner makes a profit. That sounds like a win-win situation for everyone involved.

As more and better data becomes available, and user targeting becomes more refined, viewers should begin to find that most of the ads they’re being served are for products and services that actually interest them. This will make the interactive format even more valuable, as it increases the likelihood that viewers will actually interact with the ads, which in turn increases both engagement and effectiveness.

A Better User Experience 

User experience will be a key differentiator for television services in the coming years, and the ability to watch entire programs without interruption will be a critical feature. As the movie industry has long known, viewers are happy to put up with some advertising before the show in exchange for an uninterrupted viewing experience afterwards. This is especially true for viewers watching on a digital platform where viewing can be assumed to be more intentional — the viewer has purposely set out to watch a specific program, versus randomly channel surfing just to see what is on TV.

More Like ‘Real’ Ads 

Interactive advertising should also prove to be quite popular with brand managers as the ads feel more like ‘real’ ads, with strong selling messages and calls to action. This positions them favorably in regard to their ‘new advertising’ competitors, native advertising and branded content. Many marketers feel those formats soft peddle the brand sell too much and would welcome the more traditional structure of interactive ads along with their easily trackable feedback loops.

Hulu-As-Bellwether 

Hulu now effectively has three ways for viewers to watch its programming, and this may prove to be a harbinger for how the industry evolves. Those with higher incomes or higher levels of involvement with the programming can choose to pay $11.99/month to avoid advertising altogether. Those who want to interact with a thirty-second ad at the beginning of a show can then avoid interruptive ads during the show, while those with a lesser degree of involvement can just sit back and watch ads (or, more likely, use the ad breaks to check their Facebook accounts.)

Take those models, throw in a smattering of native ads, product placement and branded content, and you just might be looking at the future of TV advertising.

Originally published at tdgresearch.com on November 5, 2015.

Is YouTube Red Poised To Be The Next Netflix?

Originally published at TVREV.com on October 22, 2015

YouTube rolled out it’s new subscription service Red yesterday in an announcement that was full of surprises.

To begin with, the $9.99 service includes both Google’s gaming and music applications, along with the ability to watch videos commercial-free. Videos are downloadable too, for offline consumption. And then there’s original content, consisting of series starring some of YouTube’s best known creators.

So how does it all stack up? TV[R]EV takes a look.

Music
This is a very clever addition as it ties in Google Play users while targeting the millions of people who use YouTube (and by extension, Vevo) as their go-to music source. Red will allow users to utilize a feature called Background Play that (as the name implies) allows videos to keep playing in the background even when you open another app. This will be a huge bonus to anyone who wants to listen to music on YouTube without having to keep the app open and the phone on— it essentially positions YouTube as a competitor to Spotify and Apple Music and more than justifies the $10/month fee.

Downloading
The ability to download video for  offline viewing is probably the single most requested feature for OTT sites. Most forbid it due to fear of piracy. Amazon, however, took the leap last month, allowing users to download video for future viewing and now YouTube follows suit. This will be a very desirable feature, though it’s probably more desirable for long-form content than for short-form, given the ability to facilitate a binge-viewing jag, YouTube’s decision to allow it is more of a “nice to have” rather than a “must have.”

Gaming
YouTube’s Gaming app is a Twitch competitor, designed to give users access to game-related video (as opposed to actual games.) Including this in the YouTube Red package is a smart move though, as it gives another group (hardcore gamers) a reason to sign up for Red.

Original Content
YouTube needed to do this— there’s not much “professionally produced” content that hasn’t been snatched up by Netflix, Hulu and Amazon, and there’ not much professionally produced content from their own stars. What Originals does is give series-like structure to creators like Pew Die Pie, hopefully transitioning them from free-form videos shot with barebones technology into something much slicker and more easily marketed to both advertisers and audiences.

The danger here is that the transition might alienate their creator’s current fans, by making them appear too “corporate.” At the same time, there’s the danger that many of these creators might not transition well to more structured formats. Fortunately for YouTube, they don’t need “many” of them to make the transition— just one or two per season will do, provided those one or two become the sort of breakout hits that help YouTube Red obtain and retain subscribers.

It’s also unclear how much the creators are being paid for the new programming and how it matches up with the ad revenue they’re currently drawing. The split clearly has to be in their favor to make the new formats worthwhile.

The Name
As Digiday was quick to point out, RedTube is a well known porn aggregator. Oops.

The Prospects
While YouTube Red will be able to sweep up a lot of YouTube’s hardcore adult fans, the real difficulty is going to be with the middle school and high school students who make up a sizable percentage of their base.

It’s not that the service isn’t worth $9.99/month—as noted earlier, the music service alone is probably worth that for someone who’s not currently using Pandora or Spotify—it’s just that the potential subscribers’ parents aren’t likely to see the value of YouTube Red’s proposition. $10 a month is a lot to ask parents to pay so that their special snowflakes don’t have to watch commercials. It’s a lot to ask too, if the only value is that the special snowflake gets to watch Pew Die Pie in more structured, series-type videos.

That’s why we see Red as being a tough sell to parents, with lots of conversations that contain some variation of “I’m not paying ten dollars a month, so you can skip through commercials.”

So the question becomes how many of YouTube’s adult users are willing to put up the money for something that (music service aside) doesn’t offer a whole lot of additional value, particularly since YouTube’s ad serving system, which lets viewers skip ads on many videos after 5 seconds, is not particularly intrusive. Similarly, original short form series with YouTube stars are intriguing, but probably not $120/year worth of intriguing.

We’ll reserve our final judgement for when the product is rolled out for real, but until then, the chances for success are looking just okay.

The Wait Is Over

Originally published at TDG Research on October 22, 2015

After almost two years of waiting, Nielsen has finally delivered on the OTT measurement system for which the industry has been waiting. Called “Total Audience Management” it promises to be a real game changer, boosting industry adoption of TV Everywhere.

This, in turn, will boost the amount of television being watched via OTT. Adoption of the system will launch a new era, dramatically changing the way everyone – from networks and MVPDs to the folks at home – looks at TV.

Nielsen currently has the advantage of being the only measurement system accepted by all parties: advertisers, networks and MVPDs. If the company can deliver on its promise of counting OTT views the same way it counts linear views, it could overcome the networks’ objections to releasing content for viewing on their own or MVPD TV Everywhere device apps.

If anything, networks are excited to enable this type of anywhere, any-device viewing as it will likely increase the amount of time people spend watching television. More viewing time means higher ratings and increased profits.

For MVPDS like AT&T, Comcast, and Verizon that provide both Internet and pay TV service, more OTT viewing via their TVE apps increases subscriber bandwidth use. An uptick in bandwidth use benefits multi-service providers because broadband is generally a more profitable business segment than pay TV.

Also, with Nielsen counting OTT views, TVE apps likely will become more attractive to networks, leading them to release more programming and demand fewer restrictions. This would make for a superior user experience – a win for consumers and providers alike.

Some Encouraging Stats
Nielsen revealed their Total Audience Management product to Adweek this week, while providing some initial stats for an unnamed network drama. This provides very encouraging news for the TV networks.

The first bit of good news: Nielsen found that 55% of the total audience watched the unnamed show live, with 14% watching via a connected device or OTT app (6% and 8%, respectively). Counting those additional viewers should provide a healthy bump to the show’s overall ratings.

But drill down to the 25-34 year old demographic, and those numbers are even more impressive. For that demo, only 15% of viewers watched live, while a whopping 40% watched via a connected device or OTT app (22% and 18%, respectively). Since advertisers covet these younger viewers, the jump in ratings that comes from adding in 40% of the 25-34 year old audience should certainly help raise network ad revenues. It may also reaffirm television’s overall stature as an advertising vehicle capable of reaching young adults.

Broader Measurement
The new ratings system eschews overnight or real-time ratings for a broader window, looking at views over the course of a week. This is more reflective of how people watch TV now, where “real time” has come to mean “this week” (or “before the next episode airs”) as opposed to “tonight.”
It is also important to note that many views are started on one device, continued on another and finished on a third. Allowing networks and advertisers to get accurate ratings for this type of quantum viewing will allow the industry to adapt to the way viewers watch TV today.

Coming Soon: The Rise of OTT
Now that the long wait for Nielsen is finally over, OTT can begin to come into its own. As OTT picture quality rivals that of QAM (the traditional cable TV delivery format), viewers will see numerous advantages to freeing themselves from the actual cable cords – not least of which being the aesthetics. Who really enjoys looking at yards of cable strung throughout the house?

As predicted in my Spring 2015 report on OTT Advertising, OTT viewing should approach 50% of all viewing within the next 5 years, eventually overtaking QAM.

Hands On With Roku’s New OS 7

Originally published at TVREV.com on October 16, 2015

Roku rolled out its new OS 7 operating system the other week without a whole lot of fanfare.
But the features they did roll out should be the cause for much celebration for Roku users. And much fear in Cupertino.

There’s voice-enabled search. A watch list. Hotel and dorm room use. A new and improved iPhone app.

What’s notable is that since many of these new features are contained within the aforementioned new iPhone app, they’re available to everyone who already owns a Roku, any model released since 2011, anyway. This is a huge advantage as getting all these features on a $50 Roku stick is a huge value and and while some of the features on the new $150 Apple TV may be a little slicker, they’re certainly not $100 worth of slicker.

That matters, because for $150, you can hook up three Roku sticks, giving voice searchable streaming capability to every TV in the house. (The average American home has three TV sets.The new app really is the revelation Roku says it is.

It’s got a very easy to navigate main menu with Search and Remote as the top two options. Choose “Search” and you get a simple screen with just two graphic options: Voice or Text.
Roku performed admirably on our voice recognition tests, easily identifying Rizzoli and Isles and Starsky and Hutch. You can also search by actor names and Roku had no trouble with Mariska Hargitay and got Lupita Nyong’o when we limited the search to “Lupita” The only name it couldn’t get was “Uzo Abuda” from Orange Is The New Black, but overall,the voice recognition was pretty flawless and we’ve been relying on it since.           

Your own personal Watchlist
Calling up a show also gives you the ability to “Follow” it, which means that you’re notified when new episodes are posted on a range of streaming networks, including Amazon, HBO Go, Crackle, Hulu, Vudu, FoxNow, FX and others. Netflix was the only major service conspicuously missing.

But here comes the really amazing part, the thing that sets Roku apart from the pack: the shows and movies you follow are collected under the “My Feed” tab and become your own personal Watch List.

No more having to struggle to remember whether Treme was on Netflix or Amazon or HBO. No more clicking through various and sundry submenus to see whether there’s an episode you’ve missed.
You can add movies and TV shows to the “My Feed” list. Actors too. It adds a personalized program guide layer to Roku that’s been missing from all the other streaming devices, including the new and improved Apple TV.

The remote function on Roku is pretty slick as well. It has an automatic 10-second rewind button, for lost bits of dialog and turns on closed-captioning then too, a schtick that annoyed us at first glance, but which we quickly came to appreciate.

Roku OS7’s final trick is the ability to easily log in in hotels, dorm rooms and other places that have password-enabled WiFi

Here again, things could not be simpler. Roku generates a unique network name and password and you use that to log in on your laptop or tablet. For frequent travelers, taking the Roku stick along on trips is a nice bonus. It’s also something Apple TV can’t do.

Roku’s still the one to beat
With voice commands, a watchlist and a $50 price tag, Roku is still the gold standard for streaming players. The “My Feed” watchlist in particular is a killer feature, giving Roku the DVR-like feature set that streaming devices have been missing. If we were Apple, we’d be worried.

Is Facebook The New YouTube?

Originally published at TDG Research on October 15, 2015

News reports this week indicate that Facebook is beta testing a new Video tab on its mobile app. That’s not surprising, given Facebook’s emphasis on video over the past year – a push that has seen the number of daily video views on the platform go from one to four billion (from September 2014 to May 2015).This is a huge leap, and it’s likely to go much higher still.

So is Facebook going to unseat YouTube? What about the TV networks? Or Netflix and Hulu?

Facebook is well-positioned to take a sizable share of the video market. It serves up video using a very different system than YouTube, making it an attractive alternative to many people. Add to this the strong likelihood that it will start showing video from TV networks (clips or full shows), and you have a strong case for Facebook’s growing dominance in video.

Different User Experiences

Viewers are still, for the most part, finding YouTube videos via search or from an external site link. Once selected, the video plays on its own page, with a list of similar videos on the side. Immediately after the selected video ends, an auto-play feature plays a similar video. But, since many (if not most) users are not logged in, the site has no real data from which to pull, making its recommendations spotty at best.

Facebook’s recommendations, however, are anything but random. They are served up by the Mighty Algorithm. This allows the site to make recommendations based on what individual users might actually want to watch. Gone may be the real sense of boundless discovery found on YouTube, but with Facebook video, you can at least count on the content being of interest to you. For many people this is the ideal experience. They have no desire to browse through YouTube looking for hidden gems, and are happy just to lean back and enjoy whatever videos Facebook serves them.

The social platform can rely on the reams of data it has about users: what they like, where they vacation, who their friends are, etc. Further, once users start engaging with Facebook video, the algorithm can factor in what they watched and what they skipped, using that information to make its recommendations even more relevant.

Long Versus Short Form Video

Facebook has two possible paths when it comes to the TV networks. It can provide networks the opportunity to use clips to increase awareness of, and drive tune-in to current TV shows; or it can negotiate the rights to older seasons’ episodes in a bid to compete with Netflix, Amazon, and Hulu.
Option one makes Facebook an attractive venue for networks to promote current shows or, better still, to have users do the promoting for them. Given the very nature of Facebook, users are far more likely to share a short clip of Jimmy Fallon’s monologue than an entire episode of the Tonight Show. This is why Facebook might be the ideal home for “snackable” video content, i.e., short clips of 10 minutes or less. The shorter format would allow users to share something new with friends without taking too much time away from other activities on the platform.

It is also possible that Facebook might want to go long. The company could line up content deals that would put it in head-to-head competition with Netflix as the OTT operator of choice for the networks’ older seasons. This would certainly appeal to networks, providing them with a (delightfully) rich trove of data about the people who watch their shows. It would also give them pause, since that data would ultimately be owned by Facebook.

That said, we think Facebook will choose to go the clip route. This would give them the same amount of data, without the financial commitment of licensing full-length shows. Users come to Facebook to interact, so sending them off to watch hours of video seems contrary to the sort of use case Facebook desires.

You can read more about Facebook and Social TV in my report on Social TV, coming soon.

VidCon – Ignore It At Your Own Risk

Originally published at TDG Research on July 23, 2015

VidCon is taking place this week in Anaheim. What started out as a convention for teenage fans of YouTube stars has turned into one of the premier events of the entertainment industry, with 21,000 attendees, and sponsors like Kia, Taco Bell, Best Buy, Panasonic, and Canon. Media executives that ignore this conference do so at their own peril.

As VidCon sponsors and attendees are figuring out, interruptive advertising is not the best way to reach Gen Z and Late Millennials. Rather, they are turning to more social-based outreach like #CreatedWith content done in conjunction with Social Video Influencers, such as the stars of YouTube, Vine, and other social video platforms.

But just how popular are these Influencers, and is their reach limited to only a small pocket of young teens enamored with them?

READ THE REST AT TDG RESEARCH

Bullying The Bullies

Originally published at TV[R]EV on July 21, 2015

Sling TV launched its first round of TV commercials this week and we know some MVPDS who are not going to be happy.

Like, all of them.

Despite the Sling team’s initial promise that they were going after cord nevers (people who’ve never gotten a pay-TV subscription, usually younger Millennials), the ads, which mock the less-than-stellar customer experience offered by the nation’s MVPDs, seem squarely aimed at convincing people to cut their ties to those poor-service-providing providers.

In other words, cord cutting.

READ THE REST AT TV[R]EV

Is Stream Comcast’s Trojan Horse?

Originally published at TDG Research on July 16, 2015

Stream, Comcast’s new virtual pay-TV service, has been causing quite a buzz in the industry this week. People seem confused by it, by the seemingly random set of features. This is why every conversation I’ve had about the service seems to start with “What do you think they’re really trying to do here?” And they’re asking because the official response of “sell a skinny bundle to a bunch of Cord Never Millennials” just seems a little off.

It’s not that Cord Nevers aren’t a good target for a skinny bundle. It’s just that there’s something about the Comcast package that doesn’t add up, something that makes you think that there may be something else going on.

Allow me to explain….

READ THE REST AT TDG RESEARCH

The Search For Orphan Black: Why MVPD VOD Gets No Respect

Originally published at TV[R]EV on July 6, 2015

This weekend, I set out to binge watch Orphan Black. While I get BBC-America through my pay-TV service, I’d only recorded six of the ten episodes and so needed to go to my MVPDs VOD to watch it.

Thus began my tale of woe and dreadful customer experience.

Clicking on the “ON DEMAND” button takes me to the “Movies” tab of the first level menu, which is so long I need to scroll to see the whole thing. My options are (in order)

• Search

• Free & Premium

• TV Shows

• Kids Zone

• Movies

• Movie Bundles

• TV Series to Own

• My Library

• Zona Latina

• Events

• Adult

Deciding that my best bet for finding Orphan Black was to go to “TV Shows,” I scrolled there, where I encountered a lengthy submenu:

• Most Popular

• By Network

• By Genre

• Full Seasons to Own

• Hit Series to Own

• Full Season Sale

• Buy to Own

(Think they’re pushing ownership?) From there, I went to “By Network” since I really wasn’t sure what genre Orphan Black fell into.

There are a lot of networks. This submenu was broken up into:

• A – C

• D – G

• H – M

• N – R

• S – T

• U – Z

Finding and clicking on “BBC-America,” the 14th listing on the A-C submenu, I am again confronted by a series of choices:

• BBC America HD

• Doctor Who

• Graham Norton Show

• Jonathan Strange

• Orphan Black

• Tatau

But my journey was far from over.
Choosing “Orphan Black” gave me yet another submenu, with all the episodes from Seasons 2 and 3 listed as:

• Orphan Blk 201

• Orphan Blk 202

• Orphan Blk 203, etc.

It’s a confusing nomenclature, one I’m guessing is lost on a lot of viewers.
Finally locating “Orphan Blk 301,” the first show of the third season, I click and am confronted with what is hopefully the final submenu:

• Add Bookmark

• Other Episodes

• Watch Now in HD

• Watch Now in SD (the default)

• Rate this show

Clicking on “Watch Now in HD” actually finally launches the show.

But say I’d accidentally clicked on the wrong episode and wanted to choose “Other Episodes”  from that final submenu. Rather than take me back to the previous menu, I am taken to the “Buy To Own” sub-menu where I can buy the season for $17.99 or individual episodes for $1.99. Since the episodes are included for free with my pay-TV subscription, I’m not sure why I’d want to buy them, but getting back to the previous screen (the one with the free episodes) takes a whopping 35 clicks.
One final issue: should I need to exit out of the show for any reason, I’m brought back to the live TV screen, not even the On Demand menu and have to start all over again.

With a user experience like this, it’s no wonders viewers prefer streaming services like Netflix or their own DVRs. If the MVPDs expect to make VOD a profit center and if they expect the networks to regard them as viable alternatives to their own OTT apps, then they’ve got to step their acts up and solve the user experience dilemma.

Binge-Watching Isn’t A Trend Anymore. It’s The Norm.

Originally published at TDG Research on July 2, 2015

A new study released this week proclaimed that 92% of ‘consumers’ have binge viewed TV programs. That made for a lot of great headlines–there was, however, a giant footnote to that stat. It seems the study, conducted by TiVo, consisted solely of current TiVo users, who, given that they’re spending hundreds of dollars a year on a high-end DVR system, are probably far more prone to binge view than the average user, and thus not the segment to hold up as representative of all TV viewers.

Does that mean we need to throw the results of the study out? Or are TiVo users (like TDG subscribers) just ahead of the curve?

While in-and-of-itself not representative of general US binge viewing, the TiVo study is directionally correct, indicative of where things are heading. And while it’s unlikely that 92% of the population is binge viewing (it’s hard to get 92% of Americans to do anything, even pay for TV service!), we do think that a sizable majority have indulged and will continue to do so.

READ THE REST AT TDG RESEARCH

Multiple Pain Points: PromaxBDA Conference Explores The Challenges of Marketing TV Series

Originally published at TV[R]EV on June 8, 2015

The PromaxBDA conference, which is coming up on Tuesday in Los Angeles, highlights just how challenging marketing TV shows has become these days.




Once upon a time, the playing field was pretty level in the sense that there was a stable media environment: People turned on the TV after dinner and left it on until 11PM (10, if they lived in the Midwest.) They watched one of the three major networks and if you wanted to drive tune-in for your new prime-time series, you ran a promo during prime time. Sure there were billboards and print ads and transit posters and all, but promos and PR were the way to go.

Compare that to today’s landscape, where marketers need to navigate a range of outlets, from social media platforms to online to mobile to time-shifted television all in the hopes of chasing a rapidly-moving target called “tune-in,” that may or may not happen at the time the show is first aired and may or may not carry the same commercial load.

Changing viewing habits are hard enough, but then there’s social media, with different platforms playing different roles for different demographics and the marketing team having to make sense of it all while trying to get actors, writers, producers and showrunners to play along. Or at the very least, contribute the occasional tweet.



New platforms like Snapchat make the game even harder, as not only does the marketing team have to get itself up to speed, they’ve then got to go and convince the network executives that the platform is worth spending money on.

PromaxBDA runs for three days (Tuesday-Wednesday-Thursday) at the JW Marriott in downtown L.A. The actor Joseph Gordon-Levitt will be delivering the opening keynote speech. Other featured speakers include Viacom’s Doug Herzog, comedian Tig Notaro, and producer Greg Berlanti, Many of the panels will focus on the challenges of marketing television and other entertainment properties and what to look for in the future.

In what promises to be one of the more popular panels, the Truth Company’s Linda Ong, Hulu’s Jim O’Donnell, TV[R]EV Founder Jesse Redniss, and Giant Spoon’s Alan Cohen will join moderator Frank Radice to explore the latest industry buzzwords and what they mean. Look for some great infographics on here all week around that topic.

Badges are still available from the PromaxBDA website.

Netflix Rising

Originally published at TV[R]EV on June 3, 2015

Not content to disrupt the television industry on several continents, Netflix garnered headlines this week with a couple of surprise moves.

The first was a site redesign that introduced a black background, horizontal cover art and easier scrolling. The point, according to Navin Prasad, Netflix’s lead product designer was to make the site feel less like a video store. While the screen shots we’ve seen (SEE BELOW) indicate a sharp looking redesign, what’s significant here is that they’re bothering to do a redesign at all: the site is already notably prettier and more functional than its competitors and we have not heard much (any) consumer whining about the layout.



Which is exactly when you should do a redesign.

It’s a sign to your customer base that you are always thinking about them, that you are constantly improving things, even things that currently work pretty well. That’s a sure sign of a forward-thinking company, one that is going to retain its users loyalty for years to come.

On the flip side of that lovely thought comes this development: Some users reported that they were starting to see promos for Netflix original series show up in the form of pre-roll ads, leading many to wonder if this was a prelude for Netflix rolling out a full-on ad-supported model. That notion has been raised before by detractors analysts who claim the service will not be able to support itself on $8.99 subscription fees alone. It’s a conundrum for Netflix, because the more successful their original programming is, the more original programming people want, the more their costs go up. They can view some of those production costs as marketing expenses, but it’s unclear if there’s a point at which their production expenses overtake whatever benefits they are getting from them.

That said, CEO Reed Hastings was quick to proffer a vehement “No way, José” to talk of Netflix introducing advertising, taking to Facebook to quash the rumors. While Hastings was quite adamant, we wonder how long Netflix can withstand the tide of advertising and whether they will introduce a two-tiered system: an ad-supported model that viewers can watch free of charge, and a subscription model they’ll have to pay for.

It’s an interesting proposition, as it works well with apps, where the paid version of games like Angry Birds rake in millions, but not so well for Spotify, whose paid version still needs to grow its user base. That may have everything to do with how intrusive the advertising is for frequent users, and the value they place on the content itself. Whether it’s the future of Netflix likely depends on how many new subscribers they feel an ad-supported model could bring in, taking into account both potential ad revenue and the value of the data they’re able to collect from those new users.

If that is indeed in the cards, then their ability to attract users to an ad-heavy site is one reason why their current emphasis on providing a superior customer experience may someday prove to be a very wise call.

The Real Loser In The Charter-Time Warner Deal: The Set Top Box

Original published at TV[R]EV

While most MVPDs would love to see the set top box go the way of the dinosaur, Comcast has been betting on their X1 box, a sleek, 21st-century device that they had hoped to make the industry standard. That was, at some level, part of the motivation behind the Comcast-Time Warner deal: to create critical mass for X1 so that it would be virtually unstoppable.

Only now that’s not going to happen.

While Charter and Time Warner are unlikely to do away with set top boxes in 2015, they both seem to be fans of the BYOD (Bring Your Own Device) theory which says that set top boxes are clunky, poorly designed, expensive to maintain (it costs an MVPD something like $200 every time they need to roll a truck) and the unreliability of cable installers contributes heavily to the public’s low impression of MPVDs. Which is why companies like Time Warner and Charter would love to do away with them and let viewers buy their own Rokus, Apple TVs or tablet/smartphone apps.

Time Warner was one of the first MVPDs to launch a TV Everywhere app on Roku. Charter’s CEO Tom Rutledge has often expressed his displeasure with set top boxes and is looking to introduce a cloud-based UI which could also easily be ported to a streaming device or connected TV once the old boxes gave out.

Either way, they new entity (should Congress approve the marriage) seems ready to exit the set top box game and that’s bad news for Comcast. The goal with the X1, which Comcast hopes to license to other MVPDs, isn’t to own the set top box market as much as it is to own the firehose of data that comes with owning the interface: Comcast would be able to know what shows people were watching, saving, recording, favoriting and sharing on other MVPD systems, data that would in turn be very valuable to the networks and other programmers.

Maybe next time.

Apple’s Flunking TV 101

Originally published at tvrev.com on May 22, 2015

Not a great week for Apple as far as their involvement with the television industry goes. First there was this article in the Wall Street Journal, wherein billionaire investor Carl Icahn claimed that Apple was still working on the mythical Apple TV set, something the Journal assured readers Apple had actually given up on sometime last year.

While tech journos get all hot and bothered about the Apple TV, those of us in the TV industry are often left scratching our heads, and so I’m sure I was not the only one surprised to learn that Apple had seriously been heading down that road to nowhere as recently as 2014.

You see, consumers really don’t have any problem with their actual TV sets, which are reasonably priced, fairly reliable and provide excellent picture quality in HD. The problem has always been with the interface and that’s dictated by the set top box — the set itself is just a dumb terminal.

That’s why the real action has been with streaming boxes (which, as Roku, Google and Amazon have shown, can be reduced to a stick the size of a thumb drive.) They are the brains of the operation, work with any existing TV set and at under $100 a pop, can be replaced every two or three years when they become obsolete. That’s important because the average replacement cycle for a TV set in the US is 7 years, which just about ensures that any Apple TV set would become obsolete long before the buyer was ready to part with it.

Which is why Apple should be focusing on the hockey puck sized Apple TV, a piece of hardware that hasn’t been updated in years. That fact is largely responsible for the second piece of bad news Apple got this week: according the latest Freewheel report, Roku is kicking their ass.

A whopping 43% of all OTT ad views (up 37% year to year) happened via Roku while only 20% happened on Apple TV (down 36% year-to-year.) That’s a huge gap and it’s only going to keep growing as Roku’s wide range of channels, native search capability, easy to use interface and multiple model options continue to make it the streaming device of choice.

While Apple is rumored to be working on an update to the Apple TV device, adding in things like voice control (another place for Siri to not understand what I’m saying) and home monitoring, the further behind they get, the harder it is going to be to catch up.

I’m a big Apple fan and I’d love to see them succeed, but right now they’re not having an easy time conquering the television industry. Given their history however, it’s way too soon to write them off.

The Real Threat To Pay TV: Bad Customers Experience

Originally published at Digiday on May 13, 2015

Verizon’s recent posturing around the need for smaller, slightly less expensive bundles is a classic case of treating the symptoms not the cause. Because the real threat that Big TV is facing is the disconnect between the monthly cost and the perceived value of the customer experience they’re delivering. Right now, that experience, to put it mildly, stinks.

The bad experience starts when you turn on the TV to find something to watch. You go to the program guide, which has no rhyme or reason any sane person could figure out. Thanks to byzantine legacy deals, TV providers need to do things like make sure that CBS is Channel 2 (or 502 or 902) on the lineup because they were Channel 2 on the circa 1975 dial … and then make sure that’s the default home screen.

There are many ways to make the experience better — Comcast’s X1 system has managed to bring the set-top box interface into the 2010s— but unfortunately none of the other providers seem to realize how important this is. It stems, at some level, from the fact that they are in either a monopoly or duopoly situation and thus don’t have a whole lot of impetus to create a positive customer experience either on the set-top box or off: If you live in their region and you need video-capable broadband and/or pay TV, you don’t have any other options.

But imagine what consumer reaction to paying over $100 per month for pay TV plus broadband would be if they were actually given an elegant solution, something that felt like 2017 not 1997. Would they be complaining about too many channels … or not enough? What if the entire system (including video on demand and the DVR) was seamlessly integrated into their mobile apps the way Netflix is so they could move from room to room, device to device, without skipping a beat. What if customer service was a positive experience rather than a mine field filled with missed appointments, phone trees and hostile reps?

Or go one step further: what if discovery wasn’t limited to a wild goose chase around an antiquated program guide, enabled by hunt-and-peck typing with the remote control. What if there was a system that recommended shows based on prior behavior, that created a Watch List like the one on HBO Go, even sent out reminders when a new episode of a favorite show was available. (There are companies like Yidio, Jinni, ThinkAnalytics and NextGuide that are already doing some or all of this— the technology is out there, it just needs to be adopted.)

People would find the aforementioned system (and the responsive customer service that would need to go along with it) to be worth a fairly hefty price tag because it would feel like a high-end luxury service, one that many consumers could easily afford, one that touched their daily lives far more than other luxury good or service. It would dovetail nicely with the renewed emphasis on quality programming, where well-written, well-cast, well-reviewed shows are starting to outshine the morass of reality programming that has dominated the industry for the last 10 or 15 years. In short, it would feel like the medium was finally keeping up with the message and the second golden age of television would actually have a delivery system worthy of the content.

Ostriching Their Way Through INTX

Originally published at BRaVe Ventures

Wedged between the newfronts and the upfronts, it’s easy to forget about the Cable Show, (newly rechristened INTX — Internet and Television Expo.)  But some of what went down in Chicago last week bears analyzing as it’s indicative of greater trends in the industry.

The biggest trend we’re seeing is something we’ll call “ostriching” — MVPDs and networks burying their heads in the sand and pretending that massive changes aren’t happening all around them.

Evidence? Comcast’s announcement that they were adding voice activation to their remote control was greeted as if they’d announced remotes with mind control. Voice activation is a nice feature, to be sure, but it’s already available on Amazon’s Fire TV and on Roku. And while it may rate a big shrug, what’s even more telling is that none of the other MVPDs are even close to Comcast when it comes to revamping their circa 1997 set top box interfaces.

That may well be because they’re planning on outsourcing them to the likes of Roku and Apple— Comcast is the only MVPD that’s still embracing the set top box. But it’s still another year of slapping the consumer in the face with the dual whammy of overpriced packages and underwhelming service.

The MVPDs were far more concerned with throwing FCC Chairman Tom Wheeler some shade for his stand on Net Neutrality. Acting more like Regina George and her clique from Mean Girls than a bunch of C-level executives, the MVPDs made sure to call out Wheeler for his stance on the net neutrality issue every chance they could.

Let’s examine that one a little deeper too: if all net neutrality is about is making sure that large companies can’t pay to ensure upstart competitors have slower connections, why would the MVPDs be so adamantly against that? It’s like being against puppies.

The short answer is that net neutrality in the MVPDs eyes is about letting big media companies pay for dedicated fast lanes which does not translate to everyone else being in the slow lane. It just means that if there ever is a slow lane, the guys who paid won’t be in it, not that the MVPDs are expecting any sort of slow lane, mind you.

So that’s issue one. Issue two is a bit deeper: the MVPDs fear that all this posturing about net neutrality is step one on the road to a situation that ends in them losing their monopoly over broadband in the US. That is, of course, the underlying issue around net neutrality, why it is that one company can effectively control access to the internet.

And the solution to that issue of course, is to create a situation where that’s no longer the case, where no one has a monopoly on access to broadband. That may happen through government intervention or through the development of an alternate access mode (super LTE.) But for now the MVPDs are guarding their position fiercely as they realize that “we want to hold on to our monopoly” is not going to be a very popular position. Ever.

As for the networks, they were more or less silent during INTX, keeping announcements to a minimum and letting the MVPDs hog all the glory. It may just be that they’re saving everything for the upfronts this week and we can’t say we blame them: if you’re a network, the upfronts matter a lot more than the Cable Show. Which is why we’ll be covering the upfronts, providing you with BRaVe insights throughout the week.

Periscope Up, Set Torpedoes To Stun The Media Market

It’s all about the headline folks, but here’s the real punchline: if you logged onto Periscope or Meerkat during the Mayweather/Pacquiao fight this weekend, you were greeted by the sight of dozens of live streams of a fight many people paid $100 to watch.

That’s right: someone paid $100, and then out of some Robin Hood-esque sense of fairness, the desire to grow their follower base, a misguided notion of sticking it to the man or maybe even some “Hey, let’s turn this on and see what happens” hijinks, some of the fans who’d paid $100 for the HD broadcast on PayPerView turned on their smartphones and broadcast the event to tens of thousands of other people who didn’t pay $100 for the privilege.

Some of the more popular Periscope streams had close to 10,000 viewers. Meerkat, which was the night’s clear runner-up, was running closer to 3,000.

Either way, there were a lot of people pirating the boxing match which equated to a whole lot of copyright violations going on.

So should HBO and Showtime, who hosted the PPV event and whose revenues stand to be affected be concerned?

Absolutely. AsAdAge reported today, during the night of the fight, copyright holders sent Perisciope 66 takedown requests and only 30 of them were removed. But should the onus here be on the copyright holders to monitor and send in requests?

Aswe pointed out when YouTube quietly shut down Katch a few weeks ago, the platform provider needs to make a concerted effort to monitor the content they are hosting and proactively shut down streams that are clearly in violation of their Terms of Service. This is the very reason YouTube spent nearly a decade in corporate litigation with Viacom, and why they are now extremely diligent in monitoring the YouTube universe with their Content ID system.

Based on the reporting that only 30 streams were shut down, Periscope could have done a much better job to identify the offending streams. The process is simple: use searchable key terms and concurrent video load alerts to identify high demand streams, manually check them out and then shut them down… by hand using humans… without having to wait for a takedown notice from the copyright holder, a notice that’s particularly futile as streams are only live for 24 hours and the appeal is watching them in real time.

Which brings us back to the headline: during the early days of social and UGC, big media lawyers spent a great deal of time trying to get comfortable with a myriad of issues such as Privacy Policy, Rights Management, Copyright Infringement, Trademark Infringement and Fair Use.

And now, thanks to live streaming, we have a Meerkat in a coal mine.

Because all these live streams create a new wave of legal and broadcast rights issues that we’re just beginning to scratch the surface of. And the answer is going to be a lot trickier than it ever was for tweets and Facebook posts.

How are we ever going to track and compensate these athletes, musicians and rights holders for all of the streamed performances once they go big time? On top of that, what’s going to happen once anyone tries to monetize these platforms?

Imagine what would happen if Jared Leto, one of the most popular casters was at the Meadowlands and decided to start casting a Jets game along with Gary Vaynerchuk, another popular caster (and big time Jets fan.) Combined, the two of them could drive a considerable audience to their streams. What if Periscope started running ads against those streams… Who owns that revenue? How is it tracked? How furious (and litigious) would the NFL be, let alone CBS, ESPN and NBC?

It’s not just about advertising. The PGA Tour had a meltdown this week when Stephanie Wei, a well-regarded blogger, Periscoped the tour’s golden boy Jordan Speith taking some practice rounds. This is not footage anyone would ever broadcast, but the PGA reacted as if Wei had drilled a peephole into the locker room: they’ve banned her from the tour for the rest of the year.

The question here is who owns that footage. The PGA says that anything that happens on the tour is their intellectual property, even if it never would have made it on air. The very fact that it could have made it on air is enough. Wei and her supporters (who boosted #FreeWei to trending Twitter status) contend that they are just enhancing the overall experience and driving more fans to the main event. But that just raises a larger question: since Wei is a “journalist” does she get a free pass? What if a couple hundred fans were Periscoping that practice round? Would that make it different?

The controversies are only going to continue as more and events from sports to concerts to court proceedings are live streamed without the “express written consent” of the people who own the rights to the event. It’s a huge boon for anyone specializing in media and copyright issues and it’s sure to spur a number of court cases challenging everyone from Twitter to fans to rights holders for years to come.

However it shakes out, one thing is clear: social and mobile based live streaming is here to stay. But, Twitter is sailing in deadly waters, do they really want to use Periscope to seek out their next battle with the major media companies?

Originally published at www.braveventures.com and co-written with Jesse Redniss

The Sleeping Giant: Hulu Finally Wakes Up.

Hulu has always been the Jon Snow of streaming services: the bastard child of three of the four biggest networks that always had a lot of potential if it could ever figure out just what it wanted to be.

And like the erstwhile commander of Game of Thrones Knight’s Watch, it seems that Hulu is finally coming into its own. At this week’s upfronts, the service unveiled a number of deals that seem likely to clarify its value proposition for consumers, though there is still work to be done to make that proposition bulletproof.

The deal getting the most buzz was the acquisition of all nine seasons of Seinfeld for a sum larger than the gross national product of several developing nations. This will allow a whole new generation to binge watch the show that reinvented the sitcom, helping Hulu to become masters of their domain. With Friends now on Netflix and a Clinton running for President, the ‘90s synergy will be even more intense.

Hulu made a number of other substantive moves this week too:

•They dropped the “Plus”from HuluPlus (but not the $7.99 monthly fee…or the commercials)

•Struck an exclusive deal with AMC to stream the highly regarded networks’new shows.

•Announced Difficult People, a buzzy new series produced by SNL alum Amy Poehler and starring social media savvy Billy On The Street star (and fellow Stuyvesant alum) Billy Eichner.

•Obtained rights to Stephen King’s 11.23.63, which is to become a series from Lost creator J.J. Abrams starring James Franco.

•Cut a deal with Cablevision whereby Cablevision will sell Hulu subscriptions dirctly to its customers.

Not a bad day.

On the other hand, there are times where it seems like Hulu still knows nothing.

They have yet to do an even workmanlike job of explaining the value of the service formerly known as Hulu Plus. What exactly does the viewer get for their $7.99 month? (The answer is not too shabby: access to the full current season stack for shows on ABC, NBC and Fox, a hefty back catalog of shows from those same networks, movies, and the full seasons of Hulu’s expanding original content. But how many current subscribers actually know that, let alone potential ones.)

Then there are the commercials. It’s only natural for viewers to wonder why they’re paying for a subscription and still seeing ads, something that doesn’t happen on Netflix or Amazon. Here again, Hulu has done a poor job of communicating the reason why to subscribers and making the whole experience seem less onerous.

One adjustment we’d strongly recommend as a way to ameliorate some of that ill will is for Hulu to stop running commercials during their original programming, especially now that they’ve got series on deck that are certain to be buzzed about.

These series will be competing for mindshare with shows from HBO, Showtime, Netflix and Amazon. None of which have commercials. If Hulu wants consumers to view their programming the same light as the other premium networks, then they need to make them feel similar and the experience of watching a show without commercial interruptions is unique and creates the sense that the program is special. Hulu needs to do this with their original series too — if nothing else, it answers the consumer question of “so what exactly am I getting for my seven dollars a month?”

That’s a question Cablevision customers will be asking now too, as the cable giant begins selling Hulu subscriptions directly to its customers. One less bill to hassle with is an answer, but not a particularly compelling one. It’s unclear what the Cablevision deal will look like: will Hulu be packaged with HBO Now and other streaming services in a broadband double play aimed at cord cutters/nevers? Or will it be integrated into the Cablevision program guide so that viewers can watch the service without having to locate the remote and switch inputs, one of the more annoying aspects of watching streaming services via the current MVPD system.

As this year’s upfront showed, Hulu is definitely beginning to forge its own identity and define what it is, not what it’s not. With a few tweaks and a few hit shows, it should provide Netflix and Amazon with a formidable competitor.

Originally published at www.braveventures.com.

Predictions On OTT TV Advertising: My First Report for TDG

My first report for The Diffusion Group came out last week and readers of this blog (or, more accurately, their companies) can get $500 off by mentioning this blog when you email jay@tdgresearch.com -- you can see details here.

Here's the press release describing highlights of the report, which has been getting some very good press, from Digiday and International Business Times

According to a new report from TDG, revenue from OTT TV advertising - that is, commercial advertising placed in full-length TV-quality programming delivered via broadband - is expected to grow nearly four fold between 2015 and 2020. The Future of OTT TV Advertising 2015-2020 represents the first publicly-available ad forecasts associated exclusively with the delivery of OTT TV content.

According to TDG's analysis, the average ad load for a 30-minute legacy linear program will decline by 38% between 2014 and 2020, from approximately eight minutes to around five minutes. During the same period, average OTT TV ad loads will increase 63%, from 3.2 minutes to 5.2 minutes, during the same time period, bringing OTT TV ad loads in line with that of legacy linear TV.

This shift in ad load is not all bad for content networks. According to Alan Wolk, TDG senior analyst and author of the new report, the value of legacy linear TV advertising in 2020 will be worth considerably more than today. Wolk adds that new forms of advertising such as native and sponsored promotions will generate additional revenue and keep total TV ad revenue stable through 2020 (no growth in total revenue, but no decline, even as dollars are shifted to OTT TV ).

By 2020, OTT TV ad revenue will be approximately $40 billion, just under half of 2020's projected $85 billion in total TV ad revenue.

These are just a few of the unique insights featured in TDG's latest analysis and forecast of the burgeoning OTT TV space. The report includes an in-depth examination of the trends driving (and inhibiting) the shift from legacy to OTT TV advertising, as well as detailed forecasts for total TV ad revenue, weekly OTT TV viewing, and both OTT and legacy linear TV ad revenue.

Get your copy today!