Flies With Honey: How Network Operators Plan To Keep Their Audience

Verizon FIOS announced plans today to upgrade the speeds they offer residential customers (although keeping with tradition, the feature greeted registered users as a splash page which, when clicked on, lead to a dead page. Note to FIOS: you put up the splash page last, after you’ve got the other pages working. Sort of like a door.)

Websites missteps aside, what’s really significant about that announcement is that it’s just another step in the network operators plan to stop users from cutting cords.

Because Verizon’s pricing makes it more expensive to get high-speed Internet service as a stand-alone product versus as part of a bundle that includes TV and phone service. (FierceCable has the price of a 50/20 service only as $140/month. I pay less than that for 50/20 internet plus the comes-with-HBO-and-Showtime TV package and phone service. I remember when I was signing up that it wound up being cheaper to get a landline phone thrown in.) 

That’s how they lure you in.

You want all that bandwidth to watch movies and play games and download videos and everything else you do to be able to cut the cord. And they will give it to you. But only if you keep the cord. The network operators aren’t dumb. They know that by controlling the pipes (as previously noted, something like 94% of FIOS subscribers have both TV and internet with the service.) And part of controlling the pipes means controlling the pricing and manipulating it in a way that makes cord-cutting the more expensive option.

That’s why we’re not likely to see any sort of internet-only MSO coming from anyone other than an existing provider. The rumor mill on that is just plain baffling: say Facebook did want to launch their own socially enabled, internet based MSO. And they will only charge me $25/month for it. Great. Only where am I getting the internet connection from?

Oh right, FIOS. And they’re going to charge me big bucks if I drop my TV service to go with Facebook. So what am I going to do?

Well, if I’m really into the Facebook service, I’ll get it as an add-on, same as Netflix or HuluPlus. There may be some overlap between my services, but I may decide that it’s worth it just to get the cool extra features Facebook is offering on their TV service.

Which is exactly how I expect the eventual roll-out of these web-only networks to go: early adopters will get them as an addition to their current service and focus on what’s cool and different, not what’s identical. You know how people will tell you “I don’t really watch TV anymore, I only watch Netflix.”

Bazinga!

The Convergence Conundrum

 

Verizon's FIOS TV service announced a rate hike this week, which coincides with their announcement at The Cable Show that they were going to be rolling out a mobile video app called Viewdini, which searches through content from Netflix, Comcast, Time Warner and others (but not FIOS, interestingly enough. At least not yet.) The app allows you to look for a particular show or movie, find it and then stream it to your mobile device. This comes on the heels of the telco's recently confirmation that they are done with FIOS build-out for now, and are concentrating instead on fill-in: gaining additional customers in areas where they already have a presence.

All of which leads industry insiders to wonder: is Verizon looking to sell FIOS?

While the service is widely regarded as the Neiman Marcus of cable service, with new fiber optic cable and truly “blazing fast” internet, it’s been very, very expensive for Verizon to build: it can take the better part of a day to wire a single house and the company has literally spent billions on building out their infrastructure.

So who would buy it?

Two distinct possibilities are Apple and Google, each of whom would relish the opportunity to own the network and its 2.2 million upscale subscribers. (FIOS is concentrated in Charles Murray’s Belmonts: the affluent residential neighborhoods of the Northeast.)

For Apple it would be an easy way to introduce the mythical Apple TV on a well-regarded network that’s already built out to over 2 million subscribers.s On the other hand, 2 million isn’t a very big number for Apple, who may or may not want to get into the network operator game. (Check out “An Apple TV Will Be Just Like The iPhone" for some theories on that.) Plus the Steve Jobs’ run Apple never really liked anything it didn’t build itself and there’s no reason to think that trend won’t continue. Add on the fact that, as currently configured, FIOS is very Apple-unfriendly (Its FlexView streaming VOD service still doesn’t work on a Mac or iOS device and the iOS apps are clearly an afterthought) and it's unlikely Apple will go anywhere near it.

Google may be a more likely option than Apple, as they have committed to the network operator race and are already building out their own network in Kansas City, with an eye to setting up their own pay-TV system. Google can also push the Android platform via FIOS, which, as I mentioned previously, is anything but Mac friendly. But Google's Kansas City project is also an indication that they've got their own idea on what the TV delivery system of the future should look like, and billions of  Benjamins to back that up. So chances are good they'll take a pass as well.

That leaves on more option, the one I think is most likely. That is that Verizon will keep FIOS as a boutique brand, one whose well-to-do users are more than willing to pay a premium for high-cap or unlimited bandwidth and premium content.

As The Convergence presses onwards and TV delivery becomes exclusively web-based, bandwidth caps will become both an economic necessity and the norm. In that scenario, affluent, price-resistant FIOS users are exactly the kind of customers Verizon would want. Not necessarily early adopter, but in no way ready to cut the cord.

At least not for economic reasons.

The Assault Continues: Four New Consumer-Centric Video Technologies

It wasn’t too hard to predict that once every permutation of text-based social media had been explored, would-be entrepreneurs would shift their attention to video. And while “social TV” has become an all-purpose buzzword these days, this spring has seen a couple of notable consumer-centric introductions

First off are the competing social video services Viddy and SocialCam. Both of which take the cute-puppy-video meme to the next level. While users are encouraged to upload their own video and share it with their Facebook friends, the primary use of both sites seems to be sharing new cute puppy videos on Facebook.

That's because both apps use “frictionless sharing” - updating your Facebook timeline every time you watch a video through the service. Once "Janet Smith just watched "Beaglemania!" on SocialCam" starts populating your news feed, it encourages your friends to sign up so they can watch too. This cycle-- both Viddy and Social Cam rate high on Facebook’s SuperSecret Algorithm-- has helped both apps skyrocket to over a million users in next to no time.

But despite all the claims that these are video versions of Instagram, that seems to be stretching it: Viddy and Social Cam make it easy to socialize the same YouTube videos people have been watching all along without taking any action to share them: if you watch the video, you’ve shared and promoted it. Creation, which is Instagram's forté, is not much of a factor.

This cycle has its limits though, as The Guardian, The Washington Post and other pioneers of frictionless sharing have found out. People don’t want every story they look at pushed out on Facebook (particularly if all they’ve done is click on the headline and decided it wasn't worth reading farther.) While it is possible to remove stories from your timeline, it’s even easier to stop using those sites to access the news.

This is the likely fate of Viddy and Social Cam - they will see a bit more growth followed by significant drop off as people decide they would rather not have their video viewing habits be public knowledge. (Especially since the apps unintentionally tally up the amount of time they’ve wasted watching sneezing kitties.)

And while Viddy and SocialCam have been getting the bulk of the press, two very interesting TV-based startups have flown in under the radar. The first is Nimble.TV, a cloud-based app with Slingbox like functionality that is still in beta. The notion of the product has been raising eyebrows as it seems to fulfill the idea of TV Everywhere.

Nimble is working directly with (unspecified) pay TV providers to launch the service which allows subscribers to receive a streaming broadcast of their pay-TV service to whatever device they want, wherever they want, a cloud-based DVR,  and unspecified "social recommendation tools."

In the initial test phases, Nimble will only offer access to a few dozen stations, not the full lineup. By working through the providers, rather than against them, Nimble is hoping to avoid legal hassles over retransmission. But since just about every provider is working on its own proprietary TV Everywhere solution, avoiding lawsuits is likely just a pipe dream.

The best Nimble can hope for is to be acquired by a provider in search of an easy win (possibly a satellite or smaller cable service provider.) For consumers, their success would be a win, as the demand for TV Everywhere has grown much faster than its actual availability. A successful third party solution might force the hand of both the network operators and the network executives who are holding up the process.

The final product of note is Skitter, a startup that promises Aereo-like access to free broadcast stations. For a fee.

The company launched its service in Portland, Oregon earlier this year and is planning to expand to additional markets. And while Skitter has the same business idea as Aereo-- offer access to broadcast TV to potential cable cutters-- their business model is markedly different. While Aereo is attempting to get around the legal issues of retransmission by claiming that they are selling access to HD antennas (rather than the shows broadcast via said antennas) Skitter operates with second and third tier telco operators and is only available in regions where those telcos operate.

Unlike Aereo, which is only available on tablet and smartphones, Skitter can be watched on your TV via a private Roku channel or through a Western Digital box. While the Roku interface is pretty basic, the WD box offers a snazzy EPG. Like Nimble, Skitter is likely to wind up as an acquisition: there are only so many second and third tier telcos.

The success of services like Skitter and Nimble, however, put pressure on the television industry to adapt its model to changing viewer habits and expectations. That may not have any immediate effect: the industry has too many masters to please and too many moving parts.

For now.

Little by little these changes will gather steam and become too big a force for the industry to ignore.

Introducing the KIT Social Program Guide

I don't usually talk about my own work on here, but this is something I am particularly proud of: after months of hard work and preparation, working with a team that spanned from San Francisco to Milan, it's here: the KIT Social Program Guide or SPG.

Here's a 2 minute demo - if you're at NAB this week, you can get a hands-on trial



What Is An SPG?  It's a Social Program Guide-  a white label product that lays social functionality on top of a pay-TV provider's EPG so that viewers can see what their friends are up to and then act on that information... by actually changing the channel or hitting "Record." Hence "social" program guide.

We're emphasizing the program guide end of things because the genesis of this product is our belief that people rely heaviest on social data in the discovery phase - when they are figuring out what to watch. The KIT SPG lets them get input from a number of sources: friends, neighbors, all viewers, and critics. Chat-- via Twitter, Facebook and other social networks, is enabled, but we have found that chat usage varies greatly depending on the type of show. That, and the presence of multiple chat options, makes this a secondary feature. An important one, but secondary nonetheless.

A Social Program Guide also offers advertisers a real opportunity because they are now able to sync their first and second screen ads. That means a viewer will see a TV commercial during the show while a more detailed and personalized ad is shown on the second screen. We don't think viewers will interrupt their viewing experience to buy things during the show, but they will tap a button to see more information once the show is over.

Some key features of the SPG:

INDIVIDUAL ACCOUNTS: Every family member gets their own account which is tied to their social networks. That means everyone can be sharing a first screen experience while simultaneously having a personalized second screen experience.

WATCHLIST: Your go-to screen, it combines all the shows you've recorded, added to the watch list or bookmarked via the (pay) On Demand service.

TV GUIDE: Two views: a traditional Grid EPG that highlights which shows your friends are watching, and a Recommended Viewing matrix that sorts what's currently on air via an algorithm that combines your preferences with recommendations and activity from your social graph and/or critics.

ASYNCHRONOUS COMMENTING: If you are watching something after it's aired, your friends comments are saved in a timeline and shown in real time, so you the experience is not ruined by spoilers.

MULTISCREEN: You can watch on any screen you like - tablet, smartphone and, of course, your television. You can move the show from one device to another with just one tap (there's a great demo of this in the above video.)

Some sample screen shots:

The Watchlist has all the shows you've saved, recorded or bookmarked on the VOD store. This is your personal TV Guide

The Recommended tab on the TV Guide uses a unique social algorithm to rank the shows currently on air for you, so you don't waste time searching through 2,000 channels.

So your friends don't give away the ending: comments are embedded in the video and show up at the appropriate time.

You can see which of your friends are watching from the TV Guide's grid view. This makes picking out what to watch a lot easier-- and more social.

Check out the great piece on LostRemote about the KIT SPG

The Five Things You'll Be Hearing About At NAB This Week

 While NAB is due to start in about 12 hours, I wanted to do a quick rundown of the sorts of things we expect to be seeing there:


1. Social TV Apps: The Pets.com of 2012. Lots of VC money being thrown at any and every permutation of "social TV," 99% of them suffer from two big problems: they don't interact with each other and they don't interact with the TV set.  Anyone who solves those problems will be drawing huge crowds.

2. Ahhhhh! Netflix!!!: The astounding success of their streaming service caught everyone (including Reed Hastings) by surprise as it flew in the face of three things that used to be part of the Conventional Wisdom: (1) Consumers are giant technophobes who won't try new technology until it's neatly packaged and served up on a platter for them, (2) Consumers are only interested in seeing the latest hit movies and anyone who can't offer that is dead in the water, (3) Video delivered via broadband will look like crap on a 42-inch HDTV.  Which is why so many broadcasters are standing like deer in the headlights trying to get their IPTV mojo flowing so they can figure out some sort of response to Netflix. (Hint: pay careful attention to the UX) Remember, this is an industry that just a year ago saw VOD as a promotion tool for new movies (hence the spate of five minute "The Making Of...." videos.) So look for a spate of people talking about consumer demand for streaming video and a smaller number offering actual solutions.

3. Gaming: Gaming is huge. It uses video. TV is huge. It also uses video. For some reason, that's as far as the industry's gotten: they still haven't figured out a way to successfully join the two. Using gaming devices like XBox to stream broadcast and subscription television is a step in the right direction- and there will be a lot of chatter about that at NAB- but I keep thinking there's got to be a better way to meld the two. And while TV-on-the-XBox is a great solution for the US and Europe, the high price of legally obtained discs for gamers in developing countries means that many of them don't connect their devices at all.

4. Timeshifting and It's Affect On Advertising: Not as scary as Netflix, but close: the more people timeshift-- particularly people in the desirable higher income brackets-- the less advertisers are willing to pay, since the assumption is that no one would willingly sit through a block of commercials when they own a set top box that allows them to fast-forward in 30-second intervals. A lot of the sessions around this broader topic are going to resemble group therapy, since there's no easy answer: what makes consumers happy makes advertisers unhappy, and vice versa. I'm hoping to hear about a couple of alternate solutions, a way for broadcasters to make money and without having to let technology pass them by.

5. Google and Apple and Facebook and Amazon: I'd be surprised to hear any sort of announcement here: if nothing else, NAB is not their crowd and won't generate the buzz they want. But what they are doing around TV, streaming video and the like, when and where (Kansas City) and why is bound to the topic of endless after hours conversations and a surefire conversation starter.

Tomorrow, we'll find out if I'm right.

Lack of Pinterest?

I've been prepping for a minor home renovation project and thus spending more time than usual on sites selling everything from appliances to furniture. These are sites that seem to be ground zero for Pinterest, yet few of them have added the little "PinIt" button up there with the Facebook "like" and Twitter buttons.

These are major retailers too, not some mom and pop shop.

It surprised me because I have found Pinterest to be an excellent organization tool - it's very easy to go back to the page, look at actual pictures of all the refrigerators I pinned (with prices and dimensions) and make a choice or narrow down the list.

And while it's easy enough to "pin" from the toolbar, you'd have thought the furniture and appliance stores would have been at the forefront of this - it's free advertising and adding that button can't be too much of a programming challenge.

The Nielsen Myth

This originally ran on Digiday and was picked up by IPTV News. Co-authored with KIT COO Alex Blum

TV is a hugely successful $60 billion industry. It’s also built on a jury-rigged measurement system that’s a bit of a joke and needs to be replaced for the potential of the modern media world to be fully realized.

Nielsen ratings have admittedly come a long way from handwritten diaries, but they’ve still become antiquated as our viewing experience shifts from broadcast television to over-the-top services like Netflix and Hulu. This sea change of Internet meshing with TV presents a golden opportunity for anyone with the smarts to step up and figure out a better way to mine the resulting avalanche of consumer-engagement data that is now becoming available. Nielsen guesstimates shouldn’t be OK anymore.

With IPTV, it’s possible to track exactly how many people are watching any given show and where and when they are watching it, and it can break down the results by geography, gender, interests, household income or any other factor someone may find of interest. (And that’s today: the social TV systems currently being rolled out will allow individual family members to simultaneously check in from the same TV set, making data even more accurate.)

This opportunity will be realized by those content creators, advertisers and merchandisers that have the courage and vision to finally dispense with the ways of the past and embrace this new paradigm in order to optimize both viewer engagement and advertising spend. Make no mistake: Inertia is what has prolonged Nielsen’s rule.

As linear programming goes the way of the 8-track, your ad buy will need to adjust for the fact that there is no logical sequence to when viewers see your ads. There’s also bingeing: If someone is spending the evening catching up on season two of “Glee,” how do you adjust the ads they’re seeing to account for that? You’ll also need to provide synchronized second-screen experiences. So that if your commercial is playing on the main screen, there’s a way for someone to use the Web-based second-screen device to get more information, in a way that does not ask them to actually stop watching TV and pay attention to your product — a mistake made by far too many advertisers during this year’s Super Bowl.

Improved ratings and the move away from a broadcast model bring up yet another critical issue: Who will be buying all that valuable new ad inventory — the traditional TV media-buying services or the newer Internet-advertising ones? Each has unique strengths, and while the big TV-buying shops have had Web-focused divisions for a while now, neither has demonstrated that it can handle the myriad demands of the new viewership model.

That leaves the media-buying world ripe for the emergence of a new player, a service that positions itself as the experts on this new, post-convergence world. This new player will intuitively understand that the demise of linear TV gives consumers greater control over what they’re watching and gets why that will shake up the video-content production game the same way the rise of blogging and Internet-based newspapers shook up print journalism.

More importantly, they’ll understand that media itself can no longer be split by Internet ad spend and TV ad spend: With social TV and the convergence, they are now one and the same. So the job of the new generation of media planners and media buyers will be to understand social television and how the video message on the primary screen interacts with the Web-based message on the second screen and what consumers are expecting from each.

The potential offered by these consumer-driven changes outweighs sticking with the old way of doing things because “that’s how it’s always been done.”

I'm Not Really Watching: Active vs Passive Viewing and Social TV

Quick question: when you’re watching TV, do you talk during the entire show? When the commercials come on (provided you’re not skipping through them) do you only think and talk about the show you’ve been watching?

I’m guessing the answer is no. So then why does so much of the activity in the social TV space assume the opposite?

Yes, a lot of people watch TV with a second screen device in hand. But there’s no logical path that says they are using that device solely to interact with whatever is on the screen. Chances are high that if they’ve whipped out the iPhone, they are checking email, looking at a friend’s Facebook photos, checking the score of the game they’re not watching or some other activity completely unrelated to the what’s on TV.

That’s because people often turn on the TV just to have some sort of background distraction. Call that “passive viewing.” Reading email and half-watching American Idol aren’t incompatible. Neither is going on the Fox website and looking up the bio of a contestant who captures our attention. They’re just two of the many things we might do during a passive viewing experience.

What about shows that aren’t just background noise? Shows we look forward to and actually care about what’s happening. Call that “active viewing.”  Logic dictates that if you are engrossed in a program, you are not going to wander off to look up the IMdB profile of the lead actor or open up TweetDeck to see if anyone else is tweeting about the District Attorney’s pink shoes.

That’s the thing about chat: there are events where we want to spend the entire time talking exclusively about what is happening onscreen: football games, political debates, reality game show finales. But those are the exception, not the rule. During active viewing we’re far more likely to give our undivided attention to what’s happening on the screen, to the point of letting phone calls go unanswered. During passive viewing, there’s not a whole lot of incentive to spend a time talking about a program we’re only casually watching.

All of which weighs in favor of a Social EPG: an application whose primary purpose is discovery: a nicely designed listing of all the programming options available to us and the ability to change the channel.

Everything else is just gravy: which shows our friends are watching, which ones they’ve liked, who is in the cast, what, if anything, are people saying about it. That’s all information we might want to have before we hit “Watch Now.”  Any “second screen experience” is unlikely to be the focus of our attention for shows we are actively watching and likely to be just one of several outlets during shows we are passively watching. A social EPG just a really useful tool, one that provides us with all the social and related data we need.

In other words, it’s not a magic bullet. Just a really powerful one.