Short Video Clips From Digital Hollywood Panel

I was on a panel this week at Digital Hollywood on 2nd Screen, and Sirpa Aggarwal from Arktan was kind enough to supply me with two nicely edited video clips.

Also featured in the video are Rahul Aggarwal from Arktan, Marc Scarpa from Simplynew and Amaury Blondet from Discovery.

Monopoly Is Not Just A Board Game

Late last year, I wrote about rumors I was hearing that GAFA (Google/Apple/Facebook/Amazon) had come to the conclusion that the only way they were going to be players in the TV industry was to control their own chunk of broadband access. The thought was, why would NBC sell them rights to content given that the deal would only serve to annoy Comcast or whichever MVPD owned the broadband connection to the end user’s TV. And the way they were going to get their piece of the broadband pie was by convincing Congress that the monopoly the MVPDs had over broadband access in the US was a grave threat to the principle of net neutrality and thus a threat to free enterprise and everything else the American people held near and dear.

So imagine their delight when the confluence of events over the past month has set that very chain reaction in motion. With nary a cent spent on L Street lobbyists.

First, the DC District Court rules in favor of Verizon, declaring the FCC’s current net neutrality rules to be in violation of the Communications Act. And while the actual takeaway was just that the FCC needed to rewrite the rule, some of the mainstream media—and many of those on social media-- seemed to think the court had effectively nullified the entire principle of net neutrality and was giving the MVPDs carte blanche to overcharge innocent Netflix users.

Then came the Comcast/Time Warner Cable merger, which would create a cable behemoth capable of reaching 57% of the U.S. population. And even though (or perhaps because) Comcast never competed with Time Warner for broadband subscribers, the red flags went up again: Comcast was going to control broadband access in the US. They could change the fee structure at will, especially now that net neutrality was out of the picture.

And the drumbeat grew louder still.

The final twist was the announcement last week that Comcast had worked out a commercial interconnect agreement, which, as analyst Dan Rayburn convincingly explained, was a paid peering agreement that had nothing to do with net neutrality. This troublesome fact did not seem to deter many observers who saw Netflix paying Comcast for delivery and declared net neutrality cooked and done.

The panic over net neutrality plays into the current national gestalt that the rich and powerful are happily screwing over the 99% and the government is doing nothing about it. You can see it in everything from Bill de Blasio’s runaway victory in the NYC mayoral election to protesters harassing Google busses in San Francisco. And so the dawning realization that broadband access is, at best, an oligopoly, at worst a monopoly, has now got the public’s attention. Fear that the formerly open internet will suddenly be available only to the highest bidder has left many scratching their heads and wondering why the government doesn’t do something about something so clearly un-American.

There are actually many good reasons for the government to pay attention to broadband. A free national WiFi network would be a huge boon to the economy and put the US way ahead of much of the rest of the world. Unfortunately the same government who built the Obamacare website would be in charge of building this free national WiFi, so be careful what you wish for.

Which brings up plan B, the one that GAFA is allegedly hoping comes to pass: the government decides that Broadband circa 2014 is a lot like Telephony circa 1982 and brings an antitrust suit (or some variation thereof) against the MVPDs and breaks up the monopoly. It’s something that’s easier said than done: would new competitors be required to lay down their own cable? Would existing cable be available by all competitors who’d compete on price and service alone? What about the fiber optic cable that Verizon and (recently) Google have installed? And will all this be obsolete because 5G mobile signals will be strong enough to handle video and data traffic.

Regardless of what happens, the mainstream media has gotten the scent of blood and stories like Comcast/Netflix are going to be hitting the news on a more regular basis as carriers work out deals with content providers. What happens as the sharks circle around is anyone’s guess, but watch as politicians on both the left and the right stake out positions on this to pander to voters who are generally fed up with the current state of the TV industry. Or at least the size of their monthly bills.

Ellen's Selfie: Whose Win Is It?

So Ellen’s Twitter selfie (taken by Bradley Cooper) has broken all sorts of retweet records and the usual suspects are claiming a win for Samsung.

But is it? To quote my friend Todd Walker (on Twitter) “the brand attached to that selfie is Twitter. Not one person's gonna remember what phone was used.”

Bingo.

The brands that will garner a win from this are (in order) Twitter, the Oscars, Ellen, Bradley Cooper. Meryl Streep, Brad Pitt, Julia Roberts, Angelina Jolie, Jennifer Lawrence, and then, maybe, Samsung.

USA Today’s insta-headline reads Ellen, Brad, Julia, Meryl Snap Starriest-Ever Selfie and the article doesn’t even mention Samsung. Ditto the Wall Street Journal's Ellen DeGeneres’s Epic Oscar Selfie Becomes Most Retweeted Tweet

So step one for the brand would be to get their PR people in gear and make sure they're attached to the moment.

Is this a replicable moment that proves the overall viability of social TV? Not really. The confluence of a widely viewed live broadcast (e.g. no time zone issues) with celebrity presence and a Twitter-heavy audience makes it more of a one-trick pony that's a great example of the power of real time marketing and the speed at which something can go viral.

Which is not to say it’s not a win for Samsung. It’s a great idea and far more powerful and buzzworthy than any of the TV spots on the show. But without the direct brand tie-in (and competition from Twitter and celebrity brands, it's not the win 1 million plus retweets would make it seem it is.

WhatsApp and the 19 Billion Reasons UX Matters

One of the recurring themes you hear from naysayers who are unhappy with Facebook’s $19 billion purchase of WhatsApp is that it does the exact same thing as any number of messaging apps. Which is true. It just does it better and easier.

Take Skype, which is often held up as an app with even more functionality than WhatsApp: it allows texting, talking, and video chatting. But Skype requires you to sign up. It puts the onus of finding friends on you. And as any Skype user can attest, it’s buggy: IMs show up two days after they were sent. Friends online status get updated seemingly randomly with intrusive pop-up messages. And, the interface is often counterintuitive.

WhatsApp may not be breakthrough, but it’s simple and if you look at its core user base, you’ll understand why. WhatsApp didn’t break through with affluent American teenagers, they of the unlimited texting plans and unlimited iPhones— it got its traction overseas, with people whose friends didn’t always have smartphones, who had to pay for each text message, more for an MMS. In that sense, it’s similar to the Chinese WeChat, which is designed to work as well on an older Android technology as it is on the latest version of iOS. The recently announced addition of voice calls should play into that strategy too, provided it works as simply and easily as the chat app. The 40 million WhatsApp users in India and the 38 million in Brazil don’t have the same access to unlimited calling plans the way their American peers do. So a simple way to initiate and receive voice calls that doesn’t feel overly corporate (Skype) should be right in WhatsApp’s wheelhouse.

And while we’re riffing on WhatsApp, let’s not forget that a chat app— of any sort— is fundamentally different than Facebook, which bears a stronger resemblance to AOL circa 1998 than to any of today’s new crop of apps. Facebook allows users to spend hours doing anything but communicating with each other: playing CandyCrush, reading articles, stalking old girlfriends. It’s a win for Facebook because they get to serve up countless ads during your hours-long gaming and stalking visit and it gives people who aren't inherently social a reason to visit the app.

If you’re going to WhatsApp, on the other hand, the odds are high you’re going to communicate with someone. Not browse or dilly dally.

So if Facebook is smart, they’ll keep WhatsApp separate. And just be happy knowing that the Facebook brand gives users the best omnivore app (in the original Facebook) the best photo app (Instagram) and now the best messaging app. As companies from P&G to Disney can attest, there’s nothing wrong with that strategy.

A Universe Of Their Own: The Real Fallout From The Time-Warner/Comcast Merger

One of the things that got lost in the news about the Time-Warner/Comcast merger was that the day before, there had been no small amount of buzz around an alleged Apple/Time Warner deal where Time Warner was going to allow Apple to create an interface for Time Warner Cable that lived on the Apple TV box and that supposedly the only thing holding it up was the fact that Apple wanted users to be able to authenticate with their Apple ID rather than with their TimeWarner ID.

It was going to be a big step forward for Apple and for the Apple TV device in general, particular since that device has been getting a major ass-whupping from Roku. To the point where, as once tech blog articles would refer to “streaming devices like Apple TV and Roku” they now seem to default to “streaming devices like Roku.”

The merger would seem to put as end to that, for as tech writer Jessica Lessin noted in a tweet, “(Comcast CEO) Brian Roberts is more likely to win a gold medal than do a deal with Apple right now.”

It’s not that Comcast is anti-innovation— if anything, they tend to lead the industry. It’s just that they like to do things themselves and that doesn’t leave a whole lot of room for Apple or anyone else.

Take set top boxes: while the rest of the industry regards them as something akin to radioactive waste, what with their high upfront costs, $250 truck roll costs, unreliable installer problems and the like, Comcast is doubling down on set top boxes, actually selling their X1 and X2 platforms (and boxes) to competitors. In Comcast’s view, the set top box is their way to control their ecosystem, and with something approaching a national presence, they are in a unique position to do so. That’s bad news for Apple and any other company who was banking on creating a unique TV platform that worked regardless of which MVPDs content it was displaying.

The same DIY philosophy is behind Comcast’s Xfinity Streampix product, which is positioned as a direct competitor to Netflix and Amazon. Streampix allows Comcast to make use of their extensive video library and access to new movies. But more than that, it allows them to circumvent some net neutrality practices since, for example, the bandwidth used when streaming movies via Streampix does not count towards the amount of bandwidth that certain Comcast customers are allowed before caps set in. And here again, the sheer size of the new Comcast will make this significant and may make Streampix a viable rival.

In both instances, the Comcast-Time Warner merger is a big step backwards for third parties who have been trying to/hoping to disrupt the pay TV landscape. Whether they’ll be able to recover from that, to rally other MVPDs together to present an alternate vision of what TV looks like, remains to be seen.

Are DVRs Doomed?

While much has been made lately over cloud-based DVR services — from Comcast’s Boston launch to Aereo— there’s another line of thinking that says the DVR may soon be heading the way of the 8-track.

It’s killer? Non-skippable VOD.

While consumers may love their DVRs, no one on the industry side has ever been particularly fond of them. DVRs allow viewers to miss live broadcasts and, more importantly, skip commercials. And even if they’re not skipping commercials, they’re often watching ones that are out of date, their offers having expired, the movie no longer in theaters.

As the networks have come to terms with the whole notion of binge-viewing and making everything available on VOD pretty much immediately, they’ve also come to realize the financial advantage VOD has over DVR.

With VOD, the networks control the interaction. With DVR, it’s the consumer. That means the networks can ensure that their VOD programming has non-skippable commercial slots built into it. And that allows them to continue the current ad-supported television model, possibly even growing it, as VOD also offers the opportunity for dynamic ad insertion— placing current ads in those non-skippable slots, perhaps based on what is known about the consumer, their buying habits, their taste in shows. Which means those VOD slots can become even more valuable than live ones.

And so look to the networks to push the MVPDs who will gladly stick a fork in the DVR. Something they can easily do because other than TiVo, there just aren’t that many independent DVR manufacturers. Most people have DVR through their cable box and if the MVPDs want to kill it off, they pretty much can. Which won’t be that big a deal for consumers if every show is instantly available on VOD. In fact, most people might find VOD a more convenient set-up as they’ll no longer have to worry about recording things or whether the football game ran longer than it was supposed to and knocked everything off schedule.

The catch, of course, is that the networks can’t get too greedy. If they stick to a couple of Hulu-esque 60 or 90 second commercial pods, they will be fine and consumers won’t get all that hot and bothered about the commercial breaks. But if they get greedy and insist on 8 minutes worth of commercials on every 30 minute prime-time show, then I’d look to buy stock in TiVo and anyone else who still makes a DVR.

It’s a tough call too, because there’s such a built-in bias towards greed, towards discounting what the consumer wants.

Once again, time will tell.

Interviewed on CBC TV About The Future of Television

I was interviewed the other day by Aaron Saltzman from the CBC (Canadian Broadcasting Corporation) about changes to the TV industry. The story ran on Canada's national news last night.
(My bit is at 00:54)

The Net Neutrality Trap

The significance of the federal court’s decision to strike down the FCC’s net neutrality ruling may not be in its effect on Netflix or Google or any of the usual suspects the inter webs are all freaked out about. No, the companies hit hardest by this lawsuit may be the ones who actually filed the lawsuit in the first place: the MVPDs.

Allow me to explain.

As I wrote last month, there has been much whispering as of late that GAFA (Google/Apple/Facebook/Amazon) have— individually or collectively— figured out that the only way they are going to have a shot of getting into the TV business is to own the means of access, e.g. broadband.

They’ve figured out that so long as they’ve got to go through Comcast or Verizon to get their programming onto people’s TVs and tablets, there’s not a whole lot of reason for NBC or CBS to sell them rights. At least not at a price point that allows them to make any money. And even if they do manage to get the content, they’ve then got to deal with potential broadband caps and other roadblocks the MVPDs will throw up to make sure they don’t steal their audience. Which, as Intel learned the hard way, is why Hollywood sees no reason to play nicely with them.

So the plan seems to be to lobby Congress to declare broadband access an unfair monopoly or oligopoly. Most people only have one or two realistic options for broadband, and those are both via MVPDs. So the plan is to use net neutrality as the crowbar with which to open the door to divestiture and open up the broadband market to new players, e.g. GAFA.

Why net neutrality? Because despite what the court may have ruled earlier this week, most Americans believe that net neutrality is fair. The opposite— letting broadband operators start charging different prices in a way that affects consumer experience is not going to be popular. So just pointing out how evil the MVPDs could be if left to their own devices— especially in light of the recent ruling—- might just be enough to get Congress to sit up and take notice.

“Could” is a long way from “will” though. There’s a strong counterargument that having invested billions in building out the nation’s broadband infrastructure, it would be criminal (or at least socialist) to force the MVPDs to surrender their broadband assets.

So divestment is far from a slam dunk.

Plan B may be for Amazon, Facebook and Apple to follow in Google’s footsteps and build out their own broadband services. While Google Fiber is currently limited to Kansas City and Provo, Utah, noted analyst Rich Greenfield expects them to expand to a major market in 2015. Should the other GAFA members follow suit, the resulting networks could provide a formidable counterweight to the current MVPD oligopoly, especially if they offered a more popular, more consumer-friendly counterweight. And that would be the change needed to launch a major disruption.

Grab your popcorn and enjoy the show.

UPDATE, 1.21.14: Today's confirmation that Verizon has purchased Intel's OnCue service and is likely going to launch a virtual MVPD, has, as Will Richmond points out, created a new wrinkle in the Net Neutrality issue: what if the the MVPDs start denying each other equal access. Will that help GAFA's argument or hurt it? I'm not sure-- depends on how over the top the battle for over the top gets.