New on SlideShare: Still Not Dead: The Remarkable Resiliency of the US Television Industry

Still Not Dead: 7 Myths About The Current State of the TV Industry Debunked from Alan Wolk

There Ought To Be A Law: Using Congress To Change The Television Industry

Cord cutting is not going to change the TV industry.

Not because it’s happening really slowly, not because it appears to be mostly an economic decision made by lower income people, not because Netflix trends highest with more affluent households, the ones with titanium level pay TV packages who regard it as just another flavor of HBO.

It’s not going to change the TV industry because right now, there’s no real alternative to pay TV.

You ever hear people who’ve cut the cord for non-economic reasons? They’re always talking about how easy it is to cobble together a solution using an outdoor antenna or Aereo and some combination of Netflix, Amazon and Hulu.

“Cobble together.”

That’s the problem, right there, in those two words. The vast majority of Americans may not be happy with their pay TV service, but they’re not turning it over for something they have to cobble together. Revolutions don’t work like that. At least not in the tech world. People want a better alternative. Or at least a better-seeming one.

“1,000 songs in your pocket” was a pretty appealing proposition and so people were willing to give up CDs for iPods. So was the notion of a flat rectangular telephone that put millions of apps and websites in your pocket.

So why hasn’t the TV industry had a similar “ah-hah” moment?

The answer is pretty simple: the same people who bring you your pay TV service generally bring you your broadband service. So cut one cord, and you’re left with the other. That makes it next to impossible for anyone on the outside to innovate: in order to get the service into your house, they’ve got to rely on the very people they’re seeking to displace. And because broadband service in the US has become such an oligopoly, it’s way too profitable for anyone to willingly give it up. So of course you can cut the cord and stream hours worth of Netflix. The same way they can then impose bandwidth caps on all that streaming (it’s already happening in certain markets) so that your bill isn’t really any smaller.

And there’s nothing you can really do about that because there’s no one else for you to take your business to.

Right now there is no realistic alternative to the major broadband providers. Which is why so many “death of television” manifestos end up claiming that people are going to give up their Comcast and FIOS broadband… for free WiFi at Starbucks. Because that’s currently about it for alternatives: free WiFi at Starbucks or the free public WiFi that some cities now offer in limited locations. And if you’ve ever tried to watch even a 30 second YouTube video on free WiFi, you’ll know why that’s not really an option. (Think free hotel WiFi.)

So what is?

Well, here’s where it gets complicated. Because right now, the only realistic possibility for change is going to come courtesy of the United States government. Who have it within their power (either Congress or the FCC) to break the stranglehold the MVPDs have on broadband.

That legislation is not going to happen (if indeed it ever does) because so many people are pissed off about having to pay for 800 channels they never watch or because they can’t watch the Olympics online or because they have to use their parents log-in to watch HBO. It’s going to happen because the companies the French have nicknamed “GAFA” (GoogleAppleFacebookAmazon) have launched a major lobbying effort to make it happen.

Who stands to gain the most from the breakup of the television industry? GAFA. And who keeps getting punted every time they try? GAFA. Which is why I keep hearing so many rumors about how they’ve come to the conclusion (individually or together) that legislation is the only thing that’s going to work. Because they’ve tried all the obvious routes: GAFA have all come to Hollywood, waving their billions, only to get rejected by deals that were too expensive to be profitable or not happening at all. Partly because the entertainment industry thinks of them as the scorpion in Aesop’s The Frog and the Scorpion fable, but mostly because there’s no compelling reason to give them a good deal— as Intel recently learned the hard way, without their own broadband connection, there’s not much they can really offer in return.)

And it’s not like they haven’t tried that angle either: Google is building out something called Google Fiber, a high speed (1G) broadband and pay TV service. But they launched that service around two years ago, and thus far they’ve wired up Kansas City, with nascent forays into Austin, Texas and one or two other small cities. It’s a big country and build it yourself isn’t really a viable option, something FIOS also recently figured out: after spending billions to bring fiber optic cable to what essentially amounted to the upscale suburbs of the Northeast, they gave up on building out new territories and opted instead to fill in their existing territories.

Which leaves the federal government as GAFA’s only viable option. They need an angle, of course, because stamping their collective feet and shouting “it’s not fair!” is only going to get them so far. And it seems they’ve found that angle too, in a theory known as Net Neutrality.

Net Neutrality is the principle that all internet traffic should be treated equally and that no company should be able to pay for preferential treatment or access to bandwidth. It’s meant to protect start-ups and prevent power (aka bandwidth) from accumulating in the hands of the few. Which is exactly what GAFA will be claiming: by creating an oligopoly where access to broadband is controlled by two or three major carriers in any given market, we’ve created a situation where net neutrality is too easily compromised and thus we need to break open the system the way we once broke open Ma Bell.

The MVPDs on the other hand, have a very compelling counterargument centered around the billions of dollars they’ve invested in building and maintaining that infrastructure and the inherent unfairness of a government deciding to take that all away from them.

While both sides have extremely deep pockets with which to lobby Congress, the MVPDs generally wind up dominating the list of America’s most hated companies while GAFA are still pretty popular. A fact that should be keeping the former up at night.

What happens if GAFA wins and they get to have their own broadband pipes and the ability to set up their own pay TV services? Well that’s when the TV industry should start to see a shakeup.

Maybe.

On the one hand, competition is the lifeblood of innovation and the entrance of several well-liked, well-funded competitors should serve to shake things up and induce real changes in an industry that desperately needs them.

On the other, there’s the fact that we still only have one source for popular, high-production value programming and the networks and studios are not going to roll over and accede to deals that negatively affect their bottom lines. Nor should they: they are businesses, not charities. So the sweeping changes may happen in slow waves, rather than all at once. (Factor in too the long-term deals and rights agreements already in place: those can’t be trashed unless both parties agree to it.)

Nothing is a given however, especially government intervention. Which may take on many forms, including a push to build out a high-bandwidth free national WiFi network. If change is going to come to the TV industry, it will come in the form of a shakeup to our current broadband infrastructure, as closed markets have no incentive to innovate whereas open markets breed innovation. Only time will tell.

Take The Piksel Recommendation Engine Survey

Are you happy with the way your provider recommends shows for you to watch? Do online services like Netflix do it better? Or maybe you know exactly what you want to watch and just want them to leave you alone. Whatever the case, please take this very short (10 question) survey on TV recommendations.

Survey ends on Saturday December 7 !!

Backdoor Saviors: Why Virtual MVPDs May Be Just What The Industry Needs To Stay Relevant

To no one’s great surprise, Intel’s attempt at creating their version of the mythical Apple TV didn’t pan out. The OnCue service - a streaming set top box and 21st century pay TV service that would replace the viewer’s current service— never came together and now Intel is looking for someone to buy it.

This week’s rumors are about Verizon and Liberty Global, with the former possibly wanting OnCue as their answer to Comcast’s X1 platform… or as a launchpad for their own VMVPD: Virtual Multichannel Video Programming Distributor-- a web only version of their pay TV service.

The allure of a VMPVD (for operators, anyway) is that they it would allow them to expand their footprint beyond their current geographic restrictions and reach a whole new set of customers. Which is why many in the industry view them as potential time bombs that could lead to all out warfare.

I’m much less concerned about that and actually see them as potential saviors for the industry, providing an outlet for all those 20something “cord nevers” much in the way that iTunes provided an outlet for millions of Napster users.

Allow me to explain.

Who is the prime market for a VMPD? Not the family of four with three big screen TVs, a home hub set top box and little inclination towards early adopterdom. Rather, it’s the 23 year old young professional who’s never home to watch live TV (outside of sports) but who understands that the only way to watch HBOGO/ESPN Live/FoxNow/The Olympics is to have a valid pay TV log-in and he’s tired of using his parents credentials to gain access.

Which is why a low-cost, low-hassle virtual package is going to prove to be very appealing.

Low cost is going to be a big factor here,  and so the Intel box, designed to be a premium product with a beautiful interface, is not going to be all that necessary. Because our target really doesn’t need a set top box of any sort as very little of his viewing is going to be live. So an app that lives on Roku or Apple TV (as well as an iPad) is going to be enough, particularly if it comes with a cloud-based DVR capable of storing about 10 hours worth of programming. (He doesn’t need more as the DVR is just a way to fill the 24 hour gap between live broadcast and VOD availability.)

What he will then have is a valid pay TV log-in for all his favorite channels along with the zero-hassle ability to tune in to CNN or NBC to watch election results, disaster coverage and the Super Bowl.

He will also go from being a “cord never” to being a loyal paying customer of Comcast, Uverse, Verizon or whoever it is he also gets his broadband service from.

Which is part two of the equation.

While there will be some initial agita over competitors launching VMVPDs in new territories, there won’t be much long term poaching of customers: you still need a broadband connection to access your virtual MVPD, and since that’s not something potential interlopers can provide, it gives the incumbents a huge advantage

Because short term deals aside, it’s always going to be cheaper and more efficient to get your service via a double or triple play package. (And don’t rule out the appeal of a single bill, which, while it may sound trivial, is actually a nice selling point.) And when it comes to pay TV, our prospect is always going to be all about cheaper and more efficient.

If the MVPDs are smart, they’ll negotiate a different set of rights for their virtual offspring, one that allows for a more Netflix-like device agnostic experience along with different package configurations, like the one Comcast rolled out last month that lets customers sign up for broadband plus HBO.

There’s still a lot to be worked out as technology changes are embraced by the masses, but the virtual MVPDs will provide the industry with a back door into the sorts of device agnostic, (partially) unbundled, forward-looking solutions consumers on the cutting edge have been asking for.

Slaves of the Internet, Here's Your Problem

I hate the word "content" and strive to use it as infrequently as possible. I find it to be emblematic of the way stories, photos, movies and TV shows have been reduced to the status of filler and it carries the assumption that the end user could care less what the content is, so long as it is "compelling," an equally nebulous term.

But there's a reason it's become so ubiquitous and that's because the internet is filled with a whole lot of "content"-- poorly written/designed/filmed/concepted content, and the truth is very few people seem to care.

That's the unfortunate response I have to Tim Kreider's much-commented-upon screed Slaves Of The Internet, Unite!

You see while I get that it sucks that people are always asking him to write and speak for free (that's my world as well) I also get that the reason that happens is that audiences don't see enough of a difference between work that's really good and work that's just okay. And if that's the case, there's no reason for anyone to pay for work that's really good, when there's an unending source of "just okay" content (and in this case, the stuff I'm referring to is aptly called "content.")

So if your goal is to put out an 800 word listicle or a "How To" service piece, the audience doesn't seem to care a whole lot about craftsmanship. They care about the bullets and the quick takeaway and that's it. They care that there was some sort of photo to catch their eye, but unless it's egregiously offensive, that's about all they'll notice.

So while it's unfortunate that the people who used to be able to make a living out of those kinds of creative endeavors (and to be fair, the work that Kreider and the people he is talking about create is far more nuanced and skillful than just 800 word listicles or stock photos) the audience for whom their work is intended just doesn't see the value of it.

Once They've Seen Paris: A Revolutionary Proposal For The TV Industry

Once you’ve gotten used to watching television without advertising, it’s really hard to go back.

That’s something the industry hasn’t really come to terms with yet, the fact that they’ve been training a whole generation (and many of its elders) to studiously avoid the very thing they use to pay the bills. It’s like having a dull ache in your leg for years and then suddenly finding a pill that makes it go away. It wasn’t life-altering pain, but once it’s gone, you realize how much better you feel without it and there’s no way you’re ever going to put up with it again.

I was thinking about this while listening to the Netflix earnings call on Tuesday. For 8 dollars a month, they’re able to make hundreds of millions of dollars a year off subscriber fees alone. And no commercials. Ever.

But how many networks are there that we’d pay 8 dollars a month for? I suspect not that many. Maybe 5 or 10 at most. The rest we could live without: we mostly watch them because they’re free or we’re bored or because they have one particular show we like. The rest is just a flyover zone, the channels you pass through when clicking from NBC to Showtime.

So here’s a radical thought: what if we turned the whole paradigm around? What if we made ad supported TV the back-up option and subscription services the premier one?

Take the CBS series Under The Dome which premiered this summer on Monday nights, with multiple commercial breaks, on CBS and then resurfaced on Fridays on Amazon, commercial free.

What if the process was reversed and the Monday night broadcast was on a service called CBS Prime that you paid $8/month to subscribe to and where you got to watch Under The Dome and other CBS series ad-free?

Viewers who didn’t sign up for CBS Prime would get to watch the show five days later for free, only with the usual eight minutes worth of advertising thrown in.

This would create two strong reasons for fans to subscribe to CBS Prime (early access and no commercials) and would still allow the show to build audience with remaining viewers, some of whom might like the show enough to sign up for CBS Prime. It would also place pressure on the networks to improve the quality of their programming so that viewers would want to sign up for the prime versions.

There are potential downsides to this maneuver: affluent audiences might just default to the ad-free services and be lost to advertisers forever (though I’d argue that this is more or less happening already, thanks to streaming, VOD and DVR.)

The industry would also be forced to admit that an ad-supported model is an inferior model and risk losing ad revenue (though again, you can argue that this is already the case with apps and it’s not hurting mobile ad revenue. Plus TV advertising still has incredible reach and services like AdTonik that tie TV spots to mobile ads can help extend that reach, while also hitting affluent audiences.)

The biggest downside would be that the Prime system would only work for a dozen networks at most and that would create a more transparent two-tier system. On the other hand, if costs were low enough and a niche network had a small-but-extremely-loyal following, the Prime system could work for them as well.

How it would work is also open for discussion: the most logical move would be an HBO-style service with a preset linear schedule, though there’s also an argument to be made for a pure VOD service that had much of the network's library already on it (ad-free) and where each new episode would be available for download at noon Eastern time on Mondays. A Netflix-style system where all episodes were released at once is also possible, though spoilers might serve to disincentivize weekly viewers.)

Given the results of Piksel's recent Binge Viewing Survey, that showed many viewers are no longer watching their favorite shows live (and thus presumably watching them without commercials) a shift in emphasis to align TV with the rest of the entertainment industry, where the free/ad-supported model is not the premium model, could go a long way to keeping those viewers happy and keep them from leaving the pay TV ecosystem. It’s a major paradigm shift, but it’s one that could work to the advantage of all parties involved.

Viewers in particular.

Beyond The Bubble

This article first appeared in Visions, a newsletter put out by our partner Civolution

There’s an apocryphal story of how the late playwright Arthur Miller, upon hearing that Richard Nixon had won the 1972 election, expressed incredulity given that “no one I know voted for him.”

That attitude persists today inside the media and tech bubble where all too often we look at the behavior of our friends who also reside inside that bubble and decide that it’s reflective of the world at large. Unfortunately, that’s just not true and can lead to some very bad decisions. But put that behavior into the right context, and it can lead to some very prescient ones.

Inside the bubble, we take it for granted that no one actually watches linear (live) TV apart from the occasional sporting event. But the reality is that over 80% of the TV watched in the US is watched live. We don’t watch commercials, so we assume no one else does either. But TV ad revenue is actually up. It’s an article of faith that “kids” all watch TV on their iPads. But most kids, even in Europe and the US, don’t have iPads or tablets to begin with, let alone use them for watching television. Many of our friends seem to be abandoning pay TV and cutting the cord in favor of a combination of Netflix and other streaming services. But there’s scant statistical evidence that this is happening on any significant basis, and a recent Nielsen study showed that Netflix actually indexes considerably higher with high income families who maintain their top tier pay TV service.

So then here’s the catch: none of these things are true today. But they will be. Maybe not in 2013 or 2014 and maybe not all of them. But that train’s already left the station, and the trends that are happening inside the bubble now, have a very good chance of happening outside of it quite soon.

Our challenge, as an industry, is to figure out how to harness those trends and make them work to our advantage. Television is as mass a medium as it gets. While smartphones and computers can feign at attracting the young and tech-savvy, we’ve got to appeal to everyone, to grandma and grandpa, to people who don’t know an OS from an OTT. And we’ve got to do that without alienating the people on the cutting edge.

The best tool at our disposal for accomplishing this task is listening. Listening doesn’t have to mean extensive research and long costly studies. It can be as basic as taking people outside the bubble into account, thinking about what they’d want to see, whether their living rooms also contain multiple iPads, let alone multiple TVs. It’s easy to assume we know what the consumer wants because we are consumers too and why wouldn’t everyone want the same things we do? That’s fatal though and it’s a problem that’s plagued the tech industry from day one, along with its cousin, “we should build it because we can.”

Television is changing, and like most changes, it will happen slowly and then all at once. Success involves staying ahead of the change, but not too far ahead that you’re waiting for everyone else to catch up. Listen to your friends and co-workers, but listen to the people outside the bubble as well. They’re the ones who are going to make or break you. Not us.

Calling Twitter's Bluff

As a run-up to their IPO, Twitter has been making a lot of noise about how they are the new virtual water cooler for television shows. And to prove that point, they’ve engaged Nielsen to come up with ratings that show how much Twitter-powered “engagement” TV shows get.

Now measuring sentiment has always been a tricky business, but this set of ratings seems particularly specious. To begin with, Nielsen doesn’t track what’s being said, just that someone is saying it. Which on it’s own is enough to raise an eyebrow, but they then compound that by pretending that every tweet is read by everyone who is following the tweeter. Which we all know is patently false: most tweets go by unseen, especially if you’re following more than a handful of people. [UPDATE, OCTOBER 30, 2013:  Steve Hasker from Nielsen explained to me that Twitter has a way to tell if a user has looked at a tweet - that Twitter can tell if a user has the mobile or web app open and if they've scrolled down and seen the tweet. He also said that an independent auditor was going to test that to see if it was accurate. But that is how Twitter judges the reach of each tweet.)
Twitter is not Facebook - there are no algorithms to put your friends tweets up front and the speed at which tweets go by all but ensures that most will go unread. While claiming all those eyeballs may make networks, advertisers and potential investors feel better, the stats seem pretty far removed from reality.

There’s also the whole demographics thing: Twitter is not what you’d call an ideal focus group. It skews younger and hits a range of random demographics, but seems to miss the mainstream. Only around 25% of Americans have Twitter accounts. And if I’m being extremely generous, that means maybe 20% are regular users. So a full 80% of the audience never sees a single tweet. Twitter’s not adding a thousand new users a day, either. The numbers are pretty stable. Which means that 80% figure is pretty stable too.

As this article from The Wall Street Journal points out, that means that what’s popular on Twitter is pretty much only reflective of what’s popular with Twitter users: The Big Bang Theory, one of the top ten rated shows with the general populace, does not even crack the top 10 of Nielsen’s Twitter ratings.

Now what’s interesting is that Comcast just announced a plan to allow people to tune their TVs directly from Twitter. Which will do something Nielsen has not yet been able to do: provide an accurate read on the number of people who are actually tuning in to TV shows because of Twitter. No more guesswork: this is as close to click-through as you’re going to get with TV.

My assumption is that the results will be exactly what you’d expect them to be: live events and teen girl oriented shows like Pretty Little Liars will get decent sized boosts from Twitter. Well done History Channel documentaries on the life of Konrad Adenauer won’t. Shows like Psych (USA Network) and Game of Thrones (HBO) that engage in well-planned, well-funded “get out the tweet” campaigns will see some gains as well. But that’s about it.

As time shifting continues to grow as a consumer behavior (particularly, as our recent study indicated, around shows people really want to watch) the value of platforms like Twitter that rely on live tune-in will diminish. Which is not the disaster for advertisers and TV networks it sounds like: we’re in a holding period right now, waiting for things like contextual, dynamic ad insertion to stop being unicorns and start being real. We’re close and when that happens, when ads are inserted because the systems knows the viewer is watching on an iPad at 10PM the week before Halloween and inserts an ad for Reese’s Pieces, then the system becomes whole again and Twitter becomes just one more vehicle for driving certain audience segments to watch shows they might not otherwise been aware of.

Which is a lot different than a virtual water cooler.

The Value Of Ownership

I find it incredibly useful (not to mention fascinating) to step back every so often and ask “how did we get here?” How did we wind up with the particular business model and set of beliefs that currently dominate the industry. And to fully understand the media industry in 2013, it’s necessary to look back to the year 2007.

In 2007, the music industry was still reeling. The conventional wisdom of the day said that two things killed the music business. The first was piracy, in the form of Napster, Limelight and other services that people used to download entire libraries of music that they could play on their computers and MP3 players. The second was the death of the album, which allegedly came at the hands of Apple. The belief was that because iTunes let listeners cherry pick the songs they wanted to buy, they stopped buying albums, and because iTunes had a virtual lock on online music, Apple ignored the music industry’s pleas to raise prices on downloads, which would have allowed them to recoup some portion of their shrinking profits.

Many people believed that it wasn’t a matter of if these twin viruses would infect other industries, but rather, when.

The conventional wisdom of the day also held that people wanted to own media. Owning movies was a habit the DVR helped start back in the 1970s and people had been buying music for even longer. There was no reason to think that they would not continue to do so. Rental options existed, but their business models were based on the notion of limited supply which served to encourage sales rather than cannibalize them.

It was precisely because of this belief that the notion of the digital locker took off. The idea was that the digital locker would prevent piracy, as people would not have physical access to all those digital files they owned, and that it would prevent any one company (i.e. Apple) from owning the digital marketplace and fixing prices. (It was widely held that consumers stuck with iPods because their considerable iTunes libraries did not work on other players. A digital locker with files that worked on any device, current or future, would ensure that did not happen again.)

It was a great idea in 2008, only then consumers did what they oft times do: they changed their behavior in a way that no one had predicted.

Sometime in the period between 2008 and 2012, consumers, or at least a significant number of them, decided that they didn't really need to own music or movies: they were happy to rent them in exchange for unlimited access to a close-to-unlimited library. Hence the success of Netflix and Spotify.

Part of that decision had to do with the superior user experience of the subscription services. Unencumbered by fears of piracy and the need to keep track of individual libraries, they could keep their interfaces free from multiple log-ins and other protect-the-content features that digital lockers and similar services, were forced to add.

But mostly it seemed to be a part of a gradual awakening by consumers to the fact that there was no longer a reason to own any sort of media. Storing everything in the cloud eliminated the notion of scarcity. It meant that everything would now be available to everyone. And you could watch or listen to it immediately for one low monthly fee.

We’d never had that before. Media was always scarce. Libraries only had so many copies of a given book. Owning media was the only way to ensure consistent access. But now there was a better way. One that gave you access to the entire spectrum.

The value of ownership is fading on a macro level, particularly among the younger generation. Which is perhaps not surprising when you look at our recent history. For years, people owned very few things. Even rich people: the gilded-age mansions of Newport are not known for their lavish walk-in closets. And then, very quickly, the postwar consumer revolution of cheaply made goods turned ownership from novel to commonplace and suddenly we owned more things than we could keep track of. At which point ownership began to lose its value.

We can see that same change in the automobile industry: young people, who grew up in an era where owning two cars was fairly common, are buying fewer cars. And even the ones who own cars report that it’s less of a big deal than it was a generation ago. Not all of them. Not most of them. But enough of them that automakers are noticing the shift.

That’s how we got here. To a world where consumers prefer the ease of use of an OTT (broadband-based) TV signal that sometimes buffers but is available whenever they want it. Where they’d rather pay Netflix $9/month to be able to watch any show they want rather than pay the studio $15 for the right to own a particular movie in perpetuity.

The future of media is in that change, in the triumph of convenience over quality, in the idea that there will always be a way to access any type of content at any time on any device. Those are the principles our future systems-- and future business models-- need to be based on. Consumers may not be aware that they’ve made this decision for us, but they have, and trying to buck that decision makes as much sense as trying to turn back time.

A Crack In The Armor

So it turns out one of the most interesting things I heard about during IBC wasn’t happening anywhere near Amstedam, but rather many thousands of miles away in Los Angeles.

Where numerous people have allegedly done the math in their heads and come up with a Hollywood elevator pitch that goes something like this: “House of Cards. Without the middleman.”

The idea is that there’s a lot of talent in Hollywood, but that talent rarely makes it past the gatekeepers. And that networks like AMC, HBO, Showtime and now Netflix have proven that if you assemble the most talented writers and directors in the industry and let them follow their vision, you get award winning shows... and a whole lot of buzz which eventually translates to a whole lot of money. And then Netflix proved that you can put those well-crafted shows online and still get that buzz. To which the next logical response seemed to be “well then, who needs Netflix?”

So the idea is to raise the money to produce a high quality show: top writers, top actors, large production budgets. Only then, instead of selling it to a network (or wannabe network) you put it online yourself. Via a Roku channel and/or a Chromecast-friendly website. Maybe even one of the new on-demand only channels the MVPDs are rumored to be rolling out for non-broadcast content (provided their own cut isn’t extortionate.) And that between those outlets, you can recoup the money you spent producing and marketing the show and then some. By selling subscriptions or advertising or a little of both. With the potential for a lot more, as the long-tail effect kicks in along with overseas licensing deals.

Now to my knowledge, none of this has gone beyond the “taking a meeting” stage. Not that I’d be among the first to know if it had, but it still seems in the contemplation stage.

It’s also important to note that it’s far from a sure thing: you’d really need to get a lot of viewers or advertisers paying a lot of money to make something like this turn a profit. But if you did-- or even if you almost did-- the shockwaves reverberating through the industry would look a lot like Wile E. Coyote after the anvil fell on him.

And we’d all sit and stare at the crack in the armor and contemplate what it meant for the industry.

At least until the next one appeared.

From Beet.TV - Most Viewers Watch Fave Shows On-Demand or Streaming, Study

My latest video on Beet.tv, this one about our Binge Viewing Survey and our white label 2Si second screen platform.

Results of the 2013 Piksel Binge Viewing Survey

The results of our Piksel Binge Viewing Survey are in and they're up on SlideShare. 

You'll find some interesting conclusions, like the fact that only 11% of respondents watch their favorite TV shows live. Read through the results and share your thoughts.

CBS Settles With Time Warner. And Netflix Could Not Be Happier

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On the odd chance you missed the news, CBS and Time Warner settled their dispute last night, CBS is back on the air, and is being widely hailed as the “winner” in the battle. (TWC Chairman Glenn Britt is even quoted as admitting “we certainly didn’t get everything we wanted.”)

Lots of backstory, particularly around the role of sports in forcing TWC’s hand, but the one that interests me the most is the battle over digital rights , which was a much bigger deal than many realized.

It seems that back in 2008, when the last CBS-TWC deal was inked, CBS agreed to give TWC pretty much exclusive rights to its on-demand programming and, much to Time Warner’s chagrin, CBS did not want to renew that portion of the contract.

 So what happened in the interim? Pretty much everything:

1. The MVPDs always treated VOD like the red-headed stepchild. The interfaces were confusing at best, incomprehensible at worst. The content was limited and that was when it worked, which it often didn’t. And you could only watch it on your set-top box connected TV
2. Along came Netflix, Amazon and Hulu who started licensing the networks’ older programming. Digital rights are different than on demand rights, but for the consumer the result was the same: they could watch past seasons of popular series whenever they wanted. And with Netflix, Amazon and Hulu, they could also watch it pretty much wherever they wanted. Or at least on an iPad in their bedroom.
3. In addition, the streaming services all had much more intuitive interfaces than the VOD services: they were easier to search and they had cross-device intelligence - the ability to pick up the program where you left off as you moved from one device to another.
4. Binge-viewing became a thing and people started using services like Netflix to catch up on entire seasons of older series. This was easy to do on Netflix because they made it easy to locate the entire season and navigate your way through it. Not so easy to do on MVPD VOD systems which sometimes randomly left out episodes or left it to the viewer to decide what S3EP4 meant and how it related to the episode they just saw. That, and having the SD and HD versions of the series under completely different sub-menus made for a less-than-compelling experience.
5. Realizing that TV series were driving their subscriptions faster than movies (and after losing the rights to stream most current movies, which were heading to TVOD (Transactional Video On Demand) services like iTunes) Netflix quickly saw the value in paying large sums of money for digital rights.
6. Unfortunately, the deals CBS and other networks had in place with the MVPDs automatically gave them VOD rights to the same series CBS wanted to sell to Netflix. And it gave it to them at no additional cost.
7. This meant CBS couldn’t charge Netflix as much, since they weren’t getting exclusive rights.
8. Now, with the 2013 deal, they can.

While the MVPDs were remiss in not seeing the revolution coming, the truth is, hardly anyone did. As I’ve mentioned before, the one lesson we’ve learned from the digital age is that convenience trumps quality: the music industry did not think anyone would listen to MP3s because the quality was so poor compared to CDs. The phone companies did not think people would use rectangular cell phones they couldn’t cradle between their shoulders and necks for hours.

 They were wrong. People prefer convenience.

 To be fair to the MVPDs, there were also additional rights issues-- VOD rights vs digital rights-- which impeded innovation. But that’s just an explanation as to why they lost, it doesn't change the fact that they did indeed lose.

So the networks have the upper hand. For now. That may well change though, as the lawsuits spawned by Aereo wend their way through the courts and the MVPDs question whether the networks have a right to charge for retrans fees. Stay tuned.

Take The Binge Viewing Survey

Last week, Variety columnist and well-regarded industry expert Andrew Wallenstein, posited that not every show was meant to be binge watched.

As he was basing that on his own experiences with Breaking Bad, I thought it might be interesting to see how others binge-watched TV, and since Google Drive makes pulling together surveys so easy, I cobbled together this quick, ten question survey that will take you no more than two minutes to fill out.

Thanks!

As The World Turns

Add today to the list of days where it feels like the TV industry is in a totally different place than it was when you went to sleep last night.

Two big developments.

Roku has surpassed Apple TV in number of users. According to a study by Parks and Associates, of the 14% of US homes that own a streaming device, 37% are using a Roku vs the 24% using an Apple TV.

That's a curious number given that Apple TV has outsold Roku - As of April 2013, Roku had sold 5 million units vs 10 million for Apple TV. My guess is that the same people are buying both devices and that the greater channel selection on Roku (Amazon in particular) has them using the Roku more often. I am open to hearing other theories if you have them.

Whatever the reason, that's a big boost for Roku, a device I am personally quite fond of -- I own three, one for each TV-- and it will be interesting to see what effect Google's Chromecast has on them. It's a critical duel over interface, pitting Roku's model of having the box control the TV experience against the Chromecast model of using the phone or the tablet as the "brains" of the operation.

So that was this morning.

Then, around dinnertime, we learned that Sony had struck a deal with Viacom to supply content to their virtual MVPD project, a project that seems to have taken the industry in general by surprise. (Surprise may be too strong a word but it did not get anywhere near the amount of ink Eric Huggers' Intel box has been getting.)

This is also huge because the biggest stumbling block for the virtual MVPDs has been their inability to get content licenses from networks anyone actually wants to watch. That's the main reason Apple and Google have allegedly walked away from any sort of virtual TV deal and not something anyone was expecting Sony to nail, given how many in the industry have basically given up Sony for dead.

While Viacom alone does not a virtual MPVD make, and it remains to be seen who else comes on board, Brian Stetler raised an excellent point in his article for the Times, noting "Having the news spread was advantageous for Sony, though, because having Viacom on board — even just on a preliminary basis — will most likely help the company complete other carriage deals."

Exactly.

This is another one to wait and see how it pans out and watch the effect the launch of virtual MVPDs from both Intel and Sony has on the industry and how it might encourage other virtual MVPDs, both from newcomers and from existing MVPDs.

Quite a day.

From MacWorld: Why The Chromecast’s Future Could Be Brighter Than The Apple TV’s

Quoted extensively in this article by Marco Tabini MacWorld that does a great job of explaining the pros and cons on the new Google Chromecast

The launch of the Chromecast marks Google’s latest attempt to enter the consumer TV market—an attempt that, while still in its early stages, seems to be on a better footing than Google TV, a consumer reject since its launch in October 2010. 

Google’s $35 video-streaming dongle has drawn predictable comparisons with the Apple TV—Cupertino’s perennial “hobby” that, at last count, sells some 1.5 million units every quarter. And why not? The two devices are, on the surface, very similar: They both stream video, and both are part of attempts by their respective manufacturers to dethrone the traditional living room TV experience.

READ THE REST ON MACWORLD

There's Always A Second Screen

Piggybacking off the last post about watching on the best screen available: there's a corollary to that: unless it's a show you are absolutely engrossed with, there's always a second screen. Or, to be more accurate, a secondary screen.

If you're watching a show on your tablet, and a text message comes in, you're reading it on your phone.  Can't think of the name of the actress and want to IMdB her? You could stop the movie on your iPad, switch over to Safari and go online. Or you could grab your laptop and do it there.

Before portable media, we used physical media as our secondary screens: telephones and newspapers and magazines. Today, we talk/text/read on a device. Only that device also serves as a TV screen. Which is why we need a secondary device, one that can handle all the distracted media consumption we're doing while the first device is busy playing video.

Here's where it gets confusing: a lot of the time, we're only going use that secondary screen to do all the non-TV related stuff: check Facebook, read email, look at pictures. Sometimes we may use it to check something we saw on the television. And sometimes we'll use it as a legitimate companion device to what we're watching on television. The question is, while we, in the industry may see a difference, does the consumer see it that way too, or is it all just "on my phone" to them?

Time will tell.

The Prophesy of the Wounded Wildebeest And Other Tales of Summer

Because it’s summer and because it’s fun to speculate (and because last week saw both an Apple TV and Google TV story, both based on unnamed sources and secret meetings) let’s take a look at what the world might look like if the Prophesy of the Wounded Wildebeest comes true and one of the MVPDs gives in to Apple.

The Prophesy of the Wounded Wildebeest says that the weakest of the MVPDs, the one most likely to be culled from the herd and taken out by the jackals of Bankruptcy and Insolvency is the one that’s most likely to strike a deal with Apple in a sort of Hail Mary play that assumes the Apple TV will be successful enough to keep them in business and then some. And since that is more or less what happened with the introduction of the iPhone, the prophesy is not altogether unfounded.

So let’s assume for the purposes of this exercise that the device in question is a streaming set top box, something on the order of the current Apple TV device, that delivers Apple’s magical new TV interface to the user’s existing television set. (Apple has no reason to actually build a TV set: the monitors are dumb terminals and there’s nothing wrong with them in terms of size, shape or screen quality.) Let’s further assume that this set top box is available only to subscribers who have the Wounded Wildebeest’s cable and internet service (e.g. most of them) and that the Apple TV enables some combination of live broadcast (of several hundred of the most popular stations), VOD and DVR functionalities. And that no matter what you think of Jonny Ives’ design for iOS 7, the new TV interface is universally acknowledged to be something pretty special. Special enough for fanboys to camp out overnight and pay a couple of hundred dollars for the privilege of owning one of these new devices.

So what happens next?

The first few months will no doubt feature lots of reviews of how absolutely life-altering the service was (along with the inevitable backlash in the tech press.) But the service will be new enough that it will still seem like science fiction-- most people won’t actually know anyone who has the system and the whole experience will seem pretty foreign. There will be the usual debates about whether TV is responsible for the dumbing down of American culture and how a device that makes it easier to watch TV is the worst thing ever invented and a sure sign of the impending apocalypse.

At the same time, pretty much everyone else in the industry, from the other MVPDs to competing internet companies to TV set manufacturers to random VC-infused start-ups will be scrambling to introduce their own version of the magical Apple box... much to the chagrin of the various networks, who all have things like channel placement written into their retrans agreements. And while they might have reluctantly agreed to let Apple come up with a new interface, that agreement did not, in their minds, extend to the rest of the industry. So expect lots of lawsuits around the "me too" players.

And the Apple TV may or may not succeed. Because by the time it comes out, the early adopters, the people who put up with the glitches and crashes and Fail Whales, may have gotten so used to watching TV in a completely nonlinear fashion that anything linear-- no matter how cool it is-- is going to be greeted with a giant collective yawn.

Or not-- the inherent “Apple-ness” of the product may still be enough to get a critical mass of fan boys on board and with them, a similarly critical mass of second-stage adopters.

Whatever happens, I will make two predictions that don’t feel a lot like going out on a limb: (a) there will be lots of lawyers and legal wrangling involved and (b) the final product, no matter whose product it is-- Apple, Google, Intel or someone else-- will not be nearly as revolutionary as insiders hoped it would be.

At first.

In business, victories are won slowly, in increments. And then, suddenly, all at once.


The Best Available Screen

It seems like just about every conference I go to features someone putting out the “teens prefer to watch TV on their iPads” myth and I just wanted to set the record straight.

Teens (like adults) prefer to watch TV on the best and largest screen available. Which, if you are an American teenager in 2013, is often your iPad: Mom and Dad are watching the big screen TV and even if they aren’t, they’re in a position to comment on your viewing habits, which makes the relatively private iPad a better option.

Now one reason behind this dynamic may be the fact that many parents seem to have banished TV from the bedroom, a result, no doubt, of the many articles outlining how harmful that was. That leaves the living room or family TV as the only option, and if it's already occupied, then the tablet or laptop makes a good back-up.

But regardless of why, high production value TV just looks better on a big HD screen. (And even better still on the new 4K and 8K screens.) So if it seems that kids are avoiding the big screen in favor of their devices, it’s only because someone else got there first.

The 4S's of Second Screen

While much of the talk around second screen focuses on the content that users will create, that’s just the tip of the iceberg: most users don’t want to create content of any sort and are more than happy to let someone else do that for them. Someone else, in this instance being the people who create the actual shows, and/or the networks and the advertisers who pay to be on those networks.

In talking to all of the aforementioned stakeholders, we’ve come to the conclusion that second screen content can be broken out into four main buckets. Their weight in the second screen experience will vary from show to show, depending on factors like audience makeup and content type. The mix may even vary depending on when the viewer experiences it: before, during or after the program.

These four content buckets, which we’ve been calling the “4 S’s” are Social, Stories, Stats and Shopping.

Social is social media, which will play an increasingly shrinking role in the equation. While Twitter currently has a large install base compared to any dedicated second screen experience, it is nowhere near as ubiquitous as many advocates would have us believe: the majority of Americans are not on Twitter and are unlikely to ever join. Even among Twitter users, influence varies wildly depending on content: for every Oscar ceremony, there are 10 documentaries on History Channel no one is tweeting about. The waning popularity of live television makes any “of the moment” form of social media less relevant. Which is perhaps why a recent study showed that “only 1.5% of respondents report being drawn to TV viewing occasions because of social media.” Social will continue to be important for sports and other event programming that people like to watch live, but we see it’s current prominence rapidly diminishing.

Stories will become the most prominent second screen content for scripted programming. Stories, which will be created by the same people who create the show itself (with occasional help from avid fans) can be anything from “scenes from next week” to behind the scenes footage to interviews with the stars or producers to additional background on the characters. This content will generally be intended to be viewed either before or after the show-- not during it. It’s ideal for hardcore fans and for viewers who are bingeing on a show and want to catch up on the entire experience. The advantage for networks and advertisers is that this is the sort of content fans will return to long after the program airs live, thus prolonging exposure to the series itself and providing additional opportunities for both advertising and promotion of other network shows.

Stats are statistics, polls, voting and all other things number based. These will be particularly important for sports and reality game shows where viewer interaction is already part of the experience. Being able to touch the screen to manipulate stats and poll results and the like should prove to be a very engaging experience and this is one area where users will be able to take full advantage of their devices. As a result, stats should prove more popular during programming that is watched live than during scripted programming.

Shopping is T-commerce, which will generally happen after the viewer is done watching the show. Certain types of how-to shows (cooking and home improvement) may prove to be the exceptions, but given that many of those shows are, for all intents and purposes, 30 minute infomercials as it is, providing a vehicle for in-show t-commerce makes perfect sense. For scripted programming, however, it’s something that is likely to occur once the program is over and the viewer has time to focus on shopping, rather than cramming it in during a quick commercial break. If done correctly (watch our explanation of the “Ad Locker” concept) this will be part of a very lucrative second screen ad ecosystem.

Show runners will need to figure out what combination of the “4S’s” best suits the needs of their audience, and then tweak that content-- on a daily basis, if necessary. The goal of the content will be to drive tune-in, increase loyalty among hard core fans, promote future episodes and to serve as a platform for advertising and for the promotion of new network programming. (As live TV viewing decreases, networks will need to seek out alternate ways to promote their new shows. Second screen experiences for their existing shows should prove to be an effective medium.)

The Door To The Second Screen May Be Through The First

Despite the fervent wishes of just about everyone in the second screen industry, consumers have been slow to adopt any of the tablet and smartphone-based companion apps created for TV. It doesn’t seem to matter much what functionality the apps offer: discovery, additional content, social intercourse or remote control: the number of viewers willing to both download them and then use them on a regular basis has remained quite small*

Which has me thinking that perhaps it’s not the apps themselves as much as the devices on which we’ve trapped them.

We watch TV, for the most part, on the largest screen available. And by “available” I mean “in the room we wish to be in, unlikely to result in a counterclaim being proffered by someone else in the room who wishes to watch a different program, and with the ability to view the actual program the user wishes to watch on the actual large screen TV set.” (The latter not always being possible given the tangle of rights issues in the US TV industry.)

We also don’t always watch. At least not actively. There’s an oft-quoted Nielsen stat about how 84% of people are using their tablets while they are watching TV. Which generally means “checking their email or posting something on Facebook because they’re not all that engaged with whatever’s on TV.” And even though there are stats showing that many people have looked up information about shows on their tablets while they are watching said shows there’s nothing to indicate that this is habitual behavior versus a one time “what’s the name of the actor playing the sister, go look it up on IMDb” sort of thing.

Which may just be human nature. The lure of multitasking is a big one. There are numerous apps designed to help people stay focused on the work they are doing rather than drifting off to Facebook or cute puppy blogs or whatnot. And those same forces are at play when using the tablet as a second screen app: unless it’s a show you are seriously involved with, it’s way too easy to pull away from the TV app to reply to the email that just came in from your boss because, after all, having the TV app open doesn’t simultaneously shut down email. Or Facebook or Twitter. Or Angry Birds.

Which leads us back to the first screen as a way to solve for all of that distraction.

What if all that supplementary content the networks are (allegedly) creating was available on an opt-in basis via the first screen. So that while Big Bang Theory was playing on 75% of the screen’s 55 inches, that additional content would be available on the remaining 25%. It would be content that’s meant to be viewed alongside the show and that didn’t necessarily require any sort of additional interaction to enjoy, very much in the manner of VH1’s Pop-Up video or the HBO Game of Thrones iPad app (which is second screen in name only - it requires you to watch the show on the same screen as the additional content, thus making that the first screen.)

That sort of set-up would be attractive to hard-core fans of the show who were looking for deeper levels of bonding and to people who were only half-watching the show, as the additional content may prove more interesting to them than the original content. It wouldn’t be that much of a disruption as we’re already used to the partial screen concept from news channels like CNN and today’s super-sized TVs offer plenty of space for both main event and extras.

The challenge would be designing a system that was intuitive enough for viewers outside the early adopter cohort, because until those people start using it, second screen, or anything resembling second screen, is only going to be a pipe dream. That challenge is made all the more challenging by the current state of today’s remote control devices, whose UI choices defy logic and which vary from maker to maker, MVPD to MVPD, making an easy way to turn the extra content on and off a serious challenge.

That’s where an actual second screen app may come into play. Both to initiate turning the first screen additional content on and off, and, once it’s up there, to interact with it. (Because for certain types of programming, polls and quizzes are always going to be an option.)

That app could also serve as a program guide/DVR/recommendation engine that would appear on the big screen, but would also allow users to get recommendations/program their DVRs/watch TV directly from their tablets when there was no big screen option. (Which would rely on the networks and MVPDs finally coming to an agreement on TV Everywhere, but I digress.) That could be anytime from your office to the kitchen table to the floor of the den because your mom wants to watch Dancing With The Stars and you’d rather watch the Laker game.

I still firmly believe that program guide functionality is what’s going to get the mass of viewers over to the second screen: it’s just easier to control your TV from a touch screen device that already has a built-in keyboard. Plus there’s only so much we can do with voice commands and then there’s the psychological hook: talk to the machine and it feels like you are telling it to do something for you. Tap it or swipe it, and it feels like you are doing the work. That’s not a conscious perception, but it’s an important distinction that may make some people uncomfortable with relying on voice commands.

The trick to mass adoption may be as simple as keeping viewers attention focused on the same screen as the program they’re watching, whatever that screen might be. It goes against a lot of what we currently believe about first screen/second screen interaction, but given second screen’s current failure to launch, it’s well worth looking into.

*Yes, there is a Dutch TV show that has a second screen app that something like 25% of the population of the Netherlands is currently using. It’s a way to play along with a popular quiz show at home (and win valuable prizes) that makes me think it’s a clever exception rather than success story #1.

Cablevision, New Jersey Transit and the Rise of TV Everywhere

There's news today that Cablevision and New Jersey Transit have just signed a deal for Cablevision to introduce WiFi service onto all NJT trains. (By 2016, but hey, you can't have everything.)

Now as a daily NJT commuter, I was thrilled to read this on a personal level, but it's the potential impact on the TV industry that's really got my interest piqued.

What this offers is one of the first examples of a legitimate use case for regular out-of-home TV viewing. As I've noted in previous posts, outside of live sports, there just aren't that many places where you'd watch TV away from home. (It's not like you are going to go down to Starbucks to watch "Game of Thrones" on your iPad. And most people don't travel for work as much as the readers of this blog likely do.)

Countries where out of home viewing is popular tend to have public transportation systems with either WiFi or really good 4G. The US has neither. That's why the Cablevision/NJ Transit deal could really be the start of something. Most NJT riders have fairly lengthy rides (upwards of 30 minutes) and so plenty of time to sit and either watch live TV or an entire program that they'd recorded on their DVR.

A lot will depend on how much bandwidth you're getting, as anyone who's ever tried to fire up HBO Go in a hotel room can attest to, but assuming it's good quality and doesn't have multiple dead zones, we could be seeing the start of a whole new behavior pattern.

In New Jersey, anyway.

The Not So Secret Life of the American Teenager

There’s been so much written lately about teenagers in the age of social media, so much of it patently ridiculous (e.g. I talked to my sister and her friends and thus extrapolated what all teenagers were up to) and/or posited by people who haven’t actually seen a teenager since they themselves were one, that I felt a tirade was in order. So here goes:

What’s the one constant about teenagers, of any generation, beyond the whole horniness thing? The fact that so many teens are constantly trying on new personalities and new identities just to see what it feels like or to see what fits. And so what apps they are into varies wildly from day to day, from school to school, from clique to clique and (especially) from girls to boys.

Facebook is the one constant. They may tell you they don’t really like it, don’t like seeing the dumb things people post on it, but reality check: so do most adults. And like teens, we may gripe about it, but we still use it.

Why? Because it’s its own self-contained theme park. You can chat, you can play games, you can look at pictures, listen to music, stalk old friends-- there’s a whole world of things you can do on Facebook depending on your mood. And everyone you know is on there, from Grandma to the kid you sat next to in kindergarten, so it’s got the same repellers and attractors as home. Especially if you’re 15 and undecided whether it’s comforting or mortifying that your mom “liked” your picture from soccer practice.

Apps are like teenage fashion choices. One day you’re wearing Ugg boots because they’re cool and trendy, the next day you decide they’re stupid and pretentious and want nothing to do with them. Substitute Pinterest or Twitter or Snapchat and you get the picture. And that shouldn’t be the least bit surprising: teenagers are like that, they’re capricious about pretty much everything from friends to music to the mood they’re in when they get home. And they have been like that since we invented them back in the 1950s.

So let’s stop trying to define them and assigning them a specific taste in apps. Vine is hot this month because comedians are making funny videos/hipsters are making cool artsy videos/someone was playing with it in study hall and everyone started watching/my older brother and his friends said it was cool.

Next month it’ll be something else.

Which is not to say that every teenager is doomed to spend their middle school and high school years in a permanent state of app flux. Sometimes it feels right and so you stick with it. But what that “it” is varies so widely, it’s foolish to try and define. The one thing we do know is that the next Facebook isn’t here yet. Facebook still feels like “home” and with the possible exception of Instagram and Snapchat, all the other apps are about interacting with others or about being entertained. None of them are the new Facebook, either singly or in combination.

The new Facebook won’t be here for a while: sea changes like that don’t come about very often. But when it does, don’t worry about trying to identify it: like the Supreme Court said about pornography, you’ll know it when you see it.

The Perils Of DIY Development

“We’re just going to build it ourselves.”

There are few words more disheartening to a tech company than a potential client who decides to build something on their own.

It’s easy to understand why: there’s an IT director who’s constantly having to battle the impression that his only function is to fix the printer when it breaks down. Who looks at the product, gets a sense of what it does and decides he can figure out how to build it for half the price the external vendor wants to charge him.

There’s the marketing team, who wants to bring in their preferred design team and who want to be able to control the look and feel of the site/app, control they believe they’ll lose if they bring in an outside vendor.

Then there’s the CFO, who looks at the bottom line and sees a significant savings from taking things in house.

So what’s the catch?

Building things internally can be very cost effective... if you’re going to leave your site or app up for two to three months or less. After that, it’s not. You’ve got to factor in the cost of maintaining, upgrading, updating and keeping everything up to date with the current operating system. That means every time Apple upgrades the iOS, you’ve got to upgrade your app or site too. New functionality (e.g. voice commands) suddenly becoming popular and a must-have? Your problem.

And the reason why it’s truly your problem is that you likely don’t have a full time staff of engineers on hand. So you’ve had to outsource pieces of the project, if not the whole thing, and now you’ve got to hire new engineers and hope that they can figure out the code the first group wrote.

That’s particularly true if you hired a design shop to design the site and let them do the buildout for you. The UX may be beautiful and the design cutting edge, but if the underlying code isn’t up to snuff, you’re in trouble once you move to version 2.0.

That’s why it makes sense to hire a company that specializes in building and maintaining whatever it is you’re launching. Because then all those updates are their problem. Or not so much of a problem, since they anticipate those sort of changes and are able to roll out updates more efficiently and cost-effectively since they’re writing the code for a range of projects, not just yours. That keeps costs down and makes sure you stay up to date in a timely fashion.

One caveat here is that many of the these builders and/or systems integrators view design and UX as a necessary evil, which is the last thing you want to hear if you’re in the entertainment business. That’s why (shameless plug alert!) KIT has invested in a top-notch UX and design department: we want to be the ones who help design the app or site, build it and maintain it.

Which makes us a rarity: most design shops don’t excel at building, most builders don’t excel at design. To get both in one company is a luxury, but that doesn’t mean you need to sacrifice: rather than give short shrift to one of these options, you’d do well to hire two companies, one to design and one to build and maintain. It may not sound like the most cost-effective move, but it the long run, it will be worth it as you’ll have a well-designed site that operates and updates smoothly.

Maybe The Meteor Is Inside A Roku Box

We talk a lot about how it’s going to take a meteor to disrupt the way we watch television, so tightly bound are the legal arrangements that impede innovation. But maybe that meteor is already here and we don’t know it yet.

Maybe that meteor looks a lot like a Roku box.

Roku is far and away the most successful of the streaming devices, both from a sales perspective and from a usability perspective (I test them out both in the office and at home and Roku is the winner hands down - more content, easier to use and cheaper.)

And now, in addition to all the network apps, there are MVPD apps: Time Warner introduced an app a few months back that has over 300 channels - including all the good ones - housed in a far more user friendly interface than we’ve ever seen from an MVPD.

Which raises the issue of network apps versus MVPD apps.

To date, most of the activity around second screen apps has come from the networks, HBO GO and Watch ESPN being two of the more prominent examples. But there’s a limit to how many apps we can open - imagine if your TV experience consisted of 150 apps, each for a different network with a different navigation and different experience.

Which is where the MVPD can come in. Live viewing aside, there needs to be some sort of organizational framework for the various network experiences, a common discovery engine and a way to personalize each user’s experience on a macro level, not just network by network.

So here’s where the MVPD can come in. Imagine Time Warner didn’t just have an app but that the Roku OS was their app. They would handle discovery, wish lists, recommendations and the like, and they’d enforce standardized ad units and ways to measure the success of both ads and programming.

But once you crossed that line, once you moved from the home screen to the show of your choice, you’d move into the world the network created.

That would, in turn, give the networks a renewed sense of purpose. The loss of brand identity is what's keeping network executives up at night. (They’ve fallen rapidly since the days of “must see TV.”) A unique second (and/or first) screen experience would help each network to maintain its identity and connect with the user, while the MVPD would still be able to create a framework with the program guide, controlling things like discovery and channel flipping along with any DVR functionality (which is likely to take the form of catch-up TV.)

Is it the system you’d design if you were designing TV from scratch? Probably not. But then again you probably wouldn’t design networks or production companies into the picture either. We work with what we’ve got, and this seems like it could be a very good solution. It doesn’t necessarily require Roku-- you could create it on any streaming device, and the only caveat is that you’d need a decent sized pipe to ensure that picture quality was the same as it is on broadcast TV.

But that’s it. The pieces are all there. Someone’s just got to put them together. And start killing off the dinosaurs.

Heresies

Every so often it's a good exercise to examine some of the core beliefs of a company or industry and call out the ones that don't make any sense. In the short run, saying out loud what a lot of people have been thinking pisses off  those who are heavily invested in these now outmoded ideas, but in the long run, it's healthier for all involved to recalibrate.

TV Everywhere Wasn’t Worth The Battle. It sounded like a great idea at the time: you can take your television with you anywhere you go and watch it on your tablet or smartphone. The reality, however, shows a very limited number of use cases beyond sports and live events.

Because seriously, when are you going to have a half hour to an hour to watch live TV outside the house in a place where you have a decent 4G or WiFi connection?

It’s not like you’re going to leave your bedroom or living room to go down to Starbucks to spend an hour watching Game of Thrones. Sitting in the park may sound appealing, but anyone who’s ever tried to use an iPad outdoors knows it’s not a pleasant experience. Hotel rooms? Maybe, if you want to watch something off your DVR, but for most people, travel is a once or twice yearly event.

Commuting is the one use case that makes sense, but here again: (a) what percentage of Americans commute 30 minutes or more each way via public transportation, and (b) moving from cell tower to cell tower does not create an optimal condition for video reception. So even if you solve for B, A still makes it a niche product.

TV Everywhere does make sense inside the house for personal viewing: using the iPad as the bedroom or kitchen TV. But that’s it and it certainly doesn’t seem worth the amount of money the networks and the MVPDs have spent in legal battles over it.


Cord Plussers Are More Common Than Cord Cutters/Nevers: A Nielsen study that came out this week confirmed something I’d suspected all along: Netflix and other OTT subscription video on demand (SVOD) services are far more popular with upper income households who use them as an add-on to their existing Titanium Level pay TV packages. Let’s call this group “Cord Plussers” as they’re looking for options beyond what their cable package offers and for $8/month each, they think it’s a steal to add on Netflix and Hulu Plus.

Never mind that the success of Netflix and Hulu is a huge fumble by the MVPDs, many of whom maintain extensive VOD libraries that could compete with Netflix and who should be enabling the kind of 7 day catch-up TV you find in Europe, but who have outsourced that function (and then some) to Hulu, Amazon and Netflix-- the price of these additional services and the value add they bring is enough for people to add them without feeling the need to drop their existing pay TV service.

As for cord nevers, we’ve been through this already, but to reiterate, it’s not that surprising that certain busy, single, tech savvy 20somethings don’t feel the need for a cable subscription: at some point, as they grow older and settle down, they probably will. That, and study after study fails to find any evidence of cord cutting outside of the anecdotal evidence offered by tech bloggers.

Another recent study showed that 18-24 year olds watch an average of 5 hours of TV online each week. What's important to note is that’s not 5 hours they chose to watch TV on their laptops instead of a big screen TV, but 5 hours they carved out to watch TV online in the absence of an actual television set. People really do like watching TV.


Twitter Is Not The Future of Second Screen. This is another seemingly obvious one: most people are not on Twitter, so why do we expect Twitter to become the dominant medium for second screen?

If you’re Fox, and (to use an extremely generous figure*) 30% of your American Idol audience is on Twitter, but 100% of that same audience can take part in a second screen poll, which one are you going to go for?

It’s a win for Fox if the 30% who are on Twitter start tweeting about the poll, but it’s crucial to remember that they are just talking to each other: the 70% who are not on Twitter will never see what they're saying.

Here's the problem: Right now, Twitter has a much larger install base than any second screen app. It's also free to implement, since the only real cost is whatever "tweet about our show" promotion the network decides to run. So in Spring 2013, the numbers work in its favor.  But that won't last for long: as second screen becomes more ubiquitous, the percentage of people using Twitter will be dwarfed by the number using second screen. If MVPDs and/or TV manufacturers go ahead and make second screen the primary program guide and remote control option, you're looking at close to a 100% adoption rate.


Second Screen Engagement Will Never Replace Marketing.  Like it’s cousin, social media, second screen TV is really good at two things: (a) making hard core fans even more hardcore by giving them an outlet for their obsession and (b) moving casual fans up a notch by fleshing out the experience.

This does not mean every hardcore fan and every casual fan: it means just a few of them.

Because really, how many shows can you be a hardcore fan of? 3? 6? In any season, there are only a handful of shows people can fully devote their energy to. Second Screen interaction can help make sure a show remains one of those handful, but that’s it: it can’t create interest where previously there was none.


Aereo Is Not Worth Worrying About. While the networks are all up in arms about Aereo, it's worth thinking about why someone would want it: while Aereo plus Netflix may be a way to replace cable for $20/month, the resulting experience is not all that desirable. Aereo has a less than ideal UI (see my review on VideoNuze) and, like Netflix, you don't get the "always on" option - you've got to make a choice every time you use it and as this piece from Nilay Patel at The Verge points out, that creates an experience that's very different than just turning on the TV and flipping the channels.

That, and the notion that Aereo plus Netflix is a perfectly good replacement for a full cable package is debatable. Lots of people still want their MTV. And ESPN and Disney and Nick and Comedy Central. So the question remains - is it worth it?

UI and content issues aside, all Aereo offers is a very basic cable package for $8/month. There's no reason the MVPDs couldn't replicate this (and then some - throw in some cable only channels) at the same price point and drive Aereo out of business. So it's all sounding like much ado about nothing. Or much ado about retrans fees, which winds up being about nothing.


TV is the one medium that has not yet been disrupted by the digital revolution... yet. That's why it's so fascinating to watch the various pieces as the industry slowly changes and important to keep track of what's a wish and what's reality.

 *Extremely generous. According to a recent Pew report, only 14% of Millennials use Twitter. And that’s use Twitter period, not "use Twitter regularly to chat about the TV show they're currently watching."