Why Cord-Cutting Remains An Unrealistic Option For Most TV Viewers

Originally published at TDG Research on August 20, 2015

Whilst there was much rending of clothing and gnashing of teeth about the Q2 2015 pay-TV subscriber statistics (along with a dramatic sell-off on Wall Street), a closer look at those numbers reveals a lot less gloom and doom than originally reported.

Yes, the top 13 MVPDs lost close to 0.5% of their subscribers last quarter (around 500,000). However, when you cull the top 13 down to the top nine, the results are a lot less negative. Not only did those top nine providers (responsible for close to 90% of cable pay-TV subscribers) manage to reduce the number of losses vs. Q2 2014 by half, they also logged the smallest number of Q2 losses they’ve had since Q2 ’08.

So is it all roses and unicorns in pay-TV land or should we hold on to our skepticism?

Right now, we’d have to say the roses and unicorns are winning. While pay-TV is facing a world of problems, cord-cutting (and even cord-nevering) appear to be the least of their worries.

Why is that?

For starters, unless you’re an infrequent TV viewer, the cord-free experience quite frankly sucks. This has been the case for a while now and the addition of new OTT services seems to have exacerbated the problem rather than ameliorated it.

Insignificant Cost Savings
As numerous reports have pointed out, cobbling together an OTT system that replicates a robust cable package rarely results in any significant cost savings, particularly now that there are more options. Once you’ve added on all the major streaming services (Netflix, Hulu, and Amazon), plus a kids-and-sports package from a virtual provider like Sling, plus access to HBO and Showtime, your package may well be as expensive than the one you were getting from Comcast. This may not be the case if you are among the 67% of ABUs (adult broadband users) with no children living in the home, or are an infrequent television viewer content with a package of three or four apps and limited access to live broadcasts, but more avid viewers (those watching 15 or more hours a week) and viewers who rely on premium networks, will not see considerable cost savings.

Inferior User Experience
Then there’s the interface, or rather the complete lack of one. While going from app to app may work on your phone, it’s not a particularly expedient way to watch television. There’s no way to keep track of what shows are on what networks, no cloud-based universal program guide, watch list or DVR. Again, this is not much of a problem for the casual TV viewer, but for someone who watches upwards of 10-20 hours of TV a week, having to keep up with a dozen or so apps can prove to be quite a hassle. Add in the fact that not every app is available on every device, and the joy of having to keep track of a half dozen separate monthly bills (not everyone believes in auto-payments, which can be more difficult to keep track of than standard bills) and the hassles really start to add up.

Nothing Lasts Forever
We’d be remiss if we didn’t note that pay-TV’s current advantages may not last forever. While a cloud-based universal program guide for OTT may still just be a pipe dream, it’s not in the same league as flying cars and we suspect some clever startup will figure out a way around the hurdles and introduce one sometime soon. For now, however, legal and technological issues prevent this from being a real option. And while Roku may have universal search on its devices, a feature rumored for the next generation of Apple TVs as well, a device-centric search and recommendation function is not the same as a cloud-based interface that works across multiple devices.

Cost may still be an issue, but if the customer experience is superior, then consumers may be willing to pay for a sleeker system that allows them more freedom and superior features even if the result is fewer channels.

A New Middleman
It’s also conceivable that OTT resellers will crop up; middlemen who’ll strike volume deals to bundle up various OTT services for a small cut, providing that elusive universal interface along with a single monthly bill. It’s a service many people might gladly pay for, rather than have to cobble together a system on their own.


Without a doubt legacy pay-TV is in transformation, and today’s viewers demand to watch TV on their own terms. But for now, getting rid of their pay-TV service won’t give them the changes they want and so we’re not likely to see a massive exodus anytime soon.

5 Ways Sports Rights Holders Can Make Periscope And Meerkat Work For Them

Originally published at TV[R]EV on August 20, 2015 


With the fall sports season fast approaching, we thought it was worthwhile to take another look at the way sports leagues were dealing with the streaming services Periscope and Meerkat. The two apps burst onto the scene last spring and put a scare into sports rights holders, especially after the MayPac fight pay-per-view event, where tens of thousands of viewers were using the apps to watch the fight for free.  Shortly thereafter, all the major sports leagues banned fans from using the apps at games, with the NFL even banning teams from running their own official streams.

While we think that rights holders do have a cause for concern when people are filming a $100 PPV event off their TV screens, we think they are missing a real opportunity to use these increasingly popular apps to engage with fans who are at the game. While pirating Pay-Per-View off the TV set is an issue, we don’t see fans broadcasting from inside the stadium as a real concern. In addition to the issue of spotty in-stadium Wi-Fi, logic would seem to indicate that a fan with a smartphone is not going to get a very clean video of a game, certainly nothing anyone else would want to watch. The far more likely use case is for fans to use these streaming services to take videos of themselves at the game.

So rather than ban Periscope and Meerkat from the stadium, we’ve got 5 ways teams and leagues can use them to increase fan engagement:

1. Allow fans to stream, but give them a place to save and share their clips for possible inclusion on a highlights or scoreboard reel
It is possible to save the streams as regular video, which makes for easier upload to your site. This will keep their video within your ecosystem where you maintain rights to it . On a practical level, this means setting up an alert for anyone who is streaming from the arena and tweeting at them to let them know about the upload.

2. Phrase the instructions to make it clear that you are talking about short clips  
We’re not talking about streaming the entire game of course. Encourage fans to take videos of themselves and their reactions before, during and after the game, with an eye towards being able to use them in a highlights clip or on the scoreboard.

3. Credit the fans whose clips you do use 
Make sure your official social media accounts give them a shout-out. This will make them feel appreciated and chances are good they will promote the link to your official highlights reel. This will also encourage other fans to take part.

4. Promote your official Periscope or Meerkat account
sports teams on periscope
Use it to focus on fans during the game, with an eye towards sharing the clips on the Jumbotron or on a post-game highlights reel. That will go a long way towards making fans feel like they are a part of the action. Some scenarios you can look to capture include:

• Pre-game  prep (tailgating, face-painting, traveling)
• Fan Predictions for the game
• Fan reactions between innings or between quarters
• Shout-outs and “pump ups” for their favorite players

5. Come down hard on anyone streaming the live TV broadcast
That’s where piracy becomes a real issue and where it’s possible for someone with a high end camera to do a good job of recreating the broadcast you paid good money for, cutting into your ad revenue and otherwise interfering with your profitability.  Twitter (Periscope’s parent company) and Meerkat have both promised to be responsive to illegal streams, so let’s take them at their word for now.

Conclusion

Embracing your streaming fans and making them part of the family, giving them a purpose and rewarding them for helping to promote your teams is a far better strategy than issuing an outright ban and can really work to boost engagement. That said, it will still be important to monitor how Periscope and Meerkat develop and how quickly fans adopt these live streaming apps.

Are We Getting A Little Over The Top About OTT?

Originally published at TDG Research on August 13, 2015

HBO, Showtime, and CBS have launched their own standalone OTT apps, and there’s been much discussion about whether ESPN is in a position to make that move too. Subsequently, eyes are now turning to the hundreds of other broadcast and cable networks, with fans and industry observers wondering when they will take the plunge and launch their own standalone OTT apps. Many predict the action will begin any day now.

But don’t touch that dial. The Great OTT Migration isn’t happening just yet. There are many reasons most networks will not (and can not) make the leap to OTT, either now or in the short-term future.

The first reason has to do with who owns the distribution rights to the network’s programming. In most cases, it is often an outside studio. Take AMC, for example: Lionsgate owns the rights to Mad Men, while Sony owns the rights to Breaking Bad. These sorts of deals are the norm in Hollywood, as the studios develop the shows and incur the costs of winnowing down scripts and creating pilots. And the reason they shoulder this expense? So they can then sell distribution rights to a show once it becomes a legitimate hit, raking in millions upon millions of dollars.

The second reason OTT may not be right for broadcast and cable networks has to do with who they sell those rights to–online distributors like Netflix, Amazon, and Hulu. While these distribution deals can generate a great deal of income, they also limit the amount of content the network has available to populate their own freestanding app.

This is why we’re seeing genre apps appear, like the NBC Comedy app, Shudder (a horror app), and the SundanceNow Doc Club from AMC. This is the only programming they have available for OTT distribution and, as many networks are discovering, it’s not enough to fill up an entire OTT network app.

HBO and Showtime are unique in this regard, as they produce much of their own programming and thus own the rights to it. CBS is unique among the broadcast networks in that it’s not a part of Team Hulu, and thus still has rights to most of its programming (or at least the ability to work with the studios to secure those rights). That’s why they were the first networks into the OTT pool, and why the pool is remarkably uncrowded.

For now, anyway.

Networks are also starting to rethink their distribution deals with Netflix. They have come to realize that the streaming behemoth is actually drawing their viewers away from rather than driving them back to live network broadcasts. As the breadth and quality of Netflix’s offerings—both licensed and original—continues to grow, viewers have even more reason to stay in the app. That’s why we predict that more and more networks will choose not to renew their Netflix deals when they expire, understanding that easy money today is not worth the losses they’ll incur down the road.

In addition to pulling back from Netflix, networks are creating more of their own original programming, while making sure own the digital distribution rights no matter who makes the shows.

Once their content libraries have reached critical mass—a combination of new shows they have rights to, and older shows they’ve reclaimed from Netflix—more and more networks will finally be in a position to take the OTT plunge.

To Binge, Or Not To Binge? Why We Like Hulu’s “Not Right Away” Strategy

Originally published at TV[R]EV on August 14, 2015. Co-authored by David Beck

Bucking a trend towards enabling binge viewing, Hulu recently announced that it was going to release original series like The Mindy Project and Difficult People on a weekly basis, rather than all at once.

While “TV is dead” proponents may perceive this as a reactionary measure, we think it’s a very smart move/experiment that could:

• give Hulu’s orginal series a better chance of success
• show advertisers they are actually getting their money’s worth
• let viewers rediscover the joys of weekly viewing

Hulu actually has an opportunity to build audience and community.

One of the greatest challenges of an on-demand, binge-enabled series is how to build community.  The lack of a shared viewing experience coupled with fans paranoid about social media spoilers can create an almost anti-social viewing experience. Ultra hardcore fans will band together on sites like Tumblr, but for someone whose involvement is more restrained, the weekly debut of a new episode is all the news they need to share. This approach also allows Hulu to create a more coordinated social push, while driving live tune-in.

For Hulu, the advantage is an audience that, once they’ve watched and enjoyed a single half hour episode, might stick around to see what else Hulu has to offer. This can help reduce churn rate while building up Hulu as a brand, turning it from a destination to watch last week’s Saturday Night Live into a full-fledged network with a range of content. This is why the platform’s recommendation engine plays such a critical role, as we believe the data Hulu harvests here about the correlation between different shows will prove most valuable, both for targeting and for future programming decisions.

Advertisers might actually get their money’s worth.

Hulu is unique among the streaming services in that its subscription model also comes with advertising. So while Netflix and Amazon don’t need to worry about the needs of the advertising community, Hulu does.

Fortunately, advertisers will see real benefits from this new paradigm as they’ll be assured of reaching a set audience at a specific time every week, an audience with whom they can share time-sensitive messages and whom they can activate via social media. This allows them to buy Hulu the same way they buy network TV (or at least network VOD) which makes for easier planning. Integrating native ads or #createdwith content featuring the show’s stars is easier too, because now there’s a timeliness to the programming.

And since Hulu’s 90 second ad pods are mercifully shorter than the four minute pods found on network TV, viewers won’t be drowning in a sea of commercials, which makes each advertiser’s (non-skippable) message stand out even more.

Audiences benefit from a shared experiences. 

For those who don’t exclusively binge watch, watching weekly episodes can reduce the anxiety that certain “binge master” friends will accidentally spoil the season by revealing crucial plot points.

Those who stopped watching live TV “long before it was cool to say it”, may find they actually like episodic television: binge viewing often feels like binge eating: you’ve scarfed down the entire pint of Haagen-Dazs in one sitting and now you’ve got nothing for dessert all week. Knowing that there’s something to look forward to once a week might be appealing in and of itself, especially if you’re marathon viewing all the other series you follow.

But…they need to think about hedging a few risks

We’d be remiss not to mention some potential downsides to Hulu’s plans. While older viewers may appreciate the shared experience, younger Millennial and Gen Z viewers may regard it as hopelessly old-fashioned and give up on the series once they realize they have to wait a week for the next episode. And since no one, regardless of age, is accustomed to watching Hulu on any sort of linear schedule, the concept may prove confusing to viewers, especially if it’s not promoted correctly.

That’s why Hulu needs to develop a smart multi-platform content and engagement strategy—everything from releasing additional content across social networks to setting up live midweek Meerkat and Periscope sessions with the actors, writers and producers of these shows in order to increase viewer awareness and engagement. Given the strong existing fan bases for the stars of Hulu’s new shows, we think these sorts of tactics will be very well received.

Hulu has defied the conventional wisdom before, running commercials on a subscription service,  and then running a countdown timer while asking viewers to rate the relevance of the ads they’ve seen. The introduction of linear is just another experiment for them, one we think will yield excellent results.

If there is one rule of thumb for the TV[R]evolution, it’s to experiment and adapt. In other words, #BeBrave

Virtual Reality: The Future of Entertainment Or Just Another 3D?

Originally published at TDG Research on August 6, 2015

‘Virtual Reality’ (or ‘VR’) is a term bandied about a lot these days, particularly in the entertainment industry. It’s supposed to be the ‘next big thing,’ a medium that changes the entire notion of storytelling by making it more immersive, more realistic, and (you guessed it) more reliant on technology.

At the same time, many observers hear the words ‘Virtual Reality’ and immediately roll their eyes, recalling 3D, Second Life, and other technologies widely touted as the ‘next big thing’ only to flop.

So is VR just another overhyped technology, or will it truly matter to the future of TV and video?

TDG believes that VR has a strong shot at becoming a defining element in the future of video entertainment. While ‘nice to have,’ 3D added little to the viewing experience of most films (and even less for TV programs). VR, on the other hand, offers a truly immersive experience; an experience so exquisite and unique a Wall Street Journal reporter noted that “writing about VR is like fiction about sex—seldom believable and never up to the task.”

VR Goes To Work

While VR is most often mentioned in relation to entertainment, it has multiple use cases for business and beyond, which will help it gain traction and diffuse more widely. Among the most obvious applications for VR is real-time conference calls, and several startups are already working to apply VR to this use case. Unlike video conferences, which can feel like watching TV, participants in a VR conference call are all in the same three-dimensional ‘space,’ and the speaker is able to make eye contract with everyone in the ‘room,’ while unintentional or inappropriate gestures simply don’t register. In many ways, VR conference calls are an improvement over in-person meetings, only without the attendant travel costs.

Real estate is another industry where VR apps should prove to be a plus. Such apps already been developed for high-end properties so that overseas buyers can get a more realistic view of the property and what it would feel like to actually ‘live there.’ This is but one example of the many business applications of VR and another reason why the technology will have staying power.

Storytelling

While video games remain the main attraction for VR developers, the real opportunity in entertainment is in creating movies and other story-based content. There’s a steep learning curve here, as filmmakers need to think through all aspects of a story — what’s happening throughout that story world, and to navigate the user through it.

Filming VR is a unique experience as well, with special devices containing as many as 36 camera lenses deployed to capture every aspect of a scene so that post-production can bring everything together to create a VR world.

Working the viewer into the VR experience is another dimension of the story, and no doubt requires genuinely creative thought. Are you are in the same world with the characters and, if so, are you an active part of the story line at that moment in time? Writers and filmmakers will make those determinations based on the story they want to tell, and the role a viewer plays in its unfolding.

Technology

As with 3D, VR manufacturers are struggling with viewer hardware. The current crop of headgear has great functionality but feels clunky, and is extremely uncomfortable to wear for periods beyond 10-15 minutes. Many observers see smartphones being turned into VR devices, via headsets like Google Cardboard, an inexpensive lightweight headset that feels more comfortable over long periods.

Recommendations

The VR revolution will be televised, and in order to take advantage of it, TDG has a few recommendations on how to prepare for the changes ahead.

Learn. Everyone in the television and video industries should be educating themselves about VR. That means actually playing with it, experiencing it firsthand, not just reading about it. Hands-on use will change the way you and your company view the possibilities (and limitations) of VR.

Observe. Watch what others are doing in the space, how they’re using VR, how they’re going to be using it. Send someone on your team to VR conferences to learn where the ‘cutting edge’ lies. The more you’re on top of VR innovation, the less likely you are to be caught unaware.

Plan. Have a plan in place as to when you wish to begin experimenting with VR and the properties with which you wish to experiment. Be prepared to alter that plan as industry dynamics change, and as new devices and functionalities are conceived (not implemented, but genuinely envisaged).

When it comes to VR and the future of video entertainment, passivity is unwise. Our suggestions are spot on, and create genuine opportunities will emerge.

Recaps Are The New Water Cooler

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

Like many people these days, the vast majority of my TV viewing is done on a time-shifted basis. Sometimes I’ll binge a series long after it’s off the air, other times I’ll catch up with a show that’s in-season, only I’ll do so  intermittently, in bursts. But however I’m doing it, the one thing I miss is that water cooler conversation, the ability to trade notes with friends and co-workers who’ve also just seen the same show.

That’s not happening these days. Particularly when I finish watching at 2 in the morning. But I’ve found a solution and so, it appears, have many others: Recaps.

Recaps, for the uninitiated, are a combination of a review and blow-by-blow recounting of an episode and the best ones are humorous and have a very strong POV. They are a great way to ascertain, for example, who random characters in Game of Thrones actually are and which family they’re related to, or get someone else’s opinion on which of the Wet Hot American Summer actors have aged the best.

READ THE REST AT TV[R]EV

Virtual Reality: The Future of Entertainment or Just Another 3D?

Originally published at TDG Research on August 6, 2015

Virtual Reality’ (or ‘VR’) is a term bandied about a lot these days, particularly in the entertainment industry. It’s supposed to be the ‘next big thing,’ a medium that changes the entire notion of storytelling by making it more immersive, more realistic, and (you guessed it) more reliant on technology.

At the same time, many observers hear the words ‘Virtual Reality’ and immediately roll their eyes, recalling 3D, Second Life, and other technologies widely touted as the ‘next big thing’ only to flop.

So is VR just another overhyped technology, or will it truly matter to the future of TV and video?

READ THE REST AT TDG RESEARCH

The Shot Heard Round The World?

Originally published at TDG Research on July 30, 2015

In TDG’s April 2015 report on OTT TV Advertising, we predicted that the artificial division between OTT and linear TV streams of the same broadcast would cease to exist within five years, at least for advertising purposes. Lo and behold, what should we see this week, but that CBS is going to run the same ads on the 2016 Super Bowl regardless of whether you’re watching the game through your set-top box or through your iPad.

Is this revolution already being televised or is CBS just slightly ahead of the game?

The answer is a little of both. CBS is in a great position to set new terms for television advertising, and the Super Bowl is the perfect vehicle to make this happen. It is, after all, the most desirable advertising space available. But advertisers are increasingly concerned that Cord-Never Millennials won’t see their commercials if they only run on linear and not via OTT. Having one’s ads featured on both is a huge plus…especially if CBS does indeed charge a record $4.5-$4.7 million for a thirty-second spot.

Traditionally, OTT broadcasts of network TV programs have been sold separately from linear broadcasts, even when they run simultaneously, as there is no universal standard of measurement for OTT — Nielsen does not yet measure most OTT streams. Rights issues also come into play, as advertisers must buy digital rights to the commercials, then pay extra for talent costs when the ads are delivered via OTT.

Waiting For Nielsen

CBS’s decision to run the same Super Bowl ads on both live linear and OTT streams may not immediately alter the reality of bifurcated ad buys. It will, however, open the door for the rapid adoption of a single-broadcast model — that is, once Nielsen (finally) begins to measure OTT broadcasts. Without a universally accepted standard of measurement, networks cannot properly monetize those TV shows that also enjoy large online audiences via operator and network TVE apps.

The Super Bowl, however, is a different animal. Advertisers know that millions of people will be watching the game. They are also aware that millions of fans engage in the weeklong extravaganza via social media, with ads frequently appearing on YouTube a week before the actual game.

Since the majority of ad views on game day will come through linear TV, advertisers need not worry that their ads aren’t reaching enough viewers. Even if concurrent OTT views remain uncounted, marketers know that their ads will be seen by enough viewers (and hopefully generate enough social buzz) to justify the extravagant costs.

The Problem With Live Broadcasts

There is one other issue with the OTT broadcast of the Super Bowl: the stream itself. In previous years there has been a significant delay between the linear broadcast and the OTT live stream, sometimes as much as four or five minutes. This voids the notion that the ads are running simultaneously and advertisers can claim that they are losing the promised synergy.

And while many have blamed the lack of concurrency on the Internet’s inability to handle live TV, the reason is far more mundane: the hardware and software used to broadcast the OTT live streams are just not up to snuff. They were not made to handle such a large audience, or the sizable traffic spikes that come with a live broadcast.

We’d thus advise CBS to invest significantly in perfecting its Content Delivery Network (CDN.) This will ensure that both the linear ads and OTT ads will show up at more-or-less the same time. This is a particular issue at a time when social media coverage of Super Bowl ads is at a peak, as live stream viewers do not want to read about ads in their Twitter feeds five minutes before those ads appear on their screens. (Reading about touchdowns and fumbles five minutes in advance would be even worse!)

Establishing A Precedent

While CBS’s decision to sell linear and live streams as a single unit is not about to open the floodgates, the precedent it establishes is huge. Running ads in tandem helps to usher in a system that reflects the way viewers watch TV today — on multiple devices and multiple screens without regard to how the signal is being delivered.