Posted in Industry Update | Comments Off on NAB Chief: What’s Not to Like About Free, Live and Local?
WASHINGTON— Just what part of free, live and local don’t you like, the chief broadcast lobbyist asked industry critics today during a House hearing.
National Association of Broadcasters President and CEO Gordon Smith testified this morning before the U.S. Senate Subcommittee on Communications, Technology, and the Internet at a hearing on the “State of Video.” He kept it short and sweet, highlighting broadcasting’s role during disasters and emergencies, the business of retransmission consent and the migration to mobile distribution:
“Stations play a vital role in informing, protecting and entertaining every local community across this great nation,” he said. “And that is never more apparent than when a disaster strikes, reminding us of broadcasters’ important role as first informers.”
“We’ve seen this time and again. In Arkansas and Mississippi, you saw the largest tornado outbreak that took hundreds of lives across the South. Whether an earthquake in Washington, D.C., a hurricane in New York or a terrorist attack in Boston, I have no doubt that each of you can retell a tragic story from your own state. But I’m also confident that each story involves a response by your local stations. These stations kept residents safe.
“And when there was no cable, no satellite, no broadband, no cell or phone service, broadcasters were there to provide a lifeline to their communities. When it was time to rebuild, local stations were there for their neighbors in need, holding fundraisers and food drives to help them get through the hardest times. So I ask you, isn’t this a public good? Isn’t this a role that should be supported? Because if broadcasters are not there to serve this role, who will?
“Even with all of the spectrum in the universe, the wireless industry’s one-to-one delivery system could never match our unique architecture and ability to broadcast to the masses.
“It’s crucial that broadcasting and broadband work hand-in-hand to offload congested wireless systems and deliver the content consumers want and the emergency information they need.
I“n this regard, it was also critical that Congress implemented the necessary safeguards in legislation granting voluntary incentive auction authority. While these auctions will present an enormous challenge to the FCC, your constituents and local broadcasters, we stand ready to roll up our sleeves and conclude this auction in a successful, timely fashion.
“Broadcasters not only inform…we entertain.
“As content producers, we create the most watched shows on TV. In fact, 96 of the top 100 shows were on broadcast television last year. This content is valuable – to the viewers, to the stations that supply it and to the companies that retransmit it.
“Broadcasters’ ability to serve our local communities, produce the best shows on television and deliver that content free to over-the-air viewers, is sustained by two revenue streams: paid advertising and fees paid to us by those who rent our signals and sell our content to paying subscribers.
“Without this economic foundation, we could not do what we do.
“This revenue enables stations to meet their primary goal: serving the public interest. And policy decisions that threaten this economic foundation could cripple an industry that provides an indispensable, even irreplaceable, lifeline service to all Americans.
“I am always surprised when some of our competitors try to describe broadcasters as “yesterday” – part of a bygone era. I have to ask these critics: What is it about free and live and local that you don’t like?
“Our communities not only like broadcasting, they depend on it. And despite a changing media landscape, broadcast television is as relevant today as ever.
“When TV stations transitioned from analog to digital transmissions in 2009, it revolutionized free, local TV, providing viewers more choices than ever before. Most stations offer extra channels, called multicast channels, that deliver diverse and hyperlocal content. It’s coverage of local sports and community events, your weather and traffic matched to your zip code and programs reflecting vast languages and cultures, amplifying the voices of women and minorities in our communities.
“Broadcasters continue to innovate and deliver the content viewers want, when and where they want it.
“Including interactive TV customized to your needs that we’re sending to tablets, cars and smartphones. The future of TV is mobile and on-the-go and more vibrant than ever. In the past month alone, we’ve seen new services rolling out for viewers. Networks are investing in, and launching, mobile services to provide viewers with live, local and national TV on all their devices and even on demand. We also saw just last month at the NAB Show ultra-high definition broadcasting, which is literally 3D TV without glasses; the picture is astonishing.
“Consumers have limitless options for content and countless ways to access programming, and yet they continue to turn to broadcasting more than any other medium.
“That is the enduring value we provide.
“I would ask that as you consider public policy that impacts the future of this great industry, remember the unique and critical services local stations deliver, and consider the consequences of decisions that could impact broadcasters’ ability to serve our communities, and your constituents.”
In early 2012, the CEO of Home Box Office (HBO) referred to the cord-cutting movement as nothing more than a “fad.” Fast forward 14 months and the “fad” is not only still relevant, but growing at a rapid pace. According to a 2012 study conducted by GFK Media, nearly 21 million households now receive TV programming exclusively through broadcast signals rather than cable or satellite.
Pretty startling statistics, wouldn’t you say?
In addition to receiving content over-the-air, many cord-cutters are supplementing their viewing experience with a streaming service such as Netflix or Hulu. As the subscription totals for these platforms continue to rise, Hollywood executives are beginning to view these outlets as an alternative way to distribute original programming.
The producers of the Netflix original program, House of Cards, opted to go with Netflix over HBO because they felt the streaming service not only provided a better avenue to reach their audience, but afforded the viewers the luxury of being able to watch the entire season at their own convenience.
Additionally, Netflix will be bringing back the critically acclaimed comedy series, Arrested Development. Once again, Netflix beat out a cable network (Showtime) for the rights to broadcast the new season. The producers chose Netflix over Showtime because—according to Netflix data—that is where their target audience resides.
Amazon has also jumped into the original content pool. In April, the online retailer posted 14 original pilots, asking viewers to choose their favorite. This will, in turn, give the audience more control over their viewing experience, thus creating a stronger connection the program.
Sound Off: What do you think about Netflix and Amazons foray into original programming?
Posted in Industry Update | Comments Off on Dishs Charlie Ergen: I think people are cutting the cord. A lot of customers can live with Netflix and an antenna, YouTube and they would be pretty happy.
By Janko Roettgers February 11, 2013: 10:16 PM ET
Cord cutting is real, argued Charlie Ergen, Chairman and co-founder of Dish Network at All Things Digital’s Dive into Media conference in Dana Point, California Monday. “think people are cutting the cord,” Ergen said, arguing that kids in college never use cable, and that they won’t suddenly start paying once they leave school. “There is a reason that tobacco companies give away free cigarettes at colleges,” he joked.
Ergen also reiterated his position that a la carte programming would be better for consumers, as well as the industry itself. “We are still for a la carte, because the Internet is a la carte today,” he said. People could just watch Netflix, or even pirate content online, and service providers would have to compete with this new reality. “A lot of customers can live with Netflix and an… antenna, and YouTube… and they’d be pretty happy,” he said.
However, Ergen cautioned the audience at Dive into Media that a la carte won’t become a reality anytime soon. “It’s gonna go there slowly,” he said, arguing that the major broadcasters won’t break the bundle willingly. It would be more likely that the bundle would be broken by outside forces like Amazon and Netflix.
Speaking of Netflix: Ergen was quite bullish when asked about the future of the video service. “I think they will be successful,” he said, adding that the launch of Netflix’s first original series House of Cards was “brilliant.”
He said that it would be possible for both Amazon and Netflix to succeed with their respective services – but it was quite clear that Ergen is rooting for Netflix: “I’m a fan,” he said, adding: “I feel stupid that we didn’t think of it first, but I’m a fan.”
Cord cutting is real and happening in significant numbers now, concludes a new research report by Nielsen (which is significant itself, given Nielsen’s long-time central role in television audience measurement). The report measured year-over-year changes from Q3 2011 – Q3 2012.
Here are some of the report’s key findings:
– U.S. individuals spend 33 hours per week watch videos across all screens
– the number of homes subscribing to wired cable television services decreased 4.1%
– at the same time, telco-provided television services increased 21.1% and satellite television increased 2.1%
– “nearly a million more homes are subscribing to broadband while skipping a traditional paid tv subscription”
– the number of broadcast/broadband only “television” homes increased 22.8% in the two year period Q3 2010 – Q3 2012
Posted in Industry Update | Comments Off on Study: Cord-Cutters and Cord-Nevers Will Soar to 17.2 Million U.S. Homes by 2017
Tuesday, November 27, 2012, 10:18 AM ET
New research from The Diffusion Group forecasts that the number of “pay-TV refugees” – U.S. homes subscribing to broadband, but not to pay-TV services – will increase 58%, from 10.9 million in 2012 to 17.2 million in 2017. Pay-TV refugees consist of both “cord-cutters” (homes that once subscribed to pay-TV, but no longer do) and “cord-nevers” (homes that have never subscribed to pay-TV). The percentage of broadband subscribers who are pay-TV refugees will increase from 12.5% in 2012 to 17.2% in 2017.
Although it forecasts the number of cord-cutters to increase over the next 5 years, TDG’s founding partner and director of research Michael Greeson believes the pay-TV industry’s main concern should be with cord-nevers which will more than double during that period. Of the 17.2 million pay-TV refugees in 2017, TDG forecasts 40% or 6.9 million of them to be cord-nevers, up from 29%, or 3.2 million, in 2012.
Michael explained to me last week that, as expected, cord-nevers will be younger, have lower incomes and be more technology savvy. They are challenged by the high cost of pay-TV service, which increasingly will be seen as more of a luxury than a necessity. With the proliferation of inexpensive over-the-top choices and behaviors that lean toward video consumption on screens other than the TV, this cohort will become more prone to skipping pay-TV altogether.
Michael notes that in doing so, many younger cord-nevers will full well recognize that they’ll have an “imperfect, but sufficient substitution solution” for pay-TV. Yet for many, it won’t be much of a sacrifice given shifting viewing patterns. For instance, when cord-cutters age 18-24 were asked about their rationale for dropping pay-TV service, over 61% cited that they were watching more SVOD services like Netflix. This was the second-highest rated response after pay-TV was “too expensive and I needed to cut back,” which, together with pay-TV is a “poor value,” scored in cord-cutters’ top 3 reasons across every age group.
With the average tab for video services alone now over $80/month, affordability has emerged as a key pay-TV vulnerability. The primary culprit in driving up subscriber rates as been the surging monthly costs for programming that pay-TV operators bear. And as I’ve pointed out numerous times in the past, among the programmers, there’s no bigger cost driver than sports networks, both nationally and regionally focused.
The bad news for pay-TV’s future affordability, and one of the reasons I think TDG’s focus on cord-nevers and their price sensitivity is correct, is that TV sports rights continue to escalate dramaticaly. The latest deals by News Corp. to buy 49% of YES Network for nearly $2 billion and also likely pay $6-$7 billion for 25-year TV rights to the LA Dodgers (7 times more per season than it currently pays), plus ESPN’s $7.3 billion to lock up college football’s BCS playoffs, Sugar, Orange and Rose Bowls, are among the latest contributors to the mania around TV sports rights.
As I begain saying almost 2 years ago, and as cable TV titan John Malone said last week as well, rapidly rising sports costs are creating a massive tax on non-sports fans, creating a squeeze on them that will ultimately drive some to switch to cheaper OTT options. Pay-TV subscription rates – like trees – cannot grow to the sky, and TDG’s forecast should be yet another warning sign to the pay-TV industry that given more choices, consumers will vote with their wallets in the years to come.
TDG’s research is based on an online panel of 500 U.S. adult broadband users randomly selected from an online panel of several million consumers. The report also contains extensive demographic, psychographic and techno-graphic information and is available exclusively to TDG’s members.
Posted in Industry Update | Comments Off on As pay-TV operators embrace the model, OTT comes of age.
Over-the-top appears to be coming of age, as consumption hits critical mass, the revenue opportunity expands and the business model continues to work its way into mainstream carrier tactics.
The research into the area is coalescing: the OTT market is set to be worth $37 billion by 2017, according to new research from Informa Telecoms & Media. And that, in turn, is prompting service providers to adopt new multi-screen models to cash in on the opportunity. And not just that: Pyramid Research says that pay-TV providers absolutely must embrace it in order to retain and grow subscribers.
“The growth of OTT video services is disrupting the traditional pay-TV market and is dramatically driving traffic growth,” said Pyramid Research Analyst Daniele Tricarico, “but more consumers are watching video on multiple screens, opening up for new opportunities for pay-TV providers and telcos to implement multi-screen business models.”
And while the United States is ahead in terms of operators rolling out TV Everywhere (Informa says that the US currently accounts for over three-quarters of revenue), other regions are catching up. The US portion of OTT consumption will likely drop to less than 60% in 2017 as Europe and Asia grow more quickly, Informa noted.
One good example of an operator getting ahead of the curve is Telefónica, which has announced plans to build a new Global Video Platform (GVP) for all video entertainment services over both IPTV and OTT networks across its operating businesses.
“Video is a fast-growing market, and we already play a leading role in delivering pay-TV services to customers in Europe and Latin America,” explained Vivek Dev, director of digital services, Telefónica Digital. “This new platform allows us to reflect the deep and rapid changes happening in this market. It offers the ease and convenience of a global, convergent platform while maintaining flexibility over content for our local businesses. Most important, it allows us to meet customer demands for access to video content on an ever-expanding range of devices.”
In terms of the hybrid perks, the range of advanced features it aims to offer to TV subscribers will include time-shifting, multi-screen and multi-device capabilities across set-top boxes, Xbox 360, tablets and smartphones.
Meanwhile, in the UK TalkTalk is riding the OTT wave to a massive subscriber acquisition rate — it says that it is signing up 1,000 new customers per day in the wake of launching its OTT-based, YouView-powered TV service in September. During its interim earnings report, it said that it has now has seen a growth of 44% compared to last year.
TalkTalk has a base of four million broadband customers for whom the TalkTalk Plus package is free after payment of a £50 ($80) installation fee for the YouView STB. It offers customers a free YouView Internet TV STB, with a 12-month subscription to the popular LOVEFiLM Instant service and access to more than 100 broadcast channels, including free to air programming from the BBC, ITV and many others, as well as extra paid premium channels such as Sky Sports.
“We have successfully launched our TV proposition and have installed 29,000 customers to date,” said Dido Harding, CEO at TalkTalk.
Overall, TV Everywhere and multi-screen services that leverage OTT are helping telcos and cablecos to increase loyalty and to generate new revenue by boosting migration from lower-value packages to higher-value multiplay bundles, including high-speed Internet, which is needed for better quality video.
“All pay-TV providers also have the option to launch their own OTT-like video services and extend their reach to non-customers, thus generating additional revenue beyond the existing customer base,” Pyramid’s Tricarico added.
Posted in Industry Update | Comments Off on Still Hate Your Cable Company? 292,000 Defections Show You’re Not Alone.
Posted 6:00AM 11/10/12 |
One thing is becoming clear as cable companies and satellite television providers shell out their latest quarterly financials: Americans are fed up with their ever-growing bills for premium TV.
With the exception of DirecTV’s (DTV) — which gained 67,000 net subscribers during the quarter — the key players lost more video customers than they signed up.
It’s not pretty, but let’s look at the net change in U.S. residential video subscribers for the third quarter.
Source: The Wall Street Journal.
It’s grim. Add up all six players and the cable and satellite TV industries closed out the period with 292,000 fewer customers than they had just three months earlier.
Where Did Everyone Go?
AT&T (T) and Verizon (VZ) have been gaining ground with their slightly more economical U-verse and FiOS services, respectively, but that doesn’t explain the entire shortfall. Folks are either genuinely fed up with their TV bills or they just can’t pay up.
Even DirecTV is smarting. Sure, it stands out because it gained ground last quarter, but analysts were expecting net additions of 105,000 for the period. DirecTV suffered the first net decline in its history during the second quarter, and Wall Street figured that it would bounce back in a major way.
Life After the Cables Are Cut
There are plenty of solutions for those ditching their pay TV plans. HD antennas are a cheap way to receive over-the-air local channels, and are growing in popularity. Beyond that, homes with Internet and WiFi can take advantage of a growing number of video services.
Cable and satellite television providers know this. They have been trying to milk more value out of their subscriptions by offering broader arrays on-demand content. The “TV Everywhere” movement — which allows cable customers to stream the channels they are already paying for through mobile apps at no additional cost — was initiated by Comcast and Time Warner Cable.
However, customers are getting antsy. They don’t appreciate having to pay a growing flat fee for one-size-fits-all baskets of programming that include more channels that they’ll never watch than channels they will.
When the pay-TV industry suffered its first quarter of net defections two years ago, some suggested that it was simply a matter of the soft economy. Now that the economy is clawing its way back, it’s clear that the industry has a bigger retention problem on its hands.
Michelle Clancy | 12-11-2012
The North American pay-TV industry’s subscriber numbers in the third quarter continued to deliver bad news, with subscriber totals across segments missing targets.
Overall, Sanford C Bernstein’s Craig Moffett said that operators, including privately-held ones, lost a combined 127,000 subscribers in the quarter. Analysts say that the continuing softness will drive new over-the-top (OTT) offerings from traditional providers — and perhaps a satellite merger.
Here’s a quick rundown on Q3 totals for traditional cable and satellite: Cablevision lost 10,000 customers, Charter Communications lost 73,000, and Comcast lost 117,000. DISH Network lost 19,000, and DirecTV added just 67,000 new video customers — that’s 80% less than last year. Time Warner Cable, meanwhile, lost 140,000 video subscribers.
“For two years now, the pay-TV industry has grown subscribers at a rate essentially indistinguishable from zero,” Moffett said in a research note reported by the Hollywood Reporter. To wit, he noted that a first-quarter gain of 429,000 this year was promptly negated by a 410,000 drop in the second quarter and now the slightly less awful 127,000 in the third. In 2011 the pattern was the same, but with the second half of the year showing marked improvement. A first-quarter pay TV subscriber gain of 454,000 was followed by a 440,000 drop in the second quarter, a 25,000 drop in the third and a gain of 243,000 in the fourth, he said.
ISI Media analyst Vijay Jayant agrees that the sector lost subs. “The third quarter of the year is generally the rebound quarter for the [sector] after a seasonally weak second quarter,” he told THR. ” While third-quarter video subscribers did rebound, overall video net adds were tepid at 30,000 subs. We estimate that if unlisted cable companies are included, pay-TV industry lost subs.”
Of course, all segments are not suffering equally. In addition to the cable losses, gains at DirecTV offset Dish Network losses to yield net growth of 48,000 subscribers in the satellite TV sector. IPTV operators are faring marginally better than the TV incumbents: Telco Verizon Communications reported that that its FiOS TV service added 119,000 pay TV subscribers in the third quarter. That’s virtually unchanged from the 120,000 subscriber additions in the second quarter, but less than the 131,000 additions recorded in the year-ago period. As of the end of September, FiOS TV had 4.6 million subscribers, representing a year-on-year increase of 15.4%.
AT&T meanwhile added 198,000 U-verse TV subscribers in the third quarter, with revenue ticking upward 38% year-on-year (including the 613,000 additional U-verse broadband subscribers that it picked up). It now has 7.4 million U-verse TV and Internet subscribers.
Overall, the telcos signed up about 320,000 new TV subscribers in the latest quarter — less than a year previous but still far surpassing cable and satellite performance.
So is subscriber drain a serious issue? Yes and no. ABI Research estimates that the traditional TV operator business, which is worth $16.8 billion in the US, is set to decline just 0.5% per year through 2017 — hardly evidence of widespread cord-cutting. But it does show a shift in consumer trends that savvy operators will note and make plans for.
If anything, it could be an opportunity: consumers are embracing additional entertainment choices thanks to continually improved online and over-the-top (OTT) video experiences, leaving an opening for pay-TV operators to build a new business that leverages OTT components. Some are already working on this: DISH Network acquired Blockbuster to make a play at that market; Verizon will soon launch Redbox Instant with physical kiosk rental company Redbox. Meanwhile, TV Everywhere plays that leverage traditional pay-TV operators’ vastly better content vis-a-vis OTT providers can appeal to the thirst for anytime, anywhere content and sweeten the pot for consumers taking $100+ TV subscriptions.
The move to OTT also opens up a case for selling faster broadband tiers to more subscribers. AT&T, for instance, said the average U-verse home spent $170 each month on cable TV and Internet. And 54% of its U-verse Internet customers taking a plan offering speeds of 12Mpbs or higher, compared to 43% in the third quarter of 2011.
The losses, in the main, are being driven by economic woes, and therefore are being seen in lower income households. “Declining industry penetration rates suggest that cord-cutting is a reality, but perhaps not in the way that most pundits think,” Moffett wrote in his note. “Certainly, there is no evidence that customers are dropping subscriptions in droves in favour of Internet-based content. Rising costs of cable service, however, are undoubtedly becoming more burdensome for lower income households, increasing the likelihood that some households are reverting to rabbit ears – cable losses, at least, continue to be concentrated among low-end ‘broadcast basic’ subscribers.”
ABI pointed out that pay-TV operators could thus also leverage thirst for OTT to provide “entry-level” tiers of TV. “While many OTT services focus on movies, the goal of lightweight pay-TV packages should be to introduce customers to the brand and tease customers with premium content offerings,” said Sam Rosen practice director, TV and video.
In addition to OTT strategies emerging, Moffett also thinks that the poor subscriber performances will add impetus to a merger between satellite giants. “We are increasingly of the view that DirecTV and Dish Network will propose a merger over the next 12-18 months,” Moffett said. “Making the case to regulators that their long-term viability is only ensured if they merge to form one stronger entity would be a bit easier against a backdrop of subscriber weakness.”
If anyone needed any convincing about the power of web TV, the recent news that YouTube now serves more search queries than the Yahoo and Live search engines has certainly emphasised the point. Moreover, this reflects the continuing dominance of Google, which owns the video streaming site.
In November, YouTube received 2.79 billion search queries, more than the 2.62 billion searches registered on Yahoo and the 1.05 billion searches on Live. In this article, we will look at research, which further illustrates the growing popularity of web TV as a platform.
Recent research by Forrester Research has shown that watching web TV is now the fourth most popular online activity, ahead of downloading music and movies. Watching online video streams was common among 54% of heavy internet users studied by Universal McCann and Insight Express.
60% of internet users have watched videos online according to the Pew Internet and American Life project. Among these, three quarters of young adult Internet users aged 18 to 29 watch online video and approximately one in three of these said they did so every day.`
It is not just the young, however, who are watching web TV. A survey by BIGresearch has revealed the shock statistic that the average age of YouTube viewers in the U.S is 39. Similarly, data compiled by Nielsen/NetRatings, comScore and Quantcast revealed that those aged 35-64 constitute between 48% and 65% of audience figures for online TV.
Clearly, downloading is popular, but uploading is not as common. Just one in 12 people surveyed said that they had uploaded a video file to a video streaming site. Those brave enough to upload should be aware of production values, as 60% of viewers said that their favourite streams were professionally produced.
10 hours of video content is uploaded to YouTube every minute and here in the UK, a staggering 3.6 billion video streams are watched each month. 20 million people tune in to content on the site, far in excess of its nearest rival, the BBC, which draws in 6 million online viewers.
A new video and movie-streaming site, FilmOn.com is looking to capitalise on the growing popularity of online video streaming. Alki David, founder of the site does a good job of summarising the reason why web TV has become so popular:
“We’re trained to watch what’s on the box, but audiences are not fools and it doesn’t take long at all to change. The YouTube generation is a good example. You can seek what you want to watch when you want.”