Category Archives: Broadcast

Aereo is not a Betamax moment

But pro wrestling could give us one

vcr-displayAll eyes were on the US Supreme Court this week when arguments were heard in American Broadcasting Companies, Inc. v. Aereo, Inc.  While an interesting legal exercise, it’s hard to imagine any outcome that would upend the broadcast television industry as we know it is highly unlikely. The court that gave us the Citizen’s United ruling is not predisposed to ruling against large business interests. The justices’ questions hinted they were looking for a way to rule against Aereo without affecting other cloud business models, and they appeared to find it. Don’t expect the vote will be close. It might even be unanimous.

In the unlikely event the court were to rule in favor of Aereo, the broadcasters have threatened to power down their transmitters and morph into cable networks. Virtually no one watches television over the air these days, so few prime time viewers would notice. David Carr of the New York Times explains the numbers and the disruption to local broadcasters’ business models. For viewers tuning in to local broadcasters for news, weather, and sports, the TV world will look very different. But no one seems to be concerned about that right now, though they should. Do we really want the large swaths of the populace being informed solely by cable news outlets?

Even assuming Aereo goes away, for broadcast and cable television the status quo remains untenable. The sea change has begun. “Cord cutting” and “binge viewing” are now part of the vernacular. Netflix and Amazon Prime are established players already going at it for top spot in the post cable universe, but unless each becomes a content owner in its own right, they are fighting today’s war with yesterday’s weapons. You either own the content or the infrastructure that delivers it to the end consumer, or you are relegated to a shrinking role.  This is because content owners like Major League Baseball (MLB.tv) and the WWE Network (soon to be launched)  have decided to cut out the middle man and go directly to customer.

After seriously considering launching its own cable network, WWE changed course.

From Forbes April 14, 2014:

[WWE CEO Vince McMahon] roostered onto the stage at Las Vegas’ Consumer Electronics Show in January to announce a bold new venture: the WWE Network. McMahon told the cheering audience that the WWE Network would not be broadcast on cable television, where Monday Night RAW has consistently been a top-rated program each week, nor would it be another pay-per-view (PPV) play. Rather, the WWE network will stream content 24/7 directly to viewers on the Internet or what’s known in the entertainment industry as going over the top. It’s a move that directly endangers both WWE’s PPV revenues ($82.5 million) and its potential new TV deals, a huge gamble that according to some estimates could double the size of the WWE’s business in two years–or fall flat on its face…

WWE estimates it needs a million subscribers at $10/month to reach breakeven. Considering that watching all 12 WWE pay-per-view events each year costs over $600, another $120 per year for the complete WWE archive will seem like a bargain to its rabid fanbase.

An over the top, a la carte future is what consumers have been pining for. Content owners salivate over the opportunity to sell directly to customer, letting the customer pick up the tab for a good portion of the delivery costs through wireless and broadband access fees. What’s not to like? Well, for both the content owner and the consumer it can start with the FCC’s decision to abandon the concept of net neutrality. With so many Americans receiving broadband services from the cable providers, the cable providers will have the pricing power to keep themselves in the game for a while to come. If they have to pony up for access to the Internet’s express lane, the barrier to entry into the new over the top world will be prohibitive to all but the largest content owners. Plus ça change…

Rethinking Ratings

Last week the NY Times reported in its Media Decoder blog that Nielsen is rejiggering the way it tabulates ratings to include Internet connected TVs. Of course media executives are in favor of any upwards pointing tweak to the algorithm, but how much closer to reality is this making the ever dubious ratings game?

I think not much. Nielsen still isn’t counting laptops, tablets, and phones. Just big, old flat screen TVs.

The new definition “will include those households who are receiving broadband Internet and putting it onto a television set,” said Pat McDonough, the senior vice president for insights and analysis at Nielsen. Currently a “television set” is the flat-screen kind…

…just 0.6 percent of households in the United States meet the new description.

It’s a start, but for how long are advertisers going to care about the aggregate? If everyone isn’t seeing the same ads, what good is the data? And don’t we already have good numbers on ads that reach viewers via IP?

To an advertiser a ratings point equals 1.1 million or so households viewing its ad. Advertisers don’t really care about who viewing the surrounding content. In the age of the DVR, VOD, and TV over IP, that’s not just semantics. The discrepancy between eyes on the content and eyes on the ad can be significant.

According to Wikipedia, the number of homes with televisions dropped by 500,000 form the previous year. A cynic might argue that a mere 0.6% upwards adjustment was concocted to maintain the value of a rating point, not the value of the data. It’s time for a fundamental overhaul of the ratings system. Television might be the first case in the modern media era where the IP-delivered ad has greater value than the traditionally delivered ad due to targeting and mandatory viewing through technologies like fast forward disabling in VOD.

Rumors of 3D demise greatly exaggerated

Every campaigning politician recognizes the pattern. The media build up the candidate until his or her victory is a forgone conclusion, then begins the process of tearing the candidate down. Ascendancy and demise sell papers, so every candidate is always rising like a rocket or falling like a lead balloon. For a pundit to garner enough attention to retain the title of pundit requires that said pundit is 1) definitive, and 2) just ahead of the curve.

Pretty much the same holds true in the world of consumer electronics. Yesterday’s Next Big Thing is supplanted by today’s Next Big Thing. Just a few months ago technology pundits were tripping over themselves declaring of the rise of 3D in living rooms and theaters throughout the world a sure bet. 3D in every living room by 2015 was the sure thing flying cars by 2000 were in 1950. David Pogue was among a handful of pragmatists and questioned the hype just after CES 2010.

First of all, those glasses. E-w-w-w. Do we really want to have to put on glasses every time we sit down for some TV? Don’t we lose something when we look around the room to exchange glances, and we can’t see anyone’s eyes? Do we really want to nuzzle up to our fiancées and spouses with those things on?

Certainly very few (if any) consumer electronics or studio executives believed the hype earlier this year, but who’s going to argue when the mainstream media is declaring your latest and greatest a smashing success? You don’t get to run these huge companies without some understanding of your customers’ technology adoption rates – especially after the decades-long gestation of HDTV. They knew that standards battles loomed. A sober assessment of the 3D landscape shows the industry has been making reasonable investments in the technology. No film was slated to be released 3D-only. No television network was going to make 3D-only programming. No set manufacturer announced plans for 3D-only sets. Everything was not going 3D. Jennifer Aniston and Oprah were to remain 2D experiences.

Any wannabe technology pundit worth his blog’s revenue stream, can’t say, “Everything’s going fine. 3D is coming at a reasonable rate. What you want to see in 3D you can, and in a few years when you’re ready to buy new TVs there will be just enough 3D content available that you’ll consider a stereoscopic set.” What’s the fun in that? So here come the 3D obituaries.

Last week Adam Frucci asked in Gizmodo if 3D is already dying. The blog entry is not terribly over the top, but its overly simplified arguments and limited statistical sampling should be questioned. Frucci cites the downward trend of 3D revenue as a percentage of total box office receipts of five films since Avatar as evidence 3D may have peaked. He are the key flaws in his arguments:

  • Five is an awfully small statistical sampling. It represents about half a year’s output. While acknowledging Avatar was unique — marketed as a 3D event, he fails to consider that the rest of the films sampled appeal to a younger demographic. Among preteens, mom and dad often make the decision whether the movie is watched in 2D or 3D. Price consciousness and concerns whether a squirmy eight year-old can stand to wear glasses for two hours factor into the decision.
  • Frucci also assigns a direct relationship between the success of 3D in the theater with the success of 3D in the living room. That’s nowhere near a sure outcome. The television networks are not depending on 3D Hollywood fare to be the primary driver to build demand for 3D broadcasts. They are clearly betting on sports. ESPN and BSkyB are not looking to the studios to supply them with content, and Discovery is looking to produce its own non-fiction 3D content as well. The 3D set manufacturers don’t need Blu-Ray 3D players to drive sales as much as the article implies. Gamers and live broadcasts are their primary drivers.

It’s clear that many writers over-hyped 3D after CES and NAB 2010, but it’s also far too soon to declare 3D is dying. The technology will get more affordable, the glasses might go away, and producers will hone what content works best in the medium.

And the award for greed goes to…

Unbelievable. Disney decided to pull the plug on WABC-TV with Cablevision in the New York area on Academy Awards Sunday. Sports fans throughout New York are thankful ABC didn’t have the broadcast rights to the Olympics or the Super Bowl. As of 7:30 PM EST, still no agreement.

Let’s assume there won’t be an agreement. Both Disney and Cablevision lose. ABC will face the ire of advertisers who won’t be reaching a couple of million viewers in an affluent market. Cablevision, already among the least loved companies in Greater New York, will rise to the top of the most hated list with a bullet. No small feat in a metro area that sports AIG, Citibank, ConEd, and the LIRR.

Cablevision is claiming Disney wants $1 per subscriber per month for the right to distribute WABC-TV. Cablevision already pays Disney for the Disney Chaneel, ESPN, ESPN2, ESPN News, and the half dozen or so other outlets that provide repeats of SportsCenter round the clock. What am I not getting? Disney already broadcasts WABC over the air for free. WABC’s business model is to sell advertising. Cablevision helps Disney reach more ABC viewers, so ABC can sell more advertising.I’d

Let’s say Disney prevails, and every New Yorker’s cable bill goes up a buck. Customers get mad and switch to FIOS. Disney shakes down Verizon. Customers get mad and give up on TV. By then Lost will have run its course. Who’s going to miss TV? Customers might be mad at Cablevision tonight, but it won’t be long before Disney pays a price as well.

Everyone involved understands Disney’s challenges. Ad revenues for broadcasters across the spectrum are down as audiences shrink, but Disney needs to learn from those who have gone before — music labels and newspapers. Raising the price to the customer only exacerbates the problem.

Updated 9:00 PM 3/7/10New York Times reports someone blinked. This kind of brinkmanship is no way to treat customers.

Use care discussing next-gen anything

The Times had a nice bit of analysis on some Forrester analysis of the Morgan Stanley* analysis of teen media consumption. While much can be learned from Forrester’s latest research into next-generation media consumption. There’s a bigger point to be made here. I call it Townshend’s Theory of Cultural Evolution. To most everyone else it’s the last line of Won’t Get Fooled again. Meet the new boss, same as the old boss. What Forrester discovered is the new teen is a lot like the old teen.

The Times tells the story best in the opening paragraphs of the Media Cache blog entry:

During a slow week for news last summer, the investment bank Morgan Stanley generated headlines when it sent out a research report about teenagers’ media consumption, based on the musings of a 15-year-old intern at the bank’s London office.

For those who missed it, here’s a summary: Teenagers like movies, music, video games and mobile phones. They like to pay as little as possible for them, or nothing at all. They use the Internet for social networking and other “fun” things when their homework is done. Twitter is pointless.

Like many of us, the analysts at Forrester figured executives probably shouldn’t be pinning their businesses’ futures on the media musings of a single, 15 year-old male Morgan Stanley intern. How typical could any teen be that opts to work at Morgan Stanley for the summer over lifeguarding amongst bikini-clad peers? But it’s absolutely amazing how that Morgan Stanley “research” became common wisdom overnight.

* I highly recommend reading our intern firend’s media worldview. The confidence, the definitiveness he shows tells me he’s going to make a hell of a grown up analyst.

The Forrester research didn’t completely disprove the Morgan Stanley intern’s world view, but it did rein it in. Yes, TV viewing is down, Forrester acknowledges, but TV is still top dog.

The lesson to be learned? Revolution is rare. Evolution is the norm. It doesn’t matter what the context, when a producer, a marketer, or an advertiser talks about how different today’s X is from yesterday’s X, be suspicious. Be very suspicious. In my world as a software designer the alarm bells start to ring whenever someone says anything prefaced by the phrase, “but newbies…” I spend a lot of time with new users. (I loathe the pejorative term newbies — it makes them sound like infants. You’re trying to describe a class of users, not a size of diapers.) Yet most of the people so eager to school me in the wants and needs of newbies, see one just a few times a year. We are all subject to believing our infinitely small sample size is indicative of a larger population, but it rarely is.

So the next time someone tries to instruct you how to write, shoot, edit, or design a website for today’s X, check their sources. If it’s their niece the intern, take it with a grain of salt because today’s X is yesterday’s X tomorrow.

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