The Advertising Conundrum

When our blog kicked off in 2013 I wrote an entry about opting in or out, discussing some of the pros and cons. In that short time, cable advertising has started to mimic some of the internet ad methods to become better at targeting online viewers. While TV ad targeting lags a bit behind, cable companies are working hard at Dynamic Ad Insertion (DAI) to catch up, even using online behavior data for personalized ad selection. When I wrote the first blog post, I suggested I that wasn't too concerned about sharing my data if it helped focus the ads I saw, and generally I still agree with that statement. However, my behavior would suggest otherwise. The one shortcoming of online internet ads is the inability for it to know when you have made a purchase decision. I was getting ads for outdoor lighting over 3 months after I purchased the lights from that very company! Subsequently, I am now blocking ads in my browser.

A new measurement approach to online video banner ads has been in use for quite a while. Internet ads often allow skipping after a designated watch time. Some believe this provides a better value to advertisers by assuming a higher quality impression rate, by analyzing drop off rates and knowing the number of people who watched the full ad. In television, there are often contractual requirements to block ad skipping; this has fueled a growth in products that provide time shifting to circumvent the ads altogether, causing a legal uproar, and prompting a counter attack with software to block the blockers. However, it seems there might be value in similar on-line models for cable and advertisers to consider. Ad skipping could provide more data for determining how to target ads. Combining various data sets and using smart algorithms to place ads provides technical challenges, but has the resulting potential for better ad consumption. In the meantime, the only ads that definitely won't get skipped are the product placements inside the programs.

Pay-TV Strategies for Engaging Millennials

With Millennials accounting for one in every five dollars of consumer spending, there’s the need for for pay-TV operators to reshape the video experience of Generation Y’s unique viewing habits, including increases in online consumption, multitasking and gaming-related activity.  John Carlucci, President and CTO of Alticast US, recently spoke about how pay-TV can engage this high-value demographic through higher quality UIs, as well as innovations such as simultaneous viewing of multiple streams of content and transitioning between handheld devices and the television with the swipe of a finger.

Cable TV vs. Cable Broadband; the cat bird's seat

I read an article by Peter Kafta discussing a possible pullback of content resale to Netflix from top content companies, and followed it by an article by Michelle Clancy about how the cable companies will only benefit from Apple and others for cable broadband service growth. At TVOT last summer a further connecting viewpoint was made by Jennifer Mirgorod, Turner EVP of Brand Distribution, suggesting that Turner had been positioning their contracts for content long ago to avoid exclusivity so they could put their content in front of as many viable eyes possible.

The TV environment is changing at a fast pace. Cable Operator third quarter announcements highlighted that they had net gains in cable subscriptions, a hopeful trend away from losses, but if you looked at the numbers, the gains were a tiny fraction compared to their gains in broadband subscriptions. As Michelle pointed out, while the monthly broadband subscription dollar amount is significantly lower, the margins are much higher.

So it would seem that if the MSO's growth business is in their smart pipe to the home, they might prefer that content owners continue to sell to multiple outlets putting demand on the pipe and driving a desire from consumers to increase the bandwidth to the home. Will this shift in revenue change how MSO's contract for content? This is a conundrum for the MSO's as they strive to reinvigorate their video business against a consumption spectrum of video content options that multiply every year (reflected by the ever changing list of services on my smart TV).

From the content creator/owner point of view, I am not so sure they will abandon outlets, as Ms. Mirgorad makes a good point. The higher potential eyes the more opportunities for brand building and ad dollars (aside from paid non-ad services and blocker software).  So this may be more about the details in the contracts, than outright cancelation. Netflix is fast becoming the service that can most readily distribute content to a huge global audience, so I don't see them losing much steam. Their content pool will be more localized and diversified beyond the major US studios as they supply content to a multi-lingual and multi-cultural world.

The future for the Cable companies is fascinating right now. With a variety of approaches to attract millenials and cord-cutters; from MCN acquisitions (on-line Multi-Channel Networks), to skinny bundles, to delivering on consumer devices and more, operators are making every attempt to shore up the video business. It will be interesting to see what works best, but either way it looks like the cable companies will win on the other end with their expanding broadband business.

Securing UHD Content

If pay-TV is bringing high-value, proprietary sports content to 4K, is the threat of piracy far behind?

Rogers’ Communications’ recent announcement that it would offer a total of 100 baseball and hockey games in 4K next year, BT’s planned launch of a 4K sports channel and deployment of 4K STBs by forward-thinking operators such as Videotron all are signs of a growing recognition of the value of both the technology and the display enhancements enabled by its High Dynamic Range (HDR).

But as operators move the needle on content, what’s equally important is protecting that premium programming with stronger Conditional Access Systems (CAS).  While the 64-bit systems in use by most operators today is sufficient for current needs, better choices for securing higher-value 4K content -- now and in the future -- would be the 128-bit or 256-bit versions of the Advanced Encryption Standards (AES).

The coming availability of live sports can give pay-TV a competitive edge in countering early moves by Amazon, Netflix and over-the-top providers to leverage the growth of 4K.  You can read more here about the measures the industry can take to ensure that its investments in 4K production and delivery are protected as it brings that content to market.