The Winning Ticket For Pay-TV Operators

Forget the Iowa caucuses and the New Hampshire primary.  The results that pay-TV operators are interested in have been tabulated, and they paint a clear picture of why intuitive navigation experiences are becoming increasingly important. 

According to the Leichtman Research Group, 81% of U.S. households now have a DVR, use VOD services from a cable or telco provider or subscribe to Netflix.  Moreover, 30% of households use two of those services and 13% use all three.

What this means is that subscribers are making use of more platforms than ever when it comes to content sources, creating a need for navigation that presents a 360-degree view of all available options.

Rather than searching individual silos for content of interest, subscribers are seeking to narrow the myriad of entertainment choices to their specific interests.  Forward-thinking operators are migrating from traditional guide paradigms to advanced user experiences that prioritize channels from all sources based on established viewing preferences, and supplement video content with related applications that enhance the viewing experience.

As content sources continue to expand, viewers can be expected to “vote with their feet” – shifting their loyalties to those experiences that offer the best views across linear TV, DVR, VOD and even SVOD.  The winners will be those operators who invest in new technologies that continually strive to offer personalized, customizable interfaces that most accurately address viewers’ individual preferences and needs.

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.

"RDK: The Worldwide Route to TV Everywhere?" (Advanced TV)

Alticast's own Tiaan Schutte, President, EMEA, recently had the opportunity to sit down with Nick Snow of Advanced TV and three other executives to discuss the merits and future of RDK.

To watch the multi-part discussion, click here.

Smart Pipe

We hear about cord cutting a lot, but the future holds a very different picture. While cable providers have primarily been about TV content delivery in the past, the critical aspect of TV delivery is the actual pipe they own that provides the service. We like to call this the smart pipe, and the cable operators are busy stepping into delivery of the "internet of things" services adding a lot of new value to their offerings. Home security and automation can all be tied together with this pipe which might include a special gateway for data storage and management. Wireless service in the house will all originate through this pipe, whether it's delivering cable content or other content services. The infrastructure that the cable company provides becomes a key part of every household, whether they watch much TV or not. Lucky for the cable providers, the numbers say we are watching even more video these days! (Notice I said video and not TV...on any device video is provided by a 'pipe'.)

The Couch

The adage 'couch potato' has transformed with the proliferation of smart phones and tablets. Almost every individual on the couch is using a laptop, messaging with friends, or gaming or surfing on a tablet while 'watching' TV. In the last year or so, cable companies have started to offer applications on those devices to help you view guides, use secondary content applications and in some cases view content (the breadth of content on secondary devices is growing as licensing deals are extended).

Consider the contrast of the computer and the TV. In regards to entertainment consumption, the visible difference is the computer is mostly a one-to-one device, verses the TV which is one-to-many. What happens when your phone starts allowing you to do things like 'vote' interactively for a reality TV show, or becomes the remote control? The battle over the remote is well documented and phones and tablets are controlled by the owner, where the remote is a shared device. I hope application developers keep this in mind and consider multiple parties on the couch each with a single device that might want to interact with the TV. Do you allow all devices to be the remote control? Image the possible chaos. However, if voting is allowed, shouldn't each person on the couch get to vote using their own device?

The couch where this is often discussed is at the therapists, they might want to prepare for a much more complex world!