Posts Tagged ‘broadband video’

Google TV: Oops! Never Mind…

In a story reported by the New York Times, Google has asked TV manufacturing partners Toshiba, Sharp, and LG to hold off on introducing any new Google TV products at next month’s Consumer Electronics Show.

The official reason is that Google needs more time to refine the software. The real reason may be the lackluster reception that Google TV has gotten so far from consumers. The first sets to launch with Google TV were Sony Bravia TVs, back in October.

If any readers walked the aisles of Best Buy recently, you probably noticed the Google TV kiosk that featured an incredibly complex remote control – one that outdid Rubik’s Cube in complexity. The Sony Google TV remote featured two mouse disks and dozens of tiny alphanumeric keys, and was a sure turn-off for those viewers used to one-button navigation to Netflix and YouTube.

It's just like a smart phone keyboard...only vastly more complex...

In fact, the question now is whether there is any real interest in using a video engine as part of a NeTV – or if consumers are happy with icons or apps that take them directly to Hulu, Netflix, or other content sources.

To make matters worse, major TV networks including CBS, NBC, and ABC are blocking their online programming from Google TV, as is Hulu. Given that the top-rated TV shows are carried by these “old school” networks – as is the current #1 time-shifted show, The Office – that’s not good news for early adopters.

Logitech’s Google TV set-top box has also met with indifference and disdain. According to the Times story, 38% of reviewers on Amazon.com gave the Logitech Google TV receiver three stars or less, and 19% gave it just a solitary star. Not good!

Does this mean consumers don’t like the idea of NeTVs? Not at all. What they DO seem to prefer is a limited number of directed channel apps for the most popular content providers, and not another Web TV-approach to merging computer and TV viewing…something that is akin to mixing oil and water.

Don’t bet against Google, though. They’ll eventually figure out what consumers want and don’t want. The question is; can they compete against the amazingly user-friendly TiVo interface and the ‘directed apps’ approach of companies like Samsung (also a Google TV partner)?

And is Google TV destined for success, or will it go the way of Web TV? (Challenge: Do any readers even know what happened to Web TV? It’s still around, although under a vastly different name…)

3D TV Came In With a Bang, But Appears to Have Fizzled Out

A recent story at Reuters.com says that 3D TV hasn’t caught the imagination of consumers and that they are still largely sitting on the sidelines when it comes to a new TV purchase.

Even Internet connectivity hasn’t provided much of a boost to the ailing TV business, which has seen big-screen LCD and plasma prices sliced to unheard of levels as manufacturers try to kick-start the holiday buying season.

How about super-thin LED-backlit TVs? Those aren’t doing the trick, either. Instead, the hot items this year appear to be smart phones and digital cameras, which have also seen dramatic price drops.

The Reuters story quotes Frank Ingarra, a portfolio manager at Hennessey Funds, as asking why TV manufacturers thought it necessary to push a new generation of TVs right after many people bought their first flat screen sets. “People don’t understand the added benefit of 3D,” Ingarra said. “When you get into $2,000 TVs, you start thinking: ‘At what point do I really need this, and is it going to make my viewing experience that much better?”

Not surprisingly, the high cost of active-shutter 3D glasses – and their incompatibility with other 3D TV brands – has been a turn-off for consumers, according to Ross Rubin at NPD Research. Earlier research studies showed that some consumers are waiting for 3D technology to progress further, and are waiting for “competing technologies” to resolve their differences. By “competing,” I mean active shutter vs. passive 3D viewing, which uses much less expensive glasses.

The lack of content and the ill-advised exclusive 3D content bundles have also impaired 3D TV sales, in my opinion. There’s still not a lot of 3D content to watch yet, and in particular, the premium 3D Blu-ray titles that viewers really want to see, such as Avatar, are all locked up in long-term deals with TV brands.

On a related note, TVs equipped with Google’s search engine (read: Sony Bravia LCD TVs) haven’t been selling well, either. That could be evidence that consumers are voting for more of an app-driven approach to NeTV viewing (such as direct links to YouTube and Netflix) and don’t care to search through millions of videos on the Internet with a complex keyboard to simply “watch TV.”

The story pointed out that “…consumers realized they could find the same services, like movie service Netflix Inc, elsewhere” using lower-priced alternatives such as PlayStation and Xbox consoles, Blu-ray players (which are getting dirt-cheap now), and Apple TV and Roku boxes. (Anyone remember what happened to Web TV?)

At CES next month, we’re certainly going to see more cutting-edge TV products, although I think the emphasis on 3D will be toned down considerably from a year ago and TV manufacturer’s marketing efforts shifted more towards connected TVs and peripheral media players. Even though TV sales are weak now – a recession just can’t be overcome with marketing hype – the future of TV is clearly Internet connectivity.

Whether most of those connections take place through a TV or through a connected peripheral such as a Blu-ray player remains to be seen. In the meantime, consumers are content to sit on their checkbooks and credit cards for now, paying scant attention to 3D and Google TV as they rush out to buy the latest Droid, Samsung, Apple, or HTC phone to put under the tree…

Can You Cut the Cord and Still Find Happiness in TV Land?

The newspapers have been full lately of stories that (a) claim cord-cutting will have no impact on pay TV viewing, or (b) show an increasing number of TV viewers are dumping (or strongly considering dumping) cable TV packages in favor of broadband video, or broadband plus over-the-air digital TV.

On the “it’s no big deal side,” you’ll find ESPN and Frank Magid Associates, while the “cord cutting is a growing trend” camp is represented by Parks and Associates, Time Warner, and SNL Kagan. While both sides acknowledge that the pay TV industry suffered its first-ever net loss of subscribers from April to September of this year, they disagree on the reasons.

ESPN and Magid claim that the total subscriber churn is less than 1%, and may be as low as one-quarter of one percent. They attribute the drop-off to the recession and expiring triple-play special deals. Parks points to the explosion in sales of Internet-connected TVs (NeTVs) and connected Blu-ray players and DVRs. Time Warner, in the meantime, just launched a lower-price basic “popular demand” channel package to hold on to subscribers, and will be followed by Charter Communications shortly.

Time for some clarity! According to a story on paidContent.org, Needham & Co. analyst Laura Martin reported the results of a simple request she made of 300 respondents in October: “Please list which TV channels you must have available online in order for you to turn off your pay TV subscription.”

Guess who sat at the top of the list? CBS, named by 35% of respondents. The #2 slot was filled by ABC (right behind at 34%), while Fox was in a tie with NBC at 31%.

The highest-rated pay TV network was (no surprise) ESPN, listed by 27% of respondents. The rest of the top ten was made up of Discovery (19%), History Channel (14%), HBO (11%), Comedy Central (10%), and The Food Network (also 10%).

It’s interesting that the top four networks are also available in many markets for free as over-the-air digital TV broadcasts. That also may explain why some cord-cutters are quick to dump cable TV and get their TV fix with antennas and a broadband connection.  (For what it’s worth, PBS finished in a seven-way tie with The CW, MTV, HGTV, CNN, Lifetime, and Bravo.)

The paidContent article comments that most respondents who voted for at least one over-the-air TV network also listed the rest of them. “Most folks think of the four broadcasters as a monolith,” said Martin. “This may be because consumers actually watch shows on all four broadcast networks, or it could be because they have no idea which network their favorite shows are on.”

For viewers who live near major cities, it’s not unusual to have as many as 30+ minor channels of free, over-the-air programming available. Those viewers are also more likely to have fast broadband, so cutting off cable or satellite TV still leaves them with plenty of program choices…and apparently, their ‘can’t live without’ TV networks as well.

So yes, you can find some happiness in the world of free TV…so long as you are willing to part with a few cable and satellite networks, and have a good broadband connection for Hulu, Netflix, YouTube, and other Internet TV channels.

To Readers: How about you? Would you be willing to drop cable or satellite TV, and just live with what you can watch using an antenna and a fast Internet connection? Or maybe you’ve already cut the cord? I’d like to hear your comments one way or the other.

Cable TV – Socialism?

We’ve just passed through a very contentious mid-term election, characterized by a change in the political majority in the House of Representatives, and a smaller margin in the Senate.

In addition to the usual established political parties, a newer movement, the self-named Tea Party, is grounded in protests against ‘big government,’ deficit spending, and ‘creeping socialism’ and has managed to secure quite a few seats for itself in Washington come next January.

Regardless of how you feel about the recent tempestuous election and its outcome (which isn’t anything new; review your American history and you’ll find similar political uprisings in the past), you’d have to agree that there is widespread concern about our government trying to be all things to all people, filing in the economic holes that free market, capitalist systems often leave behind.

The way our system of government works now, many of your tax dollars go to benefit people in other towns, cities, counties, and even states. You may not be aware of it (most people aren’t), but for every mile you drive on a federally-subsidized interstate highway, someone in another state is driving on a similar highway, part of which was paid for with your tax dollars. (n some states, LOTS of your tax dollars.)

Is that socialism? Sure it is! Our legislators made a decision that all American citizens benefit from an interstate highway system, even if most of us never drive more than 50 miles from home.

Now, back to my cable TV analogy. You pay taxes because you have to, and your tax dollars subsidize many government agencies and programs. But you don’t pay cable TV bills because you have to. After all, no one forces you to watch television!

Yet, your cable TV payments subsidize numerous TV networks that you’ll probably never watch. That’s because your cable TV operator has decided that all of its subscribers benefit from having 200+ channels of programming to choose from, even if most viewers never watch more than 15 channels.

Is this socialism? Essentially. Your cable TV payments (beyond operating costs and profit) are split up and shared among a wide variety of channels using a tiered model of distribution. You pay for a block (tier) of channels, and you can watch or ignore them – it’s your choice. This revenue structure ensures that all cable TV networks get a guaranteed rate of return, although there is quite a disparity between the most popular networks like ESPN (over $4 per subscriber) and small-audience channels like Lifetime and Oxygen (nickels and dimes per subscriber).

Trouble is; many Americans are trying to make ends meet in a recession right now. And all of their monthly expenses are coming under scrutiny, including ever-escalating cable TV costs. So it’s not unreasonable to ask why cable companies expect them to pay every month for an ‘all-you-can-eat buffet’ when smaller, a la carte dishes will suffice.

And there’s the thrust of my argument. Cable TV revenue subsidizes minor TV networks and channels that would never make it on their own in a free market system – they just wouldn’t draw enough viewers. Yet, we still have to pay for them anyway and keep them alive whether they deserve to stay in business, or not.

Satellite TV systems, FiOS, and U-Verse also work the same way. You pay a flat monthly rate and are delivered a slew of channels, many of which you’ll simply ignore as you stay hooked to ESPN, Discovery, Fox News, USA, AMC, MSNBC, TBS, TNT, and other ratings leaders.

Is it time to move to a different model? You betcha, especially when cable TV channel subscriptions are being dropped like hot potatoes. Even the head of Time Warner cable, Glenn Britt, has acknowledged that it is probably time to come up with ‘value’ cable TV packages that will convince customers to stay aboard, yet deliver the popular channels that viewers really want. (For more on this story, read what GigaOM had to say about Britt’s comments.)

The cable TV industry has vigorously resisted any moves towards a la carte pricing, because channel tiers are best for the company’s bottom line. But that may have to change, as consumers start to value Internet connections more than TV channel packages and access TV content over broadband connections in lieu of changing channels.

So my question is this: If socialism is supposedly a bad thing when it comes to government, why is it a good thing when it comes to cable TV service?

Cord-cutting: Funny Thing About That… (Updated 10/28/10)

(Editor’s note: This story has been updated from the 10/27/10 post.)

Yesterday, Comcast Corporation announced its 3rd quarter financial results, and they reveal a disturbing trend: 275,000 basic cable subscribers said goodbye to Big C, helping to put a pinch on the company’s net income, which dropped 8.2% to $867M on sales of $9.4B.

According to a story on the Fierce Cable Web site, remaining Comcast subscribers paid an average of $129.75 per month for various services.

The story suggests four factors that are driving people to drop cable TV subscriptions – the economy, the flagging housing market, constant rate increases, and the digital TV transition.  Comcast Cable Communications President Neil Smit was quoted in the story as saying there are no signs that the customers are giving up cable for over-the-top (Internet TV) services. “All our active surveys have seen almost no impact from OTT… (a) small number of customers appear to be going over-the-air (DTTB) more than any over-the-top impact.”

Through September of this year, Comcast lost 622,000 cable TV subscribers, according to a story in the 10/28/10 edition of the Philadelphia Inquirer. That represents about 3 percent of its subscriber base and about $300M in revenue. Smits said that 40% of those cancellations were basic cable tier subscribers.

By this time last year, Comcast had lost 424,000 cable TV subscribers. The drop rate has gone up by nearly 50% in just one year, although some of that was offset by new subscriptions for almost 250,000 broadband customers, 228,000 VoIP customers, and 219,000 digital video customers. (It’s reasonable to assume there is lots of overlap in those last three numbers, as the three services are often taken as a ‘triple play’ bundle.)

The term “cord-cutting” first appeared in early 2008 as the current recession took hold, forcing many households to re-assess the amount of money they spent each month on communications and entertainment services.  It’s not unusual for a typical ‘triple play’ service (VoIP, broadband and cable TV) to cost $130 a month or more.

Add in monthly charges for a standard family wireless phone plan, and we’re starting to talk some real money here!  So it’s no wonder that consumers are looking for more economical ways to watch TV – and free, over-the-air digital TV (with lots of HD) is definitely one of them.

DTTB also solves the current Fox – Cablevision dispute quite nicely for several million subscribers in the New York City metropolitan area – that is, if they figure out how to connect an antenna to their digital TV. In many cases, that means nothing more than a $12 radio Shack UHF loop and rabbit ears.

Comcast COO Steve Burke called attention to the problem of cord-cutting a year ago at the CTAM convention in Denver, CO, pointing out that “…An entire generation is growing up, if we don’t figure out how to change that behavior so it respects copyright and subscription revenue on the part of distributors, we’re going to wake up and see cord cutting.”

How prescient. As I’ve written in the past, families are starting to value their broadband service more than tiers of dozens of cable channels, most of which are never viewed anyway. Add in video streaming from Netflix (something Redbox is also about to offer) for a flat monthly rate, plus selected network offerings on Hulu, and the cable industry has a legitimate concern.

No one should ever think they can’t price themselves out of a market. It’s happened before, and it will happen again. It’s very clear from recent trends that many consumers are placing a greater value on high-speed Internet access over cable TV channel packages, a trend that may result in Comcast (and other service providers) delivering metered broadband service in the not-too-distant future – especially if TV subscriptions continue to decline.

The challenge for Comcast and other cable MSOs is how to re-structure their standard TV channel offerings into a more affordable a la carte model, served up on demand.

That’s obviously what consumers want, and they’re voting with their wallets. Is Big Cable listening?