Posts Tagged ‘Streaming’

Who Wins In The New Media Landscape?

The past few weeks have been mostly a blur for me, what with trips to and presentations at the annual Hollywood Post Alliance Technology Retreat the week of February 14, plus presentations to the Delaware Valley chapter of SCTE last Wednesday (my annual CES recap) and the New York City chapter of SMPTE last Thursday (plasma and OLEDs as candidates for reference monitor technologies).

Through it all, I’ve been staying on top of a blizzard of news stories and press releases pertaining to media distribution (over the top, or OTT), the continued decline in packaged media sales and rentals, a new streaming service from Redbox (presumably with Amazon) and a new 3D channel from Comcast.

If you’re not tracking this brave new world of media distribution and consumption on a daily basis, it’s almost impossible to keep up with the changes. At the Tech Retreat, we had an interesting breakfast roundtable discussion on 3D in the home, and whether it was a flop, partially successful, or had any real future.

That discussion also turned to the relative scarcity of 3D movies, which in turn brought up a comment from one of the participants (Ethan Schur of TDVision) as to why more studios didn’t remaster more of their older 3D movie titles into the Blu-ray format.

The reply, as worded by participant Wade Hannibal of NBC Universal, is that the cost to do those remasters probably wouldn’t be justified by Blu-ray disc sales, let alone rentals. Similar comments were offered after we watched a beautiful restoration of Stanley Kubrick’s 1965 masterpiece Dr. Strangelove on Thursday evening. Kudos to everyone involved, but how would Sony Pictures possibly recover its investment, instead of charging it off as goodwill against taxable income?

The fact is; Hollywood does not like streaming at all. At least, not the way Netflix practices it. The revenue stream isn’t substantial enough to replace the lost income from DVD and Blu-ray sales and rentals. But with Netflix now boasting in excess of 20 million subscribers (second only to Comcast) and Blockbuster in Chapter 11 – and possible Chapter 7 bankruptcy – the studios are rapidly losing all of the high-value outlets they once had for selling movies and TV shows.

Along with Jerry Pierce, I moderated a panel discussion at HPA on over-the-top (OTT) video. Panel participants included Dan Holden of Comcast, Jeff Cove of Panasonic, and Dani Grindlinger of TiVo, and the discussions were lively. Is OTT video a real threat to traditional pay TV channel subscriptions? Comcast’s Q4 2010 financial results, released during the conference, would seem to indicate ‘no’ as they only lost about 135,000 subscribers during that time period.

TiVo has made some nice gains with Charter Communications, who will offer their Premiere series of DVRs to customers for traditional pay TV service. But TiVo also supports Netflix, YouTube, and other Internet video channels that could compete with Charter’s bread-and-butter services. Is this tantamount to letting the fox into the chicken coop and hoping he’ll stay honest?

Panasonic, who was among the leaders in pushing 3D last year, now has a Viera tablet PC and their TVs offer a wide range of connected (OTT) services, including Netflix (who else?), Pandora, Skype, Facebook, Twitter, MLB.com and NHL.com. But they’ve also opted for a proprietary ‘apps’ platform, which means that app developers have yet another proprietary format to deal with.

The one company missing from our discussion was (of course) Netflix. Their business lately can best be described as “a house on fire,” and with their stock price in the mid-$200s per share, they don’t need to explain themselves to anyone.

But there will be pushback against the big red N. And that will come with higher rights fees in future licensing agreements from the likes of Sony Pictures, Warner Brothers, Disney, Fox, et al not to mention major TV networks. It’s been pretty much conceded that packaged media (for better or worse) is on the way out, and that digital downloads and streaming are what the marketplace wants.

So the big question is how to make any money from it. Believe me, studios are very concerned about future revenue streams, which is why some of them are also discussing a shorter exclusivity window with movie theaters before popular movie titles would be available on pay-per-view (probably for $29.95 or $39.95), a proposal that is being roundly criticized by the North American Theater Owners (NATO) group.

The so-called 28-day reserve period that protects Blockbuster against Netflix and Redbox may also have to go out the window. The latest news from ‘the Block” is that it may shed as many as 600 stores, and that even a move to a streaming model isn’t going to save their chestnuts as studios sue to get millions of dollars back in unsold DVDs and Blu-rays.

However all of this turns out, there will be casualties. Blockbuster looks to be cooked and I don’t see anyone else looking to get into the brick-and-mortar DVD rental/sale model. What DVD/BD sales there are will be handled by the likes of Target, Wal-Mart, Amazon, and even my local Acme market (which had a 3’ x 3’ bin full of $9 DVDs in the candy aisle last week, including recent titles like Kick-Ass).

Netflix will likely pass Comcast in total subscribers by June of this year; maybe sooner (they added 3 million subscribers in Q4 of 2010). Redbox should have its movie streaming service up and running by then, and they may soon be joined by none other than YouTube. What kinds of deals will Hollywood ink with these companies?

One of the great ironies of all this is that Blu-ray player sales are picking up speed as their prices continue to drop. But anecdotal evidence so far is that consumers are buying BD players mostly for Netflix streaming – it’s cheaper than buying a new TV to gain Internet connectivity, and you can always play the occasional DVD or Blu-ray disc if you need to. (And I know where you can find some really good deals on cheap Blu-ray discs, over by the detergent, paper towels, napkins, and household items aisle…)

3D: Americans Still Aren’t Buying It

Nielsen’s latest report on American media device ownership and use is now available here, and it contains plenty of useful tidbits of market information.

For example, the average American watches 35.6 hours of television a week, which is almost as much time as they spend at a full-time job. As for our constant obsession with ‘too much TV viewing’ for kids, we’re looking at the wrong age group: Children 2-11 watch about 26 hours a week, while adults over 65 are hooked to the boob tube almost 50 hours a week.

As far as media devices go, 75% of respondents own a computer with high-speed Internet, while 46% own at least one HDTV. Digital video recorders were next on the list (35% of respondents own one), followed by handheld media devices like iPods (20%), NeTVs (14%), peripheral devices with Internet video connections like Blu-ray players (10%), Netbooks (9%), E-book readers (5%), tablet computers (less than 3%) and 3D TVs (2%).

About 116 million U.S. homes own at least one TV, with 105 million of them cable- or satellite-ready. 100 million homes have a DVD player, while (gasp!) 71 million still have a VCR. HD-compatible TVs are found in 65 million homes, and 56 million homes have digital cable TV service. In addition, 43 million have a digital video recorder.

Are you following the cord-cutting stories? According to Nielsen, the number of homes equipped with broadband service but no cable TV is relatively small and unchanged through 2010 (about 4%), while homes that have both broadband and cable TV actually increased from 62% to 66% from January 2009 to January 2010.

Another very interesting part of the study reveals that 76% of respondents ‘probably won’t or ‘definitely won’t’ buy a 3D TV in the next 12 months. 2% of respondents already own one, while only 6% “definitely’ or ‘probably’ will buy one. That’s not good news at all for TV manufacturers, who are currently struggling with profit margins and an ultra-competitive marketplace.

The fact that 14% of respondents own a NeTV and 10% own some sort of connected peripheral indicates that focusing on connected TVs may be a better strategy for manufacturers in 2011. 3D is still a tough sell for any number of reasons, but NeTVs are appealing to just about everybody, particularly those keen on streaming movies and TV shows, even if they are in less-than-standard definition.

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.