Posts Tagged ‘Verizon’

By The Numbers – Or Maybe Not

Several news stories crossed my desk this morning that are each worth closer scrutiny. The first one comes from Reuters and says that Dish Network’s quarterly revenue missed forecasts as more customers disconnected their satellite antennas.

Dish stated that they had lost 23,000 subscribers on a net basis for the quarter ending September 30. In the same time period a year earlier, the net loss was 12,000 subs, almost half as many. And apparently the company’s new $20/month streaming service, Sling TV, isn’t proving to be as popular as expected.

The combination of DirecTV with AT&T also puts Dish at a competitive advantage, since AT&T can offer bundles of service (including mobile telephone) at competitive prices. Satellite TV has always been at a disadvantage to cable and fiber optic services due to issues with reception during inclement weather and the inability of some home and apartment sites to “see” the satellites, ruling out installations.

In my neighborhood, several folks canceled service from Comcast in recent years and picked up Dish and DirecTV as a cost-saving measure, only to drop both when Verizon laid fiber optic cables for FiOS and offered some low-cost, triple-play bundles that Dish and DirecTV couldn’t beat. (Internet service via satellite isn’t exactly fast and reliable.)

Right now, Dish’s most valuable asset is the UHF frequency spectrum acquired in FCC auctions- but it looks like that spectrum may go back for re-auction next February. And the DirecTV / AT&T juggernaut may force Dish into a merger to stay alive – or perhaps an outright sale.

So things aren’t looking too good for pay TV service providers? Not according to TDG Research. In a story on the Multichannel News site, TDG claims that “the percentage of adult broadband users (ADUs) who were moderately or highly likely to cancel their pay TV service in the next six months dropped 20% since last year.”

TDG went on to say that the group of consumers saying they “definitely will cancel” their pay TV service in the next six months has been cut in half — down from 2.9% in early 2014 to 1.4% in early 2015.” They cite the fact that Comcast only lost 48,000 video subscribers in Q3 2015, as opposed to 81,000 in the same quarter a year ago.

The problem with opinion surveys vs. market trends is that opinions can change abruptly. After a series of mishaps with Comcast’s Xfinity platform earlier this year (and well-documented on this site), I was about ready to throw in the towel and switch over to FiOS myself! But after my original complaint was resolved (replacing the buried cable from the drop to my house) and I wound up with a new modem (802.11ac 2.4/5 GHz), plus much faster Internet speeds and new Xfinity set-top boxes, I decided to stay with the devil I know – for now.

So the TDG data may reflect consumer preferences right now, but what will actually happen remains to be seen when the next set of quarterly data becomes available in January or February of next year.

There’s no arguing with numbers, however. From the Digital Entertainment Group (DEG) comes a report that consumers spent more money on digital video downloads and video streaming through the first nine months of 2015 than on rentals and purchases of DVDs and Blu-ray discs.

According to a story on the TWICE Web site, consumers forked over almost $6.5 billion on downloaded and streamed videos. The “digital” category includes subscription streaming and video-on-demand (VOD), plus digital downloads such as movies to tablets and smartphones. (Like I do when I fly cross-country).

In contrast, the dollar amount spent on rentals and purchases of optical disc media amounted to $6.3 billion – close, but still in 2nd place. From January through September, revenue from downloads and streaming rose by almost 16% Y-Y, while revenue from DVD/BD purchases declined by 14% and disc rentals dropped 7.1%.

Within the streaming/downloads category, the lion’s share of revenue (3.65B, or 57%) went to subscription streaming, while digital downloads captured 21% or $1.34B. The rest went to subscription video-on-demand ($1.41B, or 22%).

What’s interesting is that in 2014, the DEG states that “consumers spent more on physical media, about $6.93 billion, compared with $7.53 billion spent on digital downloads and streaming.” Overall, that means that in 2014, consumers whipped out their credit cards to the tune of $14.46B, or about $1.2B per month. Through September of 2015, that number is $12.74B total, or $1.42B per month – an increase of about 15%.

So there you have it. Cord-cutting (or “dish dumping”) is on the rise. Or maybe it isn’t, if we are to believe the preferences of consumers. Or maybe it’s the HDMI cable we’re cutting, preferring to stream and download videos as opposed to playing them back from optical discs.

One statistic I wish the DEG would delve deeper into concerns the installed base of Blu-ray players – almost 80 million households own one now, according to DEG. But how often are they used for playing movies, as opposed to streaming movies and TV shows from Netflix, Hulu, Amazon Prime, and other services? We just don’t know.

 

Faster Broadband Means Abandoning the Pay TV Ship

The concept of “watching television,” now over 70 years old, continues to evolve away from traditional, scheduled mass audience broadcasts through the ether to multi-channel delivery over wired connections. And the next stage in that evolutionary process is picking up steam.

That next stage would be cord-cutting, the practice of discontinuing linear pay TV program services in favor of Internet delivery of video in an “any time, any place, any viewing device” format. Pay TV service providers have long scoffed at the impact of cord-cutters, stating that as younger viewers mature and form families, they will return to traditional pay TV services with monthly subscription fees.

Well, the executives of pay TV service providers sound more and more like they’re whistling past the graveyard these days. In a recent story on the eMarketer Web site, 60% of U.S. respondents to a study conducted by market research firm AYTM stated that they still had a pay TV subscription to go along with their broadband service.

However, another 23% of Internet users said they had dropped their multi-channel video service, while 17% responded that they didn’t have any TV service at all. The combined 40% who either cut the cord or don’t watch pay TV is the highest number I’ve seen to date in surveys of cord-cutting trends.

A Leichtman Research Group study conducted back in March found that 27% of U.S. adults watched videos on non-TV devices every day and more than half of survey respondents did so on a weekly basis. AYTM’s study dug a bit further and discovered that found that 29% of respondents watched YouTube videos at least daily in May, and more than half of respondents did so more than once a week.

According to AYTM, over half of cable TV viewers said they watched less than half of the channels available via their subscription and 74% said they would prefer to choose individual channels rather than paying for a whole bundle. Until recently, there was no chance of a la carte channel pricing, but broadband video channels are now providing that option.

Not surprisingly, the most popular broadband video service is Netflix. Leichtman’s numbers showed that 22% of respondents stream Netflix content weekly, up from 4% in 2010. That is an incredible growth rate and the main reason why Netflix’ subscriber base is rapidly closing in on 30 million customers.

The controversial Aereo DTTB-to-Internet service, which recently launched in Boston, has plans to expand to several other cities this year. But the end game may not be broadcast TV redistribution after all.

According to a story on the Advanced Television Web site, Aereo boss Barry Diller’s game plan is to break up controlled, centralized video distribution systems (broadcast, cable, satellite, and fiber) and move all content to Internet delivery. Diller was quoted in the story as saying, “The more you can get all forms of video over Internet Protocol; the better off the world is going to be.”

Let’s ignore some of the logical and technical fallacies in that statement and see if this goal is even realistic. You may be surprised to learn that true high-speed broadband service is only available to a relatively small percentage of the population. An FCC study published last year said that less than 10% of U.S. households could count on sustained data rates of 2 – 3 megabits per second all day long.

Ironically, broadband speed enhancements are largely coming from pay TV system operators, who may be shooting themselves in the foot as they try to keep up with Verizon and Google Fiber: Speed up broadband service, and you speed up the exodus from pay TV subscriptions to Internet-only services as consumers try to cut their ever-escalating monthly bills.

Advanced codecs like H.265, which promises a 50% bit rate reduction over H.264 and which will start to roll out next year, will only hasten this process as consumers fully embrace “anytime, anywhere” Internet video. Abandon ship!

This article originally appeared on Display Daily.

A ‘Contrived’ Broadband Crisis, Indeed

A news story in the Wednesday 10/12 edition of the New York Times announced that the Federal Communications Commission is partnering with Best Buy’s Geek Squad to teach Americans how to use the Internet and take full advantage of broadband services that are available to them.

According to the story, only 68% of Americans are taking advantage of broadband access. The author of the article compares that rate unfavorably to South Korea, where over 90% of Koreans use available broadband services.

The source of that statistic is not provided. But it’s a big “Uh Oh!” for the FCC, whose chairman Julius Genachowski has been on a one-man crusade to convince everyone that we have a wireless broadband spectrum crisis in the United States, and that TV stations should willingly give up 120 MHz of UHF TV channels (basically everything above channel 31) to address this ‘crisis.’

His clarion calls have also been parroted by the head of the Consumer Electronics Association, Gary Shapiro. Neither individual has provided substantive proof to back up their claims, leading many of us industry analysts to believe that the impetus for this fabricated crisis is being driven by telecoms like Verizon and AT&T at the expense of millions of Americans who rely on free, over-the-air digital TV as a counter to high-priced cable TV subscription plans.

Three reasons were cited in the article for the reluctance or refusal of 32% of Americans to sign up for and take advantage of ‘available’ broadband services to surf the Web. The first was the cost of Internet services and the cost of computers. Number two was not knowing how to use a computer, and number three was ‘not understanding why the Internet is relevant.’

The plan is for Geek Squad staff to partner with service organizations like Boys and Girls Clubs, Goodwill and 4-H in 20 cities to offer training in basic computer literacy. Microsoft is also on-board,  and will offer training in stores, schools, and libraries.

Now, I am not not by nature a political animal. But this seems like a waste of taxpayer money to me, particularly if Best Buy is deriving any benefit from the program.

Mr. Chairman: Have you not been reading the papers lately? (Sorry, I should have said ‘reading the on-line news sites.’) There are hundreds of thousands of newly-minted college graduates who cannot find jobs that pay decently, and are taking whatever work they can find to cover their monthly bills and student loans.

I’ll bet a sizable number are quite computer-literate and would be quite happy to instruct Americans about the ecstasies of ordering from Amazon, friending on Facebook, and streaming from Netflix, in return for a modest stipend from Washington, DC. Sort of a “Bits Corps” program, if you will. Why not put them to work? Best Buy doesn’t need the money.

I’d also like to mention that I know a few people who spend little or no time on the Internet, and have acquaintances that don’t even own a computer. They have no interest in surfing the Web and are quite happy functioning in what to them is a ‘normal’ world. Call them Luddites if you will, but they are co-existing with us ‘connected’ folks quite nicely.

It should not be the federal government’s job to make sure 100% of Americans know how to use a computer and do so on a regular basis. That is a choice for individual citizens to make. If Washington wants to establish an outreach program to help citizens get over a technology learning curve ‘hump’ so they can then make use of broadband connectivity, fine. But let it be run by volunteers in the finest spirit of our country, not government-subsidized employees of a big box retailer.

As for the ‘wireless spectrum crisis;’ we’ve called you out on it, Mr. Genachowski. It is a claim fabricated out of whole cloth and you should just drop it and leave what’s left of the free broadcast TV spectrum alone. Stop penalizing financially-pressed Americans by taking away one of the very few really good deals left out there…free HDTV.

Nuff said!