THE LAST MEDIUM TO BE DISRUPTED BY THE INTERNET
Television is the last of the twentieth-century mass media to be disrupted by the twenty-first century internet. It’s also going to prove to be the toughest. The American television industry is still a cash machine that’s protected by an intricate web of rights deals and inertia. But that’s changing, and rapidly. And when it does, it’s going to change the industry dramatically, making it even better for both creators and consumers.
In the first section of this book, we’ll examine where the industry is today: who the players are, how they interact with each other (who pays who and for what), and what their sweet spots and pain points are.
Next, we’ll look at a number of current trends that are starting to rock the industry, looking at both the business and technology aspects of each and what their road map for the next few years looks like.
Finally, we’ll end with some predictions about where the industry ends up, who the winners and losers are and what TV will look like in the coming decades.
Sit back and enjoy the ride.
. . . . the larger cable networks tend to draw the same ratings as broadcast networks and, just as importantly, viewers – especially younger viewers who came of age with cable as a given – don’t really see a distinction.
Only business model differences. . . .
The A.C. Nielsen company: rating by Nielsen
Multichannel Video Programming Distributors
Comcast, Uverse, DirectTV and the rest.
Two revenue streams:
The vast majority of MVPDs don’t just sell pay TV packages. They sell broadband and landline services too. The old Triple Play. It’s an incredibly lucrative system for them and an incredibly bulletproof one too.
HOW MANY CORDS CAN YOU CUT? It’s bulletproof because what tech bloggers often forget when they talk about “cord cutting” is that the cord that brings you television is generally attached to the cord that brings you the internet. And if you’re cutting the one, you’re still going to need the other. (To put this in perspective, somewhere over 90% of FIOS and Uverse subscribers get TV and broadband from the same provider.)
So here’s where the genius of this set-up kicks in: the MVPDs will give you two options—get the pay TV service and get unlimited bandwidth (free unlimited bandwidth, in the case of Google Fiber), or, get broadband only, but face possible bandwidth caps. If you’re a heavy TV watcher who plans to get content off web-based services like Netflix and Amazon, you probably won’t wind up saving any money.
The MVPDs are not blind either. They see where the market is going, understand the effect of Netflix and Amazon. And so they are busy cutting deals to include those services in their offering. It’s already happening in Kansas City, where Google Fiber TV has Netflix baked into the program guide with more OTT (Over The Top—the industry term for signals carried over the open internet) channels to come. Smaller MVPDs such as Atlantic Broadband, Grande Communications, and RCN recently announced deals to carry Netflix on their networks, and it won’t be long until the larger players follow suit.
see also television studio.
While the networks do produce some of their own programming, many TV shows are produced by studios and production companies. These range from studios affiliated with the larger movie studios (Warner, 20th Century, Sony et al) to smaller, independent production companies like Amblin and Bad Robot.
How Do They Make Money?
THE NETFLIX CONUNDRUM:
HBO, Showtime, Cinemax, Red Zone and other sports networks (ESPN, ESPN2, etc.).
How Do They Make Money?
How Do They Make Money?
. . . the OTT networks have all set out to produce original content.
How Do They Make Money?
BYOD (Bring Your Own Device)
A second screen involves the use of a computing device (commonly a mobile device, such as a tablet or smartphone) to provide an enhanced viewing experience for content on another device, such as a television. In particular, the term commonly refers to the use of such devices to provide interactive features during broadcast content, such as a television program, especially social media postings on social networking platforms, such as Facebook and Twitter. The use of a second screen supports social television and generates an online conversation around the specific content. Second_screen
How Do They Make Money?
While “second screen” is a great catchall term, the range of interaction models (let alone business models) makes it difficult to issue grand pronouncements on the entire segment. Each piece currently has its strengths and weaknesses.
Do viewers really want to look back and forth between their phones and the TV while they’re watching television, and even if they do, is an independent third-party app the way they want to conduct this interaction? . . . .
How Do They Make Money?
Direct sales to consumers. The additional “smart” features are used to justify higher prices than “dumb” HDTVs, though as new features are introduced, the prices for older models tend to drop.
. . . consumers don’t bother hooking up the smart TVs to the internet.
. . . you had to wait for summer rerun season to catch it again.
VCRs came on the scene in the 1980s
In 2000, a new device called TiVo . . .
. . . but TiVo was quickly elbowed aside by a series of MVPD-supplied all-in-one set-top box/DVR units.
In December 2014, NBC research chief Alan Wurtzel confided that close to 40% of NBC’s programming was watched on a time-shifted basis.
The Diffusion Group confirms . . . that only 53% of viewers look to linear TV as their first option when they sit down to “watch TV.” DVR, VOD, streaming services, and similar options make up the remaining 47%
Popularity of non-linear streaming services
Improved interface of the services
Portability of the services
Time shifting has made a shambles of the ratings system . . . .
Nielsen, the MVPDS, the networks and advertisers are all scrambling to find a way to make sense of a world where close to half of all viewers no longer watch live TV.
Fade out of America's shared moments
Why has it not been here?
. . . . the lack of commitment. (monthly payment instead of pay per view)
A lot of programs to binge (old and new) . . . .
. . . . availability of British series
So how popular is binge-viewing? A recent study I did at Piksel showed that over 90% of viewers had binge-watched at least one show, and the behavior showed no sign of abating. (Although it should be caveated that this figure was limited to a specific segment of the population, and that only about 50% of U.S. TV viewers own DVRs.)
The way the show is written has been changed since DVR . . . .
LILLYHAMMER . . . . Netflix’s decision to release all episodes of their original series at once. . . .
Because suddenly the whole notion of linear TV was completely off the table and replaced by the sort of fully on demand line-up many futurists had been predicting.
The effect of this sort of . . . . TV shows will need to be marketed more like movies, with a huge build-up around the initial release date, followed by a combination of paid media and social buzz as follow-through.
Production schedules will feel the impact too. While network TV shows are currently written, filmed, and edited week by week, with writers and actors racing to keep up with constant deadlines, the new series will be able to be shot all at once.
Chasing rating: Data will also come into play as networks will be better able to track viewing habits, understanding how many viewers drop off from episode to episode, who those viewers are and where they live.
Big data: But remember that Big Data is only starting to develop, and its role in the TV industry is still far from clear; data can be used to help make creative decisions, but many fear that data-based decisions cater to the lowest common denominator.
Also providing APIs and others to promote the subsidiary markets
Viewers vs. Users (Passive vs Active)
No notion of binge watching . . . . A lure of live feeding
VOD vs. DVR (commercial skipping tech): VOD with commercials from MVPDs
And . . . networks work too (providing VOD to their viewers).
Netflix, Amazon, Hulu . . . Viewers become loyal.
A large selection of movies from MVPDs
+ situation awareness services: Picture frame, Musice, Movie, TV show, Sports
Catchup TV in Europe
Quick question: When you’re watching TV, do you talk during the entire show? When the commercials come on (provided you’re not skipping through them) do you only think and talk about the show you’ve been watching?
I’m guessing the answer is no. So then why did so much of the initial activity in the social TV space assume the opposite?
Yes, a lot of people watch TV with a second screen device in hand. But there’s no logical path that says they are using that device solely to interact with whatever is on the screen. Chances are high that if they’ve whipped out the iPhone, they are checking email, looking at a friend’s Facebook photos, checking the score of the game they’re not watching, or some other activity completely unrelated to the what’s on TV.
TV as a background distraction – passive viewing
Shows you look forward to and actually care about – active viewing
. . . . During active viewing you’re far more likely to give your undivided attention to what’s happening on the screen, to the point of letting phone calls and texts go unanswered. During passive viewing, there’s not a whole lot of incentive to spend any time talking about a program you’re only casually watching.
Studies show that live sporting events and reality game shows were most likely to get fans interacting (either via Twitter or via polls and quizzes) during the show.
Live . . . Super Bowl, Oscar, presidential inauguration
Sitcomes and reality dramas
Dramas and crime shows
|sports and live|
|sitcoms and reality dramas|
|dramas and crime shows|
|?|| chatting |
Many went out of business as consumers showed little interest in checking in to shows or getting recommendations from apps that couldn’t tell them what channel the show was on. Those that did survive kept merging until almost none were left.
So who's left?
TV networks are using that data in four distinct ways:
Anonymous and synchronous communication.
TV watching is not public behavior.
Engaging with no-known others is not familiar activities?
Twitter is going to begin allowing tweets to runs as native advertising on third party sites.
Going with motion pics!
The first thing I see becoming a reality is TV Everywhere (TVE), which is basically what you have now if you have Netflix: you can watch your pay TV service on any device at any time. If you’ve paused a show on your iPad and want to resume it on the TV, you can do that seamlessly.
There are two possible options for TV Everywhere: a system where the MVPDs proprietary TV Everywhere apps prevail, or one where the networks proprietary OTT apps do.
Personalization. Your personalized account will also mean that you will receive advertising that is specifically targeted to you, based on your tastes and interests, even your recent credit card activity.
It's important that advertisers understand that it's going to be increasingly harder for a generation raised on Netflix and iTunes to go back to a model that relies on four- or five-minute commercial blocks. They’re just not going to take it and will seek out alternate means (pirating, cloud DVRs) of viewing to avoid painfully long commercial breaks. But give them shorter, more relevant blocks, throw in a timer to show just .
. . .
IN-HOME VERSUS OUT-OF-HOME
Being able to access TV from any device will also free it from the television set and make it a more personal medium. Meaning that watching TV was always somewhat public— anyone walking into the room could see what you were watching, but with an iPad or similar tablet device, the viewing experience becomes much more private and thus more personal.
Where second screen or additional content works best for most types of programming is after the show is over. And it only works for viewers who are serious fans of the show. Those are the people who are happy to extend the experience. Who are glad when they're able to spend more time with the characters, the actors, the writers, and the producers. Not to mention the other serious fans.
Question about “during” or “post”
While I see a lot of opportunities for production companies to create experiences around their shows, I’m less optimistic about the chances of Facebook and (especially) Twitter to become a part of this future ecosystem, mostly because I believe their role lies in driving tune-in via paid posts and tweets.
What they do want to hear, though, is what celebrities or media figures have to say. That’s far more interesting and also far more likely to be surfaced via one of Twitter’s new “tweet ads” that live on third-party sites.
Which is another problem: every year when surveys of the “most hated companies in America” are conducted, several of the MPVDs wind up in the top 10—for many reasons, but the unreliability of their set-top boxes certainly doesn't help.