c:dbnm:2016:over_the_top
Differences
This shows you the differences between two versions of the page.
Both sides previous revisionPrevious revisionNext revision | Previous revision | ||
c:dbnm:2016:over_the_top [2016/11/07 13:09] – [Player #8: Smart TVs] hkimscil | c:dbnm:2016:over_the_top [2017/11/02 08:40] (current) – removed hkimscil | ||
---|---|---|---|
Line 1: | Line 1: | ||
- | Preface | ||
- | **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, | ||
- | |||
- | 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. | ||
- | |||
- | ====== Group reading assignment and presentation ====== | ||
- | * The Television Industry Today: | ||
- | * Player #1: The Networks: group 1 | ||
- | * Player #2: The MVPDs: group 2 | ||
- | * Player #3: The Studios: group 3 | ||
- | * Player #4: The Premium Networks: group 4 | ||
- | * Player #5: The OTT Services: group 5 | ||
- | * Player #6: Streaming Devices: group 6 | ||
- | * Player #7: Second Screen Platforms: group 7 | ||
- | * Player #8: Smart TVs: group 8 | ||
- | * Summary | ||
- | * What’s Disrupting The Industry Today | ||
- | * The Revolution Has Begun: group 1 | ||
- | * Time Shifting: group 1 | ||
- | * Binge Viewing: group 2 | ||
- | * Video On Demand (VOD): group 1 | ||
- | * Second Screen and Social TV: group 3 | ||
- | * Fans and Fan Communities: | ||
- | * Cord Cutting: group 5 | ||
- | * The Shifting Value Of Ownership: group 5 | ||
- | * Streaming Video Platforms: group 5 | ||
- | * Net Neutrality: group 6 | ||
- | * V-POPs: group 6 | ||
- | * Tablets and SmartPhones: | ||
- | * Streaming Devices: The New Set Top Boxes: group 7 | ||
- | * The Dominance of Data: group 8 | ||
- | * Future Predictions | ||
- | * TV Everywhere: group 1 | ||
- | * The Future of Second Screen: group 2 | ||
- | * BYOD (Bring Your Own Device): group 3 | ||
- | * Recommendation and Discovery: group 4 | ||
- | * Non-Skippable VOD: group 4 | ||
- | * New Business Models: group 5 | ||
- | * The Spotifyization of Television: group 6 | ||
- | * A New Revenue Model: group 7 | ||
- | * The Continued Dominance of Data: group 8 | ||
- | * Summary | ||
- | |||
- | ====== The Television Industry Today: A Primer For The Uninformed ====== | ||
- | ===== Player #1: The Networks ===== | ||
- | |||
- | * Broadcast Networks((A broadcast network is an organization, | ||
- | * [[ABC]], [[CBS]], [[NBC]], [[PBS]], [[FOX]] and [[the CW]]((The CW Television Network is an American broadcast television network that is operated by The CW Network, LLC, a limited liability joint venture[1] between CBS Corporation, | ||
- | * Cable Networks | ||
- | * [[Discovery]], | ||
- | |||
- | <WRAP info>. . . . the larger cable networks **tend to draw the same ratings** as broadcast networks and, just as importantly, | ||
- | |||
- | Only **business model differences**. . . . </ | ||
- | |||
- | **Ad Sales: | ||
- | * National advertising on the show by the network | ||
- | * Local advertising by carriers or affiliates | ||
- | * Avenue drops < | ||
- | |||
- | **The A.C. Nielsen company**: rating by Nielsen | ||
- | * three networks era (NBC, CBS, ABC) vs. | ||
- | * new media era (+ Cable networks) | ||
- | * Overnights: Nielsen’s next-day ratings | ||
- | * Outdated methods for rating: Nielsen still relies on a small sampling of households who are tasked with recording their viewing habits in a diary (in pre-internet days, this was an actual handwritten diary). | ||
- | * TV Everywhere ratings package | ||
- | * C3, a three-day window rating((Nielsen also provides viewership data calculated as the average viewership for only the commercial time within the program. These " | ||
- | * C7 | ||
- | * L+SD -> L+3 | ||
- | * People are also watching a lot more television on their connected devices (smartphones and tablets.) While Nielsen has been working on a solution, none has been implemented to date, and views on those devices go uncounted. We’ll take a closer look at OTT viewing—and how to measure it—later on. | ||
- | |||
- | |||
- | **Content license: | ||
- | * Carriage fees determined by network value + subscribers (MVPD) | ||
- | * Retrans fee | ||
- | * [[wp> | ||
- | |||
- | * BUNDLING: | ||
- | * OVERSEAS RIGHTS: | ||
- | * O&Os AND AFFILIATES: | ||
- | |||
- | ===== Player #2: The MVPDs ===== | ||
- | Comcast, Uverse, DirectTV and the rest. | ||
- | |||
- | Two revenue streams: | ||
- | * Local Ad Sales on the programming they run | ||
- | * Subscription fees from consumers | ||
- | |||
- | 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, | ||
- | |||
- | 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, | ||
- | |||
- | ===== Player #3: The Studios ===== | ||
- | |||
- | While the networks do produce some of their own programming, | ||
- | |||
- | * Hundreds of scripts and winnow to get picked up by cable and broadcast networks. | ||
- | * A dozen or two will get made into pilots | ||
- | * The pilots are winnowed down by the network programming executives into the shows that will actually appear on air the following season. (This process is not set in stone and shows with big name stars or big name producers associated with them will often get picked up without having to go through much of the winnowing process.) | ||
- | |||
- | How Do They Make Money? | ||
- | * Programs are picked up by the networks. The networks pay them a fee to run the series and reap advertising revenue from it. Sometimes, if the producer is powerful, they can work a deal where they get a share of the ad revenue. **That’s just step one.** | ||
- | * If a series is successful (the holy grail has been 100 episodes, or around four or five seasons), the studio can then sell syndication rights to independent TV stations and networks like USA or TBS that rely on reruns of recent hit shows. Syndication is worth millions of dollars and can continue to line pockets for years. | ||
- | * In the past few years, Netflix and Amazon have become a key source of income for studios too, as they pay top dollar for full seasons of reruns, which allows for binge viewing. Studios and networks like this arrangement because, (a) it’s very lucrative and (b) if the show is still on air, they can attract new viewers who have caught up via Netflix. Selling prior seasons to Netflix also allows studios to recoup their losses from shrinking DVD sales. | ||
- | * The final money-making opportunity comes by selling overseas rights: non-U.S. networks and MVPDs will buy rights to the shows, and a hit show can make a huge profit through these sorts of deals as there will be a new deal for each and every market. While it used to take American shows years to make the voyage overseas, the difference between U.S. and overseas launches can now be just days. | ||
- | |||
- | THE NETFLIX CONUNDRUM: | ||
- | UNIONS: | ||
- | |||
- | ===== Player #4: The Premium Networks ===== | ||
- | HBO, Showtime, Cinemax, Red Zone and other sports networks. | ||
- | * ad-free cable networks that started out showing movies but really made their mark by introducing high quality original content. | ||
- | * a second “golden age of television” | ||
- | * a must-have for many Americans, especially the affluent 25-to-54 demographic. | ||
- | |||
- | How Do They Make Money? | ||
- | * **Subscriptions.** The subscriptions are sold via the MVPDs who collect the money for them and keep a percentage for themselves as a profit. Subscriptions to the various premium networks __are often bundled together__, so that HBO makes money every time someone decides they want to watch the Showtime series Homeland; chances are good that the upgrade will consist of a premium channel bundle which gives the viewer access to both HBO and Showtime, along with Cinemax, Starz, and some smaller premium networks. | ||
- | * Not having to collect money from users every month is a huge plus for the premium networks, who also get to rely on the MVPD’s marketing machines to promote their products. It’s one of the main reasons why, despite frequent calls from many in the tech community, many actual industry observers were surprised in October 2014 when HBO announced their decision to launch a standalone app, dubbed HBO Now. In addition to having to do their own marketing, they’d now have to set up billing, accounts payable, and customer service departments and deal with the attendant headaches of running those sorts of divisions. (Recent reports indicate that HBO plans to continue to outsource the aforementioned functions, this time to manufacturers of devices like Apple TV, Roku and Chromecast, and to the MVPDs as well, this time as part of a broadband package.) | ||
- | * Many observers (myself included) suspect that one of the main reasons HBO is introducing the standalone service is that it gives them an edge in negotiating their carriage deals with the MVPDs: give us what we want or we’ll bolt and take our toys with us. That’s a situation neither side wants to find themselves in, but so long as it’s an option, it gives HBO the upper hand. | ||
- | ===== Player #5: The OTT Services ===== | ||
- | * [[https:// | ||
- | * OTT = Over The Top, a reference to how web-based video is delivered -- e.g. without a set-top box. | ||
- | |||
- | **How Do They Make Money?** | ||
- | |||
- | * __Subscriptions__: | ||
- | * __Sales and Rentals__. Amazon Instant Video, Vudu, iTunes, et al are known as TVOD service—Transactional Video On Demand | ||
- | |||
- | . . . the OTT networks have all **set out to produce original content**. | ||
- | * Amazon original series | ||
- | * [[https:// | ||
- | * [[https:// | ||
- | * {{: | ||
- | * [[https:// | ||
- | * [[https:// | ||
- | * {{:house of cards.png? | ||
- | * [[https:// | ||
- | * {{:Orange is the new black.png? | ||
- | |||
- | **NETWORK CONTENT:** | ||
- | * TV shows, often shot on HD, that people wanted to watch but either hadn’t jumped on the bandwagon at the beginning and now found themselves hopelessly behind, or they’d been too young when the series first aired. | ||
- | ===== Player #6: Streaming Devices ===== | ||
- | [[https:// | ||
- | * [[https:// | ||
- | * {{: | ||
- | [[http:// | ||
- | * {{:apple tv.png? | ||
- | [[https:// | ||
- | * {{: | ||
- | * {{: | ||
- | [[https:// | ||
- | * {{:amazon fire tv.png? | ||
- | |||
- | **How Do They Make Money?** | ||
- | * Direct sales to consumers. | ||
- | * . . . However, the difficulty of updating an %%$%%800 TV set versus a %%$%%50 Roku would seem to indicate that they will remain as separate devices. | ||
- | |||
- | **BYOD (Bring Your Own Device) ** | ||
- | * BYOD + OTT = cable cord cut + binge watching | ||
- | * With the possible exception of Comcast, which is building out its own state-of-the-art set-top box, most MVPDs would be happy to see the traditional box disappear. | ||
- | * < | ||
- | |||
- | ===== Player #7: Second Screen Platforms ===== | ||
- | < | ||
- | |||
- | **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. | ||
- | |||
- | __SOCIAL TV__ | ||
- | * Twitter and Facebook | ||
- | * {{:twitter social tv.png}} | ||
- | * [[https:// | ||
- | * Nielsen data shows that 95% of U.S households have at least one TV, and the average American watches 5 hours of TV per day | ||
- | * . . . as many as 87% of consumers are using a second device while watching TV—and for 71% of adults aged 18-34, that device is their smartphone. | ||
- | * [[https:// | ||
- | * Both Twitter and Facebook have the potential to become drivers for live (same day) tune-in, something the networks desperately need and newer apps such as Snapchat are also poised to take on that role. | ||
- | | ||
- | __APPS__ | ||
- | 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? | ||
- | ===== Player #8: Smart TVs ===== | ||
- | [[http:// | ||
- | [[http:// | ||
- | [[http:// | ||
- | [[http:// | ||
- | |||
- | **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. | ||
- | |||
- | |||
- | ===== Summary ===== | ||
- | ====== What’s Disrupting The Industry Today ====== | ||
- | ===== The Revolution Has Begun ===== | ||
- | ===== Time Shifting ===== | ||
- | ===== Binge Viewing ===== | ||
- | ===== Video On Demand (VOD) ===== | ||
- | ===== Second Screen and Social TV ===== | ||
- | ===== Fans and Fan Communities ===== | ||
- | ===== Cord Cutting ===== | ||
- | ===== The Shifting Value Of Ownership ===== | ||
- | ===== Streaming Video Platforms ===== | ||
- | ===== Net Neutrality ===== | ||
- | ===== V-POPs ===== | ||
- | ===== Tablets and SmartPhones ===== | ||
- | ===== Streaming Devices: The New Set Top Boxes ===== | ||
- | ===== The Dominance of Data ===== | ||
- | ====== Future Predictions ====== | ||
- | ===== TV Everywhere ===== | ||
- | ===== The Future of Second Screen ===== | ||
- | ===== BYOD (Bring Your Own Device) ===== | ||
- | ===== Recommendation and Discovery ===== | ||
- | ===== Non-Skippable VOD ===== | ||
- | ===== New Business Models ===== | ||
- | ===== The Spotifyization of Television ===== | ||
- | ===== A New Revenue Model ===== | ||
- | ===== The Continued Dominance of Data ===== | ||
- | ===== Summary ===== |
c/dbnm/2016/over_the_top.1478493562.txt.gz · Last modified: 2016/11/07 13:09 by hkimscil