Tag: OTT

Sling TV: A Big Step Forward for OTT

Posted on by Leave a comment


Not to be confused with the Sling Box, Sling TV is a new over-the-top television service from Dish Network that allows consumers to stream a limited number of cable channels without a cable subscription.

Hundreds of thousands of people have already preregistered for Sling TV since it was announced in January at the Consumer Electronics Show, Sling TV is offering a handful of networks, led by ESPN, for $20 a month. Other networks on the service include Food Network, HGTV, Travel Channel, CNN, TNT, TBS, Disney Channel and ABC Family.

Sling TV is aimed at “cord-nevers” who want to stream nets including ESPN and Food Network for $20 a month. With its launch, the service is also rolling out a series of apps for mobile phones, tablets, and streaming devices that hook into a subscriber’s TV.

For those who want more choices, particularly for children’s content or news, Sling TV offers bonus packs of channels for $5 a month in those categories. It also hopes to have an expanded tier of sports channels at the same price, which it says is coming soon.

The introduction of Sling TV is the beginning of the TV businesses reaction to the popularity of streaming services, led by Netflix. The number of pay-TV subscribers has been slowly shrinking and there is concern that the availability of more streaming services will accelerate the decline.

Sling TV isn’t all about streaming live TV, the service will have videos from Maker Studios in addition to live TV channels from traditional TV networks. Finally, Sling TV will also offer up a selection of video-on-demand movies and TV shows that users can purchase.

To get users watching the service, Sling TV has introduced mobile apps for the iPhone, iPad, and Android phones and tablets. It will also have apps for Amazon Fire TV, the Amazon Fire TV Stick, and the Roku 3, to allow viewers to stream live cable networks directly to their TVs.

Sling TV still isn’t my dream OTT service. It makes you buy a limited bundle of preset live channels, but does not include the broadcast networks or options to add additional channels.

The good news is that Sling TV, unlike traditional cable TV bundles, has no contracts and no upfront installation costs. Subscribers can cancel at any time, and the company is offering a one-week free trial for those who’d like to try it out before committing to it.

Unbundling Pay-TV Brings New Challenges for Media

Posted on by Leave a comment


The media industry is racing toward an Internet-TV future at a breathtaking pace. But the swift changes, highlighted by efforts from Apple Inc., Dish Network Corp. and others, are giving consumers an array of confusing options and forcing entertainment giants to confront some sober realities.

Not long ago, consumers who wanted to watch “Monday Night Football” on ESPN, “Mad Men” on AMC or “Game of Thrones” on HBO knew what they had to do: shell out for a cable package that typically costs around $90 a month in the U.S. They could catch old seasons of popular shows on Netflix or a similar streaming on-demand service, but live, up-to-date programming lived in the cable bundle.

In the span of a few months, tectonic shifts are remaking a television landscape it took decades to sculpt, opening up a range of other possibilities for “cord cutters” who don’t want traditional pay TV. Apple is working on an Internet-TV service with some 25 channels, which is expected to be priced between $25 to $35 a month, according to people familiar with its plans. It will join Dish Network Corp. and Sony Corp., which are pitching their own online-TV bundles. A host of TV companies, including HBO, NBCUniversal, Nickelodeon’s Noggin and CBS, are in the mix with stand-alone streaming offerings.

But if consumers drop pay TV and sign up for TV services delivered over broadband, will they really get a better deal?

“If you buy retail and you have six or seven of these things, that might cost you as much as a bundle that gives you 400 different networks,” said Philippe Dauman, CEO of Viacom, which earns money from bundled channels but also recently launched a subscription streaming service aimed at preschool children that it imagines will be complementary to the bundle.

Sorting through which options or combination of options to sign up for—while keeping costs from spiraling—will be a headache. Dish’s basic $20 a month streaming package will get you ESPN, TNT and some cable channels but not broadcasters CBS, NBC and Fox. Apple wants to bring customers a “skinny bundle” including broadcasters and some cable channels but its service will cost more. Sony will soon offer something more akin to a full-on cable bundle, albeit likely at a higher price than the others—and notably, for now, without Walt Disney Co.’s ESPN and ABC.

On top of all this, consumers will have to factor in the cost of their broadband access. As a reference point, one operator charges $67 a month for a speed of 25 megabits per second once its first-year promotional discount ends.

Still, the new streaming world has the potential to be “better for many consumers” because it offers choice that the pay-TV industry never provided, said Roger Lynch, chief executive of Dish’s Sling TV streaming service. For the “vast majority of all consumers, the pay-TV bundle offers good value. But there’s a growing number of consumers for whom that doesn’t work anymore,” he said.

Media giants have their own calculations to make—quickly—as they prepare for a world that will look very different in 12 months than it has for the past several decades.

For years, TV channel owners and their pay-TV distributors—cable and satellite providers—were able to count on two reliable trends: that pay-TV subscriptions in America would grow each year, and that consumers would submit to paying ever-higher cable bills. In the past two decades, the pay-TV industry has grown by about 40 million subscribers to a total of about 100 million homes, and typical cable bills increased at a compound average annual growth rate of about 6.1%, according to the Federal Communications Commission. Those dynamics produced a steady stream of subscription revenue that drove profits for Disney and Viacom Inc. just as they did for Comcast Corp. and DirecTV.

But evidence mounted over the past couple of years that something fundamental was changing. In 2013, the industry’s base of subscribers contracted for the first time. Last year, pay-TV subscriptions fell by 129,000 industrywide, according to MoffettNathanson, even as analysts said new household formation surged, typically a good sign for the industry in years past.

And besides cutting the cord, more consumers started “shaving” it, downgrading to cheaper packages that operators began to offer. Comcast, for instance, offers an “Internet Plus” package of HBO, fast broadband and local channels for $40 a month, and AT&T has been peddling a similar $49-a-month bundle that also includes Amazon.com Inc.’s Prime free-shipping and streaming-video service for a year.

A mutiny was afoot, threatening the pay-TV fortress. “The ice cube is melting,” one senior industry executive said. “It’s a reality of the marketplace.”

The TV advertising business got a shock as ratings for major cable channels plunged, particularly over the second half of last year. The Cabletelevision Advertising Bureau, an industry trade group, recently told media executives that it estimates 40% of the ratings decline was due to viewers migrating from traditional television to subscription streaming services like Netflix.

“It was happening at a pace no one was anticipating,” said an executive at one big TV network. “We said, ‘We better start finding other ways to grow.’ ”

And with that, media companies that for years had pooh-poohed cord-cutting was a real threat, began to embrace it, albeit reluctantly. HBO, owned by Time Warner Inc., announced its stand-alone Web streaming service in October, followed by CBS, while in the background Dish and Sony assembled rights for their online TV bundles.

The goal for TV channels is to carry out this experimentation while safeguarding the traditional business to the extent possible. Virtually every TV network that has launched a Web TV service says it hopes to target the roughly 10 million homes that subscribe only to broadband service—without encouraging any current pay-TV subscribers to drop their service.

But holding on to pay-TV customers is getting harder. “We think there is going to be a continual dripping, dripping, dripping of millennial consumers and poor consumers who will be outside of the big bundle,” said MoffettNathanson analyst Michael Nathanson in an interview.

One risk of the media companies’ strategy is that by bringing TV channels to the Web they aren’t thinking far enough beyond their current business models. Their real competition for young audiences in coming years will come from companies like Facebook, Vimeo and Vessel that are attracting content creators from entirely outside the pay-TV ecosystem, said Mr. Nathanson and his fellow analyst Craig Moffett.

“Our suspicion is that the millennial cord cutter isn’t waiting around for just the right package of cable channels that only their parents watch,” they wrote in a research note Tuesday.

Not every TV channel is assured a secure place in the emerging Web TV world, analysts say. The small and midtier channel owners—companies like Discovery Communications Inc., Viacom, Scripps Network Interactive, and A+E Networks—will be jockeying to make sure their networks are in the online TV bundles being marketed to the audience of the future.

Some are making headway. Discovery, owner of Discovery Channel, Animal Planet and TLC, and Viacom, owner of MTV, Comedy Central and Nickelodeon, are in talks to be on the Apple service, people familiar with the matter said. Some A+E Networks channels will be added to Sling TV’s core package by the end of March, the companies announced Tuesday.

Read More at WSJ.com

TV Ratings are Falling as SVOD Subscriptions Rise…

Posted on by Leave a comment

 

TV viewing in the US are on the decline and as TV ratings fall, so does TV advertising revenue, as companies like Fox have experienced this year.

Nielsen’s Q4 “Total Audience Report” released on Wednesday shows a huge drop off in traditional TV viewing as consumers shift their viewing habits from old-fashioned scheduled programming.

American adults still spend a huge amount of time watching TV each day. But the overall levels of viewing (which includes live TV + time-shifted viewing) declined 4.6% year-on-year. That’s compared to a 4.2% year-on-year decline in Q3 and a 2.1% decline in Q2. The level of decline is accelerating.

Excluding time-shifted viewing, total live TV consumption was down 5.5% year on year to 114 billion person-hours of live TV video consumption.

Nielsen time spent with TV

The Nielsen Company

Among younger audiences, the drop off in TV viewing was even more severe: 16% among 18 to 24-year-olds, and 10% among 12 to 17-year-olds.

The steep drop off of traditional TV viewing is correlated with a sharp rise in the number of US homes with access to a subscription video on demand service like Amazon, Hulu, or Netflix. Nielsen says 40% of US homes had access to a subscription video on demand service in Q4 (the pink segment in graph below), up from 36% in the same quarter the previous year.

Nielsen Subscription Video on Demand

The Nielsen Company

Of those with access to video streaming services, Netflix is the most popular option.

Nielsen Netflix Penetration

The Nielsen Company

As you may have noticed from the previous charts, the amount of media consumption per day is actually up as consumers have more choice about the way in which they view content. And the more devices and services they have, the more content they consume.

Nielsen daily screen time

The Nielsen Company

Elsewhere, the amount of time spent on the web and with apps across devices among adults over 18 years old was up 32%, according to estimates from Pivotal Research, which uses Nielsen’s data as a guide. Pivotal says this now equates to 44% of the time spent with TV versus 32% in the year-ago period (although, intriguingly, on Pivotal’s estimates, this represents a sequential decline from 48% in the third quarter.)

An opportunity for TV networks?

hbo now announced at apple event Richard Plepler, CEO of HBO

APHBO CEO Richard Plepler announcing HBO Now at the Apple event on Monday.

Brian Wieser, senior research analyst at Pivotal Research, says in a note: “While declines should level off eventually (and viewing levels would certainly look better if tablets and out-of-home viewing were included in the data; a break-out of viewing of TV content in digital environments would also probably convey something more favorable for legacy providers of TV content), a concern is that if reported viewing levels continue to fall at these levels and if the industry is unable to generally make its case for why advertisers should use the medium, marketers who might otherwise have continued to focus their spending on TV may incrementally look toward other alternatives – namely digital media at a broader level.”

However, Wieser adds that this is a “secondary concern” relative to the broader state of TV advertising, which Pivotal believes is mostly due to the fact that marketers are maintaining tighter cost controls broadly across their entire advertising budgets.

There might be new competitors in the space, but there’s also more ways to get content (and advertising) in front of viewers than ever before — and they’re actively choosing to consume more of it.

And that’s why — as ratings are getting hammered — more and more traditional TV companies are opting to launch streaming services. Most recently, HBO announced HBO Now will be available on Apple devices starting in April.

Read more

The Future of Cable TV?

Posted on by Leave a comment

Even as cable/satellite TV carriers like Comcast and DirecTV squabble over dollars and cents with broadcast and cable networks like NBC and Viacom, the very structure of their decades-old business model is under attack from new Internet technologies and services, as well as new government regulations. At stake is the future of how people watch and pay for television and video – and who controls the experience.

With plot twists like last-minute negotiations ending in content blackouts, regulatory changes that could derail well-established business models, and brand new technologies delivering video content in brand new ways, this TV-delivery drama should be a blockbuster.

The question is, what surprises will the next episode bring? The search for possible spoilers brings up a wide range of theories from all over the industry, as various players, regulators and observers try to figure out what happens next.

Kevin Lockett, Digital Media Analyst from Lockett Media, says the result will be a fundamentally changed cable industry – one that will have to be far more transparent and flexible in order to keep its customers from defecting to new Internet-based options. If and when the general public figures out that it now has real alternatives, Locket says, “the cable companies are in trouble.”

Previously On Cable TV…
For two decades, cable TV, joined later by satellite providers, has been the dominant force in delivering video content to homes and businesses in the US. Lately that dominance has been challenged from within by cable TV’s own business practices and from without by Internet video providers like YouTube and streaming Internet TV delivered to special set-top boxes with weird names like Roku and Boxee, or Blu-Ray DVD players, or even “Smart” TVs themselves.

This new class of technology is hard to label, since there are so many variations on delivery devices, but over the top (OTT) platforms is one name that seems to be getting some traction. OTT is a broad term that describes not only the devices that receive and display Internet TV, but also the online services that deliver them. A tablet, then, is not an OTT device in itself, but it can receive OTT-delivered content, such as that from Hulu and iTunes.

OTT devices vary in form, but they share the function of bringing in video content over existing Internet connections through service providers like Hulu, Amazon Instant Video, and Netflix. Such services feature on-demand video programming at monthly rates that are typically much lower than cable subscription rates (for a more limited range of content, of course).

Who’s Gone Over The Top (OTT)?
How much attention is OTT getting? The Interpret LLC’s New Media Measure syndicated report sets the number of US consumers age 18-65 that own an Internet-enabled set top box (like a Roku player, Apple TV, Slingbox, Vudu box, etc.) at 13.6%, reported a company spokesperson.

Less than 14% may not sound like much, but OTT has been around for only three years. And Interpret’s numbers don’t include the millions of users watching alternate video sources like YouTube and Vimeo.

The other half of the squeeze on the cable TV industry comes from the ossified business practices of the industry itself. Cliffhanger battles for carriage rights that lead content creators to pull their programming from cable and satellite systems if they can’t get a deal they like is shooting the industry in the foot.

Frustrated with what appear to be more frequent content blackouts and ever-rising rates, consumers – and lawmakers – are applying pressure for less bundled programming and more à la carte-style programming. Content providers like Viacom and Disney rely on channel bundles to keep alive channels that consumers might not otherwise pay for.

Bundling Is The New Villain
The animosity over channel bundling is building. During the recent dispute with Viacom that led to a content blackout of Viacom channels for 26 million viewers, DirecTV laid it all out for the New York Times:

“Programmers like Viacom typically won’t allow anyone to buy their channels individually, but we hope to change that,” DirecTV told the Times. “We currently pay them hundreds of millions of dollars every year already, and if Viacom thinks their networks are worth a billion more, then you have to be able to select what’s most important in your own living room.”

DirecTV was willing to endure public blowback for dropping popular Viacom channels lilke Comedy Central and Nickelodeon because it was more afraid of bundling. In the past, customers had little choice but to pay for channels they didn’t watch to get the ones they were interested in.

But things are changing. Now customers can go to competing cable companies in the same town, or buy a satellite dish. Or leave the game completely to use OTT devices and services. Suddenly, the cable companies are pushing back at bundling demands from content producers.

Finding the Plot Motivation
As vice president of Accedo, a software vendor that builds apps and application interfaces for OTT devices, David Adams knows first hand about the changes in the cable TV industry.

“We’ve moved from just a few services in there with their toes in the water, to these services actually driving strategy,” Adams explains.

Ironically, though, the barriers to sweeping change within the existing cable TV industry are the same factors driving the change: business models and technology. Even as content takes new paths producer to consumer, Adams says, “when you have these 10-year, long-term carriage agreements in place, it’s hard for the [cable TV] industry to respond.”

Deeply ingrained ways of doing business show up even when cable providers or broadcasters try to adapt to the growing presence of OTT. A classic example is HBO Go, which offers on-demand programming over the Internet – but only to existing HBO customers. “They’re trying to adapt, but their business model isn’t changing,” Adams says. Instead, “they are looking to become more competitive with OTT.”

The real potential for OTT may come if it can combine the full-screen ad experience of traditional television with the targeted marketing promised by OTT technologies.

According to Adams, though, that combination is not yet mature enough to attract major advertiser interest and jump start adoption of OTT.

Is Cable Doomed?
“We’ll always be able to choose cable,” analyst Lockett predicts. “It’s in their best interests to appeal to their customer base and they eventually will.”

But even as non-technical people learn more about OTT, Lockett doesn’t see the complete abandonment of cable practices like channel bundling. Unbundling or better bundling won’t be the only thing keeping cable TV alive – instead, cable will have to find a new role. “AM radio is still around after all these years,” Lockett notes, albeit serving a more limited niche.

Adams, too, doesn’t predict the demise of cable. Customers are still dedicated to the big, full-screen watching experience, he believes, and cable remains one of the best ways to get that experience.

Instead, he sees the most revolutionary changes coming TV consumption from the use of tablets and other mobile devices in conjunction with TVs.

A Starring Role for the Second Screen
“The second-screen experience is something the content producers in Hollywood are playing around with now,” Adams explains. “The combination of tablets and TV will change the way we view television forever.”

Tablets and smartphones already provide a range of second-screen experiences – from following Twitter reactions to the Olympic opening ceremonies to show-specific apps like one launched last winter for the popular Fox reality show “American Idol” or the additional show content delivered in the form of a graphic novel for USA Network’s “Burn Notice.”

Meanwhile, companies like Shazam are trying to ease the need for viewers to hunt for apps and content related to a given show. The music-recognition app recognizes the soundtrack from a shows and downloads related content or apps chosen by the show’s producers.

Far from a challenge to cable TV, the second-screen could actually help save it. Cable TV providers could use the second screen to enhance viewing of primary video content and deliver even more targeted advertising – helping to offset income lost from the decline of bundling. That, in turn, would help cable TV service providers hold down subscription costs, and stem the bleeding of customers looking for less expensive alternatives.

Cable TV’s ratings may fall as OTT becomes more popular, but don’t cancel cable’s season just because the plot is getting a major rewrite.