Social Media – Linear TV’s Saviour

Let’s admit it, we record everything, skip through commercial and watch what we want, when we want, where we want. TV is catching up to how we the users, want to consume content – on our terms. Traditional Linear TV is on a rapid decline. News and sports were once the provider’s saving grace as everyone still wanted to be kept up to date, but even that is changing. The internet is the number one source for up to the minute news and personally, I’ve even gotten into the habit of recording live sports and watching the game after I have put my kids to bed; (which honestly, may have been my wife’s idea). On Demand video consumption is booming. Customers today can record, download, rent, stream or watch any show they want on demand. Whether that is from the PVR, Pay-per-view, video on demand, downloaded or streamed over the top, it truly is an on demand world and that world is changing the value of advertising.

Traditional linear TV has been declining since the invention of the VCR (yes it does start way back then). That trend has been accelerating over the past ten years as technology catches up and significantly improves the user experience. Advertisers are searching for non-traditional mediums to get their messages out and cord cutting behaviour has picked up in the United States especially. However, the Linear TV trend is showing a slight uptick. Why is that?

Social media is stepping in and at a minimum creating an upswing in linear viewership, and potentially shifting people back towards real time consumption. Facebook and Twitter are a buzz with TV references on a nightly basis. If the show is a true entertainment event (think season finale or American Idol type reality show) the twitter traffic is truly phenomenal. Social Media is changing the way people watch TV and it is moving viewers back into linear consumption.

The studios have been very aware of the blending of social media and TV content for years (whether it was labeled social media is another story). ESPN and most of the major TV shows had message boards created specifically to give viewers a location to post and discuss their content. Watching Lost was much more than sitting back and following what was happening on the Island for an hour a week. Message board postings and analysis, plot discussion and conspiracy theories drove the success of that show at least as much as the writing, cast, plot and spectacular Hawaiian set. While message boards helped to blend traditional TV and the web, Twitter made it much more instant.

Water-cooler conversations are no longer happening the next morning at the office. They are in real time, online through twitter and Facebook. Commercial activity almost always shows a big spike in traffic (and I’m willing to bet channel surfing has decreased as viewers pick up their tablets and PCs instead of the remote during that short commercial break). The Royal Wedding, the Super Bowl, Oscars, Emmys and even the weekly network shows are a hive of social traffic on the web. Two million American were tweeting during the Royal Wedding and over one million users on Facebook changed their status update. The entire event averaged 67 tweets a second. To prepare for this event, twitter had to increase its overall server capacity. Historically, that’s the equivalent to bringing in ten extra “water-coolers” the morning after the super bowl. Which I guess, after most traditional Super Bowl parties, might not have been a bad idea.

Many shows now are integrating with Facebook, whether it is through fan pages or applications such as HBO’s True Blood. Major League Baseball has gone as far as embedding a twitter application into their MLB.TV service. Viewers are watching and tweeting all in real time, much to the delight of advertisers. Social Media may have just become the saviour for linear TV

Internet and TV… Google’s really saying, let’s work together.

There has been much written in recent days to address comments made by Google’s Eric Schmidt.   Schmidt was quoted during his keynote speech from the 2011 Edinburgh TV festival as saying, within five years, “Virtually all the television manufacturers on their high end products will eventually adopt Google TV… or perhaps one of the competitors that will emerge.”  Google TV has had little to no market adoption since its launch and has yet to carve out any semblance of a market niche that looks sustainable.  Schmidt even admitted that Google TV was more of a beta release and changes were definitely coming.  Even still, bloggers have been all over any belief that Google TV will be integrated into virtually all televisions.  Google TV, a major marker force?  Who was going to believe that?  But is that really what he said?

Reading through the entire transcript (posted here -http://www.guardian.co.uk/media/interactive/2011/aug/26/eric-schmidt-mactaggart-lecture-full-text), Schmidt discusses the history, evolution and opportunities of the net and how specifically those can be applied to the TV industry.  His discussion moves beyond the replacement (or supplemental) view point of OTT video streaming and delves into the Social and Interactive qualities a blended Net and TV experience will provide.  While there is in an obvious undertone that Google TV will be a major player in this space, I personally think Schmidt’s statement resonates much louder when you layer in other competitors.  The TV landscape is changing, and that’s essentially what Eric Schmidt is referring too.

Many national newspapers have misconstrued the Google Executive’s comments to imply that Google believes Google TV will be the leading TV provider within five years.  By no means do I see Google becoming a major content owner, and quite honestly, in my opinion, neither does Google. Google is far more focused on providing a contextual platform for users to consume content.  Whether that content is free, ad supported, subscription based or a blend of all three is anyone’s guess (and Google I’m sure will play in multiple video spaces).   As with the web, video viewers are now inundated with content.  We’ve moved well beyond Springsteen’s “57 channels and nothing on” timeframe.  Traditional broadcasters generally carry channel line ups in the 200 to 400 channel range.  Supplement that with enough DVD quality video, in user generated and Hollywood produced format,  contained on the web to give you over 100 years of continuous viewing pleasure, and you have enough choice to satisfy any micro-niche.  Traditional linear delivery just cannot possibly package this in a user friendly experience.  A market gap still exists within the TV space for truly recognizing and recommending contextual content.  By tagging and recommending associated content, IP functionality can significantly increase the overall viewing experience, recommending content and providing it to the user on demand.  Amazon now recommends what books I should read/buy next, whether it be push advertising through recommended newsletters or pull via their “Customers purchasing this book also bought X, Y and Z” approach.  Friends and associates on LinkedIn, Youtube and Facebook are commonly sharing videos and online articles.  The user no longer has to search for information they are interested in, it’s hand delivered and shared the world over.  IPTV providers, whether that be Google, Apple, Netflix or the Telcos will adopt and foster this approach with traditional TV content.

Let’s be clear though, IPTV does not mean the end of linear delivery.  As Schmidt alludes to, IP functionality only serves to enhance a delivery system that has worked (and will work) for years. Viewers today typically tweet or post on facebook while they consume video.  This social interaction co-exists naturally in real time as viewers watch, comment and interact during the show.  Youtube has launched a platform called Hangouts which allow viewers to chat on top of a jointly shared Youtube clip.  Each user has shared control of the remote and can rewind, pause, fast-forward and chat all while the clip is playing.  Performing similar functions on your TV with a linear show would be exponentially easier for the simple reason all users would know what time to show up.  News, sports and major entertainment events will continue to be viewed in a linear format, IP functionality will simply serve to enhance that experience.

When you take into account the notion of Google TV OR any number of competitive products and the increased functionality and value IP can provide to the TV space, it is very easy to envision every manufactured TV coming out of the box IP enabled and embedded with pre-configured connectivity.  Whether Google TV is in the mix or not; personally, I believe Eric Schmidt’s comments are pretty much, right on the mark.

Are the Cable Companies banking on TV Everywhere to slow losses and reduce Cord Cutting?

For the Cable and Telecom industries, Q2 is in the books and the market outlook for Q3 is not looking all that stable.  International markets have been mostly on the downward trend as the US had their AAA status revoked, and if unemployment follows this market trend, Q2 losses may not be easily made up (or slowed) over the remainder of the year.  As you would expect, traditional MSO’s lost TV subs (Comcast, CableVision, Time Warner and Cox all recorded losses) and the Telco’s gained with their IPTV solutions (AT&T and Verizon both posted gains of approximately 200,000 a piece).  Shaken from the overall picture though was a gross loss of between 200,000 and 450,000 pay-tv subscribers (depending upon where you source your data).  This is higher than any quarter in history and more than twice the losses year over year.  Where did they go?  Did they just disappear into the cloud?

While “cord cutting” is on the minds of all executives, it’s traditionally been hard to quantify.  By nature, cutting the cord implies that the customer was a Pay-TV subscriber before going to either no TV or an OTT model. Quantifying these losses becomes difficult at the industry level and even at the individual provider level as reporting is dependent upon customer testimonials coupled with their disconnect notification.  It may just be easier for a customer to quote “lack of use”, claim they are moving, or temporarily disconnecting than to get into the standard save offers presented by the provider during the disconnect process.  Measuring “cord cutting” also does not take into consideration the so called “lost generation” of customers who have actually never subscribed to a service in the first place.

This leads us to another question that has yet to be played out; can the Cable Companies (TV Service Provider) attract a growing absentee market segment with the evolution of a TV Everywhere offering?  I have seen a number of online articles comparing today’s TV landscape to the phenomenon in the Telco space in the late 90’s and early 00’s. Many Gen-Xers and most of the Gen-Y segment cut (or essentially did not even adopt) the traditional Telco Landline.  As they transitioned from University into the working world, getting their first jobs and homes, they questioned the need for a $40/month Landline when they’ve made it this far in life with only a cellular/mobile phone.  Statistics vary across Urban/Rural markets and across Telco’s, but I’ve seen wireless substitution estimates higher than 35% in some US States.  Pure urban estimates would obviously be higher.  Fast forward to today and you have a growing demographic that has been consuming video through an $8.00/month Netflix account which is supplemented by downloadable video content (both through subscription and bit torrents).  As the OTT market continues to enhance and evolve both their content and user experience, you have to wonder if the Cable Company’s TV Everywhere movement will attract this demographic.

Comcast Xfinity has gotten some traction with their entry into the TV Everywhere space.  They will continue to enhance their content line up (there are currently thousands of movies and tv series) and extend Xfinity to Android devices, iPods, iPads, iPhones and any PC.  This has helped Comcast stem the losses to their competitors.  Their strategy is to reach as many customers on as many devices as possible and for the time being this additional functionality is having an impact on cable losses.  Controlling and accessing DVR content, coupled with the ability to stream subscription based content to any device, makes this a powerful value add for Comcast customers.  TV Everywhere should certainly help maintain subscribers, especially while they hold a content advantage, but the current structure may not be enticing enough to attract new acquisitions.

The move to an OTT substitution (vs. a supplemental pairing with your traditional TV service) is as much about price as it is about flexibility.  TV Everywhere solutions should be able to offer a better Quality of Experience (the providers do own the network) and as usage models start to evolve in the broadband space, the total cost of ownership on an OTT subscription will have to rise.  SNL Kagan forecasted cord cutting to reach 4% by the end of 2011, and 10% by 2015.  Based on Q2 losses, I’d say they have slightly underestimated.  As indicated above, some of this can be blamed on the economy, but customer inertia is definitely headed in the wrong direction if you own a Cable Company.  It’s still a trickle at this point, but it’s a trickle worth watching.

 

Over-the-Top and Set-Top Integration – a potential game changing partnership?

The Over-the-Top landscape has continued to both gain market momentum and video solution  credibility (I’ve seen projections as high as 20% of customer cutting the TV cord  in the near future) over the past four to five years.  This momentum has caused traditional Telcos and MSOs to take notice; I’m sure every service provider in North America has an Over-the-Top (OTT) competitive assessment in their  business plan.   Netflix continue to be the poster child for the OTT revolution and they’ve  moved from DVD Mailer to a true Over-the-Top delivery model that has evolved from purely PC based, to include access through major gaming consoles, integration with the TV manufacturers and AppleTV.  OTT providers such as AppleTV, Netflix and  Hulu have steadily gained market penetration, causing the traditional Service Providers to rethink their approach.  While the traditional battle lines between Telco and Cable providers are not going anywhere soon, OTT providers are reshaping the competitive landscape.  However, the move I keep waiting to see from the Service Providers is not a competitive assessment, but a partnership agreement between one of the smaller providers and Netflix.  Service Providers continue to spend strategy cycles attempting to understand the impacts to bandwidth utilization and premium content revenues, these efforts could be used to build a new business eco-system on their competitive landscape.

Let me explain my thinking.

Many smaller Tier III players are in the unfortunate position of competing head to head against one of the national giants.  Tier II and Tier III Telcos cannot compete on content costs against companies such as Comcast, Cox, Verizon or Bell and Rogers in Canada.  There just is not enough scale for them to negotiate an equal footing.  While the average consumer will stress supporting the local guy and the value of personalized customer service, the buying decision will still involve overall cost and availability of the content they are actually looking to consume. Securing a content relationship for specialized content with HBO or Major League Baseball can be a costly endeavour for providers with small subscriber counts thus putting smaller providers at competitive disadvantage.

With content costs continually rising, network utilization increasing year over year and a highly competitive pricing landscape, I keep
asking myself, “is there not a better solution?”   Service Providers are heavily discounting triple play offers to new customers to secure growth and retain customers; this is not a sustainable strategy.  My feeling is that blending traditional TV service and an existing Video on Demand (VOD) library with a supplemented OTT content option works for everyone.

• For the OTT Player – While purchasing content off the web via your credit card, and streaming video (either via your PC, console or web based TV) seems second nature for the IP literate market segment, the OTT players should not underestimate the opportunity the service provider can offer by offering these services via the set-top box and billed on the customer’s existing phone/cable bill.
• For the Service provider – Trading subscription based revenue from premium content for a lower overall price point for their customers can be offset by gaining overall market share.  Smaller providers will continue to struggle with specialized content offerings for their customers.  Netflix and other OTT players can open up incremental market niches.  There also exists a network opportunity to reduce overall transit costs by securing peering arrangements with the providers and increasing caching high volume content.
• For everyone involved – Moving content closer to the end customer can reduce transit costs for the provider and increase Quality of Service (QoS) for the customer.  Competing on a value proposition that enables a simple delivery of OTT content, a higher quality of service on that content delivery and a greater overall suite of content offering can move a provider out of a deep discounted model and into a higher value marketing model, increasing ROI for both the service provider and the OTT player.

While the Video landscape continues to evolve, the blending of traditional linear TV service, with an existing VOD line up and an Over-the-Top partner just seems to be a match made for any living room.  Maybe working together is still the simple answer…

Todd Price

Generational Shift will impact Home Video Monitoring

Service providers are starting to take responsibility for the connected home, by default really, because the customers hold them accountable for the service end-to-end. And what they are responsible for now is only the tip of the iceberg… multi-devices and all. In a pre-IBC interview, Curtis Howe, Mariner President and CEO, is optimistic that the hill to climb to support the connected home will be offset by a younger generation of users that prefer to activate and solve multi-device issues, TV included, by themselves. More on this in September, stay tuned for a link to the article.

Tunnel Vision

Being in the IPTV industry plays funny tricks on one’s mind.  Most are quick to forget that, outside of the industry, very few people even know what IPTV is.  To the consumer, IPTV is brand names such as “Digital TV”, “U-verse TV”, “mioTV”, “OptikTV”, “FibreOp”, or simply “TV”; IPTV becomes whatever the service provider markets it as.

While IPTV professionals boast and talk about the end user’s experience and how it is a priority, it is important to remember that many end-users don’t even know this industry exists.  It’s a lot like buying a cheeseburger; you know who sells it to you, you might be able to see who’s cooking it, but you never think about who actually processed, froze and shipped that meat out.  The TV viewer knows who they’re paying for their programming, but they don’t know how, where, or who it is coming from – and the most important thing is that they never have a reason to ask.  That’s what a seamless user experience is all about; TV that just feels right, and never falters.

So what does all this mean?  It means that those of us in the B2B world of IPTV need to realize we are effectively in the B2C domain as well.  The quality of experience of the end user ultimately determines our success or failure in the industry, and this end user doesn’t even know we exist, let alone about our role in their TV experience.  Our focus needs to be on increasing quality of experience, giving customers what they want, and, ultimately, avoiding tunnel vision at all costs.

The Emergence of the 3rd Generation Telco

Telcos across North America and Europe are making significant strides towards the evolution into their “3rd generation”. This 3rd generation is being characterized by capabilities and platforms that are truly open for business in terms of applications and services.

That said, within the IPTV domain, many lingering challenges remain. The telcos, as do the cable companies, face the challenge of needing to innovate on two dimensions to remain competitive and relevant. One dimension being the products/services themselves, a never ending pursuit. The second dimension being servicing, still a source of sustainable advantage.

Check out Mariner’s video on how to best optimize the emergence of the 3^rd Gen Telco »

TV Everywhere traction

As exciting as it may be to witness the traction TV Everywhere is getting at events such as IP&TV World Forum 2011, this industry is still in its infancy. Some middleware moguls’ infrastructure lack the flexibility for Service Providers to enable remote PVR programming from a smart device while other features require so much integration that the cost-benefit analysis blow them out of the water before they even make it in an RFP. The ecosystem of companies need to develop flexible solutions to better enable SPs next best apps. If you want to hear what Marc Savoie and Mike MacNeil had to say on the topic at IP&TV WF, go to:

Mariner @ IP&TV World Forum 2011 – TV Everywhere and xVu: real time viewership analytics »

Viewership analytics across all devices

The future of video analytics and business intelligence for the TV industry is changing rapidly as the TV broadcasting world converges into IP Video – attempting to catch up with the rise of internet video/TV. The challenge once faced by Telcos is now also faced by cable companies. They too, must modernize to thrive. With the advent of IP video and OTT apps on the TV, and the continuous online chatter about TV shows via several social media applications, including across mobile devices, TV ratings will no longer rely solely on localized TV stats but also on the influence of social media on viewership. Viewership analytics across all devices – ensuring a quality of experience that transcend mediums.

Curtis Howe and Huw Price-Stephens give first hand accounts at IP&TV World Forum: Mariner @ IP&TV World Forum 2011:
In support of OTT, mobile video, video monitoring and analytics »

How Service-Assured IPTV is Helping Local Telcos Reclaim Competitive Advantage

In the ever changing communications marketplace, product and service bundles are now mandatory for retaining customers and growing revenues. TV has become a must have for telcos, large and small, to compete effectively for market share in the communications and entertainment markets.

Local telcos are unique in that they enjoy strong brand recognition amongst a loyal customer base with whom they are well-acquainted.  They are more nimble than competitors and are able to position size as an advantage as it enables them to be more responsive to customers.  Finally, with over 75% of rural service providers already delivering Video on Demand (VOD) services, for many there is already a strong base in existence upon which to build, expand, and diversify TV services.  However, to fully leverage the full potential of Video and TV, rural telcos need to address the service challenges and operating costs of delivering IPTV.

Read the full article by Marc Savoie >> How Service-Assured IPTV is Helping Local Telcos Reclaim Competitive Advantage »