October, 2010

The time for the networks to fish or cut bait on OTT video is fast approaching

Over-the-Top Video On one level, it’s neither surprising nor inappropriate that the broadcast networks would try to block Google TV from accessing their free streamed content at this point. Google is looking to build a new business for itself, after all, by leveraging the network’s content and it makes perfect sense that the networks would want to secure a piece of that action before getting with the program. Striking now, moreover, when almost no one has Google TV yet and there’s no risk of angering a large number of viewers with the black out, is simply smart tactics on the networks’ part. Their leverage with Google will only diminish with time and the growth of Google TV users.

Yet on another level, there is something fundamentally untenable in the networks’ whole posture. While it might make sense for the networks to want to carve out a piece of Google’s future TV ad revenue for themselves, their real issue with Google TV concerns their relationships with incumbent service providers. Cutting a deal with Google for a piece of the ad pie isn’t going to resolve that deeper problem. Read More »

Fox and Cablevision partner on TV Nowhere

Cable TV Perhaps Fox has calculated that Congress or the FCC will soon change the rules regarding must-carry and retransmission consent in any case, and the current round of negotiations with cable and satellite distributors will be the high water market of their leverage. So they might as well go for broke now. If it’s to be downhill from here, might as well try to set the baseline as high as possible now.

Such a calculation might explain why Fox would risk the wrath of regulators — to say nothing of viewers — by letting Channel 5 go dark for Cablevision’s 3.1 million viewers in the New York area on the eve of a NY Yankees playoff game and an important mid-season match for the NY Giants. Maybe Fox thinks this fight really is for the ages and so it simply has to win it. Read More »

NBC dumps Google’s TV ad network; a sign of things to come?

Google TV The first Google TV-enabled devices haven’t even hit stores yet but the technology may already be shaking things up in the TV business. On Wednesday, Adweek reported that NBC Universal has discontinued the ad-sales partnership it formed with Google two-plus years ago.

“We’re not currently contributing inventory into the Google marketplace, but we continue to work with Google on multiple projects involving advanced advertising,” NBC said in a statement.

In a separate statement, Google added, “While we are no longer offering NBC Universal inventory through Google TV Ads, NBC Universal continues to be a great partner to Google. Both NBC and Google are committed to bringing more relevance to TV viewership and advertising.” Read More »

Three-strikes whiffs in Ireland

Three-Strikes Three-strikes will not be coming to Ireland. A High Court there on Monday ruled that it did not have the authority under Irish law to order an ISP to disconnect subscribers caught repeatedly downloading copyrighted content illegally. Any attempt to amend the law to give courts that authority, moreover, would likely not be enforceable in Ireland because it would conflict with European Union copyright directives, the court said.

The ruling is a major blow to the Irish Recorded Music Association (IRMA) which had brought the case against UPC, the Emerald Isle’s third-largest ISP, seeking to force it to adopt a strict three-strikes regime. Although the judge in the case, Mr. Justice Peter Charleton, made it clear he found UPC’s existing  anti-piracy efforts wholly inadequate to the task, he nonetheless found that “The Copyright and Related Rights Act 2000… has made no proper provision for the blocking, diverting or interrupting of internet communications intent on breaching copyright.” Read More »

I want my tablet TV

Tablets Considering the well-earned skepticism that clings to Microsoft in the mobile arena the introduction yesterday of Windows Phone 7 (WinPho 7? WinPhoSev?) is getting very solid notices. But it didn’t do media producers any favors by optimizing the new mobile OS for smartphones at the expense of tablets. According to Microsoft, there are no current plans to port WinPho 7 to tablets. Instead, the company will continue trying to adapt full-blown Win 7 for the tablet form factor.

There may be sound strategic and technical reasons for Microsoft’s decision. It needs to get the mobile phone OS category right this time and trying to focus on tablets as well could be a distraction. It may also be, as Microsoft claims, that at some point in the future people really will want tablets that can run more PC-like applications than Apple’s iPad can support, requiring a bigger OS. But for media companies looking for an alternative to Apple-captivity in the tablet category today, it has to be disappointing news. Read More »

Why don’t Hulu’s parents love it?

Online Video It may be time to call Child Protective Services about the ongoing abuse of Hulu. As they did twice before with Boxee and Kylo, Hulu’s broadcast parent companies have forced the JV startup to block access to the site by Google TV. Why? Because they still don’t want Hulu playing in the living room.

NBC and Fox launched Hulu with much fanfare in 2008 (later joined by ABC) to let viewers watch ad-supported TV shows for free on their PCs using a standard web browser. But when Boxee, Kylo and Google took the next logical step of sticking a browser in (or on) the TV the networks panicked, worried over what their friends in the cable TV business might say. So they suspended Hulu’s TV privileges. Read More »

French disconnections

Three-Strikes As the Obama Administration begins thinking about how a “voluntary” system of graduated response to online copyright infringement might work in the U.S., the real-world experiment currently underway in France is serving up some potentially invaluable object lessons. Of particular note is the importance of taking into account the competitive implications of such a system to ISPs. It also helps to make sure all “T”s are crossed and “I”s are dotted in any agreement the parties might work out.

As I noted in a previous post, one French ISP, Free, has refused to cooperate with HADOPI in forwarding  emails to its subscribers suspected of illegal file-trading, warning them of potential legal consequences if they don’t knock it off. While Free claims its non-cooperation is a matter of principled objection to the law, other ISPs see it as a naked grabfor market share. Read More »

Obama Administration begins work on DMCA 2.0

Copyright The Commerce Department issued its promised Notice of Inquiry Tuesday seeking comment from various stakeholders on how to improve the protection of copyrighted works on the Internet and “the relationship between copyright law and innovation in the Internet economy.” According to a press release on the department’s website, the comments gathered from the NOI  “will be used by the Internet Policy Task Force in preparing a report that will contribute to the administration’s domestic policy and international engagement in the area of online copyright protection.” Comments are due Nov. 19.

While the NOI is not related to any specific regulatory or legislative proposal at this point, it’s clear from the questions it poses that the administration is taking a hard look at whether the safe harbors established for service providers by §512 of the DMCA and §203 of the Communications Act really are getting the balance right between “copyright law and innovation in the Internet economy.” Read More »

First strikes called under French three-strikes law draw brush-back

Three-Strikes After several false starts, the first emailed warning letters to French Internet users suspected of downloading copyrighted content illegally have now gone out, marking the beginning of a new enforcement regime that content owners hope will put a significant dent in the amount of infringing content available online in that country. The letters, which began going out Oct. 1, were sent by ISPs to subscribers identified by their IP addresses, under orders from France’s Haute Autorité pour la diffusion des oeuvres et la protection des droits sur Internet (High Authority for the dissemination of works and the protection of rights on the Internet), which was set up to administer the new law.

The form letter alerts the recipient that “your internet connection has been used to commit legally-noted acts that could constitute a breach of the law.” It goes on to warn of further consequences if they don’t cut it out. A third offense can lead to the user being referred to a judge, who will have the authority to impose a fine or to cut off the user’s Internet access for up to a year. No word yet on how many letters have actually gone out. Read More »

Is the tablet race already over?

Update: Not only is the iPad running away with the tablet market before others are out of the starting gate, it’s running away with the the consumer electronics business. According to a report by Bernstein Research, the iPad adoption rate is now the fastest ever for a CE product , surpassing the DVD player.

Tablets Things are not looking good for would-be iPad competitors. It now seems likely that promised Android tablets will miss the holiday season, as both Google and OEM’s work to refine the operating system that even Google admits is not optimized for tablets, while Microsoft can’t seem to get out of its own way in mobile.

The iPad, meanwhile, continues to add to its retail leverage for the holiday season, going on-sale Monday at Target stores and Amazon.com in addition to Best Buy locations. Speculation is that Wal-Mart will be next. Read More »

Netflix starting to take it in the shorts

Streaming Video What goes up must come down. After hitting an all-time high of $173  last month in the wake of the Blockbuster bankruptcy filing, shares of Netflix have begun to fall to earth. As of Friday’s close, the stock was off more than 10 percent from its peak. Short sellers are piling on. According to FactSet Research, short interest in Netflix shares has risen 64 percent since June and now represents roughly one-third of its float. UBS Securities and Susquehanna Research recently downgraded the stock.

High-flying stocks ofter provoke a backlash, and that’s no doubt part of what’s causing the shift in sentiment on NFLX. The shares are currently trading at 42X forward P/E and 63X trailing — sky-high even for a growth stock. But a more comprehensive bearish narrative has also emerged lately, which holds that as Netflix’s business shifts from mailing out DVDs to streaming it is increasingly exposed to direct competition from the likes of Amazon, Google,  Best Buy and Comcast, all of which have much larger financial resources than Netflix and generally operate in more favorable release windows. That will lead to slowed subscriber growth for Netflix, higher content acquisition costs, lower prices and ultimately margin compression, according to the bears. Read More »