Paul Sweeting

Reinventing TV For Cord-Nevers


At his Streaming Media blog, Frost & Sullivan analyst Dan Rayburn adds a new wrinkle to the ongoing debate over why Amazon kicked Apple TV and Chromecast products out of its online store. According to Rayburn’s sources, Amazon has been chatting up content owners about offering a live, over-the-top video service of some kind.

Rayburn speculates that such a plan could help explain why Amazon recently acquired the cloud-based live streaming platform provider Elemental Technologies at an unusually high valuation:

cable_TV_not1Insiders say Elemental is on a run rate to do close to $100M in 2016. So if the rumors of Amazon valuing Elemental at $500M are correct, Elemental is getting about 5x projected 2016 revenue, a rather high valuation, unless Amazon is also placing value on them for other reasons, like the ability to power their own live OTT service.

I’ll add another data point in support of the notion: Twitch, which Amazon acquired last year for close to $1 billion. As noted in a post here last week, Twitch is rolling out a new set of tools to help its broadcasters linear-ize their channels, by mixing live and on-demand content and creating playlists that turn the channel into a 24/7 experience.

Clearly, Amazon sees opportunity in providing live, linear and over-the-top video services.

Here’s another data point: Amazon has expressed concern to the FCC that its over-the-top video plans, and in particular its evolving channel strategy for Twitch, could end up getting it regulated as a multichannel video programming distributor under new rules being considered by the commission.

Here’s what Amazon told the commission on the subject last month, according to an ex parte filing:

The parties also discussed the Commission’s pending proceeding to alter the definition of “multichannel video programming distributor” (“MVPD”). We explained that competition and innovation in all sectors of the video content and distribution industry, including “over the top” (“OTT”) services, today is vibrant and growing, with many companies offering content through multiple devices and delivery technologies and investing in high quality programming, all to the benefit of consumers. We discussed how this investment in new creative and award-winning content by multiple companies, which is attracting a large and growing viewership, is occurring naturally in the marketplace, with little or no government involvement. In view of this dynamic, healthy, and rapidly changing technological and competitive environment, we questioned the need for government intervention in this market segment, expressing concern that the rules proposed by the Commission would inhibit innovation by imposing on OTT services regulatory burdens created long ago that are neither relevant to nor tailored to address this new vibrant industry…

We also cautioned the Commission to be mindful of potential unintended consequences arising from an expanded definition of MVPD. For instance, Amazon owns, a live streaming video service focused on video gaming. Content on Twitch can be viewed live (i.e., on a linear basis) or on demand. We raised the question whether Twitch could be considered a “channel” under the Commission’s proposed rule, thereby making it an MVPD subject to regulation. If so, we noted how such unintended consequences could be highly damaging, inadvertently causing the government to significantly distort a new and alternative video segment that is growing and flourishing without any government intervention.

“New and alternative video segment” you say?

As I speculated at the time, Amazon’s acquisition of Twitch seemed to be less about video gaming per se than about building the next-generation TV platform. And nothing Amazon has done with Twitch since then suggests anything else.

According to a study out this week from Forrester Research, cord-nevers — those who have never subscribed to a traditional pay-TV service — make up 18 percent of the U.S. population today, a larger share than have cut the cord. Forrester projects that by 2025, half of all Americans under 32 will not pay for TV under the current model.

That doesn’t mean they won’t be consuming a lot of TV content, however. “While older cord-nevers understood that they would have to live without access to some of the best programming by forgoing pay-TV service, younger digital cord-nevers have grown up believing that they can have all of the TV they want without paying a traditional TV distributor for it,” Forrester analyst James McQuivey wrote in the report.

As it happens, the overlap between those under-32’s that won’t be paying for traditional TV service and Twitch’s core demographic is likely to be quite high. If TV programmers want to reach those folks  without pay-TV cords, Twitch is where they’ll be.

Programmers won’t be reaching them on Twitch on the same terms as through Comcast or DirecTV, however. For starters, the user-generated style of broadcasting on Twitch is a very different animal than traditional TV broadcasting — more interactive, more engaging, more social. More to the point, the audience is already there, amusing itself with games.

Unlike traditional pay-TV distributors, who must depend on programmers to create value for their service, Amazon will bring a large and growing worldwide user-base to the table with it in any discussions it may eventually have with TV programmers about reaching the Twitch audience. That’s likely to make for a very different sort of negotiation than TV programmers and broadcasters typically have with traditional pay-TV providers — more like the sort of negotiations Amazon has today with book publishers.

All of which adds some more color to Amazon’s banishing of Apple TV and Chromecast. As discussed in a previous post here, Apple is trying to position Apple TV to develop into a vital platform for programmers and content owners — one in which they need position within the Apple TV UI as much as Apple needs them. Even more than market-share considerations for their respective set-top boxes, Apple’s aspirations Apple TV represent fundamental strategic competition for Amazon’s ambitions. Insofar as Apple needs to build up the install base of the new universal-search powered Apple TV UI to have value to programmers, Amazon has no reason to help it.

As for Google, it came within a whisker of buying Twitch itself before Amazon swooped in a snatched it away. So Amazon is well aware of Google’s interest in live, over-the-top video services. Google has now launched a direct challenge to Twitch in YouTube Gaming, which, like Amazon’s acquisition of Twitch is less about gaming than about building a broadcast audience online. While Amazon can’t banish YouTube it has no reason to help Google bolster its position in the living room by helping it sell Chromecast dongles.

As other commentators have noted, Amazon is flirting with legal danger by using its dominant position in consumer electronics retailing to gain leverage in an upstream market. But that may also be a measure of how high it sees the live, linear and over-the-top stakes to be.



Rayburn: Content Owners Say Amazon Is Considering A Live OTT Streaming Service 

Considering Amazon already offers an on-demand Prime Video streaming service, it’s would not be surprising that they would also look at the economics of offering live content, just like every other OTT provider is probably doing. But what makes this Amazon story even more interesting is that Amazon recently agreed to acquire Elemental Technologies, a company that offers a cloud-based platform for ingesting, encoding, protecting and packaging live linear streams.

Source: Content Owners Say Amazon Is Considering A Live OTT Streaming Service – Dan Rayburn –

The FCC has turned down one of the first business complaints under net neutrality 

CNS’s chief executive, Barry Bahrami, argued that Time Warner Cable was demanding an unacceptable toll to transport the video traffic to viewers’ computers and mobile devices, even as other Internet providers were carrying that content for free. But legal experts cast doubts on Bahrami’s complaint because the net neutrality rules don’t explicitly prohibit companies from negotiating private carriage agreements for so-called “interconnection.” They merely give the FCC the ability to probe deals that it finds

Source: The FCC has turned down one of the first business complaints under net neutrality – The Washington Post

Forrester: Half of Consumers Under 32 Won’t Pay for Cable by 2025

An online survey of 32,000 U.S. adults found that 76 percent subscribe to cable. Of the 24 percent who don’t pay for cable, 18 percent are cord-nevers—people who have never paid for a cable subscription—while 6 percent are cord cutters, meaning they have canceled their cable subscriptions. The report notes that this year, digital cord-nevers have surpassed cord cutters and represent “the next stage of evolution in TV viewing.”

Source: New Study Says by 2025, Half of Consumers Under 32 Won’t Pay for Cable | Adweek

25 Percent of Instagram’s Top Accounts Are Music-Related

According to Instagram CEO Kevin Systrom, music has become a very important aspect of the photo-intensive app, which is exactly what’s happened on other social networks like Twitter, Facebook, and Vine.  “We never knew music would take off in the way it did but now 25% of our top [most followed] accounts are music related,” Systrom told BBC’s Newsbeat.  “We realized there’s this whole community of interesting bands and musicians on Instagram so that’s what the [@music] account is all about”.

Source: 25 Percent of Instagram’s Top Accounts Are Music-RelatedDigital Music News

Pandora Buys Ticketfly, a Competitor to Ticketmaster 

Pandora announced early Wednesday that it would acquire Ticketfly for $450 million, in a mix of cash and stock. The deal further expands Pandora’s interests in providing services to artists. Last year, it introduced a data system, the Artist Marketing Platform, or AMP, that shows musicians which songs are most popular on the service and where. And in May, Pandora bought Next Big Sound, another data service, which studies the listening and online searching patterns of streaming music customers.

Source: Pandora Buys Ticketfly, a Competitor to Ticketmaster – The New York Times

Tech Giants Likely Safe From Europe’s ‘Safe Harbor’ Ruling 

European regulators blocked a key pipeline on Tuesday that tech companies use to shuttle data across the Atlantic. It’s an annoyance for Silicon Valley giants, like Google, Apple and Facebook. But it’s a much bigger deal for smaller tech companies that rely on that data for their business.

Source: Tech Giants Likely Safe From Europe’s ‘Safe Harbor’ Ruling | Re/code

Stage Ten to expand beta for live-streaming e-sports platform 

Two weeks after announcing its intentions to launch a new live-streaming platform for e-sports and gaming, digital studio Stage Ten has expanded its free beta program to more users as the company continues to shift its client focus from traditional broadcasters to the e-sports and gaming crowd.

Source: Stage Ten to expand beta for live-streaming e-sports platform » StreamDaily

Sling TV to launch Campus Insiders sports channel 

The channel will provide access to hundreds of live college sporting events, including the inaugural NOVA Home Loans Arizona Bowl. Campus Insiders will be accessible on all devices supported by Sling TV as part of the $5 per month Sports Extra pack, available to customers who subscribe to the Best of Live TV core package.

Source: Sling TV to launch Campus Insiders sports channel | OTT | News | Rapid TV News

Wall Street Is Totally Unimpressed With Streaming Music

The biggest issue right now is happening in Paris, where a problematic Deezer is trying to go public.  As part of its IPO filing, federal law mandates the filing of financial and company data, a move that is exposing some serious issues with the world’s second-largest streaming service.  Chief among them is the lack of actual ‘subscribers’: according to IPO filings, roughly half of Deezer’s claimed 6.34 million subscribers haven’t even accessed a single song in the last month, while only 1.54 million are paying full fare.  “This could be ugly,” one major label executive observed.

Source: Wall Street Is Totally Unimpressed With Streaming MusicDigital Music News

M&A Market For Media/Technology Near Strong Pre-Recession Levels

Large media deals announced during the period include Verizon’s $4.8 billion deal for digital media company AOL; Media General’s $3.1 billion acquisition of media company Meredith; Expedia’s $1.7 billion purchase of online travel site Orbitz; and LinkedIn’s $1.5 billion deal of, a provider of online educational videos.

Source: M&A Market For Media/Technology Near Strong Pre-Recession Levels 10/06/2015