Disney’s Split UI Personality

Walt Disney Co. CEO Bob Iger this week said he is “very excited” about the user interface Hulu has designed for its planned virtual-pay-TV service launching next year.

“We’ve seen the interface because we’re partners [in Hulu]” Iger said Wednesday at the MoffettNathanson Media & Communications Summit. “It’s a great interface, a tremendous user experience, and we’re in discussions with them about our channels and about prices.”

hulu_nocbs-1He also used the opportunity to take a swipe at traditional pay-TV operators for the lack of innovation in their UIs over the years.

“I’ve been frustrated over the years by the UI” of cable and satellite TV services Iger said. “Maybe because I’m getting older I don’t have the patience anymore, but we’re all getting more and more spoiled by what technology makes possible,” in terms of surfacing, discovering and accessing content.

According to Iger, consumers raised on digital platforms today simply won’t tolerate any glitches or difficulty in access the content they want when they want it, and the traditional pay-TV industry simply hasn’t kept up with the times. Read More »

What UI Voodoo Will Hulu Do In Linear Debut?

One of the more interesting subplots to Hulu’s apparently pending rollout of an over-the-top bundle of linear channels will be what it does with the user interface.

As I’ve noted here previously, the traditional programming grid that still drives navigation on most pay-TV systems today is at the core of the current tussle over Federal Communications Commission chairman Tom Wheeler’s proposal to “unlock” the set-top box to allow third-party devices and applications to interoperate with pay-TV services. And apart from pay-TV operators themselves, the loudest objections to Wheeler’s proposal have come from programmers, who fear those third parties will not honor the agreements networks have with operators concerning their position within the traditional pay-TV UI.

“ArmHulu_homepage’s length agreements between MVPDs and programmers provide the necessary licenses to transmit the content, and in exchange the MVPDs agree to a range of license terms, including security requirements, advertising rules, [electronic programming guide] channel placement obligations, and tier placement requirements,” the Motion Picture Association of America wrote in comments submitted to the FCC. “These terms are material to the grant of the copyright license, and to copyright holders’ ability to direct the exploitation of their works in a manner that enables them to continue to invest in the high-quality programming that viewers expect. ..The only terms the proposal would explicitly recognize are copy, output, and streaming limitations. Extensively negotiated terms on matters including “service presentation (such as agreed-upon channel lineups and neighborhoods), replac[ing] or alter[ing] advertising, or improperly manipulat[ing] content,” are all left unaddressed by the FCC’s proposal.” Read More »

AT&T Prepares To Flex Its OTT Muscles

AT&T announced this week that it plans to take DirecTV over-the-top later this year through a multi-tiered streaming service that will be available to wireline and wireless broadband subscribers regardless of provider.

The top tier, to be called DirecTV Now, will feature “on-demand and live programming from many networks, plus premium add-on options,” which sounds more or less like Dish Network’s Sling TV OTT service. A mid-level tier, called DirecTV Mobile, will offer a stripped down video lineup and a “mobile-first experience.” A third, ad-supported free tier, called DirecTV Preview, will offer a “millennial focused” grab bag of digital-native content along the lines of Verizon’s Go90 service.

cable_TV_not1The announcement itself was no big surprise. AT&T obviously didn’t spend $48 billion to acquire DirecTV just to be in the satellite TV business — a business with little if any organic growth left in it — and extending DirecTV’s business onto broadband and wireless platforms is an obvious strategy. What is a bit surprising is the timing of the announcement.

As of now, AT&T has no programming lineups to announce for any of the tiers, no pricing information and no exact start date. And according to a Wall Street Journal report, negotiations with the networks to secure streaming rights have just begun. Read More »

What’s In A Network Name? Linear TV Brands Still Looking for Traction Online

HBO added 2.7 million subscribers during the fourth quarter according to Time Warner Inc.’s latest earnings report, “about 800,000” of which, or just under one-third, came from HBO Now, it’s standalone over-the-top offering. That suggests that, barely eight months in, HBO Now has emerged as an important contributor to HBO’s overall subscriber growth.

Since HBO Now is sold direct-to-consumer at $15 a month, moreover, those subscribers are likely worth more to HBO on a revenue basis than pay-TV subscribers, for which revenue is shared with operators.

Time Warner officials pronounced themselves pleased with the results so far.

sports_centerWall Street, however, had a different view. Analysts were expecting as many as 1.4 million OTT subs by now and investors responded by sending shares of Time Warner down by nearly 5 percent.

To be fair, Warner announced its results on a day when media shares got slaughtered across the board and Time Warner’s losses were in line with other media victims. On the other hand, Time Warner’s results, along with Disney’s the day before, were major triggers for the sell-off, as investors continue to fret about subscriber losses among among cable networks as consumers cut the cord or shift to cheaper, skinnier bundles.

Disney got dinged for subscriber losses at ESPN, despite posting a record-breaking quarter on the strength of “Star Wars: Force Awakens.” Read More »

Retransmission Discontent

Last week’s meltdown among media company stocks seems to have subsided for now, but not before wiping out $60 billion in market value. Shares of Viacom fell 17 percent between August 4 and August 11; Discovery Communications and 21st Century Fox each fell 13 percent; Disney shares dropped by 11 percent; Time Warner by nine and Comcast (NBCUniversal), CBS and Starz all fell by mid-single digits.

Media CEOs complained, and many analysts concurred, that the sell-off was overdone, and that neither the actual earnings news that triggered it nor the underlying fundamentals of the business justified such a drastic repricing. It certainly wouldn’t be the first time that the market overreacted to events in the short term.

FCC_buildingIn fact, the stampede out of pay-TV stocks last week felt more like the release of pent-up anxiety among investors than a reaction to any particular bit of news. It began when Disney issued a small downward revision to its earnings forecast for its ESPN unit, which it blamed on “modest subscriber losses” from cord-cutting. The adjustment was a small one, but Disney chief Bob Iger has been among the most outspoken media CEOs in arguing that cord-cutting is a limited and manageable phenomenon, and that ESPN is well-positioned to profit from changes in the pay-TV business. If even Disney couldn’t paper over the impact of cord-cutting on ESPN, investors seemed to conclude, then maybe the problem really is as bad as we feared.

Similarly, ratings woes on linear TV channels are not new. But when Viacom reported a 9 percent drop in ad revenue from its cable networks investors seemed to take it as confirmation that even well-established media brands are losing pricing power in the advertising market. Read More »

Miscalculating movie release windows

Speaking of windows, Disney has touched off quite the firestorm in Europe over its plan to release “Alice in Wonderland” on Blu-ray and DVD just 12 weeks after its March 5 worldwide theatrical debut instead of the usual 16 to17 weeks. Holland’s National Board of Cinema Owners is up in arms, and has organized a boycott among that country’s four largest theater chains, representing some 80-85% of screens. Three top chains in the U.K. are threatening to follow suit, vowing to keep Tim Burton’s 3D extravaganza off 95% of the 3D screens in the realm unless Disney backs down.

Good luck with that. I don’t see Disney backing down on this one. It obviously picked this fight with theater owners now because it knows it has the leverage to win. “Alice in Wonderland” will be one of the biggest-grossing theatrical releases of the year, with or without wide distribution in The Netherlands, and it has “Toy Story 3” in the wings, which will be even bigger. In crude terms, the theaters currently threatening boycotts need Disney’s movies more than Disney needs their screens, and both sides know it (U.S. theater operators have more leverage, of course, which is why Disney apparently has cut some sort of deal with NATO that would let it “experiment” with windows on one or two movies a year so long as it doesn’t make a habit of it).

The real question is: why is Disney so intent on getting “Alice in Wonderland” out on DVD and Blu-ray so soon.

In an interview with CNBC last week, Disney CEO Bob Iger said the early “Alice” release would allow the studio to “put the video out before the doldrums of the summer and to put it out when the movie is very fresh in consumers’ minds.” Read More »

Is DECE about to get Lala'd? (Updated)

Updated to fix the bad link: MP3tunes CEO (and former MP3.com CEO) Michael Robertson has an interesting guest post on TechCrunch today about Apple’s emerging cloud strategy and the possible role in that strategy for Lala, the subscription music service it recently acquired. According to Robertson, the Lala acquisition does not presage the launch of a subscription iTunes service, as many have speculated. Instead, the real value of Lala to Apple is its cloud-based personal music storage service and the software for managing it:

As Apple did with the original iPods, Lala realized that any music solution must include music already possessed by the user. The Lala setup process provides software to store a personal music library online and then play it from any web browser alongside web songs they vend. This technology plus the engineering and management team is the true value of Lala to Apple.

An upcoming major revision of iTunes will copy each user’s catalog to the net making it available from any browser or net connected ipod/touch/tablet…After installation iTunes will push in the background their entire media library to their personal mobile iTunes area. Once loaded, users will be able to navigate and play their music, videos and playlists from their personal URL using a browser based iTunes experience. Read More »

Getting nowhere on TV Everywhere

The Media Wonk is en route to Las Vegas for the Consumer Electronics Show as this is being written, where I expect to be inundated with all things 3D. Between taking off from Washington, DC and a stopover in Minneapolis, however (there’s a reason Delta Airlines went bankrupt awhile back, by the way), my BlackBerry was bombarded with “urgent” communiqués from all sides of what looks to be shaping up as a nasty policy fight over TV Everywhere.

The hoo-hah appears to have started with an item in the Washington Post Monday about calls on federal antitrust regulators by various public interest groups spearheaded by Free Press to begin immediately to investigate TV Everywhere. The calls were ostensibly prompted by a “study” paid for by Free Press, which purportedly discovered that TV Everywhere is actually a plot by “giant cable, satellite and phone companies,” along with Time Warner, to “eliminate the threat of online competition,” so they can continue to gouge consumers.

“This is a textbook antitrust violation,” thundered University of Nebraska law professor Marvin Ammori, the study’s author. “The old media giants are working together to kill off innovative online competitors and carve up the market for themselves…The antitrust authorities should not stand by and let the cable cartel crush Internet TV before it gets off the ground.” Read More »

TV Everywhere needs a better Mouse trap

The Media Wonk was attending the NewTeeVee Live conference in San Francisco this past week wearing his GigaOm Pro hat, where much of the discussion focused on TV Everywhere. Comcast Interactive Media president Amy Banse made news by announcing on Thursday that On Demand Online, Comcast’s “expression” of TV Everywhere, will be available to subscribers at no extra cost “by Hanukkah,” which begins on December 11 this year.

hanukkah_dancing_sevivons_16At nearly the same moment, however, just down the coast in LA, Walt Disney Co. CEO Bob Iger was tossing a turd into the TV Everywhere punch bowl during the Mouse House Q4 earnings call by explaining to analysts that not charging consumers an extra fee to access their TV content Everywhere is a non-starter as far as ABC, ESPN, The Disney Channel and ABC Family are concerned. Disney, he made clear, expects to be compensated by Comcast and every other MSO and satellite provider for the right to distribute Disney’s cable networks over broadband:

Look, TV Everywhere is maybe an example of what we have talked about often, and that is digital technology providing us with more opportunities to reach consumers and consumers more opportunities to consume our product. And to the extent that TV Everywhere serves consumers better, we are in favor of it. However, when you serve consumers better, when you provide more convenience or more utility, you should be able to charge for that and charge an appropriate amount. And some of what we have heard about TV Everywhere suggests that interest in charging the consumer for greater access is not necessarily a priority and we believe it should be.

What’s more, he added, Disney does not intend to be bound by any subscriber authentication system distributors might come up with and will retain the right to make its cable properties available online to non-subscribers as well as Disney sees fit:

We also believe that we should still have the ability if we go to a world where there is authentication and TV everywhere for the multi-channel subscriber, we should not be precluded from offering our product directly to consumers who may not be subscribers to multi-channel services, because we believe that would — and even though there aren’t many of them, that wouldn’t necessarily be good for consumers and while we realize we are trying to serve many masters, the master that is most important to serve for us is the consumer.

The Media Wonk isn’t exactly surprised by the message. Iger had been making Disney’s lack of enthusiasm for TV Everywhere clear for months. But I hadn’t expected the gauntlet to be thrown down quite so pointedly, quite so soon, either. I had expected programmers to let MSOs get a bit more invested in TV Everywhere before springing the retransmission trap on them. But with Hanukkah less than a month off, perhaps Iger felt Comcast was far enough down the TV Everywhere road that there was nothing to be gained by waiting.

What the contrast between Banse’s comments and Iger’s reflects, it seems to me, is the potentially fatal flaw at the heart of the TV Everywhere vision: The interests of the programmers and the cable/satellite service providers are not quite aligned.

For service providers, TVE is essentially a defensive strategy: an effort to forestall cord-cutting and competition from over-the-top delivery platforms by enhancing the value of a basic subscription by including broadband access as part of a package. For programmers, on the other hand, the real upside of TVE is the opportunity it presents to squeeze the MSOs for higher affiliate fees in exchange for the expanded distribution rights. If they’re successful, that would dramatically alter the economics of TV Everywhere for pay-TV providers, and not for the better.

True, there are some programmers who seem genuinely concerned with preserving the cable networks’ dual-revenue stream business model (advertising + affiliate fees) by enhancing and protecting the value of subscribing to a pay-TV service. But that call has always been theirs to make: If you’re worried about over-the-top distribution undercutting the value of a pay-TV service don’t make your content available to over-the-top distributors. TV Everywhere is not a necessary condition to decide not to go over the top. It’s only a necessary condition if you’re goal is to scare pay-TV providers into paying you higher affiliate fees by threatening to go over the top. In organized crime circles they call that a protection racket.

Disney at least is being honest about its intentions.

amy-banse-ntvlAll of which is not to suggest that Comcast is without wiles of its own in its approach to TV Everywhere. As Banse noted at the NTVL conference, On Demand Online users will be able to register up to three different authenticated devices as access points for subscription content. That means subscribers will be able to register their laptop so they can access On Demand Online content while traveling, for instance (or, as one wag whispered to The Media Wonk at NTVL, “I’m going to bring my laptop when I visit my mother over the holidays because she’s a Comcast subscriber and she’ll never register anything, so I’ll just register my laptop with her subscription”).

The three-device rule will certainly make On Demand Online more attractive to subscribers. But it’s also a neat way for Comcast to colonize a bunch of mobile devices before some over-the-top distributor can claim the same turf with the same content. Once you’ve registered your smartphone with On Demand Online, why bother with someone else’s app, especially one you might have to pay for? TV Everywhere, in other words, is likely to set off a device-focused land grab, and it’s a shrewd move by Comcast to get a stake in the ground first.

Apple still messing with people's heads on video

For a company that has never been terribly friendly toward ordinary press coverage Apple has had a remarkably sophisticated media operation over the years when it suits Apple’s purposes. They’ve been masterful at winking, nodding and leaking just enough juicy bits to the fanboy sites and a few carefully selected mainstream outlets to get everybody hyped up ahead of new product announcements, often managing to turn not much into big news. But it has been outdoing itself lately in its manipulations around online video.

Apparently unsure what it wants to do itself in video, Apple seems to want to make sure no one else figures it out first.  So it’s sowing FUD about video industry initiatives by leaking “news” of purported video plans of its own that borders on vaporware.

apple-tv-2Last month, the Wall Street Journal broke the “news”of iDisney’s Keychest technology that will supposedly let consumers buy permanent access to movies and then retrieve them from the cloud using a variety of devices. “People in the entertainment industry,”  told the Journal “it would be reasonable to infer that Apple would cooperate with such an initiative.”

And The Media Wonk is telling you it’s reasonable to infer that it was Apple who told the Journal that. It is also reasonable to infer that the story’s appearance on the eve of the Digital Entertainment Content Ecosystem discussions in Seoul was not a coincidence. Neither Apple nor iDisney are members of DECE, which is attempting to devise a system to let consumers, well, buy permanent access to movies and then retrieve them from the cloud using a variety of devices. And it’s certainly not in Apple’s interest for DECE to succeed.

But if Apple is really on-board with Keychest, it’s a fair bet the system will be limited to Apple devices, using Apple DRM. The alternative would be for Apple to design its devices to be interoperable with others, and with other online services. I’ll believe that when I see it.

Today, Apple struck again, once more in the Wall Street Journal. This time, we’re being told that Apple is shopping a plan content owners to create a $30 per month subscription video service through iTunes “if Apple is able to get enough buy-in from broadcast and cable TV programmers.”

I’m willing to bet no actual “broadcast and cable TV programmers” have really been pitched on the idea, apart from iDisney’s ABC and ESPN networks, who I’m sure were enthusiastic. And I’m also willing to bet that the timing of the trial balloon is related to Comcast’s recent announcement that it plans to rollout its On Demand Online (i.e. TV Everywhere) service to all 24 million subscribers by January. Comcast has had strong support from the pay-TV networks for its ODO trial in 5,000 homes, but a number of those networks are on the fence about whether they want to be part of the broader rollout. Hey, maybe they should see what Apple is offering before signing up with Comcast. No wonder Comcast is so anxious to buy NBC Universal. At least then it can play the same game Apple is playing. (Does it need saying that Disney has been cooler toward TV Everywhere than other pay-TV programmers and is not involved in the Comcast test?)

Everyone would be better off if Apple just figured out what it wants to do in video so the rest of the industry can get on with business.

iDisney

One of the more interesting subtexts to the battle between Disney and Sony Pictures over the work of the Digital Entertainment Content Ecosystem consortium (DECE) is the degree to which the studios have come to resemble each other. Sony Pictures has long been a captive of Sony Electronics. Decisions on what technologies or which formats to support are not made independently by Sony Pictures; they’re made by Sony Corp. in accordance with Sony Electronics’ technology or device strategy. That’s why Sony bought Columbia Pictures and CBS Records, after all: to be sure it had content to feed its devices.

steve_jobs_mouseketeerIn Disney’s rejection of DECE we see a similar dynamic at work with respect to its technology master, Apple. The parallel isn’t exact; Apple doesn’t literally own Disney. But Steve Jobs is Disney’s largest individual shareholder and sits on its board of directors. He obviously has a loud voice on what technologies and which formats Disney supports.

How do I know Apple is a factor in Disney’s DECE stance? I don’t have direct knowledge of it, of course. And I’m sure Disney executives would sputter and fume at the allegation. What makes it a reasonable conclusion, I think, is that there is no obvious or compelling reason for Disney not to support DECE, at least officially, if not enthusiastically.

I can see lots of reasons to be skeptical of DECE. It’s already taking too long to produce results and it’s likely to require so many compromises as to be only marginally useful at best. But I don’t see a big downside for a studio in keeping a hand in. It could, of course, turn out to be a waste of time, but the studios waste time on inter-industry groups all the time. Disney Home Entertainment president Bob Chapek has, himself, served as chairman of the Digital Entertainment Group, for instance, which is a complete waste of time, to say nothing of the $10,000 per company in dues. It’s possible the work of DECE could lead to something useful, which can’t be said of the work of DEG. I don’t see the downside to a studio from being involved, or the upside in trying to scuttle it.

Apple’s opposition to DECE, on the other hand, makes perfect sense. Apple has never believed in device interoperability, unless they’re all Apple devices. And it has done very well by following that strategy, as its Q3 earnings report this week makes clear. But a large part of Apple’s success in the device business has also come at the expense of content owners, as the music companies can explain (Disney, of course, was the first studio to sign a deal with iTunes). DECE’s success would be Apple’s failure. But it’s hard to see how it would harm Disney, were it not for Steve Jobs’ interest.

comcast-nbc-monopolyAs is happens, another major studio, NBC Universal, could soon come under the control of another technology company, Comcast. Comcast’s interest comes at a time of technological upheaval in the pay-TV business, and Comcast officials have made no secret of their desire to control the technological exploitation of NBC’s content assets, particularly its cable networks.

Should a Comcast/NBC deal come to pass, three of the six major studios will be controlled — if not literally owned — by technology companies with distinct agendas regarding the evolution of media business. Rather than playing kingmaker among technology providers as in the past, the studios are becoming the pawns.

Dear Sony, F@%K You, Love, Apple

Fascinating story in the Wall Street Journal this morning about a new digital delivery system for movies being pushed by Disney. Fascinating not just for the ostensible news it contained — Disney hopes to replace lost DVD revenue with a new system  for letting consumers access movies across multiple digital platforms called Keychest –as for the timing of its appearance and its sourcing. Clearly, this was a torpedo sent by Apple and aimed squarely at Sony.

The backstory: Sony is the driving force behind the Digital Entertainment Content Ecosystem (DECE), a consortium comprised of five major studios and several technology company, and chaired by Sony Pictures exec, Mitch Singer. DECE’s goal is to create a system to, well, let consumer access movies across multiple digital platforms. Though progress has been slow, work has continued. In fact, DECE principals are scheduled to meet Thursday in Seoul, Korea, for the next round of talks. When the WSJ story appeared here on Wednesday, of course, it was already Thursday in Seoul.

grenadeAmong the companies conspicuously missing from the DECE consortium are Apple and Disney. Apple, in particular, has shown no interest in cooperating with an industry-wide standard, perferring to go it alone when it comes to digital delivery. And Steve Jobs, of course, is Disney’s largest individual shareholder.

It’s pretty obvious that the story in the Journal  was planted by Apple and Disney and intended to blow up any progress DECE was thinking of making over in Seoul this week. How do we know Apple was involved? Because Apple went out of its way to make sure people knew where the story was coming from.

 According to the story, “people in the entertainment industry say it would be reasonable to infer that Apple would cooperate with” Disney’s initiative.  By “people in the entertainment industry” it would be reasonable to infer the reporter means “people at Disney” and possibly even people at Apple. As a reporter who has covered the entertainment and technology industries for many years, I can assure you that Apple almost never, ever cooperates on stories like this, even on background. For that sentence to be in there, someone at Apple had to either provide it directly or give the green light to someone at Disney to pass it on to the Journal.

Oddly, Disney Home Entertainment chief Bob Chapek more or less gives the game away by admitting the studio doesn’t expect Keychest, “to deliver tangible financial results for five years.” Apart from being a stupid thing to say in the Wall Street Journal, it also telegraphs the strong likelihood that Keychest isn’t quite as ready for primetime as the planted story tries to make it appear.

Nope, this was a hand grenade, rolled into the meeting room in Seoul, to inflict maximum damage.

Disney wins the race to be third on Hulu

In Hollywood, there’s always a race to be the third studio into any new platform, format or distribution channel. No one ever wants to go first, because it usually means pissing off your existing distribution partners, some of which (Wal-Mart) have the leverage to make their displeasure hurt. Going second is okay, but you still take some heat and you look like you’re just me-too-ing the leader. The best place to finish is third. Read More »