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 »

The TV Everywhere MacGuffin

psychoI wrote a long-ish post for GigaOm Pro the other day on TV Everywhere headlined, Split Decision on Paying For TV Everywhere. Most of the post is behind a pay-wall but nothing in the analysis it provides would be unfamiliar to readers of The Media Wonk. The post drew an interesting response from GigaOm subscriber MichaelMcNabb. In it, McNabb offers four predictions:

 1) TV Everywhere is available as an add-on to your basic cable subscription and free for premium subscribers;

2) Hulu goes behind a paid wall;

3) Cable programmers significantly restrict availability of free content in return for an increase in affiliate fees;

4) Free to air Networks agree not to increase re-transmission fees in order to participate on new On Demand networks – including network DVR’s.

 Net result – continued shift from linear to On Demand model leaving linear channels as “barker” channels for on-demand platforms.

I have no idea who McNabb is (his subscriber profile is a blank slate). But I wouldn’t argue with any of his prognostications. Much of what we’re seeing in the debate over TV Everywhere is a business negotiation among incumbent service providers and programmers over how to divide the revenue pie as its ingredients shift. As is usually the case when incumbents are driving “innovation,” the object is the preservation and enhancement of the incumbents’ leverage, rather than actual innovation, with its potential to disrupt established business models.

“TV Everywhere,” as first articulated by Time Warner and now taken up with gusto by Comcast, is not so much an example of geniune innovation as what Alfred Hitchcock called a MacGuffin: a plot element that drives the story forward but is ultimately irrelevent to the drama. Think: the stolen cash in Psycho. It’s the reason Janet Leigh ends up at the motel. But it’s not the reason for the shower scene.

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.

Can TV survive TV Everywhere?

One of The Media Wonk’s day jobs is as an analyst and curator at GigaOm Pro, the subscription-based offshoot of the popular GigaOm web site (to which I also occasionally contribute some blatherings). On Monday, the Pro site is issuing a new report The Media Wonk wrote (subscription required) on TV Everywhere, the effort by leading cable MSOs as well as some cable programmers to make pay-TV content available online to cable and satellite subscribers.

TV-EverywhereFor those of you in the Bay Area, The Media Wonk will also be appearing on some panels at the NewTeeVee Live conference in San Francisco, where the TV Everywhere report will be distributed free to attendees. Come one, come all.

The report is a good read (if I do say so myself) on the nuts, bolts, whys and wherefores of TV Everywhere. But there’s one question I didn’t really discuss in it because anyone professionally interested in TV Everywhere has probably already answered it to their own satisfaction, and it sort of would have obviated the need for the report in the first place.

First proposed by Time Warner CEO Jeff Bewkes and quickly taken up by Time Warner Cable (soon to be a separate company), along with Comcast and Verizon FiOS, TV Everywhere is self-consciously an effort to preserve the traditional pay-TV business model as viewership shifts irresistibly away from  traditional pay-TV platforms.

Multichannel News, earlier this month:

At a National Association for Multi-Ethnicity in Communications Conference general session Wednesday, panelists said operators and programmers need to find a solution quickly, as consumer demand to access content on multiple platforms continues to grow.

Mark Garner, senior vice president of distribution, marketing and business development for A&E Television Networks, said the industry continues to face a challenge in finding the right business model to offer content on multiple screens. The current strategy taken by some networks to offer content free on their Web sites jeopardizes the current affiliate fee-based distribution model with operators that, he says, represents 45% of A&E Networks’ overall revenue.

“There’s a lot of enthusiasm for maintaining the current business model,” Garner said.

And from September:

“TV Everywhere is an all-around win for those of us who love television,” Time Warner Cable chairman, president and CEO Glenn Britt said in a statement. “It will give our customers more control over content and allow them greater access to programs they are already paying for, while enhancing the distributors’ and networks’ robust business model that encourages the creation of great content.”

Fine. But how many cases can you point to in other media businesses wherein the incumbent providers were able to sustain their traditional business models with respect to digital distribution? Not many, I’d venture to say.

Bob-IgerMusic? Fuhgetaboutit. If “record companies” survive in something like their current form (which I would call a long-shot in itself) the single revenue-stream model of selling high margin “albums” containing 10-15 songs will not be how they do it.

Movies? Ask Bob Iger.

Broadcast television? As I wrote last month for GigaOm Pro:

In addition to his Hulu comments, [News Corp. COO Chase] Carey also suggested last week that News Corp. is laying the groundwork for a battle with cable operators over retransmission consent for Fox Broadcasting content. “We need to move that business [broadcasting] to a place where we are getting fair value,” he said, according to a report on the SportsBusiness Daily web site. “You have to have conviction and do what’s necessary to do.”

What’s necessary to do, in Carey’s view, is to get cable MSOs to pay for the right to retransmit free broadcast programming. “It’s about trying to get our business to a place where it can be a healthy, long-term business,” he said. “It starts with making dual revenue.”

Newspapers? Please.

Books? Too early to tell but the pricing structure emerging for e-books suggests publishers are going to need to start thinking in terms of multiple revenue streams.

If the pay-TV companies manage to pull it off it will be notable not just for their own sake but because it would mean they had bucked the tide of both history and technology.