The Other Pay-TV Bundle

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Hulu’s virtual pay-TV service went live in selected cities this week, offering a basic bundle of 60 channels for $40 a month ($73 a month with enhanced DVR capability). The launch, still officially in beta, brings to six the number of live, multichannel over-the-top services now available, including DirecTV Now, Sling TV, Playstation Vue, YouTube TV, and Fubo TV. More are likely on the way.

But while Hulu was rolling out, many traditional pay-TV providers were rolling over. According to an analysis by MoffettNathanson analyst Craig Moffett, based on publicly reported results and estimated results for privately held companies, traditional pay-TV providers collectively lost at least 762,000 video subscribers in the first quarter of 2017, more than five times their losses in the same period last year.

“For the better part of fifteen years, pundits have predicted that cord-cutting was the future. Well, the future has arrived,”  Moffett wrote in his latest quarterly overview of the industry. “It leaves the Pay TV subscriber universe shrinking at its worst ever annual rate of decline (-2.4%). And it was the worst ever accelerate in the rate of decline (60 bps).”

The news spooked investors, who sent shares of media companies tumbling. Read More »

More Than One if Five Broadband Households Have No Pay-TV Service, Study Finds

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You don’t have to look far these days for news on cord-cutting. According to a report out this week from Leichtman Research Group the largest U.S. pay-TV providers lost a combined 795,000 subscribers in 2016. According to a report out last week from TiVo the share of cord-cutters who have dropped service within the previous year reached 19.8 percent in the fourth quarter, the highest ever registered, suggesting the phenomenon is accelerating.

In yet another report released this week, The Diffusion Group turned the telescope around and looked not at how many pay-TV households have dropped their service but at the number of U.S. broadband households that are going without pay-TV service. If anything, the view was even worse for the pay-TV industry.

According to TDG’s survey, 22 percent of the 100 million households that subscribe to broadband — some 22 million homes — do not have pay-TV service. That’s up from 9 percent of the 85 million broadband subscribers in 2011, or 8 million households, and up from 18 percent just since the beginning of 2016. Read More »

Plenty of Bundles, Not Much Joy in Linear OTT

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YouTube this week formally unveiled its long-gestating linear over-the-top services, YouTube TV, which will feature a skinny-ish  bundle of about 40 live channels for $35 a month. When it begins rolling out later this year in select cities YouTube TV will join Dish Network’s Sling TV, AT&T’s DirecTV Now, and Sony’s Playstation Vue in the linear OTT sweepstakes, and will soon by joined by a previously announced entry by Hulu and perhaps one from Apple.

As with those other services, however, the lineup of channels in YouTube’s bundle is a bit of a hit and miss affair at this point. Subscribers will get all the major broadcast networks, along with ESPN, USA, Bravo, Fox News and MSNBC, but no CNN, Turner or TBS, and no Viacom-owned networks.

Sling TV will get you CNN and Turner but the broadcast networks are only available in select markets, and again, no MTV, Nickelodeon or Comedy Central.

DirecTV Now will sell you a big bundle of 100 or so channels at the skinny-bundle price of $35 a month, but so far AT&T hasn’t figured out how to deliver it to you without its crashing. Read More »

Disney’s Split UI Personality

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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?

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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 »

The Box And The Bundle

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One of the most striking aspects of the current debate over the FCC’s proposal to “unlock” the set-top box is how shabby the public arguments are on all sides.

Chairman Tom Wheeler, who cooked up the idea, hangs his case for requiring pay-TV providers to disaggregate essential programming, navigation and entitlement elements of their service for the convenience of third-party device makers and developers on the alleged cost to consumers of renting a set-top box from their provider every month, which the proposal pegs at $231 a year (a figure others dispute). Allowing consumers to bring their own device will save them money, according to Wheeler. The White House made a similar argument in endorsing the proposal.

settop _box_openSet-top box fees are surely excessive, like the cost of pay-TV service itself. But they’re also arbitrary, just like a lot of other line items on the average cable bill. Broadcast fee? Regional sports fee? How are those calculated? The idea that requiring operators to eliminate one line item on a monthly bill full of arbitrary fees and prices will translate into meaningful cost savings to consumers seems far-fetched.

For that matter, the idea that letting consumers buy their own set-top box would necessarily result in significant savings also seems far-fetched. A TiVO Roamio goes for $600, plus $10 a month for the guide. Read More »

The Impoverishment Of Live TV

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Live programming, particularly live sports, is widely seen as the last major thread still holding together the pay-TV bundle. Apart from news, nearly all other types of programming are just as enjoyable viewed on demand or time-shifted, perhaps even more enjoyable given the prospect for commercial-avoidance.

Live events, however, especially sports, are more valuable and enjoyable when viewed in real time, providing an incentive for consumers to coachellacontinue to pay their cable or satellite bill, particularly so as more live sports programming moves off free broadcast channels to pay-TV channels.

Live sports are also increasingly available over-the-top, of course. But for the most part those streams are simply retransmissions of existing linear broadcasts targeted at fans who can’t watch the games on their native broadcast platforms either because the games are not available in the viewer’s home market or because the viewer doesn’t have access to a big screen TV at game time. Issues with Given the option, most people would still choose to watch most sporting events on their native broadcast platforms.

Recent developments in the world of live streaming hint at how that could start to change, however. Read More »

We’re All Netflix, Now

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On April 10th Showtime will make all 13 episodes of its new Steven Soderbergh series “The Girlfriend Experience” available on its VOD platform in a single, binge-ready dump. So too will Starz, with all six episodes of the new Andrew Dice Clay comedy “Dice,” as the pay-TV networks increasingly ape the strategy pioneered by Netflix.

They don’t have much choice. Bingeing is how Americans watch TV now. According to Deloitte’s latest Digital Democracy survey, 70 percent of viewers admit to binge-watching, defined as viewing three or more episodes in a single sitting, and one in three say they binge at least once a week. The average number watched during a single binge, fact, is an astonishing five episodes, which in the case of a drama series could easily eat up four or five hours. Millennials in the survey average six episodes per sitting.

We binge-watch so much TV in fact that we’re making ourselves anxious, depressed and lonely, according to a separate study by researchers at the University of Toledo. Yet our appetite is only growing. According to Deloitte, all age groups in its study binged more in 2015 than they did in 2014.

The seemingly irresistible trend, however, poses a dilemma for traditional linear networks. Making new series or seasons available for bingeing risks undercutting primetime ratings. Read More »

AT&T Prepares To Flex Its OTT Muscles

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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 »

FCC Goes Searching For A New Set-Top Box

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At a press conference following the Federal Communications Commission’s 3-2 vote Thursday to launch a formal rulemaking proceeding aimed at unlocking the set-top box FCC chairman Tom Wheeler emphasized, as he has since announcing the proposal last month, that nothing in the proposed new rules alter existing licensing or content-protection agreements  between networks and pay-TV providers or disrupt existing advertising models.

Federal Communications Commission (FCC) Chairman Tom Wheeler gestures at the FCC Net Neutrality hearingOn the contrary, he said, “the rules will require that the sanctity of the content is passed through” unaltered to any new device or app used by consumers to access pay-TV content. That includes, he went on to clarify, the network’s channel position, the content recording rules and the unadorned, original ad load.

“Nobody’s going to be replacing ads, or doing any kind of split screen, with ads on one side, or putting a frame around the content and putting ads around it; none of that,” he said. “The sanctity of the content will be preserved.”

In fact, it’s not clear from his comments what, exactly, Wheeler hopes or expects anyone to be doing with the newly open standards for set-top boxes, assuming the rules ever gets that far through the likely gantlet of lawsuits and foot-dragging  (the formal Notice of Proposed Rulemaking the commissioners voted on has not yet been published by the FCC). He took pains at Thursday’s hearing to make it sound as if nothing much would change about set-top boxes at all under the new rules apart from the manufacturer’s name plate, going so far as to put up a pair of identical slides purporting to show before and after schematic drawings of how consumers would access pay-TV content. Read More »

Unbundling The Set-Top Box

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Somewhere, Steve Jobs is smiling. Nearly six years after the late Apple CEO complained that real innovation in the TV industry could only happen if you first “tear up” the traditional pay-TV set-top box, the FCC is taking the first steps toward doing just that.

FCC chairman Tom Wheeler this week announced that the commission will vote next month on whether to proceed with a formal rulemaking to “unlock the set-top box,” if not quite tear it up, by requiring cable, satellite and telco pay-TV providers to make elements of their service available to third-party device makers and software developers.

“Today, 99 percent of pay-TV customers lease set-top boxes from their cable, satellite or telco providers,” Wheeler wrote in an op-ed published Push_button_cable_boxWednesday. “Pay-TV subscribers spend an average of $231 a year to rent these boxes, because there are few meaningful alternatives. If you’ve ever signed up for a $99-a-month bundle for cable, phone and Internet and then wondered why your bill is significantly higher, this is a big reason…This week, I am sharing a proposal with my colleagues to tear down the barriers that currently prevent innovators from developing new ways for consumers to access and enjoy their favorite shows and movies on their terms. The new rules would create a framework for providing device manufacturers, software developers and others the information they need to introduce innovative new technologies, while at the same time maintaining strong security, copyright and consumer protections.” Read More »

FCC Hitting Pause On Pay-TV Overhaul?

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For much of the past year, the Federal Communications Commission has been conducting a pair of proceedings that together, depending on their outcomes, could go a long way toward remaking the pay-TV business as we’ve known it. But at an oversight hearing before the House Energy and Commerce Committee yesterday, FCC chairman Tom Wheeler seemed to turn down the heat under both of them.

Receiving the most attention at the hearing was the recently completed report by the Downloadable Security Technical Advisory Committee Federal Communications Commission (FCC) Chairman Tom Wheeler gestures at the FCC Net Neutrality hearing(DSTAC), in particular a controversial proposal in it to require pay-TV operators to disaggregate their services into discreet components that would allow third-party set-top box makers to design their own user interfaces that could leverage elements of pay-TV services to create new user experiences (see our previous discussions of the debate here, here and here).

Republican members of the committee were sharply critical of the proposal and accused the FCC of exceeding Congress’s mandate for DSTAC in allowing the committee to consider non-security elements of pay-TV interoperability. Some members all but endorsed a competing proposal, put forth by pay-TV service providers, to adopt an app-based approach to interoperability under which service providers would, in effect, virtualize their existing STBs, complete with proprietary UIs, into apps that could be downloaded and run on third-party devices. Read More »

Cutting The Cord From Both Ends

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Depending on whom you believe and when you start counting, cord-cutting is either slowing down or it’s accelerating.

According to a new survey by TDG, the percentage of adult broadband users who are “moderately” or “highly likely ” to cancel their pay TV service in the next six months has dropped by 20 points since last year.

“Cord cutting proclivities have held steady for several years, with approximately 7% of [adult broadband users]  pay-TV subscribers moderately or highly likely to cancel their service in the six months following the survey,” TDG director of research Michael Greeson said in a statement. “In early cable_TV_not12015, however, the number declined to 5.7%. This is the first time in five years we’ve seen significant change in these metrics.”

According to MoffettNathanson analyst Craig Moffett, however, U.S. pay-TV providers lost 357,000 subscribers in the third quarter of 2015,. That was more than twice their losses in the same quarter last year, although it was down substantially from the 605,000 they lost in the second quarter of this year.

Take your pick. Read More »

The Studios Look For An Island In The Set-Top Storm

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The Motion Picture Association of America really, really doesn’t want the FCC to tear up the set-top box. So much so that its filing with the commission last week regarding the final report of the Downloadable Security Technical Advisory Committee (DSTAC) contained a thinly veiled threat of litigation should the FCC mandate disaggregation of pay-TV services into parts that can be reassembled at will, and on constitutional grounds no less.

“Mandating such a regime…could violate content owners’: 1) contracts with distributors regarding how their content may be presented, monetized, and accessed; 2)

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exclusive rights under section 106 of the Copyright Act to determine how their content is copied, distributed, and publicly performed; 3) First Amendment right against compelled speech; and 4) Fifth Amendment right against taking of property without due compensation,” the MPAA warned. “If third-parties wish to offer a subset of content, services, features, and functions rather than all the choices distributors offer customers in the way that they offer them, the appropriate course is through individualized negotiation, not regulatory fiat.”

What has the Hollywood trade group so exercised is a proposal by one faction within DSTAC, included in the final report, to require cable and satellite providers to unbundle their video feeds from other elements of their services, including the user interface, interactive features and billing, so those feeds can be incorporated into the UI of a third-party device and integrated with other video services. Only then, proponents of unbundling argue, can consumer electronics makers create devices that can compete fully with or replace set-top boxes provided by pay-TV operators. Read More »