The topic of cord cutting is always an interesting one, one that waxes and wanes across technology and media outlets over time.  In all cases, there are compelling arguments for cord cutting, and just as compelling ones against it.  I thought I’d opine a little on the topic.

1) Cord cutting is undeniably on the rise.  But how much is the real question. First, it’s important to acknowledge this is after the longest run of cable sub GROWTH we’ve ever seen. We hit the peak last year , and are now backing down to some other plateau – but i’m far from convinced we’re heading to an abysmal valley.  We might see decline continue for several quarters, but realistically – the rate of decline is virtually meaningless against the business operations of most Pay TV providers.

2) How economic recovery is a factor. This may sound counterintuitive, but I believe much of the decline in subs is related to post-recession recovery – yes, recovery.  The #1 thing people spend money on in bad times is home entertainment – its much cheaper to go up to a premium cable package than go to the movies.  Now that the economy is doing better, people are reallocating their spend, and choosing to be entertained outside of the home.

3) Cord cutting isn’t inherently disruptive, but it could tangentially be part of a massive change in the industry.  Here’s a “major impact” possible outcome: breakdown of geographic/regional MSO barriers.  Traditionally the only way for a Pay-TV Provider like Comcast/TWC to expand was via acquiring local providers (of which there are still ~12000 in the US alone, jfyi).  As we see these companies increasingly offer TV Everywhere and app-based offerings (on Apple TV, Roku, Smart TVs, iPads, and Web Browsers), it *must* be tempting for them to start figuring out how to legally encroach without boundaries.  I believe this must happen over time, and will be the “singularity” that most disrupts the ecosystem as it exists today.

4) Awesome hype: I was recently discussing cord cutting with a reporter, and one thing that emerged from the conversation is the realization that nobody in the media is going to write a blog post/article entitled “TV: Doing Great!”.  It’s not interesting, not dramatic, and wouldn’t get page views – therefore isn’t news.  But to be the canary in the coal mine – now that’s enticing!  So we have a heap of prominent news outlets with articles written by people who don’t necessarily fully get the industry they are writing about (no offense intended – this is one of the most complicated industries to even attempt to understand!) AND are *incentivized* to write dramatic/sensational headlines.  “Death of TV” is a good one, “Nobody’s Cord Cutting At All” is not.

5) Live TV is well-loved, and awesome – even if you don’t watch it. I find an amazing correlation between people who believe cord cutting is huge and also think everybody in the world has seen House of Cards, and in fact they all watched it opening weekend.  It leads to a terrible bias about how individuals perceive most TV audiences, which are nowhere near accurate.  The truth in TV watching comes down to this: even in households WITH DVRs (not the majority of US homes, btw), over 50% of TV watching is done live.  Now I personally cannot fathom that behavior, nor the desire to watch 4.5+ hours per day of TV – but it’s still more accurate than someone like myself, who watches virtually everything on my own schedule (and device of choice).

6) MSOs will do just fine even if cord-cutting emerges more significantly.  These companies have spent a few decades with a lot of CapEx which has now enabled them to create new value-added services. Voice, for example, became a multi-billion dollar business for Comcast, with NO SIGNIFICANT investment whatsoever.  Now they are looking toward: Home Security, Home Automation/Monitoring, increased Communications, etc.  The revenue that fades (if any) from TV will shift to Internet and other value-added services.

7) The real damage is to Broadcast Networks. If you really want to analyze the business impact, it’s essential understand the revenue flow and content itself.  Even in a cord-cutters utopia, with all of everything available fully on demand (and free, if I get them right), the content is still king. So in this utopia, however the business model works, it seems like the companies whose role is buying shows and distributing them to cable networks will need to find a new raison d’etre.  We’ll still need Internet, and we’ll still want stuff on demand – those two functions alone necessitate a service provider.

8. Cord Cutting Paradise might really be more Hellish. Pretty much every analysis on the topic shows that a la carte pricing and unbundling will cost consumers more than it saves them.  Again, for everyone reading this who thinks most people are like them, and only watch two shows at a time, all marathon/binge-style – you are in the extreme minority of audiences.  Buying, for example, Game of Thrones on iTunes goes for roughly $39/season.  Or you can upgrade to get HBO (which typically comes with a bunch of other channels), and get all 3 seasons, and the entire back catalog of HBO originals for (depending on provider) typically $10-20 (or more) per month.  It’s a good deal.  For a household of 4, who watch 4.5 hours per day (on multiple TVs in multiple rooms, plus their mobile devices), that’s 540 viewing hours per month (or more) – so if you pay $100/month for TV, it’s averaging under a quarter an hour. Not too shabby.

9) One more thing on the “great unbundling” of TV.  I’ve read numerous reports about how a variety of ambitious startups and tech ventures are negotiating with Hollywood to offer TV in different forms.  Sounds good in theory, and follows a very Google-like logical argument around content, but flies in the face of business interests and, more importantly, long term multi-billion dollar contracts.  The “big” service providers (Comcast, etc) all have “most favored nation” style clauses with the broadcasters that utterly prevent anyone else from buying it any cheaper.  So for anyone to offer it cheaper, they will likely do so at extreme loss.  Literally, any vision of any other type of offering is an unrealistic fantasy, and I cannot possibly imagine how it happens.

Looking forward to thoughtful replies in the comments!

Want to know how to “kill” the traditional TV industry?  It’s easy.  Come up with a cash flow of roughly $70 billion.  That’s it.  Pure and simple.

The thing about it, that so many people out there seem to not grasp (which frustrates me to no end, I must say), is it takes about that much money to maintain the rough production costs (and profits) for all the shows we love to watch.  See, we all know that there’s some perfect blend between Live TV broadcasting and an all-streaming/on-demand library (neither end of the spectrum are “correct”), but we don’t know how to get there.  Meanwhile, everyone wants to talk about killing/disruption the TV ecosystem. So let’s talk about the cold hard facts of this world:

TV Shows Are Expensive to Make. While new technologies across the spectrum certainly reduce many aspects of production, if you want a Game of Thrones, House of Cards, Mad Men, Breaking Bad, etc type of show, you need sets, lighting, etc.  We *cannot* get around that statement in any way.  So regardless of the surge in lower cost reality shows, if you enjoy quality dramas/comedies for 44/22 minutes at a time, you need a budget.  Unless you can get all the actors, directors, writers, key grips, etc to take a big salary haircut, this will not change.

Advertising Pays The Bulk of it. Other than fine shows from HBO, Showtime, Netflix, and a handful of others, the wide array of money that covers costs of TV shows comes from the $70(+) billion ad industry.  There is no model, from subscription to a la carte to anything else that can easily replace this cash flow as far as I am aware, but if so, I’m sure we’d all love to hear about it.

victoryag.org Advertising Models Are Based on Live/Near-Live Viewing. Another tough, but true, fact about the existing ecosystem is the revenue is predicated on live audiences.  While I love catch-up and streaming as much as anyone, it does not contribute to the bill-paying.  For this to change/shift/be disrupted, the massive amounts of people, and money, all have to come up with an entirely new model for their world.  Again, even if we know there’s a desire/trend toward a decrease in live viewership, nobody, anywhere, has come up with a successful alternate structure here.

So the TL;DR version of the above: TV Shows Cost a Lot Of Money, and the Only Way to Pay for them is Advertising, and the Only Way Advertisers Spend Money is on Live Viewing.

If you want/expect the above statement to change, get ready for more ads in your streaming – lots of them.  Like 8 of every 30 minutes worth.  That’s what it takes.

While we’re at it, I just want to add two topics regarding the discussion around TV disruption:

Pay-TV Operators Have an Arbitrarily Bad Rep. It’s easy to blame Comcast, ATamp;T, etc for anything and everything, but they should not be pointed to as “the problem” of television.  Yes, they have their part to play, but when you consider the fact that someone has to send people into homes to repair lines, answer customer service calls, etc, there is always going to be an easy enemy.  And as much as our cable bills have risen dramatically over the past two decades, the cost the operators are paying for content have risen *more* dramatically, and those costs are not entirely being passed along to consumers.  I’m not defending anything about Pay-TV providers, but I’m also not in agreement that they are “bad” and everyone else is “good”.

Most Startups Are Clueless About the TV Industry. Yes, that probably sounds harsh, but considering the quantity of companies who spring out of nowhere and want to disrupt or change things, it amazes me how few of them actually take the time to learn enough about the world and business they are getting into (read Mike Wolf’s solid piece on this here).  This is important because the “TV Industry” is actually an amalgam of many industries, from service providers, content production, distribution, studios, data, etc.  It’s easy to say “TV Industry” but in reality, we shouldn’t say it at all – it’s isn’t “an” industry, it’s many.  My tip to startups: pick one specific sub-industry you want to get into/go after/change/kill/whatever, and go learn how it *really* works.

So there you have it, your simple recipe for how to disrupt the simple world of television.  Good luck with that.

TL;DR version: “Pinterest meets Evernote meets TV Guide” 🙂

Today we introduced NextGuide Web. NextGuide Web is a new site that helps people find and explore TV shows and movies and see what their friends recommend and watch. The site lets users discover and watch shows on live TV and popular streaming services including Amazon Prime, Amazon Instant Video, iTunes, Hulu Plus, and Netflix.

What can you do with it?

Single Search – No more need to browse site after site to find your favorite show on a streaming service – search once on NextGuide for combined live and streaming results.

Universal Watchlist and Queue – No need to maintain unique queues on all your favorite sites, just create one list at NextGuide for anything you’d ever like to see.

Automatic Reminders – For any show or movie, set a reminder and NextGuide can email you whenever there’s a new airing on live TV or any streaming service.

One Click to Watch amp; Record to DVR – When browsing shows, NextGuide includes direct links to watch on streaming services, or queue recordings to your home DVR (note: DVR features only for Comcast and DIRECTV subscribers at present).

Social Recommendations – Easily discover what shows and movies your Facebook friends are Liking, and get recommendations from other people who watch similar shows and movies as you do.

For an example, here’s my personal TV profile on NextGuide.

Here’s some of the other coverage about NextGuide Web.

VentureBeat: http://venturebeat.com/2013/05/20/dijit-launches-a-web-version-of-its-nextguide-app-tv-utility/

TechCrunch: http://techcrunch.com/2013/05/20/dijit-nextguide-web/

Robert Scoble : http://www.youtube.com/watch?v=MRZlfml5Aowamp;feature=youtu.beamp;a

The Verge: http://www.theverge.com/2013/5/20/4346866/nextguide-web-replaces-your-dvr-interface-with-your-web-browser

GigaOm: http://gigaom.com/2013/05/20/nextguide-web-app/

Engadget: http://www.engadget.com/2013/05/20/dijit-unveils-nextguide-web/

The Next Web: http://thenextweb.com/insider/2013/05/20/dijit-media-launches-nextguide-web-a-site-to-help-discover-tv-and-movies-your-friends-love-to-watch/

CNET: http://news.cnet.com/8301-1023_3-57585296-93/social-tv-app-nextguide-goes-from-mobile-to-the-web/

PandoDaily: http://pandodaily.com/2013/05/20/nextguide-web-launches-can-it-possibly-be-a-discovery-powerhouse/

Lost Remote: http://lostremote.com/dijit-media-debuts-nextguide-on-the-web-to-make-it-easier-to-find-and-watch-tv-shows_b37680

TechNewsDaily: http://www.technewsdaily.com/18109-nextguide-keeps-track-favorite-shows.html

Multichannel News: http://www.multichannel.com/technology/dijit%E2%80%99s-personal-tv-guide-targets-web/143394

Appmarket.TV: http://www.appmarket.tv/second-screen/2124-dijit-media-introduces-nextguide-web-a-next-generation-social-tv-discovery-and-sharing-web-experience.html

nScreenMedia: http://www.nscreenmedia.com/1/post/2013/05/guide-web-seeks-to-unify-search-and-discovery-of-video-online.html

The End of Television: http://www.theendoftelevision.com/nextguide-tv-dijit-introduces-a-web-version-of-nextguide/

Would love your feedback, so please take a glance around and let us know!

Though I haven’t watched House of Cards yet (no spoilers!), I’ve followed the viewing behaviors and studies around the show extensively, and have come to an interesting conclusion: I believe, fundamentally, that shows should not be released all at once for optimal viewing.  Instead, my proposal would be a monthly release cycle of 4 episodes per month, followed by a season finale. Let me also state I’m a *huge* Netflix fan and supporter, so this isn’t intended as criticism of that company – this is uncharted territory and the company must be applauded for their (expensive) risk-taking.

For backgrounder, here are some stats (not necessarily accurate) on per-episode viewing and others on overall Netflix traffic during opening weekend.  The TL;DR version of them is that Netflix did not experience an overall bump in usage – in effect House of Cards cannibalized against other Netflix traffic, not against live TV watching.  This isn’t necessarily a bad thing at all, though I’m sure they’d prefer to have eaten away at primetime content.  I’d postulate that perhaps a weekend launch wasn’t the right timing, and a mid-week release cycle of 4 episodes could have had a better impact.

Next, the waiting cycle. I have a few friends who’ve binged the whole season already (as did TheVerge apparently), all of whom loved it, and are now waiting for a year to get the next season.  With any other show, the typical cycle is watch one, wait a week, get a new one.  That said, many shows really benefit from being able to watch more than one in a row (especially shows with a lot of nuance, such as my personal favorite Arrested Development), so there’s clearly value in the batch release.  If 4 episodes came out once a month, the audience would get the recurring sip of nectar whilst also enjoying the back-to-back viewing.

Next, there’s a lack of scarcity being created here.  There’s no anticipation, no wait, no build-up – until next year. This basically benefits Netflix only once annually, whereas with a high quality show like House of Cards, they could see the uptake in “water cooler” effects on a monthly basis.  And the season finale would be “an event” as opposed to an utter non-event like it is now.  There’s no social pressure, no “OMG That Happened!?!” moment possible amongst any group of people.  In fact, there’s literally nothing tying together any form of a “community” around the show.  A cycle would help this immensely.

So overall, I think that the “all at once” model is a great experiment, but one that certainly doesn’t “break” anything about TV.  I believe some shows deserve the weekly treatment (especially genres like traditional sitcoms, reality shows, etc), and others would be great with a monthly batch.  Personally, I find some shows have their own rhythms – I am catching up on The Wire only once every week or two specifically to savor the sweet deliciousness of that awesome show.  Let’s see what happens with House of Cards for Season 2.

Passoverriffic!

Pictured here is a container of good ol’ Manischewitz brand cake meal (a staple of my pantry every Passover).  The packaging could show the contents, which is basically flour.  Instead, we see a picture of a cake (enticing or not).  I couldn’t think of a simpler way to make the point: if you really want to sell, focus on the benefits or outcome, not the features or process.

Every time I read about a new phone and I hear about the processor, the cache, the RAM, etc, I think about cake meal.  This is something only Apple’s mastered, and Samsung’s rapidly learning – nobody cares about what’s inside the phone, they care about what it can do.

And the same is true for computers, for TVs, even for Websites and apps.  In fact I can’t think of anything involving technology, other than cars, where this isn’t the case.

Back when I was a consultant, this was possibly my most common advice.  When I mentor with 500Startups or FounderFuel, again, a topic that comes up virtually every meeting.

And the reality is this is the blunt feedback so few people in technology seem to receive: other than your team and your supporters, nobody cares about what’s under the hood.

I recommend exactly two things for anyone not sold on this:

1 – think about how you’d try to sell cake meal

2 – watch this video by Simon Sinek, one of my all time favorite TED Talks.

El Cable Guy es Mucho Loco

As the phenomenon of predicting the death of TV via cord cutters is waning, it’s being replaced by a plausible (at first) sounding theory: cord nevers.  Whereas a cord cutter is one who cancels their Pay-TV service for free/streaming alternatives, a cord never is, roughly, a person under the age of 22 who, upon renting their first apartment after college, never subscribes for TV services in the first place.  My theory at this point is these people may live happily cable-free for a year or few, but sooner or later, they’ll pay.  Here’s a few reasons why:

Cultural Zeitgeist
The single most common binding element pulling modern culture together today is TV, and I can’t see anything replacing that in the short term.  As someone nearing the end of their first year watching entirely “catch up” I’ve noticed, multiple times, the feeling of being left out of some conversations.  By the way, I’d like to keep this post and ensuing discussion free from judgment regarding watching decisions – I don’t care what the show is, everyone’s free to be entertained however they’d like.  But I currently have no idea what exactly a Honey Boo Boo is, nor what the Amish Mafia are after, and I have literally zero friends who just finished Season 4 of The Wire like I just did (btw – awesome).  I believe the natural gravitas of “fitting in” will drive most people toward paying.

Cheapest Entertainment Around
Estimates vary, but for a typical 4+ hours/day home, watching TV with a pay-TV provider works out to about $0.25/hour.  People love to complain about their cable bill, but they really wouldn’t if they did the math. (not that I’m advocating any provider, I’m just not dissing on them either).   Then again, math is hard.

victoryag.org Laziness FTW
While it’s certainly simple enough to browse Netflix on my Apple TV, find a show, then watch it, it’s nowhere near as simple as turning on the TV, then pushing “channel up” enough times until something watchable appears.  As I’ve blogged about elsewhere, I fundamentally believe in the “escapism” nature of TV watching, which makes an all-on-demand lifestyle a lot of work.

More Money, Less Time
It’s easy to talk about “those kids today” and their willingness to watch movies in 10 minute increments on YouTube.  Yeah, I remember college too –  I had loads of free time, no money.  Now I have no time, and while I don’t have loads of money, I can easily do the mental math to figure out the money value of time makes hunting around websites and menus not a good use of time.

TV, now with Free Internets!
As the pay-TV industry has morphed into MVPDs (“multichannel video programming distributor” – worst rename ever!) and offer Internet and voice and home automation and monitoring and security and dishwashing and laundry and other services (mostly for sheer profit – other than the laundry part), the allocation of revenue is less relevant for them.  They can offer quintuple packages and more because it doesn’t really cost them anything, and most have invested so much money into capital expansion that they can continue to lay out new value added services for incremental costs.  So perhaps we’ll eventually pay for TV, with free everything else – or vice versa – it just won’t matter that much.

While I do fundamentally believe we are in the middle of the most transformative era of television behaviors since the advent of the cable industry, I also think we are far from a radical new world.  Looking forward to constructive comments and feedback below.

HBO and Universal just renewed a distribution deal.  For the next 10 years.

If you are in any ways connected to the TV industry, be it for the past, present, or future of it, this is quite significant.  Why?

Part of the reason TV as an industry is fairly impervious to disruption is the unbelievably tangled knot of deals and relationships.  In TV/Movie-land, deals are (1) worth Billions, and (2) made for the long-term.

victoryag.org

But with all the kerfuffle about TV changing, TV dying, TV this and that,we should take note that two of the biggest players in the industry just renewed a deal that is (1) worth Billions and (2) made for the long term.

The significance is, in a nutshell, that in TV-land, business as usual is still going on.

ps – dont think I’ve ever made a point before in 100 or less words!  😉

The Dijit team’s been really hard at work all year building NextGuide, which was quite the task and accomplishment. A few months ago we recognized it was time to give the Dijit Remote another round of enhancements as well, so we got to work on giving it a good refresh.  Most importantly, of course, was updating it to support everything new in iOS-land since last winter, which includes Retina iPads, the iPhone 5, and iOS 6 support too.

Additionally, we incorporated the NextGuide social TV profiles into the Dijit Remote, so users of either app can discover and share content back and forth.  We are building the most robust personalized TV discovery platform out there, and this is the first step to bring it to iPhones as well.  Between our two apps we now have a lot of people finding new shows and movies to watch on live TV, as well as streaming services like Netflix, Amazon Prime, and more (note: the Dijit Remote app only supports Netflix search at present).  We also added the extremely popular “record to DVR” button for DirecTV subscribers, allowing anyone to program their home DVR the moment they find a great show or move to watch on live TV.

Lastly – accessibility.  We’ve heard story after story from people who use accessibility enhancements on their iOS devices, and how the Dijit Remote is integrated into their personal needs.  I was shared images of a young girl in a hospital room with extremely limited mobility, but just enough to control the TV using her iPad and the Dijit Remote app.  Unfortunately she couldn’t access all of the features, so we set about fixing that, and now we’re very proud to bring accessibility enhancements across virtually every feature in the app to help anyone who might need it.  It’s not often we get to be in a position to just help people, so it’s something that we all feel pretty good about.

It’s been a long while, but we’re happy to bring this update to the legions of loyal Dijit Remote users, hope you love it! Check out the new and improved Dijit Remote here!