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Tag Archives: video on demand

When Will TV Shows Get Surge Pricing?

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Surge TVThere’s a lot of mixed feelings about Uber’s “Surge Pricing” concept, which described in a nutshell is: if lots of people are trying to get Ubers in a certain region, the price goes up. Economic-minded folks will call it simple supply and demand, whereas others feel the company is attempting to gouge their customers, manipulate pricing, etc. Assuming for this discussion it’s more the former – a simple case of supply and demand – I’ve been wondering about applying a similar model to TV shows.

When Better Call Saul premiered, it launched as the number one series debut in cable history. I was/am very interested in watching it, but without a pay TV subscription, I had no option to see it in/near-real-time. Within hours the episode was available in a variety of Video on Demand (VOD) formats, either for free or a low fee ($2.99 in iTunes at this moment). Older shows in iTunes tend to run at $1.99 per episode.

I’d argue the TV industry, specifically content owners, are missing opportunities right now by having equanimous pricing. The value, to an interested audience, of a piece of content is much, much higher in a short window. Especially for content that has any kind of zeitgeist/cultural value. Being “in” the crowd who sees the premiere matters to some segment of the population.  Similarly, older content has less inherent value. Do I really find an episode of WKRP in Cincinnati is “worth” the same as others? WKRP in Itunes

And yes, there is a range – Game of Thrones is $3.99 per episode, for example – but I’d argue there’s a lot being missed out in both directions. Older, library catalogs are worth less, and hot/newer shows are worth more. I’d probably also argue that anything more than 2-ish years old should have free S1E1 viewing to all viewers.

This takes a lot of new-style thinking for an older-style industry. And I see the hazards as well – if content gets priced too high, audiences may well seek out illegitimate sources. But I’d assume there’s a lot of opportunity to be had in a real-time priced marketplace. As content owners seek out new methods of monetizing their huge inventories, I hope to see experimentation in this space. Then again, I’d hate to see a snowstorm make a good show cost 2.8x the normal rate!



Guest Post: the Broken Golden Age of Television

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This is a guest post by TV industry thought leader Erik Schwartz:

broken golden tv

It’s broken. But in 4K!

“Television is dead.” 

“It’s the golden age of television.”  

Here at the NATPE conference in Miami Beach this week, I’m hearing both of these arguments being argued repeatedly.  I think there’s truth in both positions.

This is the golden age of television. Programs like Mad Men, Breaking Bad, HOC, Hannibal, Fargo, The Americans, are as good or better than anything that has ever been produced. The current MVPD model is optimized around every network having a blockbuster show that makes that network a “must carry” for cable and satellite providers, and then filling up the rest of its schedule as cheaply as possible. As the number of networks has grown, the number of these tent-pole programs has swelled.  

Television is dead. Fewer consumers are watching this programming in a linear fashion, as the network airs it. It is DVR’ed, viewed on demand through TV Everywhere or Hulu, or purchased from iTunes or Amazon. It’s a generational shift. This is making it more difficult to monetize via traditional TV advertising channels. (My kids barely know what commercials are.) If this trend continues, will networks continue to invest in the funding of premium programming?

Will the SVODs like Netflix pick up the slack by funding even more new programming? To a certain extent, yes. But SVOD growth was fueled by buying archives of existing high-quality content, for much less than it would cost to produce new quality programming. This content is cheaper because it is already monetized.  It is found money for the rights holder. At market saturation (and Netflix is almost there in the US), if the SVODs have enough programming (original and archive) to prevent subscriber churn, is there incremental ROI in making more premium shows? Their profit is maximized by offering just enough content to keep a viewer subscribed — everything over that threshold eats into profit margins. A viewer consuming more SVOD is an incremental expense that does not increase revenue.

Yes, it is the golden age of programming. But the existing models for monetization are flawed given today’s consumer’s preferred consumption channels. Flat-rate SVOD incentivizes “just enough” great programming. For decades, advertising made revenue directly proportional to consumption. That changed when retransmission fees started accounting for more network revenue, and then it changed more with SVOD. For this golden age to continue, we need a new model in which revenue for all stakeholders is correlated with audience size.

– Erik Schwartz



The Only Two Ways People Watch TV

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Over the past 30 years we’ve evolved the television experience from something where everybody watched the same shows on the same channels on the same devices in the same rooms at the same time to a world where that’s almost never the case.  Today, with the exception of appointment TV, it’s such a fragmented landscape that it’s almost a challenge to find other people watching the same stuff you do.  But with all the variance in content, services, devices, location, price, etc, there’s still really only two ways people choose to watch TV.  This is a subtle, but extremely important concept to anyone in the business of changing television.

Deliberate viewing: you go to the TV with a specific piece of content in mind.  This includes live TV (“let’s watch Idol at 8pm tonight”), your DVR (“I need to watch last night’s 30 Rock”), and any VOD/OTT platform such as Comcast OnDemand, Netflix, Hulu, etc (“I’m going to watch the first season of Breaking Bad”).  We could also include a deliberate type of content in this category (“I’m going to watch a comedy” – not necessarily something you’d say out loud, but if you are in the mood for something funny, that’s a pretty deliberate concept).  I also refer to deliberate viewing as “search mode” for TV, since you will specifically search for the piece of content you want, whether by changing the channel, navigating your OnDemand menu, or going to your DVR library.

Random viewing: you go to the TV with no idea what you want to watch.  This includes simple channel surfing (“nope, next!”) as well as direct channel changing (“I wonder if anything good is on TNT now.  Maybe Shawshank or Blues Brothers??”).  It also includes browsing the OnDemand options (“I wonder if there’s anything new on Netflix?”) and even your DVR (“Maybe we recorded something we haven’t watched yet?”).  I also refer to random viewing as “browse mode” for TV, since you are just perusing lists of stuff until you find something you are content to watch.  Note the last phrasing here, as random viewing is less about the “excitement” factor of watching something deliberately, and more about the “good enough to pass the time” factor, with the potential for excitement.

Now for the cold, hard fact: any “future TV” service or product which doesn’t account for both types of TV viewing, will fail. This includes OTT services, smart TV apps, second screen apps, third screen apps, eighth screen apps, widgets, websites, gadgets, platforms, and everything else under the hood.  Again, if you cannot service both primary needs of a viewing audience, your system is a goner – unless, that is, you are specifically aiming to replace an existing component of those services (in other words – if your live TV service is designed to replace another live TV service, that’s viable, since the consumer’s ecosystem will still include whatever else it had before).

How do I back this up without cold, hard facts?  Because people don’t really change much, and TV, specifically, is not merely “another” activity up there with Angry Birds, Facebook, Pinterest, reading books, etc.  Watching TV is a very specific type of activity, one about entertainment and more importantly, escape.  Life is hard, TV lets you escape for a period of your day – why on earth would Americans spend 4-8 HOURS per day in front of it otherwise?

So if people don’t change, and people need escape (especially as they age – I’m not talking about 13 year olds here, for the most part), they need some version of deliberate and random lean back TV watching.  Could this include YouTube videos? Sure. How about an all-on demand lineup?  Doubtful.  How about a “TV is just an app” concept? Doubtful. It’s why most cord-cutting theories aren’t holding water.  It’s why #SocialTV is still mostly just a fad. It’s why most “second screen” apps are just barely gaining traction. It’s why Google TV is such a mess right now.  It’s why Apple TV is still a hobby.  Sure, these things work absolutely great for some, but absolutely don’t for most.

The future of TV involves a lot of change.  And the more things change, the more they stay the same.  Long live TV.

15 vs 50: The Battle of the Future of Television

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When you look at the stats for video consumed on computer screens, it’s fairly staggering.  Literally hundreds of millions of videos per day on YouTube alone, 26 billion videos online in the month of September, averaging about 10 hours per month per person.  From one perspective, this could be considered inconsequential relative to the estimated 8 hours per day on the old fashioned TV set (though that stat is open to some interpretation).  However, considering this is still the early days of quality content being available online, it’s pretty safe to say that the computer (and of course Internet) is a successful media playback device.  So is the future of entertainment going to live on the 50″ HDTV display or the 15″ laptop?

The old argument: the PC is a terrible entertainment platform
At my job a decade ago I used to travel around the world meeting with virtually every company who built PCs, phones, and other gadgets.  At the time the focus was on the emerging “digital home”, a wonderful place where we envisioned the PC (for sake of typing, when I say “PC” I mean “computer” and include Macs in this generalization) as the “server” device, providing media to enjoy on connected TVs and stereos. We used to talk about how terrible a laptop or desktop was as a media consumption device, and how nobody would really want to sit around a small screen to watch any kind of premium content.  Other than the time I thought Amazon wouldn’t get anywhere selling books online, I can’t think of a time I was more wrong about something.  In reality PCs are now phenomenal media devices.  Laptops are unbelievably convenient when it comes to portable entertainment, and you can readily purchase surround sound setups for desktops.

All the ways the PC rules
The computer is unquestionably the most versatile product since the invention of the wheel, and when it comes to entertainment offerings, there’s no shortage of tools and services to enhance one’s experience.  With a computer and a high-speed Internet connection, we are a hair’s width away from a true all-content on-demand any-time lifestyle (and for those willing to skirt some pesky laws, they are already living that way).  Whether it’s Pandora or last.fm, Hulu or Windows Media Center (or even the remote possibility that TV Everywhere actually delivers as promised), you can have truly personalized media experience, all the time.

The kids today…
As a youth I distinctly remember our home’s expansion to a few dozen channels and our fancy remote control (which was actually wired to the cable box).  By the time I was in college, we had a couple of hundred channels, pay-per-view content, and premium cable offerings.  The living room was the only real place in the home for entertainment, with our CRT TV, video game console, cable box, and VCR.  College-age kids today have a very different perspective.  Paying for content (other than video games) is a generally foreign concept, as they’ve been surrounded by free for a long, long time.  And this is nothing compared with young children who are growing up in the post-DVR, on-demand world, where programming schedules seem utterly arbitrary.  People under 25 (and some above, of course) are used to taking their entertainment with them, and the only reason to bother going into the living room is to use their game console for gaming, chatting with friends, or watching movies – all activities they’d prefer to do in their own space anyway.

So is my $4000 (2000 1000 500!) high definition set with surround sound a dinosaur?
Ask me that after I watch Dark Knight in 1080p for the 3rd time. Or during the Stanley Cup Finals. Or even for an episode of Glee (yeah, I watch it, but I offset it with Man vs Wild, so back off). There’s just some content that, if given the option, I’d rather watch on a humongo-screen with amazing sound.  And no matter how much time we spend watching content on our laptops or phones, it’s just a different type of experience.  Further, the TV industry isn’t about to go quietly into any goodnight – innovation in televisions is probably moving faster than we’ve seen in the past 3 decades.  Today you can already buy TVs with built-in Internet streaming from a variety of sources, and we’re seeing numerous experiments with 2-way interactivity and 3d displays.  So the era of “making em bigger and cheaper” seems to be fading into the era of “making em do more”.

Some infallible predictions:

  • The popular categories of TV sizes will remain the same for the foreseeable future
  • PC/online media consumption rates will increase (rapidly) over the next 5 years
  • TV viewing rates will NOT decrease over the next 5 years
  • Cable attachment rates (# of people who pay a cable/satellite company) will decrease over the next 5 years, specifically due to people “cutting the cord” and consuming Internet-provided content instead
  • All major sports will have full live and archived streams available online within 2 years
  • At least one major sport will provide direct-to-TV streaming services within 2 years
  • Blu-Ray will continue to flounder, but will show continued (mild) growth for the next few years
  • Real-time interactivity will be tested on major TV shows in the next 2 years (and it’ll be more than just a twitter stream!)
  • Apple will do something more interesting in this space than Apple TV.
  • 3D will not drive the sales of new sets anywhere near what “the industry” hope or project
  • The biggest growth area will be the confluence of laptop use simultaneous to TV viewing
  • There will likely be a resurgence in more dedicated portable media players (that aren’t iPhones) with native streaming services.  They will fare poorly.
  • The concept of the “convergence/Internet set-top box” as well.  These too will do poorly.
  • In 3 years there will be 14 different versions of CSI on the air. Also, the writers of Heroes will still fail in their attempt to kill a character permanently.

I’m loving it
Let’s face it, this is an exciting time for being entertained.  There are so many ways to consume content, and so many interesting experiments occurring around the industry.  Further, many “standards” are pretty well in place, meaning the 720p 42″ plasma you bought 3 years ago is still going to work just fine 3 years from now.  This is unquestionably a good time for innovators, entrepreneurs, and consumers alike.  If you find yourself bored and you have a screen somewhere nearby, you just aren’t trying hard enough.

Disclosures: I was on the steering committee for UPnP, DLNA, I built the Slingbox, and have consulted on topics related to convergence and marketing/PR for Boxee, DivX, VUDU, Clicker.com, NETGEAR. As such, I’ve attempted to avoid anything specific to those companies in this post. In no way are any of my consulting clients related to my tech blogging, though one could argue I’ve seemed to align myself with companies who build cool stuff in the convergence space – and they would be right.