As Netflix Locks Down Exclusive Disney Rights, The New Walled Gardens Emerge

from the meet-the-new-boss dept

Back in 2012, Netflix and Disney struck a deal wherein Netflix would be the exclusive online provider of Disney content starting in 2016. And while we knew that the deal had been struck, it was only this week that Netflix announced on its blog that the exclusive arrangement would formally begin in September. As of September 1, if you want to stream the latest Disney (and by proxy Marvel, Lucasfilm and Pixar) films -- you need to do it via Netflix.

Given the popularity of the Marvel films and the now-annual release of new "Star Wars" titles, that deal has become bigger and more important than ever, making it a pretty large coup for Netflix. Especially if you consider that Disney is co-owner of Hulu, which is planning to dramatically scale up its own subscription streaming video service later this year or early next. In fact, while Hulu for years was little more than an uninteresting ad for traditional cable, data suggests that Hulu's catalog is now much larger, thanks in large part to Netflix's tight focus on original content.

And while this is good news if you already subscribe to Netflix, this ongoing quest to lock down content in exclusive arrangements has a notable downside as the practice expands. As Hulu, Netflix, and Amazon have tried to each lock down their own exclusives, finding your favorite movie or TV series has become a frustrating game of hunting and pecking to ferret out which provider has the exclusive rights. It's also becoming increasingly confusing for consumers to understand when these deals expire; something that's not effectively communicated by most streaming companies.

And, ironically, while many streaming video customers cut the cable cord due to high prices, exclusive arrangements are now forcing those customers to pay for countless streaming services if they actually want to access all of their favorite shows and movies. There's a certain danger in replacing the cable industry's long-standing walled gardens with newer, different walled gardens, and it's pretty clear most of these companies either don't see the potential pitfalls or, in a rush for eyeballs, just don't care.

And as broadcasters increasingly realize they can cut out the middlemen and launch their own streaming services, it seems inevitable that the exclusivity wars will only get worse. For example, if you want to watch the new "Star Trek" TV series from CBS when it launches in January 2017, you'll need to subscribe to CBS's $7 a month, All Access streaming platform. There's likely going to be a lot more where that came from, especially as Comcast takes a bigger role in managing Hulu (NBC Universal merger conditions preventing it from fiddling with Hulu to prevent anti-competitive shenanigans expire next year).

So while the streaming industry and broadcasters are intent on following the exclusivity concept deep down the rabbit hole, few if any seem to notice that while these kinds of exclusive deals may be good for one company over the short term, they're not going to be great for the broader streaming industry over the long haul. There's a lot of potential here to fracture content availability, confuse paying customers, and drive frustrated customers back to piracy after all of the work done to get them on legitimate platforms in the first place.

Filed Under: tv, video, walled gardens
Companies: disney, netflix

Once Again With Feeling: Cord Cutting Is Not A 'Myth'

from the ignoring-the-bigger-picture-to-make-a-point dept

For years we've noted how the cable industry (and companies that feed off of it like Nielsen) have been in stark, often comic denial about the changes happening in the legacy cable sector. But every few months or so, a select rotation of news outlets also feel compelled to pooh pooh the entire notion of cord cutting, broadly declaring that the idea is a "myth" perpetuated by a select cadre of mean bloggers hellbent on confusing the public for some unfathomable reason. More often than not it's the editors trotting out the "myth" headline to gain hits, despite the story itself doing a piss poor job actually debunking the concept.

One case in point is the Boston Globe, which recently proclaimed that because cord cutting is happening slowly in a country jam-packed with Luddites, the phenomenon at worst isn't real, and at best isn't important:

"The thin trickle of households that have dropped pay TV in recent years is barely enough to make a dent in the industry. Just under 100 million households have some form of pay TV according to Nielsen surveys, whether it comes via cable, satellite, or alternatives like Verizon Fios and AT&T U-Verse. That’s lower than it was a few years ago, when 105 million households had pay TV, but it’s hardly a revolution and there’s no sign of an accelerating trend."

A five million user drop hardly constitutes a "myth," but there's another problem with that analysis: just looking at pay TV subscriber totals doesn't tell the full story. One, several cable companies have started including their own $15-$40 standalone streaming service customers in with those totals, meaning the total tally of "pay TV subscribers" now includes -- ironically -- customers that have cut the cord. For example, Dish Network last quarter proclaimed it saw a net gain of 35,000 pay TV customers. But the company is now including its Sling TV streaming video customers in that total. Subtract those, and Dish actually lost an estimated 215,000 traditional TV customers.

Comcast has now quietly started doing something similar after launching its $15, creatively-named "Stream" service in several beta markets. And while yes, these are technically still "paying TV customers," the difference is more than just semantics if you're analyzing which customers still subscribe to traditional television -- and paying upwards of $120 a month -- and which customers have flocked to much, much cheaper standalone streaming platforms (still a rarity among cable companies that don't want to cannibalize their own TV rolls like Dish appears willing to do).

The Globe continues:

"A separate survey by the Leichtman Research Group found that about 83 percent of households had pay TV subscriptions in 2015. That's down from the 87 percent with pay TV in 2010, but actually higher than the 81 percent in 2005. Bottom line, pay TV remains a staple of the American diet.

Again though, just looking solely at total TV subscriptions doesn't illustrate what's actually happening. Another trick cable companies have used for years is to offer broadband and TV service bundled at a promotional price point significantly cheaper than just getting broadband alone. As a result, you've got millions of households that sign up for TV only because it's the better deal. In many cases these users, especially Millennials, aren't even using -- and didn't want -- the traditional TV service they signed up for. And, given they're on short-term promotions, it's far from certain they'll be sticking around. That's a short-term "solution" that makes investors feel cozy looking at the raw numbers, but it doesn't solve cable's real problem, and it doesn't somehow prove cord cutting isn't real.

And now the newest trend is forcing customers to subscribe to legacy TV if they want to avoid usage caps, which is going to continue to prop up traditional TV subscriber tallies.

To really understand shifting viewing behaviors, analysts have to look at how many customers are actually using the TV subscriptions they're signed up for. That's why traditional subscriber totals have remained static or in slight decline, but broadcast and cable ratings have been in free fall. As ESPN has painfully realized, this is also thanks to "cord trimming," or the act of reducing overall programming packages in an attempt to avoid relentless rate hikes -- more common than severing the cord completely. None of this is mythical, just a little more complicated than claiming the cord cutting is akin to yeti and unicorn.

Analysts also tend to forget to factor in the fact that traditional cable TV subscriptions are either flat or in decline as the housing market recovers and grows. In short, that means millions of new houses and apartments aren't signing up for traditional cable, something that's also left out by just looking at subscriber rolls. Sanford C. Bernstein analyst Todd Juenger penned a research note this week pointing out that once people are faced with re-subscribing to cable after moving, many aren't bothering. In many instances, people aren't cutting the TV cord, they're refusing to connect it in the first place. That's especially true of Millennials heading out into the wild for the first time.

Like the Boston Globe, Techcrunch also recently penned a missive declaring cord cutting a "myth," but like most other articles of this type failed to factor in the above details. It also makes a few odd logical leaps, like declaring that cord cutting isn't a thing because consumers have "their own definition of TV":

The story goes, "Cord-cutters are canceling their cable services and going over-the-top, therefore it's the demise of the television business as we know it." This premise is wrong. Here’s why: The consumer has their own definition of TV. To start, we should clarify that consumers now perceive “TV” as content, not as content delivered through a linear hardware box in their living room. HBO, Netflix, Amazon, Hulu, Buzzfeed — consumers don’t care about where content derives, they only care that it’s quality.

In short, Verizon-owned Techcrunch had to redefine television to try and make the point that "cord cutting" as a concept somehow isn't real. But nobody is arguing that TV as a concept will die; it will just mutate. Traditional cable operators will eventually realize they need to compete on price, and they'll ultimately adapt. Right now though, the name of the game is fiddling with subscriber TV totals to calm investors, while generating the illusion among consumers that they're competing on price and flexibility. The result is so-called "skinny bundles" that are intentionally underwhelming and saddled with post-sale charges and fees, while the cable and broadcasters happily push bi-annual rate hikes on the majority of their legacy TV customers.

So no, the traditional cable industry isn't "beating cord cutting," it's just fiddling with subscriber totals and forcing millions of customers to take TV service they may not want. And cord cutting isn't a "myth," many analysts just aren't yet seeing the full picture.

The reality is that cord cutting is a very real, but very slow phenomenon. Slow in part because many TV subscribers are intimidated by new technology, something that will shift as these services get better and easier to use (and, to be blunt, old cable users die off). It's also slow in part because broadcasters were afraid of killing the legacy cash cow and licensing their content to potential disruptors like Apple. But the flood gates are slowly opening, and 2016 and 2017 are slated to be packed with new, cheaper streaming TV options that should accelerate the trend to the point where denial will no longer be an option.

Claiming cord cutting is a manufactured fantasy certainly helps cable companies and the research firms making a living telling myopic cable executives precisely what they want to hear. And right now, what these executives want to hear is that cord cutting and cord trimming are just a small blip on the radar, easily conquered without seriously competing on price. These executives also want to be told that all of these problems will magically evaporate once Millennials start procreating. Once that happens, the theory goes, Millennials will suddenly realize that they really love traditional cable, high prices, and utterly atrocious customer service. So really, at the end of the day, who's telling myths, exactly?

Filed Under: cord cutting, internet, myth, tv

Cable Company CEO Calls TV Business A 'Tragedy Of The Commons' That Ends Badly

from the mass-seppuku dept

While larger cable companies have the scale and leverage necessary to negotiate better programming, smaller cable companies are finding themselves facing tighter and tighter margins as broadcasters push for relentless programming increases. As such, many have begun candidly talking about exiting the pay TV sector entirely and focusing on broadband service only. When approached by broadcasters like Viacom about major hikes, some cable operators have simply culled the channels from their lineup permanently and refused to look back.

Not too surprisingly, the narratives being told by these smaller cable companies vary differently from larger cable operators, many of which deny that pay TV is caught in an unsustainable death spiral thanks in part to relentless broadcaster demands. CableOne CEO Thomas Might, for example, candidly declared last week that the traditional cable sector is a "tragedy of the commons" that's going to end badly for everyone involved:

"The actions of content owners is easily explained by the concept of tragedy of the commons. Once one programmer started taking double-digit rate increases, even in the face of falling ratings, each of the other programming groups felt compelled to do the same. The reason the theory is named "tragedy" is because it is guaranteed to end badly for all in the long run. It appears that long run is finally arriving."

And again, while large cable operators and broadcasters have denied cord cutting's very existence -- and downplay "cord shaving" (reducing your cable packages or opting for a skinny bundle) at every opportunity, Might states the obvious in noting the kids just aren't watching regular TV anymore:

"Linear video ratings are plummeting for several reasons. The lower end of the market can no longer afford the big bundle; the number of disruptive OTT technologies and vendors are now multiplying rapidly; and the millennial generation has very limited interest in traditional TV viewing. These patterns will inevitably bring an end to the ubiquitous fat bundle, but only slowly and painfully."

As we've long noted, cable operators could pretty easily defeat cord cutting by competing on price and value. But instead their solution so far has been to raise rates on broadband and TV like it's going out of style, to impose usage caps to punish cord cutting, and to offer "skinny bundle" packages that give the illusion of value, but saddle users with misleading fees post sale. Only when cord cutting shifts from a trickle to a steady roar will most major cable executives finally change tack, at which point they'll be surrounded by an ocean of hungrier, leaner companies all doing what cable refused to do for a generation: offer a cheaper, more flexible pay TV product.

Filed Under: cable tv, thomas might, tv
Companies: cableone

ISPs Are Now Forcing Cord Cutters To Subscribe To TV If They Want To Avoid Usage Caps

from the damned-if-you-do dept

We've noted time and time again how broadband usage caps on fixed-line networks are arbitrary, unnecessary, and harm innovation. They're also a useful weapon against streaming video competitors, and the natural evolution of TV competition. Caps can be used to either punish users who try and cut the cord with higher prices, but they also allow ISPs to exempt their own streaming services from said caps (something currently being done by both Verizon and Comcast), thereby giving these services a distinct and unfair advantage in the market.

But broadband ISPs are now coming up with a new way of attacking cord cutters: forcing them to subscribe to television if they want to avoid usage caps.

Back in January, AT&T announced that the company would be happy to remove usage caps on its wireless network, but only if you subscribe to DirecTV or U-verse TV service. Then last month, AT&T carried this idea over to its fixed-line broadband network, announcing that it would be imposing new usage caps on its broadband users starting May 23. While AT&T says it will generously allow users to pay $30 more per month to avoid usage caps entirely, it also announced that users who subscribe to its TV services will be able to avoid usage caps entirely.

This month, an Oregon company by the name of Bend Broadband followed suit, informing its users that it would be happy to remove its usage caps (ranging from 150 GB to 500 GB), but only if users subscribe to television service. Bend offers up a misleading explanation for why caps are necessary in the first place in a company FAQ:

"The continued migration of Netflix usage from mailed DVD to Internet streaming/download, as well as other data intensive uses of the Internet, are impacting all providers of high-speed Internet service. While we certainly acknowledge and appreciate that content rich services like Netflix make our high-speed offering more valuable to the end user, the volume of data associated with this content drives significant incremental investment in the network and the need to purchase more bandwidth in order to maintain the user experience and this must be funded."

Right, but that's bullshit. U.S. residents already pay some of the highest prices for broadband in the developed world; money that any earnings report will clearly illustrate is more than enough to offset what at this point is only modest network upgrades. As one cable CEO recently noted, most of the heavy investment is over, and the name of the game now is milking these uncompetitive markets for all they're worth until either broadband competition magically sprouts from the ether, or regulators wake up from a deep slumber and shut down the price gouging party.

Usage caps on fixed-line networks are nothing more than rate hikes on uncompetitive markets, and anybody claiming otherwise either has been swindled by a good salesman, or is selling you something themselves.

There's absolutely nothing good about this trend. ISPs are using a lack of competition in the broadband space to impose usage caps. They're then using caps to force subscribers to sign up for TV services they may or may not actually want. It's a mammoth, misleading and anti-competitive abuse of two markets simultaneously, all sold to consumers under the lie that ISPs need even more revenue to keep funding unprecedented investment and innovation. In reality, the entire push may just be one of the largest cons ever perpetrated on consumers in the modern communications era.

Filed Under: broadband, bundling, cord cutting, data caps, isps, tv, tying, usage caps

Roku CEO Kisses Up To Comcast, Supports Opposition To Cable Set Top Box Competition

from the rooting-against-your-best-self-interests dept

As we've been discussing, the FCC is cooking up a plan to open up the closed cable set top box to third party competition. As we've also been pointing out, the cable industry has been throwing an absolutely epic hissy fit about this plan, given it would destroy the $21 billion in annual revenues cable operators make off of cable box rental fees. Since it can't just admit this is all about protecting set top rental fees, the cable industry has been pushing an endless wave of editorials in newspapers and websites nationwide, claiming more set top box competition will hurt consumer privacy, increase piracy, harm diversity, and rip the very planet from its orbital axis.

Most of these editorials are being penned by the usual assortment of entertainment industry and telecom hand-wringers, the majority of whom have a vested financial interest in the status quo and as such have been happy to repeat the talking point that the FCC's well-intentioned plan is just a secret plan by "big Tech" (aka Google) to treat the noble and ultra-innovative cable industry unfairly.

Back in March we noted that despite the fact that such rules would obviously help streaming set top vendors, Roku had come out in defense of the cable industry, rather timidly saying it wouldn't be supporting the FCC's plan because it has been trying to secure new, semi-exclusive deals with cable providers:

"We have not been advocating for a rule making in this area at this time,” Tricia Mifsud, a Roku spokeswoman, told IBD. “While we are known for selling streaming players, it is only one area of our business. Customers also access our platform through smart TVs and streaming players that operators deploy."

Roku's opposition to the FCC's plan became a little clearer last week, when Comcast (trying to preempt the FCC's plan), announced it was launching an initiative to let some Comcast customers access cable content via Comcast apps on third party devices. Comcast's partners in this new initiative? Samsung and Roku, who'll be offering the Comcast Xfinity app on smart TVs and streaming devices. And while Comcast's plan is certainly a step in the right direction, Comcast being Comcast you can be fairly certain that there will be caveats when the program launches to ensure the impact to set top box revenue is minimized. Comcast's plan obviously also doesn't impact other pay TV operators, so it doesn't really change things for the overall industry.

Trying to defend the company's self-immolating position, Roku CEO Anothony Wood decided last week to write an editorial over at the Wall Street Journal, breathlessly insisting the FCC's plan would hurt consumers. And, as with every editorial of this type, Google is trotted out as the bogeyman pulling the FCC's strings in a plan to somehow treat cable companies unfairly:

"...With prodding from Google and TiVo, the FCC is proposing new “set-top-box” rules that would force cable companies to make their video services available as an “open” set of streams. In other words, companies like Comcast or DirecTV would be required to provide their video, guide data and encryption for use by other companies who could then create their own hardware and software to deliver cable content. As Google argued in an FCC filing last year, the intent is to “unleash competition in the retail navigation-device market” and drive down costs.

This might seem like a great deal for consumers and companies like mine, but once you start peeling back the layers, the picture changes. The proposed regulation would—as we say in the industry—“decouple the user interface” from the video and data itself. This would allow a company like Google to do to the TV what it did on the Web—build an interface without the “inconvenience” of licensing content or entering into business agreements with content companies such as ABC, FOX, HBO, or video distributors like pay TV operators. The unintended consequences of circumventing these kinds of arrangements are likely to include increased costs for consumers, reduced choices and less innovation."

But if you actually read the FCC's proposal so far (pdf), you'll notice the plan does nothing of the sort. In short, customers will still have to pay their cable provider to access cable content, it will just be delivered to additional hardware platforms -- using copyright protection standards determined by the cable industry. The content can't just be repackaged without cable companies getting compensation. How letting consumers have access to more, better and cheaper methods to access the same content results in "reduced choice and less innovation" is a logical leap that makes no coherent sense whatsoever. Similarly, this repeated claim that this is some secret cabal by Google -- when the quest for clunky cable set top box reform is decades old -- remains a bizarre narrative unsupported by reason. Would Google benefit from open set top boxes? Yes. So would countless other hardware vendors and developers.

Woods also tries to argue that regulation isn't necessary, because we're already seeing innovation in the streaming set top box market:

"Regulating the set-top box is unnecessary in the modern age of Internet streaming. Consumers now have tremendous choice for their TV operating system and interface. Robust competition among companies like Roku, Apple, Amazon and Google is already driving rapid innovation and pushing costs down.

Right, but we're not talking about streaming players and services, we're talking about the traditional cable set top box. You know, the cable boxes that consumers, on average, pay $231 to rent annually (and thousands of dollars for over the life of the hardware) despite most boxes being worth a fraction of that? And while we have seen some innovation in recent years on the set top box front (voice search, marginally less archaic GUIs), by and large the cable box remains a clunky relic of a bygone era and a cornerstone of the cable industry's antiquated and uncompetitive walled garden approach to customer services.

The thing is that if anybody should know better, it's Roku. The company had to file a complaint with the FCC (pdf) after Comcast spent years refusing to let its customers access HBO Go on Roku devices (in order, of course, to push those users toward Comcast's own Xfinity set top boxes and apps). Roku also expressed concerns in net neutrality filings with the FCC that Comcast was using TV Anywhere authentication as yet another way to inhibit Internet video competitors; Roku included:

"A large and powerful MVPD may use this leverage in negotiations with content providers or operators of streaming platforms, ultimately favoring parties that can either afford to pay for the privilege of authentication, or have other business leverage that can be used as a counterweight to discriminatory authentication. Additionally, MVPDs with affiliated ISPs can abuse their power over authentication by choosing to authenticate only their own or affiliated offerings."

Yet here we are, with Roku's CEO now playing kissy face with that same company because they've struck a new deal that will give Roku its own, special advantage in the pay TV market.

It should be noted that Woods wasn't entirely willing to pledge unwavering fealty to Comcast. Nor is his editorial entirely devoid of good points. Though Woods isn't willing to mention his new BFF by name, he does make some vague references to Comcast's decision to give its own content an unfair advantage via usage caps and zero rating:

"...the FCC proposal is distracting from the leading risk to the continued evolution of TV—open and fair broadband Internet access for all consumers. In particular, cable companies often control their customers’ broadband access and can take measures against competing streaming services and devices to give their own streaming services and devices an advantage. FCC regulations banning the discriminatory use of data caps and “zero-rating” schemes that selectively exempt certain content from data limits are far more important to the future of TV than “opening” the cable box.

If broadband Internet services are accessible and affordable to consumers and there is a level playing field for content providers and devices makers, then consumers will benefit from a revolutionized television experience. Let’s not bog down the revolution with an unnecessary government intervention in a dynamic marketplace.

In other words, while Woods is perfectly happy to blow a few kisses to protect his new business relationship with the Philadelphia-based cable giant, he's not willing to entirely sell himself and his company down river by ignoring the problems Comcast is causing on the net neutrality and zero rating fronts. And this is actually the one area I don't disagree with Woods on. With Internet video disrupting traditional cable anyway, it might make more sense for the FCC to focus its efforts on improving broadband competition. And, more specifically, the telecom industry's use of usage caps and zero rating to protect legacy TV from Internet video.

By the FCC's logic however, the glacial pace of cord cutting means that traditional cable and ye olde cable box will still be a dominant force for much of the next decade -- and consumers could still benefit from increased cable set top box competition during that period. The problem is that the cable industry clearly intends to fight this proposal tooth and nail, by dragging the FCC's effort out via lawsuit, and funding a major PR offensive in the hopes of convincing the public the FCC's gone power mad. With so many efforts on its plate (from municipal broadband to new broadband privacy rules), the FCC may have to seriously consider just which battles are truly worth fighting, and which problems, like the cable box, may be resolved organically by the market.

All of that said, it remains more than a little embarrassing that Woods and Roku are so eager to sell their longer-term success -- and the overall viability of the broader streaming industry -- downriver just to snuggle up a little closer to one of the most anti-competitive companies in the television industry.

Filed Under: cable, competition, fcc, set top boxes, tv
Companies: comcast, roku

Silverpush Stops Using Sneaky, Inaudible TV Audio Tracking Beacons After FTC Warning

from the tread-carefully dept

ISPs and cable companies already track and sell your online behavior, your location data, and effectively everything you do on the Internet (to the second). Now broadcasters and app developers are cooking up a new technology that uses so-called "smart audio beacons" emitted during television programs to help track user viewing habits. These tones, inaudible to the human ear, are picked up by applications which use your smartphone or tablet microphone to listen and record them. That data can then be used to build a profile that potentially matches your existing online data with your viewing habits.

While the technology appears to currently only be in use overseas right now, the FTC felt the need to issue a press release recently warning companies using the technology that they too are being watched. The warning accompanied a letter the FTC sent to 12 app developers (pdf) that informs devs that if they use the technology and don't inform consumers, they're potentially violating Section 5 of the FTC Act. The FTC's attention was grabbed after they realized that the apps in question failed completely to inform users they were being tracked, or that they were even using the device microphone:

"...The code is configured to access the device’s microphone to collect audio information even when the application is not in use. Moreover, your application requires permission to access the mobile device’s microphone prior to install, despite no evident functionality in the application that would require such access. Upon downloading and installing your mobile application that embeds Silverpush, we received no disclosures about the included audio beacon functionality — either contextually as part of the setup flow, in a dedicated standalone privacy policy, or anywhere else."

Two days later, the company pioneering this new snooping tech, Silverpush, announced that it had "exited from all UAB (Unique Audio Beacon) based business and shifted to a newer product line" and that it would "appreciate if SilverPush is not associated with UAB based business going forward." The company also seems to be claiming in conversations with the media that this sudden departure had absolutely nothing to do with the FTC's warning:

"When asked by Motherboard why it pivoted away from audio beacons, a SilverPush spokesperson would only say its decision was “a natural process to move to a more evolved product as a part of our business plan” that began almost a year ago, and again insisted that it wasn't responding to privacy concerns. The company spokesperson also said that SilverPush has never partnered with US app developers in the past, and claimed that any apps that integrate its audio beacon tracking code explicitly ask for permission before accessing a device's microphone through a pop-up message within the app itself.

Motherboard was not able to verify these claims, because SilverPush will not identify which apps and companies are using its code. As of April 2015, the company claimed that 67 apps were using its code, allowing it to monitor around 18 million devices."

Much like the boiling frog metaphor, online privacy is eroded one degree at a time, without most people noticing the temperature shift. For example while it would have been controversial fifteen years ago, most people are currently ok with letting companies track absolutely everything we view (ISP deep packet inspection) and everywhere we go (location data tracking and sales). Still, the marketing industry occasionally pushes into territory that just creeps everybody out (like cable boxes that watch you). But what creeps everybody out today can and usually does become the new normal of tomorrow.

Filed Under: apps, audio becaons, ftc, isps, tracking beacons, tv
Companies: silverpush

Yankees, Comcast Engage In Public Pissing Match Because They're Incapable Of Adult Negotiations

from the Titanic-deck-chair-rearranging dept

For many years now we've seen a dramatic spike in programming contract disputes between broadcasters and cable operators, usually resulting in consumers losing access to TV content they're paying for. These feuds usually begin simply enough; with a broadcaster asking for a programming rate hike cable operators don't want to pay for. But instead of sitting down and hashing out a new deal that satisfies both parties like grown ups often do, the companies take their feud into the public sphere, punishing paying customers in the process.

This involves blacking out content users are paying for (without giving any refunds), annoying customers with ads and on-screen tickers blaming the other guy for being a greedy villain, sometimes cutting off user access to online content, and making an endless series of snippy comments in the media. After months of annoying customers, the two sides will usually strike a confidential deal, and the rate hike will get passed on to consumers whose cable bills are already skyrocketing at four times the rate of inflation. It is, to be kind, an unsustainable death spiral of dysfunction given the looming threat of Internet video.

The latest fight of this kind is between Comcast and the Fox and Yankees-owned YES Network. Comcast pulled the network from its lineup last November after YES asked for a 33% rate bump. Comcast has spent the last few months publicly complaining that nobody watched the network. YES Network has spent the last few months calling Comcast gutless, and with the new baseball season approaching has launched a new ad campaign using Yankees players like Alex Rodriguez and a new website that urges customers to switch to another cable operator while mocking Comcast:

"The most recent American Consumer Satisfaction Index ranks Comcast among the lowest of the more than 300 companies it tracks, calling out Comcast Xfinity for suffering one of the largest drops in customer satisfaction in the pay-TV industry. In a 2015 poll conducted jointly by 24/7 Wall St. and Zogby Analytics, Comcast finished dead last for the second straight year in terms of quality of customer service among 151 of America’s best-known companies across fifteen industries...Now Comcast is depriving fans of watching Yankees games on YES, even as it continues to force price hikes on its customers and charge more money for less service."

The problem is that with the amount of money broadcasters are demanding, and the apathetic, dysfunctional nature of cable companies (Comcast is a broadcaster itself no stranger to rate hikes), these are feuds many people wish both sides could somehow lose. Again, customers are paying for content they're not getting, being refused refunds, being harassed with on and off screen marketing, and -- once Comcast and YES strike a secret deal just before the first pitch is thrown -- customers will be pounded with a shiny new rate hike anyway. Regulators have thus far responded by implying these fights are just boys being boys.

It would be in the cable and broadcast industry's best self interest to get these deals done without pissing off any more customers, but the industry's incapable of seeing the bigger picture. Such as the fact these fights only accelerate piracy streams, cord cutting, and the downward-sliding satisfaction ratings of the least liked industry in America.

Filed Under: baseball, carriage, tv, yankees, yes network
Companies: comcast, yankees

CBS CEO Forced To Admit Cheaper 'Skinny' TV Bundles 'Inevitable'

from the wake-up-and-smell-the-Millennials dept

CBS CEO Les Moonves hasn't always been a huge fan of change. The CEO likes to whine a lot about how the television landscape is shifting, whether that's the fact that Netflix doesn't have to share viewership numbers in the subscription streaming age, or the way Dish is giving users what they want with DVRs that automatically skip ads. Moonves is also a big fan of pouting and claiming CBS will pull all of its broadcast content off the air if the network doesn't get what it wants (a man, in a very nice suit, threatening to take his ball and go home).

But even the change-averse CEO this week was forced to admit that the industry can no longer charge hundreds of dollars for hundreds of garbage channels and continue to call that value and innovation in the face of streaming competition. For all his myopia, Moonves at least has acknowledged that the shift to so-called "skinny" bundles is "inevitable":

"You’ve heard the cliché over and over again, people are tired of paying for things they don’t want to watch. That’s finally going to change. Someone’s going to figure out how to do this and how to give people what they want to watch and it’s not for $100 a month, it will be for $35 or $39 dollars a month where you’ll really get the 12 to 15 or 18 channels that you care about. And not get the karate channel for 25 cents a month."

Somebody did try to do this named Aereo, and it was sued into oblivion by CBS and others for its trouble. Other companies like Verizon are also trying to do this, but have been sued by broadcasters for trying. So to be clear, CBS believes "somebody" needs to shake up the stale cable bundle, but it should be CBS that does it.

To Moonves' credit, CBS has done a lot more than other companies to try and embrace the streaming video revolution. CBS launched its own $6 a month "All Access" streaming service in 2014, and in 2015 followed HBO's lead and offered a standalone Showtime streaming platform for $11 a month. CBS is also battling with Facebook, Verizon and others for new NFL streaming rights, and is planning to relaunch a new "Stark Trek" TV series that will be made exclusively available to CBS streaming customers. CBS hopes to bundle all of this into one giant package that bypasses the cable industry entirely.

That's in notable contrast to broadcasters like ESPN, which has pretending that skinny bundle defectors are old, lame customers nobody wants anyway. Given ESPN benefits from having a channel many don't care about forcibly included in core cable lineups, it has been notably more aggressive in defending TV's status quo.

The problem CBS and other broadcasters will face is they continue to believe that streaming content exclusivity is the key to television's future, and that consumers have an unlimited budget to subscribe to dozens of streaming services to get the content they're looking for. The more fragmented content availability becomes, the more likely consumers are to avoid the hassle and cost of hunting and pecking through confusing and often shifting exclusivity windows -- and revert to piracy.

Filed Under: cord cutting, les moonves, skinny bundles, tv
Companies: cbs

Canadian Cable Companies Make A Mockery Of Government's Push For Cheaper TV

from the forced-innovation dept

So far, the Canadian government's attempt to force innovation and lower prices on the Canadian TV industry doesn't appear to be going so well. As previously noted, the government has demanded that all Canadian cable TV operators begin offering a so-called "skinny" bundles of smaller, cheaper channels starting this month, and the option to buy channels "a la carte" starting in December. But this being the cable industry, companies are finding all manner of ways to tap dance over, under and around the requirements.

Bell's solution is to offer a skinny bundle, but hide it from the company's customers. And while most Canadian operators last week unveiled discounted base bundles starting at around $25, they've saddled the options with all manner of fees to ensure that once a customer actually gets their bill, their prices remain as high as always. DVR rental fees, home gateway rental fees, HD fees, "digital service fees," fees for additional channel packs (since the core pack is intentionally left sparse), and installation fees all quickly demolish any proposed savings.

And companies like Rogers have generously gotten ahead of the December requirement for individual channel purchases, by offering sports channels a la carte -- but at the rock-bottom price of $18 a piece:

Ahead of the Canadian rollout, major cable operator Rogers Communications began offering two sports add-ons — TSN and Sportsnet — at $18 each, bringing a sports fan's bill to a minimum $61 a month, not much below the $66 a month for a similar sports-included package that has 230 more channels.

The same thing is happening over at Shaw, where customers will be paying a pretty penny to nab the channels they actually want:

Prices for Shaw’s pick-and-pay channels, which include A&E, CNBC and Fox News among others, range between $3 and $5 per month. More popular channels, like AMC, Bravo and CNN, are only available if you purchase them in $6-$8 channel bundles. Premium movie channels, meanwhile, are priced at $18 per month.

So a move that the CRTC insisted would usher in an "era of choice for Canadian television viewers," appears to be doing nothing of the sort, with most of the bundles designed specifically to make them as unappealing as possible. One Bell employee tells the CBC the company's intentionally making the new bundles "unbuyable," while "just sort of giving the CRTC the finger." And while Canadian Law Professor remains optimistic that the CRTC's gambit will work, it remains unclear precisely when or how this is supposed to happen.

Granted it's early, but whether or not the CRTC's push for flexible options actually works will depend largely on whether the regulator is willing to call the industry's bluff on below-the-line fee shenanigans, something North American regulators as a whole aren't known for. And as with the attempt to disrupt the lowly cable box here in the States, one's left wondering if it doesn't make more sense for regulators to give up on trying to "fix" a TV model that's slowly-but surely dying, and focus any serious regulatory efforts on making sure there's broadband competition so that these same companies can't use usage caps to hinder Internet video competition.

Filed Under: a la carte, canada, hidden, tv
Companies: bell, rogers, shaw

The Cord Cutting The Pay TV Sector Keeps Saying Isn't Happening -- Keeps Happening

from the televised-revolution dept

Several cable operators managed to eek out some modest subscriber gains in the fourth quarter of last year, prompting some renewed claims by the industry that cord cutting was "on the ropes" or was otherwise an unfair hallucination of the media. After all, Comcast saw a net gain of 89,000 pay TV users during the fourth quarter. Time Warner Cable similarly saw its best year since 2006 with a net gain of 54,000 TV subscribers. Charter also saw a net gain in the fourth quarter of 29,000 video subscribers. For some of these companies, this was the best performance they've seen since 2006.

As such, cord cutting is clearly yesterday's news, right?

Not so much. Full analysis of the fourth quarter and full year numbers by analysts like Leichtman Research indicates that while cable operators might have had a solid fourth quarter, most of them still saw a net loss on the year. As a whole, the pay TV sector as a whole lost 385,000 pay TV subscribers in 2015, according to Leichtman:And Leichtman's analysis, as a firm that has traditionally downplayed cord cutting, appears to be conservative. Full year analysis by SNL Kagan indicates the pay TV sector as a whole lost 1.1 million subscribers last year, four times the drop seen the year before:

"SNL Kagan estimates the combined cable, DBS and telecommunications (telco) sectors lost more than 1 million video customers in 2015. The 12-month decline was more than 4x the 2014 decline, and marked the third consecutive overall annual drop for the industry. That said, the waning months of 2015 carried signs of stabilization after steep losses for the better part of the year. The industry dipped by only 15,000 total customers in the period ended Dec. 31, 2015, essentially matching the losses of fourth quarter 2014."

So why did cable have a better-than-usual fourth quarter? Charter, Time Warner Cable and Comcast have all been deploying faster speeds and new cable set top boxes, which appear to be luring back some customers that had previously fled to satellite and telcoTV alternatives. So what we're seeing is a lateral move of some customers between different types of legacy TV (deck chairs, Titanic, etc.), while cord cutting continues unabated in the background. Cable companies have also ramped up promotions in which they offer pay TV and broadband for significantly less than a customer can buy broadband alone -- meaning many of these tallied customers may not even have wanted (or even use) television service.

And it's worth noting these numbers may be even worse than they appear. For one thing, companies like Dish and Comcast have started including streaming video customer numbers in their legacy TV numbers to try and sooth investor worries that the legacy cable cash cow has caught a nasty case of pneumonia. You'll also note that as the housing recovery accelerates, broadband subscribers aren't growing in parallel, meaning there are millions of new home owners and renters that aren't signing up for traditional television service.

So, no, despite some analysis you'll read, cord cutting isn't "on the ropes," "overhyped," or the rogue opinion of a few mean old bloggers and journalists. It's a continued, very real consumer response to an industry that simply refuses to seriously compete on price.

Filed Under: cord cutting, denial, tv
Companies: comcast, time warner cable