FilmOn Loses A Second Case, Meaning That Supreme Court May Get A Second Shot At Aereo Decision

from the it-ain't-over-'til-alki-david-sings dept

Earlier this year, lots of copyright law watchers were taken by surprise when Alki David's video streaming service, FilmOn (though its name constantly has changed) actually won a case in California. If you don't recall, the service was a sort of fake knock-off of Aereo, enabling streaming broadcast TV service on the internet. Alki David, an eccentric, publicity-hound wealthy guy, had been sued earlier with a similar service, using a different technical infrastructure, and had responded with some ridiculous countersuits. When Aereo hit the scene, and had been carefully vetted by copyright lawyers who believed (strongly) that it was following the letter of the law, David suddenly declared that FilmOn was using the same micro-antenna infrastructure and got sued.

In the early days, Aereo was winning its cases, while FilmOn was losing its cases. It was so ridiculous that I heard conspiracy theories that the Hollywood-connected (he likes to promote the fact that he's acted in some movies) David had actually set up FilmOn as something of a legal foil to Aereo to set precedents in one direction. That's probably too big of a conspiracy theory, but either way, Aereo made it to the Supreme Court and famously lost when the Court made up its weird "looks like a duck" test, saying that Aereo "looked" like a cable TV system, and that Aereo's service was a "public performance" and thus infringing.

After the dust settled, people realized that, based on the Supreme Court ruling, it sounded like an earlier 2nd Circuit appeals court ruling in 2011 over a company named ivi was possibly overturned. ivi offered a similar service, but claimed that it was a cable TV service and just had to pay compulsory Section 111 fees to rebroadcast broadcast television. Aereo and FilmOn both quickly pivoted in their cases to argue that if the Supreme Court said they "looked like" cable, then the ivi ruling was no longer good law, and they, too, should be able to operate just by paying the compulsory licenses. For Aereo, the lower court didn't buy it. It wasn't going that well for FilmOn either, with a NY court actually holding the company in contempt for pushing this argument.

And then there was the California ruling from earlier this year... followed up this week by another loss for FilmOn (found via Eriq Gardner at THResq), this time in DC. The ruling itself is apparently under seal so the exact reasoning is not clear, but it appears that a real circuit split is potentially developing, meaning there's a real chance that, at the very least, the issue of whether or not online streaming services can just pay Section 111 compulsory fees could end up before the court. It would be somewhat ridiculous and hilarious if FilmOn ended up winning that argument, while Aereo (and ivi) got completely shut down. Copyright law can be weird sometimes.

Filed Under: alki david, broadcast tv, cable tv, copyright, section 111, streaming, tv
Companies: aereo, filmon

Time Warner Promises To Adapt To Cord Cutting With Fewer TV Ads, Gets Punished By Wall Street For It

from the (re)volution dept

So far the cable and broadcast industry has had a three pronged approach to the threat of cord cutting and the rise of Internet video. One, remain in stark denial about the changes in its sector, refusing anything more than the most superficial evolution (and if anybody notices, just use the word innovation a lot). Two, a relentless dedication to annoying its customers further at every turn, whether that's blocking ad skipping technology or inserting more ads than ever into every viewing hour. And three, a total refusal to ever, ever compete on price. Ingenious, right?

So it was interesting to see Time Warner admit last week that the company would need to make some changes if it hoped to appeal to younger generations, for many of whom traditional cable is a utterly foreign concept. According to Time Warner, the company says it's actually going to limit the number of ads shown on some of its networks:

"Time Warner’s TruTV is testing a new advertising model: It wants to charge sponsors more money by running fewer commercials. Starting in the fourth quarter of 2016, the network, which is devoted to comedic reality programming, will fill less of its time with advertising and promos and more of its air with actual programming. In all, TruTV should run just 10 minutes to 11 minutes of national commercials and promos, compared to 18 minutes to 19 minutes at present..As a result, episodes of shows that air under the new model could run as long as 25 minutes.

“We have a generation that has grown up with access to content that does not have commercials,” said Chris Linn, president and head of programming at TruTV, in an interview. “In order for us to remain relevant to them, we have to deliver the most premium experience possible.”

And while that's only half the battle, it's at least a step forward for an industry that's been comically in denial. Time Warner basically admitted the company needed to address the quality of its product and the delivery of it, accept that the existing TV cash cow is not immortal, and push harder into online streaming. But after Time Warner CEO Jeff Bewkes made the mistake of admitting this on the company's earnings conference call last week, near-sighted Wall Street was sent into absolute hysterics:

"Media stocks faltered during Time Warner's call with analysts to discuss its third-quarter earnings. Chief Executive Jeff Bewkes said his company -- which owns HBO, CNN, TBS, TNT and Warner Bros. -- expects adjusted earnings of about $5.25 a share next year, well below the $5.60 a share forecast by analysts.

One reason for the lower earnings, Bewkes said, was because the company is investing more in new programming for its streaming service, HBO Now, and other digital initiatives. He cited HBO's recent deals with Jon Stewart and "Sesame Street" as well as Turner Broadcasting System's plans to launch a new digital studio, Super Deluxe.

The problem is that offering a better experience is only half the battle. In the face of inexpensive streaming and skinny bundles, the cable and broadcast industry is also going to have to compete on price, something that cable operators and broadcasters alike have treated like the Bubonic plague. So far the cable industry hasn't quite realized that its precious cash cow is dead and current profits are unsustainable. And those that do have this revelation (and begin the much-needed process of adaptation) are punished by Wall Street's total and often painful obsession with the six inches in front of its collective nose.

Filed Under: competition, cord cutting, tv, tv ads, wall street
Companies: time warner cable

TVEyes Hit With Incredibly Restrictive Permanent Injunction By Court

from the so-much-for-the-fair-use-'win' dept

The last time we checked in with the long-running TVEyes case, the TV monitoring company had scored another partial victory for fair use. The company packages clips of news stories from TV broadcasts and makes them available to paying subscribers -- which include journalists and government officials.

It had scored a much larger fair use win earlier, when the court found that even the storage of clips by TVEyes fell under fair use, despite Fox News' protests to the contrary. A year later, some of TVEyes' fair use victory was scaled back. The court took another look at the end users' ability to download and store clips and found these actions weren't covered under the fair use ruling. Users could privately share clips and create archives only they could access. What wasn't covered was public sharing and downloading of clips.

In order to comply with the court's decision, TVEyes would need to additionally restrict access to its compiled content. The court didn't say specifically what TVEyes would have to change to comply with the ruling at that point. Those instructions appear to have arrived.

An injunction issued by the court contains all sorts of new restrictions, as Eriq Gardner reports.

Here's a list of things that are now forbidden:

Enabling users to download to their own computers video clips of content telecast on the Fox News Channel or Fox Business Network.

Enabling users to view FNC or FBN content by searching by date, time, and channel.

Enabling users from sharing video clips of FNC or FBN content on social media websites rather than by personally directed emails, with further limitations.

Those further limitations?

If a TVEyes client wants to email a clip, he or she can only do so to five or less recipients. The client also has to register their work email with TVEyes instead of using Gmail or another free web email service. Those being sent the clip will also have to submit their own email address to ensure they are the intended recipients.

These new restrictions could do some serious damage to TVEyes, which charges subscribers ~$500/month for access to a wide variety of news clips. Where high-profile subscribers like Reuters, Bloomberg, the White House (yes, THAT one), the Dept. of Defense and others will go if they find the new restrictions unworkable isn't exactly clear, but it's a safe bet that Fox's litigious efforts will see a few of these entities finding the service no longer worth the investment.

And that's not the full extent of the restrictions in the permanent injunction. TVEyes will also be required to create and implement a social media blockade solely for Fox News content to prevent the public sharing of its clips. Any Fox content circulated by TVEyes will also have to carry a warning that the content has not been purchased or licensed by the company and that unauthorized sharing is considered copyright infringement. So, for $500/month, TVEyes' subscribers will now have the privilege of being blasted with anti-piracy warnings as if they were lowly, DVD-purchasing peasants.

This order can be appealed and most certainly will be, as it imposes a ton of restrictions on content originating from a single source. Fox News gets its own new set of rules and everyone else plays by the old ones. The court's decisions haven't exactly added up to a fair use win, because a real fair use ruling would apply across the board, not just to everything but this one particular litigant's content.

Filed Under: archiving, copyright, downloading, fair use, search, tv, tv news
Companies: fox, tveyes

One Slightly Less Shitty Quarter For Cable Fuels Renewed Cord Cutting Denial

from the head-in-sand dept

First the cable and broadcast industry argued that cord cutting didn't exist. It was, to hear execs tell it, simply a reflection of the sagging housing market, and the people who were cutting the TV cord were poor, 40 year old nobodies, living in their mom's basement who didn't matter. Of course data has since shown that cord cutting continued as housing markets recovered, with millions of new home owners not signing up for cable. Similarly, most data shows that cord cutters are young, educated, and just tired as hell of constant rate hikes for mammoth bundles of awful reality TV programming.

After a record-setting second quarter for cord cutting, the cable industry seemed prepared to accept cord cutting (and as a result embrace new, skinny bundles of channels and the reality that it may actually have to someday compete on price). But subscriber TV losses during the third quarter sucked slightly less than normal. That, in turn, fueled a new industry press meme about how Internet video's threat to cable was "overblown," cable has "struck back" and it's time to "change the narrative," because cable, like, has things totally under control now:

"It’s time to change the narrative about cord cutting,” Craig Moffett, an analyst at MoffettNathanson LLC, said Thursday in a note titled “Charter Q3 Earnings: Cable Strikes Back.” “Yes, the pay-TV industry is slowly drip, drip, drip declining,” he said. “That cable was actually holding its own was at best a secondary narrative."...The third-quarter resurgence after a disastrous summer quarter of record subscriber losses was led by Comcast, the nation’s largest broadband Internet service provider."

So what did Comcast do to encourage this suddenly rosy outlook among many stock jocks? Why the country's least liked company lost just 48,000 subscribers last quarter. That's still notably pathetic, but it excited Wall Street because it was Comcast's best subscriber showing in nine years (which again, speaks volumes). Time Warner Cable saw similar "improvement," losing just 7,000 subscribers last quarter. Other third quarter earnings results were all over the board, from AT&T's loss of 92,000 U-Verse subscribers (great job!) to Charter managing to add a whopping 12,000 video subscribers (wow!).

And while this narrative of cable "striking back" and cord cutting being a hallucination of a few, mean 'ole bloggers is a great one for firms pushing specific stock positions, news outlets and analysts nervously sucking at the teat of dwindling industry ad money, or executives with their heads buried deeply in the sand, it misses the forest for the trees.

One, many of these companies just finished new gee-whiz set top box GUI upgrades (notably Charter, Time Warner Cable and Comcast). And while some graphical upgrades for the aging cable box may have excited customers temporarily, they're in no way going to be a substitute for the direction the cable industry absolutely needs to head: lower prices and more flexible channel packages. Netflix is now in half of all american homes and the impact on cable ratings has been abundantly obvious. And while several cable companies are finally experimenting with new "skinny" channel bundles, they're still not seriously competing on price. As a result these offerings tend to lack value, features, and, in cable industry fashion, are jam packed with fees and caveats.

A slightly less shitty quarter also doesn't change the fact that the housing market continues to grow without bringing new cable subscribers along for the ride. Nor do these numbers address the arguably bigger threat of "cord shavers," an admittedly idiotic term that includes users who are trimming back on their cable TV and service bundles to counter absurd programming rate hikes. Flat cord cutting numbers are just one metric to look at. Looking at all of the data, including ratings, housing growth, and cord shaving paints a very clear picture that Internet video is a serious threat that's not going away.

To be sure, much cord-cutting analysis and press coverage tends toward the apocalyptic, and over-states both the pace and scale of the problem. It's also true that cable could likely swat cord cutting like a pesky fly were the industry interested in things like actual innovation, competing on price, and disruptive new, open viewing platforms and hardware. But it's pretty abundantly clear looking at consumer bills and customer satisfaction surveys that the industry is interested in none of those things. Claims that one slightly-less-shitty quarter for a single statistic means the tide is turning sends the completely wrong message to an industry that needs to wake up and engage in aggressive adaptation before things get truly ugly.

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

AT&T: Mega Mergers And Anti-Competitive Behavior Are Bad...Unless It's Us Doing It

from the ill-communication dept

Focusing on mega-mergers instead of healthy competition is bad, according to AT&T. That is, unless you are AT&T. The telco, fresh off its $69 billion acquisition of DirecTV, this week filed some comments with the FCC (pdf) on Charter Communications' planned $78.7 billion acquisition of Time Warner Cable and Bright House Networks. While AT&T doesn't outright oppose the merger (hey, that would be hypocritical), AT&T does proclaim that companies like Comcast, Charter, and Time Warner Cable are increasingly focusing on giant mergers and acquisitions in lieu of actually competing with other companies:

"The cable industry, as the merging parties concede, is marked by a lack of head-to-head competition. Cable companies have chosen not to compete and instead coordinate to gain shared advantages over rivals, which further industry consolidation will only facilitate. The reason is simple: as Charter CEO Tom Rutledge put it, following the proposed merger "(t]here will be less people to coordinate [with]."

That's a pay TV provider that just spent $70 billion on a mega-merger instead of competitive upgrades, complaining that the cable industry spends too much time focusing on mega mergers, and not enough time competing. While AT&T's acquisition of DirecTV did give the company better leverage in broadcast negotiations (savings that most assuredly won't be passed on to the consumer), its primary goal was ensuring that DirecTV wouldn't apply any competitive pricing pressure on AT&T's U-Verse TV business. Apparently conning regulators on a shitty deal that decreased pay TV competition has filled AT&T with fresh joie de vivre.

AT&T notes the only reason it's even really commenting is because it's just really worried about the Charter merger's impact on the emerging Internet video market, which AT&T cherishes like a new family puppy:

"Careful scrutiny is especially warranted because this increased consolidation and coordination comes just as new competitive threats are emerging. Over-the-top video providers are disrupting the traditional cable pay TV model by revolutionizing the way consumers access and view video. AT&T/DIRECTV - which the Commission described as "a bet on competition" - is investing billions to go toe-to-toe with cable incumbents and foster online video distribution ( .. OVD")."

Except that's bullshit, too. AT&T aggressively mislead regulators into thinking its DirecTV acquisition would be a good thing, by falsely promising that it would expand fiber to the home service to an additional twelve million homes. Except as we noted at the time, these promises were based on AT&T Miracle Math (TM); the company has been deploying very limited fiber to the home ("fiber to the press release") to scattered development communities for years, and somehow successfully got the FCC to buy into the idea that these deployments were somehow new -- specifically thanks to the DirecTV deal.

It's that kind of con man confidence that apparently gives AT&T the perceived license to lecture other industries on what constitutes good behavior. Perhaps most amusingly, AT&T takes issue with the cable industry for its tactic of using a wide variety of associations to further the competitive goals of the cable industry:

"The cable industry has formed a variety of exclusive associations, organizations, and other ventures to advance the competitive interests of cable companies. These joint initiatives, although opaque to outsiders, are transparent to cable-company members who may use them to coordinate strategies against rivals. The proposed merger could make that easier."

Why fan my face before I faint! You mean like the countless associations, astroturf efforts, hijacked minority groups, fake consumer groups, and policy think tanks that AT&T has funded for decades to help it pursue a decidedly anti-consumer and anti-competitive agenda? Most companies are detached from reality in some fashion or another, but absolutely nobody does blistering, hypocritical policy hubris quite like AT&T. Do as ma bell says, not as ma bell does, kids.

Filed Under: competition, hypocrisy, mergers, tv
Companies: at&t, charter, comcast, directv, time warner cable

NBC's Ingenious Solution To Ad Skipping And Low Ratings: More Embarrassingly Unfunny Product Placement

from the dead-cash-cows dept

We've already talked a lot about how the cable and broadcast industry's response to a changing TV landscape (ad skipping, dropping ratings, Internet video competition) is the ingenious one-two punch of mindlessly raising rates and making the viewing experience more annoying than ever. They've accomplished the latter in several ways, ranging from simply pushing more ads than ever before, or by even speeding up or editing popular programming to ensure more ads will fit in each viewing hour.

With ad skipping on the rise, ratings in free fall and lawsuits to stop ad skipping going nowhere fast, the broadcast industry's latest ingenious solution is to also start including more in-show product placement:

"Moments before climbing into bed with supermodel Christie Brinkley, Donny Deutsch turns to the camera and tells viewers that a certain brand of vodka is perfect for the occasion. The scene is from Deutsch’s new comedy series “Donny!” debuting next month on NBCUniversal’s USA Network. It’s the latest example of how TV shows, which have long avoided acknowledging product placement to their viewers, are becoming increasingly upfront about it, even turning it into a joke.

That sounds incredibly stupid to me, but maybe you had to be there. Now that consumers have more choices and improved ad skipping technology, they're making their preferences clear, whether that's Netflix or Dish's Hopper ad-skipping DVR. Adapting to competition is still a foreign concept to the cable and broadcast industry, which is why NBCUniversal execs apparently believe that including stupid references to products that erode the quality of your series is the height of "creativity," helping them better connect with Millennials:

"We see that happening at our company more and more often," (NBC U ad exec Linda) Yaccarino said during an Advertising Week panel in New York. "You have to acknowledge the challenges with ad-skipping and lapses in measurement and break out in a more creative way."..."Today's young people are hip to what we do for a living," (Donny) Deutsch said on stage during Advertising Week, which ended Oct. 1. "You've got to let them in on the joke."

Yeah, but hawking vodka just isn't funny. The real joke is that your valued young target audience is increasingly no longer watching your show on traditional TV to begin with, and you believe having stars peddle more hummus is the answer. Shoving more ads down the throats of your viewers isn't creative, it's desperate. And while advertisers may be willing to pay an estimated $300,000 per each placement, it's a band aid on a major gash in the hull of the industry's legacy cash cow. It's also telling that the broadcast industry's version of "creativity" and customer adaptation is bringing television advertising back full circle to the 1950s:

Of course, the solution for traditional cable and broadcasting isn't to find a way to shovel more ads into less space, it's to develop a better product and offer it in more convenient packages at a better price. Whether that's a fair position to be in is irrelevant. The cable and broadcast industry's traditional cash cow is dead. There's no turning back the dial. The answer now is in developing new models going forward that finally, after a generation, give consumers what they want. Sadly, that's going to mean having to (gasp) compete on price and probably make less money for a little while. But the alternative is letting companies like Netflix run away with the holy cash cow, leaving legacy cable a relic of a bygone era that could have adapted, but instead chose to stupidly keep making the same mistakes.

Filed Under: ad skipping, product placement, tv
Companies: comcast, nbc universal

Now That Nielsen Can Actually Be Bothered To Track Internet Video, The Numbers For Traditional TV Are Getting Ugly

from the viva-la-revolucion dept

For years, we've noted how popular TV ratings firm Nielsen has turned a bit of a blind eye to cord cutting and the Internet video revolution, on one hand declaring that the idea of cord cutting was "pure fiction," while on the other hand admitting it wasn't actually bothering to track TV viewing on mobile devices. It's not surprising; Nielsen's bread and butter is paid for by traditional cable executives, and really -- who wants to take the time to pull all those collective heads of out of the sand to inform them that their precious pay TV cash cow is dying?

Now that Nielsen has decided to join us in 2015 and start tracking streaming service and mobile device viewing, the numbers, shockingly, aren't looking all that hot. Nielsen's latest analysis shows a number of things, most notably a decline in pay TV subscribers but a sharp uptick in users who are only subscribing to broadband:

"According to Nielsen’s second-quarter Total Audience report, the number of homes with pay-TV subscriptions—a crucial number for the industry—is down 1.2% to 100.4 million from 101.6 million a year ago. The number of broadband only homes rose 52% to 3.3 million from 2.2 million...Meanwhile, the share of homes with subscription video on demand rose 18% to 45% in the second quarter of 2015 from 38% in the second quarter a year ago. The number of homes with enabled smart TVs rose to 18% from 11%."

So, yeah. Traditional TV is slowly and surely dying. While Nielsen helped prop up the industry belief that cord cutting was over-hyped, other tracking firms were busy pointing out that not only were cable TV providers slowly hemorrhaging subscribers each quarter, but the number of new pay TV subscriptions weren't scaling in line with new home ownership growth like they used to.

And that's before you even get to traditional broadcast numbers. Data had already shown a sharp downtick in viewership for traditional cable channels, starting with children's programming and now even impacting the supposedly untouchable ESPN. Nielsen's latest traditional ratings data also shows that TV viewership ratings continue to drop, with fall's TV premiere season landing with a thud for every major show without Kermit the frog in it:

"According to Nielsen fast national data, every returning Tuesday night drama suffered double-digit ratings declines, while the three new series were a mixed bag. Leading off the night at 8 p.m., ABC's reboot of "The Muppets" put up decent numbers, averaging 8.91 million viewers and a 2.8 among adults 18-to-49, making it the night's No. 2 rated show behind "The Voice."..Networks have always banked on Premiere Week as an interval of peak sampling, but Tuesday night's PUT (or people using television) levels were discouraging. The number of adults 18-to-49 watching primep-time programming dropped 8% versus the year-ago period and overall usage in the demograhic for the last two nights is down 10%.

Gosh, it's almost like viewers are headed to a fictional land where they have more control over what they view for much less money? It gets worse: TV viewing among adults 18-to-24 dropped 20% from last year, and male usage in that holy-grail demographic has wilted by roughly 24%. Again, cable and broadcast executives (and if you're Comcast NBC Universal, that's one and the same) could stop all of this right now if they were willing to offer more flexible channel lineups and compete on price, but they've grown too fat and comfortable to notice the storm clouds gathering on the horizon.

Filed Under: internet, tv, video
Companies: nielsen

The Weather Channel Finally Gets The Message: Announces Plan To Actually Cover...The Weather

from the brilliant-ideas dept

Over the last few years, The Weather Channel has been slowly but surely veering away from its core competency in a ham-fisted attempt to cater to the lowest common denominator. While its TV channel now offers a rotating variety of relative-awful reality TV only tangentially related to the weather, (ranging from Prospectors to Fat Guys in the Woods) its website often focuses on non-weather related subjects like kooky buffalo and hard-hitting analysis of the world's "sexiest" beaches. Having anchors stand stupidly around in thundersnow storms is another favorite channel pastime.

But then something interesting happened. When The Weather Channel executives tried to up the rates on cable operators like DirecTV and Verizon FiOS, both companies balked -- and pulled The Weather Channel from their lineups, replacing it with channels, apps and services that actually reported the weather. Apparently, threatening to pull your product from the market if you don't get more money -- only works when people give a damn about your product. Meanwhile, cable companies are having a harder time pushing off programming rate hikes to consumers awash with alternative options.

Initially, The Weather Channel executives responded by trying to claim DirecTV and Verizon were threatening public safety by pulling access to an invaluable public resource (an argument that fell flat on its face since most realize the channel doesn't actually provide that). Then, the company amusingly tried to attack competitors like AccuWeather by actually claiming it offered too much fluff. But with a little time to think about it, The Weather Channel executives appear to have finally learned something.

The company this week announced a notable restructuring that will, amazingly enough, involve refocusing The Weather Channel on actually covering the weather:

"The plan calls for a singular focus "on our unique strength -- and that is the weather." With the cable channel bundle coming under increasing pressure, and "skinny bundles" becoming more common, "it's inevitable that channels will be cut," Weather Company CEO David Kenny said in an interview. With this in mind, "we need to be really clear who we are," Kenny said.

That means paring back its original programming investments (shows like "Prospectors" and "Fat Guys in the Woods") and lifestyle coverage. The priority is essential, live weather coverage -- particularly during periods of severe weather -- and local information.

Granted there's only so many ways you can monetize a quick glance at the five-day forecast, and filling twenty-four hours of eyeball-grabbing airtime in the smartphone era without catering to nitwits will likely be a continued challenge. But it's at least a positive sign that the company sees the cable TV landscape changing and needs to either change with it, or be left behind.

Filed Under: customer service, tv, weather
Companies: the weather channel, weather channel

The Cable Industry Is Fighting Tooth And Nail To Prevent Cable Set Top Box Competition

from the protectin'-innovation-through-obstinance dept

For years now regulators have tried fruitlessly to bring a little more competition to the cable set top box market. While CableCARD was supposed to be a revolution on this front, regulatory enforcement was messy and inconsistent, and to protect set top box rental revenues and overall market control, cable companies rarely advertised the technology and made installations frequently nightmarish and expensive. When lackluster CableCARD stats then emerged annually, the cable industry just shrugged and apathetically declared that gosh -- nobody really wanted choice anyway.

Senators Ed Markey and Richard Blumenthal recently collected data from ten cable companies and found that things haven't really improved when it comes to set top box competition. Their data found that 99% of cable customers still rent a cable box, and pay $231 in fees annually for hardware that's usually not even worth a single year's payments. As a result, the cable industry generates $19.5 billion per year in rental fees, and has every incentive to keep things as they are.

Last fall, Congress passed the Satellite Television Extension Act Reauthorization (STELAR), which effectively killed the CableCARD and the FCC's sloppy attempt to crack open the set top market. However, STELAR's passage included the creation of the the Downloadable Security Technology Advisory Committee (DSTAC), tasked with advising the FCC on how to move forward on a CableCARD replacement that actually works. That's no small feat given the cable industry desperately wants to maintain the status quo, and the copyright brigades want hardware to be as locked and crippled as possible.

Among the DSTAC proposals released last week (pdf) is the idea of a "virtual headend," where network security functionality is performed in the cloud, leaving the end user device flexible for an array of hardware and software solutions. It's an evolution of the "Allvid" proposal the FCC considered in 2010, intended to create a single, unified standard for a set top gateway that's open to all forms of video competition, software and hardware alike.

Not too surprisingly this idea has the support of companies like Google, Apple, Sony and Microsoft, but has faced stiff opposition from the cable industry. With reports suggesting DSTAC will be pushing such an open platform (even if more flexible than the original Allvid proposal), the cable industry's chief lobbying apparatus (the NCTA) is of course once again trotting out the safety, privacy and security bogeyman:

"Regrettably, the report veers off course by including a controversial proposal to place a burdensome technology mandate on MVPDs known as AllVid. This approach could jeopardize consumer protections including privacy, emergency alerts, parental controls, and inhibit innovation by allowing the government to dictate the way video content is delivered to consumers. Fortunately, the report reflects substantial opposition to the idea of a new, government-imposed technology mandate and extensively describes the proposal's shortcomings."

Yes, and we wouldn't want to "inhibit innovation," would we? Opening up the locked-down cable set top box not only would open the door to greater set top hardware competition, but it would ultimately threaten the cable industry's stranglehold over cable itself. As such, it's highly unlikely that any proposal worth its salt will see NCTA approval. It's also probably unsurprising that Allvid has the support of consumer advocates like Public Knowledge and the New York Times editorial board, which this week tried to soft sell the idea to the cable industry at the bottom of an editorial on the subject:

"Cable and satellite companies will surely resist change or try to water down the new F.C.C. regulations. After all, they stand to lose billions in rental fees. But it is in their long-term interest to give consumers more choices. A growing number of Americans are giving up cable-TV because it costs too much. Consumers might be more inclined to pay for cable if the industry stopped trying to nickel-and-dime them."

Except it's not really in their long-term interest to give consumers more choices. Open set top gateways and open, competing platforms would only further usher in increased Internet video options, incurring a mass realization that people pay the cable industry far too much, for far too little. As such, expect the cable industry to scratch, piss and moan until it has ensured that whatever standard emerges from the FCC committee is a scarred and bastardized shadow of the original intent. And should this shadow actually survive the lobbying gauntlet and see real-world adoption, the cable industry will surely work tirelessly to ensure the same level of dysfunction consumers enjoyed with the CableCARD.

On the bright side: none of this really matters longer term. Neither incompetent regulators nor terrified legacy giants can stop the Internet video revolution from threatening traditional cable television. And as traditional cable's power wanes, its all-too-comfortable walled-garden authority over the set top box market becomes utterly irrelevant. As such, the cable industry needs to stop focusing on swimming upstream, and start battening down the hatches ahead of what's going to be a particularly nasty storm.

Filed Under: cable, cablecard, competition, fcc, set top box, stelar, tv

Steve Ballmer Shrugs Off $60 Million TV Offer For Clippers Games, Considers Streaming Instead

from the tick-tock dept

It was really only a matter of time. As cord-cutting continues as a trend and the cable TV market as we know it today struggles to stay relevant by grasping at major pro and college sports broadcast deals, the injection of a tech-industry giant into the sports ownership arena meant that the chance of streaming for sports could only increase. Truthfully, When Steve Ballmer bought the Los Angeles Clippers for $2 billion, he wasn't the first tech celebrity to own an NBA team. Mark Cuban, after all, has owned the Dallas Mavericks for some time now. But Ballmer has been quite progressive in a traditionally conservative league in pushing the Clippers forward into modernity. Given the state of the team's business practices when he made his purchase, there was always going to be a lot of heavy lifting to do. Still, it seems that Ballmer isn't going to let that keep him from considering some very big ideas.

And one of those ideas appears to be transitioning the broadcast of games away from the television model to a streaming model. The New York Post reports that Ballmer has turned down a $60 million per year contract offer from Fox and is mulling over plans for an over-the-top streaming network instead.

If he follows through on the plan, Ballmer, the former CEO of Microsoft, would be the first owner of a major US sports team to deliver games direct-to-consumer via a Web-based service and not through traditional cable or satellite companies, sources said.

Clippers games are now aired to roughly 5 million Los Angeles-area homes through Fox Sports’ Prime Ticket regional sports network in a deal that runs through the 2015-16 season. Prime Ticket currently pays the team a rights fee of $25 million a year — and offered a 140 percent increase, to $60 million, but the billionaire Ballmer turned it aside.

There are hurdles to be jumped over to make this work, of course. Production of the games is a job currently done by the networks, meaning Ballmer's service would need to come up with its own crews, commentators, and production values. That said, it feels silly to suggest that he isn't capable of that jump. More difficult would be creating a subscription model for the broadcasts, which is what the link above seems to think is the plan.

While he may have the technological smarts to pull it off, Ballmer may find it hard to earn more than $60 million in revenue a year from a single sport streaming RSN, experts said. The Clippers would have to sign up around 10 percent of LA’s 5 million households and get a pretty high price for the service, those people said.

“If it costs $12 per month, multiply that by 12 months in 500,000 homes, it would add up to $72 million — but then you’d have to produce the games and market the product,” said one.

And that’s if Ballmer can give fans a reason to subscribe during the five-month off-season. If he can’t, revenue would only come to $42 million.

And? The Clippers' deal with Fox currently stands at $25 million per year. Even under the notion that a $12/month subscription is the model, surely some percentage of fans would sign up. But, actually, I don't particularly understand why a subscription should be necessary to start with. Instead, free the product and let it grow in a streaming service that would be watchable on any internet-connected device. This means smart TVs, devices hooked up to regular TVs that can stream content, phones, computers, tablets, etc. If the accessibility of the games means that more viewers and fans can get the stream for more games than they could under the broadcast product, the advertising premium should see a correlative jump as well.

That extra revenue ought to make up for the lack of a subscription, I think. Meanwhile, you become the team with the most accessible product on the market, allowing the fanbase to grow. They might end up being America's basketball team, leading to even more revenue. Either way, streaming might be a win for Ballmer's Clippers.

And another nail in the cable coffin.

Filed Under: basketball, la clippers, ott, steve ballmer, streaming, tv
Companies: la clippers, nba