Tag Archives: ESPN

My Review of Sling TV

Fatty_watching_himself_on_TVAs I mentioned in an earlier blog, I signed up with Sling TV because I wanted to see what web TV is like. My household is already a big user of Netflix, Amazon Prime, and Hulu, and I have a very good opinion of all of those services. I will admit that I don’t watch Hulu as much as the other two since I have yet to buy the premium service there, and so for now I suffer through the commercials. But all three of these services have a decent level of quality and I have rarely had problems watching what I want to watch.

I also have access to HBO Go. Comcast forced me into a small TV bundle in order to get faster Internet, and so I have the basic package that consists of the major networks plus they threw in HBO. I like the quality of the HBO online product, and in fact it seems to have better picture quality than the other web services, although it boots me from time to time.

But sadly I have not had the same experience with Sling TV. One of the reasons I got Sling TV was to watch the NCAA basketball tournament. It turns out that my favorite team, the University of Maryland, was playing two games on TNT, and these games were not available anywhere else on the web. I also caught U of M’s women’s basketball game on ESPN2.

The experience of trying to watch basketball on Sling TV was painful. It started when I first tried to log on to the service and repeatedly got the message that the feed was not currently available. It took me almost ten login attempts to make a connection. When I finally connected, the ‘reception’ was pretty good, about the same quality that comes with standard definition service on Netflix. The picture was clear enough and it looked good on my 27 inch monitor.

But after about ten minutes it started to have problems. First, I lost my connection and it took me a full ten minutes to reconnect. To a basketball fan that’s an eternity. I finally got the game back and it was pretty decent quality again. But then I started having problems with the audio. The announcers’ voices started clipping to the point where I had a hard time understanding them. Within another ten minutes the audio had also gotten almost two seconds out of synch with the video, with the voice coming in before the picture. This was really disconcerting.

I found that if I restarted the service that I could fix the voice, but I again needed multiple attempts to get reconnected. By the second half of the basketball game the audio was just so awful that I turned off the sound and listened to the rest of the game on Sirius radio while watching the video. There were times during the game when I got significant pixilation, although this tended to clear itself after a few minutes each time.

I had this same thing happen on other channels including ESPN, ESPN2, and the Food Network. The problem was not as pronounced on ESPN, but the audio problems were still there.

I have a 50 Mbps cable modem that has low latency, and I can’t remember ever having any major issues on Netflix or Amazon Prime. In hundreds of hours of viewing I may have been booted from those services maybe three times. So I know it’s not my Comcast connection. The problems I had with Sling TV are puzzling since it’s a unicast and every viewer gets the same signal at the same time. I’m curious how many other viewers had the same problems I did.

There are some good features of the service. While they advertise that you get ESPN and ESPN2, a subscription also gets you a feed into ESPN3, the online ESPN programming. I looked at several college baseball games, some wrestling, and soccer on ESPN3. The feeds I watched for past events did not have the same issues, so perhaps the problem is only with real-time feeds. I was not given access on ESPN3 for content on the SEC network, but I find that understandable.

But for now, until Sling TV figures out these issues, the service is not ready for prime time. This makes me sad because I want web TV to be successful. But my experience of watching several basketball games was horrible and was some of the worst sports viewing experiences I have ever had. This was even worse than trying to watch sports via satellite on days when the pixilation is bad. Luckily you only have to buy it one month at a time and I will come back in the fall when it’s football season and try again. I would certainly caution folks against signing up for the three month subscription they are offering without trying it first.

If web TV is going to succeed they have to be able to offer the same quality that people expect elsewhere. They are directly competing with Netflix and Amazon Prime and customers can easily compare their quality against those services. But they are also competing against the quality of normal cable TV systems and satellite. If web TV isn’t at least as good as those two alternatives they will have a hard time retaining customers.

Some Thoughts on Sling TV

Old TVSling TV is the first on-line package of programming that is offering a real alternative to the big cable packages. They have put together a package of 15 channels for a base price of $20 per month.

The channels included are ESPN, ESPN2, TNT, TBS, the Food Network, HGTV, the Travel Channel, Disney, the Cartoon Network, ABC Family, CNN, Maker, adult swim, El Rey and Galavision. Additionally, they offer three add-on packages for $5 each: one for sports, one with news and info, and one for kids.

This is being marketed to cord cutters — people who once had cable. A survey from Esperian marketing near the end of last year put cable cutters at 5.5% of households. To put that into perspective, that translates into 8.6 million households. But there is a larger potential market that is not much talked about, which are the cord-nevers who have never had cable TV — a little more than 24 million households.

The first news stories I saw about Sling TV assumed the package is aimed at millennials, since younger households are leaving cable at the fastest pace. But the demographics of the channels in the line-up paint a different picture. Consider the following average ages of those who watch the following Sling channels: CNN (59.1), ESPN (48.6), ESPN2 (53.1), HGTV (56.4), TNT (53.6), Travel Channel (48.2), Food Network (47.6), and TBS (44.4). There are a few channels for kids: Cartoon Network (11.9) and the Disney Channel (11.7). Overall the average age of the viewers of the Sling channels is 48 years old. That’s not exactly a millennial line-up.

There is also a rumor that some of the contracts for programming are putting a subscriber cap on Sling TV at somewhere between 2 million and 5 million total customers. That would be one way for the programmers to stop the online phenomenon from getting too large. They do not want to put at jeopardy the 100 million households that have a cable subscription of some sort.

All of the numbers say that the market is ready for online TV. Just last week it was announced that between the fourth quarter of 2013 to the fourth quarter of 2014, overall live TV viewing dropped 12.7%. That’s the average drop, and varied between a 23% drop for Viacom (MTV, Nickelodeon, Spike, and Comedy Central) and a 7.5% drop for Disney, including ESPN.

A number of analysts say that the viewers that left cable didn’t go away, but instead shifted to streaming services like Netflix and Amazon Prime. This trend will bring about changes to the cable industry. Losing advertising eyeballs at this rate is going to translate to less advertising dollars going to cable channels and networks.

One can see this shift already happening in the advertising world. In 2012 there was $39 B of advertising online and $64 B on TV. By 2014 online advertising had grown to $52 B and TV advertising to $67 B. 2015 is projected at $57 B online and $68 B with TV. One can envision that soon after that TV advertising is going to trend downward along with the lost TV viewers.

I look at Sling TV as the first volley among many to provide more programming online. Both Verizon and AT&T say they will have an online programming package sometime in 2015. There have been rumors of a package from Google and also that Apple is taking another run at this. And some of those who have tried in the past like Sony and Microsoft might give it another shot. Even CBS is now streaming their content online for a fee.

This trend towards online programming is likely to get a major boost from the FCC later this year. The FCC is looking at the barriers that programmers have in place against online programming and it’s clear that the sentiment of Chairman Wheeler is to enable more online TV. The current docket at the FCC asks if we should give online programmers the same rights to get content as cable companies. If they are given that right, then online programming will explode.

I am probably going to buy Sling TV. This might even prompt me to buy a television. My interest in TV networks is really limited. My perfect package would be ESPN, the Big Ten Network, HBO, the Food Network, the Travel Channel, and Comedy Central. Sling TV provides me with half of my wish list, which is not bad for a first volley.

Sports and Cord Cutting

Maryland TerrapinsThere are two trends having to do with TV and sports that are headed in opposite directions. There is a continued bidding war where networks are paying records prices to lock down sports content. But we also have the cord cutters who are dropping off the network and reducing the size of the cable TV subscriber base. Somewhere soon those two trends are going to collide in a big way.

The sports programmers keep hammering cable operators with higher costs. Time Warner claims that they have seen a 91% increase in sports programming since 2008. Where is this increase coming from?

  • There are more new sports channels all of the time. There has been an explosion of sports channels over the last decade.
  • The programmers force bundles. For example, I have clients throughout the country who are now being forced to carry the SEC channel, although their customers have very little interest in southern college football.
  • The various leagues are extracting huge payments for rights to their content and this translates into the cost of sports programming growing faster than other programming.

Let’s look at an example of this. I am a Maryland Terrapins fan and they just moved this year to the Big10, largely to get a share of larger television revenues there. The Big10 will reportedly pay out almost $31 million per school this year, mostly due to revenues from the Big Ten Network (and some from bowl games). That network is carried by 60 million homes. They have expended to new TV markets by the additional of Maryland and Rutgers and the projected payments per school are estimated to grow to $44.5 million per school by 2017.

But even in the Midwest, no more than 5% of households, at most, watch the Big Ten Network very much. The two big draws on the network are college football and basketball. Most college football games on the network draw only a few million viewers, with some games getting far fewer than that. And basketball games in general draw maybe half of what football draws. And only the diehard fans watch the network the rest of the year when they show wresting, volleyball, baseball and all of the other Big10 sports.

So the network is pulling in huge dollars due mostly to a three months of college football and most of the rest of the year there are very few eyeballs on the network. Contrast this to ESPN which has a lot of programming that outdraws the Big Ten Network. ESPN has more viewers on a day-to-day basis than a whole season of Big10 football. And so a network like ESPN can make more money from advertising than they do from subscriber fees.

One has to wonder what is going to become of networks like the Big Ten Network as cord cutters cut into programming revenues. We recently saw ESPN agree to be on the Sling TV lineup which is going to be completely online. That will get them new subscribers from sports-loving cord cutters, but it’s also going to attract a new wave of cord cutters. And Sling TV is not the end game, but just the first volley. It seems like there are dozens of companies working to put packages of programming on the web.

The cable industry as a whole stopped growing a few years ago due to cord cutters. Instead of adding a few million new homes per year, the total number of cable households has held steady. But lately it’s finally starting to drop, and when there are real options online a lot more households are going to opt out of the big cable packages.

I’ve seen statistics that say that the average household only watches 17 channels out of the hundreds of programs on the typical cable lineup. When households start finding $20 and $30 dollar packages that give them most of the channels they want, it’s going to become easy for them to jump ship.

ESPN is probably going to make the transition to the web just fine because they are going to be included in most of the web packages. But networks like the Big Ten Network and every other regional sports network are not going to fare so well. It’s just a matter of math.

Let’s say the Big Ten Network wants to make $350 million annually from programming. If there are only 2 million homes willing to pay for the network then they need to charge $14.58 per month. With 3 million customers it’s $9.72, 4 million it’s $7.29 and 5 million is $5.83. Perhaps they can find one of those price points to make it work. But they won’t be operating in a vacuum and there are going to be lots of other sports channels trying to do the same thing and wanting to charge the same high fees. On an a la carte basis it is going to cost a sports fan a lot more than what they pay today for all of the channels, and that is where the rubber hits the road.

I don’t know what is going to happen any more than anybody else. But my gut tells me that the revenue collected by networks like the Big Ten Network are going to drop – slowly at first and eventually precipitously. At some point they will have to get on the web and reach a new stasis, and that probably means making less revenue than today. That’s not such good news for the Terps and the teams of the Big10.

The Total Sports Programming Bill

footballThe average cable bill in the US is now somewhere between $75 and $80 per month (depends on who measures it). Nobody can say for sure how much of that average cable bill that is needed to pay for sports programming, but we know it’s huge. There are a number of reasons why it’s hard to get at the true cost of sports programming. First the deals with sports teams are often private since the sports teams and the companies buying rights to the content are often closely-help corporations. Further, cable companies sign a mountain of non-disclosure statements that prohibit them from talking about what they pay for a given network.

Anybody who buys a big channel lineup has a tremendous amount of sports programming available today. I currently count 35 national sports networks in the US. This includes the ESPN family of networks as well as the Fox Sports networks. But there are also networks that carry tennis, golf, horse racing, skiing and fishing. There are the national networks that carry college football such as the Big 10 network, the SEC Network and the PAC-12 network. The major professional sports of baseball, basketball and football each have their own channels. In addition to these 35 channels, there are 50 regional sports networks that carry mostly local professional sports and college sports not represented on other networks.

In addition to all of this there are sports costs buried within the cost of many non-sports network. Certainly when you pay for CBS you are paying for some of the deals they have made for the NFL, college football and basketball, tennis, golf and auto racing. With NBC you are also paying for the Olympics, which alone have a monthly cost of over 80 cents per cable customer in the US. When you buy TBS you’re paying for the Atlanta Braves. And local stations everywhere carry local college sports.

There were some hearings earlier this year in Congress that looked at the high cost of cable TV. There were a variety of estimates put forth for the cost of sports programming that ranged from a low of $21 per household per month up to an estimate that sports represents nearly half of programming costs. I think the answer is somewhere in between.

One of the problems with sports programming is not just the proliferation of networks, it’s the fact that sports programming costs are increasing much faster than the cost of other programming. It’s a vicious circle where companies bid for the rights to get sports content with the assumption that they’ll be able to pass it all on to the public. And for the most part they have been able to do this.

But consider the deal made for the Los Angeles Dodgers. The Dodgers were able to negotiate a new 25-year programming deal that increased the team’s TV revenue from $39 million to $335 million per year. That’s an 860% increase. It’s a great deal for the Dodgers certainly. Some of the smaller market baseball clubs don’t have total revenues greater than $300 million per year. But this turns out to have not been a good deal for the newly formed SportsNetLA. This company is owned partially by Time Warner Cable. The network wants cable companies in the area to pay them between $4 and $5 per customer per month to air the Dodgers, and all except Time Warner have declined to do so.

It’s obvious this is driven largely by greed. Every time the existing carriage rights end for a given sport there are generally multiple parties bidding up the price for the new rights to content. There is a lot of incestuous behavior in this part of the industry since cable companies like Time Warner and Comcast own significant rights to sports that they pass on to their own subscribers without negotiations.

It’s been estimated that about 30% of households actively watch sports of some kind. But even that number is aggressively high because the majority of that 30% favor one or two sports and not the wide range of programming we are all paying for. It’s been estimated that maybe 4% to 5% of households are the total sports fanatics who watch it all. Doing a little math shows that if the 30% were asked to pay for all of the sports programming the cost would be $85 per household per month. And if the 5% had to pay for it all the cost would be $500 per sports fanatic household per month. It’s obvious that households who care nothing for sports are subsiding this lucrative industry.

At some point in the near future this model is going to break, because the cost of programming is rising far faster than inflation, driven in large part by sports programming. Nobody knows what the magic number is, but there is going to come a point where the average home is just going to say no to the monthly cable bill. One doesn’t have to look very far in the future and the average cable bill in ten years is going to be $150 and within fifteen years it will be $200. I am guessing that long before those numbers that a whole lot of households are going to opt out of paying for sports and other programming that they don’t even watch.

ESPN and a la Carte Programming

Maryland TerrapinsEarlier this month ESPN announced that it would be providing some professional basketball and other programming available by a subscription basis on the web. This got the sports world buzzing. I follow several sports bulletin boards and sports fans have been looking for a glimmer of hope that sports programming will be sold a la carte. A large percentage of football fans (at least the vocal ones on line) say that they hate paying for the big programming packages to just get sports. They all say they would gladly pay for ESPN and a few other networks (depending upon the part of the country they live in).

Unless these guys all live in bachelor pads that only watch football and basketball channels they probably are ignoring the fact that their families probably prefer to watch something other than sports. But let’s just suppose that a genie came along and gave these guys their wish. What might an a la carte sports programming world look like?

ESPN is clearly the king of the sports programmers. In 2013 they had revenues of $11 billion, about $7 billion of which came from programming fees mostly from ESPN, but also from the other sports channels they operate. The remaining revenues came from advertising. It was reported in 2013 that ESPN was in almost 100 million homes and that their average fee to cable companies was about $5.50 per month per subscriber. And that number is growing rapidly and I have already seen fees of $6.00 in 2014.

What would it take for ESPN to go a la carte and sell at a premium price only to sports fans? It’s really simple math. If ESPN was to charge $15 per month they would need 40 million customers. At $20 per month it’s 30 million, and at $25 per month it’s 24 million? Might ESPN be able to do that? It’s at least conceivable that they could get those kinds of subscriber numbers, but it looks like a tall order. It’s hard imagining a third of US households signing up for an ESPN subscription at $20 per month. I am sure the folks at ESPN are quite happy with the current regime and will only contemplate a la carte if the wheels come off the industry.

ESPN is probably the only sports network that can contemplate such a scenario. Making a change this drastic would certainly upset their comfortable business model, but if they were able to get 20 million customers they could establish a new baseline and grow again from there.

My alma mater Maryland just joined the Big 10, partly due to a promise of higher revenues from TV. The Big 10 Network, along with the SEC network are the next two highest earning sports networks after ESPN, both expecting revenues of around $350 million in 2014. Let’s look what it would take for the Big 10 network to change to a la carte. Today they charge about $1.10 per subscriber in areas where they have schools and it’s reported that outside those areas the fees are closer to $0.25 per customer. If they were to charge $10 per month they would need 2.9 million customers. At $15 they would need 1.9 million paying customers, and at $20 they would need 1.4 million.

These are certainly lower numbers than ESPN needs, but they also have a much smaller potential universe of customers. One way to see how reasonable a la carte might be is to look at recent TV ratings for Big 10 football games. Let’s look at weeks 7 and 8 of this college football season. In week 7 the Big 10 had three football games that got more than 75,000 viewers. That was Michigan State vs. Purdue, Penn State vs. Michigan and Indiana vs. Iowa. In total the Big 10 games were watched by 5.0 million people that week. Week 8 was similar and the three games with more than 75,000 viewers were Rutgers vs. Ohio State, Michigan State vs. Indiana and Maryland vs. Iowa. In total that was 4.9 million viewers for the week.

And one has to suppose that a lot of Big 10 football fans watch more than one game, so I’m thinking one might discount those numbers by 40%. That means that the Big 10 has perhaps 3 million individual viewers per week. Is it reasonable that they could talk 2/3 of those fans into paying $15 per month for the network, or half of those fans into paying $10. That seems unlikely to me.

But you might ask, “What about basketball?”. There are a lot of basketball fans, but football is king. The weekly total viewers of a league for basketball is significantly smaller than football for most schools (except those that identify as primarily basketball schools like Georgetown).

Plus, one has to ask how schools stay relevant over the long haul when only homes willing to pay a la carte pricing will watch them. That means millions of homes (and potential future fans) are not going to grow up watching their product and identifying with a given university brand. I would love the idea of a la carte being available as I have described it. I would subscribe to both ESPN and the Big 10 network at those prices. But are there enough others out there like me there to support sports a la carte? I have serious doubts.

Tomorrow: The Total Sports Programming Bill

Sports Programming is Still Ratings King

Super Bowl FootballI have been reading a lot about sports programming and its role in the cable industry. I will be writing a series of blogs that talk about different aspects of the sports programming business. For anybody that likes sports or anybody who thinks they are paying too much for cable this is pretty fascinating stuff.

The reason that sports programming is so important to the cable companies is that it is the only major source of programming that people still insist on watching live. Many cable broadcasters like ESPN and regional sports networks rebroadcast sporting events, but Nielsen reports that 96% of sports viewing is still done live. People are not interested in watching sports after everybody knows the winner.

Years ago before DVRs, TiVo and Netflix all programming was watched live. But that is no longer the case and a significant amount of TV viewing is done on a delayed basis. That matters to cable companies because the premium advertising revenues come from the live broadcast of a show with lower advertising (or often no advertising revenue) coming from subsequent airings. As an example, look at the numbers for the recent premiere episode of Fox’s top series Sleepy Hollow. A very impressive 10.1 million viewers watched it live when it was first aired. But another 5.2 million watched in on a delayed broadcast within the first 3 days. 2.8 million viewers have watched it on VOD after 4 days (a number that is still slowly growing). Finally, another 3.1 million viewers watched it on other platforms such as NetFlix. This means that the total viewers was 20.2 million, with only half of them watching it the day it was first aired. (And imbedded in that number are a significant number of millions who recorded the show on a DVR to watch later).

The percentage of delayed viewing varies widely by the type of content. Very popular shows like Sleepy Hollow actually have some of the higher percentages of same-day viewers and there is a lot of content where the majority of views are done on a delayed basis. Some shows, like the Daily Show on Comedy Central have promoted delayed viewing as a tactic to expand their appeal.

So the networks love sports programming because it’s a hook to get people watching them. And in the cable industry, eyeballs equates to advertising dollars. Advertisers like sports programming for several reasons. Perhaps primary is that it draws the younger male demographic in one of the few ways that advertisers can count on. But second is that it gets a lot of viewers. Let’s look at some of statistics.

The biggest draw on TV is always the Super Bowl. If you look back at the history of the most watched programs in TV history it is a mix of a few events like the last episode of Mash plus a big string of Super Bowls. In recent years the Super Bowl has gotten over 100 million viewers, which is off the charts for TV viewing.

And there are other sporting events that draw big audiences. If you look at TV events that draw over 30 million viewers in recent years you will find that it’s the Oscars, an occasional final episode of a popular TV series and sports events. To contrast this with only ten years ago, in 2004 less than half of the big drawing events were sports-related. So part of the story is not just that there are popular sporting events. Events like the Kentucky Derby, the Master’s golf tournament, the BCS football championship game or the NCAA basketball championship have always drawn well. But the number of big non-sporting events has dropped drastically due the number of people that now watch their entertainment on a delayed basis.

Of course, sports is not as predictable as the networks would like. There is a huge difference in ratings when the playoffs for football, baseball, basketball and even hockey involve teams from major US markets. For example, the current World Series is drawing over a 45% rating in Kansas City, as you would expect, but the series as a whole has a much lower rating than when the Yankees or some other major market team is involved.

But even with its unpredictability, sports programming is still the advertising king. It creates dozens of events each year that are will predictably have large numbers of viewers, and viewers of a demographic that is otherwise elusive. Sports is going to remain the darling of the broadcast world as long as the current broadcast model is in place.

Tomorrow: ESPN and a la carte programing.

Chipping Away at the Cable Industry

Digital-tv-antenna-620x400It seems that every day I read a story about some big company who is working very hard to break the cable monopoly and to bring alternate programming packages to the market. Aereo is at the Supreme Court this week for trying just that – for bringing a small package of network channels to cell phones and tablets in major metropolitan areas.

Yesterday I read that Dish Networks expects to have a new service out by late this summer that is going to further chip away at the cable industry. They plan to offer a smaller package of programs over the web that are aimed at Millennials that will let them watch TV on smartphones and tablets for $20 – $30 per month. But I think a package like that is going to be appealing to a lot of households and is going to lead to a lot more cord cutters.

Dish has already signed up Disney, which brings them Disney, ESPN and ABC. They have reportedly been in negotiations with A&E, Turner, Comcast (which includes NBC) and CBS. The largest content providers have reportedly placed some contractual conditions on Dish getting such a package. They must include at least two of the major networks of ABC, CBS, FOX and NBC. They also must include at least ten of the highest-rated other networks in the package.

This concept is not new for Dish and they already sell packages on the web in fifteen different languages that they market under the name of DishWorld. This includes packages at $14.95 per month in Arabic, Hindi, Cantonese, Urdu, Filipino, Punjabi and many other languages and is a great way for emigrants to see programming from their home countries.

In another announcement that came out today, HBO, a division of Time Warner agreed to sell its library of original content to AmazonPrime. This is the first time that HBO or any cable network has made such a deal. This content has been made available on the web to people who subscribe to HBO at a major cable company like Comcast or Verizon. But the content has never been available to people who did not subscribe to HBO.

No one of these deals is going to break the cable industry. However, these two particular deals will chip away at the subscribers who buy traditional cable packages. These are deals that will let people get content on the web in a way they could not get it before. I think it is these sorts of deals that will chip away at the cable industry, and the industry won’t die in a big bang but will die from a thousand cuts.

Dish will lure away a pile of cord-cutters with this package. Verizon Wireless will lure away another pile. Google, or somebody non-traditional will get the rights to the NFL Sunday package and will lure away a pile. Somebody will make a deal with ESPN and the other key sports networks and take a pretty big pile. The Dish deal is the first major OTT deal but it will not be the last. As the programmers find a way to monetize their content over the web we are going to see more and more people dropping the giant packages. Virtually nobody is happy about paying for content they never watch.

Interestingly, not everybody sees the world in this same way. Here is one guy who sees a rebound for the traditional cable providers. He sees an increase in both customers and penetrations through 2019 for the cable industry. Nothing is impossible and we don’t have to wait long to see if he is right, but just about everybody else predicts that the large cable companies are going to keep losing customers and that the rate of loss will accelerate. Every little side deal made with Dish Networks or Verizon Wireless or Google is going to drag another pile of customers away from the big dollar, big-channel packages.

And at some point, the big line-up model starts breaking when programmers start getting less revenues for the less popular channels that are not being included in the new Internet-only alternatives. ESPN and Disney and the other popular networks are going to do just fine since they will probably be viewed by more people than ever. But the other 80% of networks have to be very worried about the trend towards OTT.

A Little Bit Closer to OTT

TabletWe keep inching closer and closer to the day when customers will have a viable access to real time over-the-top programming. The first company to make any progress in this area was Aereo who is sending the network channels to people’s cellphones and tablets in major markets. But Aereo has an upcoming day in court and the US Supreme Court could put them out of business.

It’s not like there isn’t any programming available on the web, because there are mountains of old TV shows and movies available on NetFlix and AmazonPrime and the many other companies that have deals to put content on the web. And many customers of the major cable providers have TV anywhere where the cable company lets them watch some of the channels they subscribe to on remote devices.

But what is still missing, and what will finally give a lot of people the impetus to cut the cord is when they can get the programming they most want in real-time on devices other than televisions. I have largely cut the cord and watch the programming available on NetFlix and AmazonPrime. But I would be very happy if I could buy ESPN and the Big10 Network a la carte. And maybe some news network like CNN.

There were two announcements this past week that inch us closer to an OTT alternative. The CEO of Verizon Wireless, Lowell McAdam announced that he has had discussions with content providers about launching an OTT service for customers using the Verizon LTE network and also possibly for those using other broadband providers.

The second announcement came from Dish Networks who announced a major deal with Disney that would allow them to distribute Disney and ESPN wirelessly. The agreement was complex and also resolved a number of issued between Disney and Dish for satellite carriage. Last week I reported on the spectrum that Dish has been buying, and this announcement demonstrates that they have plans to use some of that spectrum to offer an OTT product.

When the Verizon CEO was asked about the Dish Networks announcement his response was that he thought Verizon has a huge head start and that it would take Dish at least a year to construct a wireless network. So I think we can expect Verizon to roll something out soon to take advantage of the existing network.

Both announcements make it sound like customers will be able to buy the OTT programming without having to subscribe elsewhere to a landline version of the same channels. This would be the first time that such live content like sports has been made available this way. I wrote last year that there are only a handful of channels with enough market power to pull off OTT programming, and that very short list includes ESPN. I know that I would gladly pay $20 for ESPN a la carte rather than have to buy a $60 package to get it. And I don’t think I am that unusual. Just in the last week I have had conversations with several other sports fans who say the same thing.

I had cable service several years ago with all of the channels and all of the movies. And I found that I would go weeks, and sometimes even months without turning on the TV (especially outside of football season). I am really hoping that these announcements are the first little crack in the programming monopoly and that the first pieces of OTT are here. But I won’t believe it until I can buy it. It’s possible that Dish and Verizon Wireless will be forced to also sell bundles of programming including a lot of things I won’t want. But I can’t see them getting into the OTT business if they aren’t going to let customers buy the smaller packages they really want. I will be watching.

Google and the NFL

The new NFL logo went into use at the 2008 draft.

The new NFL logo went into use at the 2008 draft. (Photo credit: Wikipedia)

Google has announced that it is interested in buying the Sunday package from the NFL to stream over the web. For those of you who are not sports fans, this means every regular Sunday football game (just not the Sunday or Monday night games or the mid-week game).

The Sunday package today is available today only on DirectTV. A sports fan must buy a DirectTV regular programming package in order to buy what DirectTV markets as the Sunday ticket. DirectTV simulcasts all Sunday games, so there are a number of games playing at one time.  DirectTV owns the rights through the end of the 2014 season and the package comes up for bid again.

The football programming currently costs DirectTV $1 billion per year, and one has to imagine the price is going to go up in a bidding war. But obviously Google can afford this.

I would think that losing football would be devastating to DirectTV. As a serious sports fan, I know of a lot of sports fans who subscribe to DirectTV just for the right to buy the football package. If that goes away, DirectTV is going to see a number of subscribers melt away over the first year.

The whole idea of Google buying the NFL package raises all sorts of different issues:

  • This would give major legitimacy to OTT programming and could form the core of a Google on-line TV offering with some teeth. One has to think that Google is going to bundle this with other programming to get enough revenue to pay for the package. This could turn Google into a serious player in the content provider war.
  • One has to wonder if Google understands the lack of bandwidth in much of the country. DirectTV delivers football in high definition, and most fans routinely watch multiple games at the same time or want to quickly flip between games. This country is divided into a lot of broadband haves and have-nots. Certainly customers on fiber like Verizon FiOS will love football on the web. But there are still a significant number of rural households who can’t get real broadband. And even more importantly, there are a whole lot of towns that don’t get enough broadband to watch multiple football games in HD.
  • Interestingly, the FCC has been tracking the availability of broadband by letting the service providers tell the FCC what they offer where. And everybody knows this process is highly flawed and that a lot of the reporting is very far from reality. Moving football to the web is going to more effective than any broadband map at showing who has and does not have adequate broadband. All we need to do to track where broadband is inadequate is to follow the complaints about Google football.
  • On the other hand, Google would be opening up the Sunday football package to a lot of new households. There are a lot of people today that can’t get DirectTV, either due to a clear look at the right part of the sky or else from living in a place, like a high-rise that doesn’t allow satellite TV.
  • And Google football is really perfect for somebody like me who is not always in the same place every Sunday. I would assume that if I am a subscriber that I am going to be able to watch as long as I can find a good broadband connection. I think there will quickly be web boards that track which hotels have good or poor internet and business travelers will be going to the good ones and avoiding the poor ones.

Sports programming is the one wild card in the programming world for which there is no substitute. To any sports fan there is the NFL and then there is everything else.

It has also been reported that ESPN is considering a web-package that they would only sell to web-providers who bundle it with a larger programming line-up. And one has to think that if ESPN works out this kind of deal that the college football networks will follow suit. If NFL football, college football and ESPN become available on the web, then landline cable TV is going to have lost its grip on a lot of households. This has to be a concern for the big cable companies.

Telecommunications Enters a New Marketing Era!

Today’s guest blog is written by Mindy Jeffries the President of Stealth Marketing. She will be writing a series of blogs that will appear here on Fridays for a while. If you want to contact Mindy you can call her at 314 880-5570. Tell her you saw her here!

In this blog post, my intent is to examine the history of telecommunications marketing so we can all have an appreciation of the work we have today, the products and the marketing solutions in the fast paced environment we find ourselves. From the day I started in 1978 until today, one thing is certain and that is change. So this post will provide solutions and ideas on how to make that change fun and manageable.

Cable started as a technical product that solved a problem for people in places that could not get the new invention called ‘television’.  The cable industry solved a need. Today those needs are rarely present with products that telecommunications companies market. So, what started as a technical-needs-based product became more of an everyday consumer product, and a story had to be told in an effective and compelling manner which would help new consumers choose which product fit their needs the best. This is when it got a lot more fun for marketers.  But wait, telecom companies had no marketers!

Telecom began to get more competitive and a need emerged to tell the ‘how are we different?’ story in an increasingly compelling way. Competitors came in on the television side, on the phone side, and on the Internet side. All of a sudden, telecom companies had competitors emerging at every door.

In the early days of cable television we told the story through products. HBO, ESPN, and other similar companies would help pay for the marketing. Our competitors started marketing with those same brand names. Cruel. Products became ubiquitous, available through all competitors. Those premium product offerings were no longer a differentiator.

Of course, a few other things happened in the world of marketing in the last 30 years. A truckload of marketing options started to become available to us. The marketing industry was introduced to new technology, new research entities, new methods, new philosophies, etc. In the end, that yielded options, more than one way to skin a cat. More marketing options means more places to spend your money with a lot of variation in response rates to different audiences with different marketing methods.  Sophisticated, targeted, analytical marketing became very important.

The problem became: how do we effectively differentiate in a quickly emerging telecom world . . . how do we tell our story, what is the target market, who is the target demo and what is the best way to place that communication? How do we utilize all of these marketing innovations? Those are the questions we will answer over the next few weeks. Hopefully these blogs will explain the process behind the curtain and I hope to show you the processes and strategies behind effective marketing.