Tag Archives: YouTube

Looking at Generation Z

We’ve already seen a lot of analysis about the viewing habits of Millennials. We know as a group that they watch less traditional linear TV than older generations. We know that over 30% of millennial households are already cord cutters and get all of their entertainment from some source other than traditional TV.

But now we are starting to get a glimpse at Generation Z, the next wave of our kids. These are the generation following the millennials. A new survey firm, Wildness, is concentrating on this generation to study trends for companies that want to market to this segment. The firm is a spin-off of AwesomenessTV (and since I assume you don’t know what that is, it’s a leading source of programming for kids on YouTube).

Wildness just did their first survey of Generation Z viewing habits. These kids are the first ones to grow up in a connected world since birth. They looked at 3,000 kids from 12 to 24 and found the following:

  • Nine out of ten watch YouTube daily.
  • For 31% of them their favorite programming is on YouTube.
  • 30% of them follow their favorite brands on social media and post about them.
  • When asked if they could keep only one viewing screen, only 4% said they would keep a television. Their screen of choice is a cellphone.

This does not bode well for traditional linear television. For a long time industry pundits assumed that millennials would ‘come back’ to traditional TV as they got older and started their own households. But they have not done so and now it’s largely accepted that the way you learn to view content as a kid will heavily influence you throughout your life. And Generation Z kids are not watching linear TV.

Another interesting aspect of Generation Z is that they are not just content consumers, they are also content generators. More than half of them routinely generate content of their own (short videos, pictures, etc.) and share with their friends. And a significant amount of their viewing is of content generated by other kids. This has to scare traditional content generators a bit as these kids are not consuming traditional media to the extent of older generations. This generation has blurred and blended their social life with their online life to a much greater degree than older generations. This is the first generation that freely admits to being connected 24/7.

And it’s not just prime time TV shows that are being ignored by this generation. They are also not following sports, traditional news or any of the other standards of programming. At a young age they are discovering that interacting with each other is far more satisfying than watching content ‘crafted’ for them by older generations. Most of the programming they follow on YouTube is being generated by contemporaries (millennials or younger) rather than by traditional media companies.

Anybody that offers traditional cable TV has to look at these statistics and know that the clock is already ticking towards a day when cable TV becomes obsolete. Already today the average age of viewers of prime time shows keeps climbing as younger viewers eschew linear programming.

Last year about 1.7% of all households become new cord cutters. That may not sound like a lot, but it’s over 2.1 million households. And it seems that cord cutters rarely come back to traditional TV. A lot more older households are also favoring Netflix and other OTT content. These households still maintain cable TV subscriptions, but you have to wonder for how long.

I would not be surprised within a few years to see cord cutting accelerate rapidly. It’s getting hard to find households that are satisfied with what they are paying for cable TV. Even those who love traditional cable think it costs too much. And this could lead at some point to a rapid abandonment of traditional cable. But one thing the industry must accept is that when Generation Z grows up they are not going to be buying cable TV.

OTT News, March 2017

There is a lot of activity going on with web-based video. There are offerings that are starting to look like serious contenders to traditional cable packages.

Comcast Integrates YouTube. Comcast has made a deal with Google to integrate YouTube into the Comcast X1 settop box. This follows last year’s announcement that Comcast is also integrating Netflix. Comcast also says they are working to integrate other SVOD platforms.

Comcast is making a lot of moves to keep themselves relevant for customers and to make the X1 box a key piece of electronics in the home. The box also acts as the hub for their smart home product, Xfinity Home.

One has to think that Comcast has worked out some sort of revenue sharing arrangements with Google and Netflix, although all details of these arrangements have not been reported. The most customer-friendly aspect of these integrations is that the Comcast X1 box is now voice-activated and customers can surf Netflix and YouTube by talking to the box.

Sling TV Adds More Sports. Sling TV has made another move that will make it attractive to more customers by adding the Comcast regional sports networks (RSNs) to their line-up. This includes CSN California, CSN Bay Area, CSN Chicago and CSN Mid-Atlantic. These networks carry a lot of unique sports content that is not easily available anywhere else on-line today. The networks carry pro basketball, pro baseball and a number of college sports. For example, CSN Bay Area is the home station for the popular Golden state Warriors. CSN Mid-Atlantic is the home station for the Baltimore Orioles.

I know in talking to my sports-centric friends that the narrow sports content on-line is the number one issue holding them back from switching to an OTT package. There are still other networks that Sling TV would need to add, like the Big Ten Network and the NFL Channel, to be a totally rounded sports provider. But they have already added a credible sports line-up that includes all the ESPN channels, the SEC Network, the ACC Network, NBA TV, the NHL Channel, the PAC12 Network and a few other sports networks like Univision TDN.

YouTube Launching an OTT Line-up. Cable TV just got another new OTT competitor. The new service is called YouTube TV and brings a fourth major OTT competitor along with Sling TV, PlayStation Vue, and DirecTV Now. The platform is going to launch sometime in the next few months, with no firm release date yet. The basic product will be $35 per month and allows customers to turn the service off and on at will.

YouTube TV will carry the typical network channels as well as ESPN, Disney, Bravo and Fox News – a line-up that sounds similar to its competition. The service will come with unlimited cloud DVR storage. It will allow 3 simultaneous streams per account and 6 user profiles per account. They will first launch in a few major urban markets (probably due to the availability of the local channels for various network channels).

If YouTube has any advantage in the marketplace it’s that they are becoming the preferred content choice for a lot of millennials. The company says they now are delivering over a billion hours per day of content. Millennials are leading the trend of cord cutters (and even more so of cord nevers), and if YouTube can tap that market they should do great.

Dish Network Predicts OTT will Replace Traditional TV. For the first time, Dish Networks Chairman and CEO said he thought that OTT programming is the real future of video. Until now the company, which owns Sling TV, has said that their product was aimed at bringing video to cord cutters.

But Sling TV and the other OTT products are getting a lot better. Sling TV now has over 100 channels that provide a wide set of options for customers. And these channels are not packed into a giant must-take line-up like traditional cable packages, and instead provide a number of smaller packages that a customer can add to the Sling TV base package. Sling TV and the other providers also make it easy for customers to add or subtract packages or come and go from the whole platform at will – something that can’t be done with cable companies.

Certainly Sling TV has made a difference for Dish. The company has been bleeding satellite customers and had customer losses for the last ten quarters. But the company had a small customer gain of 28,000 customers in the fourth quarter due to the popularity of Sling TV. The company does not report customers by satellite and OTT, so we don’t know the specific numbers.

Content Finally is King

One of the more common memes in our industry is the phrase “content is king.” This was first said by Sumner Redstone of Viacom in 1994 but made more famous by Bill Gates in 1996. The phrase has been used since then to describe how the creators of content have the power in our industry – be that programming or web content.

John Stankey, the CEO of AT&T Entertainment, recently emphasized this same concept in talking about the company’s planned merger with Time Warner. At the recent Mobile World Congress in Barcelona he said, “We just cannot envision a future where AT&T is relevant if we don’t directly participate in some of the water flowing through our pipes.”

All of the big ISPs have decided that content is key to their survival. Comcast already owns a mountain of programming, and after the merger with Time Warner, AT&T will be a content powerhouse as well. Verizon has climbed into the game with the acquisitions of AOL and Yahoo. There are web companies with the same philosophy. Netflix has built a new industry by creating new content. Google is pushing content heavily through YouTube. Amazon has started to create unique content and recently said they are going to make that a priority. Facebook is becoming a content force through Facebook Now.

I remember having this conversation with Derrel Duplechin of CCG back in 2000. We were asked by several clients to speculate about the future of the carrier industry and we foresaw that most carriers were likely on the path to eventually become what we called “dumb pipe” providers. I remember that this was a story that many of our clients did not want to hear.

We lived in a different carrier world in 2000. Most homes still had telephones and voice was the most profitable product for most carriers. The cable TV product that many of our clients sold then also had decent margins. But we predicted that both products would eventually sink in importance and in margins and that eventually most of our clients would earn most of their profits from broadband. We thought this would happen to all carriers, small and large, and we figured that the most profitable future companies would be those that found some other line of business other than just selling data pipes to end users.

We had some clients take this to heart and some of them have made a really good living by providing extra value to customers. For example, we have several clients who thrive by bringing a suite of products to businesses other than just plain connectivity. But for the most part, the majority of the ISP industry sells dumb pipes today. They compete with the speed of those pipes and with price and with good customer service – but the primary products (and the driver of most of the profits) are now data pipes.

The big companies like AT&T, Verizon and Comcast looked at that future and it scared them. It’s pretty obvious that if your only product is dumb pipes that your earnings are not going to continue to grow fast enough to satisfy Wall Street. This is probably what convinced Verizon to stop expanding their FiOS network. Both AT&T and Verizon got huge earnings boosts from expanding their cellular businesses, but that industry also seems to be heading towards the same plateau as landline ISPs – cell service is becoming a commodity.

So these big companies are now pursuing content because it looks to be the last area in our industry with the potential for significant bottom line growth. It’s going to be an interesting race to watch. Content providers have succeeded or failed over the years according to their ability to find smash hits. A huge hit movie or TV series can mean huge returns to the bottom line. But content providers that don’t create what the public wants to watch suffer badly in terms of stock prices and earnings. Being a content provider is not predictable in the same way as telecom.

Interestingly. AT&T, Verizon, and Comcast are now direct competitors of Facebook, Google, Amazon and Netflix. Content certainly is king, but content also brings the risk from competition. The companies that fall behind in this race are likely to be gobbled up by their more successful competitors. I find it extremely unlikely that all of these big companies will still be in existence in 10 years.

There is no real barrier to entry into the world of content creation other than having a pile of money. It’s likely that other big companies will join the content fray. But all of these companies are entering a world that is in big flux. For example, traditional video and web content might well be replaced by virtual and enhanced reality. The companies that succeed in content will have to spend a lot of money staying one step ahead of the competition, and my money is on the more nimble technology companies. Twenty years ago I would have been shocked to know that someday AT&T would have a CEO of Entertainment – and that may turn out to be the most important job in the corporation.

Small ISPs and Net Neutrailty

Network_neutrality_poster_symbolLast week a small ISP asked me if they should be concerned about the potential end of net neutrality. It’s clear that the new FCC chairman is either going to reverse the net neutrality order completely or hobble it significantly. My response to the question comes in several parts.

First, net neutrality has had virtually zero impact on small ISPs. It is inconceivable to me that a small ISP could somehow find a way to violate the basic principles of net neutrality. It’s not something a small ISP can do on their own and they would have to somehow make a deal with a content providers that would give them the ability to discriminate against customers or against other carriers.

If anything, not having any real market power can be turned into a marketing advantage. Small ISPs should be advertising the fact that they are the one ISP in the market that does not spy on customers. Small ISPs generally offer bandwidth with few strings attached – customers are free to use what they buy in almost any manner.

If net neutrality goes away the real impact is going to come when the big carriers begin offering products that give them an unbeatable market advantage. We already have a hint at what such products are like by looking at the cellular carriers. It’s clear that AT&T and Verizon are each heading down a path where they can offer cellular customers free access to certain video content while charging all other data use against stingy data caps. And, with net neutrality going away, industry analysts expect them to step this up and begin offering exclusive content to their cellular customers that they can’t get elsewhere.

But that’s not the end game. The product that net neutrality is aimed to protect us from is what is called a curated web. Consider, for example, that some of the content providers join together to partner with AT&T. This could be traditional programmers like ESPN or newer content providers like Facebook or YouTube. These companies could help to subsidize customer data plans to entice people to buy a curated web product.

Such subsidies could mean cell plans that significantly less expensive than normal cellular service, but which comes with all of the web access baked-in. The content providers would encourage you to only use their portal. They would control which browser you use. They would control your search engine. And they would advertise specifically to you and collect everything they can about your preferences, buying habits, social contacts, etc. A curated cellphone product would severely curb a user’s ability to get to other content.

Such a product could become popular if it bundles in things people already like such as Facebook, YouTube and other popular web sites. The upside to the content providers is that they have exclusive control of you for purposes of data gathering and advertising – and they ought to be willing to pay for that right. And customers are going to love the savings.

You might ask, “Why worry about cellphone plans? I don’t compete against them.” Well, there is nothing to stop curated web plans from coming to landline broadband as well. Comcast might have a normal broadband product at $60, but a curated one at half that. A company like Comcast could offer multiple curated web products – perhaps one from Facebook, a sports package from ESPN, another that focuses on Star Trek and science fiction, and so on.

These curated plans don’t sound bad if somebody comes out with one that you would find of interest – and that is the danger. People are likely to want such plans if it saves money and has a lot of the content they already use.

But curated web access has several big problems. First, they give the ISP that offers them a major market advantage over any competition in the market. It’s hard for anybody else to compete against a web product that has been paid down to be under market rates by a content provider like Facebook. Second, the curated web will stifle new web content providers. It’s easy to think that companies like Facebook and Google are so large on the web that they can’t be supplanted by something else. But it has only been a few years since when the web was dominated by companies such as AOL, Yahoo and others. It’s almost in the nature of the web that people’s tastes in web content changes over time, sometimes rapidly. The next Google or Facebook is never going to get traction if a huge chunk of the web is curated by the current content giants. In that environment we might still be seeing a Facebook-curated web a century from now – and that would be an innovation killer.

But, to circle back to the original question: Small ISPs are not harmed today by net neutrality. But if it’s taken away, the big ISPs have already given us hints on what they’ll do – and it is those actions that will ultimately disadvantage small ISPs along with anybody else that wants a web which constantly innovates rather than one that would stagnate.

OTT is Not Easy on the Consumer

Fatty_watching_himself_on_TVThis article compares the channel line-ups for Sling TV, DirecTV Now and Playstation Vue.  I think it provides the best demonstration I’ve seen yet of how confusing it’s going to be for consumers to choose an OTT option.

The process of choosing an OTT provider is only going to get harder in the future as additional OTT providers enter the market. In the coming year we are going to be seeing Google / YouTube with a similar on-line option. Hulu has announced that they will soon be launching a live-streaming alternative. There is a strong rumor that Amazon is considering an OTT option and has already announced they are pursuing live sports. And various articles I’ve read hint at a few more new OTT providers in 2017.

Comparing OTT channel line-ups is a lot more work than comparing the line-ups of your cable company vs. one of the satellite providers. While satellite providers aren’t required to maintain the same rigidly-defined line-ups as the cable companies, the two sets of line-ups are still reasonably comparable.

Cable company line-ups are defined by the FCC cable rules that require a basic and expanded basic line-up. Contracts between cable companies and programmers has led to uniformity and there are not major difference between cable companies. Cable companies are free to offer additional premium tiers and packages, but even those are largely the same between cable companies. The satellite providers know that their basic package is competing against the expanded basic line-up, so they include roughly the same channels in their 50 – 75 channel packages as the cable companies.

The OTT companies have a different set of challenges. The programmers are not required to sell them any content, and so the OTT companies must negotiate with each programmer individually. These have to be interesting negotiations because the OTT providers want to put together the skinniest bundles they can get while still offering what consumers want. They are then free to bundle channels in any way that the programmer contracts will allow. Since each OTT providers negotiates a unique arrangement with programmers there are going to be major differences between the line-ups from different OTT providers.

The programmers, however, either want to sell multiple channels or else they want a revenue stream that insures them of some decent profits. Programmers understand the math, which is that they are losing money for every customer that moves from traditional TV to a smaller OTT offering. This puts them into an awkward position. It’s obvious that the cord cutting phenomenon is gaining momentum. But if the programmers help to create really attractive OTT packages they are then helping to accelerate cord cutting for consumers.

As I’ve written before, many of the programmers are able to tolerate the growth of OTT since they are selling a lot more new content overseas than they are losing to cord cutting. Many of them acknowledge that there are cable channels that only exist because of the monopoly the handful of programmers have over the industry. They know that the cord cutting phenomenon is going to mean the death of less popular cable networks.

But back to consumers. You can see in the comparison in the link I posted above that between the first three major OTT providers it’s not easy to even visualize what you get in the various packages. The options between the three providers are significantly different, and all of these options have some glaring holes from programmers that have not yet allowed their content into these OTT bundles. It’s hard to imagine how complex this comparison is going to be with 3 – 6 more options by the end of 2017. I think a lot of consumers are going to come to web sites like this and be intimidated by the choices and will delay cutting the cord.

It’s likely that over time the various OTT providers will find niches in the market. Certainly if they all end up with the identical sets of channels there won’t be a lot of difference between them. But I would expect the ones that will be successful in the long-run will find a demographic niche that will give them an advantage. But for now their line-ups are a messy hodgepodge since they are cobbling together line-ups from the channels that they are able to acquire. This is going to make for a number of confusing products for the first few years of this new industry until they all figure it out.

Millennials and Broadcast TV

Fatty_watching_himself_on_TVYouTube recently caused a big stir in the broadcast world by announcing that it now reaches more Millennials (individuals between 16 and 36) than any broadcast or cable network. Of course, since massive advertising dollars are at stake, the cable networks all pushed back on the claim. And the fact is, nobody knows the real numbers because YouTube is not measured by Nielsen ratings in the same way as broadcast and cable networks.

But one thing is clear – that Millennials are abandoning traditional TV in droves. Just this last TV season there was a huge fall-off in Millennial viewers almost across the board, as measured by Nielsen. This not only has a big impact on advertising and on content providers, but it has to be of great concern to anybody that offers a traditional cable TV product.

Nielsen reports that during the 2014-15 TV season that there were 19 shows broadcast in primetime that drew 1 million or more Millennials. In this past season that dropped to 12 shows. And the drop is almost across the board. ABC Millennial viewers were down almost 19%. The CW that has programming for younger viewers was down 16%. NBC dropped 10%, Fox dropped over 7% and CBS was down 3%.

Some individual shows lost a lot of support from Millennials. For example, How to Get Away with Murder and Family Guy each lost an average of 700,000 live weekly viewers. Scandal and Once Upon a Time each lost 500,000 live viewers. The trend isn’t just one of Millennials abandoning live viewing. Nielsen tracks viewing also on video-on-demand. In 2014-15 the show How to Get Away with Murder had 2.7 million viewers aged 18 – 34 in live-plus-three and 2.8 million in live-plus-seven viewing. Those numbers dropped in one year to 1.7 million and 1.9 million, a drop of 37%.

This trend is one of the primary drivers that is moving advertising away from traditional TV to web-TV like YouTube’s Google Preferred. eMarketer reports that 2017 will be the year where Web advertising passes TV advertising. They are predicting $77.4 billion for web advertising compared to $72 billion for TV. And they predict after that web advertising will skyrocket while TV advertising will remain flat. They also predict that by 2020 that mobile advertising will eclipse TV advertising.

None of these statistics are good signs for traditional TV networks and for cable TV operators. An entire generation of viewers is tuning out, and the expectation is that generation Z behind them will have almost no affinity for television. Recent studies suggest that peoples’ TV viewing habits are largely set by their experience with the medium as children, and the children of Millennials are going online far more than watching traditional TV.

This doesn’t mean that watching video content is down. The average hours for individuals to watch some kind of video content has grown slightly over the last decade. But that viewing time is now being spent watching YouTube, Netflix, Amazon Prime and other non-TV sources of video. And the viewing is rapidly shifting away from the TV screens to other devices.

Millennials are an interesting generation. They are old enough to remember the time just before the explosion of technology, but they are young enough to have adopted new technologies as they came along. They are the generation that has experienced the biggest change during the shortest period of time for digital technologies. But it seems that as they are getting older that they are becoming more like their kids and are abandoning older technologies like sitting in front of a TV.

I’m not sure that cable companies really are going to have any product to attract the attention of this generation and certainly not for their children in generation Z. Cable companies are hoping that things like TV Everywhere and skinny bundles will slow people from dropping TV entirely, but even that might not be enough. Broadcast TV is now largely something that is being produced for – and watched by – Baby Boomers. And they aren’t going to be around forever.

The Growth of 4K Video

4K CameraIt looks like 4K video is making it into the mainstream and is going to put a big strain on broadband networks serving residential customers. 4K video resolution is 3840 x 2160 pixels, or about 8 million pixels on a screen, which is about four times more resolution than an HD display. It takes a lot of bandwidth to stream that many pixels and with current compression technologies 4K video requires 15 – 20 Mbps download speeds. Google and others are working on better compression techniques that might cut that in half, but even so that would mean videos streams at 7 – 10 Mbps. That’s a whole new level of broadband demand that will increase the household need for faster data speeds.

Just a year ago it wasn’t easy to find 4K video on the web, but this year there is a lot of content being shot in the format. This includes:

  • Netflix is currently shooting most of its original content like House of Cards, Breaking Bad, Jessica Jones, Daredevil in 4K. It also has a big array of documentaries in the format as well as a number of classic movies being reformatted to 4K.
  • Amazon Prime is also filming new content like Alpha House, Transparent, Mozart in the Jungle and Man in the High Castle in 4K. They have a small library of movies in the format.
  • Sony probably has more mainstream movies in the 4K format than anybody. Rather than streaming you download Sony movies and a typical movie can take 40 GB of storage space. It doesn’t take too many movie downloads to blow the data caps of AT&T or Comcast.
  • M-Go has developed a small but growing 4K library in conjunction with Samsung. They also will be adding title from Fox.
  • Comcast offers a few movies in 4K online for customers in partnership with NBC Universal.
  • YouTube has a huge amount of user-generated 4K video of all different types. YouTube is also now producing original content sold under YouTube Red and which contains 4K content.
  • Ultraflix has a big library of 4K nature documentaries including some originally produced for IMAX. They are also carrying lot of Hollywood movies.
  • Vudu, which is owned by Walmart has a small, but high quality 4K set of content. They are the first to marry 4K video to Dolby surround sound.

If 4K follows the same migration path of standard definition video to HD video, then within a few years 4K content is going to be everywhere. Where just a few years ago there was little video on the web, video now seems to be everywhere. There are video ads on all sorts of websites and social media services like Facebook and Twitter spit out piles of video at a user these days.

One of the biggest problems with broadband regulation in this country is that it fails to recognize the ever-growing nature of broadband demand. Once households start using 4K video then the FCC’s newly minted definition of broadband at 25 Mbps download will already be getting stressed. The fact is that the household needs for broadband are just going to keep growing year after year and any regulatory definition of demand will be obsolete almost as soon as it is established.

Broadband demand has been growing steadily and doubling about every three years and there is no reason to think that we are anywhere close to the time when that growth curve is going to slow. 4K video is not the last new technology that will stretch our needs for broadband. When I read about where virtual and augmented reality are headed over the next five years it’s not to hard to see where the next big push for more broadband will come from.

OTT By the Numbers

roku-3-2Lately I’ve been reading about how much OTT video services have grown and so I looked to see how big the phenomenon has become. What I found was that you get a different answer depending upon who is doing the counting and how you define OTT.

It’s easy to start with Netflix, which is clearly the largest provider of alternate programming. As a public company they publish their subscriber numbers every quarter and at June 30 of this year they had 29.8 million paid subscriptions in the US and had added 605,000 customers in the quarter. With approximately 134 million housing units in the country that’s a penetration rate of over 22%.

Parks Associates tracks the OTT industry and they recently released a list of the top 10 OTT companies, ranked by the number of paid subscribers. They say there are over 100 pay OTT services available in the US. The top 10 list is interesting and probably includes things that many people aren’t aware of or that don’t think of as OTT. The most recent top 10 list is as follows:

  1. Netflix
  2. Amazon Video
  3. Hulu
  4. MLB TV
  5. WWE Network
  6. HBO Now
  7. Crunchyroll
  8. NFL Game Pass
  9. The Blaze
  10. Sling TV

I think most people would have guessed the top 3. It’s interesting that 3 of the top 10 are sports networks. The subscriber numbers for baseball and football are very seasonal and move up and down the list depending upon the time of the year. Major League Baseball (MLB TV) just announced that starting next season they will only make their programming available to subscribers of a cable service, so they will fall off this list. Crunchyroll features Japanese anime, manga, and auto racing. The Blaze includes Glenn Beck and various other political shows. To show how low the threshold for getting on the list is, number 10 is now Sling TV that just started early this year and currently claims about 400,000 subscribers.

Using the above definition of OTT, Parks Associates reports that 58% of US broadband households have used at least one OTT video service in the past 30 days. They say that a little more than 25% have used two or more different OTT services.

But there are others counting OTT using a wider definition. For instance, the numbers jump way up if you include things like YouTube, which has more viewers than Netflix. The multiservice screen provider Clearleap reports that when counting services like YouTube 71% of households report using OTT services. This count differs from the Parks Associates count by also considering smartphone-only usage rather than only considering homes with a broadband connection.

There are a number of other surveys around also and each differs in defining what is included as OTT and also differ by the type of platform used to watch the content. So any time you see OTT statistics it’s important to dig a bit to understand just what and who is being counted.

One thing that all of the surveys agree on is that younger people view a lot more video than anybody else. Common Sense Media just reported that teens between 13 and 18 use an average of 9 hours per day of entertainment media. This would include not only OTT content, but normal TV, on-line games, social media, and sites like Vine which are not counted as OTT but which include video content. As a parent of a teen I would say that number sounds just about right.

Adapting to Technology

speakersI’ve read several product reviews lately for smartwatches and other electronics devices where some of the reviewers lamented about how they felt they had to work hard to adapt to the technology, and how they wished things were more intuitive to use. Today’s blog is my own lament about how we have been nudged over the years  to adapt to technology, as opposed to technology adapting to us.

As an example, look at our music. There was a time back in the 70s and 80s when anybody serious about music was at least a bit of an audiophile. Anybody who loved music loved it even more when it sounded great. And people who were serious about music, which was a lot of people, did what they could within their budget to buy the best listening experience they could afford.

I am not a very materialistic person; I drive my wife crazy at Christmas and my birthday because I really don’t want things. But when I was younger I wanted better speakers. I remember that perhaps the happiest purchase I ever made was the day I got my first pair of Boston Acoustics speakers. I sat in front of them all day listening to my favorite albums. I heard things in the music I had not noticed before with cheaper speakers. I was hooked as an audiophile.

But our music world started changing with technology. First came cassette tapes. To an audiophile cassette tapes were crap. After that came CDs which had the potential to be great for new music that was mixed directly for the CD format. But CDs did a lousy job of capturing older album music unless that music was mixed again from the original source (and thus the whole genre of re-mastered CDs).

Then along came the iPod and internet download music files and the music world was turned on its head. Every audiophile groaned because MP3 files are generally of much lower quality than any original music source. The process of converting music to a new format will, by definition, chop off the highs and the lows, robbing the recording of the nuance and crispness of the original.

Worse than that, the iPod came with crappy earbuds that further degraded our music experience. But let’s face it – an iPod let you listen to your own music collection in an airport or on an airplane, and so we adapted to accepting inferior music for the sake of convenience. Next, the industry took another huge left turn and everything went to online streaming services like Spotify. The quality is nowhere near as good as a quality CD, but who can resist the fact that there are millions of songs to listen to? And we listen to these songs on our computers or with bad earbuds or with tiny Bluetooth speakers. The audiophile in me cries for the good old days.

The same thing has happened to video. There was a time in the 90s when we all went out and got the best large screen we could afford with the best resolution. Even for people like me who didn’t watch a lot of TV, seeing my first football game on an HD TV was impressive.

But now streaming video technology is luring us away from that quality and into watching video on our computer screens, on tiny cellphone screens, or on tablets and laptops. And we will suffer through some really crappy video and audio quality to watch the latest funny cat video on YouTube.

I just find it interesting how marketing has changed over the years. In the old days the expensive marketing went to lure us to upgrade – get better stereos, better speakers, better TVs. But today we are lured to accept much lower quality content on NetFlix, YouTube, and Spotify, and we do it because the range of content available makes us give up quality for quantity.

I expect that after we have all gotten used to this new world where we can watch anything, anywhere, at any time, eventually the desire for quality will creep back into the conversation. For now, we (and I include me) are happy enough with the huge selection of music and video available to us that we will tolerate a poor experience for the joy of watching things that used to be impossible to find. I notice that there are already young people who grew up with ubiquitous video and music who are rediscovering the beauty in the old stereo systems. So perhaps over time we will realize what has been lost and the move back towards quality will start all over again.

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.