TV Everywhere: If everyone is running the 100 meter dash, who is running the marathon?
By Jan Steenkamp
The history of premium content tells us that if content has value and is not restricted in access, the opportunity to monetize that content is lost. It's a simple, sensible principle, but one that has not yet been fully applied to media consumption online -- a startling phenomenon, particularly as broadcast and cable companies quickly migrate toward broadband distribution. Today, we see a cable company like Comcast acquire NBC for the simple reason that Comcast sees a future in content distribution -- one where they'll be granted the exclusive ability to exercise more business models on NBC's content. In doing so, Comcast can extract more value (money) from this premium content over the long term.
Comcast's deal with NBC and the launch of their TV Everywhere initiative, Xfinity, signals the start of a race that over the next couple of years will result in new technologies, corporate ownership changes, strategic alliances and new market entrants -- all in an effort to capture the broadband opportunity. Already, telco brands like AT&T and Verizon FiOS have purchased mainstream content rights and are building out competitive offerings, serving notice to the cable and satellite industries that a new threat has arrived. Consumers are also playing a pivotal role. Based on strong demand, consumer electronics manufacturers have expressed a strong interest in capturing market share around this new opportunity. Companies like Apple are showing an early market advantage with proven business models like iTunes and Internet giant Google is well-positioned to attract TV viewers, thanks to its success with YouTube.
Clearly, online video broadband distribution will be a hotly contested arena, and at this point it's anyone's race to win. However, in order for cable to succeed with TV Everywhere in the long term, these four critical challenges have yet to be met:
- Scalable Publishing and Rights Management
- Content Production Costs
At the Starting Line - Cable's Late Start
For many years now, cable operators have been deeply entrenched in the post-consolidation era of the U.S. cable industry. Territories have been well established by large operators like Comcast or Time Warner and all show limited differentiation, carry most of the same content offerings and have similar price points and subscription models. Overall subscriber bases have stayed relatively stable and routinely ebb and flow with competition from satellite services, and to a limited degree, new telco video offerings.
Over the last 10 years, cable operators successfully thwarted competition from emerging Internet Service Providers (ISPs) by up-selling premium broadband services to existing cable subscribers and dramatically increasing their Average Revenue per Subscriber (ARPU) in the process. But while cable operators locked up the broadband connection to the home, they failed to connect with their subscribers with relation to core content distribution services. Cable did little more than act like a utility company providing power or water to the home, in exchange for a small fixed fee.
As broadband services flourished, a series of disruptive side effects boomed, transforming almost every industry across the globe in one way or another. For traditional media companies like newspapers and music labels, a complete overhaul of the business model was necessary to stay solvent.
For cable, risks associated with unprecedented access to mainstream programming via legitimate vehicles (ad-supported Web portals like Hulu, AP, Yahoo, YouTube) have triggered a revelation - the value of the subscriber-broadband relationship. Due to this existing subscriber relationship, cable operators have found that if managed correctly, they can fend off competition from Over-the-Top (OTT) and telco models in much the way they did over emerging ISPs in the late 1990's.
Another advantage maintained by cable operators is that content creators stand to extract more value for their content by monetizing it through existing subscriber relationships rather than attempting independent advertising initiatives or their own direct to consumer initiatives. To amplify subscription-related revenue, they can further engage viewers through Web exclusive programming and branded social media offerings over the Web.
And They're Off! The Race to TV Everywhere
When the concept of TV Everywhere entered the equation, the starting gun essentially went off. TV Everywhere was defined as an offering that would provide access to Cable Network programming on any Internet connected device, conditioned upon the consumer having an existing subscription relationship with the TV Everywhere-enabled cable operator.
Currently, the industry is centering initial TV Everywhere trials around a solitary solution controlled by industry titan Comcast -- first named On Demand Online and now called Xfinity. On the surface, it appears that other industry players are acting defensively by consolidating around a Comcast solution -- rather than seeking a way to differentiate themselves in the market. To quickly establish a market presence, this may be the best way to approach an early deployment. If other cable companies view TV Everywhere as a long term opportunity, however, they are going to have to start behaving much differently than they are now.
To create a truly compelling service, operators will need to look beyond the short term launch of Xfinity and implement a service that prepares them to execute and compete in the race ahead.
Scalable Publishing and Rights Management
The concept of TV Everywhere is just as the name implies. Under its premise, one should be able to access his/her TV from "anywhere." In theory, this sounds great, but it is unlikely that anyone fully understands what it will mean from a content workflow and publishing point of view.
In a fully featured TV Everywhere world, this could mean multi-platform variants for content consumption happening every minute for every channel, 24 hours a day. Already, companies are struggling to take existing linear digital content and slice and dice it into many different versions for many different platforms. For example, one media company must publish sports and news highlights in abbreviated form on mobile and outdoor advertising no more than 20 seconds after the event aired on the television channel. Apply this across an entire digital offering and you have a good sense of the...Continued