24 Comments

Summary:

The TV industry knows that broadband changes its business, but it can’t adapt quickly. That’s why the CEO of Conviva expects cord cutters to suffer higher fees and less content in the short term.

While millions of cord cutters are eagerly awaiting their chance to subscribe to HBOGo, the CEO of the company that helps ensure that HBO’s over the top content looks good is skeptical about when that might happen. Darren Feher, the CEO of Conviva, thinks things will get worse for cord cutters before they get better.

Instead of watching Game of Thrones via an a la carte HBOGo subscription, they’ll face higher fees for content aggregators like Netflix and Hulu and will find more content inaccessible unless they have a pay TV subscription, he thinks. Even Hulu’s backers have toyed with making the site accessible only to those who have a pay TV subscription.

“The whole industry is doing a lot of experimentation in places and markets where they are trying to figure out what will work for the U.S. market,” said Feher, who prior to the top job at Conviva was the CTO of NBC-Universal responsible for activities such as streaming the Beijing Olympics. “But before that, in the next 12 months there will increasing pressure against cord cutters. The whole authentication thing, where you can’t watch content unless you have a cable sub, will be a mess for consumers.”

In short, while Nordic viewers get their HBOGo a la carte, those of us in the U.S. may have to wait, no matter how many webcomics and industry insiders demand it. Even vague suggestions from HBO executives are compromises that limit the experience to an app.

However, there’s a light at the end of the tunnel, according to Feher. “Inevitability consumers will tell content creators what they want and the content guys will have to respond. There’s a whole upcoming generation of ‘cord nevers’ that the industry has to consider.”

For example, he notes that while many in the industry expected online viewership of the Super Bowl to be lower that it was, given that it was a weekend and people tend to have parties where they cluster around the big screen TV to watch it. He and others were surprised at how many online watchers there were and how many came from sites with an .edu address.

“No one brings a TV to college anymore, and so it’s logical to ask if they will ever want to watch outside of this way they’ve gotten used to,” said Feher. “But in the short term there will be a lot more pressure on aggregators like Netflix and Hulu, and the consumer will feel that in less content or higher prices.”

The challenge for the industry is complex, and is one where technology is pressuring business models designed for the old way of delivering television — multicast from one to many over a guaranteed and pay-TV-provider-controlled connection. The internet has made viewing content more of a one-to-one proposition and the rise in over the top services and multiple devices on which to watch the content has made the entire experience disjointed.

Conviva has stepped in to ensure video quality in this brave new world with software that parses a lot of data in the cloud and has software agents that make decisions about how to adapt the video in response to problems. If the internet is congested for example, it may route content via a different route. If the video is buffering in your home because your Wi-Fi is wonky it may drop down to a lower bit rate.

But outside of technical solutions, Feher also thinks there’s a business model that will help content companies and broadcasters make money so they can avoid “trading analog dollars for digital pennies,” as NBC-Universal’s Jeff Zucker (and Feher’s former boss) has said. It may be a matter of charging people more money for HD streams or even more for 4K streams that require a whopping 25 Mbps connection. ISPs are trying to build this level of granularity into their billing systems and networks.

It might also be as simple as using the targeting abilities available in the digital world to better monetize a viewer by showing him or her more relevant advertising or charging different prices for a la carte content. Essentially he’s proposing that the data driven model we’re seeing drive success in other industries takes a stab at changing television. I hope the results are worth watching.

  1. Or we’ll just be forced to steal the content…if the industry won’t provide the means, we’ll take it into our own hands.

    Share
  2. Ha, my wife watches game of thrones for free by checking out copies at the Library!

    Share
  3. We don’t have cable or satellite at home anymore. We do have an OTA antenna, but never use it. The shocked reaction of my kids (7 & 9) when we stay at a hotel and they try to watch “regular” TV indicates that it is only a matter of when, not if, with regards to its demise.

    Share
  4. Brilliant Read

    Share
  5. HBO/Time Warner seem to be procrastinating and sluggish. Their dragging their feet to get into the internet streaming world paints a perfect picture of fat, old executives not having the slightest clue.

    If HBO doesn’t get with it soon, they will get eaten up by competition in the internet world. They could actually be somewhat competitive with Netflix but with Hulu, Vudu, Blockbuster, Amazon, Youtube, Snagfilms, Hitbliss getting traction… HBO might have just missed the boat!

    I’m so tired of hearing about HBO. I think the media should relegate HBO to taking the backseat and not give them any press. Just let HBO get comfortable in the grave they are digging for themselves and give press to a company that is actually doing something. Fat, old, stinking, rich, dillusional executives need to be put in their place.

    Share
  6. Only a matter of time before enough people learn how to use a VPN or a free browser extension to access the legal but region-locked content that is available on international sites. E.g. It’s easier to keep up with shows such as breaking bad and walking dead via Chinese video sites (they paid for online rights in China, and they are putting these shows up as soon as they air in the US).
    Check out a simple site like imayju.com which will show you how to access these shows

    Share
  7. Statspotting.com Thursday, March 28, 2013

    Well that might be true, but the numbers are so strongly in favor of just cutting that cable

    http://statspotting.com/92-dollars-a-month-vs-7-99-dollars-a-month-the-cord-nevers-logic/

    Share
  8. Karen Kazaryan Friday, March 29, 2013

    Less legal content? More illegal content via torrents.
    But hey, if industry want to shoot themselves in foot so badly, go for it!

    Share
  9. Claudio Marcus Friday, March 29, 2013

    It is more logical to assume that once they can afford to get a TV college graduates will do so. If you can afford to watch on a big TV, you are more likely to add it to your viewing repertoire. And once it is added to the mix, the larger TV experience generally tends to benefit from the best screen available rule.

    Share
    1. This makes no sense. Someone going to college is reasonably well off by default or at least has access to loans. A tv is cheap. You can buy a perfectly nice, large screen tv for $500. Its the cable bills that are outrageous.

      I seriously doubt that it is the cost for a large screen tv that is keeping college students away from cable. Even more damning for the cable companies is that most dorms include cable. So college students are choosing not to watch cable even when they have it for “free”.

      Share
      1. Bill Anderson Saturday, March 30, 2013

        “A tv is cheap. You can buy a perfectly nice, large screen tv for $500.”

        That isn’t as “cheap” as you think it is. When your loans and grants pretty much just cover tuition, books, and hopefully housing (if you are in the dorms), and you are going to school full-time 500 bucks is 2-3 months of food. When they already have an iPad, a laptop, and can spend 200 bucks for a monitor/TV that fits it the dorm room, why spend 500 for a “big screen” which will be obsolete when you get finished with college?

        It makes sense if you actually think about the entire picture and not just one number. “Afford” isn’t just for dollars. If you can’t afford the floor space and/or wall space, it doesn’t matter what the price tag on a TV is.

        That said, I suspect a shock is coming for those pushing and making the big screen. I suspect the next generation won’t be so interested.

        Share
  10. I don’t care what happens to HBO and other content creators/providers. They deserve to go away because they’re dinosaurs.

    Share
    1. Rupert Pupkin Friday, March 29, 2013

      So what content do you watch? Who provides it?

      Share

Comments have been disabled for this post