Can Push VOD be the New Pull VOD?

Here’s a question I discussed at dinner in IBC last week.  If you could start a new TV business today how would you do it.  If your choice was to either  start a VOD based business or to launch a PVR based business, which would you choose?  When we discussed this in Amsterdam, the question was laced with a key assumption. This was that memory innovation will occur quicker than network innovation – i.e. hard drives will get bigger at a quicker rate than networks will increase in size and coverage. Meaning that push VOD, which  uses a PVR’s recording capability to create an on-demand outcome, could benefit from technology innovation faster that pull VOD will.  It it not unreasonable to imagine a generation of PVRs coming with 2-3 TB of memory and 5-10 tuners.

In their Anytime+ service we can already see how BSkyB use push-VOD to mitigate network deficiencies to deliver HD content on-demand.   The mechanism is invisible to consumers who are presented with screens offering the available shows.  We make the assumption that this is done with the agreement of the broadcasters concerned.  However, this doesn’t necessarily have to be the case.  As PVR memory sizes increase, and metadata becomes further integrated into TV systems, it may even  be possible for the platforms to configure a form of push-VOD which remove the need for any kind of on-demand agreements with the free-to-air broadcasters. They can do this by offering two things: a huge variety of new recording options and new, graphically rich, presentation techniques for the recorded shows.

Recording Options

The key here will be offering the consumer new functionality by which they can ‘self—create’ an on-demand outcome.    A PVR from one of the major pay platforms already includes innovations such as ‘green button’ prompts to record a show, and ‘series links’ to record whole series.  Further recording innovations could include:

• ‘Record all key shows’ from the major channels. The platform could then make an editorial decision about which shows it includes.
• Record ‘More Like This’ to allow genre based batch recordings
• Record by artist or director … or
• Group Record – where a channel is running a theme through its schedule.

Many of these features are already appearing on next generation PVRs like Virgin Tivo.

Presentation Techniques
Until the arrival of Virgin Tivo, PVRs presented their output as dry lists of programme titles.  The on-screen presentation of these lists could be very dull compared to interfaces like TV iPlayer.   If we also assume that thes hypothetical new PVRs would be broadband connected and contain web-like rich media interfaces, it would  be a reasonably simple matter to include new options to:

• Present recordings by ‘channel’ – so that each channel’s recorded output could be presented on a branded page, in date order, by A-Z or by genre
• Include rich graphics and browse functions within recorded areas making them look more like VOD players
• Include rich metadata on recorded shows (in fact this is already available on the Virgin Tivo box)
• Include social media recommendations areas.

All of these innovations are within reach of the next iteration of STB manufacturers and pay platform systems, who are currently struggling to put together deals to include the FTA broadcasters on-demand output in their services.  By creating self-served push-VOD areas for all the major channels would not have to match the depth or functionality of the FTA online players to succeed. They would have to be just good enough to stop consumers wanting to visit them.

If presented correctly by the platforms, the activity described above would have to be treated as recording activity by the consumer. While a broadcast channel could prevent use of its logos on the channel pages, the only way that it could prevent this broader ‘recording’ activity would be to remove its channel from the platform completely. It would no longer be possible to be half-in and half-out of a pay platform’s system.

Not having to do VOD deals to offer on-demand outcomes must be an attractive proposition for anyone looking for a more simple life in today’s complex TV industry.

Filed under: PVR / DTR / DVR

Are VOD deals worth the effort?

Nigel Walley – June 2011

We”ve been having a look at Virgin Tivo and having a think about what it means about the future of the TV landscape. Its begun to dawn on us that the implications could be quite significant.  Particularly as the pay platforms and the free-to-air broadcasters are finding it so hard to come to some sensible agreement about incorporating their catch-up services into the next generation pay TV services.   What Tivo and SkyAnytime+ show is that it might be easier if the platforms just ignored the broadcasters and used their PVRs to build their own versions of iPlayer and the other catch-up services.

How would this work?  We have previously looked at how BSkyB are using push-VOD to create an on-demand outcome in their Anytime+ service.  As PVR memory sizes increase, it will be possible for the pay platforms to use a form of push-VOD to remove the need for on-demand agreements with the free-to-air broadcasters.  The key will be offering the consumer new functionality by which they self—create an on-demand outcome.

A PVR from one of the major pay platforms already includes innovations such as ‘green button prompts to record’ and ‘series link’.  These are innovations that make use of the PVR easier for the consumer, but they don’t take away the key element which is that the outcome is still a consumer-requested record not ‘on-demand’.   The new PVRs also cluster the recorded shows together in folders, and let consumers arrange them in a variety of ways (eg A-Z, date order, or by whether a consumer has watched them already).  Tivo now uses the hard drive to offer Suggestions and Recommendations based on previous viewing behaviour (although these slightly break our new rule about these activities being clearly ‘consumer-requested’).

So hard drives are increasing in size (this week Western Digital today announced a 3TB hard drive for £100).   For now PVR memories  on the market have reached 1 Terrabyte, it is easier for the platforms to play with the extra recording space created.     It has dawned on us how easy it would be for the platforms to add new types of recording and presentation capability to create outcomes that mimic iPlayer, ITV Player and the others.

It would be a reasonably simple matter for the platforms  to include new options on a PVR to allow a consumer to opt to:

• Record ALL key shows from all major channels (letting me choose which channels to apply the functionality to). The platform could then make an editorial decision about which shows it includes.
• Present recordings by ‘channel’ – so that each channel’s recorded output could be presented on a branded page, in date order, by A-Z or by genre (as with the iPlayer menus).
• Include new presentation  functions (such as the browse film strip in iPlayer) within the channel areas to increase  the general utility of the recorded shows
• Include rich metadata on recorded shows (as is already available on the Virgin Tivo box).

All of the above innovations are possible with the current iterations of the pay platforms software.  The weak point is the number of available tuners.  Current chip sets would be swamped but Broadcom, and other manufacturers, have already announced chips with 5 or 6 tuners.  That is a lot of recording capability.  What’s even more interesting is that some of these features have been included in the revised Freesat / Freeview specifications within the D-Book and are creeping out into Freeview boxes.

But who would actually do this?  For the major pay platforms, the box strategy does not allow for continual upgrades.  It is hard to create a unified service strategy if all of your consumers are using different specifications of boxes.  The free platforms are unlikely to be allowed to do this, given their shareholder profile.  It is left to the smaller pay platforms  – Fetch, 3View etc- who may be able to use this capability to create a market difference.

The cumulative outcome of introducing them would be for the platform to have created self served push-VOD areas for all the major channels.  The key element being that  the customer should notionally opt-in to these functions.

These channel pages do not have to match the depth or functionality of the FTA online players to succeed. They have to be just good enough to stop consumers wanting to visit them.  While a broadcast channel could prevent use of its logos on the channel pages, the only way that a broadcaster would have to prevent this broader ‘recording’ activity would be to remove their broadcast channel from the platform completely.

Under this regime, it would no longer be possible to be half-in and half-out of a pay platform’s system.

Authors Addition:  Since writing this, Steve Jobs announced his iCloud initiative. This is where the world starts to get very interesting.  Could cloud computing arrive on TV?  Is cloud computing just what the TV industry would call a ‘network PVR’?   If I have a network PVR, could my hard-drive be ten times the size of my Sky 1TB box and have the recording functions mentioned above applied to all channels?  Are Sky and Virgin now going to have to compete with Apple to manage my online media?

Filed under: Distribution & Devices, PVR / DTR / DVR, iPlayer, ITV Player

What The Hell Is Google TV?

By Nigel Walley – Augst 2010

So Google and Sony have jointly announced the launch of Google TV – a range of set top boxes running a version of Google’s Android software. Google have also announced a range of other box launches in the US before Xmas.  You may have seen the press notices about this, and we would like to offer an explanation and opinion on its importance.

First thing is to understand the background landscape.  Broadly, there are three types of competitor in the TV market at the moment: the pay operators (like Sky and Virgin) who make their own boxes and software; the set top box manufacturers who are making Freeview and Freesat boxes with all sorts of fun stuff added over-the- top of broadcast  (sometimes called the ‘over the top’  or OTT  boxes); and the device manufacturers, like Sony,  who are desperately trying to grab ownership of the TV experience in the home with a device centric strategy.  Google TV has relevance for both the OTT and device manufacturers.

At the moment, the OTT phenomenon is being driven by some box manufacturers (like Humax and NetGem) and by service providers like Fetch (who  use a NetGem box).  None of them has a great heritage in making great software or interfaces, so Google TV represents a potential new bit of software to use in the next generation of their boxes.  This must be attractive given that is it free to use, and is supported by the weight of Google’s R&D team.   The fact that it gives Google software a route onto TV is important, but secondary.  The only problem, in the UK of course, is that this puts Google TV in direct competition with the other group developing a free-to-use bit of set top box software – Canvas.    Google vs the BBC’s Canvas would be a great head to head bit of competition were it not for the fact that they are both so desperately late to market.

For the device manufacturers like Sony, on the other hand, Google TV could offer them a way out of a problem of their own making.  The device manufacturers are connecting all their devices to the web and trying to create interfaces and on-demand packages that are available without subscription.  However, right now their offerings are very clunky and have no intelligence because the device manufacturers have no experience of putting together ‘services’. The current crop of connected devices (screens and BluRay players) are a shambles of incompatible consumer interfaces and remote controls.   The way to view Google TV’s deals with companies like Sony, therefore,  is not necessarily as a ‘web-on-TV’ initiative, but as a Sony initiative to make their connected TV devices more intelligent.

But Google may not even be able to mop up all the device manufacturers.  Samsung have just announced a deal to work with Tivo to launch DTT PVRs.

However, the key element to recognize with Google TV is that this is another ‘future TV’  initiative which fails to integrate broadcast into the emerging consumer experience. Yes, it will supercharge the search function on any TV system using it.  It will add functionality to EPGs (eg search) and the on-demand environment but will do very little for the core experience that most people have of TV – watching a live channel.   The consumer  outcome on one of these emerging ‘device-led’ systems is very fragmented – and will continue to be, even with Google’s input.   On these devices, it is impossible to move seamlessly from a broadcast show into the related catch-up shows (because there is no connection between broadcast metadata and on-demand data) or even onto the EPG and back.   This is what the BBC Vision Multi-Platform team call ‘flowing audiences’ between content.  It is a compelling vision of how broadcast, catch-up and red button content can be fused into a cohesive whole in this new IPTV fuelled TV world.   However these new device based systems, which will use Google, view each content type as separate and distinct, requiring the consumer to launch a different app each time they want to move from one to another.  It is not clear that they even recognise the idea of interactive content within broadcast.   It is a PC experience writ large, not a TV experience.  It is most certainly not consistent with the type of TV future that the interactive teams in the UK have been trying to achieve over the last few years.

This has to be viewed in the wider context of a battle for the soul of TV between technology and broadcasters.    There are groups of technology people around the world who are working on a vision of TV that largely ignores the primary role of broadcast.  They tend to be people from an internet engineering background who have been put in charge of TV projects.   These people are creating a vision of an ‘on-demand’ and ‘device’ centric TV experience, which is an outcome based on thier personal preferences not research into the mass audience.

In this world, the programme brand takes over from the channel brand as the primary organizing device, and the web as the primary distribution context.  A seemingly un-connected announcement this week from the BBC, about the iPlayer now connecting with Facebook, makes this point.  The BBC on-demand team have not yet successfully connected their catch up TV with Sky, Virgin or BT Vision, (through which 15M homes watch their broadcast channels) but FM&T have achieved a ‘breakthrough’ with a social media site.  These people are building what they personally want, and are not creating a TV future that has relevance to the mass of the current TV audience.  (The astonishing thing is that senior TV management in broadcasters like the BBC, are letting them do it).

In the UK, where innovation has historically been led by the platforms,  we have an opportunity to create a completely different approach, in direct competition to the Google TV / Sony vision of the future.  This is dependent on the TV platforms (Sky, Virgin and the Canvas group of companies) launching the next generation systems in which broadcast is central to the experience.    This experience should recognizes that the channel is the primary navigational device that consumers understand, and would include features that lock broadcast into the future, such as ‘next generation red button’,   ‘jump to VOD from broadcast‘, and  ‘play-over from the EPG’ in creating  a new interactive consumer experience.  In this light, Project Canvas has an opportunity be the pre-eminent example of a broadcast centric platform – designed to show what the future looks like from a channel controller’s point of view.  But they need to deliver against this promise, not get sucked into a ‘me-too’ apps-centric strategy like Sony, or Samsung.

We have to ask is could Google TV be good for UK broadcasters?  The answer is probably not, but in the same way that Hulu and Joost weren’t good for broadcasters – and they were seen off.   So it will be possible to minimize the impact of even Google in this world, if the broadcasters act in a co-ordinated way.  However, this is where it gets tricky.

Five have broken ranks already,  launching a Demand Five app on Sony TV,  and Channel 4 have broken ranks with the YouTube deal.  So, we are fast approaching a situation where UK broadcasters are unable to act in concert to achieve a broadcast friendly outcome.    Decipher believe that broadcast channels in the UK need to decide which camp they want to play in, because it will be impossible to support both platforms and devices in a single country. (It is important to note that in countries like Germany, with very weak platforms broadcasters may have to work with the device-led OD offerings to achieve significant roll-out of their catch-up content).

It is Decipher’s contention that the most commercially viable future for a commercial broadcaster is in the type of integrated future provided by the existing TV platforms.  However, the platforms have to deliver the required functionality to do this, and they need to do it in a consistent, integrated way between them.   This will require them to talk to each other about functionality that is used by broadcasters across all platforms.  In the past they have failed to do this, as anyone working in red button will tell you.  If the platforms want to fight off the Google TVs of this newly emerging world, they need to learn how to co-ordinate on the development of broadcast-centric functionality and do it very quickly.

Filed under: Future Content, Interfaces & Functionality, IPTV

Is Netflix Coming Our Way?

By Alex Street

The nature of competition in pay TV markets could be about to change. Internet-enabled TVs and connected devices represent a fundamental change to the way content is distributed and markted to the viewer. I’d like to address these issues by looking at one company’s attempt to build a hybrid distribution strategy that capitalizes on the growth of internet-enabled devices connected to the TV set.

Historically, a single TV platform has been in control of the viewer experience in the home. If I was a Sky customer, Sky controls everything interesting to do with TV in my home. In fact I pay them to do so. The arrival of video on demand products on Blu Ray, games consoles and internet TVs challenges this control. For example, quite soon, in my home, when it comes to watching movies or catch up, I’ll have a choice of platform at the point of decision. In other words, instead of picking up the Sky remote, I’ll have several remotes all competing to deliver me the same thing and or similar things. I will no longer be limited to the TV platform I subscribe to. This puts device manufacturers in direct competition with pay platforms and this isn’t a challenge one American company seems to fear.

Netflix started out as a simple movie rental company that delivered your DVD rental by post. However, as the company name suggests, they never saw themselves as being simply pigeon holed into just offering a postal service. Netflix has an advanced hybrid distribution strategy taht uses the open web to deliver movies to the viewer. Netflix is now available on games consoles (Xbox 360, PS3 and Wii), BD-Live Blu Ray players (Samsung, LG and Insignia) and internet TVs from LG, Sony and Vizio. Netflix is also now available on the iPad. This strategy puts them in direct competition with US cable and satellite operators. Netflix claims that by offering streaming cross-platform streaming options it can drive premium subscriptions and tap into the $66b US home entertainment market. At the end of the first quarter, April 2010, Netflix reported it had 13.9m subscribers, representing 35% YOY growth. This is expected to hit 16.6m by the end of 2010, a 400% increase in subscribers since 2005. Graph 1 shows this rapid increase in Netflix subscribers, in the context of the number of US DVD households and movie goers. As graph 2 illustrates, this expansion has been partly driven by a more competitive subscription rate, with average fees falling from $17 to $12 a month.

In order to tap further into the lucrative home entertainment market, Netflix has to drive online streaming and attract more pay TV subscribers. Firstly, Netflix is already driving more users to stream online. More than half – 55% of subscribers – now stream movies and TV shows from Netflix over the internet. Graph 3 details the average number of movies streamed compared to the average number of DVDs shipped to each subscriber, each month. In terms of the total volume shipped and streamed, Netflix believes that streaming will surpass postage as the primary delivery format for movie rentals within 2 years. Conceivably, much of this will be driven by an expansion in the base of the devices that can be streamed from. Secondly, in order to grow its subscriber base Netflix is offering TV shows in order to attach cable subscribers. This puts Netflix in direct competition with US cable and satellite operators who have combined subscriber based of around 105m. Increasingly these operators are also offering VOD products on multiple screens in the home. However, the domestic market isn’t the only way Netflix is looking to grow. Netflix will launch in a foreign market later this year. Moreover, a readily available distribution base exists in the games consoles and BD-Live players, by virtue of their international manufacturing standards and global brand presence. This is not an option open to domestic cable and satellite providers who have sunk costs.

All in all, the online streaming market is there to be colonised. Netflix is one of the first companies to develop a hybrid distribution strategy on this scale. We’re going to have to get used to the competition at the TV screen and develop ways to deal with it. Essentially, there’s a functionality rush occurring on the TV set and it’s not simply a question of the best, most commercially viable and economic way to distribute content, it’s who can offer the most compelling user experience.

Download the original article from NMA, here.

Filed under: Commercial Models, Distribution & Devices, Future Content

“Who Gave The IT Department A F*#king Brand To Play With?”

By Nigel Walley

We have been looking at the role of PC VOD in the TV industry recently and reflecting on how, in attempting to capture the potential of this new medium, the industry seems to be making many of the same mistakes of the  first dot.com boom. The  way that the PC VOD teams appear to operate as separate fiefdoms in all the main broadcasters seems troubling, and strangely familiar.

People appear to have forgotten that, when the internet came crashing into corporate life in the mid nineties, confusion and conflict quickly blew up in many big companies.    The battle lines were particularly drawn between IT and marketing over the vexed question of ‘who owned the web site’.  The IT departments thought that, as they were the only people who understood the  new technology, they should be in charge of the web site.  Like the TV industry, the creative departments in most companies were slow to react.  Suddenly, IT departments started recruiting web designers and content people to run the company web sites, and conflicts with the marketing teams broke out.

There were some bizarre outcomes.  One UK bank (whose company colours are clearly red, white and black) had an olive green web site for a while because the IT department liked it.  Inconsistency in marketing messages were everywhere.  In retail companies, this problem was further complicated as the IT departments, not content with taking on the marketing teams, tried to set up rival retail operations. One major retailer faced a revolution amongst store managers who refused to stock the promo disks, or even mention their fledgling e-commerce service in the stores, because of the antics of the new department.

Part of this chaos came about because of the insistence of the development teams that they needed their own brand for the new service.  Retailers in particular, fighting off competition from Boo.com and Amazon.com, were insistent that they needed a unique brand to play with in the dot.com space.  This only served to confuse customers and make cross-marketing difficult, let alone doubling-up marketing teams and budgets. Some of the worst offenders were the publishing industry, who set up competitive digital divisions with separate editorial and sales teams in competition to their main magazine properties.

The blame for the chaos sat clearly with senior managers.  Most were so befuddled by the arrival of the web that they weren’t able to fully appraise its strategic implications, and they therefore let their IT departments have their head.  Eventually sanity re-appeared, the absurd brands were shut down and the web operations were broken up and integrated into each of the relevant departments.  My favourite memory of this, came from an experienced older department store boss, who woke up to what was happening and exclaimed ‘who gave the IT department a fucking brand to play with?  They should be making sure my photocopier works!’ There is nothing new in this.  R&D teams always want to watch their babies grow.  In every industry, there comes a point where these initiatives have to stop being R&D, and be integrated into the mainstream, and sometimes you have to prise control from the fingers of the boffins.  Coming out of th dot.com chaos we learned a few basic rules of dealing with technology change:

• Don’t be bamboozled.  If management don’t ‘get-it’ then the  boffins aren’t doing a good enough job of explaining. Send them back to write a business model  (its funny how the only bit of software that the boffins don’t appear to be able to use is a spreadsheet!)
• Don’t throw the baby out with the bathwater.  Unless you are one of the unlucky few, your core business will stay your core business – don’t lose sight of it. (OK, that speech might not have gone down well in the typewriter industry when the PC arrived).
• Don’t let new technologies set themselves up in competition to the main business.  Almost invariably the new systems should be positioned as supportive and complementary to the main business.
• Don’t let the boffins have a brand to play with (they are bound to create something in olive green or fluorescent pink!)
• Don’t let boffins speak directly to customers or make content decisions!  (These people have no friends or family and play Dungeons and Dragons for fun. They shouldn’t be put near your customers!)
• Let the boffins run developments while the emphasis is technical, but put in place a plan to integrate back into the main business once an initiative gains momentum – then fire the techies!  (They’ll only go round annoying people by grumbling that it was all their idea in the first place).
• Don’t let key people in your existing business abdicate their responsibility to understand and  adopt the new capability. (

All of this seems logical with hindsight, but when we look at the rise of the PC VOD branded players, it feels as though senior management in the TV industry failed to learn any of the lessons of the first dot.com revolution.  In every major broadcaster, senior management  set up separate VOD R&D teams, in separate buildings, with separate objectives from the broadcast teams. These teams have effectively been set up as competitors to their parents.  In some broadcasters it appears that the VOD teams KPIs are actually in conflict with the main broadcast business.  The outcome has been cannibalistic, not complementary to broadcast audiences, and these needs to be reset.  Nobody appears to have asked the question, ‘how can we build a VOD service that is supportive and complementary to our core broadcast business?’

If we had started with that question, we might not have ended up with broadcasters repeating the dot.com mistake of creating separate brands.  In the case of the BBC and ITV the player brands that have been created are not even built out of the established brand architecture that the channels have paid a lot of money to develop.  Once again, the outcome is confusing marketing messages and confusion in cross-marketing and branding.  That is what happens when ‘you give the IT department a brand to play with!’

Creating separate entities made sense from an R&D point of view, particularly given that there was a need to drive a significant change of consumer behaviour into the market.   iPlayer in particular has been a dramatic success on that front.  However, we cannot ignore the organisational friction and chaos that all this is causing within the broadcasters.  More importantly, this separation is putting unnecessary pressure on channel brands.  Consumer research has been clear on this.   Consumers still value and use channel brands as key editorial and navigational supports.  More importantly, they view catch-up as part of a channel experience, not as a separate experience.  With the current organisational structures around PC VOD, the opportunity to exploit these consumer perceptions of channel brands have been limited.  More dangerously, when most commentators are realising that we need to bring catch-up much closer to broadcast, VOD teams are beginning to make syndication decisions for VOD based on their own needs and interests, rather than than synchronising with the interests of the main broadcast channels they are meant to support.

There is a very strong argument to say that iPlayer, and the other PC VOD teams now need to be broken up and the R&D teams focussed onto their next technological challenge.  As Tom Peters once said, ‘If it ain’t broke, break it!’. Now is the time for that philosphy in the TV world.  However, it appears the opposite is happening.  In every broadcaster these R&D teams have morphing into their own permanent divisions. (In the BBC, they are moving towards letting the R&D team commission content.) In every case there appears to have been little integration planning for how to bring this new functionality into the main business.  More worrying is that there appears to have been a hope among traditional channel managers that, having ‘solved VOD’ by setting up these separate teams, then the core business can get on with running the core business without changing anything.  This means that  management in the TV industry seem unprepared to take on responsibility for running VOD within the broader TV mix

Filed under: Distribution & Devices, Future Content, Uncategorized

Is The VOD Industy Lying To Us Or To Themselves

By Nigel Walley

Martin Johnson, the England rugby coach stood in front of the cameras after the England Scotland game at the weekend and said that he saw improvement in the England team.  Like most of the English sporting audience, who had just watched a dire display of turgid rugby, I gulped in shock  and stared at the screen feeling very uncomfortable.

My discomfort came from the fact that Martin Johnson should be able to do no wrong in my eyes.  He is someone I revere, and for whom I desire success in a very difficult job.  But he was talking rubbish.  What I couldn’t work out was whether he knew he was but was fronting up, or whether he actually believed the stuff he was saying.  It is discomforting when people I like, and want to succeed, spout stuff that is not believable. Particularly if I am not sure that they believe it either.  I am beginning to feel this way about a whole host of new media initiatives that are currently underway.

We are in the midst of a significant wave of big consumer technology and service punts at the moment. If you look at the level of commercial activity around PC VOD, TV VOD, HD TV and even 3D TV, the volume of launches planned for 2010 and 2011 feels like the height of the dot.com boom, apart from the small inconvenient backdrop of a global recession.  As part of this frenetic activity, all sorts of people who I really like, and want to succeed, are quoting numbers at me which make me feel uncomfortable.  The numbers in the business cases being expounded, were they to come true, represent significant changes in consumer behaviour, mass adoption of a host of new things, and general consumer enthusiasm for things which, if truth be told, there has been little indication of demand.  And once again, I can’t work out if the people involved believe the numbers either.

Consumer demand is a tricky thing to understand.    There are times when we, we are told, that we ignore the consumer at our peril. The customer is king. But almost by definition, our industry has always worked on the principle of ‘if we build it they will come’.  None of the great things that the internet has spawned were based on meeting an explicit demand, so why should I worry now.

Also, at the heart of many of these launches are good old competitive fights for market supremacy.  PC VOD is a case in point.  It is quite clear that there won’t be sufficient consumer demand for all the new PC VOD players to succeed, but the consumer will benefit from the competition.  As consumers, do we now care what happened to Netscape, or AltaVista?

For new media, these existential issues are nothing new.  But for the TV market, this is probably the craziest phase we have ever seen.  This week we have seen the announcements that some of the major electronics brands are ready to launch the new generation of Flatscreen TVs.  These things have 3D capability, IPTV capability, DLNA home networking capability and, almost as an afterthought, the new HD chips in their Freeview receivers.  Everyone seems to want to get into the market before the World Cup and the launch of Sky’s 3D channel.

Ignoring the cyclical problems caused by the recession, which will naturally dampen consumer demand, this explosion in TV technology is predicated on a level of consumer willingness to spend over the next two years, which would be hopeful in the good years.

The new media industry has always accepted this craziness as a cost of doing business.  But lets not forget that, alongside all the success stories, there have been a long series of high profile, venture capital sapping, failures along the way.  I liked the people at Boo all those years ago, but didn’t believe their numbers.

This blog is the original, unexpurgated version of an article that appeared in New Media Age in April 2010.

Nigel Walley

Filed under: Commercial Models, Distribution & Devices, Future Content, IPTV, 3D, DLNA, Future Programming, On-Demand, PC VOD, VOD

Why do I still watch broadcast TV?

Adrian Stroud – June 2009

I recently challenged myself to work-out why I still watch so much ‘live’ TV. I don’t mean news or sport because I can rationalise those genres quite easily. I mean bread and butter programming.
The challenge came about because I was debating just how much more damage all the VOD services and PVRs will do to live TV viewing figures in the long-run. This is important because it is those live viewing figures that contribute the vast bulk of advertising impacts. VOD currently delivers far, fewer impacts per hour of viewing than live TV, so the ‘end game’ for advertising funded TV programming is defined by this question. My guess was that live TV won’t drop more than perhaps 25%, no matter how many VOD and time shifting gadgets like Sky+ launch, but I could not say why. I suspect I’m making the mistake of confusing the technology with the benefits.
VOD and the PVR are the rational way to consume all but the livest of live TV events. So, when VOD has all the content you want and it is available on every screen in the house, why would you want to watch ordinary old broadcast TV at all?
Live TV has one strong thing going for it – ‘missability’. When you turn your TV on, the rational thing to do is to check a few favourite channels to see if something is sneaking past you that you might like. If I find something valuable in this initial foray into live TV I’ll add it to my Sky+ planner. But here is an odd thing, having committed to recording a newly discovered programme and all subsequent episodes; I’ll probably continue browsing likely sources of live entertainment. When I’m in this mode I’m not actually looking to make a commitment to something I really enjoy. I’m probably expecting to be interrupted or be forced to change channel to meet someone else’s taste. The stuff I really like is salted away for some future, quiet, uninterrupted hour that never comes. So missability is a factor for me at the moment but what if just about every TV programme you could think of was available on demand? How can you miss something then?
Misability is not always what drives me to the broadcast channels first. The conditions under which it seems appropriate to commit to a piece of VOD material are quite specific. The kids must be in bed (a deadline that slips further and further into the evening) and a joint decision must be made with Mrs Stroud as to the duration available for shared viewing and of course there is then a debate about exactly what to watch.
By habitually recording things I like and then delaying their consumption to some future ideal moment that never arrives, I could easily end-up watching less programming that I really enjoy than I did when I had to strike while the iron was hot.
Here is another odd thing. Watching one of my ‘favourite’ programmes sometimes just does not appeal as much as watching short bursts of fairly random content. When left alone with the remote control and hour to waste, I’m likely to channel hop. I might leave a programme in a dull bit and give it another chance a few minutes later knowing that it will have moved-on.
The use of Sky+ to time-shift seems to have levelled off at about 15%. This is an average drawn from a very wide spectrum of behaviour so don’t worry if you are not typical. It is not an average like the average shoe size for men is 10, it is more like the average score for a blindfolded darts player will be 10.
Maybe 15% has always been the average amount of consciously planned TV viewing, and VOD and PVRs have simply revealed this underlying truth? Maybe 85% of viewing was always low-commitment and ‘a bit random’ and we were unconsciously quite happy with this. Let’s face it, how could TV have become such a world-wide hit, occupying many hours a day for most people in most countries if ‘fairly random, low commitment viewing’ was not fun?
So the reason I watch live TV is rational but it is not about being live, it is about serendipity and the way it can be randomly sampled – it is a about browsability. When I channel-hop into a programme half way through, I know that is what I have done and that is exactly what I wanted to do. I don’t want to navigate a hierarchical menu system, highlight a title, see the channel indents, pre roll and then sample ten minutes of scene-setting before a drama gets going. I want a random few seconds somewhere in the middle. I don’t even want a ‘sampler’ of best bits edited together. If I go back to the same programme five minutes later I want it to have moved-on by five minutes. If I’m channel hopping while the children are still around I want to know that I’m not going to stumble across something violent, rude or frightening. Of course, when they are safely in bed these become positive selection criteria.
I have yet to see a VOD system that has the browsability of live TV and that encourages the same happy-go-lucky lack of commitment to viewing a whole programme. But surely a VOD system could mimic these attractive features of broadcast TV and offer added benefits? I suspect that the current generation of VOD systems are assuming that our TV consumption is more planned and sensible than it really is.
Rather than thinking about what the end-game is for live broadcast versus on demand, the real question might be how much TV viewing will remain low-commitment, fairly random sampling? It would be surprising if on-demand systems did not eventually meet the need for browsability better than the current broadcast channels. But if they do, will they be able to deliver about fifteen, spots an hour like live TV does? If you have some cash for research I’d love to see what can be done.

Filed under: Ad Formats & Cases, Commercial Models, Distribution & Devices, Future Advertising, Interfaces & Functionality, IPTV, PVR / DTR / DVR, 4OD, BBC, BT Vision, CH4, CH5, ch5 on demand, demand five, iPlayer, IPTV, ITV, ITVplayer, Joost, Sky, Sky Anytime, SkyPlayer, Tiscali, topupTV, VOD

Acronym A Go-Go

Nigel Walley - March 2009

I received an email this week from a contact who works in the TV industry in Australia asking my opinion on something to do with what he called ‘PDRs’?   Now I had to stop and think what on earth he was talking about. Eventually I went back to him to check my assumption that PDR meant ‘personal digital recorders’.   These are, of course, what we would call a personal video recorder (PVR) or, if you believe Sky, a digital video recorder (DVR) or, if you follow Tess Alp’s of Thinkbox’s mantra, a ‘digital television recorder’ (DTR) or, if you are the Dixon’s web site, a little bit of all of them, without explaining the difference.

Now when this acronym fiasco started we were only really dealing with two options – PVR and DVR.  Decipher made the assumption that a personal video recorder – a PVR – was something that behaved like Tivo in the US, learning about your likes and dislikes and recommending programmes to make a truly ‘personal’ service.  A digital video recorder – a DVR - was a more simple device which just did exactly what you told it to do.   I know  that Thinkbox were concerned that neither of these acronyms contained the word television.  As the main cheerleaders for the UK broadcast ad sales market, Thinkbox’s Tess Alps wanted to make sure that telly was central to the idea, and began to promote DTR.  In fact she has been banging heads around the industry to make us all use the same DTR acronym.  Strangely, among some consumers, the name of the original box in the market, Sky+, is becoming a bit of a generic term for the device. It is not uncommon to hear people say ‘I Sky Plussed it’ when they have recorded something. We have even heard people with a Freeview PVR say the same thing.  On Decipher’s behalf I can say that we really don’t care which acronym is used, as long as all providers in the industry coalesce around it.

The confusion about what to call this device is typical of the TV industry shooting itself in the foot over new technology introductions.  Compared to the internet, the TV industry always struggles to get quick, mass acceptance of new technology introductions, particularly within the creative communities.  Their inability to agree to industry wide naming conventions goes a long way to explain this.   A great example is the advent of catch-up TV on-demand.  Half the platforms called it catch-up TV, while BT Vision and Tiscali / Homechoice decided to call it ReplayTV.  Nonsensical.  Thankfully, Tiscali has now changed sides, and called it catch-up. However, BT Vision currently is still sticking to the Replay idea. 

This just highlights how the TV industry has a crying need for shared terms, descriptions, icons and signage around its new functionality. However getting the different platforms (Sky, Virgin, BT Vision, Freeview and FreeSat) to agree about something, is liking herding really belligerant cats. What tends to happen is that the platform that gets to market with a new feature first, gets to establish names and presentational conventions. Hopefully, the rest then adopt these, however the catch-up example shows that this isn’t always the case.

The area crying out for co-ordination at the moment is future advertising formats. As on-demand and PVR capability roll out onto every platform, the potential for new ad formats to be delivered is multiplying. Red buttons, green buttons and yellow buttons are being called into play by different platforms, each of who are emphasising a different set of formats in their development plans.  For agencies and brand clients trying to work through this, it will be a nightmare, unless some group can broker a more co-ordinated approach.  As we saw with early red button campaigns, unless agencies are given standard formats and terminology across all platforms, they just don’t come on board and its impossible to drive volume.  This might be the time for a bit more of Tess’ head banging.

Filed under: Distribution & Devices, PVR / DTR / DVR, DTR, DVR, Future Advertising, Future Programming, PVR, Sky, Virgin

No Long Tail Please – I’m Human

Adrian Stroud

Commercial TV funded by advertising is an astonishingly scalable business. You can look at the richest territories in the world such as the USA and note that when it is fuelled by $70bn in TV advertising, the TV industry can produce a service that occupies 34 hours a week of leisure time for the average adult. Then look at Serbia, with a TV ad spend that is about 1% of the USA and, you guessed it, they keep the average Serbian adult busy 34 hours a week. I know this ignores other revenue like subscription but you get the point. With a business model that scalable you’d have thought the UK TV industry could absorb a reduction in advertising revenue of a few percent without all the talk of the sky falling-in. 

So why all the gloom? Here is how I imagine it works – If you are a TV company emerging in a primeval TV market, the first thing to worry about is what I’ll call the ‘cultural fit’ of your programming. Cultural fit is how well your programming represents the hopes, fears, morality, culture and aspirations of your host nation. A cheap programme with a good fit will easily beat an expensive one with a poor fit. Eventually, all the surviving broadcasters have achieved a high level of cultural fit and they are driven to try to out-spend each-other because once the cultural fits are all balanced, the biggest spender will win the most ratings. The TV production business will absorb all the money available to it – There is no point at which it will ever have ‘enough’ money. Hence TV (and film) production costs rise to excruciating levels and stay there. There is a ratio to be worked out here if you had the time, but I’d guess it is something like every £1 you spend on ‘fit’ is worth £10 on other production costs. That is why the best writers, directors and producers are so well remunerated – they can spot a poor fit and hopefully correct it before your blow your production budget on a turkey.

So in a mature market you’d expect a handful of broadcasters to have almost exactly the same degree of cultural fit in their programming and for them to be at the very limit of what they can afford on production and acquisition.  What happens to our terrestrial commercial stations in a recession then? In theory, they could all just reduce their spending a few percent and have perfectly healthy profit-margins.  We know this is true because lots of TV markets spend a heck of a lot less than we do and have just as much overall viewing.  But what if your major competitors include BBC and Sky – both of whom have an income that looks pretty recession proof?  Well, the outcome of dropping your production costs is likely to be a disproportional loss of viewers followed by further drop in revenue and you face the spectre of ‘spiralling down’ to some much lower level.  If my mental picture of ‘cultural fit’ being of paramount importance by something like 10:1 over production costs is correct, we can expect them to fight back with programming that is cheaper but that reflects the hopes, fears, morality, culture and aspirations of the average Brit even more closely than they managed before. Is that possible?  I assume the whole purpose of the public service remit has always been to prevent that very thing from happening. So yes, it is possible but not with the current burden of public service. If the public service leach is loosened you can expect more paranormal, studio-based, live, confrontational, reality game-shows than before.

This way of thinking can help to understand what happens in the international programme market. The cultural fit of American TV programming in the UK is not perfect but the production cost of the best stuff is so high that it can win decent ratings against UK originated programming. The same is true of US programming in almost every market.

The ‘cultural fit’ 10:1 model would predict that we should import almost no programming from territories that spend the same or less than we do on programming – and sure enough, we don’t.  It would also predict that we should have great difficulty selling our programming to the main US networks where they spend much more per hour on domestic programming than we do but we might succeed better with major channels in territories like Australia that have a similar culture and spend less per hour on their own content – both true.

Hollywood films have such massive budgets that they can bludgeon their way past the cultural fit problem.  Every now and again a low budget film is the first to spot that the cultural fit has changed and that the mainstream studios have failed to notice. They can exploit this observation and beat more expensive productions hands-down, Easy Rider is the most obvious case I can think of. Punk rock would be the music business equivalent.

What about older UK programming? Here is a surprise. The cultural fit of domestic programming declines steeply over time even in its home territory so programming from the past becomes rather like material imported from another country. This is because the very best programming matches the current profile of cultural fit so well that even a year or two later it has lost it’s edge and it’s appeal is fading compared to newer productions. As production costs rise, older programming also does not have the benefit of what were considered high production values at the time, so it gets a ‘double whammy’ in terms of damaged commercial value.

Even worse news for older programmes – humans seem to be programmed to seek out the ‘new’ so anything perceived as ‘old’ has a disadvantage for irrational reasons. That is a triple whammy so far and a fourth ‘whammy’ is on the way.  The combined effort of the worldwide TV production and film businesses is producing good new content faster than you can watch it. If your Sky+ is like mine, it is like a magic beer glass that re-fills faster than you can drink it. With what feels like an oversupply of good new stuff there is no point giving something a second chance some years later. Your Sky+ hard drive is effectively a personalised VOD service that benefits from the combined programme budget of every broadcaster on the platform. For a new TV series to get my attention it would have to be better than, LOST, Desperate Housewives, Heroes, Scrubs, Battlestar Galactica, Ross Kemp in Afghanistan, Country House Rescue, Grand Designs, Russia A Journey..… I could go on.  All these fantastic programmes are backing-up on my Sky+ faster than I can watch them.

The closer to origin date that you consume material the more value you attribute to it. Even with new material on my Sky+ the chances of me ever watching it must half every week I postpone viewing it.  This seems to be an unconscious and unavoidable human trait. You cannot prevent yourself from feeling privileged when attending a premier. The TV and film industries structure themselves to move the moment of consumption ever closer to the point of production. As a producer, the speed with which you can get your content in front of all its potential viewers influences the value you can extract from it. The faster the value is realised, the more of it there will be.

Where does this leave an ‘on demand’ TV services with a ‘long tail’ of archive material? It should have surprised nobody that ‘on demand’ would end-up meaning ‘catch-up’.  The winning services will always be the ones that offer the fastest access and easiest way to watch the newest, most expensive, best fit material. The engineers might not have known that but surely the TV executives did?

What is clear is that even in the most ardent TV homes, viewers only have so many hours in the day to watch television. If consumers are increasingly able to use new systems to find their favourite big shiny shows, they will have less time and inclination to drift down the channel line-up in search of something to view.

TV companies used to be able to schedule the ‘least worst’ programming at any point in time and be guaranteed a decent share. In homes that have all these systems available, the middle order of multi-channel broadcasters, particularly those that are merely deliverers of archive programming, could (and should) be decimated. The quality of past TV programming is seen through the distorting lens of memory until you actually try watching some of it. The few gems you remember distort your recollection of the whole. In reality 9/10ths of it is not as good as current TV and you have no need to ever re-visit it.

In this world, we could easily lose 200 TV channels, and the consumers would still be better off. Because of the new functionality, viewing is going to re-aggregate around the output of a smaller number of bigger, better, functionality rich channels, because they are the ones that make the high profile, new content that drives the TV market.  Decipher calls this ‘multi-function TV’ and once again, for media planners it will bring both questions and opportunities.

Filed under: Distribution & Devices, IPTV, BBC, cultural fit, Future Content, IPTV, ITV, Long Tail, On-Demand, Programme Library, programme sales, Public Service, Sky, TV Advertising, VOD

Overhead Projectors, Broadcast Channels and Other Redundant Technologies

Nigel Walley – Feb 2009

 

I used an overhead projector for a presentation at a conference the other day.  It was great.  You get to write on a sheet of acetate, like your teachers used to, and it shines up on the wall.  Joking aside, there was something immediate and human about presenting ideas with an overhead that is completely lost with Powerpoint.  I know that I sound like a music nut comparing vinyl to the CD, but in the rush to move into the digital age, we can sometimes throw the baby out with the bath water.   Before we got rid of overheads, someone should have stopped and questioned whether there was anything great about them that needed preserving.  In fact I think they may make a comeback

 

On that not, let’s pursue the point about music formats.  It is likely that we will have a similar situation with LPs.  There will be many people who will end up owning a vinyl collection, and an iTunes collection of music, but will forgo their CDs all together.  CDs may go the way of the VHS tape and the VideoDisc.  I find it difficult to imagine someone saying what I just said about overheads, about CDs.   I did hear a very persuasive defence of the audio cassette the other day, particularly its role in the creation of compilations, as a gesture of love amongst teenagers, but I think the days of the audio cassette are gone.  Vinyl will be the great survivor because there is something about LPs that is great and human, and that people don’t want to let go of.

 

CDs will become what the Americans call a ‘buggy whip’ product.  Apparently at the turn of the 19^th century in America, making hand held whips, for drivers of horse drawn buggies was big business.  Then, all of a sudden, it wasn’t. ‘Buggy Whip’ has come to be used to mean a product or industry that just disappears as a market is redefined rather than revised.  

 

The distribution format debate has now begun to rage in the TV world around broadcast channels.  It only used to be the most fundamentalist wing of our new media brethren who would speak about the death of broadcasting channels. Now everyone is at it.  I have heard the most sensible people talking about not needing broadcast channels, and how they are now 100% on-demand. Now there is a very sensible technical argument against the death of broadcast.  If you want 11 million people to watch Coronation Street at 7.30 every night, then sticking it up in the air, rather than through an expensive network, makes the best economic sense. However, two counter arguments are appearing. The first is a neat technical rebuff.  Once we get fibre everywhere, like the cable industry, there will be sufficient capacity to not worry and that we should just make it available on-demand from 7.30.  The second argument says that making everyone watch Corrie at 7.30 at night is an old fashioned construct.

 

Now this is where the human in me starts to revolt again.  Millions of people around the country build the social routines of their household – dinner, bathtimes -  around channel schedules. Do they do this because there is no alternative and with on-demand then broadcasts are the next buggy whip.  I am not yet convinced, and the argument fails around live football.  However, I can remember when Prince Charles used to talk about organic food and saving the planet and everyone thought he was a nutter?

Filed under: Distribution & Devices, IPTV, Broadcast, CDs, channels, Future TV, multichannel, Nigel Walley, PVR, TV