The TV industry’s efforts to adapt to new consumer habits have evolved for many years. Yet much remains to be done right now, particularly in the areas of measurement, designing consumer friendly products and building technical infrastructures for the digital age.
Progress in those areas will be particularly important in 2018, given the signs that the basic glue holding together the pay TV industry is melting, with subscriber losses accelerating and more programmers launching their own over-the-top services outside the multichannel ecosystem.
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Underlying this transformation is new technology for operations. “We are very focused on the idea that we have to make our content available literally anytime and anyplace,” Diane Tryneski, HBO executive vice president, technology, and chief digital officer, technology, said. “That is a real change and the tech that supports that has to be very different than it used to be.”
To do that, HBO has embraced cloud and internet protocol technologies and adopted workflows that allow the programmer to quickly respond to new business opportunities. “The fact that we aren’t siloed means that we are seamlessly delivering content to anywhere, whether it’s TV everywhere, HBO Go or one of our affiliates’ platforms,” she said.
Discovery Communications senior vice president of technology strategy and architect Brinton Miller said he sees the same advantages and prospects. “Discovery has been very focused on getting our content on every screen and every platform, from [multichannel video programming distributors] to social or whatever the next big thing that comes around will be and we have been executing on that strategy in the last few years,” he said. “That has meant a big shift in the way we approach infrastructure, so that we can react quickly to this quickly changing landscape.”
It’s Hard to Make Things Easier
Achieving those goals isn’t easy, given the scale and complexity of major programmers’ operations.
Discovery, for example, has more than 420 linear networks and publishes to more than 380 different nonlinear platforms. Each year, the company takes in about 3,000 hours of new content that must be versioned for 220 countries around the world.
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To simplify those operations, Discovery has already completed its “On Ramp” project, which allows it to get content from producers and process it in the cloud using Amazon Web Services (AWS). The company has also moved all of its U.S. linear networks to native cloud infrastructure with AWS.
Notable progress can also be found at pay TV operators. During a lengthy interview, Phil McKinney, president and CEO of CableLabs, ticked off a long list of initiatives helping the cable industry transform their infrastructures.
These range from the transition to IP and cloud-based technologies, which are allowing operators such as Comcast to launch next-generation interfaces on the X1 platform, to the close alliances CableLabs is setting up with consumer electronics companies and Silicon Valley firms that are bringing new technologies into the industry.
One particularly important area is increased bandwidth to enable a host of new services. “Improved broadband is a critical foundation for the future of our business,” said Heather McCallion, vice president of programming at Atlantic Broadband, which has rolled out 1 Gigabit-per-second service in two markets and is working on DOCSIS 3.1 upgrades.
DOSCIS 3.1 infrastructures will let operators handle broadband speeds of 10 Gbps downstream and 1 Gbps upstream, with even more bandwidth in the pipeline. CableLabs, for example, has developed technologies that use coherent optics to dramatically speed up existing hybrid fiber coaxial networks with no need to lay down new fiber or dig up old infrastructure.
Counting on Measured Progress
Another major issue is measurement. “The industry has to get to the point where it has reliable syndicated cross-platform measurement, but at the moment we still don’t have it,” Turner chief resource officer Howard Shimmel noted.
Cary Meyers, senior vice president of fan and media intelligence at ESPN, highlighted the importance of better measurement by citing recently released data from the first seven weeks of the Nielsen Total Live Audience service.
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Between Sept. 25 and Nov. 12, the addition of out-of-home and streaming viewing to traditional viewing numbers meant that ESPN’s ratings were up among millennials aged 18-34 by 28% in primetime over ESPN’s traditional viewing. “We can now see that the millennials that have been missing from [traditional] ratings are in fact viewing our programming in large numbers,” Meyers said.
Overall, the new data from millennials — who account for 46% of the streaming of ESPN programming — boosted ratings for college football by 16% and for Monday Night Football by 13%.
A number of other major programmers have also made great strides in cobbling together a more complete picture of total viewing across platforms.
For example, Shimmel noted, Turner has ramped up its big data capabilities and analytics by combining its own digital consumption data with more traditional measuremements to document cross-platform viewing. Turner recently signed up for Nielsen’s new SVOD ratings and has also been working with 21st Century Fox and Viacom to form Open AP to help standardize the definition. But Shimmel said he was still frustrated by the lack of industry progress toward objective third-party syndicated ratings. “We have to make it easier for advertisers,” he said.
One issue has centered on Nielsen’s SDKs, which are required for the new measurement systems to work. “These SDKs are difficult to implement and you are missing a bunch of networks that haven’t turned them on,” said Jane Clarke, CEO and managing director, Coalition for Innovative Media Measurement (CIMM).
Sara Erichson, executive vice president of client solutions and audience insights at Nielsen, disagreed, noting that “SDK implementation has improved substantially over the past year. … There is a lot of implementation and trialing of products going on behind the scenes.”
Other promising developments include work on new standards. In the fall of 2017, the Media Rating Council issued standards for digital measurement and in 2018 they will be tackling the larger issue of creating a standard for cross-platform measurement, noted George Ivie, executive director and CEO at the MRC.
“There are a lot of big issues to be solved, but we are doing a ton of heavy lifting and I think there is hope,” Ivie said. “We are making progress.”
Confusion Still Reigns
Improving the consumer experience is another major area of focus for many companies. Todd Supplee, a partner with PwC’s Entertainment & Media practice, noted that rapid proliferation of choice and high quality TV programming is making it harder for consumers to find the content they want.
“There is a lot of confusion among consumers,” he said. The recent PwC Content Discovery survey, for example, found that 62% of respondents complained of struggling to find something to watch and that consumer frustration with the way they access programming is actually higher among streaming-only consumers, with pay TV subscribers reporting less annoyance.
Many companies hope to attract subs by solving these problems. “We see a real opportunity in the idea of bringing all this [OTT and pay TV] content together and making it easier for consumers,” Daniel Spinosa, vice president of entertainment services at Comcast Cable, said.
Spinosa argues that the improved interface of their X1 platform has helped boost VOD consumption by 30% year-over-year and that it has allowed them to build a successful electronic sell-through business.
Atlantic Broadband’s next-generation TiVo platform has also paid off in subscriber retention, Heather McCallion, the operator’s vice president of programming, said. After purchasing a system in Connecticut that had been losing video customers for years, the new TiVo platform and bundling strategy quickly turned things around. “For the first time in that market in many years we actually grew subscribers,” she said.
“Usability is a major driver in everyone’s future success,” added Howard Horowitz, president and founder, Horowitz Research, who also stressed the importance of building programming packages that appeal to consumers at different stages of their life.
Comcast’s Spinosa agreed. As part of an effort to attract younger consumers, the MSO launched Xfinity on Campus and then Internet Plus, which is now turning into Instant TV. “It gives them an entry point to the ecosystem that gives them the content they love,” he said. “But it also allows them to buy up into other elements, getting premium networks, Netflix and ultimately buying into bigger and bigger platforms as they migrate from young millennial to having a family.”
Interfacing With Consumers
Finding the sweet spot with improved interfaces and better program offerings is also key to the increasingly competitive virtual MVPD space. “There are a lot of these other services that are just creating and replicating the model you saw in traditional pay TV on a different delivery mechanism,” Jimshade Chaudhari, vice president of product marketing and management at Sling TV, said. “We are offering a la carte packages that are as granular as you can get in our industry so they can pick and choose the channels and genres that are most important to them.”
Sling has also worked to improve navigation, with a universal search engine that includes both the live content from the over-the-air broadcast networks and on-demand content.
Richard Irving, vice president of product at Hulu, also stressed the importance of the user experience. “Our goal is to create a decidedly unique experience and a deeply personal one,” he said, with a better interface, better search and personalization\ and voice recognition.
FuboTV has worked to differentiate its offerings by focusing on sports and Spanish-language content, head of content acquisition and strategy Ben Grad noted, though it does offer a wide array of other programming.
Last September, the young service hit 100,000 subscribers, with more to come, and Grad said he likes where things are headed.
“One of the biggest things impacting the consumption of video is just the fragmentation and diffusion of viewership,” he said, making the pay TV bundle less valuable — and boosting the popularity of services such as FuboTV.
