Although the need for a national privacy policy -- rather than evolving patchwork of state-by-state rules -- and the role of artificial intelligence permeated the dense discussions at the annual State of the Net conference, sessions on streaming media growth and the evolving role of media platforms put attention on current business issues that may have more immediate impact.

With its usual line-up of policymakers and its self-described position as "America's Premiere Internet Policy" event, SOTN2020 offered its usual array of telecom and media status reports during a day-long program in Washington on Tuesday, Jan. 28.

The "Video Streaming" session generated a forecast that after the inevitable shakeout of over-the-top providers, a new ecosystem will emerge that will be a reverse mirror image of today's structure, with ad-supported streaming services taking the role of today's "free" broadcasters and bundles of paid OTT channels replacing today's cable TV bundles.

Kannan Venkateshwar, a Barclays managing director focused on media/telecom research, predicted that "Netflix becomes the traditional broadcast network" because it carries a variety of program categories while other OTT services concentrate on specific audiences (such as Disney+ for families, NBC's Peacock for comedies).

Venkateshwar also examined the shifting global nature of streaming content. With such international expectations, "the scale of spending has gone up," he said. Although Netflix and other firms are creating specialized content in some countries or languages, most OTT content is intended for worldwide distribution. He said the only example of largely domestic content is sports (except for global soccer).

The SOTN discussion took place just as a consultant's analysis emerged, envisioning 50% global OTT revenue growth by 2024, surpassing $200 billion by then.

Another of the panelists, Daniel Ornstein, co-founder and CEO of Bundler Inc., said that a viewer's future collection of streaming channels is not like cable.

"You can pick and delete something" at anytime," he said, underscoring the problems that process will create for broadband pricing, especially if carriers continue to package some OTT channels, such as the current Verizon and Disney+ combination. Ornstein, who heads the new California aggregator and marketplace for media subscriptions, was on the FCC chairman's staff about 10 years ago and later worked at Warner Bros. Entertainment and Warner Bros. TV. He predicted that "companies are going to overlap" and eventually the ecosystem will settle into a combination of new streaming structures.

"There will not be a total revolution of everything direct-to-consumer," he said, opining that "exclusivity is here to stay." He added: "Once you focus on content investment windows, carriage rights are a good way to generate revenue."

Larry Downes, an analyst, pointed to the different ways that Generations X, Y and Z (millennials) embrace streaming media, contending that the youngest cohort sees no difference between "professional" productions and self-produced content (such as small YouTube videos). He insists that these variations will require new business models, which will complicate the evolution of streaming channels.

DeShuna Spencer, founder and CEO of kweliTV, a black-focused streaming service, expects that the "streaming wars" will open opportunities for specialized content channels such as her service. While the major OTT companies are "fighting for the same content," ventures such as kweliTV can develop targeted audience. Spencer also pointed out that her company pays for programming as it runs, not up front as the major streamers do.

"Over time, maybe five years, spending will dry up," she predicted.

The Future of Platforms: Not Just Antitrust

With the evocative question of whether Tech Platforms will "Reign or Get Reined In?" the session on what will happen to the major platforms during the next 10 years generated a predictable range of responses. Most of the panelists agreed that in this volatile category, it's hard to predict whether Google, Amazon, Apple, Facebook or other currently dominant players will continue their juggernauts -- or how upstarts might plunge into these roles.

Their fates will proceed "completely irrespective of what [happens] with antitrust," said Ben Sperry, associate director-legal research at the International Center for Law and Economics. "If we move away from consumer welfare, you'll see a different kind of economy -- not necessarily good for consumers."

Steve DelBianco, president/CEO of NetChoice, warned that antitrust actions could affect innovation, since small companies often build strategies with expectations of being acquired by a major provider, such as the platform companies.

Privacy also plays a major role in the outlook for platform providers during the coming decade, the panelists agreed.

Katie McInnes, policy counsel at Consumer Reports, characterized "privacy as a luxury good." She and other panelists joined the chorus urging a national privacy policy to avert confusing state-by-state laws.

DelBianco also predicted that by 2030, "Government will still be trying to figure out how to regulate artificial intelligence," which will continue to be a major initiative of all the platform providers.

Privacy Focus, Including New Protections for Teens

Rep. Jan Schakowsky (D-Ill.), who chairs the House Subcommittee on Consumer Protection and Commerce, said she is preparing legislation that will restrict digital messages including some advertising to older children (presumably ages 13 to 17). The expansion of the Children’s Online Privacy Protection Act (which covers children 12 years and younger) is expected to be introduced later this week. (Update: Democratic Rep. Kathy Castor of Florida introduced the PRIVCY Act on Jan. 30.)

"We think it's important to put protections into the law to protect older kids," she said, citing it as part of "baseline privacy law." Although the proposed legislation will primarily be aimed at online social media, it may affect other media platforms. Schakowsky cited the need for such legislation because of the "propaganda of fake news" that will emerge during the upcoming election campaign.

“I feel a sense of urgency that we could have a complete fantasy of a message campaign in this election,” she said.

Rep. Cathy McMorris Rodgers (R-Wash.) emphasized the problems that are taking shape as many states -- notably the new California Consumer Privacy Act (CCPA) -- that have the potential to wreak havoc on national policy.

"It's easy to see a patchwork of laws that will be confusing to consumers and difficult for businesses," she said. Rodgers, the ranking member of the House Consumer Protection and Commerce Subcommittee, also pointed out that the parent Commerce Committee is still focusing on mapping of broadband in order to resolve lingering issues about the digital divide, which affects her semi-rural district.

Artificial intelligence was the sole theme of a final keynote by Dr. Lynn Parker, deputy U.S. Chief Technology Officer. She described the pending AI regulatory plan to "consider AI on a use-by-use perspective." She also addressed the emerging controversy about over-reliance on AI, insisting that it "is unethical not to use AI if it can be beneficial."

"Global leadership in AI matters," she said, but admitted that it is "not reasonable to believe every country will have the same approach to AI."

"We're still a ways away from defining" U.S. policy, Parker said.

We face a new competitive media environment in which multichannel video programming distributors must gain a deeper understanding of their customers in such critical areas as:

• Understanding household relationships beyond RGUs.
• Gaining an overview of cord-cutters and over-the-top customers: Who is leaving? Who comes back? How long are they gone?
• The impact of OTT, or customer experience challenges and opportunities.
• Internet positioning: How can distributors leapfrog speed to become the best internet solution?

Addressing such strategic questions requires a paradigm shift. Due to the oligopolistic market structure for managed video, data and voice, the multichannel industry has focused on selling more revenue-generating units (i.e., acquisition), not on retention and loyalty.

Consumers, though, have more choices for entertainment and data services than ever, including the choice to leave managed services providers altogether. At this juncture, the industry must consider adopting a customer-centric mindset to adapt to the new marketplace. Shifting to a consumer-centric point of view is fundamental to approach strategic questions, including:

• How should we think about households as a collection of people with needs and desires distributors can meet?
• Who are the cord-cutters and why are they leaving traditional pay TV?
• Might building different levels of video services potentially cannibalize existing business?
• How do you position internet products to resonate with consumers?

In our view, success for the multichannel industry requires a new mantra:

Retain, Entertain, Relate

The first step is to understand subscribers as more than a collection of RGUs. Rather, they are households that you can delight and empower but with budgets and other bills to pay.

For households with multiple TVs, per-box rental fees and associated costs can make a reasonably priced introductory offer prohibitively expensive. Pushing additional services, including forcing customers to subscribe to products they don’t need for a “better deal,” creates a negative dynamic. Here, “personalization” has real meaning as each household should feel like it is getting a sensible offer after an honest needs assessment.

Highly relevant to this question is Horowitz Research’s proprietary segmentation of TV viewers, which identifies three segments: Content Omnivores, Content Paleos, and 5 O’Clock Diners.

Comprising 7% of the TV viewer universe, Content Paleos represent the smallest segment. Less likely to have children at home, they spend less time watching content on any screen, are much less likely to be multichannel subscribers and are largely cord-cutters and cord-nevers whose needs are easily satisfied by self-managed services.

5 O’Clock Diners comprise 32% and watch traditional platforms — live, VOD, DVR. They are the traditional TV counterpart to Content Paleos, focusing on news, broadcast and sports. They skew older and are less likely to have children at home; but are the most likely to subscribe to traditional multichannel TV.

Content Omnivores watch the most TV and have the most varied needs. They have the highest household income of all segments and are likely to have children at home. To keep up with the demand for content, they need managed and self-managed OTT services.

With new digital MVPDs entering the fray, Content Omnivores are the most vulnerable. With larger households, Content Omnivores likely pay the most for TV services. They need to be retained, entertained and engaged.

Being, on average, younger and more tech-savvy, Omnivores are the primary market of all players. While MVPDs may ask whether virtual providers can be as compelling as traditional ones, Content Omnivores have reversed the question: Can a traditional MVPD be as robust, compelling and convenient as a virtual provider? For these consumers, traditional MVPDs must ask how they can continue to be relevant to households as millennial and Generation Z consumers become key decision-makers.

Given the size of the Content Omnivore segment, it is imperative for MVPDs to understand how to retain these customers. Next-generation features, such as cross-platform search and discovery and voice control, deliver great perceived value to multichannel subscribers, especially young consumers.

Centering Around Consumers

In addition to technology advances, consumers express a desire for customer-centric experiences from TV providers, including:

• Flexible payment options (change billing dates or putting accounts on temporary hold);
• Empowering customer service representatives with greater flexibility to negotiate;
• Better communication about when promotional pricing ends;
• Engagement throughout the purchase and retention journey that relates to customer needs;
• Loyalty programs with material rewards.

As an industry, we must begin to think like our customers. The necessary technology exists but the industry’s willingness to adapt has lagged. The multichannel industry’s failure to anticipate consumers’ appetite for on-demand content and new viewing behaviors provided the entrée for Netflix to blaze a trail in this area. While adoption of streaming services has skyrocketed, usage of VOD, DVR and provider apps/sites has not experienced the same growth. It’s time for MVPDs to step up their game to include their customers as collaborators.

Adriana Waterston is senior vice president, insights and strategy at Horowitz Research.

Dish Network, which said it is fully incorporating subscriber results from its over-the-top video service SlingTV in its overall numbers, still managed to lose 81,000 video customers in 2015, up from a loss of 79,000 subscribers in 2014.

Dish finished the year with 13.9 million video customers, compared to about 13.98 million in the prior year. The results were in sharp contrast to cable companies like Charter Communications and Time Warner Cable, which reported full year subscriber gains in 2015.

Full year revenue was $15.1 billion, up from $14.6 billion in the prior year. Operating income declined to $1.3 billion from $1.8 billion in the prior year, mainly because of a $516 million Federal Communications Commission auction expense and an impairment of long-lived assets expense of $123 million.

Net income in 2015 was $747 million compared to $945 million in 2014. Diluted earnings per share were $1.61 in 2015, compared with $2.04 in 2014.

Pay-TV ARPU was $86.79 during 2015 versus $83.77 in 2014. Pay-TV average monthly subscriber churn for 2015 was 1.71 percent compared to 1.59 percent in 2014.

Dish added 46,000 net broadband subscribers in 2015, bringing its total broadband subscriber base to about 623,000 compared to 577,000 at the close of 2014.

Dish is expected to hold a conference call with analysts to discuss fourth quarter and year-end results today at noon.

NBC said its new streaming channel has launched on the Roku platform, ahead of the new fall season. Viewers can now stream all current series, plus a library with thousands of hours of available entertainment, via the NBC channel on Roku players and Roku TV models. All Roku customers will be able to log-in to the NBC channel to access day-after-air full episodes of the newest NBC fall programming, including, NBC notes, Best Time Ever with Neil Patrick Harris, Blindspot (pictured), Heroes Reborn, Truth Be Told and The Player. 

Roku customers who authenticate through their pay TV provider can stream full episodes of returning favorites, including new Emmy winner The Voice, The Blacklist, Chicago Fire, Chicago P.D. and Grimm. Full episodes and clips of NBC late-night programing (Tonight, Late Night, Saturday Night Live) can also be streamed the next day.

"We want our shows available where our viewers are watching content," Rob Hayes, executive vice president of NBC Entertainment Digital, said in a release. "As consumers shift to connected devices, we are committed to working with platform partners like Roku so our fans and audiences interested in entertainment can discover, engage with, and watch our shows.” Alison Moore, GM and EVP TV Everywhere, NBCUniversal, added in the release: “The launch of NBC’s fall slate and inclusion of other great content on the Roku platform demonstrates our commitment to expanding digital platforms for fans to watch their favorite shows. Working with Roku to add NBC shows on connected TV’s is a huge step forward in advancing NBCUniversal’s TV Everywhere initiative.”

The NBC streaming channel is on Roku players and Roku TV models within the Entertainment category in the Roku Channel Store. NBC programming is also available on the NBC app on the App Store and Google Play.

Comcast vice chairman and chief financial officer Michael Angelakis said the cable giant isn’t worried about threats from over-the-top video, telling an industry group Tuesday that such products could help its broadband and content assets.

“The consumer is evolving,” Angelakis said at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco. “Our goal is to evolve with our customer base.”

He added that Comcast doesn’t necessarily see OTT offerings as competition to its video product but rather as a complement to its video, broadband and NBC Universal content assets.

“Our goal is to serve those customers,” Angelakis said. “Ultimately, if people want to have video, whether they live in San Francisco or Philadelphia or Boston, or hopefully New York or L.A., we’ll provide those services anywhere, anytime.”

Angelakis said he wasn’t bothered by some early OTT offerings from CBS – like its CBS All –Access product – and even by the much anticipated Home Box Office over the top product expected later this year, mainly because the products are in the “embryonic” stages.

In some cases, he added the offerings could highlight the value of Comcast video.

“Some of these tend to be pretty expensive and when you add them all up they can probably outstrip the value of some off our core services when you add it with broadband ,” Angelakis said. “We have thought about more flexible packaging, more streaming and lighter packages in order to provide those alternatives and those choices to our customers. We have to evolve and we have to pivot appropriately and I think we will do that.”

Angelakis added that Comcast also is moving forward on customer service initiatives, adding that the goals there is to offer a “transformative” customer experience. While improving customer service has been at the top of the list for years, Comcast has recently endured a series of black eyes on that front, which hasn’t helped its public perception.

“Our head is not in the sand; I understand the skepticism,” Angelakis said, adding that the idea is to use some of Comcast’s recent product innovations like the X1 operating system and use them to enhance the customer experience.

“Our goal is to take that technical innovation and turn it into customer experience innovation,” Angelakis continued. “We are determined to change the experience for our customers. Not incremental but transformative. We’ve actually done a fair job incrementally, but that’s not good enough and that won’t suffice. If we really want to be an industry leader, [if] we really want to leapfrog competitors, [if] we really want to be best in class, we have to have the best customer experience both from the products and the service side.”

Angelakis also weighed in on the Federal Communications Commission’s move to reclassify broadband under Title II of the 1934 Communications Act, not surprisingly adding that a regulation drawn up more than 80 years ago perhaps is not the one to be overseeing the Internet.

“Unfortunately this is a disappointing development, in terms of that it’s going to get legally challenged and will create a period of real uncertainty in terms of what is the regulatory framework going forward,” Angelakis said.

Time Warner Cable chairman and CEO Rob Marcus said at an industry conference that if recent over-the-top video offerings lead to more flexibility in programming contracts, he’s all for it.

Recently, Home Box Office and CBS have announced plans for an online video product that doesn’t require a pay TV subscription and others are expected to follow. While Marcus wouldn’t comment on those products specifically, he said if it means that programmers are beginning to loosen the reins on some programming issues, it could lead to overall growth in the video product.

“We’ve been articulating for quite some time that we thought that delivering video with a greater degree of flexibility would be very customer friendly,” Marcus said at the UBS Global Media & Communications conference in New York Monday. “Whether that is flexibility around devices, place- shifting, time-shifting , or flex in the way we package video services so we could make different customer demands. To the extent any of these recent announcements are reflective of programmers’ greater willingness to play ball on that front, greater willingness to explore new models, we’re in.”

Marcus didn’t seem to be worried about the potential that these services and other over-the-top offerings from Sony, Verizon and Dish Network could have in luring away pay TV customers. He said that right now, his focus is on traditional competitors like satellite TV and telco TV.

“I tend to focus more on our traditional competition than I do on the threat from OTT,” Marcus said. “There is no question that there is some element of cord-cutting out in the universe, but I don’t think it is having anywhere near the impact that  losing customers to traditional competitors has on our lives day to day. …We are confident about the value proposition we offer on the video side and we’re getting more confident as we enhance the product with a better guide, more VOD, improvements to our TWCTV app. We think we can compete with any variation on the video theme.”

 To that end, Marcus said that subscriber metrics have been strong and that Time Warner Cable has every intention of growing video subscribers in 2015.