How Critical IsTV Everywhere?

Nearly three years into the "TV Everywhere" experiment, the industry remains split on the urgency —
and even the wisdom — of bundling access to programming
across a panoply of devices for no extra cost.

Originally, the notion was to give cable-TV customers
a fat carrot to dissuade them from “cutting the cord” and
watching all their favorite shows over the Internet.

But the angst about over-the-top television has receded
somewhat, as services like Netflix and Hulu Plus don’t appear
to be eroding television subscriptions in a significant way.
So just how vital is TV Everywhere?

To many programmers and operators, expanding the pay
TV model to multiple screens within and outside the home is
a business imperative as people’s viewing habits change. Just
as the industry adopted HDTV to keep viewers engaged and
happy, TV Everywhere represents another technology inflection
point. Ultimately, the idea is to let customers scratch the
itch to watch whatever they want, wherever they want.

“TV Everywhere is definitely the way this is all headed,”
professor Paul Levinson, a researcher in Fordham
University’s Communications and Media Studies department,
said. “This is the future of television. The sooner a
television provider understands this, the greater the stake
they’ll have in the future, because they’ll be able to stay on
top of this evolution.”


For Verizon Communications, the definition of television
being trapped on a TV set is an old way of thinking. “TV is
an application,” Joe Ambeault, Verizon Telecom director of
product management for media and entertainment, said.
“And applications ride on all sorts of devices.”

And as more video trickles to more screens, networks
that don’t provide access via TV Everywhere are put at
risk of losing their audience. “If you’re not on the screen,
your competitor will scoop the customer up,” he said. “If
we don’t take care of the customer, somebody else will.”

But to some ad-supported cable-network programmers,
the value of throwing in access to their shows and movies
on dozens of non-TV platforms is still dubious — especially
if those services are free.

As some cable executives extol TV Everywhere, others
are debating its true value, and whether it represents new
revenue from customers. Media companies, including
Discovery Communications, Scripps Networks Interactive
and Viacom, among others, have proceeded cautiously in
expanding their authenticated online services too quickly.

One of their key concerns is that viewing on TV Everywhere
services won’t be counted toward ratings, and
therefore will cut into ad revenue.

Nielsen has an “extended screen” program that measures
online viewing among a subset of its National People Meter
panel and credits it in the C3 window (within three days of
air). But that data currently doesn’t account for all devices,
and to be counted, the online versions must carry the same
national commercials as the linear TV broadcast, according
to Brian Fuhrer, Nielsen senior vice president and product
leader of national and cross-platform research.

“The distributors want content for free as added value
… but without Nielsen here, you’re losing twice,” Denise
Denson, Viacom Media Networks executive vice president
of content distribution and marketing, said.

Other programmers are also seeking additional revenue
from the industry’s drive toward TV Everywhere. “There
has to be a balance and collegial relationship between
content owners and distributors,” Scripps Networks senior
vice president of digital media Lisa Choi Owens said
at Bloomberg’s Media Summit earlier this spring. “We
need to figure out the economic model … I think we’re on
a path where that’s not very friendly.”

On the other hand, Turner Broadcasting System — perhaps
the biggest TV Everywhere proponent on the content
side — has argued that pay TV needs to establish a foothold
on multiple screens now, before consumers find other
things to do with their time. Turner last month launched
a series of ads promoting authentication services for TNT
and TBS, available through eight affiliates.

“Given the rapid deployment of tablets and the ability
of mobile devices to display long-form video directly from
websites, TV Everywhere is more important than ever,”
Jeremy Legg, Turner’s senior vice president of business
development and multiplatform distribution, said in announcing
authentication deals earlier this summer.

ESPN — which sells the most expensive networks on
basic cable — similarly sees TV Everywhere as adding
more value to the price of a TV subscription. The sports
programmer’s WatchESPN service, which provides access
to live feeds from ESPN, ESPN2 and other channels,
is available to more than 17 million homes through deals
with Time Warner Cable, Bright House Networks and Verizon

“This is a proposition that people get: watch television
on any device. They’re very thankful for it,” Matt Murphy,
senior vice president of digital video distribution for
Disney and ESPN Media Networks, said.

Naturally, consumers like as much content as possible
on as many devices as possible. But “Netflix pays a lot of
money to programmers for that type of device and technology
opportunity,” Denson noted. “Just because I have a cable subscription, it doesn’t follow that I will get it on any
platform. It’s never been marketed that way.”

On the ad front, ESPN is starting to replace the commercials
in the authenticated linear stream online and on mobile
with ads more tailored to the medium, creating a new opportunity
for marketers to reach sports fans off the big-screen TV.
The WatchESPN-specific ads started running during college
football telecasts over the last few weeks and, over time, ESPN
will sell ads for other live sports programming.

“We can create better engagement by selling diff erent
ads, because these devices aren’t televisions,” Murphy

The TV Everywhere equation is diff erent for premium
programmers — HBO, Showtime Networks, Starz Entertainment
and Epix — whose subscribers already pay extra
for their linear services. They also don’t need to worry
about ad revenue.

HBO has pushed the hardest
with its HBO Go service, which
is available on smartphones
and tablets, and soon on Microsoft’s
Xbox 360 and Roku.

“What it’s intended to do is
the same thing that all of our
product enhancements in the
past — the multiplex, HD and
VOD — have done: add value
for the consumer,” said Shelley
Brindle, executive vice president
of domestic network distribution
for HBO.


But is TV Everywhere making a diff erence on the bottom
line? “It’s very preliminary for us to say that,” Brindle said.

HBO estimates that about 10% of its subscribers use the
TV Everywhere service, and while it’s too early to draw definitive conclusions about the long-term eff ect, “it seems inevitable
that this will have a positive impact on retention,”
she said.

It’s even harder for cable operators to make a revenue
case for authentication right now, in part because it’s not
clear that the service can keep customers paying for TV. For
example, Comcast — an early champion of the TV Everywhere
concept — has continued to drop video subscribers
despite off ering up thousands of titles online.

Comcast off ers the biggest menu of authenticated TV programming
in the industry. On, the operator
serves up 200,000 viewing choices, and on mobile devices
subscribers can entertain themselves with more than 7,000
hours through the Xfinity TV apps for smartphones and tablets.
Its programming partners on the TV Everywhere front
include HBO, Showtime, Starz, TBS, TNT, Cartoon Network,
BBC America, CNN, IFC, Sundance, Hallmark Channel and
Ovation TV.

However, even that wealth of video goodies hasn’t prevented
Comcast from losing some 1.4 million cable-TV customers
over the last two years, with the operator reporting
22.5 million video customers as of the end of June 2011.

Comcast executives have cited competition and the sluggish
economy for the loss of video subscribers. Indeed, the
operator might have lost more customers without the TV
Everywhere product.

“I think from the competitive perspective, I think the
economy… is still slow. And it’s caused some more aggressive
off ers,” Comcast president Neil Smit said on the company’s
second-quarter 2011
earnings call, noting that average
revenue per customer
increased 9% in the first half
of the year.

Still, it’s not certain if authenticated
content is having
a major effect on sub retention.
“I don’t think consumers
understand what [TV Everywhere]
is,” Viacom’s Denson
said. “I don’t think it’s critical
to have yet.”

Indeed, consumers watch
an average of 35 hours and 37 minutes of TV per week,
compared with just 33 minutes of online video, according
to Nielsen data from the first quarter of 2011.

Verizon’s Ambeault acknowledged that there isn’t enough
data to measure the “hard results” of the industry’s initial
TV Everywhere services. But he said that over this past
summer, FiOS TV users have increased time spent viewing
content on computers, mobile devices and tablets by 100%
since January 2011, as awareness of authenticated services

“We want engagement to keep growing, because if I have
you engaged and increasingly using my service, the chance
that you will go somewhere else goes down,” Ambeault said.

Ultimately, TV Everywhere is a cost of doing business,
according to Synacor CEO Ron Frankel. His company
provides Web-portal and authentication services to programmers
and operators including Dish Network, Charter
Communications, Suddenlink Communications, HBO,
Turner Broadcasting System, Epix, Comcast Entertainment
Group and Fox.

“The way it doesn’t work is, the programmers get too cute
and require too many changes to their contracts, and that
holds it up,” Frankel said. “I think piracy is the concern. You
have the opportunity to develop habits where piracy goes
down, not up.”

Right now, Viacom, for one, is “still putting our toe in the
water on authentication,” Denson said. The company offers
150 hours of content from Nickelodeon, MTV, VH1 and
Comedy Central — with more sites in the works — through
TV Everywhere deals with Comcast and Verizon.

“We’re willing to play,” she said. “We have four authenticated
sites chock full of content. We just want to balance
the model.”