While many of the most apocalyptic predictions about the collapse of the television industry in the face of digital media are proving to be misplaced, operators and programmers are approaching 2014 with a new sense of urgency in their digital-media efforts.
“Operators understand they have to focus on the needs of the subscriber if they want to continue to do well,” Howard Horowitz, president of Horowitz Associates, said.
Given an increasingly competitive landscape that is bringing many major tech companies into the traditional TV space — with reports that Amazon, Apple, Google, Sony and others are considering 2014 launches of new over-thetop subscription services — it’s critical to ramp up initiatives to give viewers the digital options they crave.
“It is difficult to change when you’re printing presidents in the basement, and management teams have such profitable businesses,” PwC principal Chris Lederer said. “But just in the last 12 months, the chess game that is going on between all the players in the video ecosystem has significantly heated up, and I think that change is only going to accelerate.”
To strengthen the industry, one key initiative is better measurement, particularly for tablets and smartphones, which Nielsen currently doesn’t measure. “We know that there is more usage of TV than ever before, but Nielsen isn’t counting all of it,” Alan Wurtzel, president of research and media development for NBCUniversal, said.
To address these longstanding complaints, both com- Score and Nielsen this year plan to roll out new crossplatform measurement systems that combine TV ratings with smartphone, PC and tablet usage, said Jane Clarke, managing director of the Coalition for Innovative Media Measurement (CIMM), which has been playing a major role in helping the industry develop better measurement.
“2014 will see the big step forward to the cross-platform measurement we have all been patiently waiting for,” Viacom chief research officer Colleen Fahey Rush added.
Meanwhile other providers, notably Rentrak and Tivo’s TRA, are also expanding their measurement tools.
Improving TV Everywhere platforms is another widespread initiative. “The majority of major networks are now participating in TV Everywhere in some form, and there has been significant growth and expansion from a content perspective,” Matthew Strauss, senior vice president and general manager of video services at Comcast, said.
That has already translated into significant improvements in usage, added Jack Wakshlag, chief research officer at Turner Broadcasting System, who pointed to a December 2013 report from FreeWheel that found viewing of authenticated video content grew 217% in the last year.
To build on this progress, operators are now moving to promote these offers and make them much easier to use. “Operators have acquired the rights and set up the delivery mechanism for TV Everywhere,” Steve Necessary, vice president of video product development and management for Cox Communications, said. “Now is the time to make folks more aware of what’s available.”
Operators are also putting more emphasis on Internetconnected set-top boxes, whole-home DVRs and network DVRs that make it easier for subscribers to access a wide range of content on both TVs and IP-connected devices.
“The set-top box today is one of the least intelligent devices in the home,” KC Estenson, senior vice president and general manager of CNN.com. “But operators like Dish [Network], DirecTV, Comcast and ATT are really starting to realize they need to embed Internet functionality and place-shifting features into their boxes. It is one of the leading indicators of the revolution that is happening in the living room.”
In the last 14 months, for example, Cox has launched a new program guide, dubbed Contour, that improved its TV Everywhere app by providing better recommendations on IP-connected boxes and adding capacity for more than 60,000 hours of additional content, Necessary said. “Over the last 12 months, the number of linear channels actively used by customers who set up profiles with the Contour recommendation engine has grown from 22 to over 28, which creates more satisfaction with the bundle,” he added.
Such efforts are also important for the ongoing popularity of regular TV viewing, added Rômulo Pontual, executive vice president of engineering and chief technology officer of DirecTV, which has been expanding its TV Everywhere offering and has rolled out the Internet-connected Genie whole-home DVR.
Pontual also stressed the importance of big-screen TVs, given the ongoing popularity of increasingly large sets and the move to higher resolutions like UltraHD or 4K. “We have demoed 4K through the Genie,” he said. “We are launching a new satellite next year and have the capacity. All that remains is finding the right time to start.”
Faster networks are another key priority at operators. “Everything is moving towards video,” Tom Sauer, vice president of video business and original content development for AT&T, said, adding that video now comprises half of the consumer wireline traffic on the telco’s network.
To help handle that, he said, AT&T is boosting speeds. It launched a 1-Gbps service in Austin, Texas, in December and, as part of Project VIP, is expanding IP broadband to reach about 57 million customer locations in its 22-state service area. The effort will be important for handling heavier video traffic, delivering UltraHD content and expanding TV Everywhere offerings, Sauer said.
The push by operators to respond to the threat of OTT content is also affecting bundles, Mediamorph CEO and co-founder Mike Sid said.
This is already happening internationally, where several operators have deployed new TiVo boxes that allow users to access and search for both regular TV and over-the-top video, Tara Maitra, senior vice president and general manager of content and media sales, said. Operators like Sweden’s Com Hem, for example, are now using those boxes to bundle Netflix with their regular TV packages.
Mediamorph’s Sid said, “A lot of what is happening in SVOD will spark a new sort of bundle.”
Top Digital Priorities
To capitalize on changes in how subscribers consume video, programmers and operators are focusing on some of these key areas:
Developing better cross-platform measurement.
Promoting awareness of TV Everywhere platforms and improving the way they work.
Rolling out Internet-connected set-top boxes that can bundle over-the-top video and provide more content to consumer electronic devices in the home.
Improving user interfaces and discovery technologies that make it easier to find the right content from vast libraries.
Improving the TV viewing experience with UltraHD (4K) content and interactive features.
Providing faster, better wireline and cell networks to handle an explosion of video traffic.
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