‘No Appointment Necessary’ Television

Same_Bat-Time_Same_Bat-ChannelThe recent release of House of Cards by Netflix was as much-anticipated for its production value (starring Kevin Spacey and produced by David Fincher) as for its release strategy (all 13 episodes were made available to Netflix subscribers on the same day). While traditional media outlets have questioned Netflix’s decision to release the entire first season at once, which eliminates the water-cooler effect and anticipation build-up from episode-to-episode that traditional television show experiences have been built around, fans of the all-you-can-eat approach to serialized content can’t get enough of it. So it’s not surprising to hear that House of Cards has become Netflix’s most-watched program in terms of number of subscribers and total hours according to Chief Content Officer Ted Sarandos.

But is binge-viewing the future of television then? Not exactly, though it is part of a broader trend in how content consumption habits are evolving thanks to technology. Just look at some recent stats from two new series on FOX’s network- The Following and The Americans. The Following debuted to an audience of 10.4 million viewers on FOX who watched the premiere either live or the same-day. That audience figure doubled in size though when DVR (which contributed 23% of the audience), encore showing (14%), streaming (7%) and video-on-demand (5%) viewing was also included. Much like The Following, FX’s The Americans also showed audience growth of 44% and 58% across its first and second episodes respectively when DVR viewing data for the 3 days following the original airing (the period that encompasses the original broadcast plus DVR viewing up to 3 days afterwards is relevant because it is used determine the cumulative ratings used by advertisers to determine the size of the audience that saw their ads) was counted.

The story being told by these stats is that the appointment-based model of watching TV popularized in the 1960s by the likes of the original Batman series (remember ‘Same Bat-Time, Same Bat-Channel’?) is becoming a relic of the 20th century. But to what extent? That question will finally start to get answered this fall when Nielsen, the de facto standard in determining how the $60 billion television advertising market is allocated across television networks, will begin counting TV shows consumed via video game consoles and broadband connections in its show ratings (with an eye towards including iPad and tablet viewership in 2014).

By expanding the definition of what constitutes an addressable audience, Nielsen will be legitimizing viewers of shows that are already being quantified (as The Following data shows) but not valued from an advertiser perspective. This will give broadcasters the incentive to both expand the availability of their television content through additional channels (which both ABC and CBS seem to be set to do with the launch of new streaming mobile apps) as well as aggregate these cross-platform audiences to provide more reach and value to advertisers (as Disney’s networks are doing now).

Another potential benefit in this approach to TV content distribution and monetization will be the unification of pricing across digital screens (PC, tablet and smartphone) which have traditionally seen a wide discrepancy between PCs and their mobile counterparts (especially smartphones). While digital might not reach parity with television ad rates, the increase in revenues from parity within digital should convince broadcasters to make more content available online and with less delay from the original television airing day and time (depending on how all-encompassing Nielsen’s new ratings get).

The days when broadcasters knew what was best for audiences (which really meant what was best for their advertising clients) is coming to an end as consumers are exerting more control over the pace at which they consume content and the devices they use to watch it. This will have an interesting effect on event-based content and advertising as sports (especially football and playoffs or championship in any sports) audiences along with those watching voting-oriented reality TV (like American Idol and The Voice) and award shows (Golden Globe, Grammy’s and Oscars) will become even more valuable to time-sensitive advertisers (such as movie studios promoting a new weekend release) looking to reach large audiences in one fell swoop. Conversely, it will create opportunities for ad technology platforms, along the lines of BlackArrow and Freewheel, that can both deliver ads in different formats and dynamically synch the delivery across multiple platforms for advertisers looking to reach this newly identified ‘appointment-less’ audience.

Tune-in whenever you feel like it to see how it plays out.

Photo image source: Batman

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The 6 Letters Holding Back TV Everywhere

TV Everywhere- the ability to watch any televised program at any time on any device- isn’t a matter of ‘if’ anymore but rather a question of ‘when’ once you consider the evolving viewing habits of US consumers and the changing dynamics of the pay television business. The ‘when’ for TV Everywhere becoming a mainstream consumer experience though will largely be determined by the letters F, G, L, N, P and R. Let me explain.

GRP: The metric used to allocate more than $60 billion in television advertising spend each year is known as Gross Ratings Points (GRPs). This figure estimates the size of the audience reached for a particular commercial during each television program over the life of the ad campaign. Unfortunately traditional online metrics like unique visitors, clicks and video starts don’t capture online audiences in a manner that can be translated into a GRP equivalent so broadcasters haven’t been able to take the credit they deserve, in the form of greater ad dollars, for delivering audiences to advertisers through their own websites and mobile apps or those provided by aggregators like Hulu. The thinking goes that if broadcasters could get compensated appropriately for aggregating consumers for advertisers, regardless of the screen through which the content is being watched, more television programming would be made available outside of the traditional TV model in hopes of capturing the broadest audience possible for ratings and advertising purposes.

The first major attempt at addressing the disparity between television and online audience measurement was introduced last week by Nielsen. Dubbed Nielsen Cross-Platform Campaign Ratings, the multi-screen ad measurement service leverages Nielsen’s Online Campaign Ratings (OCR) with their established proprietary National People Meter TV panel to provide unduplicated and incremental GRP measurement. Nielsen’s OCR has gained momentum in recent weeks having been adopted by 15 online ad platforms as well as by the CW Network to guarantee online audiences to advertisers for the recently started television season.

Regardless of whether it’s Nielsen, comScore’s vGRP, or something else, bridging the audience measurement gap across viewing screens is an important step in bringing the discrepancy between digital ‘dimes’ and analog ‘dollars’ in advertising. This effort shouldn’t siphon money away from traditional television but instead reallocate ad spending in media to reflect the actual time being spent with media across different mediums, which will benefit the internet and mobile. The result will be an increase in advertising dollars for video across all platforms and the availability of more content to support this additional spend, which can most easily be made available to consumers via TV Everywhere.

NFL: Major League Baseball (MLB) has it. The NBA has it. Even the NHL, when they decide to get back to playing, will have it. The NFL? Not so much. What I’m talking about it the ability to watch any game live, in HD quality video across any number of connected devices. The NFL only offers its subscribers the ability to buy access to replays of games only after they have been televised.

With only 1/5th the number of regular season games versus both the NBA and NHL and 1/10th that of MLB, it is much easier for the NFL to package the sale of television rights at a national level for all of their games than it is for these other professional leagues (which rely on regional sports networks and local television stations to broadcast the majority of the regular season). Football’s reining popularity combined with the scarcity of game content versus alternative sports options has enabled the NFL to command $7 billion per year in total broadcast licensing fees from CBS, DirecTV, ESPN, Fox, NBC and Verizon Wireless to broadcast each and every NFL game (in comparison MLB generates about $1.5 billion in national broadcast revenues from a combination of ESPN, Fox and Turner). In the following chart you can see exactly why the NFL commands such a premium:

As you can see, the NFL is the only television program that can concurrently deliver an audience of tens of millions to broadcasters who in turn sell this reach to advertisers for more than $4 million for a 30 second sport during the Super Bowl.

Timing

The current agreements the NFL has in place with these 6 broadcast, cable, satellite and mobile providers run through the 2021 season so it could take another decade before the most popular content on television make a full foray across viewing screens (through the licensing of full content rights, including digital). NBC’s simultaneous live broadcast of last year’s Super Bowl on TV and the internet was a starting point, but without an economic model that can simultaneously grow revenues for the League while providing fans with additional access to content, the NFL has no reason to upset the current revenue apple-cart. When the time comes, expect GRP to play an important role in enabling this.

The issues surrounding TV Everywhere aren’t limited to just these two issues of audience measurement and content accessibility, but most other items, like user and device authentication, can be solved with improvements in technology. It’s the negotiations that will take place between content owners, distributors and advertisers that will eventually determine what user experience audiences are left with, which might not necessarily in the best interest of the consumer. If these three parties can find common ground with evolving consumer consumption needs though, not only will TV Everywhere become a reality, but the groundwork will be in place for the next evolution in television: unbundled, on-demand and IP-based program delivery.

Rise of the Event-Based Social Networks

With interest in location-based social networks (LBSNs) hitting an all-time high with Foursquare’s recent funding announcement valuing the company at $115 million, a new type of social networking has emerged that borrows some of the mechanics and incentives from location-based services: event-based social networks (EBSNs). While LBSN users notify their personal networks where they are physically located by “checking-in” to the service, earning virtual badges in the process, EBSN users earn their virtual rewards by identifying themselves to other attendees and participants by also using check-in mechanics, but without having to actually be physically present at the event.

We see from studies and personal experiences that recommendations from social networks do influence our television viewing habits. Combined with the abundant, on-demand nature of information available on the internet today, it’s easy to understand how the changing content consumption habits, from the ‘day after’ to the ‘day of”, have affected the media industry. While much of the demise of print news media can be attributed to these changing habits (and nowhere better explained than on The Daily Show with Jon Stewart), it has actually had the opposite effect on live television event broadcasts.  Here is audience data from some of the most widely-known sports and entertainment events from this year that were broadcast live:

  • Golden Globes (January): This year’s television audience was 17 million, 14% higher than in 2009;
  • Grammy Awards January): Almost 27 million viewers tuned in, a 35% increase over last year’s broadcast and the highest TV ratings for the event since 2004;
  • Super Bowl XLIV (February): Became the most watched television program in U.S. history, beating the finale of the TV show ‘M-A-S-H’ with a total audience of over 150 million and an average of over 106 million viewers;
  • Academy Awards (March): Had over 41 million viewers, up 14% over the 2009 Oscars;
  • NBA Finals Game 7 (June): The deciding game between the Los Angeles Lakers and Boston Celtics pulled in a viewership of over 28 million, the largest basketball audience in 12 years (when Michael Jordan won his last of six NBA championships);
  • World Cup Final (July): The finals between Spain and Netherlands became the most-watched soccer game in U.S. history with over 24 million viewers, topping the previous record of 19 million viewers from United States’ match against Ghana in the elimination round only weeks earlier.

While some might argue that the economy (i.e. people staying home more often for entertainment purposes) or content quality (i.e. offensive-minded Super Bowl match-up, the popularity of Lady Gaga and Avatar for the Grammys and Golden Globes/Oscars respectively, deciding game of a classic NBA Finals match-up and final of the most-followed sporting event in the world, the World Cup) are better explanations for this renewed interest in live television programming, the fact is that most of these events are leveraging social media hubs like Facebook, Twitter and YouTube more and more as part of their tune-in marketing campaigns to engage with fans and would-be viewers.

And it’s working. The network effect caused by the interest of the most engaged fans is bringing indifferent audiences on the sideline that are connected to these fans into the viewing experience. The real-time nature of information flow on the web and the ability to extended social connections through Facebook and Twitter has made it increasingly difficult for people to avoid watching or hearing about live television event broadcasts or even attempting to try to watch them in a non-linear, time-shifted manner without having the outcome spoiled by social media channels. Combined with the social pressures around participation, additional audiences are being influenced to engage with these events via social networks.

Some recent engagement figures from Facebook and Twitter seem to confirm this. Facebook has shared that about 30% of all status updates on the site during the U.S. versus England match included a World Cup-related term. More impressively Twitter saw the number of Tweets-per-second (TPS) it handles cross 3,000 as a result of the Lakers beating the Celtics in the NBA Finals. This record was broken a week later on the heels of two World Cup matches that generated almost 3,300 TPS.  To put this into context Twitter’s normal activity is 750 TPS, which is big reason why the service has experienced over 6 hours of downtime since the beginning of the World Cup.

With live television event broadcasting benefiting greatly from social networking, can EBSNs become the next big opportunity in social media?

Even though the most well-known companies in this segment of social networking have positioned themselves in a slightly different manner from one another, at the most basic level Fanvibe, formerly known as FanPulse (sporting events), GetGlue by AdaptiveBlue (home entertainment such as movies, books and music), Hot Potato (general events), Miso by Bazaar Labs (TV shows and movies) and Tunerfish from Comcast (online video and TV shows), among others, all address some type of live event participation through their services. As ReadWriteWeb points out in its recent coverage of some of these apps, their current lack of users adversely affects the social value of their respective networks. With Facebook and Twitter already driving the lion’s share of social media status updates, and check-in functionality becoming a commodity, these EBSNs will need more than virtual badges and threaded conversation capabilities around events to drive adoption.

The “more than” is partnering with the leagues and organizations behind these events as well as the television networks with the broadcast rights. Being promoted by the events or built into the digital experiences of the broadcasts is the ideal way to drive mind share and user growth.  For this reason Tunerfish is best positioned of the group to succeed since it comes out of Comcast, which has the largest television subscriber base, and is in the process of acquiring one of the biggest TV network broadcasters, in the U.S. Being part of Comcast helped Tunerfish land its first promotional partnership with HBO when the service went live last month. Owning NBC could bring a lot more of these types of opportunities to Tunerfish. With an iPad app also in the works from Comcast, adding Tunerfish’s functionality to the application could automate the check-in process for millions of TV viewers across every television show and network available in the U.S.,creating an enviable interest graph.

There is hope for some of the other services as well. AdaptiveBlue, which has been around the longest, probably has the most robust underlying platform. The company leverages semantic technologies to generate social recommendations for its users based on their check-ins and ratings. By covering a broader range of interests than just TV shows and movies and strong platform usage resulting from its recently launched GetGlue iPhone app, AdaptiveBlue can create a much deeper interest graph than some of its competitors. Hot Potato could find early success amongst sports leagues as its founding team comes from MLBAM, the digital media arm of Major League Baseball. That being said, MLB, which is the most tech-savvy of all the major sports leagues, did announce it has integrated its own check-in functionality into its iPhone app just last week. Miso’s best opportunity for success is tied to the investment it took from Google Ventures last month. With the announcement of GoogleTV earlier this year, Miso should have the inside track in doing for GoogleTV what Tunerfish could do for Comcast- to be integrated directly into the television guide and discovery experience for set-top boxes.

What’s at stake in becoming the real-time conversation service and recommendation engine for television?

Over $400 billion in television advertising and on-demand video revenues worldwide according to a recent report published by media researcher Futurescape. As I’ve mentioned in previous posts and tweets, live TV event programming such as sports championships and entertainment award shows will only increase in value to broadcasters as produced, series-based programming becomes even more accessible on-demand in a non-linear viewing experience. Live television represents the best opportunity for advertisers to find and connect with an engaged audience in the present. Combined with real-time status updates, event producers and advertisers can receive immediate feedback from users on their TV viewing experience. This social feedback loop will be critical in delivering better television programming and advertising in the future.

With nearly half of Facebook users simultaneously watching television while on the site and Twitter showing its impact during the recently concluded NBA Finals and World Cup, it’s their game to lose at the moment as each brings a respective interest and sentiment data set that can add tangible value to traditional TV audience metrics. For EBSNs to succeed they will need to leverage Facebook and Twitter’s platforms as distribution channels, much like Foursquare did initially, in order to drive utility for its users and interest for their own services. By becoming the interface between users and their Facebook and Twitter accounts, ESBNs have an opportunity to get users to build sub-networks within their respective platforms that are unique and more valuable to those on Facebook and Twitter- once again, something Foursquare is starting to do with its own LBSN. The ultimate benefit in evolving a platform in this manner is that an event-based social network can become the audience and data provider to event creators and distributors as well as advertisers while delivering better programming recommendations and socially targeting advertising to its users in the process.

Whatever the eventual outcome, it will unfold live.

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Where Does Online Video Go From Here?

Google’s acquisition of YouTube in October 2006 was supposed to usher in a new era of opportunity for video creation, distribution and monetization that leveraged the power of the internet. Now, three and a half years later, the biggest benefactors of the boom in online video consumption have primarily been YouTube’s founders and investors as profitability still eludes YouTube and revenues are scant in comparison for most others in the online video ecosystem. With webisode creators closing up shop or changing business models, television networks removing or withholding their content from partners and distribution channels, and well-funded online video aggregators Joost and Veoh shuttering their businesses, what role will the internet play in the video content experience going forward?

Here are today’s realities:

  • Television will not go the way of the newspaper industry. Clay Shirky, an internet and media consultant and professor at NYU, recently suggested that the television industry faced the same disruption in its business models as newspapers are experiencing today. What he failed to acknowledge was that the production value of video content creation cannot be commoditized in the same manner written content can (Avatar didn’t become the highest grossing movie of all-time by cutting corners on cost). In fact the cable industry seems to be strengthening its position with consumers- delivering record audiences for sports leagues, including the largest audience for a single cable network event (last year’s Vikings vs. Packers game on ESPN) and the signing of Conan O’Brien to host his new later night show on TBS. This performance is leading advertisers to commit an even greater share of their television ad budgets to cable networks in the coming upfront season.
  • There are no free lunches for online video consumers. Cord-cutting is somewhat of a fallacy. While a lot has been written about the growing minority of consumers who have given up their cable subscriptions in favor of accessing video content over the web from the likes of Hulu and Netflix, the fact of the matter is that consumers are still paying their cable or phone company to access this video content over their networks. Though monthly internet access can cost a quarter of the price of a monthly cable subscription bill, as they say, you get what you pay for. Without the ability to watch live events (American Idol, Super Bowl, etc.), or specific content from cable networks (Mad Men on AMC, It’s Always Sunny in Philadelphia on FX, etc.), in addition to no quality of service considerations for video playback on the web (when was the last time you experienced buffering while watching television through your cable service provider?), we are starting to see stories about consumers who have given up on the internet-only video experience.
  • The internet will be one of several distribution channels, not a panacea. While many consumers expect to find all content online, and for free, these people tend to forget that television’s economics continue to drive the decision-making process for broadcasters. It’s for this reason I’ve previously suggested companies such as Blip.tv should look to traditional television networks to extend the distribution and reach for their clients’ webisodic content. With the launch of the iPad and associated apps from video providers, and discussions around broadcasters working together to build a mobile television network, the number of ways consumers will be able to access movies and TV shows will continue to proliferate. While this should drive additional content consumption opportunities for consumers, it will be done so on the television industry’s terms.

And tomorrow’s opportunities:

  • Delivering “DVR economics” will bring more premium video online. For television networks to get comfortable with making more of their content available online after its original broadcast, the revenue opportunity needs to be comparable to what broadcasters are generating from their DVR-viewing audience. This makes sense since watching video online and via DVR are both non-linear viewing experiences intended for consumers to catch-up on missed shows. This will be an important metric for online video services to achieve in order to be considered distribution partners for broadcasters and networks going forward. With online consumers showing a willingness to sit through additional advertisements and both Hulu and TV Everywhere expected to charge for certain content, achieving parity with DVR economics seems to be an achievable goal as the dual revenue model  employed by the television industry (users paying for access to programming in addition to being presented with commercials while watching that programming) proliferates into new channels. This could become a recipe for enabling virtual MSOs like Apple TV and others to gain access to television shows that haven’t been previously made available online. Over time a bifurcated business model could emerge between real-time and time-shifted viewing with different price points for each experience.
  • Social TV will be the key to enhancing the video viewing experiences. Because the internet is a proactive, lean-forward experience most of the time, it is best leveraged as a companion to live event broadcasts to create a social television experience. With more and more people spending time online while watching television there’s an opportunity for programmers to engage audiences by allowing viewers to share their experience with friends or other fans in a meaningful way, creating larger and more loyal audiences. Events such as the Grammys and Oscars have benefited greatly by combining the social features of Facebook and Twitter with live broadcasts. Apps such as Hot Potato and Miso have been launched to aggregate these types of experiences on behalf of viewers, though broadcasters are now developing these services on their own as well. Regardless of the social network or app being leveraged, these services should be incorporated into devices such as mobile phones and tablets, and not necessarily directly into the television set via TV widget platforms, to not inhibit either experience individually and allow any service to compete for audience attention.
  • Unified audience measurement will be paramount. While video ad networks have probably been the greatest benefactors of the growing online video ecosystem, with over $90 million invested between BrightRoll, TidalTV and YuMe in Q1 of this year and Tremor Media earlier this week, until there is a way to merge audiences across different platforms (television, laptop, mobile phone, etc.) online video revenues will remain insignificant in comparison to broadcast television. Nielsen announced a solution to address this problem earlier this year that is expected to be rolled out for the fall television season. Looking to make buying video inventory online comparable to traditional television, two different online video ad networks have partnered with third-parties to create  an online equivalent to Gross Rating Points, called iGRP, which is used to sell prime-time ad inventory, to match online audiences with that of traditional television. As agencies and advertisers get more comfortable with quantifying users online in a similar manner as is currently being done through traditional television broadcasting more ad dollars will continue to flow to online video. This will allow online ad networks to compete for even more upfront ad dollars during TV’s traditional outlay season.
  • Opportunities exist for online video technology providers- to an extent. Brightcove, founded before YouTube ever existed, is arguably the most well know enterprise technology provider to the online video industry. In raising a fourth round of funding recently, the company disclosed it expected worldwide revenues of $50 million this year. Considering the company already works with most major media companies, what does this tell us about the market opportunity for the most important component of the online video ecosystem? If you concur with Frost & Sullivan analyst Dan Rayburn’s estimate of $300 million in total revenues for online video platforms this year, then it’s not that significant. It doesn’t mean that Brightcove won’t have a successful IPO, it’s just that for the amount of capital the company has raised ($100 million) the revenue potential ought to be 10 times Frost & Sullivan’s estimates. That being said, companies that can automate content encoding (i.e. Elemental Technologies) and distribution (i.e. TubeMogul) across disparate platforms and formats, provide rights management (i.e. Widevine) across access points and deliver aggregated audiences and reporting for advertisers will have the best chance for success, though primarily through acquisition. Companies such as Akamai will be the biggest benefactors as they can leverage their public currency to add these services to their CDN delivery business, allowing them to move further up the value chain with clients.

Add it all together and where do we end up? Most consumers don’t differentiate between what content they are accessing, broadcast network television (ABC, CBS, Fox and NBC) or cable networks (Discovery, ESPN, MTV, etc.), since in today’s digital environment you need a set-top box from a cable, satellite or telecom company to access any television programming. The same will hold true for how consumers access programming tomorrow, be it over dedicated coaxial cables, wireless carrier networks or over the public internet. As such, consumers will have tiered pricing (as either a bundle, how monthly subscriptions are currently provided, or a la carte as Apple is attempting to do) that incorporates how content is being accessed (real-time or on-demand) and from where (television, laptop or mobile phone). Whatever the model, viewers will be able to interact with audiences around the content, creating a more fulfilling experience. Advertisers will benefit from better audience targeting capabilities already being used on the web today across all these viewing outlets with the added value of unified reporting.

While the nirvana of free access to all video content over the internet will probably never be realized (except for one-off cases like YouTube’s wildly successful live streaming of a cricket tournament) the internet will play a major role in improving the online video experience from both a consumption and monetization perspective.

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