IP opens up the TV race
So here’s the thing. At the moment, TV Everywhere may be more hype than actual services, but if you are a pay TV operator you are certainly thinking about it. And if you’re not thinking about it, well, you better get your head(end) examined, and fast.
Consumers are demanding content on all devices, be it a TV or a mobile phone or a tablet. TV Everywhere, which allows pay TV operators to verify that users of internet services to multiple devices are paying cable or satellite subscriptions, is attracting major industry players. But the attraction of IP is more general. Even the UK House of Lords recently came out recommending that all TV should be ‘broadcast’ on IP networks, freeing up spectrum that the government can then sell to bandwidth-hungry mobile providers.
Of course, for the UK, or any country, to move all TV to broadband is going to require a lot of broadband infrastructure to be built.
The focus has hitherto still been on telecom and cable operators, but supplying the infrastructure is very much in the strategic plans of the likes of Google, whose Google Fiber project in Kansas City in the US is showing what a big, ambitious, cash-rich web player can do: Google Fiber offers 1Gbps, a DVR with 2TB of storage and an eight-tuner box with WiFi, Bluetooth and search capability. There is one simple video package that includes all non-premium channels and mixes internet and TV. A broadband and TV bundle with a free Android Nexus tablet (that acts as a TV remote control) and 1TB of cloud storage costs US$120 (€96) a month.
For any traditional pay TV operator this is a pretty loud wake-up call. In the US, cable operators are beginning to acknowledge that providing broadband connectivity is an easier and higher-margin business than being a content reseller. In its most recent financial results call, Time Warner Cable’s CEO Glenn Britt reported that the number of customers taking broadband without a TV or voice package rose by 28% year-on-year. The cable operator lost 169,000 video customers in the most recent quarter. Video revenue fell 1%. Broadband revenue grew 7%. Britt also noted that customers are subscribing to the faster broadband tiers.
It’s not only cable that’s hearing the call. During the Olympic Games, broadcasters NBC and the BBC both saw huge web traffic spikes. The BBC had 106 million video requests including 62 million live streams, eight million on-demand streams and 35 million video clips. By contrast, the Beijing games in 2008 had 32 million live stream requests.
NBC meanwhile was heavily criticised for buffering problems. In fact, for some of the most-watched events like Usain Bolt’s victory in the 100-metre run, US broadband networks were in permanent buffering mode, aggravated by the fact that NBC only aired the race on TV six hours after the live event in order to put it into its primetime schedule.
On the plus side, NBC reported that pay TV customers registered 9.9 million devices on NBCOlympics.com or on NBCOlympics Live Extra app for mobile devices, which NBC says is the most-ever recorded for a TV Everywhere event. Clearly the US broadcasters are waking up to the power of net-delivered content. One result is a changed strategy around Hulu.com, the online TV service backed by three of the biggest US networks: ABC/Disney, Fox and NBC. There are rumours that Hulu founder and CEO Jason Kilar is on the way out and that the networks will no longer give Hulu exclusive rights to current TV content online. Nor will the networks give parity to Hulu and their own sites with abc.com and fox.com getting some content first, or even exclusively. And the networks are also thinking of clawing back the rights to distribute their content so Hulu would no longer be the ‘super distributor’ to sites like YouTube.
While the big US content providers start to figure out IP, pay TV operators are being wooed by none other than Apple, in talks with the likes of Comcast (incidentally the owner of NBC) about using an Apple device as a set-top box. We have already seen Comcast CEO Brian Roberts lauding the virtues of using an iPad as a remote control, but the set-top box strategy could help Apple infiltrate the pay TV living room in a much bigger way. Similar to Google Fiber, the move by Apple is bold and backed by lots of money and ambition.
So let’s say that the migration to IP is already happening and the consumer is not going to wait for his current supplier to get its act together if he sees a better, easier to use service coming from someone else or powered by one of the web companies. Just look at the recent news from Netflix that claims that in its first seven months in the UK and Ireland it has attracted one million subscribers. According to research conduced for Netflix by YouGov, 10% of the UK population now dedicates two hours or more a day to watching its favourite TV shows delivered on broadband. And this is happening in the UK where Sky and Virgin Media provide very competitive pay TV services. Keeping up with the consumer is now almost an Olympic sport.
Kate Bulkley is a broadcaster and writer specialising in media and telecommunications. email@example.com.