“Media Unbundling”… and other matters

Om Malik was kind enough to ask us to write a guest piece over at GigaOm. It’s a follow-up to some earlier ruminations of his on the direction television and media generally are taking.

We’ll be picking up where our book, Television Everywhere, left off and writing occasional example pieces (here, and possibly elsewhere) building on our core thesis of a viewer-centric strategic direction for TV.

The book is now available in a Kindle edition on Amazon, and should (soon?) be in Apple’s iBook store. If you’d like a complimentary electronic version email us or DM at @i2partners

Starbucks SDN Whaa??

A while ago we wrote in approving anticipation about Starbucks re-entry into store-based media and entertainment (“Hollywood Meets the Third Place”)

That day has apparently arrived. To quote Starbucks’ 2,000+ word press release:

Serving up a collection of hand-picked premium news, entertainment and lifestyle content along with local insights and events…

The network goes live in nearly 6,800 U.S. company-operated Starbucks on Oct. 20.

Hmmm. Judging from our unscientific scan of our RSS feeds this morning (including Starbucks own blogs), media coverage has been, er, a bit spotty?

We tried a quick walk-by at a local (company-operated) Starbucks with our iPod Touch. Log-in to AT&T Wifi (no reroute to an SDN splash screen). Went to Starbucks site. Much VIA instant coffee promotion:

Fiddled around with the AppStore – nothing SDNish on offer. Downloaded the Starbucks “app”. Ha! “SDN” button in the lower left-hand corner!

Pushed SDN: "View in Safari?” Oh well, sure, why not, guess a real app isn’t ready yet… Tried viewing the movie clip on offer (“Waiting for Superman”). Oops, Flash or something, a play button with a big slash through it. Picked what appeared to be a kids game – unreadable postage stamp view of a web page (wouldn’t most SDN usage at a store be on a mobile device?). Etc., etc.

Perhaps our launch expectations are unduly conditioned by Apple- and Google-style extravaganzas, and perhaps the Yahoo! (Starbucks “media partner”) black cloud hangs a bit too heavily over this undertaking, but really??

When Hulu Went Dark

Not only did Fox go dark (and as of this moment, still is) during the Newscorp./Cablevision carriage agreement battle but, briefly, so did Fox content on Hulu and Fox.com.

To us it came as a surprise, though in our book Television Everywhere, we speculated on how Hulu might react when subjected to conflicting forces:

The “true” relationship between Hulu and its shareholders remains, externally at least, a mystery.

While very much an independent consumer brand, its current CEO strives to position Hulu within the industry as an entrepreneurial “start up.” This is certainly politic vis-à-vis Hollywood’s relationship with the cable industry.

GigaOm’s Janko Roettgers pointed out:

The whole episode was clearly meant as a show of force — a warning shot, if you will. But this wasn’t just about getting a few extra bucks from Cablevision.

Fox had to know that blocking access to Hulu would raise more than a few eyebrows at the FCC, and cause public interest groups to ring the alarm bells about possible consequences of media concentration. Which is actually quite convenient when one of your biggest competitors is about to enter a huge merger.

In any event, the Hulu incident laid bare the power of its shareholders.

Hulu Reinvents Re-transmission Consent?

“Unfortunately Hulu is not supported on your platform”

That’s the message that is plainly visible when you attempt to use Logitech’s new Revue set top for Google TV in order to access Hulu videos.

Google TV is launching with a number of video aggregation and streaming services (Netflix, Amazon) and selective content from a few cable players (including TNT, CNBC, etc.), but nary a broadcast network in sight.

It may not be retransmission consent, exactly, but clearly Hulu and its masters would like to see negotiated arrangements with those who aspire to jump the gun and bring Hulu to the living room TV…

Television’s 2010-11 Season: Still Not Dying

It's all sounds pretty familiar, with an extra dollop of good news for a possibly recovering ad market.

Fox is hosting an event at which the new American Idol judges will be revealed, CBS' Survivor and Big Brother debuted with A18-49 ratings up by high single digits compared to last season's finales, and Veronis Suhler Stevenson is now forecasting a return to about 6% growth in broadcast ad revenues.

Five years go, there was an outburst of  near-hysterical "Oh my God, television's gonna die!" amongst experts, with the internet blamed for doing the killing. We expressed our skepticism at the time through a piece called "War of the Worlds: Hollywood Opts Out of the Google Economy"

Since then, all the more remarkably given what Paul Krugman called the economy's "post-Lehman oh-God-we're-gonna-die” period, the television industry has done just fine. Lifting some summary morsels straight from our friends at Ad Contrarian (if click on their link, you'll note that they went to the trouble to actually source these facts) we see that in the US television market:

• TV viewership is now at its highest point ever
• DVR owners (continue to) watch live TV 95% of the time. 5% of the time they watch recorded material
• 99% percent of all video viewing is done on a television. 1% is done on line
• Since the introduction of TiVo, real time TV viewing has increased over 20%
• TV viewers are no more likely to leave the room during a commercial break than they are before or after the break

So now what?

Without a doubt, much has changed in five years. There was no iPhone, no Hulu, no real retrans battle, and no "Television Everywhere" back then. How will we know when these, and other developments, are actually changing the landscape in a competitively material way? We draw your attention to our own recycled list (from the Keeping Score section at the end of 'Hollywood Opts Out...'), reprinted without modification:

• Have major independent program developers (e.g. Crown Media, Playboy Enterprises, etc.) made significant library syndication commitments in a broadband-related format? What is the depth of the library under license? How does this deal complement or compete with “linear” exhibition?

• Is Big Media adding significant depth to broadband-available libraries, on what terms, for what distributors, across the board or by genre?

• Are ads or interstitials being inserted in broadband content? Who are the advertisers? Are these barter, in-kind promotional, or cash deals? What audience measurement and reporting, if any, is being employed?

• Is licensed or syndicated broadband-media delivery being linked to a paid-search or internet community model, and if so, how?

• Is anyone developing new broadband-specific content supply (either by re-purposing, similar to wireless carrier ‘mobisodes’, or with net new production)? What are the reported production costs, who is financing them and how (brand sponsorship, product placement, etc.)?

• Is there any evidence of broadband-related restructuring of rights and windows in lower-profile (cancelled series, cable channel originals, etc.) syndication deals?

• Is there any adoption of “programmer neutral”, open devices which can conveniently display broadband content directly on televisions (e.g. TiVo Series2, etc.)?

• Is one of broadband media’s potential advantages – à la carte consumption -  being eroded by the rise of less-tiered and/or lower-priced subscription services from cable or satellite?

• How are broadcast networks planning on using ancillary spectrum at their O&Os once digital terrestrial television is launched?

The more the answer to these questions is “yes” (or a statement about some significant development in the implied direction), the more likely we are to move away from 1% of TV viewing being online.

Clearly, we have some ways to go before still-early and experimental changes around the edges of the industry become …“disruptive.”

Epic Epix?

Recently, Netflix announced streaming deals with Relativity Media and Epix (the Paramount, Lionsgate, MGM distribution consortium). When we read the press we sort of nodded our head and moved on, slightly rolling our eyes at the purported “$1 billion” value of the five-year deal.

Dismissing this as "just another" expansion of the Netflix library, we got it wrong. We should have paid more attention and stopped to think, as today’s Tom Lowry piece in Variety reminded us.

The Epix deal in particular is significant, not so much for its size, but because it marks a clear, unambiguous definition of a large-scale deal for an entirely new streaming window, 90-days post-Pay TV, as Lowry points out:

The deals of the past few weeks have grabbed the attention of film and TV execs on the distribution side because it establishes a clear market rate for the value of streaming rights for fresh theatrical product. ... the Epix deal is a direct transaction with Par, Lionsgate and MGM for streaming, which sets a market precedent for separating out Web streaming from pay TV rights for a traditional linear channel.

That seems exactly the right way of netting out why these deals are important. In our on-and-off anecdotal conversations with entertainment lawyers (admittedly more about TV and less about theatrical releases) we were left shaking our heads. While we’re hardly insiders in the mix of rights deals, we remained surprised how little attention (still) was being paid by content owners to establishing new, clearly-separated rights classes and windows for web distribution.

Netflix is clearly leading the charge to change this.

Foursquare TV? "We don't need no stinkin' badges..."

Spinning through the TechCrunch RSS feed the other day we discovered that:

Starting on August 1, when you use GetGlue to check-in watching one of HBO’s hit shows, you’ll earn exclusive stickers designed by HBO.

And later that day, while trying to compare Hulu Plus with NBC's own website, we stumbled across:

Now you can be as proud as a Peacock with historic NBC logos! Collect all seven. NBC's 'N' logo got its start in 1975 and was used through 1979. With two brightly colored trapezoids making the 'N', the design was very much of its time.

We're all in favor of rewards which promote and retain viewer engagement, still we’re skeptical that a badge, mayorship, or other electronic social doodad is going to accomplish much here. Two ideas on how to do better:

• rewards have to be integrated into a cycle. TV has for all practical purposes turned into an application with six parts, of which rewarding is a final (and an important) step
• instead of badges, give viewers more of what they want – programs. Build points towards a la carte premium viewing (Hulu Plus credits, whatever). This is an opportunity to build and reinforce the six-part cycle above. And it’s also a much more meaningful way to keep viewers connected. To quote one of our favorite parts of the Hoffman|Lewis credo:

"We don’t get them to try our product by convincing them to love our brand. We get them to love our brand by convincing them to try our product."  (via The Ad Contrarian)