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The New York Times sparked quite a debate yesterday with a piece by Matt Richtel and Brian Stelter on why Americans are sticking with pay-TV services. Ironically, SNL Kagan also published Q2 numbers yesterday showing that the number of overall pay-TV subscribers dropped for the first time ever in the recent quarter. So indications for the pay-TV model are mixed. However, what is becoming clear are the reasons consumers like the current model, and what could make them switch to an alternative.
Convenience is a big factor in pay-TV’s favor. Everything is in one place, easily accessible right on the living-room screen. It’s also (virtually) always there – the entertainment equivalent to the dial tone. And there’s a lot of good live sports and premium content that’s still not available elsewhere.
On the other side, consumers are paying a lot to get pay-TV services, and some of the current drawbacks are irksome. Content management is a problem. It’s still hard to find stuff across linear TV, VOD, and DVR recordings. And increasingly, consumers also want access to content across multiple screens. In addition, there’s some compelling Internet-based content that’s not available yet from TV service providers. Integration with over-the-top content can’t come fast enough.
The pay-TV model has a lot going for it, but it’s also a good thing that providers are continuing to up their game. The more providers can manage the TV experience effectively for consumers, making it easy to get everything they need from one service, the more they can make a compelling case for consumers to stick around. It’s a pretty easy equation.
Want another opinion? Here’s a round-up of some of the coverage in the wake of the Times article.
Gizmodo: Why Are You Still Subscribing to Cable Television?
Technologizer: In (Reluctant) Defense of Cable TV
NewTeeVee: The Future of TV is Not on Cable
If your audience closes a door, it’s time to open a window – a content release window, that is. According to BTIG analyst Richard Greenfield (reported by Ryan Lawler at NewTeeVee), release windows are shrinking rapidly, with most movies available through Video-on-Demand within days of their DVD debuts. There are several reasons for this, including a wider consumer shift away from physical media, and greater comfort on the studios’ part with digital delivery. But the upshot is that the economics of video delivery are finally shifting in favor of VOD.
VOD services should be the bedrock of pay-TV subscriptions. Along with live sports, VOD has the potential to deliver the most value both to consumers and service providers. Viewers get the shows they want when they want them – you know, like the Internet, but on your big-screen TV – and providers get engaged customers they can target with money-making ads, promos, and even new services. Somehow, though, that isn’t quite how it’s worked out. The challenges have been significant, including the need for more network capacity, the problem of separate guides for VOD and linear TV, and the difficulty of negotiating broader content licensing rights. When it comes down to it, money has been a serious gating factor. Luckily, it’s also the variable that will finally push VOD to live up to its potential.
The collapse of release windows is one sign that economics are now working for the VOD model. Another sign is the increasingly competitive environment for providers who find they have to invest in greater network capacity to ward off rivals. The same is true with program guides. Although the guide problem isn’t fixed yet, operators have widely acknowledged that it has to be a top priority for them if they want to stay competitive.
All in all, money appears to be tipping the scales toward VOD in 2010. It’s about time.
Here’s some Motorola modem news to round out the week. CableLabs just awarded certifications to two Motorola modems in Certification Wave 76. The Motorola SBV6240 digital voice modem received DOCSIS 3.0 and PacketCable 1.5 certification, and the SBV5222 voice modem came away with PacketCable 2.0 certification. This follows on the heels of last month’s D3 certification for the SB6121.
Speaking of modems, you might see the ad below in a Best Buy circular near you in the next week. Motorola’s D3 modems continue to be hot sellers on retail shelves.
Remember when the Verizon brand was introduced back in the summer of 2000? For a long time my biggest association with the name came from the many pay phones plastered with the company’s big red logo. Who knew then that Verizon would go on to become a major player in TV services? The march in that direction started in 2005 when Verizon launched FiOS. Since then, the TV operator has gone on to debut whole-home DVR services (aka Home Media DVR), TV widgets, 3D broadcasts, and now new multi-screen video applications. Yesterday my good friend Dave Zatz interviewed a Verizon exec after a company press conference and teased out details on new features coming for Verizon’s whole-home DVR service. In the not-too-distant future, FiOS subscribers will be able to access recordings from multiple libraries, on multiple screens, all through one UI. As Dave puts it, “all drives add up to a single virtual storage device.”
In light of new FiOS TV milestones, I thought this would be a good time to go back and look at how the service has evolved. Here’s a timeline of Verizon FiOS TV: The First 5 Years.
The CTO for Motorola’s Home business David Grubb gave a presentation today on IP video as part of the SCTE’s Live Learning Series. Much of the presentation covered familiar ground: the shift to the Internet Era of Television, multi-screen opportunities with IP delivery, and the need for rapid development of new TV applications and services. However, the story has also evolved. David Grubb covered three separate areas where cable operators can push forward with a transition to IP. The three areas are independent of each other, meaning service providers can prioritize activities as needed, while still working toward one overall goal – migration to an IP platform.
From today’s presentation:
Three Separable Transitions to IP
- User Experience & Interface - Move to a web-based thin client approach to enable rapid development of new applications and experiences
- Home Network - Begin with MR-DVR; Enable CE devices with technologies such as transcoding
- Access Network - Move to a unified approach for all service delivery over time
Although this blog is often US-focused, I try to touch on Motorola activities in other regions when possible. Last week, Motorola execs spent time in Brazil for the annual ABTA conference on broadband and pay-TV services in the Latin American market. According to a recent In-Stat report, Latin America is one of the regions where digital set-top shipments are projected to climb over the next five years. That alone makes it an appealing market for Motorola, but the company is focused on technology far beyond set-tops in its ventures south of the border.
At ABTA, Motorola showcased the RX48 decoupled upstream module for cable modem termination systems, and the high-end SB6180 DOCSIS 3.0 cable modem. Both products launched late last year, and are now being made available for the Latin American market. Motorola also highlighted 3D TV and multi-screen technologies with demos on the show floor, and Director of Engineering Roberto Munoz spoke on a panel about evolving cable networks to support new converged applications.
You can access press releases from the event on the Motorola media center. They are in Portuguese, but that’s what those handy website translator tools are for, right?
Verizon threw down the gauntlet today with the announcement that it has trialed speeds of close to 1 Gbps using existing FiOS GPON equipment from Motorola. In other words, Verizon is showing it can hit the Gigabit mark without even migrating to new 10GPON technologies. “The trial, conducted at an existing FiOS business customer location, was intended to demonstrate in a live network setting that currently deployed FiOS equipment can support higher bandwidth services and can deliver 1 Gbps without major change to the network.”
This is what Verizon means when it says it’s got headroom it its fiber-to-the-home network. Based on the trial results, Verizon can increase FiOS Internet speed tiers significantly without sacrificing the quality of its other services. Think there’s no need for 1-Gbps speeds? Think about the coming wave of 3D TV, virtualization and cloud-based applications, and wireless backhaul.
As for Motorola’s role in Verizon’s speed tests, the two companies have worked together for a long time on the FiOS FTTH infrastructure. And Motorola has a wide product portfolio of optical networking solutions. Separate from Verizon, Motorola has also worked with a number of smaller operators on FTTH solutions as well. Need fiber with an RF return path? No problem. How about ONTs for MDUs? Piece of cake.