Last week was a busy news week for the U.S. TV industry with the "broadcast TV upfronts". These are the seasonal meetings hosted by the big four networks (ABC, CBS, FOX, NBC) for press and advertisers promoting their programming schedule. However, the news last week was about more than the upcoming programs. The networks also revealed their plans for increasing their use of alternate distribution channels. The goal for these content providers is to be available wherever their viewers are. The announcements from ABC, TNT and TBS, are an acknowledgement that out-of-home streaming of broadcast content is here to stay.
It is natural to think that these announcements are in response to disruption caused by Aereo TV, the Barry Diller backed upstart. Aereo entered the market in 2012 and has recently increased its ability to stream over-the-air content broadcast programming to consumer digital devices. Unlike the TV apps provided by ABC, TNT, TBS and others, this subscription service does not require viewers to have a cable/satellite subscription to access the content. While the Aereo service is currently only available in New York City, it is clearly a threat to the current broadcast/cable TV model.
The appeal of this service for consumers lies in their ability to select what programs they want to watch without having to subscribe to a bundle of content - some of which they will never watch. This "a la carte" TV model has been discussed for years, with Senator John McCain (R., Arizona) introducing legislation last week requiring cable/satellite operators to "un-bundle" their TV service offerings. While "cord-cutting" has been a subject of great analysis, consumers continue to maintain their cable subscriptions even as they adopt alternate consumption models (e.g., Hulu, Netflix, Amazon Instant Video, etc.)
The ultimate success of of Aereo vs the broadcast networks, may lie in the technology behind the scenes. Aereo utilizes small TV antennas to capture TV signals off the air and retransmit them over the Internet. They utilize transcoding and storage in the cloud, plus a layer of content management software,. While the costs for transcoding and storage have decreased dramatically, this combined hardware/software solution is a relatively expensive solution to scale.
In contrast, the ABC model will use cloud transcoding technology from upLynk plus a Linux server to distribute programming to existing cable subscribers. Their app, available on iOS initially, will validate viewer subscriptions before enabling access to content. This model allows for more cost effective adoption by ABC affiliates, but preserves the existing business model requiring bundled cable subscriptions.
The battle is on for over-the-air content. FOX and CBS have publicly stated that they may consider becoming paid cable networks rather than provide over-the-air content that can be captured by Aereo. Out-of-home streaming will impact existing advertising models and subscriber management solutions, while bringing incremental insight with increased subscriber data gleaned from the streaming services. The ability to learn more about subscribers is appealing both to the networks and to their advertisers. The unanswered question for all of these live streaming services, is the desire for viewers to watch content on their mobile devices vs their TV. My perspective is that it is all location dependent.
What's your perspective?
Image courtesy of Yeni Medya Duzeni