March 20, 2012, Over-the-top TV Conference, Santa Clara, CA—a panel considered the on-going commentary on the demise of cable and broadcast. Jeremy Toeman from Dijit Media moderated the panel. Panel members included Scott Mirer from Netflix, Colin Decker from the Virgin Group, and Richard Bullwinkle from Rovi.
Cord cutting?
Bullwinkle said this requires redefining service providers. Different subscription services increase the amount of content and allow for the diversification of sources.
Decker added not right now, but this trend is gong to increase over time. The next generation of viewers are not getting cable, leading to breakup and reaggregation processes.
Mirer declared that a lot of people want to see changes, but the reality is that people still use the services for data. There is no difference for the providers between data and TV. Triple play bundles shift the options higher and the changes increase the OTT capabilities. However, there are too many vested interests in the industry and consumers are responding by increasing on-demand viewing.
The number of people using cable?
Bullwinkle opined that this requires a change in market strategy for OTT solutions for cable. Cable is not happy with OTT, because they want to keep people within their own interface.
Mirer postulated that a company like Netflix could become a cable provider.
Increase in apps in the next decade?
Bullwinkle suggested that the increase is just a matter of time, however, the overbuilding will lead to consolidation. The smaller cable companies cannot compete with Turner and Comcast for capabilities and functions. Google is building a TV over IP infrastructure in Kansas City.
Google and content?
Decker noted that people are investing into the space. The bigger players are developing more services. New forms of carriage will lead to changes in services.
Mirer disagreed that not all of the service providers are sitting back. Google is more OTT ready than the cable companies.
HBO is going direct to customers. Will other channels get out of the bundles and go direct?
Decker declared that it's not going to happen, because the incumbents are too deeply encumbered. The increased demands have to be balanced with the various rights of all parties. For example, ESPN is $10 for a bundle that includes al of the other Disney properties. The ESPN portion is $4.75. The costs for sports and the values of the additional features like reporting and commentary are a big barrier to entry for any possible competitor, so ESPN will continue to be a premium property.
Bullwinkle stated that fundamental changes need a driver. Technology changes can be disruptive. For example, iTunes has reduced music theft. TV is profitable, and no one thinks that TV is broken. 41 percent of families in the US own a DVR, but 89 percent watch TV live. The model for all other platforms is to change peoples' thinking of TV differently. People like channels, so other user interfaces are not as effective.
Google is on 50 percent of all TVs in the US?
Mirer said that apps have to have relevance and somehow become a driver for people to change. Some things are better on a second screen, so people have to change their ideas about the experience versus the platform.
App overload and interactive TV?
Bullwinkle suggested that some, less than 20 percent, increase interactivity in all ways. Companies can make money by increasing immersion. Providers have to research the viewers and understand how people are willing to share their personal information. This may be proportional to the size of the screen: TV has no Facebook, tablets share some information, phones text about personal experiences. The tablets allow browsing while others are in the area. The second screen brings n new experiences.
Decker amended that some like to play, but TV is functional. Apps and second screens are a rich adjunct for the shows. Mixing the social tools and TV are not the same as watching TV, the apps are distractions and the social are for discussions. We have a ways to go until a majority of people use the social, highly personalized interactivity.
Mirer offered discovery is better with apps and a second screen. Discovery leads to engagement, which drives retention and eventually income. The functions can be concurrent.
The Internet is broken or overloaded?
Mirer noted that Netflix accounts for 1/3 of all peak traffic, but only at the edge. The rest of the infrastructure is robust.
Platform manufacturers?
Bullwinkle opined that about 10 companies need attention, including Apple, Samsung, and Comcast. Comcast is changing the infrastructure and delivers the content. BBC is getting government money and is becoming a big player
Decker argued that the context matters. The programmers and networks have properties they won't sell and are trying to retain their business models. They will not let the manufacturers have the rights to their prime assets.