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April 11, 2013

Video Industry Change in the Air at NAB

By Bob Wallace, VP of Content

Both the disruptive and the disrupted took to the National Association of Broadcasters (NAB) conference this week with the majority of relevant news focusing on innovators in the video industry, rather than those hinting at defensive measures.

Rather than maintain the status quo in an ever-evolving video industry, Microsoft, Adobe (News - Alert) and Aereo continued to drive innovation. At the same time, one broadcaster talked about fending off a small upstart that threatens to beat the industry at its own game and pay-TV operators got help in their TV Everywhere customer retention efforts.

Protecting current revenue streams and retaining customers, though of high importance, seems to have taken so much time and energy – at the expense of sorely-needed efforts to acquire new customers with new and/or different video offerings.

This week’s events illustrate the difficulty of protecting and expanding video brand:

Broadcasters vs. Aereo. (The latest) Competing with an upstart that taps into its over-the-air TV signals without compensation, some broadcasters are considering the move to a pay-TV cable service to defend its business model.

The question that should be asked and answered is this: Why couldn’t entrenched, resource-rich broadcast networks have come up with the antenna technology – and business model – that upstart Aereo created and rolled out as some form of service or enhancement to its aging staple offering?

Innovation opportunity lost.

Switching to a pay-cable channel would only hurt Aereo if numerous top broadcasters took this action. Comments in that direction from News Corp (News - Alert). on behalf of its Fox Channel seem to be an idle threat. Fighting Aereo’s disruptive service in the courts and via lobbying will be expensive, and threatens to alienate many customers not interested in signing up for pay-TV service.

“Losing” valued channels you had is never a hit with consumers regardless of the reason.

Broadcasters should be focused on the evolution of their aging business model while delivering channels in cheaper ways, and in packages that excite consumers – not bore them.

Microsoft Mediaroom to Ericsson (News - Alert), Xbox Stays. Over six years ago, Microsoft announced IPTV software for its Xbox gaming system. I called it a Trojan horse move into the home entertainment business that began the demise of the then single-function sext top box (STB), and provided a broad commerce conduit for a wide consumer base interested in far more than gaming.

Fast forward to earlier this week when Microsoft sold its telco TV middleware – Mediaroom – to Ericsson whose customer based is predominantly service providers worldwide. Xbox with IPTV (News - Alert) software and much more, remain with Microsoft as a shining example of what happens when companies think beyond the business status quo and think well outside the (set-top) box.

Adobe Simplifies Streaming for All. Looking to advance streaming in general and TV Everywhere (TVE) efforts more specifically, the company launched Adobe Primetime a broad platform covering the video delivery waterfront to support one format for viewing TV content to any connected screen.

Rather than leave streamers to their own devices – and software – in each of many categories needed to and monetize video, Adobe unveiled a comprehensive approach that simplifies the process.

Primetime is designed to integrate Adobe’s video publishing, player, DRM, advertising and analytics offerings to reach audiences, while offering new monetization opportunities for programmers and pay TV service providers. Adobe announced kingpins Comcast (News - Alert) Cable and NBC Sports as launch partners.

TVE is a customer retention strategy for pay-TV service providers looking to stem subscriber losses to cheaper and abundant alternatives by offering the ability to watch TV programming online and on mobile devices.

Cablecos, Telco TV and Satellite Providers. This group has and is expending maximum energy trying to push TVE efforts which makes sense for the generations of consumers who have lived with and paid for pay-TV subscription services. It fails, however, to take into account younger demographics that haven’t and have been raised on alternatives. This is of paramount importance to the future of these operators, as those generations are unlikely to ever sign up.

TDG Research has dubbed them “cord-nevers.” I see them as a wide-sweeping group of consumers that live in the broadband economy, not the pay-TV subscription world.

Expanding TVE?

TDG believes pay-TV providers are missing the revenue boat by casting TVE as a purely defensive retention strategy. In an opinion released yesterday, the company reaffirmed its earlier belief, born of consumer research that shows most subscribers are willing to pay $5 to $8 extra monthly for effectively packaged TVE functionality and capabilities. Whether providers will rethink TVE and cash in on potential revenue opportunities is worth watching.

With the price of most every form of content increasing, and expanding competition on all fronts, how can pay-TV service providers not jump on a viable revenue opportunity?

What’s Next?

What a difference a week makes.

While “evolve or die” may seem strong for those living in the video world, it’s clear from the above developments alone that evolution and innovation are essential to survive and thrive.

When it comes to forward progress, the best defense is a strong offense.

Edited by Braden Becker
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