[opendtv] Re: TV Technology: Broadcasters Investigate OTT Opportunities
- From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Tue, 18 Jul 2017 08:21:12 -0400
On Jul 17, 2017, at 3:49 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:
Glad to see this type of thinking becoming prominent.
It's about F*#king time!
I felt like I was in a time warp when I read this story...
Like Rip Van Winkle waking up after a six decade nap.
For the most part, the people and the companies discussed in the article were
responsible for the demise of the professional video equipment industry, which
tried (and failed) to build barriers to competition from the industries that
have driven the mobile revolution for the past two decades. Now they finally
understand that broadcasters need to be on these new screens too...
Unfortunately, it' may be TOO late.
Clearly the big content conglomerates now know that they must provide a bundle
of local channels for OTT services, as they do for the DBS services.
It is equally clear that Bert still does not understand why...
A couple of comments:
"To accommodate local audiences, U.S. broadcasters may need to work with
MVPDs and virtual MVPDs to provide an OTT-ready version of the live, linear
feeds; and the MPVDs can package these channels into their OTT offerings."
I say, mostly nonsense, to this limitation. US broadcasters should be able to
provide "live streams," if they deem these to matter so much, in any number
of ways, without retrenching to old MVPD models. Or even, whatever they are,
"VMVPDs." Multiple simultaneous options are possible, when on the Internet.
Yes, it is possible to sell content via the Internet in MANY ways, and in fact,
this is happening. If you don't want to watch the live stream from your local
station, you can catch up with a cheap subscription to the ad supported version
of Hulu for $7.99/mo. If you live in one of the markets that offers your local
CBS station via CBS All Access, you can pay $5.99/mo. At least for now, you can
access many network programs for free via the version of Hulu that now is
operated by Yahoo.
But those options are not what the broadcasters are talking about here. They
want the retransmission consent dollars that have accompanied MVPD carriage of
local stations. They want affiliates to offer IP streams to the new VMVPD
services ... if they can collect the same retrans fees they get from the
facilities based MVPDs.
The article notes that it is too costly for most loca stations to create OTT
services. This is also generally true for the network they are affiliated with.
CBS All Access has not attracted a very significant audience, for good reason:
Nobody is going to pay $5.99/mo for each of the four broadcast networks - i.e
about $24/mo, when they can buy Hulu Live or DirecTV Now for a few dollars
more. A percentage of the customers for the VMVPD services would pay $5-6/mo
for access to the broadcast networks, just as a percentage of DBS subscribers
buy the local station bundle.
It is NOT a question of "retrenching the old MVPD model."
It IS a question of providing bundles of live and on-demand content to
consumers at realistic prices, as we are seeing now with Hulu Live, DirecTV Now
and Dish Sling.
"From a technology standpoint, local broadcasters are too small to tackle the
complexity of setting up an OTT service."
Local broadcasters? Don't they most typically belong to station groups? I
wouldn't think station groups are too small to work this problem. Not that
they have to reinvent the wheel, but why can't station groups use existing
web streaming solutions that they control in-house? I doubt that this is
beyond the capabilities of a Sinclair, for example.
As the article pointed out, stations do not own the streaming rights to much of
what they broadcast. So it is not just a matter of setting up an OTT service.
They need to contract for the streaming rights for the content that would be
party of that OTT service. Even station groups don't have the resources to
compete with the likes of Hulu, which is owned by the content congloms.
Sinclair cannot create an OTT service offering all of the broadcast networks
that the stations they now and manage carry, WITHOUT the contractual rights to
those streams. They can offer the content they create and for which they can
obtain the streaming rights.
"From a content standpoint, local broadcasters can stream the content they
produce but for content that is aired and not owned-i.e., network
programming, syndication, even some ads-the rights to the content are often
for over-the-air only. Thus, they cannot take their existing 24/7 linear
channel and make it available over-the-top."
True, we already discussed this part here, on many occasions.
They why do you persist in telling us this is just a minor issue of writing new
contracts?
However, this is a matter of getting people to sign the bottom line on
contract agreements, it's not a technical matter.
Yup. It's a legal matter, and to date the content owners are NOT granting such
rights. But they are working with affiliates to coordinate the types of
services discussed in this article.
For example, RAI provides live streams of their OTA content, FOTI, in-country.
Good for them. Obviously they own the rights to the content they stream.
I'm not convinced the "live stream" is such an important component for most
of the content, but I also don't see why anyone should assume that it's a big
technical hurdle. My feeling is, there's a bit of legacy thinking going on
here, where the content owners really believe that the "live stream" is the
most valuable part. Doubt.
Just a bit of legacy thinking...?
It IS NOT a big technical hurdle Bert. It is a HUGE business hurdle.
It is pure protectionism; the content owners are feasting on two HUGE revenue
streams:
Advertising
Retransmission Consent
They don't need local affiliates to offer the networks OTT. But they don't get
retrans consent protection if they go direct. To be fair, they can still charge
subscriber fees, as they do for all of the networks they offer via the MVPDs.
If the do this without the cooperation of the affiliates, they violate their
affiliate agreements.
So the status quo remains...
As to the revenue streams part, as the article says, it can become more
elaborate and efficient than the FOTA stream is, inserting ads based on
additional criteria than just the type of TV program they are inserted into.
But that's already the case today. When I see ads with the FOTI program, the
ads already adjust to my location. So the TV networks already know how to do
this part. It's more a question of how best to get the station groups more
involved in the streaming solution, to help scale up the OTT model. More
targeted ads mean fewer ads needed, which IMO works out fantastically well.
Yup. As I said it's not a technical issue.
The only thing that has changed is that they are losing viewers to OTT services
and they want to participate in targeted advertising. Thus the content congloms
and their legacy technology vendors are FINALLY waking up and developing
products to address this opportunity.
Best I can tell, this evolution has been happening gradually, all along, for
the past decade+. And too, with the Internet available as the transport
medium, no one solution needs to be the exclusive one. That's already the
case today. Several ways to view TV content, from any one network, already
out there.
Yes there has been gradual progress. Some of this has been dictated by business
models and the challenges of protecting existing contracts. And some of this
has been dictated by a technical reality:
The Internet is just now becoming capable of handling the tremendous traffic
that is generated by OTT streaming. Sunday night HBO's servers STILL could not
meet the demand of their limited audience to watch the Sean on premiere of Game
of Thrones.
Regards
Craig
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