DIRECTV Looking at Cheaper Bundles
December 2011
U.S. Satellite Provider DIRECTV said it was cutting programming costs in 2012 in order to stay ahead of upcoming economic conditions such as the European debt crisis and the potential fallout of the upcoming presidential election. The Provider is looking to offer more ad hoc TV packages or bundles, rather than the large bundles it currently offers. One of the packages under scrutiny is its “NFL Sunday Ticket,” a popular premium sports package that offers every single NFL game during the season that is available exclusively on DIRECTV.
It seems that many consumers have rebelled against paying for TV packages when they only watch a few channels. As cord-cutting and cord-trimming continue, some Service Providers are looking to offer lower cost bundles—much to the consternation of Content Owners and movie studios.
In Q3/2011, DIRECTV said it had over 19.8 million U.S. subscribers, including a gain of 327K in the quarter, but most of those additions came at a cost. DIRECTV offered a promotion of a 1 free year subscription to “NFL Sunday Ticket” for all new customers that chose a two-year contract. As a result, DIRECTV is consuming some of the cost of the NFL Sunday Ticket, which normally costs US$53 per month.
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Sun Shines Over Multiscreen Enabled by Clouds
December 2011
One of the best panels in the recent MIS conference1 in Santa Clara, California, U.S.A., was about clouds, entitled “The Cloud—Enhanced Convergence Engine Room.” Unlike many articles and panels on the topic of clouds, this panel talked about the different kinds of clouds within the three general categories of Public, Private and Ultra-private clouds. “Private” clouds are more expensive, but yield better quality control and security, as one would expect. “Public” clouds are widely available, but at a lower quality-level and cost; and “Ultra-private” clouds are typically contained within a single residence or home, offering the highest quality and security.
Moderator Allen McLennan, President and Founder of The PADEM Group, and panelist Steve Davi, SVP, Advanced Technology of SeaChange, both observed that any video cloud is simply an extension of VOD. Because the content is mainly on-demand and because the video content could be coming from servers anywhere, this method of retrieval is being accelerated by OTT Vendors like Netflix, which is responsible for 30% of all rentals streamed over clouds in the U.S. Not only technology makes a difference in the ROI calculation of a video cloud, mentioned Davi, who assists clients on cloud implementation strategies; choosing the right business model also is key, as in the case of Service Provider 3UK in the U.K., which initially introduced a cloud video—supporting an á la carte service that wasn’t hitting revenue goals. Davi’s company changed it to a subscription service, which almost immediately improved ARPU and total subscribers. Another example of cloud supported TVE (TV Everywhere) services is London-based Virgin Media, which is heavily promoting consumer awareness of Virgin’s TVE programming on smartphones and laptops in addition to the main TV set. “Unless the consumer is aware of the service and uses it, these (cloud-supported) services would be a wasted investment,” stated Mr. Davi; therefore Virgin is doing aggressive cross promotion and uses multiple business models.
Many Clouds and Cloud Types Coming
Ted May, SVP Strategy and Business Affairs of Synacor, cleared the air by reminding us that “everything is changing,” and that the future in video service operations is “more about many clouds than one cloud, because there will be a variety of business models and cloud types to deal with.” Besides offering inter-cloud QoS, content security and privacy, a premium cloud has to perform “endless synching across multiple devices included in a true TVE service.” Such a service will also need to deal with issues of privacy and bandwidth fees; and offers a core platform for performing “authentication, billing, and data gathering regarding merchandising trends and pop trends.” When asked which group or organization could “standardize” clouds so they could communicate in the future, no panelist would answer; but Mr. May suggested a good place to start would be on the metadata. There was general agreement that first the industry should innovate in order to see what works or doesn’t work; later they can create standards based on the best of the innovations.
Standardized Metadata to Accelerate Usage
McLennan summarized the cloud sector by pointing out that the cloud concept has been around for at least a decade, and much of the excitement in digital media applications has been re-ignited with Apple’s “iCloud,” which currently is a good model to watch due to its ease of use for consumers using a variety of devices ranging from laptop, iPhone, iPad and iPod.
Analyst Comment: Since online video (or OTT) is primarily search- based content that is driving the use of media clouds, it makes sense to use standardized metadata as early as possible for describing individual media titles within the clouds—something not yet happening. It also seems advisable to not use just one business model, but to stay flexible about business models while the complexities are being ironed out. Because iCloud is already a working ecosystem in support of multiple data types and devices, it can be useful as a model of a working media cloud. So long as Apple offers it as a free service to customers of iTunes, the industry can learn from Apple’s mistakes (and successes) about what to do and not to do with media cloud services. (Alcatel-Lucent and Bitcentral also participated in this panel.)
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