Since TV is clearly not dead or even dying (sorry Business Insider) a new battle is underway for control of TV’s soul. It’s an interface battle and it pits an app-based universe of the sort found on Apple TV versus a TV Everywhere type universe, owned and operated by the MVPDs.
Who wins will have a massive ripple effect on the industry and there will be winners and losers from either outcome. Our money right now is on the MVPDs, but given their tendency to pull defeat from the jaws of victory, their triumph is far certain.
Let’s take a look at what each option looks like:
In an app-based world, every network has their own OTT app, sometimes (Seeso) more than one, and that app features all the network’s linear programming, VOD, and (increasingly) original OTT-only series. The app has a monthly subscription fee but runs ads as well, though at a lower volume than they do on old school linear television. More expensive, ad-free subscriptions are likely to be part of the mix as well—Hulu already has one and CBS is contemplating it.
Viewers will rely on their streaming device to provide some sort of program guide. Currently, these interfaces are a mixed bag, though Apple TV, Roku and Samsung’s new SmartHub have been making some real progress on this front. Their interfaces all have search, recommendations, voice control and watch lists, in various degrees of competency, but at least they’re trying, and more improvements are on the horizon.
The advantage to an app-based world is that viewers only pay for the channels they actually watch, which greatly reduces clutter and feels far more economical. We say “feels” because at anywhere between $5 and $15 a pop, an app based experience can add up in a hurry: ten networks plus HBO and Showtime will quickly approach the $80-$100 mark, far more than the cost of a not-particularly-skinny cable bundle.
So there’s that… though it is possible that the device manufacturers themselves (e.g. Apple, Roku, Chromecast) will be able to pull together their own version of cable’s bundles and offer that ten-channel plus premium package for a significant discount. If you sign up for a two-year contract. Penalties for early termination and all that.
The upside for networks is they’d get to know who their viewers are, get those credit card numbers for Experian so they can track them around the web and target ads at them wherever they may be.
The downside is that running a standalone app requires a lot of skills the networks don’t traditionally have: billing and collection being the two main ones, and for each app, the networks are essentially starting at zero subscribers and building from there, something else they haven’t done, at least not recently.
In an MVPD TVE-based world, you would simply download the TVE app your pay-TV provider gives away as part of your subscription. It would have a program guide, access to your DVR and all the MVPDs VOD channels. Like Netflix, you’d be able to pick up a show on one device (your family room TV) and finish it on another device (your iPad). More than that though, you’d have access to the full array of channels in your pay-TV package, which for many people numbers in the hundreds if not thousands.
Back to that program guide: it would, ideally, look nothing like the ‘90s style grids the MVPDs inflict on their customers today and much more like the stylish Comcast X1 guide, and then some.
If the MVPDs are able to pull that off—an easy to use program guide with real functionality, things like voice control—then they will be in a good position to win the war. But given their history of all but ignoring user experience, that’s far from assured.
What they do have working for them is a built-in user base that doesn’t have to spend any extra money to get the apps, a built-in system to heavily market the apps, and inertia, a powerful force where consumers and television are concerned.
They also have a secret weapon: if the MVPDs continue to contract with Netflix et al to bring the streaming services to their set top boxes, they eliminate the need for an additional device—people buy Rokus and Apple TVs to watch Netflix, not CBS All Access. Put a significant dent into the number of people who own streaming devices, and you put a significant dent into the number of people who might go the app route.
And if that doesn’t work, the MVPDs have a back-up secret weapon. Or not so secret, as the case may be. They own the internet. Or at least access to broadband. As such, they can easily jack up the price of a broadband only subscription, adding on bandwidth caps, giving discounts for double and triple play packages and otherwise making it really, really expensive for users to go the app route.
That’s why we’re thinking the MVPDs will win out. There’s a lot that needs to happen before that victory is anywhere close to certain, however, including the full launch of Nielsen TAM, the OTT measurement system that will make the networks agree to put the full range of their content on to those MVPD TV Everywhere apps. Then there are the carriage fee negotiations that will happen once those apps are fully functional and the networks want more money for their content.
Like we said, nothing is set in stone yet, but the battle is most definitely looming.