Week In Review: The FCC's “Unlock The Box” Proposal Is Television’s Own Personal Horror Movie; The Rise of Virtual MVPDs

1.  The FCC's “Unlock The Box” Proposal Is Television’s Own Personal Horror MovieCall it “Invasion of the Body Snatchers” or maybe “Friday the 13th” but the FCC’s proposal to give outside companies the right to supply consumer set top boxes has the TV industry scared and madder than a Trump rally.With good reason too, we might add.Parallels to 1983, when the phone companies were forced to allow third-party manufacturers to make actual telephones only go so far. That’s because the companies making those replacement phones were consumer electronics manufacturers whose main objective was to sell lots of low-margin phones.Whereas the company looking to replace those set top boxes is the world’s largest internet company, whose main objective is to gather more data to fuel it’s world dominating advertising business.That’s really the alpha and the omega of it: while Chairman Wheeler’s intentions may be good, what he’s done is open the door for Google to come in with the set top box they’ve been perfecting y with their Google Fiber project and hoover up all that user data.The industry has been pushing back on many fronts, talking about everything from the amount of new tech needed to enable outside set top boxes to the difficulty of ensuring that third parties adhere to obscure channel placement agreements. (We’ve talked about this before in relation to why TV interfaces suck: deals struck years ago require networks to be listed in the order they were in back on the old circa-1973 TV dial. Still.)This week, a bipartisan group of senators wrote to Chairman Wheeler about how the disastrous expenses smaller MVPDs would incur in upgrading their systems to support outside vendors could put them out of business. And while it’s hard to know if their plea will have any effect, the fact that Democrats and Republicans are agreeing on anything these days might give Wheeler some pause.Why It MattersWell there’s the fact that Google might soon have access to set top box data and all that entails. We believe that we are on a bubble right now in terms of consumer pushback on online privacy and MVPDs making noise about Google exploiting user data may well be the straw that breaks that camel’s back and that Google’s ascension won’t go as quickly or smoothly as they’re hoping. (On the other hand, who wouldn’t want to replace their clunky MPVD-supplied Motorola box with a sleek new Google model. So there’s that…)2. The Rise of Virtual MVPDsOn the other hand, just the threat of the FCC stepping in has pushed the MVPDs to make some long-awaited moves. Take Comcast’s decision to introduce a Roku app, which they can then turn into a vMVPD (virtual MVPD) that people all over the country can subscribe to.That, in turn, could lead to all the remaining MVPDs going national via their own newly created virtual properties, which would open up an arms race of sorts, as suddenly viewers would have access to a dozen or more pay-TV options, rather than just two or three. The vMVPDs would range from Sling-style skinny bundles to full on “Titanium Plus” packages.While the MPVD providing local broadband access would have a serious advantage in that they could make their double-play (broadband + vMVPD) option so well priced (for the first 9 months, anyway) as to be hard to resist, a killer interface might help consumers overcome that. Regardless, creating a virtual and national pay-TV market would be a huge sea change for the TV industry and right now it’s looking like there’s a pretty decent chance that could happen.Why It MattersIf national vMPDs happen, then look for broad scale addressable TV advertising to finally happen too. Addressable has been happening for a few years now, but on a very limited basis. It’s only available during the two to three minutes each hour that the networks have given over to the MVPDs and not every MVPD offers it, which has slowed down it’s overall adoption.But imagine a nationwide networks of vMVPDs that can all offer addressable advertising (different target audiences seeing different ads on the same show, courtesy of DAI.) That would shake things up for sure, as networks would have the ability to make more money from fewer, better targeted ads, along with the ability to track those ads and know, on a census level, who actually saw them.There are a lot of “ifs” in there (e.g. will brands see the value in “audience parting” over “day parting” and will digital devices like Roku be able to offer it on vMVPDs) but we feel good about the future growth of addressable and it’s role in keeping the TV industry afloat as it shifts from a mostly-live to a mostly-VOD model.What You Need To Do About ItWhether you’re an MVPD, a network, an advertiser or an agency, preparation here is all about contingency plans. A whole lot of ITTT. (If This, Then That.)So what do you do if the FCC unlocks the box and Google starts to dominate the set top box market? How do you make their TV data work with their online data?What do you do if vMVPDs become the rule rather than the exception? How does that affect how much networks should charge for their programming?If addressable is widely available on a national basis via vMPVDs, then does your brand put money behind it? Who are your targets and does narrowing the audience down change what you want to say to them?The FCC decision is due sometime this summer and won’t go into effect right away, but the fallout from a pro-Unlock decision is bound to be more immediate, so time to get your ducks in order.Before the guy with the chain-saw shows up and starts chasing them.