(Moving these to Monday for the summer because no one is reading anything on a summer weekend.)

1. Pay TV Show Recap: vMVPDs Are The New Black

I spent most of last week out in Denver at the Pay TV Show, hosting panels on ACR Measurement and Addressable Advertising and participating in an analysts roundtable at the the end.

The show was excellent, especially for a first-time event—kudos to the Fierce team for that—and it featured an impressive line-up of speakers.

Three personal highlights: (a) I got to be on a segment of Cheddar.TV with the legendary Jon Steinberg—look for more of these segments to come; (b) I got to meet and spend time with another legend, JeanDavid Blanc who founded Molotov.TV. The French vMVPD is already at 5M viewers and growing and JeanDavid is a prince of a guy; (c) a number of people came up to me after our ACR and addressable sessions to tell me that they’d learned a lot from the panels, that they had not known and/or understood much about the topics before and felt like they now had a better grasp on things. That’s the ultimate point in doing these sorts of shows—spreading knowledge—and so that was a big win in my book.

My own egocentric ramblings aside, the biggest takeaway from the show was that there was a general consensus that virtual MVPDs were hot and poised to take on a high percentage of “cord cutters” (Craig Moffat’s recent investor letters showed that about 70% of the people leaving MVPDs were actually going to vMPVDs).

Anyone who’s been reading TV[R]EV knows why we’re so hot on vMVPDs, mid-sized “mesomorph bundles” in particular, but to reiterate:

• At 80-100 channels, viewers don’t feel like they’re giving anything up, and networks that aren’t on the vMVPD bandwagon (Viacom, Discovery) are losing viewers, not the other way around, so we expect them to quickly get on board.
• Full TV Everywhere functionality of the sort that was promised back in 2011
• Superior interfaces that look the same across all devices (Hulu’s Ben Smith gave a great talk about how they came up with their breakthrough library-based interface for Hulu Live TV)
• A far more reasonable price point.

Why It Matters

As many speakers pointed out, the only downside to vMVPDs, from a business perspective, is that they provide a much smaller profit margin than traditional MVPDs do—if nothing else the recurring revenue from all those set top boxes is worth something. Some of that money can likely be earned back by throwing in extras (more DVR storage space, more channels, even original content) and by charging for increased broadband speed. (While MVPDs make a very small profit on pay TV, seeing it largely as a loss leader for advertising and broadband, they make huge profits on broadband. So that when they charge an extra $20/month to boost speeds from 25 to 150 mbps that amount will be almost pure profit.)

The other lesson to come out of the show was how well Molotov is performing because they do a stellar job of branding and marketing, to the point where Molotov has become an eponym for internet-based TV, sort of like “Band-Aid”, “Vaseline” and (once upon a time) “Tivo.” They’ve spent money running clever ad campaigns that speak to the emotions around watching TV, rather than just the speeds and feeds and price points, and that is a large part of why they have five million subscribers.

Something almost all the U.S. vMVPDs could learn from.

What You Need To Do About It

If you’re a network or local TV station and you’re not working with every single vMVPD, then you’re only hurting yourself. They’re popular enough and they’ve got enough stations now that the net result is if you're not there, then viewers are just not going to watch you. At a time when there’s just so much good TV and when people are constantly complaining that they don’t have time to watch the things they want to watch, no one but your most ardent superfans are going to be bothered that you’re not on their vMVPD.

If you’re an advertiser, now is the time to start taking advantage of all the superior targeting that the vMVPDs can offer, along with the advanced ad tactics like overlays and addressable and other forms of interactivity.

If you’re an MVPD (and we’ve been saying this for a while) get on the stick with vMVPDs. We’ve been surprised (sort of) that none of the MVPDs have doubled down on vMVPDs, using them as both TV Everywhere products for their set top box subscribers and retention tools for potential cord cutters. The thing is, the more you wait, the more expensive it will be to win all those people subscribing to other services over. If indeed you can.

If you're a vMVPD, be like Molotov and start advertising. The audiences are going to love what you have to offer, you just have to educate them about it and make it seem mainstream, not like some only-for-techies sidebar project.

2. CBS Makes Linear Addressable Happen, But Watch Those Numbers

So the good news is that CBS is going to make linear addressable happen, using ACR technology from Nielsen’s Gracenote (yes, that Gracenote. Nielsen bought them last year.) The plan is to use the fact that Gracenote can use ACR to identify which show the user is watching and then insert the ads dynamically into the show, so that different people see different ads, based on demographics, geography and (probably) prior purchase patterns.

All stripped, of course, of PII (Personally Identifiable Information)

Why It Matters

While details have been slight, the trade press has been all agog over the “millions” of viewers Gracenote reaches.

And that’s true—Gracenote does in fact track viewing from Samsung, Roku and LG. But—and this is important—only LG allows them to sell that data to third parties. Samsung and Roku keep the data for themselves and use it for their own purposes (e.g., recommendations).

Now details are light on the CBS deal, so it’s possible things could have changed. But it’s far more likely that CBS will only have access to the data from LG TVs. LG only has around 10% of the smart TV market in the U.S. (This is another one of those stats that’s based largely on conjecture as there’s no actual way to measure smart TV sales. But most reports we’ve seen have them at around 10%.)

So… if you take that 10% of all smart TV viewers and then think about the 75% or so who have their TVs connected to the internet and the 75% (and we’re being generous with both those 75% stats) who have opted in to allow Gracenote to collect their data, and the number of those viewers who are watching CBS prime time live … well, it’s not a very large number.

That said, it’s a start and kudos to CBS for taking that step and hopefully opening the door for other networks and other smart TV ACR data providers.

What You Need To Do About It

If you’re an advertiser, look into what CBS is doing. While it’s a small audience, it’s a good way to test out addressable and learn what does and doesn’t work for you.

If you’re a network, be like CBS and start looking into addressable. Nielsen will likely be thrilled to work with you, and there are other ACR providers like Vizio’s Inscape who might sell you that data as well.  It’s a great way to learn more about your audiences, show your advertisers you’re forward thinking and right now, and there’s no better time to try something like this than in the early days, when everyone’s still figuring it out.