We Pay for Entertainment One Way or Another, But it’s Nice to Have a Little Help

Content Insider #624 – Paid TV

By Miles Weston

“My life has taken another turn
again. The days can go on with regularity over and over, one day
indistinguishable from the next. A long continuous chain. Then suddenly, there
is a change.” – Travis Buckle, “Taxi Driver,”
Columbia Pictures, 1976

We
totally wasted most of last weekend!

Saturday
afternoon we binged four segments of Rod Serling’s Twilight Zone – in a row – over our slim cable system bundle.  Bright and early, we jumped on CBS All Access
and watched three episodes of Jordan Peele’s new Twilight Zone.

One
group of shows we watched at the prescribed times and in the order they offered
them.  The other?  We started with number one, then two and…

Folks
have asked why we continue with our old-fashioned Pay-Tv when we can get
everything we really want and all the newest stuff OTT.

People
like to slide right past the big hurdle for viewing content … getting the stuff
from there to here.

Reason 1

We
have to get the content to the screen and the choice is either with cable or 4G
LTE wireless (someday 5G). 

Fiber
download is supposedly 2Gbps max (usual 1Gbps) download and 5G is theoretically
450Mbps (best case 1Gbps) but 100Mbps will easily stream 4K/HDR content to the screen
with sufficient bandwidth to handle 8K whenever it’s available.  

Cable
fiber is here and 5G is coming and it looks a little more difficult.

Last 100 Ft – For most homeowners/renters, they seldom think about
how content gets to them as long as it gets there quickly and smoothly without
a lot of buffering or dropped frames.  It’s
the “unglamorous side of entertainment – cable fiber or wired/wireless telco
service.  You don’t think about it, but
it is critical to making you love or hate your entertainment. 

Cable
is reliable unless someone cuts it with a backhoe or a shark chews through one
of the 550,000 miles of undersea cables.

We’re
just beginning to build out the global 5G infrastructure and by 2025, it should
be as good if not better; but we want to watch our entertainment now.

Reason 2

Okay,
we don’t like our cable guy very much (who does); but we like him a little
better than the phone guy.

The
day/time TV people have gotten the message as people cut, shave or don’t even
bother with their expensive bundle “service” and less than stellar customer
service.

Entertainment Spend – People today have an embarrassment of over abundance
on how they can receive their entertainment; and while each has its strengths/weaknesses
and proponents, a lot of folks still enjoy the reliability of linear TV. 

And
in many instances, they have responded with:

More
flexible service/channel option programsOnline
service, supportAdded
features, capabilities like voice command and catch up on shows you missedImproved
service/support programsAdding
subscription services to their offerings

Sure,
there is always room for improvement; but sometimes, it’s the devil you know

Then
there’s the deafening noise from the wireless industry.

The
telephone guy just can’t seem help himself from making outlandish claims for
what is really going to be a widely available, super service.

AT&T
said they were delivering 5G the first of the year and offered a 5G E phone … the
E stood for eventually because it was running on very good 4G LTE service, but
really?

China,
South Korea and U.S.’s telcos rush to announce the success of their first
trials and the breathtaking performance, which is loosely translated as ultra-high
speed, downhill, with a strong wind at its back.

We get it.

Bragging
rights are important but more important is delivering high-speed, reliable,
economic service to folks around the country who are outta’ touch.

As
for being economic:

South
Koreans could have an 8GB data plan for $50 a month (4K mobile stream is 7.2GB/hr.),
no unlimited plansWith
AT&T, after buying a 5G mobile hotspot for $500 you can consume up to 15GB
of content for $70/mo. in a few citiesVerizon
… comparableEurope
– 35 5G cities identified in 14 countries to receive 5G coverage by 2020 with tens
of base stations and thousands of small cells

Signal Deprived – While it may be inconvenient to temporarily not have a
good mobile device signal to make a call or text, there are large areas of the
globe that don’t receive entertainment service and this build-out should be a
high priority of every country. 

There
are vast portions of the country – every country – where minimal (sometimes zero)
service is available which is why Amazon, SpaceX, OneWeb, Boeing, Spire Global,
VSAT, Tata and others are investing to deliver connectivity to communities overlooked.

Stringing
cable to these isolated locals is ridiculously cost prohibitive but beaming
service is economical and darned important!

They
may have no interest – or need – in watching Twilight Zone but Discovery, History, Nat Geo, BBC, Encuentro,
France 5, KTN Leo, IRIB Mostanad, Rai Scuola and hundreds/thousands of channels
around the globe help everyone.

Good Content Costs

The
great thing about the U.S. and most industrial countries around the globe is
that suddenly we have an insane amount of really good content to choose from
and you pay for it one way or another.

 Of course, you can
get it free:

Some
people mooch Netflix passwords from their friends who, for some reason, don’t
mind spreading the love. Others
patronize pirate movie/TV sites where they can get content free with more free
stuff … malware.

Cool!

Yes,
the biggest problem in our increasingly content-rich world is that:

 We switched from analog to digital We switched from shipping content over cable
broadband to OTT streaming

Entertainment Theft – Hackers and illegal torrent sites regularly steal
digital content and offer it to visitors at little or no cost, except for the chance
of also downloading malware. 

Streaming
service data breaches (hacks) ranged in size from 133 to 200 million – 11.6B
from May – Dec last year, according to Akamai. 

That
costs services – Netflix, HBO, Hulu, Disney, Sky, Amazon, Mubi, Shudder, fubo,
Philo, heck, everyone – Billions every year. 

And
there’s a trickle-down effect. It takes money directly/indirectly from the
thousands of really hard-working Indie filmmakers and crew members!

Not nice!

But
like most sane folks, we respect the creative work these people do and feel
they should be fairly compensated and have options … lots of options.

Source
– comScore

Content Choices – Every time you turn around there seems to be a new
entertainment opportunity for you to enjoy. 
New services represent added opportunities for Indie filmmakers to
produce/deliver content to consumers. 

Advertising
icon David Ogilvy once said, “The two most powerful words you can use in a
headline are FREE and NEW. You can seldom use FREE, but you can almost always
use NEW – if you try hard enough.”

Ever
since Netflix dropped their red envelopes and focused on streaming content to people’s
devices, they and their leading competitors (HBO, Hulu, Amazon) and their
growing field of competition – CBS All Access, Disney +, sometime soon Apple TV
+ and others have focused on pitching new content.

For
those without huge libraries of content, such as Netflix, it has led to major
content development investment ranging from $1B annually to $19B annually.

To
attract new subscribers, they have used a very aggressive marketing program of
social media activity, outdoor advertising, aggressive promotion of
films/projects at film festivals and industry awards programs – Grammys,
Oscars, etc.

One Plus – Industry researchers find – to no surprise – that the
number of households that have an SVOD subscription continues to grow rapidly.  In addition, one is seldom enough as
consumers add new layers of viewing options. 

Multiply
that by word of mouth and friends telling friends and it has worked … beautifully.

Streaming
analysts love to say traditional Pay-Tv (stuff delivered over the cable or satellite)
is dying as people shift to the great new anytime, anywhere streaming services.
  The only problem is people are still
paying for the wired or wireless service the same old way–a fixed monthly fee
(for each) plus the service provide fee.

People
extol the benefits of streaming because they can watch the stuff on their
smartphone during business meetings, classes–heck, everywhere.  The problem is the majority of the
entertainment is still consumed sitting on the couch and staring at that big,
beautiful screen you bought and like to brag about.   

And
according to Liechtman Research Group, while there was an initial thrill and rush
to computer-, tablet- and smartphone-viewing; the “newness” has worn off and BAM!
they’re back to the big screen.

Getting Work Done – If you wonder why you’re stressed to get your work
done, it might be because you – and almost everyone – is consuming more
entertainment. 

So,
the big difference is that instead of the big bundle of 300 channels, of which
we watch maybe ten over the course of a year, we have a slim bundle of ten
channels plus three OTT services that we use to watch one to two shows a
week. 

And
the cost?  Yep, darn near where we were
before plus there are two to three other services we’re sorta’, kinda’
interested in.

So
much for saving scads of money and having the added convenience of watching everywhere/anywhere.

Yes,
there is the convenience of anytime viewing.

You
can call us inflexible, but we’re interested in watching the 7:00 p.m. news at …
7:00 p.m.

Research
Intelligencer found that families dismantled their “store bought” bundle to
develop their own personal bundle that met the family’s wants and needs. That’s
probably why instead of the annual spend for home entertainment, it actually
hit a record of $23.3B last year, up 11.5 percent. 

While
many of the folks GfK interviewed said they had cut or severely shaved their Pay-Tv
cable explained they did it to escape advertising but upon further discussion
it wasn’t getting rid of ads but the volume of the ads.

As
David Ogilvy emphasized, free is one of the most powerful words in a headline;
and to enjoy free entertainment, someone had to underwrite the cost … advertisers.

GfK
found that people who switched to streaming services were simply sick and tired
(our words) of too many ads!

More
than 4 in 10 respondents(44 percent) say that the lack of ads is the top reason
for using paid streaming services, and three-quarters feel there are too many
ads on Pay-Tv.

Obviously,
ads haven’t deterred younger viewers from rushing to Google’s YouTube.

Because
of possibility of ads showing up on or around offensive content, most advertisers
view the option with mixed feelings because one wrong appearance can (and has)
caused irreparable damage to the product and company.   

Television
network and program owners heard the door slamming and responded by taking a hard
look at their TV ad bundles.

They
trimmed the total time of commercials shown with Fox saying they were reducing
add time to two minutes an hour by next year.  

At
the same time, advertisers have begun experimenting with shorter ads (6,10,15,
30 sec) and a broader range of variety of ads (mix rather than repeat).

It’s Not Free – Networks and stations like to tell you they’re delivering
you free entertainment because you’re not paying money for it, just
a little bit of time to watch an ad or two or three.  Still, it’s less painful because you can
always leave the room during the ad break.   

While
Magna noted in its recent global report that ad revenues in linear TV has contracted
3.6 percent this year, OTT advertising actually expanded by 54 percent last year
and is projected to increase another 39 percent this year, well ahead of social
and digital video. 

As
a result, Magna noted that a number of SVOD players – Netflix, Amazon, Hulu and
others are exploring hybrid, add-supported business models with offerings with
limited ads or company/product sponsored. 

Vincent
Letang, Magna executive vice president-global market intelligence, said that
the long-term trend will continue; and initially, AVOD services will have a
decided advantage because they will be able to deliver specific ads to
individual viewers rather than have to sell broad demographics. 

Ad-supported
entertainment will change significantly over the coming years; and as it
becomes more personalized, it will become more accepted and appreciated.  

Advertising
will become more seamlessly brought into the entertainment scene and will
ultimately be more effective. 

At
some point, we’ll have a eureka moment just as Travis Bickle did when he said, “Now I see it clearly. My whole life is
pointed in one direction. I see that now. There never has been any choice for
me.”