MVPDs Bolster Multi-Screen Products, Deals Amid OTT Competition

Comcast’s new multi-year content distribution deal with Scripps Networks Interactive disclosed last week (CD July 17 p17) includes the programmer’s six linear cable networks: HGTV, DIY Network, Food Network, Cooking Channel, Travel Channel and Great American Country. The content will be available to traditional cable subscribers and over connected TVs, Comcast’s Xfinity website for subscribers and mobile devices. “This agreement with Scripps Networks underscores our commitment to TV Everywhere and our desire to use the latest technologies and rapid pace of innovation to deliver the best content to Xfinity TV customers, wherever and whenever they want to watch it,” Comcast Executive Vice President Gregory Rigdon said in a news release (http://xrl.us/bnhjyi).

AT&T earlier this month said it’s adding new iPod and iPhone features for its U-verse pay-TV subscribers, so the mobile devices can be full-fledged remote controls for its video service. AT&T beefed up its iPad app for U-verse customers, adding social TV capabilities and sports content from several leagues, and has VOD from HBO, Cinemax, Starz, Encore, Movieplex and Music Choice and a deal with Fox News Channel for more online content.

Verizon plans to add personalization features to its multi-screen video service, Flexview. Maitreyi Krishnaswamy, director of interactive video services for Verizon’s FiOS TV unit, told us the new personalization features will allow each TV viewer in the home to receive content recommendations based on his or her own personal preferences. Krishnaswamy cited industry research indicating that consumers will end up owning as many as seven Web-connected devices over the next few years, including smartphones, tablets, connected TV sets, video game consoles and more, with most people regularly using two devices. She said the next logical step for an MVPD is to tailor its content to each individual rather than the entire household. “We are now trying to go to the next level in companion devices because they bring a unique level of personalization, which would let us create profile-based experiences that are different for kids, parents, the teenager and the toddler in the house, if you have one,” she said at an OTT video conference in Boston last month.

Video cord-cutting and cord-shaving are growing threats to the pay-TV industry, analysts continue to say. Jonathan Hurd, a director at consulting firm Altman Vilandrie & Co., said his firm’s latest consumer survey shows that cord-shaving particularly is on the rise. The 2011 study found that 20 percent of consumers say they spend less on cable TV than they used to because online video meets their needs, up from 15 percent in 2010. “Twenty percent of households is a pretty significant number,” Hurd said. The study found that 3 to 4 percent of consumers were cord-cutters. “It’s quite possible that cord-cutting will increase year over year,” he said, noting that this year’s survey is now out in the field. The trends are much higher among younger viewers. The survey found that 25 percent of 18-to-34-year-olds view TV shows and/or movies from online sources daily. More than half of 18-to-44-year-old tablet owners view online TV shows and/or movies on their devices each week. Hurd noted that once the TV viewing habit goes, it’s likely gone for good. But executives of MVPDs have said cord-cutting isn’t much of a phenomenon.

To try to ensure it stays that way, MVPDs are bulking up VOD libraries, adding new mobile apps and developing more personalization features, a vendor said. “It speeds up and intensifies the investment in on-demand programming,” said Ian Blaine, CEO of thePlatform, an online video publishing company owned by Comcast. “You want to make sure you're winning in the choice battle, in the accessibility battle.” ThePlatform signed an expanded content distribution deal for multiple platforms with corporate cousin NBCUniversal last month. “We're starting to see more and more video from more and more programmers being put online,” Blaine said. “There’s more confidence from programmers that they can do it and it’s not going to disrupt their systems.”

Some experts say it’s not clear that these content, mobile and personalization moves will be enough to stave off Netflix, YouTube, iTunes, Vudu and the pay-TV industry’s other OTT rivals over the long term. They said it’s unclear if MVPDs can make any money off their evolving multi-screen video services, three years after Time Warner and Comcast announced the first TV Everywhere partnership. “No one seems to be exploring charging more for [multi-screen] access,” Blaine said. He expects multi-screen video to generate higher ad rates eventually, but noted that it will depend on changes in how TV ratings are awarded and commercials are sold.

Verizon’s multi-screen app, Flexview, which enables customers to buy content from the telco once and then view it on up to four devices, is starting to emerge as a revenue generator, Krishnaswamy told the conference. She said that’s especially so now that the telco hands out 32 GB of free cloud storage to subscribers for their personal media. “We didn’t see enough demand” from Flexview initially, she acknowledged. She said that once consumers began to store their own videos, they started visiting the site more often and seeing new titles for purchase. “It became, accidentally, a way for them to discover new content, and we have seen sales increase,” she said. Krishnaswamy also sees strong potential to improve Verizon’s multi-screen video capabilities by adding Web-based ratings to VOD listings and creating content discovery engines that cross platforms.

Pay-TV industry executives don’t believe OTT will try to match comprehensive multichannel packages. They said it wouldn’t make financial sense for either Internet video providers or content providers to strike the same kind of content licensing deals as the programmers have with MVPDs. “Big deals are being struck between content holders and distributors that maintain the [pay-TV] model for the foreseeable future, so that means you won’t see something that replaces it,” Blaine said: A “full-boat” OTT video offering “is not economically feasible for most players."

Experts said OTT video players will increasingly seek to compete by licensing select original or specialty programming and/or channels. “There are just so many ways you can differentiate,” Hurd said. “If you're trying to differentiate yourself as an OTT provider, you almost have to consider doing that. You need a value proposition and you can’t really compete on price.” Blaine expects to see both OTT video players and MVPDs develop and market much smaller, more focused bundles of channels. “I think everyone will explore more nimble, discrete packages,” he said. “That seems like a more natural path.”

Apple is a likely candidate to try a smaller subscription TV package on its own or form a “deep partnership” with a traditional MVPD, Blaine said. Apple had no comment for this story. Blaine noted that Apple’s popular iPad tablet is already changing the way that consumers consume TV programming, offering a way for users to catch up on shows at their own pace. “It lets me watch all of the content that my wife will not,” he joked. IPads are becoming an important companion device for consumers to navigate and interact with their TV sets, he said. “It’s a great steering wheel for the TV.”