To TV or not TV
Some company named Aereo in the US lost a court battle over tech that basically gave away the data that major TV content providers were putting out over the air. Live TV.
Honestly though, there are actually 2 reasons the companies are pissed off. Firstly, this breaks a component of their revenue model. It basically proves that the subscription fees you're paying are just highway robbery. The infrastructure already exists or else the devices wouldn't work. So your fees aren't paying for that. And probably the biggest problem is metadata. They need/want to know how many people are watching a show, because the bulk of their money actually comes from ad revenue.
People getting the stations for free should increase the number of viewers for advertising. But they have no means of justifying the numbers back to the people who pay for the ad spots. That is probably the true heart of the concern.
I've long felt that the internet + video streaming should be considered the ultimate ad cash cow. And I'm BLOWN AWAY that TV networks haven't picked up on this yet. iTunes saw the potential to capitalize on the internet craze (though a little behind the curve IMO) and the tradition music industry companies suffered.
Sure, some companies offer recent shows online. But they're doing it all wrong. Their interfaces are clunky, seemingly to drive you back into the warm embrace of your cable box. They don't make you log-in. They release shows delayed online. Many stop hosting seasons or individual episodes after a certain timeframe. Shows are still held back by traditional airing models (1 new episode per night/week/etc...).
All of this is "legacy thinking" and it is this legacy thinking which is being crushed by start ups like Aereo and long timers like Netflix. One thing I've noticed with Canadian networks is the ads in online viewings are generic. It seems like the same 2-3 ads all the time with no thought to target audience for the show. If I'm paying you to show my ads, that feels like a waste. Even regular TV is better. Advertisers are armed with demographics about what types of people generally watch what types of shows and at what times, and they are able to use this to more wisely spend their ad budget.
Until you're doing the same sorts of things with internet streamed video, you're not going to get a lot of people pumping ad revenue there. You don't even have parity with traditional TV otherwise even though the exact same thinking works perfectly well there.
But, they could go even further. They could require you to sign-up to watch online TV. Now they can collect data like geographical information, age, sex, etc... and now all of a sudden you don't have to rely on broad generalizations of who watches a show to target ads, you have much more specific and granular data. This would be worth money to advertisers. They could now say "I'll pay you $X to stream 500k instance of this ad to 16-20 year old females in Ontario".
And then comes the glorious cash cow; Metadata. If they login you can track what that user is currently watching or has watched. From that advertisers may be able to make some guesses about your interests or whether or not they should spend their advertising money targeting you at all. For instance, I run a dance related charity hosting an upcoming event, and I've found that people between the ages of 19-34 are most likely to attend. I can probably assume that people who are actively watching or have watched whole seasons of shows like So You Think You Can Dance and America Idol are more likely to be sympathetic to my cause. Now I can use a combination of their personal interests and things inferred from viewing habits to refine even further when I ask for my ads to be aired. Or I might able to say that those that watch a particular show or genre are almost never attend such events, so I can pay extra to ensure it isn't shown to people watching those shows.
But wait. There's more! If I watch cable, it is through a single account. There may be many people watching on the same cable account which muddies the quality of the metadata. With online services you're much more likely that the bulk of the viewing done is by a single viewer rather than a family. Which means even the "weaker" demographic data is going to be generally much more accurate.
NOW you have data that makes your online advertising more valuable and impactful than TV viewing. And I'm not sure about you, but the "live" nature of a cable feed promotes people to walk away during commercials. The stream isn't going to stop, so you have to choose the time least valuable to you to walk away which tends of course to be during commercials. When I watch videos online, the feed stops when the episode I'm watching ends. So, I tend to sit through commercials rather than walk away during them. If that holds true for most people, then that also intrinsically raises the value of commercials in online streaming.
Also, on demand services, in theory, should raise total viewers at any given time if you have a decent content catalogue. If I'm only interested in certain TV shows, I'll only be watching TV when those shows are on. If I've bought into the online model, and you have shows I want to watch, I can watch them at any time. I may even be able to watch shows I "couldn't" on live TV because they were in a timeslot that conflicted with something I was more interested in. Those factors should lead to more people to show ads too more often.
Next, only keeping videos hosted online for a limited time makes me feel like online hosting in general is perfectly legal. When you take the shows down, I simply go somewhere else (probably illegal) to find the show, and your ad revenue dries up. Or I find it on a service like Netflix, and not only do you lose advertising but now I'm directly paying someone else. Services need to maintain titles for at least very extended periods of time (measure in years). This also counters the last point. As you remove shows, it is less likely I'll come to your site and you in turn lose viewers to show ads too.
And finally is the traditional airing model. People don't like waiting for episodes. If you abandon the live TV model, there is no longer just a fixed number of slots to air shows in. Netflix has shown that people WILL get on board with a show where an entire season is released all at once. This also has one amazing benefit over the traditional model. With traditional TV, if the show begins airing before the season is complete, then there are some number of episodes which need to be written and recorded within a fixed timeframe. There are also a fixed number of episodes required in general. This leads hastily written scripts and "filler" episodes. Waiting until the season is complete and releasing all at once removes those hurdles. From a consumer perspective you're generally guaranteed a higher quality product.
Further, services like Netflix have shown that people ARE willing to pay a nominal fee for these services when done well enough.
But the funny part was this... the article I was reading on it mentioned the incumbents striking back by offering their own online services for $20-30. The problems? The price and medium. Live TV is less convenient. And it only existed because of constraints in legacy tech. This doesn't compete with on demand services like Netflix and Hulu.
$20-30 for live TV access? That is FAR worse than a model like Netflix. You are locked to a limited content catalogue from selected channels. Netflix offers me years of content spanning all genres for $8 a month. Even when the price hike to $15 takes effect for me, it will still be worthwhile. Amusingly, for me, around the $20-30 is where the calibre and volume of content REALLY start to matter. I'd be willing to pay that much on subscription, but only for a service like Netflix but with more premium content. This is not what they are offering.
I feel like I'm watching the train wreck that was the music industry happening all over again. Like record companies trying to jack CD prices in the face of piracy, the TV industry is trying harder than ever to drive people to their cable boxes, or trying to "bribe" them away from their very good $8/month Netflix subscription in favor of a poor $20-30 cable experience. The very notion here is insane. Who seriously thinks this model will work? Get on board while you still can. The market can be profitable.
Honestly though, there are actually 2 reasons the companies are pissed off. Firstly, this breaks a component of their revenue model. It basically proves that the subscription fees you're paying are just highway robbery. The infrastructure already exists or else the devices wouldn't work. So your fees aren't paying for that. And probably the biggest problem is metadata. They need/want to know how many people are watching a show, because the bulk of their money actually comes from ad revenue.
People getting the stations for free should increase the number of viewers for advertising. But they have no means of justifying the numbers back to the people who pay for the ad spots. That is probably the true heart of the concern.
I've long felt that the internet + video streaming should be considered the ultimate ad cash cow. And I'm BLOWN AWAY that TV networks haven't picked up on this yet. iTunes saw the potential to capitalize on the internet craze (though a little behind the curve IMO) and the tradition music industry companies suffered.
Sure, some companies offer recent shows online. But they're doing it all wrong. Their interfaces are clunky, seemingly to drive you back into the warm embrace of your cable box. They don't make you log-in. They release shows delayed online. Many stop hosting seasons or individual episodes after a certain timeframe. Shows are still held back by traditional airing models (1 new episode per night/week/etc...).
All of this is "legacy thinking" and it is this legacy thinking which is being crushed by start ups like Aereo and long timers like Netflix. One thing I've noticed with Canadian networks is the ads in online viewings are generic. It seems like the same 2-3 ads all the time with no thought to target audience for the show. If I'm paying you to show my ads, that feels like a waste. Even regular TV is better. Advertisers are armed with demographics about what types of people generally watch what types of shows and at what times, and they are able to use this to more wisely spend their ad budget.
Until you're doing the same sorts of things with internet streamed video, you're not going to get a lot of people pumping ad revenue there. You don't even have parity with traditional TV otherwise even though the exact same thinking works perfectly well there.
But, they could go even further. They could require you to sign-up to watch online TV. Now they can collect data like geographical information, age, sex, etc... and now all of a sudden you don't have to rely on broad generalizations of who watches a show to target ads, you have much more specific and granular data. This would be worth money to advertisers. They could now say "I'll pay you $X to stream 500k instance of this ad to 16-20 year old females in Ontario".
And then comes the glorious cash cow; Metadata. If they login you can track what that user is currently watching or has watched. From that advertisers may be able to make some guesses about your interests or whether or not they should spend their advertising money targeting you at all. For instance, I run a dance related charity hosting an upcoming event, and I've found that people between the ages of 19-34 are most likely to attend. I can probably assume that people who are actively watching or have watched whole seasons of shows like So You Think You Can Dance and America Idol are more likely to be sympathetic to my cause. Now I can use a combination of their personal interests and things inferred from viewing habits to refine even further when I ask for my ads to be aired. Or I might able to say that those that watch a particular show or genre are almost never attend such events, so I can pay extra to ensure it isn't shown to people watching those shows.
But wait. There's more! If I watch cable, it is through a single account. There may be many people watching on the same cable account which muddies the quality of the metadata. With online services you're much more likely that the bulk of the viewing done is by a single viewer rather than a family. Which means even the "weaker" demographic data is going to be generally much more accurate.
NOW you have data that makes your online advertising more valuable and impactful than TV viewing. And I'm not sure about you, but the "live" nature of a cable feed promotes people to walk away during commercials. The stream isn't going to stop, so you have to choose the time least valuable to you to walk away which tends of course to be during commercials. When I watch videos online, the feed stops when the episode I'm watching ends. So, I tend to sit through commercials rather than walk away during them. If that holds true for most people, then that also intrinsically raises the value of commercials in online streaming.
Also, on demand services, in theory, should raise total viewers at any given time if you have a decent content catalogue. If I'm only interested in certain TV shows, I'll only be watching TV when those shows are on. If I've bought into the online model, and you have shows I want to watch, I can watch them at any time. I may even be able to watch shows I "couldn't" on live TV because they were in a timeslot that conflicted with something I was more interested in. Those factors should lead to more people to show ads too more often.
Next, only keeping videos hosted online for a limited time makes me feel like online hosting in general is perfectly legal. When you take the shows down, I simply go somewhere else (probably illegal) to find the show, and your ad revenue dries up. Or I find it on a service like Netflix, and not only do you lose advertising but now I'm directly paying someone else. Services need to maintain titles for at least very extended periods of time (measure in years). This also counters the last point. As you remove shows, it is less likely I'll come to your site and you in turn lose viewers to show ads too.
And finally is the traditional airing model. People don't like waiting for episodes. If you abandon the live TV model, there is no longer just a fixed number of slots to air shows in. Netflix has shown that people WILL get on board with a show where an entire season is released all at once. This also has one amazing benefit over the traditional model. With traditional TV, if the show begins airing before the season is complete, then there are some number of episodes which need to be written and recorded within a fixed timeframe. There are also a fixed number of episodes required in general. This leads hastily written scripts and "filler" episodes. Waiting until the season is complete and releasing all at once removes those hurdles. From a consumer perspective you're generally guaranteed a higher quality product.
Further, services like Netflix have shown that people ARE willing to pay a nominal fee for these services when done well enough.
But the funny part was this... the article I was reading on it mentioned the incumbents striking back by offering their own online services for $20-30. The problems? The price and medium. Live TV is less convenient. And it only existed because of constraints in legacy tech. This doesn't compete with on demand services like Netflix and Hulu.
$20-30 for live TV access? That is FAR worse than a model like Netflix. You are locked to a limited content catalogue from selected channels. Netflix offers me years of content spanning all genres for $8 a month. Even when the price hike to $15 takes effect for me, it will still be worthwhile. Amusingly, for me, around the $20-30 is where the calibre and volume of content REALLY start to matter. I'd be willing to pay that much on subscription, but only for a service like Netflix but with more premium content. This is not what they are offering.
I feel like I'm watching the train wreck that was the music industry happening all over again. Like record companies trying to jack CD prices in the face of piracy, the TV industry is trying harder than ever to drive people to their cable boxes, or trying to "bribe" them away from their very good $8/month Netflix subscription in favor of a poor $20-30 cable experience. The very notion here is insane. Who seriously thinks this model will work? Get on board while you still can. The market can be profitable.
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