MVPDs Need to Get Ready To Play as Virtual MVPDs

Fred Dawson, Editor, ScreenPlays Magazine

Fred Dawson, Editor, ScreenPlays Magazine

April 9, 2012 – If, as seems likely, we’re about to see the emergence of the virtual MVPD, incumbent MVPDs may want to consider what needs to be done to lead rather than be victimized by this truly disruptive development.
By virtual MVPD (multichannel video programming distributor), a term one hears popping up in conversations of late, we mean a premium TV distributor that goes over the top to achieve national if not global reach, breaking the territorial boundaries that have always defined the cable business. The purpose here isn’t to argue whether major programmers will break with the traditional model to support the virtual MVPD model; that discussion is played out in our page 1 story in this issue and in myriad conferences, blogs and press reports across the ecosystem.

Rather, the point here is, assuming the virtual MVPD is inevitable, there are steps MSOs and telcos can take before the damn breaks to differentiate themselves and build audiences for nascent versions of what will become virtual MVPD offerings. Notwithstanding the deep pockets of potential competitors like Google and Microsoft, nobody is better positioned to get a head start in this space than the incumbent MVPDs, given their longstanding relationships with programmers and strong bases of support within their current operating territories,

But to do so means these players will have to stop thinking defensively and get out of the box of strategizing about OTT streaming services as a necessary evil they have to engage in to dilute the competitive impact of Netflix and all the Netflix wannabes. What’s needed is an all-out commitment to this space as the leading edge of the broadband TV business to come, which means defining what the virtual MVPD offering looks like as a replacement to today’s channelized subscription packages.

There’s plenty of first-run content to work with to begin to fashion such a paradigm, including high-profile branded content from the leading cable networks. As Disney ESPN’s senior director of digital video distribution Eric Goldstein notes in our lead story, Disney’s programming outlets are awash in content they can’t get on air, no matter how many channels they win in their package deals with MVPDs.

So it has become a game of windows shifting to make sure first run content showing up online is parsed out according to whether or not the viewer is an authenticated subscriber. Or, as Goldstein puts it, “[T]he bandwidth and resource constraints make us smarter about what goes where.”

And then there is the growing abundance of great movies never to be seen in a cineplex near you as well as original long-form and short-form made-for-Web serial programming of every conceivable description. Movies, especially, afford distributors an opportunity to get high-quality first-run content into the broadband TV space, given the abysmal state of theatrical distribution in this country.

One of the keys to creating broadband TV services that deliver a differentiating experience compared to the OTT offerings now in play is smart spending on exclusive content distribution deals. This entails buying rights to really good content already in the production mill from established TV and motion picture producers as well as funding the growing ranks of independent producers, many of them big-name professionals like CSI’s Anthony Zeiker, who are eager to gain financial traction in this new space.

Along with spending on programming, the virtual MVPD must also spend on quality of experience to make sure viewers accessing content on every device from smartphones and tablets to big flat-panel connected TVs are not disappointed. With video-optimized advances now on offer from CDN operators, this is doable and represents another differentiating opportunity, given the sorry QoE that comes with much of today’s OTT offerings.

By starting now to create the new boundary-free broadband TV service that taps the advanced navigation and personalization capabilities of IP-based IPGs to deliver a distinctive lineup of high-quality first-run as well as delayed-window programming, today’s MVPDs can position themselves for a fast break out of the gate when the game changes. And they can do this without violating the non-compete pact with their MVPD brethren, given the early stage is just a better way of doing the current version of OTT.

In fact, as it becomes ever more apparent that the game will change, the leading MVPDs can start working in the background to cut deals with smaller MVPDs so that, when virtual MVPD operations go mainstream, those players can become the local outlets for the new broadband TV service without having to create that service themselves. In all cases, by virtue of their hold on the local subscriber bases, MVPDs can build the protections they’ll need from an onslaught of competitors by getting ahead of the virtual MVPD pack.