Burst of Activity Underscores Inevitability of Broadband TV

Lowell McAdam, chairman & CEO, Verizon Communications

Lowell McAdam, chairman & CEO, Verizon Communications

Deals in Play Open Floodgates to Live TV Access on MVPD Apps Outside the Home

By Fred Dawson

March 5, 2014 – The shift to ubiquitous availability of live TV content on connected devices has reached flood tide with significant expansions in channel lineups for out-of-home access on MVPD apps and strong indications that broadband-only pay TV subscriptions may soon be in play.

Right now incoherency reigns supreme. Over the past year individual programmers have flooded the market with self-branded apps which authenticated subscribers of pay TV providers who hold rights to those apps can use to access live content on connected devices wherever they are. At the same time, subscribers in some markets have been able to download MVPD apps that give them access to the lion’s share of the live channel lineup inside the home but to far fewer channels away from home.

Now new deals are opening the out-of-home live streaming spigot on MVPD apps, although the lineups are still restricted to less than half the channels that can be accessed inside the home, with great variations from one MVPD to the next. And with consummation of a deal according Dish Network rights to offer Disney outlets as part of a potential broadband pay TV subscription service and another such deal reportedly in the works between Disney and DirecTV, the possibility of wide-open OTT competition among MVPDs on a national basis is looking more certain.

In November Comcast took the lead on the out-of-home front with rollout of its Xfinity TV Go app, which made 35 channels accessible to authenticated Android and iOS devices over Wi-Fi and Verizon LTE connections. In February AT&T raised its live channel U-verse app count for out-of-home access to 44 from the 20 first announced in October. And other MVPDs have been expanding their live out-of-home channel counts as well.

Comcast boasts a high-value lineup on the Xfinity Go TV app that includes various Disney Channels, several ESPN channels, Fox News and Sports, NBC Sports, CNN, CNBC, MSNBC, National Geographic and others. AT&T, which, unlike Comcast, includes premium channels from Showtime, Starz and The Movie Channel with its U-verse app, has some of the same channels as Comcast but is missing the ESPN channels, NBC Sports, CNN, CNBC, MSNBC and National Geographic.

A very different set of channels is offered out of home on Time Warner Cable’s TWC TV app, including Scripps Networks’ Travel Channel, HGTV, Food Network, DIY and the Cooking Channel. TWC has increased the count from 16 at year’s end to 37, according to a recent report in USA Today.

Meanwhile, with its Disney deal, DISH has broken new ground as the first MVPD to secure rights for delivering high-value content as part of a broadband-only subscription that would include linear and on-demand content from ABC broadcast stations, ABC Family, Disney Channel, ESPN and ESPN2. No such service has been announced, and it remains unclear what, if any restrictions will be applied as to who can and who can’t get access to the Disney content through such a service.

Following close on the heels of the DISH announcement, DirecTV made known it has similar aspirations as it negotiates Internet rights with Disney as part of a renewal of its licensing agreement with the programmer, which expires in December. “The deal and terms are not unexpected as the DISH contract was the most recent in the Disney timeline to expire,” DirecTV spokesman Darris Gringeri told Reuters. “The DirecTV contract is up next and we’re in the process of working with Disney on a similar long-term agreement of our own.”

With such deals in play, it’s no wonder that expanding the out-of-home live channel streaming lineup, starting with authenticated subscribers, has become a top priority for MVPDs. One that looks to be an especially aggressive player is Verizon, which currently offers just 25 FiOS TV channels for out-of-home access.

Discussing the situation at a Morgan Stanley conference in early March, Verizon chairman and CEO Lowell McAdam made clear the company is pulling out all the stops in negotiations with programmers following its purchase of the Intel OnCue platform, which provides the means, in McAdams’ words, to deliver content seamlessly “across the tablet and the smartphone and the PC and the TV set.”

McAdam said he hoped to have 110 channels available for on-the-go access by authenticated FiOS TV subscribers by year’s end. He also affirmed the company hopes to make its pay TV service available on an over-the-top subscription basis to people anywhere, either as an LTE mobile option or via any broadband connection.

Another CEO stressing the importance of a ubiquitously available TVE service is Charter’s Tom Rutledge. During an earnings call in November that coincided with Charter’s launch of a 100-channel in-home TVE service, Rutledge said the company is negotiating hard to break free of the in-home restriction. “There are no technical constraints on where the signal can go,” Rutledge said. “The only thing that constrains it from a technical perspective is the contracts that you enter into with content providers.”

Clearly, the scattershot approach that affords out-of-home access via separate programmers’ apps while allowing bundled access on MVPD apps inside the home has not been a winning combination. TVE usage is low, as reflected in reports issued over the past year by Parks Associates, Gfk and Altman Vilandrie & Co., among others, none of which found that more than 30 percent of pay TV subscribers with access to MVPDs’ TVE services had ever used them. Parks put the number at 16 percent, and Atman Vilandrie found that a third of subscribers with such services available don’t even believe they have such access.

But such surveys indicate strong demand for TVE, suggesting the problem lies with the way the service has been offered. For example, in a report released in June cable network Pivot said that well over half of the 18-34 year olds who are broadband-only subscribers would consider subscribing to a bundle of TV channels if they could access the content at any time from any device. And 89 percent of pay TV subscribers in the 18-49 age bracket who are leaning toward cord cutting would be more inclined to keep their subscriptions if they had access to pay TV on connected devices, Pivot said.

Significantly, Atman Vilandrie found that 82 percent of consumers of all ages prefer a single TVE app over separate apps for each channel. Yet, according to the GtK study, there’s much higher awareness of TVE apps offered by individual programmers than is the base with MVPD TVE apps, by a margin of 64 percent to 52 percent.

Apparently the programmers are getting the message, notwithstanding their reluctance to negotiate rights without some kind of payback beyond the basic licensing agreements. Even broadcast TV stations are moving into MVPD apps, although there remains an in-home access limit even on the part of stations that have launched their own apps allowing authenticated MVPD subscribers to gain access on the go.

For example, TWC’s app now supports in-home subscriber access to some 50 local stations in the Los Angeles and San Diego markets. Meanwhile, subscribers who take the trouble to download Disney’s Watch ABC app in that market can watch the broadcast programming from K-ABC Los Angeles wherever they can link to a Wi-Fi hotspot.

Other broadcasters are following Disney, which now has Watch ABC available in all eight of its owned-and-operated station markets and in some affiliate markets as well. The Associated Press in December reported that NBC is about to offer local TV programming for viewing on apps in major markets.

And there appears to be a big shoe soon to drop from CBS, which last year invested in Syncbak, As previously reported, Syncbak supplies technology that allows all people, not just pay TV subscribers, who are in reach of a station’s over-the-air signal to watch the programming online while preventing access by anyone outside the signal footprint.