Tag Archives: video

Account sharing is a $7 billion problem for online video platforms, but only if they want it to be

by Steve Blum • ,

Elmer fudd

Californians who are fortunate enough to have fast, reliable broadband service can occupy their locked down, sheltered-in-place hours by watching a seemingly infinite selection of online video content. Some of it is free, but the good stuff usually requires a subscription to one of the many over-the-top streaming platforms. For most of those, all you need is a user name and password to log in and start watching.

Which creates a problem. It’s easy to loan your account info to family and friends, and hard to say no. According to a study by Parks Associates, such “credential sharing” cost U.S. video platform operators $6.6 billion.

The basic question about account sharing is whether an OTT platform thinks it’s selling a subscription to a stream, or a license to use the stream to a particular person or household. If it’s about the stream, then there’s a technical solution: only allow one stream to be used by a particular account at any one time (or however many streams that the platform chooses to sell).

If it’s a personal or household license, then it gets trickier. This is not a new problem. Software developers have been trying to restrict copying and reuse since the days of Fortran. And they’ve also profited from it. Illegally copied or not, the more users of a particular application, the more market share, and eventually some, if not most, of those illicit users will convert to paying customers. “SneakerNet” disk sharing 30 years ago is one of the reasons Excel and other Microsoft Office products have a dominant share today.

It can work the same way for streaming platforms, but they have another advantage, in that they have a real time, two way connection with the subscriber, or whoever is accessing a stream at the moment. That gives them the ability to implement conditional access solutions, similar to what DirecTv or DISH use but probably more effective and less costly.

But still more trouble than what they’re doing now. That raises the cost – in dollars and bandwidth – and decreases convenience, which impacts operations, the selling proposition and subscriber retention. But it’s part of the game. We went through this same transition in the satellite industry in the 1980s and came out just fine, once we accepted that we had to do it.

Telcos struggle as subscribers dump legacy video and copper subscriptions

by Steve Blum • , , , ,

San benito pole route 13apr2019

It’s been a bad couple of weeks for big wireline telcos. Frontier Communications’ bankruptcy led the parade of dismal news. In a filing with the Securities and Exchange Commission made a couple weeks ahead of going into bankruptcy, Frontier pinned the blame for its problems on its legacy copper business and the less-than-lucrative rural customers who depend on it. But that was no surprise.

AT&T’s and Verizon’s troubles weren’t exactly a shock, either. Some business lines, like video and copper-based broadband service, have been fading for some time. The covid–19 emergency accelerated that trend. In the first three months of 2020, AT&T lost 897,000 video subscribers and nearly 300,000 DSL customers. Even though its broadband business added 209,000 fiber subs, it still saw a net loss of 73,000 broadband accounts overall. Verizon lost 84,000 FiOS video subs, while gaining 59,000 fiber broadband customers.

AT&T gained wireless subscribers in the first quarter, while Verizon lost some, blaming the store closures forced by the covid–19 lockdown. The real numbers to watch, though, will be the results of the now big three mobile operators in the second quarter. By July, we’ll know if the shift to in-home mobile network-enabled hotspots is significant.

Both companies “withdrew financial guidance”, which means they’re not willing to make any predictions about how shareholders will fare over the next few months.

AT&T’s captain is jumping ship. In a move that’s been long expected, CEO Randall Stephenson will hand off to COO John Stankey in July. Stankey has been working for AT&T for 35 years. He’s been running Warner Media since AT&T took it over, and is in charge of launching HBO Max, which is a streaming video service that’s supposed to compete with the likes of Netflix and Disney. That would be difficult for any executive, but for someone with no history and no apparent friends in the entertainment business, and who spends a lot of time talking about things like “headcount rationalization” – AKA firing people – it would be a miracle.

Frontier’s slow video streaming platform is too fast for most of its California copper customers

by Steve Blum • , , , ,

Outer limits intro

Fewer than half of Frontier Communications’ legacy copper, i.e. DSL-only, homes in California can watch more than one high definition stream at a time on its chosen video streaming platform, Philo. More than a quarter can’t even watch one HD stream, and 14% will get jerky, low quality video, if they can get anything at all. That’s my conclusion after crunching Frontier’s most recent (as of 31 December 2018) broadband availability figures, and comparing them to Philo’s bandwidth requirements and the actual performance estimates used by other streaming services.

The first clue that Frontier is trying to dumb down customer expectations instead of providing modern broadband speeds is that Philo doesn’t offer 4K quality video, which is the 2020 consumer video standard. Philo’s service is limited to 1950s standard definition (SD) and 1990s high definition (HD) video formats. Philo’s website provides a helpful guide to the bandwidth needed to watch those streams…

13 Mbps – Recommended for reliable HD streaming, even with multiple streams or other devices using the same network.

7 Mbps – Stream one HD video. If multiple devices are streaming or using the network at the same time, there may be buffering issues.

3 Mbps – Stream SD quality video.

Under 3 Mbps – Video quality is reduced. Philo may load slowly or rebuffer.

Frontier, like other Internet service providers, advertises its broadband speeds as “up to” a particular level. Netflix discounts advertised speeds when advising its customers. It recommends they subscribe to a service advertised at 25 Mbps download speeds in order to watch 4K video, which streams at 15 Mbps. Applying that Netflix discount to Philo’s recommendations for its lower quality service results in:

  • 22 Mbps – multiple HD streams.
  • 12 Mbps – single HD stream.
  • 5 Mbps – SD stream.
  • Less than 5 Mbps – SD streams will be slow and jerky.

Frontier reports it advertises either 1 Mbps, 6 Mbps, 12 Mbps or 25 Mbps download speeds to the 1.3 million housing units in California it serves with DSL-only broadband service. It also claims to provide fiber to the home (FTTH) service to 1.6 million Californian homes at 100 Mbps download speeds. And there’s a significant number of homes that are in Frontier’s telco monopoly territory that can’t get any kind of broadband service from Frontier. The analysis below just looks at the homes that can get Frontier service via DSL, but not FTTH:

Frontier philo video service by county 31dec2018 data

Siskiyou and Tehama counties lose out completely on family style, high definition video viewing – 12 Mbps is the best it can deliver via DSL there. More than a quarter – 26% – of Frontier’s Tuolumne County DSL homes can’t watch Philo video at all or, if they can, it’s poorer quality than the original mass market television standard that was set more than 60 years ago.

Streaming video hurts cable, but it’s killing AT&T

by Steve Blum • , , , ,

Elmer fudd

The traditional, linear subscription TV business is in a nose dive. In the fourth quarter of 2019, AT&T shed 945,000 subscribers, mostly from DirecTv but also from its legacy Uverse service and its new AT&T TV platform. Add in the 219,000 subscribers who dumped its AT&T TV Now streaming service, and more than million customers walked away from AT&T’s video products.

Comcast and Charter lost TV subscribers, too. But for both companies, they each lost fewer subs over the 12 months of 2019 than AT&T lost in the last three. And both gained broadband subscribers and market share, as consumers move to higher speed service that better meets their needs than slow, DSL-based offerings from AT&T and Frontier Communications.

Like the need to watch streaming video.

Google figured out how to solve the linear TV problem. They’re not going to offer the service any more…

Google Fiber will no longer offer a linear TV product to new customers. For our current TV customers, we know you have come to rely on Google Fiber TV and we will continue to provide you with traditional TV service. And we’ll be happy to help everyone explore other options to get their favorite programming the way TV is watched now — over the Internet, with the virtually unlimited choice and control online viewing provides.

AT&T is pinning its hopes on the new HBO Max streaming service it plans to launch in May, for $15 per month. It’s beginning to look like a product that will make or break the company. With AT&T’s spending on video assets, like Time Warner, climbing and its video revenue in a nose dive, it’s betting its future on its ability to produce the same kind of instant success that Disney had with its new streaming service launch last year.

California’s marquee industries are two halves of the same brain

by Steve Blum • , , ,

Egghead

Disney and Apple launched online video services this month, with both companies falling short of perfection. It’s interesting to compare the two platforms, dubbed Disney+ and Apple+. One is the brain child of an entertainment giant struggling with technology, the other was created by a tech giant struggling with content.

When Disney+ went live last week, demand outstripped capacity and users were locked out. Apple+, on the other hand, had no such problems. Its programming could be seen by anyone interested enough to log in. Unfortunately, the content offered has not excited anyone. It was reckoned workman-like, at a moment when Apple needed blockbuster pizzazz to break out of the over-the-top pack.

Disney’s server problem was solved in hours, if not minutes. By now, I doubt many people remember it. Fixing technical issues is a left brain, linear process. Apple, on the other hand, has to contend with a chaotic, right brain challenge. You don’t create world class content by assigning more engineers and spinning up more servers. So now there’s talk of former HBO chief Richard Plepler doing a deal with Apple – he has a proven track record. That’s no guarantee in the entertainment business, but it’s the way to bet.

Silicon Valley and Hollywood have a lot more in common than people realise. In both ends of California it’s about finding executives who can manage very talented, highly mobile people who can create marvels out of thin air. A track record of success, even if liberally sprinkled with failures, will attract investors in Los Angeles and San Francisco alike. Both cities are magnets for risk-tolerant capital, outrageous concepts and creative talent. The difference is that in Silicon Valley fortune seekers of modest gifts end up in cubicles making a hundred grand or two a year, while in Hollywood they’re waiting on tables.

For now, anyway.

Mobile video viewing outruns desktops, is network capacity the next casualty?

by Steve Blum • , , ,

Brightcove 2q2019 global video index

Demand for mobile bandwidth continues to boom, as mobile devices overtake desktop computers as the streaming video device of choice for the first time, according to a study by Brightcove, a maker of online video tools and platform services which also makes a habit of tracking such things.

Their Global Video Index for the second quarter of 2019 shows that more than half of global video viewing they can monitor is done on a smartphone (mostly) or tablet (not so much). A year ago, that honor belonged to desktops. Brightcove doesn’t specifically place laptop computers in either category, but since they are specific about what they consider to be mobile – tablets and phones – a fair assumption is that they belong to the desktop universe.

Mobile networks are carrying a growing slice of an ever bigger pie, according to the report…

Worldwide mobile traffic nearly doubled during 2018, and mobile video traffic is forecast to increase at a [compound annual growth rate] of 34% through 2024. That’s really not too surprising, as mobile video has been a significant driver of the video ecosystem since the iPad debuted in 2010…

Over the past 12 months, video views on phones and tablets have overtaken desktop views among Brightcove’s media customers globally, making up 53% of all video views compared to 47% for desktop computers.

Mobile phone share increased to 45.4% from 38.5% a year ago, an increase of 18% Y/Y. Tablet share was, essentially, flat at 7.5% from 7.9% a year ago. Overall video views for tablets and phones were up nearly 62% for the 12-month period.

The company is counting on new 5G services to carry this increasing load. It’s not a revelation – that’s the reason that mobile carriers are pushing policy makers – federal, state and local – to clear the road for their planned deployments. It’s also a reminder that 5G is first and foremost about keeping pace with the growth in mobile traffic of all kinds, and particularly video. Carriers have to run as hard and fast as they can just to keep up with demand from the customers and applications they support now. Innovations such as self driving cars and the Internet of things can follow, but only after they take care of their core business.

Apple TV’s so so content depends on ecosystem integration for success

by Steve Blum • , ,

Apple tv keynote aniston witherspoon 25mar2019

Apple unveiled a new subscription video service last week. If it were any other company except Apple making the announcement, there would have been a huge yawn from the market. The Apple TV service, at least what we know of it, isn’t significantly different from other over-the-top services. They’re borrowing business model bits from several different platforms and putting the pieces together a little differently and, but overall it looks very familiar.

Apple will have exclusive programming, as the big OTT players do, and that will help it position its video brand as it has for HBO and Netflix, but it’s just icing on the same cake as everyone else’s.

What makes it different is the Apple branding, and Apple’s ability to leverage its existing customer relationships and its hardware/software ecosystem. It’s a fair question whether that’s going to be enough to make it stand out in the TV business, but it’s a unique advantage and Apple is smart to use it like this. The future growth of the company will have to come from services. Apple’s hardware and software lines aren’t hurting, but the market is maturing and whatever growth comes its way will be incremental.

The move into video by Apple – and others – and is a lot like the early days of digital satellite TV in the mid–90s. There was some programming that was unique to particular platforms – such as DirecTv’s NFL package – but for the most part programming line-ups were identical. What distinguished them was 1. bundling – DISH, for example, focused on low-cost packages – and 2. distribution – DirecTv and U.S. Satellite Broadcasting (my company) were launched via RCA’s then-formidable consumer electronics retail channel.

Apple brings customer relationships and system (and revenue) integration to the table. Netflix, Roku, Hulu and the rest built subscriber bases, but do not play in the consumer technology space. The question is whether Apple’s advantages amount to a unique selling proposition that’s meaningful to consumers. If Apple TV creates the same kind of seamless user experience that iPhones and Macs deliver – seamless technically, operationally and transactionally – then it has a shot. If it can’t, it’ll be just another OTT service.

Video will drive the U.S. mobile market in 2018

by Steve Blum • , ,

Consumer electronics is collapsing into a two-product industry – smart phones and big screen televisions – and the balance is tipping towards phones. The end of network neutrality will accelerate the shift, as the big four U.S. mobile carriers use their control over network traffic and service pricing to sell more content and capture more viewing time.

The big beneficiary is AT&T. Its DirecTv Now over-the-top platform just passed the million subscriber mark. The Federal Communication Commission’s decision scrapping net neutrality rules allows AT&T to exempt DirecTv from data caps – zero rate it – while subjecting everything else you watch to monthly limits and hefty overage charges. Combined with its national footprint, the access to content its market share gives it puts it in the lead position among video companies trying to manage the transition away from traditional linear television service.

Verizon, T-Mobile and, to a lesser degree, Sprint also have in-house mobile video services, although none with the content buying power of DirecTv. Expect innovative, competitive tactics from them in 2018. But read the fine print carefully: discounts offered on video content could be balanced by higher and effectively hidden charges on other services, such as simple broadband access.

On the network side, all four major U.S. mobile carriers were in land rush mode in 2017, as they tried to lock down access to poles and other property that they need to densify their networks and meet the rapidly increasing demand for mobile bandwidth that’s primarily driven by video traffic.

In 2018, they’ll begin to deploy the first 5G systems, although those will just be for fixed wireless service. It’ll be at least three years before there is enough mobile infrastructure and consumer devices to make a real difference in the early, high revenue potential urban area that will be first on the list. For most Californians, reliable 5G mobile service is five to ten years away and some will never see it at all.

Big cable, telcos bleed TV subs, but monopoly broadband pricing could be the cure

by Steve Blum • , , ,

It’s been a bad year for the traditional television subscription business. An analysis by Daniel Frankel in Fierce Cable shows that it’s not quite as awful as stock analysts expected, but it’s close and awful enough…

As earnings season has approached in each quarter of 2017, analysts have predicted the watershed moment where linear pay TV losses surpass 1 million customers.

The market came close in the always-volatile second quarter, losing 976,000 subscribers…

The top 10 publicly traded operators, which account for about 95% of the market, reported losses of around 398,000 video customers in the third quarter. Discounting gains made by virtual MVPDs DirecTV Now and Sling TV, these operators lost around 820,000 traditional pay TV users.

Factoring in the pay TV business’ record-breaking first-quarter subscriber losses of 762,000, the industry has lost around 2.5 million linear customers through the first three quarters of 2017.

Among the big players, the big losers were DISH Networks and Altice USA. Both lost about 1% of their traditional linear video subscribers in the third quarter of 2017. Aside from Cox, which is privately held and doesn’t publish its key subscriber metrics, the rest hovered around a half-percent loss – AT&T/DirecTv and Verizon just below that mark; Comcast and Charter just above it.

On the other hand, AT&T/DirecTv and DISH saw big gains in their over-the-top video services. AT&T reported a gain of 296,000 DirecTv Now subscribers and DISH is estimated to have added 113,000 Sling TV subs, according to the Fierce Cable story.

Cord cutting is changing the video game, although it’s too soon to start talking about the death of the linear TV subscription business model. The seven biggest operators still have close to 90 million subs. Taking a weighted average of the five companies that report revenue per subscriber (Verizon and Cox don’t), they’re getting about $123 per month per customer. That’s a total of $11 billion every month.

The trend is bad, though. The 2.5 million TV subscribers lost this year represent about $300 million a month in revenue. There will be pressure to replace it, and the first place to look is on the broadband side of the ledger. That’ll be tough for DISH, since it’s still a pure satellite play, but the rest sell – and price – broadband on a monopoly/duopoly basis. As TV viewing shifts to Internet-based services, consumer tolerance for higher broadband subscription prices will increase.

You can bet AT&T, Verizon, Comcast, Charter, Cox and Altice will test that tolerance, right up to the breaking point.

Google Fiber gives up on video, and maybe fiber too

by Steve Blum • , , ,

Google Fiber is throwing in towel on video service. In a blog post, the company announced that it won’t be offering a cable-like lineup of television channels along with gigabit Internet service in Louisville and San Antonio…

We’re trying something new in our next two Fiber cities. When we begin serving customers in Louisville and San Antonio, we’ll focus on providing superfast Internet – and the endless content possibilities that creates – without the traditional TV add on.

If you’ve been reading the business news lately, you know that more and more people are moving away from traditional methods of viewing television content. Customers today want to control what, where, when, and how they get content. They want to do it their way, and we want to help them.

Two years ago, a top Google Fiber executive, Milo Medin, said “if you don’t offer a good TV service your ability to compete with incumbents that bundle Internet and TV together is significantly impaired”.

So, what changed? A couple of things.

It’s certainly true that the availability of unbundled video content available directly via the Internet has grown considerably in the past two years, and there’s no sign of it slowing down. Declaring linear video subscriptions to be a legacy business and letting cable and satellite companies wrestle over its (slowly) dwindling remains simplifies Google Fiber’s operations and business model, and eliminates a lot of headaches. That alone could be a good trade for the potential subscribers they might lose as a result.

But something else changed, too. In the past two years, Google Fiber has become, in effect, Google Fiber and Wireless. Technically, it’s easy to add a hundred or two TV channels to a fiber-based service, but impossible on a terrestrial wireless system that has orders of magnitude less total bandwidth available. Google’s announcement should also be treated as another indicator that in the future the company is going to be even more selective about where it builds fiber to the home infrastructure. If it even installs any more fiber at all.