January 17, 2017

Live And In Color

President Obama gave his farewell address this week. I streamed it live on my phone directly from Whitehouse.gov and the picture quality was amazing. When you add the fact that we’re talking about an ad-free stream produced by the federal government, the experience was downright shocking. So good, in fact, that it got me thinking about the future of TV.

1. ‘Live’ is No Longer Synonymous with Legacy TV
Legacy TV providers (over-the-air broadcast along with cable, satellite, and telco pay-TV) used to completely own live content. Sure, people have been streaming live webcams for a while now, but most high-quality content found online has been on-demand. SVOD services like Netflix, Amazon, Hulu, and HBO Now are pretty much all void of live content. Big broadcast sports events like the Super Bowl, as well as those Thursday night NFL games this past season, now offer an online alternative, but this still represents a relatively small portion of the overall viewing audience.

Pay-TV providers still rely heavily on the availability of live news and sports content as a key differentiator and a bulwark against cord-cutting. As I was thinking back on the past year, however, I recalled all the events that I personally watched live via broadband video.

In addition to the aforementioned Whitehouse.gov streams, I came to appreciate the news and election coverage streaming continuously (and without authentication) from CBSNews.com. Next, I have to commend the NBA for the continued evolution of its League Pass offering. The selection of games has always been great, but the live streaming experience has improved, as well. I just watched a basketball game last night (via my Apple TV) that was only available on League Pass, and am starting to wonder how I ever lived without it.

The number and quality of live events on YouTube also seemed to really take off this past year, covering everything from Blue Origin rocket launches to Rubi Ibarra Garcia’s 15th birthday party in San Luis Potosi, Mexico. Much closer to home, my parents back in Minnesota started live streaming the services from our church here in Washington whenever their grandsons are singing in choir. They absolutely love it. Like many larger churches, Bellevue Presbyterian now live streams three services every Sunday. Livestream hosts the event online and the audio and picture quality is excellent (even on a large TV). No surprise, then, that the programs regularly attract thousands of viewers.

The bottom line: there still are things worth watching live, but they are no longer only delivered via legacy TV services.

2. Most Legacy TV Content is not Live.
The availability of live content via nontraditional sources, then, presents new challenges for legacy TV providers. That said, I don’t think this is the industry’s most serious problem, not by a long shot. The much larger issue is the emergence of robust on-demand broadband video services, which means legacy TV is increasingly seen principally as a source of live content (though, as discussed, it is no longer the only source).

Hulu’s pending evolution provides a concrete example. In the next few months, Hulu will add live feeds to its core SVOD service, creating a robust broadband pay-TV service. The user experience will be common across all viewers, however, based on a foundation of individual profiles and watch lists with recommended shows. As with DirecTV Now, the traditional grid guide is gone for good. As a result, legacy content will mainly bubble up to the surface of a user’s feed when something live is playing.

This presents another set of problems for many legacy content providers. The dirty little secret of today’s legacy TV offerings is that only a small percentage of what is on is actually live TV. There are exceptions to this, of course. The news channels, for example, should be fine. CNN, Fox News, CNBC, MSNBC, etc. should all do well inside Hulu-like interfaces, because users looking for live news within the app have nowhere else to go. Live sports should also do well because personalized services will quickly learn to alert users when their favorite team is playing. Pseudo-live reality shows like The Voice may also do fine for the same reason. But this still leaves a lot of legacy channels that provide little or no live content, most of which are in real trouble inside these new interfaces for three reasons.

First, the algorithms simply won’t surface it. Even if my profile indicates that I like sit-coms, Hulu is much more likely to start me off with Hulu’s own The Mindy Project (with tons of episodes available on-demand) than it is to push a random linear episode of Kevin Can Wait airing in 20 minutes. So what will get the algorithm’s attention? Truly live feeds. Once my watch list has been stocked with the best on-demand recommendations, along with some truly live alerts, there’s just not room for much else.

Second, linear content is inherently less convenient than on-demand. As to the latter, it is easy (and in some cases almost automatic) to start with episode one and keep track of viewing from there. In many cases, multiple episodes are available and viewers can watch whatever portion of the season they want. Linear shows are a total mess by comparison. If episode four of some unfamiliar show is airing on Wednesday at 8 pm this week, potential viewers have a few options, none of which are great. Obviously, viewers have to wait for the right day and time, which itself is an imposition (a relic of ‘live’ programming). Even if the viewer does stumble in at the top of the hour, watching episode four will automatically spoil the first three episodes (to say nothing of prior seasons). If cloud DVR is available, viewers can try to record it and then go look for the earlier episodes, but that feels like a significant investment (four episodes) for a show the viewer hasn’t even seen yet.

Last, but certainly not least, legacy linear channels remain saddled with advertising. On-demand shows on Hulu’s pay-TV service will likely be ad free. Most content providers will ban ad skipping as a condition of all new cloud DVR deals, so that option will be gone as well.

The bottom line: non-live linear content is increasingly at a disadvantage as TV interfaces evolve and improve. I believe many, if not most, viewers will simply ignore such shows altogether, dividing their time between on-demand shows and genuinely live programming.

Positioning is a funny thing. What seems obvious (and harmless) at the outset may carry serious consequences down the road. Broadband video is not only forcing legacy TV into a ‘live content’ corner, but it will severely diminish the value of non-live legacy shows.

Stick with TDG and stay ahead of the curve.

Joel Espelien is a Senior Advisor for TDG and serves as an advisor and Board Member to the video ecosystem and technology companies. He lives near Seattle, WA.

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