Satellite And Telco Subs Up, Cable Down – What Gives?; Mobile TV Ad Wars

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June 27, 2011 – 12:03 am

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Cable’s Loss, Telco’s Gain

That’s the takeaway from a report by SNL Kagan, which found that cable TV subscribers fell 3.8 percent in the top 15 markets in Q1, while satellite and telco providers saw a boost of roughly that same amount during the period. What gives? The researcher doesn’t say. But a look at where some of the big shifts are occurring, particularly in New York, Los Angeles and other major metro areas, shows that aggressive marketing efforts by Verizon FiOS, AT&T U-Verse, as well as Dish Network, are having an impact.

At the moment, the showing in Q1 doesn’t suggest that cable is dying or anything drastic like that. It shows how comfortable MSOs are in their current margins and how willingly the industry’s satellite and telco rivals are able to offer deep discounts. It won’t last forever, but as the pressure on service levels and the threat of cord-cutting put more pressure on the dominant cable companies, they may eventually have to give in on prices. So far, cable companies are betting on TV Everywhere schemes will keep customers from cutting the cord and going to over-the-top services like Roku, Boxee or Netflix. And telcos aren’t exactly immune to that competition either.

At time of high unemployment and resurgent economic insecurity, too many consumers can’t afford their bills, and that has undercut MSOs and favored telcos’ promotional introductory rates. Telco services are still being rolled out and in the short term, cable companies will be under the gun to match their deals. But neither side can afford to keep up a price war for very long. Read SNL Kagan’s report.

Mobile Ad Battle

Cable companies’ “TV Everywhere” plans, which allows existing subscribers to watch programming on their portable devices (while still at home, of course) has hit a wall with networks like Viacom. The owner of MTV and Comedy Central, is fighting it out with Time Warner Cable and Cablevision not just over licenses, but ad revenue, Mediapost’s Wayne Friedman notes. The problem for Viacom with a MSO running The Daily Show on an iPad means that those tablet eyeballs don’t count for ratings – i.e, advertising dollars.

Aside from the need to keep up with viewers’ demand to watch what they want on all screens, cable operators are looking to the growing mobile video advertising market. “By transmitting the exact same channels on mobile devices, cable operators -- according to their legal folks -- can now sell two to four minutes per hour of mobile ad avails,” Friedman writes. “This is based on the two to four local ad minutes per network that they now get under their deals with the cable programmers.”

Add that up across all popular shows and you’re talking about a significant amount of incremental revenue. So will MSOs and programmers work it out? Not until Nielsen (or some other audience measurement standard-bearer) can truly count consumers across their TVs, iPads, computers and mobile devices. The company is getting there, but it won’t be soon enough for both sides in this dispute.

Google’s Sagacity

Google TV, the company’s over-the-top service, may be finding that its attempts to gain programmer agreements glacially slow. But no company acquires as frequently or as quickly as the search giant, which last week bought Sage TV,  a maker of software that turns computers with TV tuners in to DVRs. Though the two don’t come out and say it, Google’s clearly hopes this will give its over-the-top produce an ability to record shows from broadcast TV.

Meanwhile, new users to Sage TV may find themselves frustrated by the service – at least for the moment. Engadget’s Richard Lawler says that the store links on Sage TV's page have suddenly stopped working. Those who got the software before should still be able to use it.

So how big a deal is this for Google TV? It’s notable, but not necessarily game-changing. Last fall, NBC, ABC, CBS and Fox all blocked Google TV from running their respective shows due to the search giant’s unwillingness to pay steep licensing fees. No impact there from this deal. So does Google TV want to be the next TiVo? Sage TV competitor SnapStream’s Rakesh Agrawal says not a chance (and he’s backed up to some extent by GigaOm’s Janko Roettgers). For one thing, GoogleTV is already designed to work with DVRs. Secondly Google’s main interests, particularly with music, is in the cloud. The acquisition of Sage TV is probably tied to its cloud initiatives in some way. Read Sage TV’s release.

Microsoft’s ITV Ambitions

When Microsoft’s Xbox Live team launched its NUads (natural user-interface ads) product in Cannes last week, the thinking was that this was simply an interactive ad product for video games on the Kinect Platform. But as Mark Kroese, the Xbox Advertising Business Group’s GM, told Digiday’s Mike Shields, the company sees this  as an immediate opportunity to make Xbox Live more attractive to brands by making all its ads more “interactive.”

As Kroese said, “The problem today is that with interactive TV, nobody really interacts with the TV. They use their phone or a tablet. This puts the focus back on TV. We think Kinect and NUads will do for TV what touch screens did for the phone.”

That’s a pretty tall order, even for Microsoft. And while it’s easy to be skeptical of the company’s abilities to do better than say more nimble rivals like Google in the TV ad space – an area where the search giant is hardly as nimble as it is on the PC – Microsoft’s gaming platform is enormously popular with consumers. That strength will encourage advertisers to work with the company, assuming it can present a concrete plan. When asked whether agencies would have to create a unique spot for NUAds, Kroese said nope; they just have to add a call-to-action and voila, the existing ad is rendered interactive. If that is indeed the case, Microsoft may have a potent ad vehicle to sell.

But Wait. There’s More!

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June 27, 2011 – 12:03 am

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