If you know anything about television, you probably know Alan Wolk. He’s currently a senior analyst over at the Diffusion Group, but speaks about the future of television and writes about it regularly. He recently published Over the Top: How the Internet is (Slowly but Surely) Changing the Television Industry, in which covers the changing landscape of television and makes predictions about what disrupt the industry.
If you think you’re an expert on OTTs, following the ad dollars, and have ideas about what SVODs should do, Wolk’s thoughts on industry disruption are informed and worth considering. And since he spends some time defining the acronyms and mapping out who owns you and going through the more technical stuff, like who owns who, and why, and what MVPD means, it’s a good handbook for a rookie, too.
Lost Remote: One of the first things you mention is program guides, comparing Netflix’s interface with the cable guide. But even Amazon and Netflix apps on smart TV’s are a pain to search and browse. Do you think it’s possible the Big Disrupter will be about hardware?
Alan Wolk: I agree that Netflix and, especially, Amazon can be difficult to navigate, though they are both a big improvement over the guide most pay TV operators saddle you with. Of the pay TV operators, Comcast has made good strides with it’s X1 set top box and they’re actually hoping to license it to other MVPDs. That said, I think the future of the program guide is a cloud-based interface that lives as either an on-screen guide or a tablet-based remote. In both instances, you’ll be able to personalize it and it will learn over time. The guide will be portable, so that you can summon it up on any device and it will have links to both second screen activity and t-commerce. This change will be part of a broader change that sees most programming available on demand, thus giving less weight to “what’s live now?”
LR: You predict that maybe we’ll move away from an ad based model. How can that work?
AW: I think we will continue to see a hybrid model. There will be more subscription-based services or the option to buy a subscription for ad-based services that would eliminate the ads. There will also be a big increase in branded content and native advertising. Both those options have worked well in other mediums and so the audience is open to them, but they won’t fully replace interruptive advertising altogether.
Traditional interruptive advertising will still be around, but we’ll see a lot less of it and it will be much better targeted due to the amount of data available about individual users. Networks will be able to sell ads for higher prices since they’ll only be seen by very targeted audiences, thus reducing the overall ad load and the need for 4-minute ad blocks. Dynamic Ad Insertion—technology that allows for the insertion of an ad based on the time, location, device and prior viewing and purchasing habits of the user—will also help to keep traditional advertising from disappearing altogether.
That said, I think the :30 commercial is a relic from an earlier era when people had time to listen to a thirty second sales pitch from a brand. In today’s world. that seems like an awfully big ask, no matter how entertaining the ad is. Today’s consumer just doesn’t have time for long ad messages until they do— if they’re interested in buying a product, they’ll spend a lot of time researching it, but otherwise a two- or four-minute ad pod is a lot to expect them to sit-through.
LR: You cite a Piksel study that shows only 18 percent of young people watch a show live, but live events and reality competition shows always top the Nielsen Social ratings. Over 16 million tuned in for Fox’s finale of Empire this spring. Are we sure appointment viewing is dead?
AW: Appointment viewing is very much alive for the types of shows you mention, but they are few and far between. Awards shows, news, sports and the occasional season premier will be can’t-miss live events ,but everything else will be on demand and people will watch when and where they want. For most users, not being tied to a specific schedule is a huge plus and they wind up watching more TV as a result, as they can fit it around their own schedules. Also, that 18 percent stat was for their “favorite shows”— there is a big gap in how users watch shows they are passionate about and how they view ones they are “meh” about.
LR: You talk about the TV revolution, but sometimes it feels like it’s taking too long. Publishing and music execs didn’t accept the Internet and that didn’t work out. Why will TV be any different?
AW:The TV industry will change very slowly because right now they are still making money hand over fist. Maybe profits aren’t growing the way they used to, maybe cord cutting is up a quarter of a percent, but there’s no immediate danger of implosion the way there was with music and publishing. There’s also no replacement—most of Netflix content consists of reruns of network TV shows.
But more important: if you want to publish a news website all you need is some software. If you want to publish music, all you need are some instruments and people who can play them. But if you want to make a TV show, all you need is a million dollars in production budget… for starters. It’s a lot more complex with a lot more moving pieces.
Right now Nielsen is what’s holding everything up. Ad revenue depends on the number of viewers a show has. Nielsen doesn’t count OTT views (yet— they keep promising to) and so no one is doubling down on TV Everywhere because the networks don’t make money if no one counts those views. Nielsen is supposed to launch their OTT viewer tracker later this year/early 2016, and when it does, we will see a lot more activity around TV Everywhere.
Another reason the MVPDs can hold up change is that they own the internet. Or the connection to it, anyway. So if you cut one cord (TV) you still have the other (broadband) and it’s easy for them to block any newcomers by upping the rate for broadband without pay TV. That situation—and it’s a monopoly in much of the country, a duopoly elsewhere) is a huge factor in why the TV industry won’t change as rapidly or as dramatically as publishing and music.
Finally, there’s the whole intricate system of rights and who owns what when and for how long. The complete lack of understanding so many people have—including people who are now writing about the industry—was one of the reasons I wrote the book. TV is a complicated business and that makes change happen slowly as key parts are locked up under long-term contracts and thus can’t change.
LR: What’s your personal set up at home, how do you watch? You talk about watching Lost on your iPhone way back when in the book.
AW: I am a big fan of Roku and actually own three of them, one for each TV. I own an Apple TV, an Amazon Fire TV and a Chromecast but don’t feel much love for any of them. And while I don’t watch Lost on my iPhone in bed anymore, I do watch a decent amount of TV on my iPad that way. The den may be about two dozen steps away, but I like lying in bed with my iPad, headphones in, catching up on series like “Peaky Blinders” from Netflix or “Mr. Robot” off my DVR. In addition to having the FIOS titanium package (HBO and Showtime) I also subscribe to Hulu, Netflix and Amazon, and generally use the latter to rent the latest movies to stream at home.