[opendtv] Re: Spectrum is too valuable

From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
To: opendtv@xxxxxxxxxxxxx
Date: Thu, 26 Nov 2015 09:03:57 -0500

On Nov 25, 2015, at 9:02 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:

Yes, Craig, and of course, that's always been my answer to you. "The
Internet" is ready for "the masses" moving to TV streaming pretty much as
soon as people are likely to buy the necessary equipment.

Here's an interesting report. I would have thought the numbers would be
higher...

http://www.streamingmedia.com/Articles/News/Online-Video-News/One-Fifth-of-U.S.-Broadband-Homes-Have-Set-Top-Boxes-Says-TDG-105899.aspx

One-Fifth of U.S. Broadband Homes Have Set-Top Boxes, Says TDG

(In a separate report, Parks Associates finds that Roku boxes have the
biggest share of sales, and are used more than the competitors.)

Set-top boxes, such as Roku and Apple TV, are now in 21 percent of U.S.
broadband-enabled homes (16 percent have one set-top box, while 5 percent
have multiple), reports TDG. In early 2014, only 13 percent of homes had a
set-top box.

The devices are most popular with adults between the ages of 25 and 44, where
they have a 29 percent penetration. Set-top boxes are less popular with
younger adults (18- to 24-year-olds) who are more likely to stream online
video through a game console. The data comes from The In-Home CE and Home
Networking Ecosystem, 2015, a 44-page report created by TDG.

Coincidentally, Parks Associates has also released set-top box data today,
finding that Amazon, Apple, Google, and Roku together make up 86 percent of
all set-top boxes sold in the U.S. in 2014. Roku is the king, selling 34
percent of all boxes. Google is next with 23 percent, Amazon is third, and
Apple is fourth.

How often do people use those devices once they get them home? Parks says
that Roku boxes account for 37 percent of all usage, followed by Google
Chromecast (19 percent), Apple TV (17 percent), and Amazon Fire devices (14
percent).

In its report, The Streaming Media Device Landscape, Parks predicts that 86
million streaming devices will sell around the world in 2019. Both reports
are available for purchase.

The report does not tell us how many people stream through smart TVs, game
consoles, or PCs connected to TVs, or those who just watch TV on PCs, Laptops
and tablets. So the actual percentage. Is probably much higher.

So this raises the real question:

Why is the shift to OTT streaming slower than Bert would like?

Something like 90% of U.S. homes now have access to 25/3 broadband from one or
more ISP services, but only 29% were taking the service at the end of 2013.
Bert has both Verizon and Cox available, but is still using the slower telco
DSL service. The latest FCC broadband reports gives two reasons for the slower
uptake of 25/3. Either the families don't want/care about broadband, or they
cannot afford it.

So there must be other reasons that are limiting the uptake of OTT services.

I think Ron nailed it: many people are satisfied with their MVPD service, even
if they believe it is overpriced. And to be fair to Bert, he chalks it up to a
country filled with Luddites, who either don't know better, or don't care.

My take is that the service(s) that will cause a large shift to Internet
delivery do not exist yet. Sling is a step in the right direction, but it lacks
many important networks that people want. Sony is a little better, but it is
only available in a handful of cities, and lacks ESPN.

The main obstacle would be edge server capacity, not last mile bandwidth. At
least, in urban and suburban areas.

Perhaps. I think the major OTT players are nearly there. But the capacity
needed for all the linear networks in the MVPD bundles is just starting to be
built out.

In playing with several of the TV Everywhere Apps, I am seeing the next user
interface to TV start to fall into place. Bert notes that there is not much
difference between the .com network websites, and these Apps. I agree.

The key components are the ability to access the live linear stream(s), the
ability to promote popular shows, and the ability to search program archives.
The legacy program guide approach of a spreadsheet with time on one axis and
channels on the other axis, with programs in each "cell" is being replaced by
the ability to search for the program you want.

The programs may be available on demand, or may be available in the future.
If scheduled in the future you could request a copy to be downloaded, or the
app could send you a reminder just before it airs live. What would need to be
stored in edge servers?
1. The linear programs scheduled for that day; these could be accessed on
demand in addition to streaming at a preset time for the Luddites.
2. Popular recent shows for those who prefer to time shift or are just catching
up.
3. And popular library content.

Most library content would be stored at regional hubs, as is the case now with
Netflix, iTunes, etc.

Desperate attempt at walling up the Internet. Not very popular.

Not desperate at all. But yes, it is a very logical step toward making content
available online.

What is different about CBS All Access, and what I just described above?

It is a separate subscription versus being part of a MVPD bundle.

I could add that not all content from the live linear CBS network is available,
and no live content is available in many markets, but that's a different
discussion.

The basic structure is the same. So the issue becomes one of buying each
network App ala carte (e.g. CBS All Access), or buying a bundle of networks
(e.g. Sling).

As for popularity, the jury is still out. TV Everywhere is still growing, but
the growth rate may be slowing. The following article provides some decent
stats, and blames the authentication process for the slowdown in growth.

http://www.multichannel.com/news/content/tv-everywhere-viewing-growth-slows-adobe/393491

Clearly the authentication process needs to be improved if you pay a MVPD for a
bundle, then want to access individual TVE Apps in that bundle. Even Netflix
suffers from the sharing of authentication credentials. But authentication can
be automated, and made more secure for the content owners, to prevent the
sharing problems.

At the moment I think the content owners, MVPDs, and SVOD services are putting
up with sharing as it helps people get used to this new delivery paradigm. Many
people (the Luddites), however, are still "programmed" to sit in front of the
TV and surf with their remote.

Which bundles, over a neutral Internet, would have to compete among OTT
sites. Unlike in the old days, when they were pretty much identical across
MVPDs, because they physically could not compete.

The most popular OTT sites, like Netflix, are still bundles behind pay walls.
About half of all U.S. Homes already subscribe to a MVPD bundle AND Netflix.

Sometime soon - perhaps next year - we will see really competitive MVPD bundles
offered OTT, probably using the App user interface I described above.

So all we are talking about is more stores selling the same content, perhaps
with more user customization/choice.

OTT streaming creates cord shavers and cord cutters, and therefore has a
bigger impact than you claim.

Not really. Most of the cutting and shaving is based on economics, not
competition from OTT services. Viewing behavior is changing however...

Some of us are just watching less TV.

But not in the way the majority want to consume those bits. Once the medium
is capable of delivering two-way service, any broadcast content *not*
consumed by 100% of users becomes wasted bandwidth. In this interim period,
1/3 of households that consume TV content on demand are using a tiny fraction
of this huge broadcast bandwidth, to record on legacy PVRs (which they rent
by the month). And the remaining 2/3 of on demand users are only taking up
the spectrum they actually need. The huge amount of broadcast spectrum
entering their homes is completely wasted, in their PON.

It's not wasted if everyone is getting what they want.

And more than that, the 47% who still watch linear, out of habit or inability
to figure out better options, are also only using a tiny sliver of that huge
broadcast capacity. This is the reality, once the medium in question has
become two-way.

Again, so what? The reality is that everyone is getting what they are paying
for. I am not having problems watching OTT services, which I am doing more
frequently these days thanks to the Watch ESPN App and Netflix.

Same applies to wireless, but most people can understand the waste in that
case, without need to belabor the point. Once you have invested in creating
two-way service over a chunk of RF spectrum, e.g. LTE cellular, it becomes
foolish to dedicate 80% of the LTE plant to broadcast. If there's some
particularly popular content, you might dedicate maybe 1% of the capacity to
broadcast, and only for the duration of that content.

Agreed for cellular services.

Same applies to cable. The broadcast remains out of momentum, and fear of
letting go of the old walled-in model from 35 years ago. It's not capacity
well used, anymore.

Disagree. The capacity is being used very well - revenues have never been
higher. Everyone is getting what they want, and a bunch of stuff they don't
watch. That's the real problem, paying for stuff I don't want.

Not only is the capacity being used well, it is being used to create new
businesses. Broadband (with huge growth serving businesses), VOIP, Home
Security, and soon, wireless VOIP via the hundreds of thousands of WiFi hot
spots the cable industry is deploying.

It is possible that one or more of the network .com sites started
streaming programs with FLASH before 2008, but I cannot confirm
this.

Some used Windows Media rather than Flash. IIRC, CBS used Windows Media when
I started using this service, and ABC used Flash. And initially, ABC's Flash
content did not go full screen.

Still waiting for some proof that the broadcast networks were streaming any
shows using any technology in 2005 or 2006.

Regards
Craig

References:
- [opendtv] Re: Spectrum is too valuable
  - From: Manfredi, Albert E

[opendtv] Re: Spectrum is too valuable

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