In June 2014, the US Supreme Court ruled that cloud-hosted video streaming platform Aereo had breached copyright in the way it ‘acquired’ content, and the service was forced to shut down three days later. While the tech-savvy consumer might have felt aggrieved to see the dissolution of a highly innovative and forward thinking content service, the ruling came at the defence of the multi-billion-dollar television industry that is determined to avoid the catastrophe that engulfed the music industry 10 years ago.
So what does this mean for entrepreneurs and how can they learn from it?
Netflix is the biggest video on demand service in the world. It has more paying subscribers than the largest US pay TV providers; 28 million globally of which 24 million are in the US. It has changed the way studios think about content distribution, and how consumers access content on connected devices.
But all is not rosy under the hood at Netflix… Their role in the value chain is to realise a margin between content supply/delivery and consumer purchase. But in doing so, Netflix is hostage to the commitment of their suppliers and there are now big questions over the long term cost dynamics that could undermine their retail model.
I seem to repeat the same discussion with every media executive I meet – I argue that connected TV is going to fundamentally change the way we watch TV, but the response, usually from those with a few more grey hairs than me, is to argue that consumers want a “lean-back” experience and that’s exactly what they’ve got with linear broadcast TV. I don’t disagree with this argument – I think linear TV is a great product and will prevail long into the future – but to couch it in an argument of “linear vs. on demand” is too narrow in today’s market.
Here’s my rebuttal: I agree that most people don’t want to be leaning forward to select the next programme as the last one finishes, like selecting individual tracks from a music library. My argument is that linear itself is going to change, and that is what’s going to drive our shift in viewing behaviour. Let me explain…
Day 2, The 7th Annual European Spectrum Management Conference, Brussels
My post yesterday focused on the weight of political and regulatory support at a European level for the reallocation of the 700MHz band to mobile, which might suggest the WRC 2015 debate is practically a “done deal”. So what now for the broadcast and mobile industries?
During the second day of the European Spectrum Management Conference in Brussels, I spoke to representatives from the ITU, European Commission, RSPG and Broadcast Networks Europe and I was struck by the lack of coordination between the mobile and television communities when debating spectrum issues. To their credit, the mobile industry has already done a lot of thinking on the 700MHz opportunity, but neither the Commission nor the ITU tried to suggest that the broadcast community has yet been properly consulted. Broadcasters on the other hand have been slow to react to the WRC’12 announcement, and they are now short on time to form a consensus view ahead of the fast approaching July meeting of the Joint Task Group.
We desperately need a balanced debate participated in by both the mobile and broadcast communities before decisions are taken that inadvertently harm the future of either industry. We are impacting the future of two important industries to the European economy and these issues should not be taken lightly.
I’d like to ask some fundamental questions:
- Have we fully understood the the future network capacity requirements of both the mobile and broadcast sectors?
- Have we thought through the full range of available options to increase network capacity before defaulting to radio spectrum?
- Is it possible for mobile and broadcast to co-exist in the UHF band?
Day 1, The 7th Annual European Spectrum Management Conference, Brussels
Radio spectrum is the life blood of a wide range of industries competing for access, and the debate between mobile and terrestrial TV has been particularly fierce. The announcement at the World Radio Conference 2012 (WRC) that the 700MHz band is to be allocated to mobile from 2015 has caught many European broadcasters off guard. The removal of 700MHz from broadcasting, equivalent to one third of terrestrial SD channels, threatens the future of a terrestrial platform that for many countries has been the driver of their content and advertising industries, delivering significant economic and cultural value and the mechanism of choice to achieve key public policy objectives.
But the mobile industry’s thirst for new spectrum is unrelenting, driven by unprecedented consumer demand for mobile data services. The European Commission has set a target of identifying 1200MHz of new spectrum for mobile by 2015. The sub-1 GHz bands currently allocated to TV offer attractive technical properties that operators argue will deliver a better quality of service for consumers at significantly lower cost. It is also clear that mobile is a major source of future innovation across many industries, including content, and it would be wrong to inadvertently stifle these opportunities.
So should 700MHz go to mobile? Although no decision will officially be made until WRC 2015, presentations made yesterday during the first day of the European Spectrum Management Conference points to an overwhelming weight of support at a European level forcing through approval.
Referencing Chairman of Dish Network, Charlie Ergen’s interview with the Wall Street Journal. Read it here.
Dish Network has come under severe pressure since it launched the Auto Hop feature in May this year. But is Charlie Ergen right when he says,
“The new ad-skipping feature that has infuriated major broadcast TV networks is a “competitively necessary” response to the explosion of cheap Internet video”
Broadcasters have always been the key marketing engines of TV content, defining the programme choices we make and dictating the schedule by which we watch them. Connected TV begins to challenge these traditions, placing greater emphasis on programme rather than channel brands and opening the door for software players to take a more sophisticated data-driven approach to marketing and personalisation. The mechanisms by which consumers discover content is changing.