Weekly Digest from the West
Jean-Baptiste Piron
Cultural Attaché I Attaché culturel I Québec Office Los Angeles
-Facebook, Apple, and Google Will Hasten the Next Era of TV: Not long ago, everyone saw Hollywood and Silicon Valley as opposites. Hollywood was cool, artistic, and uniquely adept at entertaining viewers. Silicon Valley was the preserve of geeky engineers who could captivate the public with gadgetry, but had no clue how to hit the human notes that made for blockbusters. If you still buy those stereotypes, the news that Apple, Google, and Facebook are all going to make multi-billion-dollar investments in producing scripted video entertainment seems ludicrous—a folly launched by frustrated nerd-dom. But a simple glance at the list of the world’s most valuable corporations puts the lie to that impression. The money has spoken: These three tech companies—along with a fourth, Amazon, which has already successfully cracked the code of producing original entertainment—are among the richest entities on Earth. Meanwhile, another Silicon Valley company, Netflix, has overcome similar mockeries to become one of the most successful entertainment producers on the planet. The rush into scripted video by tech giants is going to accelerate an evolution of entertainment that’s already underway. We’re already moving away from the idea that drama is a 60-minute exercise with four bathroom breaks. Internet-centric companies have already begun changing the rules with binge-watching, flexible running times, fewer commercials, and crowd-sourced content. The brainpower—and just plain power—of the most valued tech firms will change things even more. We will see the death of the kind of television programming that’s essentially been around since the 1950s: sitcoms, anthology dramas, general interest newsmagazines, and variety shows (whoops, already dead). Don’t be fooled that right now the numbers for broadcast television still top even the most popular offerings of HBO and Netflix. Their rigid formulas—with plotlines ebbing and flowing to accommodate infuriating commercial interruptions, adhering to standards based on minimizing offensiveness—have made them the walking dead. Already the idea of “watching television” seems like an antediluvian pursuit.
https://www.wired.com/story/facebook-apple-and-google-will-hasten-the-next-era-of-tv
-Google and Walmart are partnering on voice shopping in a challenge to Amazon’s Alexa: Google and Walmart have entered into a partnership to make hundreds of thousands of Walmart products available to purchase through the Google Home voice-controlled speaker, the tech giant’s answer to the Amazon Echo, the companies told Recode on Tuesday. Owners of the Google Home gadget will be able to order one item at a time from Walmart completely by voice, or add multiples items to an online shopping cart for larger orders, and complete the purchase via the Google Home app later on. Google first introduced voice shopping to Google Home earlier this year with partner retailers like Costco, Walgreens and PetSmart in a bid to offer commerce functionality like Amazon’s Alexa voice service already did. In late September, Walmart will join those retailers in the program as well as on the Google Express shopping marketplace, which started out as a same-day delivery service in a handful of markets but has since expanded to include more traditional shipping speeds from partner retailers so that the service could cover the entire contiguous U.S.
-Why Selling OTT Bundles Should Be The MVPDs Next Move: Heard the one about the guy who cut the cord, only to find out that his new bill was even bigger than his old one? It’s a pretty common story, one that’s been making the rounds this past week in light of Disney’s decision to roll out two new OTT apps. It’s also a great business opportunity for the nation’s MVPDs, who can start bundling the various standalone apps and/or combining them with their new virtual services. MVPDs make their money off of broadband, not pay TV. MVPDs greatest profits come from mark-ups on broadband service. There are some fixed costs involved in maintaining and occasionally upgrading their service, but most of what users are paying is pure profit. Compare that to TV, where carriage fees and retrans fees eat up a good deal of the profit. In many ways their pay TV service is a come on, a way to get consumers to sign up for their triple play service (broadband, TV and landline telephone.) That’s why you see all those “Get three months of HBO free when you sign up now!” offers. So given that pay-TV is really just an add on, it would make sense for the Comcasts and Verizons to start offering bundles of OTT services as one of their many options. They could create bundles for users who wanted to supplement their existing subscriptions, giving them both a discount on Netflix-Amazon-Hulu as well as the ever popular “pay one bill” option. They could have OTT bundles that were part of their new virtual services (almost every major MVPD either has, or has announced plans to introduce a virtual “skinny bundle” service.) So that someone could get 25 broadcast and cable channels, plus Netflix and HBO Now, all from the same provider, all on the aforementioned single bill.
-YouTube TV paying $35.72 per subscriber in programming for $35-a-month service, analyst says: upplying further testimony that the current virtual MVPD market is very, very volatile, nScreenMedia analyst Colin Dixon took at look at YouTube TV economics and determined the new virtual service is losing quite a bit of money. By Dixon’s tally, YouTube is paying about $35.72 for each $35 YouTube TV subscription in content cost alone. For his analysis, Dixon priced the 48 channels in YouTube TV’s basic tier based on 2014 data from SNL Kagan. He then settled on 35% premium to reflect average current-day content-licensing price increases. The analyst also referenced What You Pay for Sports for current licensing costs for sports networks. Based on his formula, Dixon concluded that the 48 networks combined priced out to $33.97. “However, YouTube is likely paying more than big operators like Comcast,” Dixon concluded. Bob Iger, Disney’s CEO, mentioned that the license fees he sees from vMVPDs like YouTube TV are slightly higher than for regular operators. For his part, NBCUniversal CEO Steve Burke made largely the same assertion. How much more YouTube TV paying for channels “is anyone’s guess,” the analyst conceded, “but even a 5% premium means YouTube is” paying more in license fees than it is receiving in subscriptions. Adding a 5% premium to $33.97 renders a tally of $35.72. The fact that a video giant like YouTube has entered the pay-TV market with a loss-leader product is, of course, of significant concern to cable companies and other linear pay-TV operators, who are also under pressure to market skinny bundles at low monthly prices.
-(Podcast) Keith Valory: Plex’s CEO On The Evolution of Media and Content: https://www.upnextpodcast.com/episode-55/