The iTV Doctor Is In! Dis-Integration and Reincarnation

Dear Readers:

It's been a wild and wooly few weeks since we last talked, and the OTT provider segment is getting crowded. It seems that every television network family has either announced their plans, or is waiting for the right time, along with every service provider. And I expect the content producers and studios won't be far behind.

HBO, CBS, Dish, Verizon, YouTube (YouTube?) and now Starz are in the mix. On Halloween, Starz CEO Chris Albrecht made his own trick or treat statement: "There is significant value in paid premium channels that is being constrained by current MVPD bundling. This is a tide that has to turn. I don't think it cannibalizes the existing business. It is a way to innovate and create real value."

I've been moderating a number of panels about OTT this fall, and there are two remaining: The OTT Executive Summit on November 11th ( and my all-time favorite, TVOT NYC on December 9th (

I'm also a mentor for a group of MBA candidates from NYU that are competing at Craig Leddy's Interactive Launch Competition on November 20th

Doctor's note: If you want to really figure out where our business is going, talk to these kids; they've got it nailed!

Try as we may to understand the negotiations and posturing behind all the public announcements, the sands are shifting quickly. Yesterday they said, "NO!" Today they said, "Distribution options are critical to our future." And tomorrow they are likely to say "We're launching in 90 days!!!"

And on the lower floors the marketing folks are apoplectic at the timetable presented. To which top management simply says, "Sorry. Now go make it happen."

That's what we've been focusing on in our panels, and what we'll continue to address: how do we turn our very successful (but very threadbare) business model upside down for one consumer segment (the OTT early adopters) without alienating the current bread-and-butter consumers and distributors?

I've been doing a little bit of pre-interviewing of my upcoming panelists, and some interesting observations are starting to emerge.

1) When you look back at how HBO turned a polite blind eye as their subscribers shared their HBO Go credentials for the last year or so, their recent OTT announcement puts things in perspective. Hasn't the "Free Preview" been a staple of premium television marketing since the business started? "Cordless" millennials shared their parents' HBO Go accounts and got used to the process (and got hooked on the content). HBO CEO Richard Plepler said, "This is a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO." And you could argue that HBO's streaming troubles with the occasional episodes of "True Detective" and "Game of Thrones" were nothing more than technical tests for wide deployment.

2) When we throw off the shackles of legacy content delivery we will establish a completely new relationship with our customers. We will no longer make the assumption that just because viewers watched a specific show, they fit into convenient cubby-holes. Netflix realized early on that viewer interests were based on a wide range of viewing behavior; but Netflix can only see their subscribers' Netflix activity. They are blind to the remainder of television behavior.

3) We have for decades given lip service to being "user-centric." But that is always hamstrung by the underlying business rules and technical limitations. As we rewrite those rules and open up the delivery mechanism, virtually all video content will be available to everybody.


We need a way to embrace and capture (opt-in, of course) everything the viewer consumes if we hope to be able to provide meaningful and satisfying viewing recommendations. We will be dealing with over 100 million user profiles, each with different tastes and buying habits. The revenue potential (subscription and advertising) will, or course, vary according to location, device and other available options.

4) Our legacy business was defined by a stable business environment, anchored (literally) by a subscriber's fixed location. We simply sold what we had to sell. But the consumer turned around and said, "I want to buy what I want to buy!" To that end, we may find some OTT providers acting as "video consignment shops," selling a catalog of content and paying the content owner a portion of each sale. (If you ever needed an argument for content owners to go direct, that's it.) As content owners continue to mine gold by selling their off-network programs to OTT providers (instead of cable networks), we may find those same providers turning into "video second-hand stores" with pricing to match.

5) I am, of course, an unapologetic Cable Guy. It's in my DNA. My synthesis of the cable operator's market position is what I conveyed this year to both global IT monoliths and NYU study sessions: "we own the customer." To that end, I believe the more complex and insane the subscription-TV market becomes, the more likely the established providers will remain on top. As the business dis-integrates with new FCC rules, evolving technology, rampant consumer demand and countless competitors, only the cable guys (and their satellite and telco brethren) will be able to gather up and make sense of the pieces for the "new" subscribers, while maintaining the profitable (albeit shrinking) fixed location subscriber base.

If OTT is the dis-integration of the television industry, it may end up being the reincarnation of cable.

Next time we are going to learn about delivering OTT content when we talk to the good people at Kaltura, who Forbes called "perhaps the most advanced and comprehensive pay OTT solution on the market."

North America