CommenTerry

The Premium Movie Channel Paradigm Could Soon Face Extinction

The article sent shockwaves throughout Wall Street, as the stock prices for both TiVo and Netflix shot up. In September of 2004, a Newsweek article reported that TiVo and Netflix might be getting together to produce a true form of video-on-demand (VOD). Then in 2005, a Netflix official fueled this speculation by dropping hints about a potential joint venture. TiVo, the original and premier provider of digital video recorders (DVRs) in the U.S., would eventually provide instantaneous online access to the entire DVD library (currently more than 80,000 films) of Netflix, the nation’s number one mail order video rental service. This would be accomplished via a broadband internet connection to specially equipped TiVo DVRs.

Although Netflix has recently begun offering a limited number of streaming movies to its rent-by-mail customers, its proposed joint venture with TiVo has yet to become a reality. However, if and when it does, it could also spell the beginning of the end for premium movie services like HBO, Showtime, and Starz.

First, let’s put all of this into perspective with a little history of the premium services. Home Box Office (HBO) was the first premium service, debuting in 1975. It was one of the first channels beamed from a satellite and carried by cable operators across the country. As its popularity grew in the late 1970’s, several other premium services like Showtime, Cinemax, The Movie Channel, as well as some lesser known premium services came into existence. The industry started consolidating in the early 1980’s as HBO bought Cinemax, Showtime bought The Movie Channel, and those lesser known services went belly-up. In the early 1990’s, the Starz-Encore networks debuted to compete with the HBO and Showtime networks.

During the mid-1990’s, as satellite services such as Directv and Dish Network debuted, the premium services began offering “multiplexed” channels, i.e., multiple channels of HBO, Showtime, Cinemax, The Movie Channel, and Starz-Encore for the price of one. Unfortunately, the number of movie choices didn’t increase. Those services just began to air their same libraries of movies at different times on their various multiplexed channels. There are hundreds of movies at local video stores that have never played (and will never play) on the premium channels while there are a comparatively small number of others that have played on these channels thousands of times. That has always been the major weakness of the premium services. Multiplexing did not fix this problem.

Several market tests of VOD were conducted during the 1980’s and the early 1990’s but, because the technology was rather primitive, it did not catch on with consumers. By the late 1990’s, it finally seemed ready and lots of promises were made about the brave new world of VOD. The cable companies were talking about veritable online video stores, which were going to put Blockbuster, et al, out of business. Unfortunately, the reality of VOD has never lived up to its hype. The stuff the cable companies are currently passing off as VOD is nothing more than a glorified version of pay-per-view or a DVR. For the most part, their VOD offerings aren’t any different from the stuff currently playing on the premium channels and/or on pay-per-view. This is what I call “faux VOD.” How lame!

Fortunately, the landscape is changing and a new era of genuine VOD is about to be ushered in. PC-based broadband VOD services like Cinemanow (www.cinemanow.com) and Movielink (www.movielink.com) have been up and running for several years and are broadening their offerings all the time.

Also, Internet Protocol Television (IPTV) platforms, offering hundreds of television channels via a broadband internet connection to a TV set-top box, has been available for several years. One of the major features of these services is advanced VOD technology. Microsoft has developed its own version of IPTV technology. See Microsoft’s website (www.microsolft.com/tv) for details.

Not to be outdone, several smaller companies also plan to compete in the broadband-to-TV market. Akimbo Systems (www.akimbo.com) debuted its service in the fall of 2004 and is currently in the process of expanding its scope and offerings. Similar ventures such as DAVETV (www.dave.tv) and Brightcove (www.brightcove.com) have entered the market as well. All of these companies plan to offer almost unlimited amounts of movies, TV shows, sports, specialty programming, and international programs via a set-top box interface between a broadband connection and a TV set. This programming will be culled from the vast internet universe and made available for TV viewing.

If nothing else, all of these developments should compel cable companies to offer a much more competitive form of VOD. Comcast, one of the leading cable providers and a partner with Sony in its recent purchase of the MGM movie library, has rolled out its advanced VOD platform. The other cable companies have had no choice but to follow suit.

Meanwhile, the premium services have still been slogging along. The premium channel paradigm has long outlived its original usefulness and has only been able to hang around because of the lack of a good VOD system thus far. The only thing really going for the premiums right now is their award-winning original programming; including series’ like The Sopranos, Dead Like Me, and Six Feet Under. Perhaps the premium services could morph into original-programming-only services in order to survive. However, they’d have to seriously increase the number of series’ (and the number of episodes of each) they produce.

Perhaps they could also carry longer and/or alternative versions of programs already aired on broadcast television and basic cable. In addition, they would have to find a way to lower their subscription rates. I’m not sure all of that would be feasible. One thing I do know for sure is that people would not continue to subscribe to the premium channels for their movie content once they could conveniently pull up virtually any movie or TV show they wanted, any time they wanted.

Good Riddance to Mobster Television

HBO's mobster family drama The Sopranos has now entered its final season. I say good riddance! I have never understood the popularity of that show. How can any decent person empathize with so-called "protagonists" who specialize in maiming and killing? What does it say about our society when we root for TV characters whose modus operandi is intimidation? In real life, people like that are the lowest of the low, in my opinion.

I'm very disappointed with NBC Nightly News anchor Brian Williams for hosting a segment dedicated to that disgusting mob show at end of one of his newscasts a couple of weeks ago. Why does he of all people want to glorify such trash? It find it quite interesting and ironic that we'll wink at the murder and mayhem portrayed on TV and in movies but would never tolerate flippant depictions of lesser offenses like drunk driving, sexual harassment, or verbal abuse (not that any of those things constitute acceptable behavior either).

By the way, I'll try to catch the final episode, but only if I suspect that Tony Soprano and company will all be killed in a police shootout.

The 20 Most Annoying TV Personalities

Television seems to be getting more annoying all the time. That's because, more and more, TV airtime is being filled with annoying people. Here is my list of the 20 most annoying TV personalities, in reverse order (with #1 being the most annoying):

20. Katie Couric

19. Mary Hart

18. Keith Olbermann

17. Oprah Winfrey

16. Montel Williams

15. Shaun Hannity

14. Stephen Colbert

13. Anderson Cooper

12. Nancy Grace

11. Glenn Beck

10. John Stewart

9. Jane Velez-Mitchell

8. Chris Hansen

7. Ellen DeGeneres

6. Maury Povich

5. Jerry Springer

4. Bill O'Reilly

3. Whoppi Goldberg

2. Rosie O'Donnell

and finally ...

1. Dr. Phil

Bill Gates is Partially Right about TV

In a recent column, Phillip Swann takes Bill Gates to task for saying that TV is terrible and that consumers will reject it in favor of Internet-based video within the next five years. Swann argues that TV is not bad at all and counters Gates' argument by saying that high definition television (HDTV) technology has improved and will continue to improve the quality of TV. He says consumers want HDTV and this will therefore insure that they stick with TV for many years to come, before considering a conversion to Internet-based video. He adds that Gates is obviously out of touch with the average consumer.

As much as I hate to admit it, I find myself partially agreeing with Bill Gates. TV is indeed terrible. It seems to me that anyone would have to be as blind as a bat to not see that. It's so obvious. I personally know very few people who would disagree with that point of view. Perhaps Swann, not Bill Gates, is the one who is out of touch with the average consumer. HDTV is fine, but crummy TV in HDTV is still crummy TV. The high cost of HDTV is not the only thing that's holding it back right now. I am one of the many people who don't think it will be worth the money until the quality of the programming improves. When it comes to TV, content is king, in my opinion.

Unfortunately, Swann is probably right and Gates is probably wrong about his prediction that Internet video will revolutionize TV as we know it within five years. That would be too good to be true. My guess is that we will be stuck with the garbage offered by the networks and cable channels for many years into the future. By the time Internet video does take over, it will be too late for those of my generation. But perhaps this is a blessing in disguise, as there are far more constructive and rewarding things I can do with my time. Besides, when I do feel the need to sit in front of my TV and watch something, there's always Netflix.

What HDTV?

If there's an overwhelming desire on the part of the American public for high definition television (HDTV), I'm not seeing it yet. It seems that most people are perfectly satisfied with standard definition (SD) TV sets, so long as they get high quality versions of them at reasonable prices.

A case in point was what happened at a local Wal-Mart during Thanksgiving weekend. That store was selling 20-inch flat screen analog TVs for $69 each. When its doors opened Friday morning, a stampede nearly ensued. People were knocking each other over to get those cheap TVs. I'm sure this scene was repeated at Wal-Mart stores throughout the country. Thus far, I haven't seen a comparable mad dash for the HDTV goodies. So much for HDTV -- just yet at least.

Why I'm Bearish on Satellite TV

Satellite TV providers might be in danger of eventually being squeezed into oblivion by the cable and phone companies. Rupert Murdoch, whose News Corp. owns a 38.5% interest in Directv, recently referred to it as a "turd bird," a term that needs no explanation. Murdoch is apparently seeking to unload his company's interest in that satellite operator, after eagerly buying into it several years ago. I don't know about his reasons for such a negative attitude toward Directv, but I would like to briefly discuss some reasons why I feel that way about satellite TV in general. I believe that, in the near future, satellite TV providers will not compare favorably to cable and phone companies when it comes to video-on-demand (VOD), high-definition TV (HDTV), broadband Internet, and voice over Internet protocol (VoIP).

VOD requires two-way communication, which seems to work better over cables and wires than via satellite. Right now, Directv and Dish Network don't do it very well, or at least not as well as cable companies like Comcast, which offers a VOD lineup that the satellite operators can't come close to matching. In addition, phone companies like Verizon and AT&T are in the process of rolling out extensive VOD offerings as a part of their new IPTV technology.

HDTV channels require massive amounts of bandwidth, something for which there is a finite supply. Much of Directv's and Dish Network's HDTV capacity is used up carrying local HDTV channels in various markets. This limits the number of national HDTV channels they can carry, without constantly having to launch new satellites. In spite of this handicap, both Directv and Dish Network are keeping up with and even surpassing their wired competition by offering an impressive lineup of national HDTV channels at this time. But will they be able to keep pace with cable and phone companies in the future? Cable systems and phone companies do not have the multiple-market problem, as they only have to worry about a single market (the one they serve), freeing up their HDTV bandwidth for more potential national channels in the future.

Initially, satellite operators were hoping to be able to carry local channels in no more than one market in each of the four continental U.S. times zones (ex. ABC, CBS, NBC, Fox, CW, and PBS affiliates from New York, Chicago, Denver, and Los Angeles), but local channels, fearing a loss of advertising revenue, would not agree to this and took successful legal steps to block it. If satellite operators were to carry network affiliates, they would have to offer them in each customer's natural market. All markets would eventually have to be covered - that's 1260 channels, six (the number of network affiliates in each market) times the 210 U.S. TV markets. This feat has not been (and won't be) easy for satellite operators to accomplish. It's tantamount to forcing the proverbial square peg into a round hole. It was troublesome enough with just the broadcasters' analog channels, but the problem grew exponentially with the advent of HDTV. Could anyone imagine a satellite provider offering 1260 local HDTV channels? Think of the bandwidth that would tie up.

So far, satellite operators have not figured out how to offer competitive broadband Internet service on their own. Their offerings have generally been much slower and much more expensive than cable or DSL. For the most part, only those who can't get cable or DSL subscribe to satellite broadband services. Since VoIP rides on the back of broadband infrastructure, quite naturally it follows that satellite operators have not been able to offer competitive VoIP either. For a while, satellite operators were partnering with phone companies, so that satellite operators could offer DSL and VoIP deals to their customers, while the phone companies could off satellite TV deals to their customers. However, these partnerships seem to be ending, now that phone companies are starting to offer their own video services like IPTV. They now view the satellite operators more as competitors than as partners. Directv and Dish Network are promising improved broadband services in the very near future. They will certainly need to make good on that promise.

For all the reasons mentioned above, I'm bearish on satellite TV. I'm not saying it won't survive; just that it has a tough road ahead trying to compete with cable and phone companies, which seem to have most of the advantages right now. Perhaps satellite operators will come up with something new and innovative than will give them the advantage once again. I'm not holding my breath though.

Why I Can Wait for HDTV

In 1978, a movie called "Heaven Can Wait", starring Warren Beatty, premiered at theaters all over the U.S.  Maybe I should make a movie called "HDTV Can Wait." High definition television, or HDTV, looks great. The picture is crystal clear and very lifelike. It's even forcing some TV stars get plastic surgery, as it shows all their blemishes in graphic detail.

There's one particular online TV technology writer who has gone absolutely gaga over HDTV. He used to write about general TV technology but now writes exclusively about HDTV. We've all seen the demos in stores and many home electronics consumers have shelled out the big bucks to get a high definition TV set. However, I won't be one of them any time soon. 

There are several reasons I feel that way. First, HDTV sets are still very expensive, although it's likely that their prices will soon begin to drop very rapidly. Second, there just aren't enough HDTV channels and programs yet, though more are being added all the time. Third, although the picture quality is incredible, it still doesn't change the lousy quality of today's TV content. It's like putting lipstick on a pig and that doesn't justify the extra cost. Fourth, I would have to buy a high-definition DVD player to take full advantage of the improved picture quality. That would mean having to choose between the two competing technologies: Toshiba's HD-DVD and Sony's Blue Ray. Right now, I would have no idea which one to select, not to mention the fact that they are quite a bit more expensive than regular DVD players. Fifth, there are still bugs and anomalies in HDTV technology that need to be worked out.

I'm content to let the early adopters of this technology pay the extra costs and deal with the bugs and inconveniences that new technology always brings with it initially. When the prices come down to reasonable levels, most channels and programs are available in HDTV, and all the dust finally settles, I'll eventually join the HDTV party, just like I did with VCRs and DVDs. Meanwhile, I can wait.

Is There Anything Worthwhile on TV Anymore?

Is there any worthwhile programming on primetime TV anymore? It seems like 90% of it consists of mindless comedies, lurid crime/courtroom dramas, and inane "reality" shows. Even so-called "news" programs, instead of sticking with real news, often resort to sensationalism to appeal to the lowest common denominator. In addition, many of these programs devote large portions of their air time to trifling things such as celebrity lifestyles, gossip, makeovers, and interviews with psychics.

It's Time for Directv and Echostar to Merge

The time is right for Directv and Echostar (Dish Network) to merge. Rumors about a possible upcoming merger between the two have begun to circulate recently. I hope it happens this time. They tried it four years ago but were rejected by the FCC, whose members felt that a merger would violate antitrust laws.

However, their primary competition is no longer each other but the cable and phone companies, which have more advantages. Right now, satellite operators cannot provide competitive broadband, video-on-demand, and VoIP on their own the way the cable and phone companies can. In addition, even more direct competition in these technologies, in the form of broadband by power line (BPL) and wireless, are beginning to hit the market. A combined company would have a better chance to compete in these technologies.

In addition, it could eliminate all the duplication of services. Think about it - 95% of the channels carried by Directv are also carried by Dish Network and vice versa. This does not just include the the 200-300 national channels that each one offers. They both carry local channels in nearly 100 markets each. Most of these markets are duplicated. The satellite space and bandwidth freed up by the elimination of this wasteful duplication could be used for additional channels, more HDTV, and more competitive broadband offerings. In short, a merger of these two satellite giants would mean more competition, not less.

Syndication vs. Network Broadcasts

Local TV stations broadcast shows from three different categories: local origination, syndication, and network affiliate content. Most people recognize the local origination stuff when they see it. It consists mainly local news, weather, and sports, along local talk shows and the occasional community-oriented special program.

However, some people have trouble distinguishing between syndicated shows and those provided the by the network that the station is affiliated with, like ABC, CBS, NBC, or Fox. The confusion is understandable because both types of shows are produced by the major studios and television networks. In addition, they both target national audiences. Adding further to the confusion is the fact that many shows originally run as network content and then their reruns air in syndication. Therefore, a  show can start out in one category then move  to the other. So how can you recognize the difference?

First, a show that is in syndication might air on different network affiliates, depending the market. For example, Wheel of Fortune might air on the ABC affiliate in New York, the CBS affiliate in Chicago, and the Fox affiliate in Los Angeles. Conversely, a show provided as network content would air on stations affiliated with same network in every market. For example, American Idol airs on the Fox affiliate in every market.

Second, a show that is in syndication might air at a different times in different markets, even within the same time zone. For example, Wheel of Fortune might air at 5:00 in Boston, 6:00 in New York, 7:00 in Philadelphia, and 7:30 in Washington, DC., even though all four of those cities are in the same time zone. A show provided as network content, on the other hand, will generally air at the same time within a given time zone. For example, American Idol might air at 8:00 every Tuesday night in all markets in the Eastern time zone.

Now, an example of a show that moved from network content to syndication would be Friends. This show started out in the mid-1990's as an NBC affiliate show. It aired only on NBC affiliate stations on Thursday nights. It would air at the same time within given time zones. However, once the show completed its run on NBC, it went into syndication. Now its reruns air mainly on weekdays on different network affiliates and at different times, depending on the market.