Fearless predictions: Don’t look now, but...
In the future, everyone will wear electronic glasses to watch TV in three exciting dimensions. Really? Really?
The future ain’t what it used to be. We were promised underwater cities, we were promised unisex silver jumpsuits, and Jim Cameron has now featured those really cool robotic exoskeletons in two movies. And what do we actually have? Changing channels with an iPad. Yes, that is kinda cool, but do not think for one second that that compensates for the sorry lack of jetpacks around here.
If the industry can't rely on the movies, what can we reasonably expect? A gradual slide toward chaos, depending on how alert consumers are.
There are simply too many companies that can now, or could, provide video services, especially now that Internet streaming is commonplace.
All this potential competition could mean disruption. But not in 2011. That said, disruption is inevitable, and 2011 will be the year that the seeds for some serious disruptions in 2012 or beyond germinate.
Why no chaos in 2011? The biggest, most influential companies that are now in the business have more to lose than they have to gain, so they’re going to play nice with each other – at least for now. HBO, for example, is preparing a streaming service – but it will be available only to customers whose subscriptions are through an MVPD, similar to the way ESPN works.
Big programmers may eventually compete directly against their traditional distributors and sign up subs directly, but there’s no incentive – yet. Small programmers, especially independents, however? Nothing to lose. Expect a few of them to try. They’ll establish the model. It should take, but slowly.
The big, established MVPDs so far have been successful making streaming video supplemental to their traditional services, rather than a replacement, so there’s not much cord-cutting yet. Expect the pace of cord-cutting in 2011 to be more or less on par with the rate last year.
3-D might – might – be of interest to sports fans; we’re still not convinced these are people who will remain patient with the glasses. Big MVPDs will continue to seize any excuse to compete on some other basis than price, however, which will be why 3-D will, in fact, be a big issue, if not a big seller, in 2011.
The price of broadband, video and voice will continue to be the subtext not only of 3-D, but of much that happens in 2011.
Once upon a time, cable companies had parallel networks – one for data, one for video – and that was perfect justification for charging two separate fees for two separate services – three actually, if we consider phone, and we do.
But as more services get delivered on unified networks and content goes streaming and more gets delivered on-demand, there is decreasing justification for three monthly fees, let alone two. (We are amazed cable gets away with separate charges for VoIP and data – hats off.)
The point is that the largest companies providing full bundles have three fees to protect. But there are a lot of smaller or less competitive service providers that don’t. And this year, some of them are going to experiment with delivering video via broadband, along with data and voice, all for one price that is likely to be significantly lower than what the larger and more successful service providers are charging right now.
And consumers are slowly going to begin asking questions. Service providers with three-fee bundles had better start working on easily understood justifications for the triple charge right now, if they haven’t already.
Video is now the biggest data segment on the ’Net, and it’s only going to increase its share. Many say that this means consumption billing is inevitable; some of the Canadian MSOs have already started shifting to this model.
The problem is that the prevailing consumption billing mindset is still in the P2P era. The problem, as service providers frame it, is that some people are consuming a wildly disproportionate share of bandwidth because they’re downloading video. More to the point, they’re downloading video that nobody is getting paid for.
But the increase in video traffic isn’t due to P2P sharers. It’s due to for-profit business conducted by the MVPDs and their partners.
Here’s the point: In that context – the context of video via broadband – consumption billing starts to look very, very similar to a la carte, which figuratively means “consumption billing,” it’s just in French. (The industry will be relieved to recall that many Americans still despise the French. “Freedom Fries,” anyone?)
And we know what the problem with a la carte is: It blows up the current TV model and replaces it with another no one is entirely sure is going to work.
Frankly, the a la carte genie is out of the bottle, it’s just that consumers haven’t noticed and asked for their three wishes yet. AT&T U-verse and switched digital video systems are basically a la carte delivery mechanisms with flat-fee pricing.
So consumption billing is inevitable? Fine, but think it through. It's tantamount to a la carte, and what are you going to do when subscribers put two and two together?
Toss in those consumption caps? There’s an increasing number of subscribers who are going to be streaming more video, and some of them are going to start bumping into what used to seem like generous usage allocations. And if the streamed video is in HD, it’s going to happen faster than anyone had feared.
Of course, there are going to be nuts-andbolts concerns. Where’s all this bandwidth coming from? Who the heck knows? There are going to be chokepoints; where they are depends on the combination of the source of video and who the broadband provider is.
Off on another subject, MVPDs are going to investigate ways to incorporate Google-like search into their program guides. This will all be hush-hush, and you won’t hear a peep about this unless you work directly for a CTO. We don’t have any secret knowledge about this, it’s just that: a) It’s insane not to, and b) MVPDs are unlikely to be able to incorporate this kind of functionality and figure out the necessary business arrangements in less than a year. So for competitive reasons, every single MVPD executive is going to pretend they’re the only ones who thought of it.
Last year, by our estimate, we did pretty danged good with our predictions – until it came to sports. The Brewers? Were we smoking something that day? No, we’re going with deadline pressure. Yeah – that’s plausible – deadline pressure.
Well, sports and the Qwest thing. We’ve been predicting for years that no one would buy Qwest. So, yes, it is technically true that somebody did finally buy Qwest. But that misses the point. The point was that somebody would buy Qwest and thereby make it competitive. CenturyLink does not have the resources to make Qwest competitive with regard to a native triple play, so we’re claiming half credit on that one. Sorry to keep whining, but we’re 28 whole percent of the country up here. That’s sort of a lot, when you think about it, isn’t it? And still no big IPTV competitor?
Next year: Phillies, Penguins, Thunder and Patriots.
Album of the Year: Teenage Dream (sorry, Arcade Fire, and Cee Lo gets unfairly stiffed for the potty mouth).
Best Picture: “The Social Network.”