Internet TV viewing cutting into broadcast and cable-Miami Herald
"When Barnett and 5,000 or so others gather Monday for the National Association of Television Program Executives (NATPE) convention at the Fontainebleau Hotel on Miami Beach, there will be plenty of sweaty foreheads, some acquisitive smiles and — perhaps most numerous — blank looks of confusion. Not since cable turned the old three-channel TV universe on its head in the late 1970s has the industry been in such a state of disoriented befuddlement.
New technologies that give viewers more say in what they watch, where they watch and how much they pay for it are great for consumers. But they’re inducing a collective nervous breakdown among industry executives, who have to figure out new ways to make money in a business facing serious threats to its traditional sources of revenue — advertising and cable-TV subscriptions....
The industry last year was blindsided by everything from a leap in the use of TiVo and other digital video-recording devices that pushed Nielsen ratings down as much as 50 percent to a new device called the Hopper that allows viewers to instantly zap by commercials.
But the biggest tremors came from the Internet, which is threatening to remake television as thoroughly as it already has the newspaper and music industries, by letting viewers bypass cable to watch shows online.
There was explosive growth in what the industry calls over-the-top or OTT, little boxes that sell for as little as $50 or so and allow viewers access to hundreds of streaming-video Internet television channels from their TVs. Apple and Roku, who make the most popular OTT players, have sold about five million apiece. But other companies like Amazon, Google and Western Electric are pushing into the market, and industry analysts say Intel, the world’s largest semi-conductor chip manufacturer, is also poised to leap into the OTT business.
Another major OTT force: video-game consoles like Xbox and PlayStation, which can also be used to watch streaming Internet video. “They may be doing more business than anybody,” says Andy Tarzon, founding partner of the media research company TDG. “Xbox is the leading viewer for Netflix content.” It will, soon enough, have its own content; parent company Microsoft late last year hired senior CBS programming executive Nancy Tellem, who helped develop Friends and ER, to direct an on-line TV operation.
• The use of programming services that deliver television program via the Internet is mushrooming, with Netflix, YouTube, Amazon and other big names — even Walmart — setting up or expanding operations. “More than anything, that’s gotten everybody’s attention,” says Terence Gray, a longtime network producer who now runs the New York Television Festival. “When you see YouTube’s $100 million investment in programming, or what Amazon’s studios did last year, or Microsoft hiring Nancy Tellem, this is no longer a conversation. This is being done.”
Hulu, a website that offers shows from NBC, ABC and Fox, doubled its subscribers last year while increasing its revenue 65 percent. Meanwhile, many of the online services are starting to make their own shows: Hulu debuted 10 of its own programs last year and Netflix has five in production, including House of Cards, a political thriller starring Kevin Spacey that debuts next week.
Attacking cable from a different direction, Aero TV uses tiny but powerful antennas to capture broadcast signals from the air, records them, then reroutes them into a viewer’s computer or OTT player to be watched whenever he wants. Because Aero pays nothing to the broadcasters (a practice being challenged in court) it can offer its service for as little as $8 a month. Last year’s start-up in New York City was so successful that Aero is expanding to 22 more cities — including Miami — this year.
Senior television executives caution against any expectation that their industry is about to embark on an instant makeover, and the numbers bear them out. Hulu’s three million subscribers are about one-seventh the number of viewers who watch NCIS each week on CBS, and its $700 million in annual revenues is tip money compared the $3.4 billion CBS generated in a single fiscal quarter last year. “This is going to be an evolution, not a revolution,” says Bruce David Klein, president of the independent production company Atlas Media.
But the technological advances in Internet television come at a time when customer grumbling over escalating cable prices has grown to a roar and a younger generation of viewers more comfortable with computers than TVs is starting to set up its own households. The new alignment of attitudes is already taking a toll.
Subscriptions to cable and satellite television peaked in 2010 and have fallen five percentage points since then, the research company TDG reported late last year. Meanwhile, consumer satisfaction with cable service, which had held steady for years between 65 and 70 percent, dropped 10 percentage points.
“The most interesting part of that report, to me, was that it said a lot of the people without cable are not ‘cord-cutters’ but cord-never-havers,” says Jim Flynn, president of Massachusetts-based Overlook TV. “We employ some of those people at my company. They’re in their early 20s, just out of college, and for them, paying $100 or $200 a month for cable TV is just not an option. And they don’t feel bad about it. They’re part of this millennial generation who are perfectly happy getting all their video over the Internet.”:...via Free Republic
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