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Cable Technology Feature Article

October 18, 2014

Week in Review: HBO, CBS and Netflix in OTT Extravaganza

By Tara Seals, TMCnet Contributor

There are ten million broadband-only homes in the U.S., and media companies going after that segment of the market has become a thing this week.

Premium cable doyenne HBO first dropped a bomb, announcing that it will offer a stand-alone over-the-top (OTT) streaming service in the United States in 2015. Many observers had expected HBO to take the lead in transitioning to a full streaming capability for obvious reasons. HBO always has been sold as a “stand-alone” product, separate from the advertising-supported channels and networks that are part of standard subscription video packages. And to be sure, HBO is trying to placate its major distributors by emphasizing the primary target is that ten million broadband-only homes, which is projected to grow over time. HBO says it plans to work “with our current partners. And, we will explore models with new partners.”

Check out all of the details in our full analysis.

Just a day after HBO announced its intentions, top broadcaster CBS has made an OTT move of its own.

The CBS All Access subscription service will go for $5.99 per month and offer a raft of live and on-demand content from the network. Most of it will include advertising, unlike HBO and Netflix, and it’s unclear whether viewers will find the CBS content-only proposition to be enough t justify the price tag (News - Alert) —particularly considering that, as a broadcast network, it’s technically available free-to-air with a cheap rabbit-ears antenna.

To read more about CBS’ OTT move, click here.

And it’s not just the big hitters that are embracing OTT. Cable news would appear to be at a crossroads too: with viewership (and ad revenue) steadily declining, where is the future business model for the 24-hour news cycle? It would appear that digital offers perhaps the best way forward amid a shifting sea of changing consumption habits. CNN’s digital operation is booming: It had 42 million unique monthly visitors in 2013, according to Nielsen. Embracing digital will be critical as demographics shift.

Read more about cable news’ quest for relevance, by clicking here.

Netflix meanwhile is starting to craft a real business model around 4K entertainment, announcing that it is offering the $12 "Action" family plan, a $3 premium over the standard streaming subscription, for access to UltraHD content. The company has been a first mover in 4K (4K resolution refers to a display device or content having horizontal resolution on the order of 4,000 pixels), shooting some of its original programs, including House of Cards, in native 4K. Other than that, the portfolio is still very small, and includes only a handful of 4K titles so far, like Ghostbusters and Ghostbusters 2, and the Smurfs 2. Breaking Bad and The Blacklist will be coming in 4K soon, it said.

“Streaming will be the best way to get the 4K picture into people's homes,” said Neil Hunt, chief product officer at Netflix.

For full details, click here.

These kinds of rollouts will be important as Netflix quests for growth in its most-mature markets. Extrapolating from recent comments by Reed Hastings, Netflix CEO, about double the number of subscribers it already has gotten, ultimately. But it seems likely rates of subscriber growth now are key issues for Netflix, as U.S. growth runs into potential slower growth, international markets have to be cultivated and more streaming alternatives come to market. 

“We saw Starz a week ago announced that they are doing an Internet video service; we saw HBO; perhaps all the other providers over the coming weeks,” Hastings said. “And so think of all the big networks are moving to Internet video and it’s just becoming a very large opportunity.”

To read more about Hastings’ take on subscriber numbers, click here.

Amid all of this digital distribution, TV viewing is harder to measure these days, with time shifting and streaming as well as other forms of consumption all augmenting traditional “television viewing.” That appears to be particularly true of Millennials, who spend about a third of their original TV series consumption time watching on digital platforms. According to Nielsen, 24 percent of 18-to-34-year-olds are not subscribing to subscription TV services. About 13 percent of Millennial respondents say they have paid for a subscription in the past, but have cut the cord, while 11 percent say they’ve never subscribed at all. And that means these OTT moves will continue to be critical for media companies and TV service providers alike.

To see the full research details, click here.

Traditional players are going to have to up their game on other differentiators too. Our columnist this week considers Comcast’s (News - Alert) age-old service outage and interruption problems, suggesting that the company’s top customer-focused execs might want to first focus on eliminating issues with the underlying network infrastructure. This approach could improve operations inside the over 50 far-flung call centers in a unit that boasts tens of thousands of customer service employees and technicians. Sure, some are attributed to schedule maintenance and upgrades, but they are still outages to the customer that collectively challenge customer service reps that deal with unhappy customers who choose to speak to a live human.

Check out more on how Comcast can solve its customer service woes, by clicking here.

To check out more details on all of this and more, visit our homepage. And have a great weekend!

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