iWatch

Capsule:  TV Everywhere can lead everywhere or nowhere depending on big distribution's and big content's appetites for building a managed data marketplace for customers that actually works. It may also be time for an economically viable version of video a la carte.

TV Everywhere


Big content and big distribution are working together to bring us TV Everywhere. The concept was named by Time Warner's CEO Jeff Bewkes and outlined by Comcast's CEO Brian Roberts in preparation for a debut as part of Comcast's On Demand Online. TV Everywhere is a digital rights management solution that will verify cable and satellite customers' pay subscription bona fides when they want to watch their favorite programs off road (in this case, online.)

At first, TV Everywhere will interconnect devices with subscriptions. This should bring a real benefit to cable MSO's: forced linking on their account management and billing systems of every digital device in the home. Right now, cable account management focuses on linking billing codes--the meat and potatoes of account authorization and payment--without sure IT links amongst all of the modem-powered digital devices that enable digital tv, broadband and broadband voice subscriptions.

Knowing the "address" of every device in the home will enable cable MSO's to "pass" content from one device to another--and from one screen to another--authorizing a la carte content for customers who have the key. The customer who subscribes to the TV Everywhere service could help MSO's by verifying their device addresses at the point of the authentication that initiates subscription. If a customer takes HBO--should HBO participate in this way--on his digital tv set-top boxes and then chooses to take TV Everywhere, he might also be authorized to watch selected HBO series, programs, promotions, and special content through his broadband modem on his PC screen. This is a very sticky application.

By linking every device with every service in the home, cable MSO's will be able to construct virtual portraits of their customers. Right now, MSO's know customers only broadly, based on their billed subscription habits and, where applicable, service records. Marketing segmentation is done through overlays and predictive modeling. The basis of the cable billing database is the physical address of a current, former or non-customer's house or apartment. The actual name of a customer--as opposed to his physical address--is only as good as what's on the cable bill and could be inaccurate if the customer doesn't care or deliberately doesn't want to correct it. The viewing habits of customers are vaguely available but not used because of the technology, platform and system bandwidth "lifting" required to collect them and the heavy privacy restrictions that obscure them according to federal cable regulation.

With TV Everywhere, customers will "opt in" to sending their subscriptions all over the house, first sending MSO's their self-portraits along with new segmentation capabilities. The more sophisticated the authentication process, the more the MSO and, as negotiated, the content companies will be able (theoretically) to know about the predilections of their customers. The future opportunities of driving and managing a database like this inside the biggest US markets are vast and reach beyond cable subscriptions to commerce and advertising partnerships enabled by smart "opt in" marketing and sales capabilities that could help revolutionize retail.

TV Everywhere may also be a master stroke for content providers. It can potentially deliver an economic structure for content companies who like the idea of "free" for timely programming that won't stand up to repeat showings--think Glenn Beck on Fox or The Daily Show on Comedy Central--but who can't legally give away the farm when it comes to theatrical and selected sports distribution. It's a fair bet that content providers don't want to give away the farm even in areas where they may have the right to do so, because of their profound, clear-eyed and celebrated respect for digital rights as the money tree that keeps on giving.

Content providers will also be able to parse their monthly subscription packages for online viewing according to what gets negotiated in TV Everywhere's development. A la carte pricing has long been feared by programmers and most MSO's alike--meaning the ability to buy cable or satellite programming one network at a time. By moving content to online distribution through cable broadband, both content and distribution companies are willingly entering a world where a la carte is the prevalent viewing model. In exchange for linking a la carte content choices online with monthly subscriptions on TV, content and distribution can seek new economic models--like per program online views and earlier viewing windows--with their feet on the brakes. At least it will feel that way, unless they realize that inhibiting all movement in the a la carte direction will mean stalled products and economics.

What's in TV Everywhere for the media customer? Everything or very little, depending on the ingenuity of the economic, product and marketing models. If customers gain the ability to watch their favorite shows on more TV sets and PC monitors throughout the home, they gain a big pick-up in convenience. Every cable or satellite-connected device can become an additional TV anywhere.

If enabled, customers could also have a new ability to view sports and movies on multiple "sets" simultaneously with PC--stop, pause, fast forward, rewind--controls. They could break through some of the limitations of their set-top boxes, provided their online TV Everywhere service doesn't appreciably outshine their wired TV service.

Here's where one of the most important friction points will be erected: if the TV Everywhere service is so attractive, fun and easy to use that nobody fires up the set-top box anymore, cable MSO's will have entered a dangerously pressured price-value atmosphere where the monthly cable bill will "feel" like it's going entirely towards online service. In a Triple Play world where customers pay over $100--in the best markets, well over $100--for digital tv, broadband and voice, will that same $100 look right if it's going primarily towards online? The value of wired voice has been deteriorating since cable MSO's entered the market, partly because of their entry and partly because of the phone companies' own wireless businesses. The value of digital TV must be preserved at least for some period of time. From a product standpoint, the risks will look like those faced by bundled print-and-online-subscription businesses: as the value of print dropped, the value of the online part of the bill got shopped against numerous free online facsimiles. We know and should want to avoid what happened.

TV Everywhere will place cable and satellite content and distribution smack in the middle of the competitive playing field. In this respect, it could be the bold move that leads to real iWatch product innovation. If this is cable and satellite's intention, their prescience should contribute greatly to their future. Just as the growing field of mobile and wireless competitors try to fractionalize the cable and satellite revenue streams in order to split off pieces for themselves, content and distribution may introduce a surprise just-in-time game-changer. Or, they may stick to their profitable knitting and place huge restrictions on TV Everywhere, making it little more than a new cable add-set plan. In order to get to iWatch quality and sustainability, this new media play needs a lot of conservative money-making strength undergirding creative risk-taking brilliance. Content and distribution can either prove their future or help destroy it.