Save Yourself

Capsule: Will giving customers greater control over TV choices through well-designed network storage lead to money-making media GPS?  It depends on who "gets it."

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A major cable distribution and content company recently scored a victory when the Supreme Court declined to hear a complaint that could have limited the development of the future of TV navigation.


An impressive group of content majors sued the cable MSO over its plan to build a network DVR. The content companies believed they had the right to give or decline permission to the MSO for their programming to be stored on the MSO's network on behalf of the MSO's customers. Big content saw the storage of a network DVR as different from the storage customers already order up from their cable company's supplied-and-serviced, network-connected DVR device. Now, big content and big distribution are trying to work together to develop an accommodation that will set a value for the network DVR for which cable customers will ultimately pay. Let's hope their accomodation comes with a saving grace.


Why content companies would want to limit how and how many times their audiences store and watch their favorite TV shows is easy to get, but hard to explain without a lawyer. Digital rights have powered the TV network and syndication system since broadcasting began. Each piece of the money road between a TV program's creation and its many subsequent showings--on its owner's distribution system, the distribution systems of its major investors, the distribution systems of its favorite affiliates and syndicators and the distribution systems of foreign industries and lands--pays the bills. Letting go of those controls would wreak havoc on a system that's already being tested severely in a few foreign lands and on the internet.


What is the problem the distributors are trying to solve with a network DVR? The DVR devices now resold through cable and satellite operators and at retail by software companies like Tivo offer a fairly wide range of storage and replay options. In fact, the capabilities of DVR devices--as with most consumer electronics--aren't completely tapped by consumers. Most of us like to learn a few DVR tricks and stop learning once we've found the way to record our favorite series and watch it on demand. It's the rare consumer who is playing network programmer, tailoring his favorite content to his every scheduling need and whim.


Would a network DVR where the consumer could program his viewing through the cable system rather than through a device connected to that system be materially better? Maybe. Devices fail. There's built-in obsolescence as well as real vulnerability when you're relying on equipment. But it's hard to imagine that too many consumers are saving their football games and Daily Shows and Dancing with the Stars episodes for posterity. If their DVR devices break, their cable operator will replace them. Alternative models--like satellite's equipment replacement charges and the issues invited by OEM distribution--can be costly, but the majority of DVR users are on the cable plan.


There are also questions about how efficient a network DVR's design would have to be to make economic sense. The question of scalability should consumers want to throw out their DVR devices and use the network system en masse is challenging. But, pricing has always been an effective means of gating demand and the major cable distributors know how to phase-in new product introductions, having already enjoyed tremendous success with digital tv, broadband and cable voice.


Is it possible that all of this commotion has nothing to do with making TV better; that it's really about how to enrich an already rich business partnership between content and distribution? It's always wise and often necessary to follow the money to understand how things work. But there are a few important benefits to the consumer that could be realized through a network DVR if distributors and content providers figure out how to do something better than split the baby in half.


Take VOD. The part of VOD that works for consumers is new releases (and maybe adult, but that's a different blog.) A value has been established on the digital rights money road and an a la carte price per viewing has been agreed upon by content, distribution and the consumer. The amount of the typical cable MSO's VOD architecture used to support new releases is huge. Movies are popular and long, requiring a lot of storage and playback room on the VOD server system. There's a rate and there's a cost. Both are understood and can be audited and so the system works.


But most of the money road serving cable distribution winds around and past the VOD system. The value of cable service includes an enormous amount of programming that never makes it to VOD, as well as broadband and voice. Cable distribution companies who have demanded access to large caches of VOD programming have often done so for free--meaning no charge to the consumer. Establishing a price for a VOD viewing of an individual network TV program would be tough, especially since the horses have left that barn via the DVR device that seems to charge the consumer nothing for the pleasure.


Why not put everything on cable on VOD? There's a simple answer with a complicated name: navigation. In the consumer electronics world of mobile devices, navigation means something wonderful--GPS, a value addition to which we're all becoming accustomed. In the cable and satellite distribution world, navigation is the limitation we face when we want to find something to watch on TV.


Geniuses have put their minds to the development of TV navigation for the last two decades. Tivo's software design is widely regarded as one of the best. After Tivo, there's a big range running from decent--"I can see most of what I might want to watch within a short enough time for me not to turn the set off"--to poor--"I can see only what the system wants me to watch and I'd like to blow the set up." This last impulse may fuel more online use during prime time than most major media companies want to admit. But the issue must be dealt with, if only because there's a gold mine waiting for the content and distribution partnership that figures out how to get those viewers back by giving them TV GPS.


How does navigation relate to the concept of a network DVR? It has to do with the subtle line between navigation and storage that can be moved toward the consumer if network distribution systems start distributing DVR capabilities. Tivo understands that navigation and storage are inseparable executions that compound each other's value. Imagine watching TV and seeing a promotional spot for a show you've heard about with interest but haven't yet watched. Imagine that your cable operator has embedded an icon inside the promo that invites you to click on it and send the show to your TV library. Holy tasting menu! It's impulse watching that may be a lot better than letting the little Tivo man recommend a bunch of programs that you then have to weed through like TV spam.


An enormous amount of cable and satellite TV advertising is devoted to promotion, but without passion (almost out of habit.) Following the broadcast model built to promote each individual network's programs over the course of a viewing week, promotional spots now advertise programs and series over 500 channels and VOD choices. These promotional spots are really TV spam: it's not that they're promoting stuff we don't want; it's that our minds, particularly our armchair minds that need rest after a busy day, can't take in all of the information. The content--here's something you might like--and the form--passive programmed placement inside breaks in the TV show you're watching now--are at war.


Somehow knowing this, the content and distribution sides of the TV business have stopped investing in program promotion, at least on the basis of investment per promo spot viewed. Add to the problem the fact that DVR devices let you skip all breaks and you can see why nobody loves the promo anymore. Rather than engaging the viewer with the magic of story-telling, promos are becoming the waste that's clogging the arteries of an otherwise decent system.


It may be time for content to let distribution do some magic with storage and navigation. The same cable system, advanced server and software technology that will program direct retail TV ads that sell and fulfill like an iPod will be able to invite you to watch and store TV shows without having to climb through the current navigation of your cable DVR device.


The content players can really save themselves from a collapsing viewership model if they pay more attention to how their programming is getting delivered to the consumer. There's a larger concern than whether content travels over closed TV systems or the internet (which itself is most often traveling over a closed cable system if you're looking for quality of service.) Until internet TV becomes common enough to be relevant to those distribution geniuses who can use it to introduce new content choices and economics, the navigation and storage problem is one that can be solved in the near term. All that's required is a system that lets the consumer save himself.