News

An Indie View of TV Everywhere

2/13/2012 12:01 AM Eastern

I have a few friends who have “cut the
cord.” And no, I haven’t told them to lose my number.

I have asked them to keep their receipts, though.
And at the end of the year, we’re going to
add up all the money they’ve spent on video
product and high-speed data, as well as
all the iTunes purchases, Netflix and Hulu
Plus subscriptions, the cost of the Roku or
Boxee boxes, and lifeline video subscriptions
(yes, multichannel providers do still
sell lifeline). I’ll bet each of them will have
saved or spent an extra $200. If we get TV
Everywhere right, I also bet each one of
them reconnects the video cord next year.

Providing consumers with access to networks’
programming anytime, anyplace
and on any device is the biggest moneymaking
opportunity our industry has had
since the introduction of the affiliate fee 30 years ago.
By giving consumers more choice over how and when
they view our content (and what they pay to view it),
we will price-discriminate ourselves to higher profits.
And our viewers will love us for it.

Although cable networks are eager to make their
entire schedules available on TV Everywhere, licensing
TVE rights from content owners has been
problematic. Cable programmers, while cautiously
building libraries of original content, license a substantial
amount of the content they air. This is true
for big network groups and small independent channels
alike. Most of the licensed content comes from
big film and TV studios, which are reticent to license
TVE rights.

Can you blame them? Studios, like the rest of us,
don’t yet know what TVE rights are worth. And while we
all expect TVE to be a solid revenue source for all participants
down the road, for now, nobody really knows.
The distributors, eager to offer TVE as added value for
video subscriptions, aren’t paying networks anything
additional either.

So, how do we move forward? We start by including
linear TVE and non-linear free-on-demand windows
around exhibition days with the TV license. Specifically,
these windows should extend for seven days around a
movie exhibition and 30 days around a series’
episode exhibition.

Why these windows? Because that is
where the majority of the catch-up viewing
exists. According to Nielsen, viewing
increases on average by single digits
in the live-plus-3-days window, with an
increase of as much as 24% for some networks
in the live-plus-7-days window. And
for series, a 30-plus-days window provides
an opportunity to gain new viewers who
may have not been watching from the start
(think 30 Rock and Mad Men) but want to
sample or catch up on the story later.

Extended windows also allow for truly incremental
ad revenue. Even when Nielsen starts measuring
TV Everywhere, it is likely to only capture the C3
period. But that’s OK. TVE will allow us to start getting
paid for all the viewership after three days that is currently
overlooked.

Once networks monetize that incremental inventory,
we can begin to pay more for the TV licenses. But it’s
going to take time. In the interim, in exchange for the
TVE rights, I propose that we give our studio licensors
a 15-second spot for promotional use in the inventory
available for days four to seven in movies, and for up to
30 days in episodic series. And by committing to shorterterm
deals, we can quickly meet our consumers’
demands and launch these services.

We all need to put viewers first. So, let’s stop arguing
about rights for a marketplace that isn’t yet commercially
viable so we can all begin to benefit from
TV Everywhere now.


Chad E. Gutstein is chief operating officer of Ovation
and a partner in the Arcadia Investment Partners/
Ovation investment vehicles that led the acquisition
and financing of the network in 2006.
March