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Media Executives Keeping OTT Video on Tight Leash

11 Sep, 2014 By: Erik Gruenwedel

Buzz about the development of broadband-based video services offering lower-cost channel bundles, coupled with subscription streaming’s burgeoning growth has senior executives at major media companies gripping both sides of a double-edged sword.

This week at the Goldman Sachs Communicopia Conference in New York, Jeff Bewkes, CEO of Time Warner, reiterated interest in offering HBO Go as a standalone over-the-top video service. HBO Go is the premium channel’s TV Everywhere app that gives authenticated users access to on-demand and live programming.

With media companies and SVOD services such as Netflix and Amazon Prime Instant Video trumpeting episodic programing (versus movies), distributing the content across a rapidly expanding broadband market via personalized video services such as HBO Go, Showtime Anytime, Comcast’s Xfinity On Demand, or Dish Network’s pending OTT platforms is gaining traction.

"The broadband-only opportunity, up until now, didn't look to us to be really at the point where it would be smart to move the focus," Bewkes said. "Now, the broadband opportunity is getting quite a bit bigger ... so the question you're asking is becoming more viable, more interesting."

The CEO said there was no announcement to be made about such a service, saying the concept remained a work-in-progress.

Meanwhile, Bewkes shot down speculation he would consider spinning off HBO in an effort to raise the company’s stock price after the board rejected an $85 per share buyout offer from 21st Century Fox.

“We’re not going to do that,” Bewkes said.

At the same conference, Walt Disney Co. CFO Jay Rasulo said the direct-to-consumer OTT bundled subscription services are aimed at Millennials, the successor to the Generation X demo that numbers about 7 million consumers. Disney is working with Dish Network in rolling out such platforms by the end of the year.

“They are talking to [consumers] who say, ‘you know what, I can't make that [financial] jump, but I want to be in the system. I want to be OTT, want to personalize my choices, want to watch on my iPad. I want to watch it on my laptop,'" Rasulo said.

Rasulo said such services enable media companies to get a segment of the population into the multichannel video program distribution ecosystem with the hope of those consumers enhancing their content spend in the future.

Verizon CEO Lowell McAdam, speaking at another session, said the days of the 200-channel bundled subscription TV business model are numbered. The telecom executive said Verizon would offer next year a wireless TV service with about 20 channels targeting mobile device consumers.

“That really goes after the Millennials. It’s targeted content,” McAdam said, adding the service would undoubtedly include the four major broadcast networks.

CBS CEO Les Moonves said the company’s relationship with SVOD remains a good one, adding CBS was an early adopter with Netflix licensing off-the-air domestic TV shows. At the same time as Netflix expands operations internationally, Moonves admitted the service has become a “direct competitor” with its third-party distributors there.

“[Netflix] has become another bidder,” Moonves said, adding that negotiations for first-run rights to network and Showtime programing in foreign territories depend on the show and market. Indeed, CBS licensed to Netflix in Germany pay-TV rights to new series “Penny Dreadful,” in effect becoming the show’s first syndicator.

At the same time, the CEO cautioned that bingeing, the social term Netflix created to characterize viewers who watch two or three episodes concurrently, is a slippery slope. Moonves said CBS’s revenue remains tethered to TV advertising, which he said could be hurt by viewers consuming unlimited content without ads.

“Bingeing [is] not the end-all and be-all. There are a number of shows that work. But we want to be very careful. By putting on a lot more episodes [on SVOD] might hurt us,” he said.

Moonves said CBS is in discussions with Sony’s pending Internet TV service, which just signed a network license agreement with Viacom.

When asked if he would consider offering the Showtime Anytime app as a standalone, direct-to-consumer service, Moonves said he and the rest of the industry are weighing offering such platforms.

“I don’t know when the timing is right, [but] it is very exciting to think about,” he said.

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