This is one of the frustrating things about writing about the TV business – it just doesn’t want to change. It wants to stay the same. One of the speakers from Viacom at the usually very effective Connected TV Summit, said this week that Content discovery is not changing that rapidly and that it still relies on traditional linear channels and word of mouth
The speaker was Christian Kurz, SVP, consumer insights and analytics, Viacom International Media Networks. And we’d like to ask “How does he know?”
This is a case of our favorite syndrome, which we call “It doesn’t work because we haven’t tried it.” Kurz concluded this because Viacom research shows that 71% of viewing sessions still start on linear TV, with catch-up and other sources playing a complementary role.
If the insurance industry had lost 29% of their insurers, they’d be in shock. If the oil industry had lost 29% of its oil fields, people would get fired, shareholders would ask questions, but when TV hears that kind of news, they say “It’s just 29%, that’s hardly anything,” and conveniently remember that none of the tools for discovery have been implemented on any major tier 1 pay TV networks, with almost all advanced discovery happening on underused OTT services, which they try to handicap.
If someone uses a diary, or sets a DVR reminder or recording, or simply switches straight to a channel, Viacom just assumes this is serendipity. The viewer must have found the new program by word of mouth? Given that news and sports are on at regular times, that movies appear at similar times, and data about which movies to watch can be assessed on the EPG, that leaves regular drama and comedy to be “found.” We’d estimate that as around 40% of programming. And if already 29% of it is being found some “other way,” we are about done.
So when Kurz says that things are still “surprisingly old-school,” and that “word of mouth is still dominated by in-person word of mouth.” We wonder why he is not excited and how he thinks he knows that?
But you can find the answer in by putting yourself in his position. He runs part of Viacom, which has TV channels, but he does not run a pay TV operator, and each pay TV operator it works with has separate experiments in OTT content discovery and they have not retrofitted those to broadcast systems (out of nervousness) and they have almost certainly not chosen to give the details of what advanced discovery does to viewing to their channel providers. i.e. Viacom.
There is a very simple premise we have talked about for years in IP delivered programming. In linear delivery a viewer needs a wide number of channels to randomly find one he wishes to watch at any point in time. A channel owner wants a wide number of channels, so that it has more advertising inventory. They have what we call “a mutual coincidence of desires.”
The moment you introduce VoD, DVR and nPVR and especially broadcast catch up and also recommendation services, a viewer has about 5 times as much content viewable as they had before. And as a result, that viewer needs about one fifth of the number of channels. The coincidence of desire evaporates. Where does that leave Viacom? Oh that’s right, it needs to have less channels, with better programming, rather than tons of channels with a wide variety of programming. And that means painful change and the potential to screw up. Much better to bury your head in the sand and say it isn’t happening.
Why did Kurz not tell us how Viacom is going to plan for a future where the best content is watched far more often and the worst, not at all? Oh that’s right Viacom plans to sell its studio, Paramount, so that it no longer has this problem and stops investing in content. It took much the same approach to Blockbuster and CBS when it thought changes in the industry were marginalizing them. By failing to invest in Blockbuster, the company missed out on becoming Netflix, and although Viacom separated CBS, that continued to thrive under new management.
These “status quo” lovers do no good at helping their shareholders and companies work out the future shape of TV, and get in good shape to survive the coming waves of change. This is a case of glass half full. If it has taken a few years of offering digital services for 29% of programming to be watched through some form of advanced discovery and that’s with it dragging its heels and trying to prevent it, how quickly will viewing change if it 1) Helps it along 2) Once people get the hang of it.
Kurz’ thinking is to position Viacom as an owner of live events. And to invest in digital distribution. He also talked about Play Plex, basically phone apps for Viacom’s partners for TV Everywhere distribution, launched last autumn. It was very late to that market too.
It is a universal truth that companies like IBM and Nokia, the undisputed kings of past respective technologies (Mainframes and mobile phones) tend to fall fastest, because they do the least to invest in the future. Viacom must be the content equivalent of this. TV Everywhere is now clearly a “failed” experiment. Comcast and Time Warner Cable, and early adopters like Sky in the UK and Liberty Global in Europe, have all found that eventually they have to get out there and offer a paid for service on top of TV Everywhere. Comcast has Xfinity, but it also has Stream; Sky has Sky Go, then introduced Now TV; Liberty Global has Horizon Go, but brought out MyPrime. Dish began with TVE then jumped straight to Sling TV.
And in the US OTT is now synonymous with CBS All Access, HBO Now, and Showtime OTT services from CBS, not to mention AMC Networks with Shudder and a host of others.
Where are the Viacom OTT plays? It has just backed high priced OTT services like Sony’s Vue, and given Hulu a bit more content. In other words, while all its rivals are getting their hands dirty and learning how to tame this OTT beast, Viacom is keeping itself at arms’ length. To a certain extent this is understandable from the protection of its assets basis, but it makes Viacom the “head in the sand” champion of the US content industry – set to end up like IBM and Nokia.
Kurz used the platform to call for international standards for multiplatform audience measurement so that companies like his, can get a reasonable amount of advertising for its content on other platforms. Perhaps he also needs a plan B.