Intel Media Lessons

Word has come out that Intel Media, which has hired some 300 people to work on its over-the-top (OTT) cable service competitor, is now looking to Samsung and/or Amazon to assist in the business. That doesn't look good for the first true OTT competitor to cable.

What have we learned here:

1. To compete on the high end of the multichannel television business, you need to have all the channels. Having any significant gaps in the lineup means your product isn't meeting the expectations of consumers for a super-premium service. So, Time Warner Cable's Internet restrictions with some programmers, even if a super-premium service provider has networks 1-15, gaps in the coverage of networks 16-50 are problematic. TWC CEO Glenn Britt made these restrictions public at the Cable Show in June.
2. To compete in the low end of the market, a new entrant must find a way to get more favorable pricing from programmers and there is little reason for the programmers to support such an effort.
3. If the programmers require Intel to meet minimum subscriber guarantees, that creates additional risk for Intel to enter the business beyond the expense of creating the distribution system and marketing it. Perhaps the programmers are unwise to do this -- after all, if Intel doesn't launch, then the multichannel distribution market (buyers of programming) is less competitive than it is otherwise, and that's not good for the programmers (sellers of programming). On the other hand, the programmers all risk annoying/jeopardizing their relationships with the current customers by selling to an OTT provider -- this is new territory and this threat/potential threat has been recognized by distributors for at least a decade. If programmers are going to antagonize their core customers, they might reasonably expect that Intel makes it worth their while. Additionally, there may be incremental costs to distribute their service over the Internet -- programming costs, creating a separate feed with separate advertising, etc.
4. The opportunity to compete with the multichannel incumbents may be smaller than Intel thought when they first pursued this effort. In the last year, it appears that the multichannel subscription television business has peaked, at least in terms of number of subscribers.
5. Perhaps an executive with experience outside the US was not the best choice to lead this business. The media and television businesses are still highly provincial as opposed to international. All of the problems that Intel has encountered were well known to me and likely dozens of other people with long histories in the US multichannel business. For clarity, I don't know Erik Huggers at all and have never heard anyone speak ill of him in any way -- my point is based solely on his CV. Having lived in the UK, I can say that its television marketplace is very different from that in the US in a number of ways -- the huge role of the public broadcaster (BBC), the national orientation of the media as opposed to local, the dominance of DBS (BSkyB) over cable in market share, the requirement that facilities-based Internet providers wholesale their infrastructure to competitors.
6. Any OTT video service faces the potential threat that limits on the amount of data a typical home broadband customer might consume could make using the video service (or using it extensively) impossible or cost prohibitive. This uncertainty certainly (pun intended) makes a big investment in a new business more problematic.

I'm sure there will be a more direct over-the-top competitor to multichannel subscription television someday, but that day looks further out now than it did a few months ago.

Updated (30 October 2013): According to Peter Kafka at AllThings D, Verizon is in talks to take Intel Media off of Intel's hands.
Updated (21 November 2013): According to Reuters' analysis, For Intel, Hollywood dreams prove a leap too far.
Updated (26 November 2013): According to Bloomberg, Intel is asking for $500 million for Intel Media/its OnCue assets

ESPN 3D Is Dead, Here Comes Ultra HD

With the announcement yesterday that ESPN is shutting down its 3D service, it appears that any chance that 3DTV would catch on with consumers has bitten the dust.

My view is that what doomed 3DTV was less the glasses required for 3D viewing -- which are a significant issue -- but more the fact that 3DTV simply wasn't that compelling a viewing experience. 

I remember heading to the 2010 Cable Show in Los Angeles, convinced that I was going to buy a 3D TV upon my return home -- industry interest in 3D was sky high and it looked like a very promising new business opportunity. However, after seeing every single 3D demo on the exhibit floor -- maybe 25 in all -- I though that the experience was underwhelming, when it wasn't actually bad.

What is most interesting about the experiment with 3DTV is how it completely tracked the initial enthusiasm for 3D movies in the 1950s and then their subsequent fall from favor. Around 1980 or so I saw the 3D Creature from the Black Lagoon and Dial M for Murder, but they didn't make me wish that the big films of that period, like Jaws or Star Wars, were in 3D.

In contrast with that experience, this year I saw Ultra HD (also known as 4K) sets on the exhibit floor this year (in Comcast's and Samsung's booths) and both looked pretty spectacular. I don't know if Ultra HD's combination of price, content availability and quality will ever get sufficient traction to be successful in the market, but I do know that the quality is uniformly very good and readily apparent.

Ultra HD set from Samsung booth -- photo does not do it justice; Van Gogh's Café Terrace at Night

Interestingly, the content that might first make a difference on these sets may be consumers own still photographs. Still pictures of masterpiece paintings were used on the demo by Samsung. Consumers' photos are already available in resolutions far beyond that of a 1080p set. An Ultra HD Apple TV device might be a great early use case. Apple already has experience with greater than 1080p resolution displays from their experience with the "Retina" displays in both the iPad and certain MacBook Pros.

More on this: Brian Stelter, New York Times

HBO (No) Go on Samsung TVs for Comcast, Time Warner Customers

While Comcast and Time Warner Cable are now happy to affiliate with HBO Go, its TV Everywhere service, apparently they are picky about the platforms on which their customers use Go.

First it was Rokus that was problematic, now it is Samsung's Smart TVs.

It seems clear that the problem that Comcast and Time Warner Cable have is that they believe TV Everywhere should allow their customers to see services on devices that are not TVs; they believe a TV should only be powered by one of their set-top boxes. While I understand their position -- no one who owns a platform likes a competitive platform -- it just feels to me that it seems like an approach from an earlier era. When cable was a monopoly television distribution business it could get away with customer unfriendly choices. Today, with a broadband Internet business and phone service to sell, and no monopoly position on those, it would seem that moves like this just serve to continue the negative cable guy image and don't build the brand that's needed now.

Thoughts While Visiting the Samsung Experience

Times Square rendered in Legos @ Samsung Experience, Time Warner Center, New York

I went to the Samsung Experience a few weeks ago.  If you are not familiar with this place, it is sort of like an Apple Store, except without the store part.  You can't buy anything, it is simply a beautiful showroom for the company's products and a place to try them out in a comfortable setting.  I visit it every month or two as a way to keep up on the developments in consumer electronics - notably 3D TV, Internet-connected TVs and Blu-Ray players.

3D TV continues to be very much a mixed bag to my eyes.  In the (Blu-Ray-based) sampler demo I saw recently, the 3D effect was not very impressive and the quality of the effect seems to vary -- sometimes it looks good, sometimes not so good.  It might might work better in a very dark room.  After all, real 3D is all around you in a lit room.  And 3D TV seems to suffer next to 3D reality.

Google TV is very clunky and laggy, when it was usable at all.  Samsung could learn from Apple and spend some time and set up decent demos of the services related to the products on display.  Without a sample account set up, the Facebook, Twitter and MLB apps are useless and no visitor wants to enter their own information to use them.  Also the Google TV remote is way too complicated (and I am somewhat familiar with the platform from experience with Android phones).  Google TV is hopeless now, but so was the first version of Android.  Roku and Apple TV, both of which I have at home, are far more polished right now.

The Galaxy Tab, Samsung's answer to the iPad, would also benefit from an Apple-style demo setup with some sample photos, emails, Facebook account, etc.  The only things that one can really use out of the box are the browser and games like Angry Birds (both of which are very nice).  The tablet did seem a bit laggy, which I hadn't noticed when I used it on earlier visits.

Samsung's Android phones look awesome.  The Epic has a great looking screen.

Samsung's 59 inch  plasma TV picture is excellent with (2D) Blu-Ray feed.  I wonder how Netflix Watch Instantly will look on it?  Of course Netflix is one of the highest profile apps for the set, but the Experience has not set up a way for one to, uh, experience it.