Commentary by Steve Effros
I’m generally very cautious about making prognostications based on timing. In my experience, particularly in our business, there tends to be a much greater disparity between when things are invented, announced, or “demonstrated” and when they actually get rolled out on any major scale in the consumer market. That has certainly been the case with “OTT,” and I’ve been saying that for many years; yes, it’s coming, yes, it’s going to be an alternative delivery path by new aggregators for video, and yes, the technology will improve to the point where it may get to be as good at delivering video as cable is today. But no, it’s not here yet, and it’s still going to take some time.
What I am referring to in the title of today’s column is not whether or when OTT video delivery becomes “mainstream.” That will still be some time off, if ever. What I’m referring to is that we appear to have reached a critical point in corporate decisionmaking regarding the course to take regarding OTT. All you have to do is recount what has happened over the past year to appreciate the issue.
We now have Netflix, Hulu, Sony’s Playstation Vue, AT&T’s DirectTV Now, Dish’s Sling Network, FuboTV, and the newly announced, but long anticipated Google YouTubeTV coming on the scene. They all have significant hurdles to still overcome. For instance you have to read the Google announcement very carefully to understand, or maybe get confused as to whether they are really going to deliver the four “major networks” to their subscribers for $35 a month. I think a careful reading says no, they are delivering “programming” from those networks, but not the network itself, and they will deliver “local news” from network affiliates, but not the network feed.
Of course Google also says it is going to roll out this new service first in major metropolitan areas, so they could use the “retranstenna” approach and have folks simply pick up the local digital broadcast feeds off the air. Anything is possible.
So here’s the challenge; for companies like Comcast, which already have incredibly well-developed distribution systems and program aggregation contracts, as well as the clear capability with their X-1 platform to distribute OTT, should they take the plunge now? Should they respond to the growing gaggle of nascent competitors by rolling out their own nationwide service? Or on the other hand, if those other services (and we can expect more from the likes of Amazon and Apple) don’t really have the packages they try to imply, or are low-balling their introductory prices—but the margins are way too slim and the assumption that ad revenue will make up the difference may work for Google but few others—is it better not to redirect the market and stick with what we already know works?
Naturally, the decision will also significantly affect other MVPDs in a major way. But one thing we know for sure: the broadband supplier in the local market is still the only way to get all that video the “last mile,” so as I have said repeatedly, maintaining your plant and you customer service is going to be the ultimate winning strategy.
In the meantime, however, the “big” guys like Comcast and Charter are going to have to decide, as are the new entrants. For them, the issue is whether they put money into distribution or product, which is going to make the most difference? None of this is clear, but decision time is near.