Consumers Will Pay ‘Premiums’ for 4K-Caliber Bandwidth, Media Summit Told
Eventually, when everybody owns a 4K TV, “we will be eating up more bandwidth,” Michael Kohn, vice president-platforms at movie streaming service SnagFilms, told the Digital Hollywood Media Summit in New York Wednesday. Those consumers will probably opt to pay for higher bandwidth and “they're going to pay premiums” to their Internet service providers for that, he said.
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"Somebody’s got to pay for” the extra bandwidth that’s needed with Ultra HD TVs, and that’s “probably going to be the consumer,” said panel moderator Gary Delfiner, chief digital officer at Float Left Interactive, a TV app solutions provider.
"The future will tell what … the ripple” effects will be of the paid peering deal between Comcast and Netflix, Kohn also said. There has been no impact for his company so far, he said.
How many connected devices a company ships, meanwhile, isn’t the only thing that is important, Stephen Spivak, president of Screen Dreams, a creator and distributor of digitally animated background video content/screensavers for flat-panel TVs, said during the same panel discussion. “Engagement” is important, so the connection rate of those devices is a key factor, he said. “Maybe only 10 percent” of the 10 million set-top boxes or TVs that are purchased from a particular company are being connected to online services, he said. After that, it’s also important to know how active those users are, he said. Roku’s connection rate and number of active users are higher than several rivals, he said.
Consumers are now spending 13-14 hours a week using each Roku device, so it already represents a “healthy chunk of TV consumption in those households” -- about “a quarter to a third” of their “TV time,” Scott Rosenberg, Roku vice president-business development, said during the same panel discussion. Offering users a “lot of choice” is helping to drive that consumption, he said.
Enabling users of online content services to discover content remains a challenge, panelists said. “You can’t show people 4,000 movies” at once to pick from -- “that’s just the wrong approach” to resolving the issue, said Kohn. SnagFilms does a lot of “curation” among its titles to decide what it opts to show as featured selections and then studies what works and what doesn’t, he said. The company uses that system as a “barometer to really figure out who our audience is for each platform because these audiences vary greatly just by device,” he said. “A Roku user is very different from an Xbox user, from an iPhone user” and from a tablet user, he said.
It is getting increasingly crowded in the online content service sector, so new companies have to “figure out what you can do with whatever platform you're going to be on” -- whether it’s Roku, Xbox or another -- that “can make you stand out,” said Kohn. “It’s going to be a lot more crowded tomorrow than it is today,” he said. Exclusive original content will play a key role in how successful online content services can be, he said.
On a similar note, “there seems to be a tolerance of a certain amount of apps” that consumers have on their devices, said Adam Klaff, vice president of online video service VHX. They probably won’t tolerate 20 apps -- maybe just five, he said. Too many different “walled gardens” by media companies isn’t in the best interest of consumers, he also said.
"There’s always going to be a place for traditional media” despite the growing strength of alternative content distribution services, said Spivak. TV apps, for example, won’t take control of Olympics broadcasting, he said. But moderator Delfiner disagreed. “I actually think that where it’s all going is the app,” he said. Cable TV “ultimately is a dinosaur” and more consumers will be cutting the cord, viewing content via Roku and other devices as opposed to traditional, linear TV viewing, he predicted. If cable TV companies don’t “dramatically” change their business models, “they're really going to have a problem,” he said. “A la carte” TV content availability represents the future of the industry, he said. Cable TV is “probably on the wrong side of history and you'll see their model changing” to survive, he said.
But Roku’s Rosenberg predicted that the cable TV industry’s current business model will remain in place for the next “couple of years.” There is still “a lot of value” in their bundling of channels to subscribers, he said. If, as a consumer, “you don’t want to watch ESPN,” for example, and instead want to “construct a TV experience just based on Hulu and Netflix,” that’s a “pretty rough-and-tumble TV experience -- it’s not a very complete experience,” he said. Cable TV companies will, however, start recognizing over the next three to four years that a certain segment of consumers are becoming cord-cutters in significant numbers, he said.
Digital Hollywood Media Summit Notebook
The Xbox One’s Kinect motion sensing system is aware whenever a user enters and leaves the room, but Microsoft isn’t keeping track of such data, said Jahn Wolland, Microsoft senior director-U.S. sales, video and Skype advertising. Compiling such data would be an “egregious violation of privacy,” he said. The ability to track when consumers leave the room, however, could potentially present an opportunity for Microsoft in the future. But if Microsoft did start keeping track of that data, it would only do so via an “opt-in” option, he said.