TV/Technology NotesIn Search of Apps for Television
By Amy Chozick and Nick Wingfield, The New York Times
- April 28, 2012
The same consumers who delight in navigating the iPad still click frustratingly through cable channels to find a basketball game. Their complaint: Why canÂ't television be more like a tablet?
The technology industry is trying to address that question for the millions of customers ready to embrace the next generation of viewing options. In the process it could transform the clunky cable interface, with its thousands of channels and a bricklike remote control, into a series of apps that pop up on the television screen.
While still in its early stages, the idea has taken off among tech-loving consumers, and companies are trying to satisfy them. Already, apps for Hulu Plus, Netflix and Wal-MartÂ's Vudu streaming service, among others, are built into Internet-enabled televisions. Devices like MicrosoftÂ's Xbox 360 and the streaming video player Roku let viewers watch apps that mimic channels. New sets by Samsung and others come with built-in apps loaded with television shows, movies and sports.
Apple has a video player called Apple TV with apps to Netflix, Major League Baseball and other content. Many media executives predict Apple will ultimately enter the television market in a more aggressive way, with either a new set-top box or an Apple-made TV set. Both would rely on apps scattered across the screen as they are on the iPad. Apple declined to comment.
ÂIÂ've told my bosses, ÂThis is beachfront real estate. Buy in now,Â' Â Lisa Hsia, executive vice president of digital media at NBCUniversalÂ's Bravo channel, said of developing TV apps.
A model built around TV apps, however, could let viewers use favorite apps on the screen on an Ã¡ la carte basis, thus bypassing cable subscriptions and all the extraneous channels they donÂ't watch. And therein lies the tension that has the television industry delicately assessing how to balance the current system with an Internet-based future that some feel is inevitable.
ÂThe question that hasnÂ't yet been answered is whether television viewing will consist of a single app that mimics the pay TV bundle or a series of different apps that together form a content experience,Â said Jon Miller, the chief digital officer at News Corporation, which owns Fox Broadcasting and cable channels like Fox News and FX.
Ã la carte apps would upend the entrenched and lucrative economics of television, which have long relied on a system in which cable customers pay for channels even if they donÂ't watch them.
The so-called bundle setup helps little-watched channels bring in revenue from monthly cable fees and allows the most popular channels to get high fees from every subscriber, even the ones who donÂ't watch them.
The idea of undermining this model is so sensitive that media executives who think that apps are the future of television would not discuss the subject publicly, for fear of disturbing their cable and satellite partners.
But many analysts caution against predicting the near-term demise of cable and satellite delivery, pointing out that the spending and viewing habits of consumers are also firmly entrenched.
ÂThe model we have is the model we have, and while itÂ's tempting to imagine an app for TNT and an app for ESPN, thatÂ's not the likely outcome,Â said Craig Moffett, an analyst at Sanford C. Bernstein & Company. Ã la carte apps might seem like a bright idea, Mr. Moffett said, but it is unlikely consumers would pay $20 a month for individual channels when the traditional cable bundle provides a bargain price.
Currently, most TV apps created by networks work on an authentication model that requires cable subscribers to log in before gaining access to a channelÂ's app. The handful of apps already available on television screens also largely require a cable subscription.
For the most part, the apps being offered today are intended as complements to traditional TV viewing and are available only on tablets and mobile devices. For instance, NBC Sports will soon introduce its NBC Olympics Live Extra app, which will allow subscribers to stream every Olympic event from London this summer. It is available only on iPads, tablets and other mobile devices, not on TV screens through Xbox or Roku.
ÂNo one on the digital side wants to take away audience from the TV,Â said Rick Cordella, vice president and general manager for NBC Sports Digital.
Time WarnerÂ's HBO still relies heavily on the cable bundle because it does not have the customer service or sales force of a company like Comcast or Time Warner Cable. But HBO Go does allow subscribers to have access to the pay channelÂ's library of almost every series, movie, documentary and heavyweight fight directly on the TV screen, via the Xbox.
ÂThe HBO Go app is seen as a doorway into the entire world of HBO programming,Â said Eric Kessler, co-president at HBO. ÂThat adds tremendous value to the subscription.Â
As such, HBO Go could help the channel lay the groundwork to eventually break out on its own on an Ã* la carte basis, even if that might not happen soon, said James McQuivey, an analyst at Forrester Research. ÂHBO has the largest subscriber base of any video service in the world, but they know none of their customers by name,Â Mr. McQuivey, said. ÂThat will be a huge liability in the future. HBO knows that; thatÂ's why they need a direct relationship.Â
The ability of any channel to strike out on its own, even strong ones like HBO or the Walt Disney CompanyÂ's ESPN, remains problematic. ESPN makes about $5 a month from each of the countryÂ's more than 100 million cable subscribers. If ESPN ever sold its live sports and talk shows directly to the consumer, it would need to charge several times that rate. ÂWe have no plans to bisect our partnerships with distributors,Â said Sean Bratches, the ESPN executive vice president for sales and marketing.
But just as with previous transformations in television, the economics will have to catch up as technology evolves, said Jeremy Allaire, chief executive of Brightcove, a technology firm based in Boston that builds apps for media companies.
By 2014, an estimated 89.5 million people in the United States will use tablet computers, up from 54.8 million users in 2012, according to the research firm eMarketer. ÂYou have to achieve scale before the economics will work,Â Mr. Allaire said. ÂBut at some point, we think direct-to-consumer will be very important.Â
That model may prove attractive to smaller cable channels, many of whom dislike how they are buried within the traditional electronic guides that viewers use to navigate their cable boxes.
Bigger cable channels may find it appealing as well. The head of digital strategy at one major channel said he was excited about the idea of having an app that sat on the home screen of a television. It would provide a Âsafer passageÂ to eventually sell the channel directly to customers, rather than through a cable package, said the executive, who declined to be identified to avoid upsetting the companyÂ's cable partners.
Cable and satellite companies have sped up the development of their own TV apps in the hope that they will eventually mimic the set-top box. In an ideal cable industry model, customers will have one or two apps that offer hundreds of channels rather than dozens of apps for individual networks. ÂYou download all these apps, and then you get app fatigue,Â said Matt Strauss, Comcast CableÂ's senior vice president for digital and emerging platforms.
ÂApps create amazing experiences,Â Mr. Strauss said. ÂBut I believe most customers and households are still looking for an aggregated experience thatÂ's intuitive and personalized.Âhttp://www.nytimes.com/2012/04/28/bu..._r=1&ref=media