1. TWO WAYS AT ONCE
THE YIN AND YANG OF THE
TV - INTERNET CONVERGENCE
Fall 2011

2. As television and the interwebs converge, it
seems as if there are two divergent paths for
every issue that arises.
It’s impossible to tell which side will eventually
prevail or if a new, third way will arise.
This Executive Summary is an attempt to clarify
the current situation for our clients

3. ISSUE 1:
PAY TV PROVIDERS
VS
DIRECT DISTRIBUTION

4. Pay TV Operators Are Beefing Up
Their VOD Inventory As They Look
To Take On Netflix.
Content Producers Are Striking
Their Own Distribution Deals Via
OTT Operators and Facebook

5. VOD DISTRIBUTION
• Verizon, Comcast , Time Warner and • Miramax and Universal have apps that let
Amazon are busy striking deals with users rent their movies directly or via
networks and studios to add more content Facebook’s new Social Cinema app, thus
to their inventory. eliminating the middleman
• They are looking to sell beyond their • HBO just struck a deal with Roku to offer
subscriber base: FIOS’ new iOS app allows HBO Go as an OTT option3
non-subcribers to rent movies using a credit
card.
• HBO Go offers much more content than
PayTV VOD catalogs always a superior
• Comcast recently struck a deal with user experience
Universal to rent the new Eddie Murphy/Ben
Stiller movie“Tower Heist” two weeks after it
•
Amazon has been striking deals with
studios to offer content via Amazon Prime
opened for a whopping $60
and the new Kindle Fire tablet4
• Theater chain operators threatened to pull
the movie and Universal reneged1
•
YouTube has also been rumored to be
negotiating deals with major studios to
• Time Warner then announced plans to offer launch pay VOD channels for movies and
movies the day they opened2 TV series, including original content5

6. KEY TAKEAWAY: Viewers will soon be
able to rent movies from any number of
sources. Loyalty will be fleeting as
consumers choose based on price and
availability of popular recent titles

7. ISSUE 2:
SMART DEVICES
VS
SET TOP BOXES

8. Manufacturers Are Pushing
“Smart TVs” For Christmas And
Apple, Boxee and Roku Have
All Rolled Out New Devices
Cablevision Announced They
Want To Add Netflix And Other
OTT Services Via Their STB6

9. SMART DEVICES SET TOP BOXES
• Boxee and Apple TV recently introduced • Other US PayTV providers are likely to
new devices that retail at around the $100 follow Cablevision’s lead and put OTT
mark channels on their set top boxes
• Rumors of an iOS-based Apple television • TiVo, the company originally displaced by
set abound on the tech blogs7 DVR-enabled pay tv set top boxes, just
launched a partnership with Virgin in the
• Roku has a new device that retails for just
UK that offers users a unique and
$50
beautifully designed set top box interface
• Google is also about to release the latest that integrates with Spotify, YouTube, BBC
version of GoogleTV8 Red Spot and other services10
• Industry reports expect sales of “Smart” •
The newest version of the program is
TVs to double in 2012 to 52.85 million units9 currently in beta in just two UK markets

10. KEY TAKEAWAY: Viewers will always
choose the path of least resistance and
if they can get OTT broadcasts via their
current provider’s set top box, they are
not going to add an additional device.
Look for pay tv operators to try and
license technology from Roku and
Boxee while Amazon, Netflix and Hulu
morph into OTT versions of pay cable

11. ISSUE 3:
SOCIAL TV BUZZ
VS
SOCIAL TV REALITY

12. “Social TV” Has Become The
Buzzword-du-Jour Along With An
Army Of New Apps
There’s No “Breakout” Social TV
App Yet

13. BUZZ NO BREAKOUTS
• GetGlue, the industry leader, has made •
None of the new “Social TV” apps
deals with several brands and TV shows connects to both the user’s set-top-box
to provide social check-ins and and social graph.
offersMiso, another check-in service,
recently struck deals with DirectTV and
• Many allow users to post to Facebook and
Twitter, but do not show activity from the
Uverse to link with the set top box and
user’s social graph
provide automatic check-inUverse also
struck deals with three other social TV • The TV Everywhere apps from the big US
apps to provide automatic connection to TV providers lack any real social
their set top box11 functionality beyond the ability to post to
social networks
• Clicker and Jinni, popular social
guide/recommendation engines were •
“Second Screen” content is
purchased by CBS12 and Microsoft13, overwhelmingly weak, limited mostly to
respectively head shots and/or links to Wikipedia or
IMDb
• TV Guide claims to be making money
hand-over-fist from their social TV apps14
• The iTunes App Store now has around
300 “social TV” apps

14. KEY TAKEAWAY: The Killer App is still not
here. When it arrives it will:
(a) seamlessly pull in likes, ratings and what
shows a user’s Facebook friends are
currently watching
(b) allow the user to take immediate action
on that information directly from the app
by either changing the channel or
recording the show

15. ISSUE 4:
TV EVERYWHERE
VS
TV STUDIOS

16. Providers Are Starting To Roll Out
Their TV Everywhere Efforts
Producers Aren’t Playing Along

17. TV EVERYWHERE RIGHTS ISSUES
• Cablevision, Comcast and Time Warner • Viacom and other content producers
have taken the lead in terms of providing have not reacted favorably to the
viewers with some form of TV Everywhere provider’s TVE attempts, suing
experience Cablevision and TimeWarner over
rights issues15
• Subscribers can watch free content on
smartphones and tablets • Fox and ABC have instituted longer
time gaps between when an episode
• Uverse and FIOS have focused on a
airs and when it’s available for free
browser-based experience, with FIOS
online16
concentrating on pay VOD
• Current TVE experiences are limited,
• A number of networks: CNN, NBC, Fox,
with no interconnectivity between
TBS, TNT, Discovery and ESPN have
devices and the set top box17
introduced their own tablet and
smartphone apps that emphasize on- • Rights issues mean that TVE viewing
demand programming must take place at home18
• There are no social components yet
beyond sharing out to Facebook and
Twitter

18. KEY TAKEAWAY: This one is hard to call: current TVE
efforts are tentative and inconsistent. Both networks
and movie studios may see their own branded TVE
apps as a way to cut pay tv providers out of the loop.
Another wild card is the possibility the FCC may
allow pay tv providers to sign up internet-only
subscribers from outside their territory, which would
open up much larger audiences for VOD content and
give the providers more leverage when negotiating
with content producers.

19. ISSUE 5:
STREAMING
VS
DOWNLOADING

20. Streaming Video Provides Instant
Gratification
Commuters And Travelers Prefer
Downloads

21. STREAMING DOWNLOADING
• Instant gratification and the ability to watch •Streaming is not on option on
on any device has made streaming video planes, trains, automobiles and hotel
the prefered choice for in-home OTT rooms, which creates a market for video
viewing on the set top box and on tablets downloads
• Streaming also avoids file size issues •Verizon FIOS’s new VOD iPad app is
download-only and Apple’s iTunes has
• The major Hollywood studios just launched
long used a download-only model
Ultraviolet, a cloud-based service that
allows DVD owners the option to stream • DIRECTV just launched its Nomad service
their movies to multiple devices by entering that allows users to transfer downloaded
a special code19 videos from their DVRs to as many as 5
devices for offline viewing21
• Ultraviolet is acknowledged to be an
attempt to boost sagging DVD sales
• Apple is also planning to introduce a cloud-
based movie streaming service via iTunes
and is alleged to have lined up several
studio deals20

22. KEY TAKEAWAY: Streaming from a cloud-based
service is the way of the future, but downloading still
has a few more years left.
4G devices will make out-of-home streaming easier,
but will not have wide adoption for at least a year or
so, which makes downloaded video a viable option
for the near future

23. SOURCES
1 Los Angeles Times, “Universal Pictures abandons “Tower Heist” early VOD release,” Oct 12, 2011, http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/10/universal-
pictures-abandons-tower-heist-vod-release.html
2 FierceCable.com,“Time Warner Cable selling VoD movies same day as theatrical release,” Oct 14, 2011, http://www.fiercecable.com/story/time-warner-cable-selling-vod-movies-
same-day-theatrical-release/2011-10-14#ixzz1bNOAnEeS
3 ZatzNotFunny.com, “Roku Brings HBO GO To The Living Room,” Oct. 11, 2011, http://www.zatznotfunny.com/2011-10/roku-brings-hbo-go-to-the-living-room/
4 FierceIPTV.com, “Amazon Announces Increased Prime Instant Video Selection for Kindle Fire and Prime Customers by Expanding digital video license,” Oct. 19, 2011
http://www.fierceiptv.com/press-releases/amazon-announces-increased-prime-instant-video-selection-kindle-fire-and-pr#ixzz1bNTpIgXT
5 HollywoodReporter, “YouTube to Add TV Channels With Premium Content From Hollywood Providers,” Oct. 14, 2011, http://www.hollywoodreporter.com/news/youtube-add-tv-
channels-premium-248876
6 Multichannel
News, “Rutledge: Over-The-Top Could Help Moderate Rising Content Costs” Sept. 15, 2011, http://www.multichannel.com/article/473926-
Rutledge_Over_The_Top_Could_Help_Moderate_Rising_Content_Costs.php
7 Fast Company, “The Great Tech War of 2012,” Oct. 19, 2011, http://www.fastcompany.com/magazine/160/tech-wars-2012-amazon-apple-google-facebook
8 ZatzNotFunny.com, “A Google TV 2.0 Sneak Peak,” Oct. 20. 2011, http://www.zatznotfunny.com/2011-10/a-google-tv-2-0-sneak-peak/
9 InvestmentU.com, “The Future of Smart TV Technology: Samsung, Google... or Apple?” Oct. 17, 2011, http://www.investmentu.com/2011/October/smart-tv-technology.html
Virgin Media Tivo Blog, “More details for Virgin Media's Winter 2011 software update for TiVo,” Oct. 13, 2011, http://virgintivo.blogspot.com/2011/10/more-details-for-virgin-
10 The
medias-winter.html
11 CNN Money “AT&T’s Uverse embraces the second screen” Oct. 17, 2011, http://money.cnn.com/news/newsfeeds/gigaom/articles/video_att_uverse_second_screen.html
12 Clicker Blog, “Clicker Joins CBS Interactive!” March 4, 2011, http://www.clicker.com/blog/clicker-joins-cbs-interactive-10011.html
13VideoNuze.com, “Microsoft Licences “Taste and Mood” Video Discovery Technology from Jinni” Sept. 8, 2011, http://www.videonuze.com/blogs/?2011-09-08/Microsoft-Licenses-
Taste-and-Mood-Video-Discovery-Technology-From-Jinni/&id=3207
14LostRemote.com, “Social TV ads bringing in millions, says TVGuide.com,” Oct. 18, 2011, http://www.lostremote.com/2011/10/18/social-tv-ads-bringing-in-millions-says-tvguide-
com/
15 New York Times/Media Decoder, “Viacom Sues Cablevision Over iPad App,” June 23, 2011, http://mediadecoder.blogs.nytimes.com/2011/06/23/viacom-sues-cablevision-over-
ipad-app/
16VideoNuze.com, “5 Things Holding Back TV Everywhere’s Rollout,” Oct. 19, 2011, http://www.videonuze.com/blogs/?2011-10-19/5-Things-Holding-Back-TV-Everywhere-s-
Rollout/&id=3256
17 Ibid.
18The Wall Street Journal/All Things Digital. “Fox Starts Its Web Pullback and ABC Gets Ready To Follow,’ Aug. 16, 2011. http://allthingsd.com/20110816/fox-starts-its-web-
pullback-and-abc-gets-ready-to-follow/
Los Angeles Times, Company Town blog, “Apple prepping movie cloud service.” Oct. 12, 2011, http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/10/apple-prepping-
19
movie-cloud-service-devices-may-work-with-ultraviolet.html
20 Ibid.
21 ZatzNotFunny.com, “DirectTV Launches DVR-Shifting Nomad,” Oct. 11, 2011, http://www.zatznotfunny.com/2011-10/directv-launches-dvr-shifting-nomad/

24. THANK
YOU
KIT Digital Alan Wolk Managing Director, Social Strategy