Who were the biggest pay-TV winners and losers at CES?
That "bear hug" offer Charter Communications (Nasdaq: CHTR) made for Time Warner Cable (NYSE: TWC) turned our attention away from material we gathered at the Consumer Electronics Show last week. Analyzing the impact of cable consolidation will likely be a key focus for us this year, but here some of the stories and ideas that we believe are worth keeping an eye on after the trip to CES.
Sony opened the convention by announcing that it will test a virtual pay TV service later this year. But the WWE was the biggest winner, unveiling the industry's first 24/7 over-the-top network.
WWE founder Vince McMahon brought a huge team to Las Vegas, which included Chief Revenue and Marketing Officer Michelle Wilson, Chief Branding Officer Stephanie McMahon and WWE heavyweight champion John Cena. What really sparked my attention were comments from Major League Baseball Advanced Media CEO Bob Bowman, whose company will handle video streaming and app development for the virtual cable network. "We think this will be the first of its kind," Bowman said, suggesting he sees more OTT networks on the horizon. "We believe they are way ahead of their time," added Bowman, who praised Vince McMahon for being "bold enough to take step this forward and go where no other content has gone." (Click here to see YouTube video of press conference).
Pay TV distributors could face challenges selling $100 monthly programming packages, as more content owners take a direct-to-consumer route. But growth in over-the-top video could also drive more business to companies like Verizon Digital Media Services (NYSE: VZ). Hot off of its acquisition of EdgeCast and upLynk, VDSM was in Las Vegas pitching programmers a turnkey solution that can handle everything from content origination to delivery to smartphones, tablets and other IP-connected devices. In addition to handling over-the-top video distribution for Verizon FiOS and its Redbox Instant joint venture, VDMS customers include ABC, Sony and Twitter.
Will VDMS also help Verizon build a virtual pay TV service that could allow it to sell subscription video outside its footprint? "If Verizon did something like that, we would certainly be the enabler of that," VDMS President Bob Toohey told me during a meeting at CES.
Look out for more over-the-top video networks launching this year. I'm also wondering if that My Nick Junior channel that Verizon and Viacom plan to offer FiOS TV subscribers later this year will be included in Sony's OTT lineup. Offering viewers both live and on-demand content on IP-connected devices, it has many similarities to WWE Network, which launches on Feb. 24.
Interactive ads hit cable, OTT devices
ActiveVideo announced a deal with Brightline at CES that could allow advertisers to create interactive showcases in HTML5 that could be delivered to everything from legacy cable set-tops to connected TVs. But chairman Gary Lauder said he also sees a lot of potential from major MSOs that could use the company's CloudTV platform to offer subscribers smarter user interfaces on both legacy set-tops and advanced high-defintion DVRs.
ActiveVideo has been deployed by Cablevision, and a trial it is conducting with Charter in Texas could see it eventually rolled out on systems nationwide. One of its biggest challenges is overcoming the perception that cloud-based program guides are slower than guides powered by set-tops. "The reality is that our latency is often less than the latency of running [guides] locally on the box," Lauder told me.
I also met with Delivery Agent CEO Mike Fitzsimmons, whose company is taking an over-the-top approach to offer viewers the ability to buy products featured on TV with a few clicks of a remote control. The company, which also has deals with cable players such as Cablevision and A&E Networks, announced that it will power a t-commerce store on Samsung connected TVs which will be plugged during a Super Bowl ad from retailer H&M.
4K gains steam
Many CES exhibitors showed 4K Ultra HD TVs, including devices with curved screens and projectors that can display wall-sized Ultra HD images. What is most needed to drive 4K adoption is programming, which will be delivered soon from companies like 3net Studios, the joint venture from Discovery Communications and IMAX. 3net CEO Tom Cosgrove told me that many of the programs 3net is working on are being shot in both 4K and 3DTV, and he told attendees at a 4K panel session that he expects the costs for both 4K cameras and displays to decrease.
Comcast (Nasdaq: CMCSA) and NBCUniversal will look to promote 4K programming next month by delivering Ultra HD video from the Winter Olympics in Sochi, CTO Tony Werner said at the 4K panel. Comcast hasn't yet detailed where it will offer 4K programming. The MSO will likely sponsor screenings for industry executives similar to the events it held in 2010 to show The Masters golf championship in 3D. Setting up 4K demos in Best Buy retail stores to display Olympics programming in Ultra HD could also help drive sales of 4K TVs.
Will biometric devices power TV Everywhere?
I had an interesting meeting with Bionym Inc. CEO Karl Martin, whose company has developed a bracelet that tracks cardiac rhythm to authenticate a user. The device could be used to open car doors, speed security lines at airports, or deliver personalized programming to TV Everywhere subscribers. Martin said that he also planned to meet with a cable MSO executive interested in the Nymi bracelet. Check out the company's demo video here.
No pay TV distributor is using wearable devices to authenticate subscribers. But with Comcast investing in BodyMedia, and both Comcast and Verizon engineers patenting ways to use wireless technology like Bluetooth and near field communication (NFC) to improve home automation and TV Everywhere authentication, the concept could catch on in a few years.
We don't have a big list of losers from CES. But it's worth noting that Cox Communications, which won a contract last fall to provide Wi-Fi and Ethernet service at the Las Vegas Convention Center, saw some challenges handling Wi-Fi demand at the biggest annual convention. It was difficult to connect to its free public Wi-Fi network. It also seemed like an opportunity for Cox to market the CableWiFi brand. While CableWiFi wasn't available in Las Vegas, that was a good decision, since it wouldn't have helped Cox and CableWiFi partners Comcast, TWC and BrightHouse if attendees were unable to connect when they selected the CableWiFi SSID.--Steve