Tuesday, May 01, 2007

Switchover One-Year Recap: Program Providers

When I started this blog, I opened with a series of posts called "The Players", where I identified what I considered to be the main actors in the unfolding drama of the DTV transition. Since then, I've done twelve monthly recaps (since I'm counting down to 2/17/09, my "month" runs from the 18th to the following 17th) tracking the changes involving each group (The Public, Government, Broadcasting, Program Providers, HD Networks, and Manufacturers - retail being thrown in with Manufacturers). This series will look at what's happened over the course of those twelve months, and ask a longer-term version of the question I ask in every monthly recap - what's changed? (NOTE: This series does not replace my next monthly recap, though it has already made it even later than it usually is.)

Life won't be as different for cable companies, satellite operators and telcos after 2/17/09 as it will be for broadcasters, except for the recovery of analog bandwidth. They'll need every bit (so to speak) of it to accommodate the explosion of DTV offerings, both broadcast and cable. Here's how things looked to me on 3/27/06:
What does every HD fan want most? More channels, obviously. And every HD fans' biggest frustration is the slow speed at which these are being added and launched (see next post for more on the latter).

At the moment, satellite seems furthest along the way to being able to add a large number of channels, unencumbered by the legacy of analog and needing only to send up new birds. Hopefully when there is enough capacity we'll see more of those channels presented at full resolution!

Cable is where there will be a real bandwidth struggle (at least until analog is gone). Any real progress in the next few years will be conditioned by how quickly services like Extended Basic can follow the example of pay channels by migrating to digital-only. What percent of the customer base will have to have digital cable to make this feasible (i.e. to stave off a revolt)?

And how will the rise of services like Verizon's FIOS affect all this?
So, what's happened since? For the most part, HD channel adds continued at a slow pace, with the game-changing launch of two DirecTV satellites still looming in the future.

Let's start with the biggest provider, Comcast. Depending on the capacity of your local system, you could have seen ESPN2, MHD, UHD, NFL Network HD, National Geographic HD, A&E HD, and Versus/Golf HD added. You lost INHD2, but so did everyone else. You may have had some local adds as well - here in Boston NESN finally got its own channel (it used to pre-empt INHD2), which is probably the big reason that all their studio shows are now HD.

Overall, Comcast has done a decent job of keeping up (unless you're in a bandwidth-challenged area), with the obvious exceptions of HDNet, HGTV HD and Food Network HD. But like every cableco, the thought of how to compete with DirecTV once the new satellites go up (see the DirecTV section) has to be paramount. One way is to be good at something the satellite companies aren't very good at (yet), which may be why Comcast is focusing on expanding HD VOD. they started in September by announcing an increase to 100 hours of HD VOD, and have added some additional content since (most recently, Showtime, with ABC scheduled for this fall).

September was also the month Comcast COO Steve Burke predicted that they would offer 32-35 HD Channels, including locals, by the 3rd quarter of 2007. Now, Boston is one of the better areas for bandwidth and we only have 22 channels, so I suspect that prediction may come up a bit short, pending some really major events in the next few months. Burke also spoke about more DVR storage and TiVo service in the near future. The TiVo part does seem to be moving forward, as December brought word that they've been testing the software, and in January they demonstrated it at CES. Certainly an improvement over the current iGuide software!

But more extensive measures are clearly called for, even though Steve Burke recently tried to lower expectations by announcing that they won't try to match DirecTV channel-for-channel. Which is why they're testing switched video as a way of expanding HD capacity. My next monthly update will have details of an interesting Chicago experiment designed to clear some analog bandwidth, not all that unlike one they tried in a a small Ohio town last July.

While Comcast is making slow but steady progress, DirecTV is more in a state of limbo (as far as national HD channels go), preparing for two satellite launches that threaten to move it from the back to the front of the pack in terms of HD channel capacity. In the meantime, they've been rolling out local stations, and debuting their HD DVR, though users of the new DVR have been mourning the loss of the TiVo interface (including actress Alyson Hannigan, who did so quite publicly in a late-night talk show appearance). They've also been sued - twice! One suit was filed in September by Peter Cohen over the issue of "HD Lite" . I haven't heard anything more about this, but in January RĂ´mulo Pontual (Executive Vice President and Chief Technology Officer of DirecTV) sat down with Ben Drawbaugh at Engadget HD to defend their HD PQ. The second was filed by Time Warner in response to their HD-related ads, causing them first to change that Jessica Simpson "I totally don't know what that is, but I want it" ad, only to have a federal judge order it (and another starring William Shatner) pulled off the air. And lest we forget, they're also being taken over by Liberty Media.

But none of these are the big story, of course. After much anticipation, that story got moving in January, with DirecTV's announcement that planned to carry 100 HD channels by the end of 2007. It's been several months, though, and most of the questions I raised in my January 30th post have yet to be answered. Even with the announcements to date, and the recent revelation that they are counting the Sunday Ticket feed as 13 channels, there are still dozens of announcements that will need to be made in the next few months if they're to have any chance of hitting that number. It's been noted that their original announcement listed channels that have yet to say anything about an HD launch, leading me to suspect that many of these channels will be rushed into production and remind us more of A&E HD than Discovery HD Theatre. And we still don't know just what effect the recent rocket explosion on the Sea Launch platform will have on the launch of one of the two satellites that DirectTV is supposed to be adding, though analyst comments suggest that the real impact may fall on their local HD strategy rather than their national plans. The next few months should be very interesting!

Contrast this with with the position of Dish Networks, currently the leader in national HD channels, but beset with a number of problems. they lost their distant network signals, and are currently embroiled in a patent infringement lawsuit instituted by TiVo, currently on appeal (this could lead to a loss of their DVR service, but hopefully will end up with a licensing deal bringing the TiVo interface to Dish customers). They're fighting to remain competitive with a no-upfront-fee DVR a simplified HD pricing structure and a roll-out of local channels. But it must be noted that I've seen nothing so far about what they will do to expand bandwidth to meet DirecTV's challenge later this year.

Time Warner has been thinking about how to counter this, as this interview with Melinda Witmer (Time Warner's senior vice president and chief programming officer) shows.

Meanwhile, alternatives to the traditional cable/satellite lineups were advancing through the year. I must have seen literally a dozen or so stories a month concerning Verizon FiOS's rollout in a 10-state area (here's a recent one). They are now available in about 400 communities (they've obtained over 700 franchises so far). Adding significantly to the speed of this rollout are the new state franchising laws they've been instrumental in getting passed (see my one year Government recap for details). Looking ahead, they've released some ambitious projections for the years ahead, as well as data revealing that over 60 percent of their customers lease HD boxes. Some additional insight into Verizon's thoughts on FiOS TV can be found in this October TV Week interview with Verizon's Terry Denson. Overall, their impact has been such that Multichannel News recently wrote about the effect they are having on the regulation of basic cable services. A pretty good first year!

Making somewhat less of a splash to date is AT&T's U-Verse IPTV service. An IP video service raises some interesting issues, such as how do you regulate it - like the Internet, or like cable? After a lot of testing (and some initial skepticism over their combined fiber/copper delivery system) the system got rolling in November, and in March reached the 15-market goal it had originally expected to reach in December, but had signed up only 7,000 customers at that point (I believe it's more like 20,000 now).

There was news from other providers as well. One actually died - I actually reported on the death of USDTV (an attempt to cobble together an inexpensive DTV service with bandwidth leased from various local stations) twice, once when they filed for bankruptcy , and eight months later, when they finally shut down. Cablevision recently released their own HD subscriber figures, which have doubled in the last year (similar to the results from Canada's Rogers Cable. For those of us who continually fret over not having every HD channel ever launched, perhaps a little perspective can be gained by pondering life as a customer of Insight Cable (ninth biggest in the nation, and now up to a whopping eight HD channels, or as a resident of Sheboygan, Wisconsin (whose local cableco waited until October) to finally add HD. And you don't have to be a big fish like AT&T to offer IPTV, as this story concerning the struggles of Canby Telecom to do just that demonstrates. There was also news about various alternative ways to get content onto your TV. Apple introduced AppleTV, and there were also announcements from Microsoft, Sony, Skype and even Xbox (Xbox LIVE subscribers were recently offered a special HD version of a 2004 South Park episode that was produced in 16:9 HD).

Coming up in the next year - lots and lots of new channels, and hopefully you'll be on a system that has room for them. Which leads us to the next recap in this series - HD NETWORKS. It's coming soon, so keep checking the feed!

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