The Next Television Platform, Part 2

This is the second part of a three part series of posts on how television is changing and where the opportunities are. You can read the first post here.

I don’t make pictures just to make money. I make money to make more pictures. — Walt Disney

I recently began re-watching The Wire and it got me thinking about how that show got created, and how much television changed in the quarter century before The Wire first aired.

A five season series about gang violence, drug dealing and the drug wars, the devastation wrought by heroin and crack, racism, underfunded and broken public schools, the decline of the newspaper business and longshoremen’s unions? On a channel you had to pay for, with no ads? Impossible to imagine in 1979.


As a teenager in 1979 in the United States of America, one of the ways to cauterize your boredom on a Saturday night was to turn on the TV. At 9pm, among the four channels on the air (five if you were lucky), your best options were The Love Boat or BJ and the Bear.

If you were making television in the 1970s, the only way to make any money was through advertising, and the only way to make a lot money was to get the biggest possible audience share. So programmers at ABC, CBS and NBC worked feverishly to engineer a programming lineup as broad as possible in its appeal, with shows designed to entertain everyone and offend no one (as my colleague Andy Forssell points out, there were exceptions like Hill Street Blues and Seinfeld — but they were exceptions, not the rule).

Cable and satellite systems changed television in two fundamental ways. First, they expanded the supply of programming, allowing people to get dozens of channels the four or five they were used to. For the first decade or so cable systems mostly offered “more” — more choices, more channels, more things to watch, more ways to kill time. The programming wasn’t necessarily better than what you got on broadcast TV, but there was more of it, and it was more precisely targeted to the tastes of specific constituencies — sports and news junkies, teens, history buffs, soap opera addicts.

The second thing cable did was even more important — it persuaded consumers to pay for something they previously got for free. That simple change took decades to play out, but had huge implications over time. With revenues no longer determined only, or even mostly, by audience size for your shows, cable networks began to think instead about how many people paid for their channel (indirectly through affiliate fees, or slightly more directly by adding it as an a la carte premium channel in the case of HBO), how much they paid, and how they could increase both of those things.

It became more important to get some people to love your channel than a lot of people to watch it. ESPN is not the most popular channel (it’s frequently not even in the top 10 in audience size per night or per week) but commands over $6 per subscriber per month from cable operators — the most of any cable network, roughly twice what cable operators pay for all of Viacom’s channels combined — because hard core, passionate sports fans love it, demand it, and wouldn’t buy cable without it.

Independence from advertising freed HBO from having to worry about audience size for any of its shows, and allowed it to take bold creative risks — “It’s not television, it’s HBO.” Starting in the early-1990s, HBO learned that it could set itself apart from other premium channels, who all had the same movies and comedy specials, by investing in original series. The Larry Sanders Show ushered in two-decades of great, ground-breaking original series and a legion of imitators.

The evolution from an ad-supported business model to paid models resulted in programming that more consistently achieved greatness. It’s too simplistic to say paid-platforms guarantee better TV — a claim immediately undercut by the junk you can easily find still on cable. But by divorcing revenues from audience size, paid platforms do a better job of creating the conditions that allow creators and publishers to make something really great, and something we love.

As Ben Thompson wrote on his blog a few years ago, we hire TV to do a specific job. It’s done different jobs over time, but today, in 2015, it does one job for most people most of the time — it entertains us, mainly on the evenings and weekends (Thompson puts it somewhat different, and says it “provides escapism.”) One reason linear television held on against the assault of all our digital devices for longer than many expected is because it did that job better than any other medium.

The biggest OTT video platforms — particularly Netflix and Amazon — are challenging the hegemony of linear TV because they now do that job better for many. They have shown they can make programming we love just as much as linear TV, with shows like House of Cards, Orange is the New Black, Transparent, Bojack Horseman, Unbreakable Kimmy Schmidt, Sneaky Pete. And they go one step further, making it all available on-demand, and viewable on any device the viewer has. The on-demand OTT world is so different that we’ve adopted a new verb to describe how we watch now — binge. And so the moat that cable and satellite channels erected is cracking.

There is another reason we’re attracted to paid-services like Netflix and Amazon — no ads.

We want the distractions and interruptions kept to a minimum and we’re far more willing to pay for that. In fact, we get into a near state of rage when we’re besieged with commercials while catching up on a favorite show:

Screenshot 2015-08-10 16.49.06

And so today Hulu announced it would finally offer an ad-free version of its service at a higher price. I don’t have data to prove this claim, but I have a hunch that our desire for immersive, ad-free escapism in the evenings and weekends has grown as we spend more time in front of other screens, on the ad-supported Stream, during the other parts of the day.

We want to use our time differently when we hire a service like Netflix on our evenings off or the weekends. We’re looking for stuff to get lost in and to love. We come for more than relief form boredom; we’re seeking enlightenment, transcendence, the suspension of disbelief.

And so the next television platform — meaning the one that joins the ranks of Netflix and Amazon Instant and perhaps one day even surpasses those services in power and popularity — will almost certainly have pay in its DNA in addition to being most at home on the TV. Because consumers have hired TV to do a job (provide escapism), and ads get in the way of that. And because the platforms with pay in their DNA are the most likely to provide the kinds of programming we can get lost in, and binge on.

Who are the contenders? We’ll talk about that in the next post.


The Next Television Platform, Part 1

How you think the world of television will be transformed depends in large part on how you perceive this really great chart put together by David Pakman.

One could look at this, as Pakman and many others do, and rightly conclude that the growing green wedge illustrating the explosion of time spent on mobile devices represents the future.

I look at this chart and see another opportunity. The largely unchanged and very large block in dark blue at the bottom — the four plus hours per day we spend watching live television — is now up for grabs. We’re at the beginning of a massive shift away from live linear television (cable & satellite) to on-demand over-the-top TV (Netflix, Amazon Instant, Hulu, HBO Go).

This shift is already well underway for some. Which age cohort is leading the switch away from linear TV to paid over-the-top video services? Millennials. These two charts tell the tale:

falling off a cliff

falling off a cliff

Millennials love paid OTT

People of all ages are watching these OTT services on devices that might surprise you (hint, it’s not the phone). Connected TV streaming players (like the Apple TV, Amazon’s FireTV, Roku, or Chromecast) and laptops and desktops dominate.

Watching OTT on the TVAnd among all the age cohorts — surprise again! — millennials are the most likely to watch a service like Netflix through a connected TV device.

Millennials & OTT on the TV
The data and trends are even more remarkable when you consider the penetration of connected TV streaming players is still relatively low (27% overall in the US as of January 2015, compared to 85% for smartphones among millennials) and in the early days (just a hobby for Apple, though rumors abound that that is about to change).

One big new business has already been built as a result of these changes (Netflix). And as more good services (HBO Go, Showtime Anywhere, ESPN, and others) are available through streaming players like the Roku or AppleTV, more people will buy those devices and use them. As tens of millions of Netflix fans have already learned, once you get used to the delights of the on-demand over-the-top TV, you don’t really want to go back to linear television. The opportunity on mobile is huge and will continue to grow, but building services and platforms for connected TV devices is skating to the puck.

So while the next video platform will need to work on all the devices we use today (phones, tablets, computers and TVs) I’d bet it will be most at home on the television. But winning on the TV will likely require a different economic approach (“just sell ads” won’t be sufficient). We’ll cover that in the next post tomorrow.


A Better Television


What if you re-invented television using the Internet, with it’s diversity and choice, and made it not just more open but more friendly as a result? Where a creator anywhere in the world could set up their own subscription video channel, supported by fans instead of ads. And where fans could get (and pay for!) just the channels they want, and watch on the device of their choice.

We launched something like that today with two big new additions to Showyou:

A self-service subscription platform where anyone anywhere can build and launch their own subscription video channel delivered over the Internet; and

A Channel Store, where fans get exactly the channels they want, and can directly support the channels they love.

Why a subscription platform? Why not an ad-supported platform?

First, we think there is already a great free, open, ad-supported video platform — YouTube. We weren’t convinced the world really needed another.

Second, we believe that advertising isn’t always the best, or right, option for all creators, all of the time.

Advertising works great for channels that reach tens of millions, or hundreds of millions, of viewers. But what about the programming that’s important and compelling — essential, even — for 1000s, or 10,000s, or 100,000s of fans? What platform was built for them, and helps those creators to make a living?

For the last 20 years, the Internet has given us new ways to create things, to express ourselves, to entertain and to inform others. Where it’s fallen short is in enabling creators to make money to sustain their creative work. Many platforms have launched with the following approach: “Give it away for free, we’ll sell (or let you sell) some ads, maybe you’ll make some money.” It’s a little bit like a casino, where the house always wins and sometimes a creator draws a lucky hand.

Over the last 4-5 years, some platforms have been launched that begin to remedy that. We’re honored to share office space with one of those pioneers, Bandcamp, a great service that help artists sell their music (and merch!) directly to their fans and that gives artists a fair shake. We have been inspired by their journey, and also by platforms and services (Kickstarter, VHX, and Patreon to name a few) that help creators get paid, and help them to sustain their creative work.

We launched our subscription platform and channel store today because we wanted to give creators another option, a different kind of platform, that sustains and encourages new and different kinds of programming. That allows creators and producers to entertain, inspire, and inform their fans, and to be directly supported by those fans.

And if we can do a good job of helping creators, we’ll give their fans (and everyone, really) better television. With more diversity and choice, with programming from independent creators from all over the world, making interesting things for us all to watch, and where people experience the joy that comes from directly supporting creators you love, and getting exactly the channels you want.


Who Disrupts TV?

A few months ago, @monkbent (Ben Thompson) had a good series of posts about the disruption of TV.  In his last post of the series, he looked at television through the prism of Clayton Christensen’s “jobs-to-be-done” framework: What are the jobs we hire TV to do? [1]

The disruption to TV will happen, Ben argued, when different services come along that do these same jobs better and more cheaply.

It’s a handy framework for thinking through what the future of TV might look like, and applying it some of the disruptors start to come into focus.

For example, many of us have already hired Hulu+ and Netflix — with their reasonably deep catalogs of  on-demand movies and TV shows — to entertain us in the evenings and on weekends. [2] As both of these services continue to grow their subscriber bases, they’ll be able to take on the other jobs cable networks do — fund the creation of great, compelling, original shows. Indeed, Netflix has already had success with House of Cards and Orange is the New Black.

Some people have hired services in completely different categories  — games (on phones or consoles) and social networks (on phones, computers) especially.

At Showyou we’ve felt for a long while that the biggest, most likely disruptive force would be the the massive amount of online programming that is finally being made available on screens we actually use in the evenings and on the weekend — the television and new television-replacement screens (tablets, especially, but also PCs and mobile phones).

That makes YouTube another obvious potential winner in the contest to disrupt TV. And indeed YouTube already accounts for 17% of downstream traffic in the evening  over “fixed access” networks (broadband wires coming into our homes).

But for many, using YouTube instead of TV still feels like too much work, with too little payoff; too much leaning forward when you want to lean back. The conceit of “video discovery” services has been that if you could just organize all this, they’d be among the winners, but that hasn’t happened yet. [3]

Whether you are YouTube or a startup, we think you have to do the following to have a shot at bringing the bounty of the Internet, and disrupting TV as a result:

1. Make your service as easy as TV

A huge part of the appeal of the television is that we don’t have to think too hard. Grab the remote and your off. Stated in a different way: one of the jobs TV does is that it allows us not to think. Your service has to do that too, or it won’t be hired.

2. Focus on “the what” not the “how”

People need to know what specific job they’re hiring you to do. When you say you’re delivering “videos picked by friends,” or “videos from your social networks,” you’re describing the how, not the what. Give people a reliable, tangible, concrete way to understand the programming they’re going to get to watch; how I’m going to be entertained, inspired, or informed by the programming. [4]

3. There is no first screen

People will expect your service to be everywhere. We may still turn to the television more than any other screen, but it’s hold on our lives is slipping with each passing month. There is no first screen anymore. In our house, most video viewing happens across iPads and PCs. The TV is only rarely on. That’s not the national norm, yet, but it’s most certainly the direction we’re headed.

4. Aggregation Wins

You need to deliver something of sufficient value and depth that people will want to use your service multiple times a week, for an hour or two at a time.

Netflix, Hulu, and YouTube of course all do this. The landscape favors aggregators. Not only for the depth of programming they offer, but also the consistency and quality of experience. The winners in this space will need to make simple, fun-to-use services across multiple platforms (iOS, Android, web, and connected tv devices) that connect and interoperate with other online services.

The great, unknown question is how many services we’ll hire to replace TV. That’s where the metaphor of “channels-becoming-apps” breaks down. It’s unlikely we’ll each hire 20-30 apps to replace TV. It seems more likely we’ll hire between 5-10; a few that do the job of giving us premium, subscription-funded TV shows & movies (Hulu+, Netflix, maybe Amazon Prime) and a few to help us watch the rest of the Internet.

The winners, whomever they are, will be giant businesses. The Time Warners, Disneys, News Corps of the future.


1. I’d argue it’s this, mainly: To entertain us in the evenings and on the weekends; to give us a way to escape and to relax after a day at work or in school. Ben suggests other specific jobs: to educate us, to inform us, to give us live coverage of sports, and to story-tell.

2. You could be pedantic and argue that Netflix and Hulu aren’t really disrupting TV, they’re simply delivering TV over IP. But the disruption we’re talking about is of cable television and its cost & economic structure.  And Netflix and Hulu, even if they largely deliver traditional television and movie programming, provide a cheaper and better experience than television (watch when you want, on the device you want, where you want).

3. Hunter Walk and I discussed this in an online dialogue in the spring (read our dialogue here and here). Christensen’s “jobs to do” framework might be helpful here, too. It may sound counter-intuitive in this age of abundance, but it’s not clear “discovery” is not a job that needs doing. The problem isn’t that we don’t know what to watch; the problem is that there is too much we want to watch with too limited time. Another problem: media discovery — for video, music, news — speaks to the “how,” but what we want is the “what.” That may sound like sophistry, a semantic argument, but consider Pandora. People often describe it as music discovery. But Pandora consistently, emphatically talks about the what, not the how. That is an “Internet radio” service. The music genome algorithm that makes Pandora work — the discovery part — is a means, not the end.

4. One of the reasons we’ve focused so hard on “channels” with Showyou is to address this. We want you to know what you’re getting — a channel oriented around taste or point-of-view (from a person or publisher you follow on Showyou), or interest (more about this tomorrow).

Television, Video

Pulling on a Thread

A dozen years ago, I helped to lead a team that created one of the first “over-the-top” video and audio subscription offerings on the Internet.

For $10 a month, you got a decent package of audio and video programming. Nothing special by today’s standards, but it was the reasonably compelling for the time. [1] The service grew to millions of subscribers, generated hundreds of millions of dollars in revenues for our company, and generated millions of dollars a year in revenues to our media partners. It was a pioneering service for the time, but it also had lots of flaws and challenges and I certainly made my share of mistakes (a post for another day, or not).

In the making and operating of this service we stumbled on an interesting idea. We did the thing cable-killers dream about; we un-bundled the bundle.

We gave people a choice — buy the programming as part of our overall subscription bundle, or just buy the specific programming you want on an a la carte basis. For example, you could buy an MLB stand-alone subscription or you could get it as part of our bundle. [2]  In addition to giving people a choice,  we learned it also maximized revenues — for us and our partners. Everyone won.

A group of us started to push an effort internally to turn our subscription service into a subscription platform — let anyone offer and sell stand-alone subscriptions powered by our infrastructure and delivered through our player. That we could, and should, open up what we had built, and let 1000s of flowers bloom.

Unfortunately, the company behind the service decided to make other efforts including the Rhapsody music service, casual gaming, and sales of audio and video delivery software to big companies a higher priority than the video subscription business.

Would we have succeeded if we got to pursue this? I don’t know. But  the notion of making a platform that would give makers of programming — from big companies all the way to individual film-makers — the tools to create and distribute their own “channels” over-the-top and make money from that has been rumbling around in my head ever since.

When we launched Showyou in 2011, we started with the challenge of finding and watching video (“discovery” in the parlance of the Internet pros). We wanted to first focus on making an app that was as easy to use as your TV, but more rewarding.

But from the start we knew discovery – while necessary — was probably not sufficient. And plus we had bigger and broader ambitions as a team. We wanted to use the Showyou app as the platform for a more audacious move  — an over-the-top, tablet- and mobile-centric video distribution platform. And over the past couple of years, that raw idea from a long time ago got re-worked, shaped into something new and different and better by our team.

And that’s the Showyou Channel Platform, which we announced today. It enables anyone — from the biggest media conglomerate to an independent filmmaker — to build a beautiful video channel for the iPad (iPhone & Android coming soon) and make a living from that if they want. As we’ve stated before, our primary focus in on new programming made for and delivered on this new medium.

Of course, YouTube does some of this now with their channel program. And Showyou very much complements those efforts, and works seamlessly with YouTube. But what we are doing is also different in fundamental ways.

Just as we put the viewer in control with our app, we put the channel-maker in control with our  platform. You decide where to host your video. If you want to sell ads, you’re in charge of that, too. You decide who your advertisers and sponsors are. You keep the money you make. It’s your channel. It’s your business.

To be even more clear about what we’ve launched and are building: it’s an over-the-top video distribution platform for the future; one designed specifically for tablets and smartphones; where anyone can build a channel; where you can host your channel anywhere; a platform with  discovery, social sharing and virality built-in; where you control your business and business model; and where you keep the revenues from your efforts.

It’s a start.

Twelve years is a long time to chew on an idea. Ideas alone are worth nothing, of course. But if you pull on a thread long enough, and maybe you’re lucky enough to be with the right team, at the right time, with the right product, to try to make it happen. Exciting, that.

So it’s with real pleasure I get to type this today:

On Showyou, it’s your channel. Go build it.

1. This was at RealNetworks, and the offering was called RealOne. Programming in the US included live audio and copious video highlights for every MLB game; live audio, some live video and copious video highlights for every NBA game; CNN and ABC News on demand video; multiple live streams from the then-enormously Big Brother show; FoxSports highlights and shows; dozens of high-quality internet radio stations (you could eventually add Rhapsody for an added fee); and much more. We also offered packages in the UK and Europe with video and live audio for the Champions League, live cricket, live Rugby, BBC News, classic BBC shows, reality programming from Endemol, and more.

2. 2.  Let it be recorded for posterity that Real got MLB started with their fine efforts in premium audio & video delivered over the Internet and powered most of the back-end for that the first 2-3 years.

Apple, Television, Video

A Modest Proposal

The 21st Century Video Platform Apple Should Build

With Tim Cook’s appearance at D11 last week, and WWDC just days away, feverish talk about an Apple-made TV, or something of the sort, has spiked once again.

In the wildest dreams of us video-loving geeks, this Apple TV will have all of the programming and it’ll do everything. A beautiful way to navigate and control your cable or satellite TV service. On demand over-the-top services like Hulu and Netflix. Seamless access to the bounty of the Internet. A DVR. All with a beautiful screen, inventive remote, interoperability with the iPad and iPhone. Apple reinvents the TV just like they reinvented the music business and mobile. Glory!

Apple is without doubt fully capable of making the hardware. But as smart commentators like @monkbent have pointed out, the Apple TV of our dreams is a bit like the Grand Unified Theory and the unicorn. Forces beyond Apple’s control make it unlikely that this device will come to pass.

This is not the music business or the mobile business.

So what to do? Here’s my advice to you, Apple:

Forget the past, build the future.

For your Apple TV device, do just enough with your hardware and software to make the existing cable & satellite experience a little bit better. But don’t get too caught up on the world as we know it. Don’t build anything that requires the permission of the cable & satellite guys, or the cable networks.

Instead, put most of your focus on building a video delivery system for 21st century, and devices made to work seamlessly with that delivery system. The iPad is one of those, and an important one. But you need to help people build new over-the-top video services that reach the TV, too.

So create, as Apple can, the ideal Internet video platform for the 21st century. Where all programming can be delivered over ip to multiple devices — iPads, iPhones, Macbooks and the Apple TV— via IP instead of cable.

What would such a platform look like? Here are the core principles of any platform Apple should set out to build.

1. The Internet is Distributed. Embrace that.

YouTube — with its centralized hosting of content — is an anomaly. Tensions produced by that centralized control are becoming more clear.

So let people host where they want. Video standards and fast broadband enable this. Just add some quality of service controls and services on the client to ensure a good experience with a distributed architecture. And add some special sauce for live streams (but don’t get hung up on live — it’s doesn’t need to be at the heart of our 21st century system).

This isn’t radical; you already do it on the current Apple TV. And of course you already support this on the iPad and iPhone. Just do more of it, and make it better still.

2. Build innovative tools for a beautiful & consistent experience 

Traditional linear TV channels are an elaborate fiction. They appear to be live, but are (mostly) full of on-demand programming played at specific dates and times.

What’s a channel in this brave new world with these new devices? How does a it work and what’s it look like? How are they traversed, navigated, consumed?

Invent that.

And then give creators and publishers the tools they need to make their channels rich, fluid and fun-to-watch.

But put guardrails in place that ensure tastefulness and a consistent experience for viewers, so that watching and navigating through and among videos in a channel is simple, wonderful, better than TV.

3. Don’t outsource discovery

Learn the right lessons from the AppStore. When you (Apple) enable a platform on the Internet,you can expect millions of flowers to bloom. Don’t plan for 500 channels — plan for 5 million. Provide smart, simple, intelligent ways for people find and watch programming they know and love. And introduce them to channels they might like.

4. Allow a media ecosystem to bloom

Build beautiful, user-friendly advertising & pay systems that let creative people and media companies make a living. You’ve got a head-start with iTunes, but go further. Bundles are a powerful way to give benefits to consumers and scale to media-makers. Enable those, but think Humble Bundle, not cable bundle.

Provide tools that allow for better and more beautiful video advertising.

Oh, and don’t be too greedy. YouTube has to charge 45% rents from their partners. Advertising, after all, is their only business. You, Apple, make a LOT of money on devices. Use that to your advantage, and offer exceedingly fair terms. Remember: “Pigs get fat, hogs get slaughtered.”

5. Build an intelligent interest graph on your platform

This isn’t silly; it’s essential in a world where the supply of programming is practically infinite yet competes for our very finite free time.

In this new world we live in, sharing is distribution. When someone shares a link on Twitter, by guiding us to things that matter, by focusing our attention — that is distribution for the site or service behind that link. You’ll want a native, video-centric graph for your platfom that facilitates sharing and distribution. It’s an essential part of the new ecosystem you want to build.

Hello, future.

Now, if Apple builds this will HBO and ESPN suddenly move to the new Apple platform? Of course not. Don’t sweat that.There are plenty of other makers of media and creators who will embrace what you’ve built.

Let this new video distribution platform evolve in parallel to the legacy cable & satellite platforms. You’ve sold 13 million Apple TV boxes already doing so much less than what I’ve described above. Build something wonderful, offer them a taste of the future, and give creative people ways to make money and I suspect you’ll see an explosion of interest.

Plus, your video platform will run not just on whatever AppleTV device you make, but should also work seamlessly on on iPads, iPhones, and Macbooks. You’ll be able to reach people anywhere throughout the day, no matter where they are.

Last, and most crucially, it’ll be a global platform. Unlike the cable and satellite operators, you’ll run a platform without geographical bounds, enormous in scale. That will be a powerful asset for you, and an incredible draw for the best creative minds and media.

Exploding the screen for real this time.

Build that and you’ll have dented the universe again.

Digital Media, Television

A Guide for Thinking about New TV

When the Internet was first getting popular, and popularized, as a media platform we talked about how it would provide people with new ways to consume or get existing things – that is, newspapers, magazines, music, radio, television, movies. It was hard for us then to imagine how the Internet would, in fact, give us new ways to make and to consume new things – blogs, wikis, Facebook, Twitter, casual and social games, photos on Flickr, and so on. It was hard for us to envision the real revolution that would take place.

And so it is now with so much of the analysis of the revolution that is about to happen with video, and the television (a subject of a post last week). Much – no, most – of that discussion focused on how these new devices and platforms (Apple TV, Google TV, the iPad and the Kindle) will give us access to the existing world of programming we understand and know. Once again, most people may be missing the bigger revolution that is about to occur.

For me, that revolution is about bringing the world of internet video to the television (or the devices that eventually replace the television). That is, the new programming. The forty-eight hours of video uploaded this minute to YouTube. The thousands of sites that offer new types and kinds of programming — stuff we watch and enjoy every day from TED, College Humor, The Onion, and Pitchfork, not to mention Vimeo and and even new types of programming from traditional print giants like the New York Times or Time or the Guardian. And all the new programming that is to come, and that we can’t even envision yet.

And because of the fact there is so much of this new programming, we need new ways to discover it and to watch it. At Showyou, we think this coming world looks like this:

Most of the recent talk has been about the new ways to find traditional programming (the upper left quadrant). But we think the real excitement lays in that upper right quadrant —  new ways to find new programming. That’s where the revolution will happen.