Editor’s Note: Welcome to Reality Check, a feature for RCR Wireless News’ weekly e-mail service, Mobile Content and Culture. We’ve gathered a group of visionaries and veterans in the mobile content industry to give their insights into the marketplace. In the coming weeks look for columns from Tom Huseby of SeaPoint Ventures, Laura Marriott of the Mobile Marketing Association and more.
Yes, I have seen the future of digital content distribution, and it is convoluted. And this Christmas Carol, like its famous antecedent, is a cautionary tale of the woe that awaits us all as the fight between traditional and new digital content distribution channels and traditional and new content providers and rights holders plays out in a painful tug of war across the wired, wireless and broadband worlds in the months and years ahead.
Hopefully, many of you have been following the saga of Thursday Night Football, as I think it provides a great illustration of the many issues confronting content providers and distributors across all platforms. And last Thursday night demonstrated pretty clearly, to me at least, who is probably going to get hurt while the issues are hashed out, and that is the customer. (Disclaimer: As some of what I will write is based on vague recollections, I may have some of the minor facts wrong, but it is the outcomes I am focused on, and those are quite clear.)
As I recall, the National Football League’s (NFL) decision to put Thursday Night Football on its fledgling NFL Network cable channel had to do with the lack of sufficient-in the League’s estimation-financial interest on the part of its traditional distribution partners, the broadcast networks and sports cable channels. Rather than take a lower amount than what it thought Thursday Night Football was worth, the NFL took their ball and went home to their cable channel and Web site-substantially broadening the scope of its D2C business.
The cable factor
Enter the NFL’s new partner in its NFL Networks venture: the cable companies. If the NFL thought the broadcast networks and sports channels were tough to negotiate with, enter the people who “own” their customers. Sound familiar? I’m no expert on how the cable companies purchase and derive value from all the content they distribute, nor on how they decide what programming goes in which of their many tiers, but I am a long-time cable video customer, and enough of an industry observer to have followed some of the business and public policy issues that have been raised as these two behemoths have tussled over how to distribute the NFL Network channel over cable. And I know first hand what happened to more than one customer who happened to decide to jump into the fray last Thursday night, when the first of the Thursday Night Football games was broadcast on the NFL Network channel.
Almost from the moment it decided to start programming its own channel, the NFL has been saying that it hoped the cable companies would distribute the channel as part of basic or low-cost programming tiers, claiming their fans (customers) were used to getting their football programming for free and that they wanted to keep it that way (begging the question, of course, of why they established a new distribution channel to begin with). Cable companies almost from the beginning demurred, and in fact the largest cable companies, and my own, made the NFL network channel part of a tier of programming that isn’t even included in the deluxe digital programming tier that I pay for each month (though, not being a very big consumer of televised football generally, and the NFL Network particularly, I was blissfully unaware of that fact until last Thursday night).
However, I had been following the issue in the industry trade press and thought about it in relation to public policy discussions regarding issues like bundling versus a la carte program offerings for months. During that time, each side took pot shots at the other (the NFL congratulating the satellite TV companies for offering the channel as part of basic offerings; the cable companies claiming there wasn’t enough demand for the service to put it in a basic tier). All of the claims and counter-claims came to a head last Thursday night, however, when the first Thursday Night Football game of the season debuted exclusively on the NFL Network.
While there was no way of knowing when the scheduling was done, the first of the games available exclusively on NFL Network (except in the markets of the teams that are playing) turned out to be a game between the two top teams in a conference, a fact that can’t be ignored in trying to divine a moral to this story (though its true value will be better determined by how much interest there is in some of the dogs that are scheduled to follow on future Thursday nights).
Game day
The NFL took advantage of one of its best in-season match ups by firing a game day salvo at the cable companies in the form of a full page advertisement in the A section of The Washington Post, explaining that most of the folks in the DC area would not be seeing Thursday night’s game between the Packers and the Cowboys because, much to their dismay, the cable companies had refused to put the channel on the basic cable tier. The ad urged cable “customers” to contact their cable company and demand the channel be made available for free. Beyond the apology and call to action, the ad also invited NFL “customers” to take a direct-to-consumer route to the action and view video “peeks” of live game action, as well as follow ongoing video commentary by its experts at NFL.com. Obviously, the NFL isn’t restricted from providing simultaneous live streaming of its broadcast. Clearly, too, having the rights to distribution across (almost) all platforms (wireless may be an outlier. for now), plus control of the distribution channels is not a bad hand to hold.
Although I had not planned to watch the game, having assumed it was not available in my market for free, I was sitting in front of the television set at around halftime anyway, and so decided to see what the process would be for getting the program in mid-game. I found the channel on the guide and selected it. Not surprisingly, a message came back informing me that the program cost extra, and asking if I wanted to purchase it, not unlike for pay-per-view movies. When I indicated “Yes,” a second message came back indicating I would have to call customer service to confirm, which I then tried to do-only to get a busy signal for the next hour and change. And not just on that line, but on a second line, and not just on the number provided, but on other more direct routes to customer service.
Now I was intrigued. When you can’t give your money to the cable companies, something is seriously amiss. As I waited, listening to stereophonic music on two handsets, I fired up a MacPro laptop and opened the browser to NFL.com, where, in fact, live game action was viewable on full screen in very high resolution. Basically, I was getting the game for free, without commercial interruption and with a variety of commentators, probably the way God intended. until I wasn’t. Broadband streaming being what it is, the screen froze a number of times over the hour, causing me to think, in my growing paranoia, that I probably looked to my cable/ISP provider (of course, one in the same) a lot like a BitTorrent user, for whom some cable ISPs have also been having a problem, and thought I might be being treated accordingly.
$1.99 per month
Whether or not that was that was the case became irrelevant when I finally got a cable customer service rep on the phone, with a couple of minutes left in the fourth quarter. Yes, she said, they had been swamped with requests for the NFL Network when the game began, were completely unprepared for it, and still had a queue going even as the game was winding down, with me obviously among them. After a few moments of establishing my authority to order the service, she informed me that I would be getting a package of eight sports channels for the next 12 months for the price of $1.99 per month, an approximation of the size of the dispute between the billion dollar cable companies and the billion dollar NFL. Moments later, the channel flickered into view on the television, while I was simultaneously watching it on the computer.
OK, I am not yet sure what the moral of this tale is, particularly for mobile content, but I know for sure there are some, as content providers and rights holders and traditional and new distribution channels try to figure out who “owns” the customer. Clearly, the cable companies, at least on a night when a game of significance was played between two top teams, underestimated or misstated their “customers” interest in the NFL Network enough to cause subscribers of out-of-market teams to overwhelm customer service departments. Clearly, too, rights holders, like the NFL, have an increasing number of D2C distribution channels that will put increasing pressure on the margins of their partners, particularly as broadband video distribution approximates broadcast/cable in quality, and especially if the current distributors try to thwart their “customer’s” access. In the case of a brand whose content is in as much demand as the NFL’s, it is hard to see why it would not want to be a fully vertically integrated provider, hoarding all revenue derived from its product. Content may not be the monarch it once was, given the many types and sources, but standing between the customer and his content is certainly no place to be.
You may contact Mark directly at MDesautels@ctia.org. You may contact RCR Wireless News at rcrwebhelp@crain.com.
