While tiresome to hear, low-hanging fruit probably best describes what IPTV and telco providers have been devouring during their short journey from scoffed-at novelty to viable business. A substantial group of consumers, unhappy with decades of ill treatment by cable operators and not quite ready to leap to satellite, have been easy pickings.
Those salad days are probably over. To get to the next level of subscribers, IPTV providers need a ladder--or maybe a gimmick.
AT&T (NYSE: T) this week chose to follow the banking model and give away toasters. Oh, correct that, AT&T is giving away a connected device--Kindle Fire HD, Nexus 7 tablet, SONOS PLAY:3 or Xbox 360--to new subscribers who expand behind high-speed broadband service. In addition to being sexier than a toaster, the device is expected to glue consumers to the carrier's IP-based home network once they're added to the ranks of phone (probably an afterthought) and TV (probably the primary target) service subscriber numbers.
A cynic might say that the move portends a belief that IPTV alone can no longer draw substantial numbers of subscribers away from a resuscitated cable TV effort. In reality, the move is the logical next step of trying to acquire a crowd of nonbelievers who are either clinging to their existing pay TV service providers or, more worrisome yet, not buying into the whole pay TV model at all. You know, the OTT bunch.
Which leads nicely into the next gimmick being used to draw subscribers to pay TV services: TV Everywhere. The pitch for TV Everywhere is that consumers bought a video package and should be able to see it wherever they go. The reality is that if subscribers who pay for content can't see it everywhere via their service provider, they might find a version of it from an over-the-top provider and realize that they may not have to pay for 17 channels of home shopping just to watch ESPN.
They could become--drum roll please--cord cutters.
TV Everywhere, while a great idea, isn't necessarily ready for prime time. For one thing, according to an NBCUniversal executive, TV Everywhere is "a little complicated for viewers to understand."
Lauren Zalaznick, executive vice president of the Comcast (Nasdaq: CMCSA)-owned broadcasting behemoth, in a story reported by Streaming Media, said that TV Everywhere will be "the next evolution of the thing we call television" and will keep consumers subscribed to pay TV. But, she qualified, the process of getting to the online content via a traditional pay TV broadcast model must be simplified.
That is, to co-opt yet another cliché, a double-edged sword. If TV Everywhere is simplified, even the most unsophisticated consumers will be able to go online to get content and, in a world that service providers fear, cut the cord. On the other edge, if TV Everywhere is not simplified, then the next level of tech-savvy subscribers hovering above the low-hanging fruit will be more difficult to pick because they will have access to yet another way to watch video without subscribing to a pay TV service.
It's a muddled picture, to be sure. What's not muddled is that IPTV, perhaps only because it's the latest player to the game, has reached the maturation point where willing consumers no longer fall out of the trees and into the subscription basket. A little more effort is required, and whether that's giving away and encouraging the use of IP-connected devices or simplifying and encouraging the use of online video, it needs to happen now.--Jim