Ralf Jacob, chief revenue officer for Verizon (NYSE: VZ) Digital Media Services, compares pay-TV to Blu-ray, the packaged media format that was supposed to be the dominant home entertainment medium through at least 2020.
"I can't remember the last time I heard about someone buying a Blu-ray," he told a ballroom audience at the Century Plaza hotel in Los Angeles Tuesday afternoon. As over-the-top services quickly take hold, Jacob added, "I think we're completely underestimating how fast" the traditional pay-TV industry is going to give way to a distribution paradigm dominated by a la carte over-the-top streaming.
The panel Jacobs spoke on, "View From the Top: The Future of Digital Video/TV/Movies," was one of three very loosely focused discussion events I witnessed at Digital Entertainment World this week. Many compelling threads were broached, but cohesive themes were, unfortunately, difficult to find among the mishmash of top-level speakers from relevant companies including Netflix (NASDAQ: NFLX), Roku, Vubiquity, CBS Interactive and The Walt Disney Company.
If there was a unifying theory, it was Jacob's--the check is already in the mail for bundled cable, satellite and telecommunications programming services, and we're about to see cord-cutting statistics shoot up like a media technology conference sushi buffet line.
"The DVR won't exist in a few years. Your programming will be stored in the cloud," said Chris Hock, senior VP of business development and strategic partnerships, Black Arrow.
"We're just at the tip of the iceberg. So few people are accessing OTT through their televisions right now. There's like this perfect storm that's brewing," added Doug Craig, VP of programming, Roku.
To me, Craig's comment was the most insightful. Every research report we see indicates a steady, appreciable uptick in the viewing of IP-delivered, on-demand video programming. But with U.S. pay-TV homes still hovering near the 100 million mark, linear TV with time-shifted DVR usage is still the dominant method of TV consumption.
I think that's going to change, but not as fast as these speakers think it is.
Having cancelled DirecTV (NASDAQ: DTV) last weekend for a hodgepodge of OTT services that include Sling TV, Netflix, Amazon Prime (NASDAQ: AMZN), Hulu Plus, NBA League Pass and MLB TV, I'm right there with them--I think video programming is going the same IP-based direction music and written news did.
But if we're talking about timing, I think those of us immersed in the OTT world live in a bit of a bubble. As I enjoyed the Digital Entertainment World's crème brulee cart after the presentations--that was probably the highlight--I wondered how much of the general U.S. population is knowledgeable enough about OTT flora and fauna to replace the video selection they currently enjoy. How many of the renaissance-minded media technologists I just saw speak have time to be devoted to a sports team with an exclusive regional sports network contract? How many consumers will weigh their OTT options and find pay-TV is a more efficient deal for them?
At least one pundit on hand Tuesday put the brakes on the unbridled cord-cutting talk. "Bundled subscriptions and are very efficient and good products for consumers," Phil Schuman, senior managing director, co-leader, media & entertainment, FTI Consulting.
He isn't allowed in the bubble.--Daniel