Broadband Cable Association of Pennsylvania

NewsClips

May 6, 2014

Verizon on Tuesday launches its latest salvo in the cable and satellite TV wars for the biggest, most powerful DVR. The cable giant this week will start offering a "FiOS Quantum TV" service that lets people run up to 10 TVs at once, and record 12 shows at once, while storing upwards of two solid weeks of recording space, if customers are willing to pay a premium. The move follows similar upgrades at providers like Dish Network, which highly publicized its "Hopper" multi-TV box system, as well as DirecTV that has a similar offering.

Verizon already launched the Quantum TV service in a few markets in Texas and Pennsylvania. On Tuesday, Verizon executives will announce the service for Florida markets - essentially the wider Tampa Bay region where Verizon offers telephone service on fiber optic networks: Parts of Hillsborough, Pinellas, Pasco, Polk, Manatee and Sarasota counties. As with most services in cable TV, there are multiple levels of service, each with their own price points. The Quantum service comes in two tiers. "Enhanced" is meant for households with five or fewer televisions, and it comes with a DVR that can record six shows at once, with up to 100 hours of high-definition program space for an extra $10 per month. "Premium" service can handle up to 10 televisions simultaneously, and can record 12 shows at once, with 200 hours of space available on the DVR. Each TV connected to the system then comes with an extra fee, and a small connector box that links with the overall system.

According to a Verizon price schedule, a home with four televisions in the "Enhanced" service would pay $56.99 per month for the new equipment, on top of whatever cable TV channel package they chose. "Expanded storage space means FiOS Quantum TV customers can store full seasons of shows they want to watch and binge on," said Bob Mudge, president of the consumer and mass business unit of Verizon. The new service comes as Verizon has dramatically slowed the rollout of FiOS in the Tampa region, and nationwide, as the company is now focusing on adding more customers and more services onto the network it already has. Verizon's direct rival here, Bright House Networks, already has a "whole house" DVR service that can run up to eight televisions and store 200 hours of content. The price for that box depends on the level of service the customer chooses.

Verizon's move also comes as more entertainment moves beyond the DVR and to online services through providers like Netflix, Amazon, Hulu, Google and Apple TV, none of which have an upper limit of storage capacity because all their media is stored online and streamed as needed to the viewer. Such services are rapidly reshaping the TV landscape. The research firm Parks Associates recently found Amazon making "significant gains" in the TV streaming market, as "nearly 20 percent of all U.S. broadband households now have an Amazon Prime Instant Video subscription." That marked an average growth rate of 55 percent. Such services are competing directly with the cable providers for viewers, although those cable providers are often the companies providing the broadband connection into the home that's needed by Netflix, Hulu and others. Verizon in particular just made a new arrangement with Netflix to allow Netflix streaming shows more broadband space on the Verizon network. Tampa Tribune

DirecTV said first-quarter earnings fell 19% as the satellite-television provider was stung by a currency change in Venezuela, though the company continued to boost its subscriber numbers, surpassing 38 million customers. Earlier this month, The Wall Street Journal reported that AT&T Inc. has approached DirecTV about a possible acquisition of the satellite firm, a potential tie-up that would rival the size of Comcast Corp. if it is able to complete its acquisition plans for Time Warner Cable Inc. A deal would likely be worth at least $40 billion, DirecTV's current market capitalization, a fraction of AT&T's $185 billion market capitalization. Net subscriber gains in DirecTV's U.S. business totaled 12,000, compared with 21,000 gains a year earlier. The total subscriber base was about 20.3 million at the end of the quarter. Revenue in the region increased 5.1% to $6.09 billion. The company added net 361,000 subscribers in Latin America, versus 583,000 subscribers added a year earlier. The company had a total of 11.9 million subscribers in the region and revenue edged down 0.4% to $1.72 billion.

DirecTV reported a profit of $561 million, or $1.09 a share, versus $690 million, or $1.20 a share, a year ago. The company recorded a Venezuelan currency-devaluation charge of $281 million in the latest period, up from $166 million a year earlier. Excluding those charges, profit rose to $1.63 from $1.43 a share. Revenue improved 3.6% to $7.86 billion. Analysts expected earnings of $1.50 a share on $7.91 billion in revenue, according to a poll conducted by Thomson Reuters. Wall Street Journal

A video ad on Facebook will cost advertisers about $1 million a day, but the social network won't accept a check from just anyone.

Just a small group of brands was invited to submit concepts, which will have to be approved by Facebook Inc.'s creative team. Then the ads will be shown to viewers, who will rate them based partly on how "meaningful" they are, the company said. After the ads make it to Facebook, they will face another hurdle: They will play without sound, and the site's users will be able to scroll past them without watching. The gantlet is designed to avoid offending Facebook users. In the process, Facebook risks offending potential advertisers. "If I'm a brand and I'm going to write a check for $1 million, I want to control my advertising," said Zachary Treuhaft, chief digital officer at advertising agency Grey, a unit of WPP PLC. He said Facebook's controls are unheard-of in the industry. After years of planning and tests, Facebook plans a broad launch of video ads in coming weeks, said people briefed on the matter. Facebook first showed a video ad in December, a 15-second teaser for the film "Divergent" that it labeled a test. There have been no others since.

Ad-agency executives and media buyers estimate there are seven to 15 advertisers waiting to post video ads. Facebook declined to name them, but said about a third are for films or TV shows. "I wouldn't say every category of advertiser is clamoring for [the ads] at this moment," said Kris Magel, chief investment officer at Initiative, an ad-buying unit of Interpublic Group of Cos. "It might make sense for someone who needs to make a big splash on a given day," he said, such as a studio promoting a new movie or a retailer with a big sale. Facebook hopes video ads will boost revenue, but needs to avoid annoying users by accepting too many ads. Some creative agencies and media buyers say they are waiting to see if the ads are effective before diving in. "It's not because we don't believe in the power of Facebook. We absolutely do," said Ben Winkler, digital director for media-buying firm OMD. But Mr. Winkler isn't advising clients to buy the ads until he sees how they perform. "It's a lot of money. We're very curious to see what kind of creative works."

One reason is Facebook's pricing structure. Advertisers will pay a flat fee up front, based on the size of their targeted audience, regardless of how many people watch the ad, said industry employees who have talked to Facebook. For most advertisers, the cost will be around $1 million a day. Another is the challenge of attracting users without sound. Rich Silverstein, co-founder and co-chairman of ad agency Goodby, Silverstein & Partners, creator of the "Got Milk?" and Budweiser Lizards campaigns, says the Facebook video ads will need "visual seductiveness" in the first three seconds. "Otherwise, who's going to pay attention?"

Facebook founder Mark Zuckerberg at first avoided most advertising. Early ads appeared in a small space on the right-hand column of the website. Over time, Facebook allowed ads in users' News Feeds and is enlarging ads in its right-hand column. Partly as a result, Facebook has become one of the biggest players in digital advertising and a potential challenger to industry leader Google Inc. Last month, Facebook said first-quarter advertising revenue rose 82% from a year earlier, to $2.3 billion. Sterne Agee analyst Arvind Bhatia estimates video ads could boost Facebook revenue by about $1 billion annually by next year. Facebook has moved cautiously with video ads. In January 2013, it introduced the idea to media buyers and advertisers at the Wynn Hotel in Las Vegas. Technical challenges getting the ads to play automatically and smoothly delayed initial tests. Facebook isn't the first Internet company to tread delicately on advertising. Former Apple Inc. Chief Executive Steve Jobs insisted on being involved in the creative process when Apple launched iAd for advertising inside apps in 2010. Google allows users to skip over many video ads on its YouTube site, and doesn't charge advertisers when viewers choose the skip button.

In spring 2013, Facebook began working with Ace Metrix, a Mountain View, Calif., company that uses online surveys to test ads for effectiveness. Its survey questions range from whether the ad made viewers want to buy the product to how it made them feel. Respondents can also add their own comments. The Facebook team initially felt it understood the types of ads users would want to see. Their favorites included an iPad ad and another for Adidas starring Washington Redskins quarterback Robert Griffin III. By contrast, the Facebook team said it probably wouldn't accept ads for something more mundane—like laundry detergent. Then Ace Metrix CEO Peter Daboll showed a TV ad for Tide on his computer. It was part of Tide's "Loads of Hope," campaign, which offers free laundry services to people in disaster areas. Facebook's team loved the ad. The incident convinced Facebook it needed an objective, quantifiable way to judge ads. Ace Metrix created a Facebook-specific rating for ads. In addition to its usual metrics like "desire" and "watchability," Ace Metrix added a factor called "meaningfulness." For a high "meaningfulness" score, an ad must inspire "emotion" and "verbosity"-a measure of how much users write in their comments. Those factors, plus humor, contribute to the Facebook-specific "fAce Score."

Ace Metrix, which has tested 32,000 ads, can usually determine a fAce Score in 24 hours. Facebook said it hasn't decided on the scores it will accept. Claudine Cheever, chief strategy officer for Publicis Groupe ad agency Saatchi & Saatchi, says the Ace Metrix test will eliminate ads that are "provocative and polarizing," in favor of bland ads that may have trouble attracting attention. "What I'd be interested in is what's going to get someone to look at this and open this," she says. "Ace Metrix is not going to help me figure that out." Mr. Daboll disagrees. He says Ace Metrix has a metric for that, too, called the "attention score." Wall Street Journal

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