There were a couple of interesting stories in the past week on Roku and its CEO, Anthony Wood.

The first, published by MediaPost, discussed Anthony Wood’s history in ReplayTV and then Roku. I had not realized that the same person was behind both devices. Talk about having a good eye for the future! ReplayTV, as some may remember, was TiVo’s main competitor when DVRs hit the market in 1999. Similar to the BetaMax versus VHS debate when VCRs emerged, ReplayTV was generally seen as superior to TiVo. But like the BetaMax, it quickly fell to the wayside. Of course, TiVo was never a big hit either – most consumers got DVRs packaged within their pay-TV set-top boxes – but it has managed to survive by licensing its software and leveraging its viewer data.

Roku

Wood then launched Roku in 2002. It has been far more successful than ReplayTV, leading the market in streaming video boxes even as tech giants Apple (Apple TV), Google (Chromecast), and Amazon (Fire TV) each entered the market. But like the DVR, the drawback of streaming boxes is that the value is in the software, not the physical box. One factor is that the margins on manufacturing boxes quickly drop as physical product is commoditized by multiple entrants. The other is that consumers prefer to reduce set-top boxes and move features as downstream as possible, preferably into the TV set itself.

The second article, from The Verge, discusses the ways Roku is trying to broaden its base away from relying on sales of their boxes and sticks. Wood admits that device sales do not cover Roku’s cost of doing business. These newer revenue streams include licensing their software to TV manufacturers to build directly into sets, selling advertising that is delivered to viewers of the various channels available through Roku, and the build-out of their own, ad-supported Roku Channel. More of a head-scratcher is their recent entry into the wireless speaker space – presumably a low-margin, crowded market.

I’ll Have What He’s Having

Wood’s track record certainly shows he’s had his crystal ball tuned to the right channel for two major TV developments in the past 20 years – DVRs and streaming. It behooves us all to see what he thinks is next – even if his business plans don’t always keep pace with his technology innovations.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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There is much good work that has come out of the Council for Research Excellence (CRE). Funded by Nielsen, but operating independently, the CRE explores the issues surrounding media audience measurement. Although participation on committees is limited to Nielsen clients, much of the output of the CRE is made freely available on the CRE website. This allows the industry at large to review the CRE’s work and to learn from it.

A recent series of recorded briefings for the very active Futures committee within the CRE has been posted. These discuss a number of topics, including addressability, ATSC 3.0, and Advertising 2020.

I found the NAB’s ATSC 3.0 briefing most interesting. It helped explain more about this new TV standard that’s been popping up occasionally in the news. In a nutshell, ATSC 3.0 will allow synchronization between a broadcast signal and a broadband connection to allow the equivalent of a fully digital, addressable, and interactive viewing experience. This sounds good for the viewer (supports 4K/UHD, can call up interactive elements or VOD from the broadcast screen) and the distributor (adds more side channels to each frequency, enables addressable ads and digital tracking of viewing).

Of course, there’s a “small” problem. The standard is not compatible with any current TV sets or receivers, not even that new 70″ 4K smart TV you’re buying for Christmas. Similar to the digital transition in 2009, you will either need a new set or some sort of converter box to use ATSC 3.0 if it goes mainstream. Based on my experience with research around the 2009 digital transition, it is hard to conceive of getting the entire stock of TV sets turned over yet again, or that stations will run both ATSC 1 and ATSC 3 simultaneously for the numerous years required for a natural transition.

A solution in search of a problem?

What may be even harder to conceive is why, in five or ten years, if a house is broadband enabled, they would still use a broadcast signal and not just stream everything. As Alan Wolk recently discussed in his TV[REV] blog, local broadcast stations that made sense in the 1940s and 1950s make little sense in today’s world where almost everyone has either pay TV or broadband.  I respect my friends at the NAB and their partners, but ATSC 3.0 has the whiff of a very complex, expensive solution to an increasingly obsolescent marketplace structure.

But that’s the purpose of the CRE Futures committee and its work, to gain better understanding of emerging technologies that will impact media and surface discussions about their implications.  Check it out!

David Tice is the principal of TiceVision LLC, a media research consultancy.
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