Rebecca Day

The amount of choice consumers have in video content is “overwhelming and chaotic,” TiVo CEO Tom Rogers said Thursday at the Sanford Bernstein investor conference in New York. Citing the addition of subscription VOD, traditional VOD and content from aggregators including Netflix and Vudu to linear TV channels, Rogers said the “march of ongoing choice” is the overall theme of the media landscape. TiVo wants to “provide order” to the chaos and help consumers get to what matters to them, Rogers said. The company also desperately wants a bigger chunk of the set-top business as cable operators evolve from quadrature amplitude modulation to Internet Protocol TV world.

Pandora Chief Financial Officer Michael Herring left the door open to a subscription fee hike, on the company’s fiscal Q1 2014 earnings call after regular U.S. markets closed Thursday. Pandora’s conversions from free listeners to paid subscribers was higher than expected after it instituted a listening cap on mobile devices in March, but the company has said in the past that it generates more revenue from the ad-supported part of the business than from its $36 yearly subscription fee (CD May 16 p19). Herring said Pandora has had the same pricing since it launched, while competing services “tend to raise prices over time.” While “that’s not been Pandora’s route to market to date,” he said, the company has “ever-rising costs” and the possibility of a fee increase is something “we look at very closely.” A subscription increase “is definitely on the table,” he said. The listening limit worked as planned, said CEO Joseph Kennedy. Pandora had an uptick in total active listeners and a drop in the number of hours streamed, which enabled the company to manage content acquisition costs with “minimal impact on listenership or revenue growth,” Kennedy said. Pandora added 700,000 subscribers in Q1, more than it added all together in fiscal 2013, Kennedy said. Of Pandora’s more than 2.5 million subscribers, nearly half have been generated on mobile devices, Kennedy said. Monetizing the business from mobile users continues to be a “core focus,” and Kennedy said mobile revenue from ads and subscriptions doubled versus the year-ago quarter. Pandora holds the top listening spot in most local radio markets and its share of total U.S. radio listening in April was 7.33 percent, he said. Kennedy cited a recent report from research firm BIA/Kelsey that predicted a sevenfold jump in mobile local media ad revenue, from $1.2 billion last year to $9.1 billion by 2017. Pandora has beefed up its ad sales staff in 28 of the top 40 local markets “to further capture our share of the relevant advertising budgets,” he said. Of its 248 sales reps, 72 are covering local markets, he said. On the Internet of Things, which Kennedy called the “the next huge wave driving technology innovation and consumer adoption,” Pandora stands to gain through connecting people to music, he said. Efforts such as its recent launch of the Pandora Premieres station, which plays new music up to a week before its official release date, and integration with Facebook -- where users can share the music they're listening to -- are examples of moves in that direction, he said. Q1 revenue at Pandora was $125 million, up 55 percent from the year-ago quarter, and mobile revenue nearly doubled to $83.9 million, the company said. Ad revenue reached $105 million, up 49 percent, and subscription and other revenue doubled to $20.4 million, it said. Pandora reported 4.18 billion total listener hours, a 35 percent bump.

AT&T’s Digital Life went to “great lengths” and “great expense” to protect its cloud-based service, said Senior Vice President Kevin Petersen at the Parks Associates Connections conference being held in Las Vegas in conjunction with CTIA. He cited an environment rife with hacking scenarios and said when it comes to consumer security, “You can’t have them.” Digital Life won’t “jeopardize the AT&T brand because of a rogue incident,” Petersen said in response to a question about what the company has done to secure the service. He cited a security group within the telco that “plays war games on the system” and has been “attacking it for the last year” prior to the start of Digital Life’s home monitoring and automation system late last month. Digital Life makes adjustments where necessary, “but we would not have rolled it [out] if our war games guys wouldn’t have said, ‘You're good to go,'” Petersen said. AT&T has an “aggressive roadmap” for Digital Life, but it will be careful in how it moves forward to expand the service, Petersen said. Letting devices come in from outside the Digital Life ecosystem jeopardizes the “predictable, reliable, consistent experience” the company is promising, he said. “It’s an open platform. It’s just open on our terms today,” he said. “This isn’t a free-for-all. I take the security aspect of this very seriously.” Once security is ensured, he said, “we can certify and move through devices and solutions very quickly.” AT&T also said Monday it’s expanding Digital Life to seven more markets. Digital Life started in April in 15 markets (CD April 29 p9), with plans for a 50-market footprint by year-end. It didn’t take long for AT&T to plan its first cross-promotion for Digital Life, which will be announced Friday, Petersen said. Consumers who sign up for a Digital Life package will get $100 off a smartphone or tablet bought at an AT&T Wireless store, he said. “That will have a big effect out of the gate” on driving sales for other AT&T business, he said. “It’s step one of integration” across AT&T products, he said. The biggest challenge to the Digital Life launch so far, Petersen said, is logistics. The company is “bringing a lot of pieces together,” he said, citing the physical aspect of rolling out to new markets.

LAS VEGAS -- The second-screen experience is creating a new measurement tool for TV viewing, panelists said Monday at the Parks Associates Connections conference held in conjunction with the CTIA conference. “In the past,” said D.P. Venkatesh, CEO of content discovery company mPortal, audience measuring companies would “tell you what people in America watch.” Now, he said, a new model is emerging based on broadband activity which “lets you know exactly what people are doing.”

Pandora’s recent listening cap on the free tier of its music streaming service has allowed the company to “clean up the edges” of how listeners consume music on the mobile platform, said Chief Financial Officer Mike Herring at a J.P. Morgan investor conference Wednesday. Only in the past two quarters, since Pandora put the caps in place in February, has mobile monetization caught up with mobile listening hours consumed, Herring said. “Hours are the main driver of cost,” he said. “We pay for every hour that we stream.” Results of the 40-hour monthly listening cap have so far mirrored what happened in 2009 when Pandora limited free listening hours on its Web Internet radio service, Herring said. Roughly 4 percent of listeners in March and April touched the 40-hour cap, and Pandora recorded an uptick in subscriptions and the 99-cent option to extend listening through the end of the month. Pandora had the same goal of managing growth while “ramping up monetization efforts” in 2009, and once it was “comfortably driving a profit margin” out of the business, it released the limit, Herring said. Herring expects the same scenario to play out in the mobile market, which is following a course “just as we expected it would,” he said. Subscription conversions were higher than Pandora expected, which Herring attributed to in-app purchasing that was enabled before the cap was put in place. “That allowed a lot more efficient and smooth purchasing for those who wanted to subscribe,” he said. Roughly 86 percent of users “returned the next month” to consume free listening hours, beyond Pandora’s expectations.

Virtualization and the complete transition to more efficient LTE networks could help bring down the costs of mobile handsets as storage and processing power requirements shrink in coming years, said AT&T CEO Randall Stephenson. “Fascinating, underlying trends” going on within the wireless infrastructure are leading to a “downward bias” in capital requirements for carriers and a residual impact on handset costs, he said Wednesday at a J.P. Morgan investor conference webcast from Boston.

Warner Music Group “would welcome Apple’s entering into the digital radio business,” CEO Stephen Cooper said on the company’s fiscal Q2 earnings call Tuesday. That was in response to a request for comment about Universal Music’s reported royalty deal with Apple for its as-yet-unannounced streaming music service. Widely published reports indicate that stalled negotiations with Sony Music and Warner over licensing fees for iRadio have slowed the streaming music service’s ramp to market. While carefully selecting his words Tuesday, Cooper said: “We, I think, as well as the rest of the industry, would welcome Apple’s entering into the digital radio business.” The move by Apple “would lead the charge for other entrants and would accelerate also the growth of simulcast and digital radio from terrestrial participants,” he said. He said he hoped “Universal, Sony, we and others in the industry will come to terms with Apple in the near future.” Apple declined to comment. On whether iRadio as a streaming service would be a threat to Warner Music’s download business, Cooper said other prominent digital radio services -- citing Pandora as the leading example -- haven’t resulted in “any meaningful shift in consumer behavior away from collecting music.” Cooper cited RIAA data showing U.S. recorded music revenue slipped less than 1 percent in calendar 2012. Digital revenue grew 14 percent and accounted for 59 percent of total U.S. recorded music revenue for the year, he said. Subscription, streaming and digital radio services generated 15 percent of U.S. recorded music revenue for the year, up from 9 percent in 2011, according to RIAA data. Warner’s track-equivalent album unit sales, meanwhile, grew 7 percent year-over-year for the quarter in the U.S., “significantly outpacing the industry,” which was down 4 percent, Cooper said. Warner’s track-equivalent album share grew two percentage points to 20 percent, its highest quarterly share in 30 months, he said. Cooper said he “wouldn’t want to assume what Apple’s long-term plans are,” but said Apple continues to “build and complement all of the facets of its ecosphere.” Cooper’s view is that while Apple likely has “more information about consumer behavior and preferences than anybody on the planet,” digital radio “hasn’t eroded the consumer’s preference to collect music and want to control and collect that in their own way.” Cooper said of Apple, “I suspect that they suspect that this will be complementary as opposed to creating erosion in the overall demand for either downloads or the collecting of music in other forms.” On the Local Radio Freedom Act, which by NAB’s account is now co-sponsored by 133 members of the House and 10 senators, Warner Music Chief Financial Officer Brian Roberts said Warner is “supportive, clearly, of a performance right in terrestrial radio for the recorded music industry.” From an industry perspective, he said, “We're very supportive of getting that right.” For fiscal Q2 ended March 31, Warner Music Group posted revenue of $675 million, up 8 percent year-over-year. Digital revenue grew 20 percent over the year-ago quarter to $281 million. The company swung to a profit of $2 million after posting a $36 million loss in fiscal Q2 2012, it said.

AT&T Friday rolled out its Digital Life home security and home automation platform Friday in 15 markets with “aggressive” plans to be in 50 markets by year-end, said Kevin Petersen, senior vice president-AT&T Digital Life Services. Initial markets are Atlanta, Austin, Boulder, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, Philadelphia, Riverside, Calif., San Francisco, Seattle, St. Louis and select areas of the New York and New Jersey metropolitan area, the company said in a news release Friday (http://soc.att.com/15Mm6e5).

Samsung’s Galaxy S4 powerhouse smartphone, targeted for delivery this week, is already causing market confusion before release by most carriers. Following online reports of delays in the much-hyped launch of the Samsung Galaxy S4 via Sprint and T-Mobile due to supply problems, Sprint confirmed in a news release Wednesday that it will be “slightly delayed” with its full product launch of the phone due to “unexpected inventory challenges from Samsung.”

Netflix shares shot up 24 percent Tuesday to close at $216.99, following its positive Q1 earnings report released after regular U.S. markets closed Monday. In a letter to shareholders released Monday, CEO Reed Hastings said Netflix added more than 3 million members to its streaming service, bringing the total to more than 36 million worldwide (CD April 23 p13). The number of DVD members fell from 8.22 million in Q4 to 7.98 million in Q1. Lower-than-expected content costs and higher revenue led to a higher-than-forecast $113 million in contribution profit for DVD in Q1, Hastings said. While the number of DVD subscribers declined at a slower rate than expected in Netflix’s Q1, the company remains focused on moving toward more and more exclusive streaming content “to reinforce a reason to join Netflix” and remain a subscriber, said Hastings on the company’s earnings call Monday. Netflix has visions of broadening its portfolio of exclusive content over the next few years, with the timeframe dependent on how new releases perform. In the next two years, exclusive offerings will increase “modestly,” Hastings said. If coming shows the company produces “were as wildly successful for us as the first three shows have been, we could continue to expand to 20 or north, but that would be dependent on what happens the rest of this year,” he said. “What we don’t want to do is -- on the back of three shows, one of which has only been out three days -- suddenly take our commitments up to that 20-plus level.” On Netflix’s ability to curate and influence original content relative to other pay-TV networks, Hastings said Netflix is getting “more sophisticated” in working with producers and the creative community, while continuing to learn. “As we bring great success to the creators, then certainly that increases our reputation in the creative community,” he said. Netflix is putting into place an $11.99 monthly family plan to allow up to four simultaneous streams of programming versus the two allowed under the standard plan. Hastings said he expects less than 1 percent of subscribers to move to the family plan. Netflix has no plans “for the near term” to boost standard subscriber fees from their current $7.99 rate, Hastings said. On the company’s brand image following the public relations beating and customer defections Netflix took in 2011 after the split between the DVD and streaming services, the recovery has been “as expected,” Hastings said. “We're making steady progress and we'll continue to work hard to make steady progress going forward.” Netflix has released the next generation of its video player technology to its consumer electronics partners for integration with smart TVs and set-top boxes, Hastings said. The new platform emphasizes “size and performance improvements,” and delivers faster playback start-up time that aims to approach the speed of a linear TV channel change, Hastings wrote in the shareholder letter. The new platform will appear “in a few new devices in time for the holiday season,” and will roll out more widely in spring 2014 CE products, he said.