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Roku Explains the Growing Threat to Cable and Satellite
Viewers are looking for more flexibility, such as a la carte models, but pay TV has been slow to respond.
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Will the next generation see the value in pay TV services? While most StreamingMedia.com readers likely get their video from a variety of sources, we're seeing signs that many of today's college-age people won't sign on for a cable or satellite bill after graduation. At the recent Streaming Media East conference in New York City, we sat down with Ed Lee, vice president of content acquisition for Roku, to talk about the growing threat to pay TV from "cord nevers."

"I think since they've never really had a subscription, they've never grown up with a subscription, I think they are trying to identify what the value is of that," said Lee. "I think every generation, you know, poses a potential threat, but I think we've seen time and time again that they're have been some statistics out there that talk about cord shaving and cord cutters. And, you know, I think it's still to be determined exactly what's going to happen down the road. But I think there's a large percentage of customers out there, the pay TV service providers need to do a terrific job in terms of how to embrace them and how to offer them content that may not be offered to the traditional subscription model."

The question now is will pay TV change its ways to respond to changing viewing habits? TV Everywhere initiatives offer online flexibility, but still maintain the pay TV status quo. Lee thinks that many customers want more choice.

"One of the things [pay TV] could probably learn is sort of how to offer content in a very specific way to consumers. So today obviously to the pay TV providers who need a device, who pay for a subscription that offers you a set of channels, I think there's been some feedback that customers would prefer more of an a la carte model," explained Lee. "Business models today just don't support that in the traditional sense of the word. And so I think with streaming boxes like Roku's and like other ones out there, I think consumers now have the option and the ability to be able to pick particular pieces of content that they want that are available through those devices. And so, I think that becomes a very interesting opportunity."

Scroll down to view the entire red carpet interview with Ed Lee.

Troy Dreier: Hi, everyone. My name is Troy Dreier. I'm the senior associate editor for Streaming Media.com, and I'm joined today here at the red carpet at Streaming Media East with Ed Lee, vice president content acquisition. Ed, thank you for joining me today.

Ed Lee: Thanks for having me.

Troy Dreier: So you're going to be on a panel later today on internet television. It's called "Internet Television -- It's Broken Already."

Ed Lee: Correct.

Troy Dreier: That's a pretty pessimistic title. Is streaming television broken?

Ed Lee: No, I don't think so. I think the industry is just getting off the ground, and I think we've got a long way to go, but I certainly think it's far from broken.

Troy Dreier: There's so many choices in online streaming content already and so much that I want to see, I don't know how I'm going to keep in touch, you know, keep aware of new things coming out and new episodes coming out. How can people stay up to date on all the great programming coming online?

Ed Lee: So it's a great question. I think one of the ways that people can stay up to date obviously is staying in touch with the device that they're using. You know lots of different devices today do wonderful jobs in terms of offering different ways to be able to promote and discover new content. So I think as the consumer, as long as you stay interactive with the UI with the devices and as long as you are connected with what's happening in the industry in terms of your favorite content, I think there should be multiple different ways that people can find access to new content on a regular basis.

Troy Dreier: And you're a content specialist.

Ed Lee: Right.

Troy Dreier: Who's doing a great job creating content for the streaming?

Ed Lee: Who's doing a great job? Well I mean there are an awful lot content partners out there today. I mean you have all the established content partners who are starting to get into the streaming media space much more aggressively than they were a couple years ago. So we're seeing sort of across the board from the incumbents from the standard content partners who are doing a very nice job and then there are obviously all the upstarts out there who have been doing it for quite some time and are now getting larger audiences and getting that attraction in the marketplace. So it's hard to pin down just one content partner who's doing a fantastic job. I think the industry as a whole is starting to grow. I think there's a ground swell of interest in delivering content over IP. And I think we'll continue to see a lot more content become available.

Troy Dreier: I wouldn't want to single out just one, toss out a few who you think are really hitting out of the park in creating content.

Ed Lee: Well, I think the terms of being able to offer services over the top. I mean we have all major sport leagues online through Roku so I think all the sports leagues are doing a terrific job in terms of offering their content over broadband. Netflix is obviously doing a terrific job and we are a key partner with them. Amazon's video on demand service and their prime subscription service do quite well. Hulu is doing really interesting things in terms of creating new content. Netflix obviously who I just mentioned are doing some interesting in terms of content creation. So, like I said, we're starting to see a swell in new content coming onboard, but I think those are some of the keys that are starting to really leap now.

Troy Dreier: And what are your favorite online programs. What do you like to tune into?

Ed Lee: Well it's hard, I've got two little boys at home so it's hard for me to spend an awful lot of time watching content at my leisure. But I spend a lot of time watching sports, news. I spend a lot of time with Wall Street Journal Live channel. That's a particularly good one that's a new news service that is on lots of different platforms today and I spend a lot of time watching news.

Troy Dreier: For a little while the industry was considered with the cord cutters and the cord shavers and now it seems like the bigger threat to the pay TV industry is the cord nevers. The college kids who never had a pay service, don't want one, don't see the point. Is that a threat to pay TV?

Ed Lee: Yeah I think it's a threat. I think since they've never really had a subscription, they've never grown up with a subscription. I think they are trying to identify what the value is of that. And so I think every generation, you know, poses a potential threat, but I think we've seen time and time again that they're have been some statistics out there that talk about cord shaving and cord cutters. And, you know, I think it's still to be determined exactly what's going to happen down the road. But I think there's a large percentage of customers out there, the pay TV service providers need to do a terrific job in terms of how to embrace them and how to offer them content that may not be offered to the traditional subscription model.

Troy Dreier: What can the pay TV companies learn from the streaming content companies?

Ed Lee: I think, you know, one of the things they could probably learn is sort of how to offer content in a very specific way to consumers. So today obviously to the pay TV providers who need a device, who pay for a subscription that offers you a set of channels, I think there's been some feedback that customers would prefer more of an a la carte model. Business models today just don't support that in the traditional sense of the word. And so I think with streaming boxes like Roku's and like other ones out there, I think consumers now have the option and the ability to be able to pick particular pieces of content that they want that are available through those devices. And so, I think that becomes a very interesting opportunity.

Troy Dreier: Very good. Well, thank you so much for joining me. That's all from the red carpet.

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