Here’s Why You Won’t Be Dropping Your Cable Box Anytime Soon

by
Aaron Pressman

@FortuneMagazine

September 29, 2016, 10:51 AM EDT

Efforts to crack the cable TV industry’s $21 billion monopoly over the set-top box market came apart on Thursday.

Federal Communications Commission Chairman Tom Wheeler had been trying to promote competition for the devices that control channel listings, grant access to pay-per-view movies, and offer other functions. Almost all customers of cable companies like Comcast cmcsa and Charter Communications chtr pay a monthly fee to rent a box.

The FCC had considered forcing cable operators to allow consumers to buy set-top boxes from others, but the industry and its allies in Congress fought the plan. A revised plan would have relied on apps to run on competing boxes. The agency was scheduled to consider the revised proposal at a meeting on Thursday, but the topic was pulled from the agenda at the last minute.

“We have made tremendous progress – and we share the goal of creating a more innovative and inexpensive market for these consumer devices,” Wheeler said in a joint statement with the two other Democratic commissioners. “We are still working to resolve the remaining technical and legal issues and we are committed to unlocking the set-top box for consumers across this country.”

With the clock ticking on Obama appointee Wheeler’s run atop the agency, Thursday’s delay means its is unlikely that new set-top box rules will be passed anytime soon.

Under the 1996 Telecommunications Act and FCC rules, cable companies are currently required to allow customers to use competing equipment, but the devices must be compatible with a piece of hardware known as a Cablecard that enforces copyright protections. Beyond Tivo, few competing set top boxes that use Cablecards have caught on. Meanwhile, cable companies have been expanding the functionality of their boxes.

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Wheeler was seeking to simplify the system by allowing competing set-top boxes that would abide by software standards to enforce copyright instead of using the more complicated hardware Cablecard. But cable companies claimed the competing boxes would still facilitate violating copyright rules.

Under a revised proposal, Wheeler wanted cable companies to make available all the shows offered through a set-box via apps that could run on competing devices like an Apple‘s aapl Apple TV or a Roku device. But the cable industry also opposed that plan.

The End Game for Viacom and CBS Is Quickly Approaching

@FortuneMagazine

September 28, 2016, 3:52 PM EDT

After a year of Game of Thrones-style intrigue involving 93-year-old billionaire Sumner Redstone, his daughter Shari, and former CEO Philippe Dauman, it looks as though the ultimate fate of Viacom could be settled relatively soon—and with it the fate of sister company CBS.

According to reports by Reuters, the Wall Street Journal, and the Financial Times, the Redstone holding company—National Amusements Inc., which controls 80% of the votes at both Viacom and CBS—is expected to send a letter to both companies soon, recommending they discuss a merger.

If such a deal proceeds, it would be a reunion of sorts for the two media and entertainment companies. The broadcast network was originally part of Viacom, until it was spun off as a standalone entity in 2006. Even farther back, Viacom was actually part of CBS until 1971.

The recombination of the two companies has been one of the scenarios floating around Viacom ever since it became obvious that CEO Philippe Dauman was not going to be long for the job.

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After more than a decade of being Sumner Redstone’s right-hand man, Dauman abruptly fell out of favor earlier this year. Dauman’s reversal of fortune occurred not long after Shari Redstone became more involved in her father’s life following years of being estranged from the aging billionaire.

First, the former CEO was removed from the board of directors of the trust that will control Redstone’s holdings after his death, and then he was forced out of the top job.

Former Viacom senior executive Tom Dooley was named as Dauman’s replacement, but he announced last week that he will be leaving the company soon, which leaves a leadership vacuum at the top of Viacom—a vacuum that makes a merger with CBS even more likely, some believe.

Part of the reason Dauman fell out of favor was that Viacom has badly trailed its peers in the media and entertainment space when it comes to both stock performance and the brand value of its key properties. The shares have fallen by more than 50% in the past two years, and assets like Nickelodeon and MTV are widely seen as being long in the tooth and not forward-thinking enough.

Viacom’s share price VIAB jumped by as much as 7% on Wednesday after the first news of a potential merger with CBS was mentioned by Reuters.

This is how much Viacom’s CEO will get in severance. Watch:

Some analysts believe that combining Viacom with CBS is the only way to revive the flagging fortunes of the company. Supporters of the move say that having CBS chief executive Les Moonves take over management of the combined company would also help its chances of success.

Moonves, however, has been cool to the idea. “We are never going to do something that is bad for CBS shareholders,” he told investors at media conference earlier this month, saying the two companies were not in what he called “active discussions.”

While such mergers are never a done deal until they are signed, the fact that National Amusements is pushing for a combination means it is fairly likely to happen because it controls the voting stock of both companies.

National Amusements is a vehicle that was originally created by Sumner Redstone’s father Michael, to hold ownership of the family’s chain of movie theaters in the 1960s. His son took over the company in 1967 and used it to acquire Paramount Pictures and Viacom, among other deals.

How AT&T and Verizon Are Testing the Limits of Mobile Net Neutrality

@FortuneMagazine

September 12, 2016, 5:37 PM EDT

Federal net neutrality rules are supposed to prevent Internet service providers from discriminating against content providers—but also from unfairly favoring their own content.

The wireless industry has been testing the boundaries of the rules, an effort that’s taken off over the past few days with moves by Verizon Communications and AT&T, the two largest mobile carriers. Some critics are calling on the Federal Communications Commission to crack down on the two carriers, which have exempted some of their own video services from customers’ monthly data allowances, a practice known as zero rating.

Last week, AT&T t said customers who subscribed both to its wireless service and its DirecTV satellite service would be allowed to watch DirecTV content on their mobile devices without counting against monthly data limits. On Monday, Verizon vz said it customers could watch its NFL mobile service without using up data, following an earlier zero rating for customers watching the carrier’s Go90 short video service. Verizon pays the NFL $1 billion a year for exclusive rights to stream football games on mobile.

With the new zero rating, that means that a Verizon customer could watch as much NFL or Go90 video on their phone as they wanted. But if they watched video from competing services like ESPN dis or YouTube goog , they would be using up their data allowances. Or an AT&T customer could watch DirecTV without limits but would run into the monthly data cap if they watched too much of Dish Network’s dish Sling TV instead.

That has public advocacy groups worried that the carriers’ moves could be thwarting the intent of the FCC’s net neutrality rules.

“AT&T is using its latest data-cap exemptions to prop up its satellite-TV business by disfavoring the competitive and diverse video choices people have online,” said Matt Wood, policy director at public interest group Free Press, last week. Wood was similarly critical of Verizon’s Go90 data exemption, when it became public in February.

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FCC Chairman Tom Wheeler has not taken a position on the carriers’ zero ratings of their own services yet, but has said his agency will monitor the industry’s behavior. “The Commission’s informal policy review into this issue is ongoing,” an FCC spokeswoman said on Monday. “Chairman Wheeler said the Commission would keep an eye on new developments in this area and we are continuing to do so.”

That’s the appropriate move at this stage, according to Ryan Clough, general counsel at public interest group Public Knowledge, another supporter of the net neutrality rules. The commission needs to evaluate the impact of the zero-rated services on consumer preferences and competing services. “It’s appropriate for the FCC to gather facts,” Clough said. “We do expect them to scrutinize these plans.”

The carriers contend that they have nothing wrong and that consumers benefit from being able to watch their video programming without using up data allowances.

“We believe this program is fully consistent with the FCC’s rules,” a Verizon spokesman said. “The FCC has said that they will not apply their rules in ways that deny consumers the benefits of new services that bring them more choices.”

“We are not treating our services differently from any other data,” AT&T said in a statement. “This feature is simply our way of saying thanks to customers that purchase both video and mobility services from AT&T. Other content providers can do the same thing through our sponsored data program.”

In several past efforts to preserve net neutrality, the FCC had exempted the mobile industry. But after courts struck down those efforts, the agency last year turned to a broader strategy based in laws that allow the regulation of telephone carriers, and the mobile industry was included for the first time.

Apple Music Hits 17 Million Paid Subscribers

by
Aaron Pressman

@FortuneMagazine

September 7, 2016, 1:46 PM EDT

Apple’s music streaming service has 17 million paying subscribers, adding 2 million customers since June, Apple CEO Tim Cook said on Wednesday.

Cook, speaking at Apple’s press event in San Francisco, credited numerous exclusives from top musicians for helping attract more customers. Cook said Apple Music had carried 70 exclusive launch debuts from artists including Taylor Swift, Drake, and Frank Ocean.

Apple introduced its streaming music service just over a year ago. Tied to Apple’s popular devices, the service has quickly grown into the second-largest subscription music streaming service, trailing only Spotify, which has more than 30 million subscribers.

Apple is expected to reveal updated iPhones and a revamped version of its smartwatch later at Wednesday’s event.

YouTube’s Pay Video Service Is Already Storming Past Other New Offerings

by
Aaron Pressman

@FortuneMagazine

August 31, 2016, 9:56 AM EDT

Google’s YouTube Red video subscription offering is already attracting 3% of viewers in the pay TV market ahead of other new services from CBS, Dish Network, and Sony, according to a recent survey.

CBS’s cbs All Access attracted 1.7% of the market in the second quarter—the same share it had a year earlier—according to a survey of over 3,100 people by research firm Digitalsmiths. The survey was reported earlier by the web site Fiercecable.

Dish Network’s dish Sling TV captured 1.5% of the market, up slightly from 1.2% a year earlier. Sony’s sne Playstation Vue service declined to 1.4% of the market from 1.7% a year earlier.

YouTube Red, the new $10-per-month offering from Alphabet’s Google, wasn’t on the market in the second quarter of 2015. The other three services carry mostly traditional cable channel fare versus the short YouTube videos available on Red.

Still, all of the newer services trailed far behind the three giants of video streaming.

Netflix captured almost 54% of viewers, up from 49% a year earlier. In second, Amazon’s Prime streaming service had 24% of the market, up from 23% last year. Hulu, owned by some of the major Hollywood studios, was unchanged on the year with a 12% market share. Time Warner’s twx HBO Now service was fourth, also with an unchanged market share of almost 6%.

Survey respondents were asked to list all video services they used. In total, 64% of viewers subscribed to at least one pay video streaming service in the second quarter, Digitalsmiths found. That was up from 58% a year ago and 51% two years ago.

The video streaming market has become intensely competitive as millennials and some older viewers increasingly turn away from traditional cable TV subscriptions, which they find too expensive or inconvenient. The cable industry has tried to fight back by giving its subscribers access to more shows on mobile devices via so-called over-the-top video apps. Meanwhile, the big three streaming players—Netflix, Amazon amzn , and Hulu—are spending more than ever to acquire shows and movies.

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With its continued market share growth, Netflix nflx did not appear to suffer much from its price hike to $10 per month—up from $8—for its most popular level of service. The increase finally started hitting existing customers who had been grandfathered to pay the old price until this year.

YouTube hasn’t disclosed details of how many subscribers the Red service has attracted. Earlier this month, Google googl said it was adding its Youtube app for kids to Red, which lets subscribers avoid seeing ads and download videos to their mobile devices for watching offline.

With New Warcraft Expansion, Blizzard Aims to Revive a Golden Goose

by
Aaron Pressman

@FortuneMagazine

August 28, 2016, 2:35 PM EDT

Legion, the latest expansion for Blizzard’s World of Warcraft, goes live this Tuesday, August 30^th. Originally released nearly 12 years ago, the fantasy-themed massively multiplayer game has proven to have massive staying power, and still has millions of subscribers. But the game, which brought in more than 50% of Blizzard’s revenue until last year, has begun to show its age, and Legion is seen by many as a crucial test of whether an already steep decline in subscribers can be halted or reversed.

Last year, Blizzard announced that WoW subscriptions were down to less than half of their 2010 peak of 12 million. They also said that they would stop reporting those numbers – so it’s unclear how we’ll be able to gauge Legion’s success. There has been a subscriber bump with most of the game’s five previous expansions, which arrived roughly every two years. But with both 2012’s Mists of Pandaria and 2014’s Warlords of Draenor, those bumps were followed by sharp drop-offs, which has been blamed both on an aging, busier playerbase, and on poor receptions for those two installments in particular.

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Blizzard’s efforts to retain players have included graphical upgrades and some gameplay innovation, but have mostly centered around streamlining and “quality of life” improvements. That has included pruning character abilities, speeding the process of building a character, and making it easier to move around in the game’s massive world. But those same changes have alienated some longtime players, who argue that the game is being dumbed down.

Perhaps the best example of the inherent tension between making the game more accessible and maintaining what attracted players early on is the implementation of group-finding tools. In the game’s early days, tackling dungeons meant laboriously assembling teams of players to fill specific roles in groups that ranged from 5 players to 40.

Now, though, players can simply queue up to be automatically placed in groups, largely for less-challenging versions of the game’s content. This gives many more players access to those experiences, but arguably reduces both the social immersion and sense of challenge that appealed to many players early on.

For more on gaming, watch our video.

Early reviews suggest that Legion pushes World of Warcraft even further in the direction of democratic accessibility. Every player is given powerful weapons and an important role in the game world. Legion also reconnects players to the game’s main storyline, as laid out in this summer’s fairly successful Warcraft movie, and lets them interact more closely with the franchise’s most popular characters.

It remains to be seen whether that approach will help keep Warcraft healthy. More than that, it may be seen as an index of the viability of subscription-based games as a whole. While MMOs with $15-a-month commitments proliferated after WoW’s initial surge of success, most of those have either disappeared or shifted to the same “freemium” model used by the most popular mobile games.

Pokémon Go is Stalling Out, Probably Because There’s Not Much Game There

by
Aaron Pressman

@FortuneMagazine

August 27, 2016, 1:25 PM EDT

Earlier this week, data from Axiom Capital Management showed that the meteoric popularity of the Pokémon Go mobile game plateaued in mid-July—only two weeks after its earth-shattering debut—and has declined steadily since then. Daily active users and user engagement are both down by roughly 30% from their peak.

A deep analysis by Ars Technica found that the game’s initial retention was worse than that of comparable mobile games. Analysts went so far as to tell Bloomberg that downward trends cast doubt on the long-term viability of the entire augmented reality category.

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But that’s jumping the gun. Huge initial interest in Pokémon Go was clearly motivated in part by a fleeting nostalgia among twentysomethings, but also by a fascination with the novelty of playing a digital game by moving around in the real world. If Pokémon Go has failed to capitalize on that fascination, it’s not because augmented reality isn’t viable. It’s because, based on what I’ve experienced in several weeks with the game, Niantic and Nintendo’s joint foray is fundamentally half-baked.

The flaws in Pokémon Go are multiple, and range from small details to all-encompassing philosophical shortcomings (and I’m just talking about design, not the game’s various technical problems). For new players, there’s no introduction to basic principles and gameplay. Some have argued that this has actually encouraged players to work together, and anyone who has seen crews of college students or young families gallivanting around with their phones out can attest that the sense of group effort was key to the game’s initial appeal.

But to what end? The big, glaring problem highlighted by Pokémon Go’s declining engagement is that, while the actual hunting of pocket monsters is fun, there’s very, very little to do with them. The gameplay proper centers on capturing gyms scattered around the world, but to even try their hand at that, players have to have leveled their monsters quite a bit—most gyms I’ve checked out are held by monsters of over 1,000 combat power, which I haven’t managed to build up over more than a month of casual but fairly consistent play.

And leveling can only be accomplished by collecting monsters, since there are no quests or other content. Players can’t even directly fight each other, which seems like a massive missed opportunity.

Even if you do find a gym you can contest, the game’s combat mechanics are as simultaneously basic and opaque as all of its other elements. You try to dodge attacks by sliding left and right, and I think you attack by tapping on your opponent. But my few tries were over so quickly, and the controls so unclear and unresponsive, that I’m not entirely sure.

For more on Pokémon Go watch our video:

In short, Pokémon Go feels like a game made as a homework assignment by a Niantic team who would rather have been doing something cooler. Taking a look at Niantic’s Ingress, the technical precursor to Pokémon Go, only drives this sense home—with its black and neon colors and cyber-punk storyline, it’s like the raw and energetic basement tape to Pokémon Go’s washed-out compromise of a major label debut album.

But the shortcomings of one game don’t mean that augmented reality itself is a flop—if anything, Pokémon Go has whetted audience hunger for a more developed take on gaming that integrates real-world movement and social interaction. Let me take this opportunity to personally lobby developers to make an AR dungeon crawler or detective game.

Just be sure to make it an actual game.

Why Apple Is Under Fire From This Major Music Label

by
Aaron Pressman

@FortuneMagazine

August 25, 2016, 9:55 AM EDT

Frank Ocean released “Blonde,” his first album in four years, last week exclusively on Apple’s digital music service, Apple Music. The $10 album came out via Ocean’s personal record label—not the major label he signed with: Universal Music Group’s Def Jam.

Instead, Def Jam only got to issue a lengthy video, “Endless,” which was exclusive to Apple Music subscribers.

How the moves will play out for Ocean and his relationship with Def Jam is yet to be seen. But the label reportedly doesn’t like the arrangement and won’t follow the playbook with other artists in the future.

Universal Music CEO Lucian Grainge told the heads of his various labels that Universal will no longer do streaming exclusives on a single platform worldwide, according to a report by Billboard, which didn’t cite any sources. Ocean repaid Def Jam for the cost of recording the album so he could release it on his own and gave the video to Def Jam to fulfill his contract, Billboard reported.

Grainge and other leading music industry executives see the exclusive deals as empowering the streaming services at the expense of the labels, Billboard said. Another concern was making music fans unhappy when they couldn’t buy or listen to a favorite artist’s new album because of the exclusives.

Two other Def Jam artists had previously gone with exclusive rollouts. Rihanna’s album “Anti” came out in January exclusively for streaming and purchase on Jay Z’s Tidal music service. Kanye West’s album “The Life of Pablo” was initially a Tidal exclusive when it came out in February.

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Apple, which trails only Spotify in the number of paying subscribers for music streaming, has looked to exclusives to attract new customers. With Apple’s aapl deep pockets—it has $231 billion of cash—the company figures it can pay more for top exclusives than its competitors.

Still, even if Universal Music was able to prevent its stars from going exclusive with Apple and Tidal in the future, it is just one of the “big three” major record labels. Artists signed by Warner Music Group, like Bruno Mars or Kylie Minogue, and Sony Music Group, such as Britney Spears or Justin Timberlake, might still engage in exclusives with Apple.

Justin Timberlake Is Taking Over This Role From Leonardo DiCaprio

by
Aaron Pressman

@FortuneMagazine

August 23, 2016, 10:58 AM EDT

Pop superstar Justin Timberlake and his wife, actress Jessica Biel, is stepping in for Leonardo DiCaprio and headlining a $33,400-a-plate fundraiser for Hillary Clinton on Tuesday afternoon.

The Democratic presidential nominee, who has racked up huge support in Hollywood, will be making an appearance, reports Politico. The afternoon fundraiser will still be held in DiCaprio’s home, but the Oscar-winning actor pulled out of hosting, citing obligations for his new documentary about climate change, “Before The Flood.” According to news reports, DiCaprio asked Timberlake and Biel to host in his stead.

They won’t be alone, though. Also co-hosting are actress Jennifer Aniston, television producer Shonda Rhimes, actor Toby Maguire and his wife, and talent manager Scott Samuel “Scooter” Braun, best known for managing the career of Justin Bieber.

The fundraiser is just one of a string of big-ticket fundraisers for Clinton, coming right on the heels of a weekend of fundraising in Massachusetts. Clinton also will be back in the Hamptons this weekend, following a string of fundraisers in the tony beach community earlier this month. Politico notes that the Clinton team is throwing many fundraisers in August in an attempt to build the campaign’s cash reserves before the general election battle intensifies after Labor Day.

Hollywood is a traditionally strong Democratic fundraising base. This swing also includes an event at the home of basketball legend Magic Johnson and one hosted by Hollywood producer and longtime Clinton loyalist Haim Saban, according to entertainment site The Wrap.

Apple Seeks to Offer Massive Guide for Apple TV

by
Aaron Pressman

@FortuneMagazine

August 5, 2016, 8:03 AM EDT

Apple has explored a variety of ways of conquering the TV business since it introduced its own set-top box almost exactly 10 years ago.

Steve Jobs famously told biographer Walter Isaacson before he died that he had “finally cracked” how to do it. But after abandoning the idea of building its own TV set, being thwarted in offering its own pay TV service, and declining to pursue acquisitions of Hollywood studios, the company appears to have lowered its aspirations, at least for now. And even aiming for far less than a revolution, Apple is still encountering resistance from the entertainment industry.

The current plan is to create a single virtual guide of all the programming that is available via different apps on the current Apple TV platform, Recode reported, citing unnamed sources. A user could search for a show or movie in the guide and get results back from any and all apps where that particular item could be watched. The guide would also be available on other devices like an iPhone or iPad.

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Apple declined to comment.

While not a major breakthrough, it would at least make Apple TV more useful. Currently, a user looking to watch the Cameron Crowe movie Almost Famous, for example, on their iPad would have to plod through numerous apps, Netflix nflx , HBO Go, Showtime, Hulu, and more, searching in each one to see if the movie was available. And since the services change their available offerings frequently, a user can’t even depend on having watched the movie previously via a particular app.

Apple’s voice-controlled Siri digital assistant provides some of that functionality already but only on the Apple TV. Users can ask Siri for a particular program and the assistant can search across a few dozen apps, with more being added all the time.

But to make the guide useful, Apple aapl needs the app owners to share their offerings on a real-time basis. And that’s where some of the pushback is already happening, Recode reported.

For more about recent improvements to Apple TV, watch:

Entertainment companies are worried about upsetting their relationships with big cable TV providers like Comcast cmcsa and Charter Communications chtr . Make Apple TV too convenient and viewers might be more drawn to the box and less to traditional cable. And of course the entertainment providers have often said they don’t want to empower Apple so they lose their leverage to dictate prices, as happened to the music industry, at least in their view.

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