Transcripts For CSPAN Internet And Television Expo Day 1 20150517

It. If it had hit us, we would have been dead in an instant. That is sunday on cspans q a. Now a look at the changing landscape of Television Technology and the intern. Key Industry Leaders discusses innovations and insights on what the future may hold for consumers. Speakers include comcast cspan 3 brian ronlts, affirm offerman l. President time armour, and michael powell, who now heads the national cape and telecommunications association. These discussions were part of the threeday internet and tv expo held earlier this month in chicago. This is about an hour and 20 minutes. This year michael thought he would snap chat the whole thing has been periscope it, although that would have been in bad test. I know you doan want another power point, as exciting as those can be. What we decided to do was an actual interview with a real reporter. That would be me. I play one on television on hbo. So we are going to do an interview. We are going to do a bunch of interviews throughout the show. Peter is going to be interviewing some figures. We wanted to start off by talking to michael. I brought my own chairs. These are the red chairs of the code conference. Before that it was all things d. Many people have sat in these chairs including steve jocks, bill gates and president obama. We thought it was appropriate to put michael on the hot seat to begin the show. Michael, come on out. [applause] were you squared . No. Some of those internet billionaires can be very messy. We had them cleaned. We are going to be talking about a range of things and all kinds of things have happened in the cable industry. Lets start off with the con accepts of what you are trying to change. The industry is changing rather rapidly and suddenly even more than it seems especially because of digital challenges you are all facing. I think thats right. The central reason we rebranded the show and really changed its mission, if i were to butt it in a sentence, is to expand our peripheral vision. Video has become so much more dimensional, much more textural. There is this fascinating intersection of television and technology all brought about by internet functionality wired and wireless, and i think it was time for our industry to sort of look beyond its traditional bounds and traditional players and invite and include them in a show that attempts to be the place to have a conversation about trends taking place in this exciting and changing industry. It can be said this internet thing has been kind of a big deal for the kids for a while. Kids seem to like it. People seem to be using these crazy technologies. When you talk about peripheral vision, is it enough . All kinds of industries have been disrupted rather substan itfly. Has the cable industry reacted quickly enough . I think they have responded, but i think it needs to be accelerated with a new kind of urgency. As you say, i think we are really starting to see exponential leaps home regard digitalization. They are really setting the tone of a new kind of behavior that i think is nontraditional. When i look at kids today you can get fascinated by the technology, but you really should look at their behavior. I think teenagers are doing the same things teenagers have always done. They are passionate about community. They are passionate about their friends. They are passionate about watching each other and building friendships around that. I think what has really come into their world is the ability to have real life be entertainment, to have the video has been moving pictures of people doing things profound and idiotic. But they are able, through the creation of new screens and devices, and a connective tissue through the internet to be continuously plugged in to their friends and community. So what is competing with Traditional Television is real life. The ability to document share and prop gate that. What happens to an industry in that situation. It would seem if people are not linking to cable has been not having a relationship to cable have bad feelings has been not using it. My kids have a very different at touchdown towards things. When my son was 4 we bought a new large television. When it got home he started hitting it. I thought he had mental problems at this point. He kept hitting the television, and i said what are you doing . He said it doesnt move and doesnt do what i antwane to do. I was used to swiping. My older son almost lives on vine. Now he is periscoping almost all the time. Most of iteveryone nane between him and his friends. How do you meet that challenge when the behaviors change so rapidly . The first thing you have toss to the physical locations they are going. For the better part of television history, there was one consumer Electronic Device that was central to you consuming content, and it was the television. Studies have shown real declines of people watching on that vehicle. It has been in the last decade that we have handed our kids smartphones, tablets and laptops. There has been a proliferation of screens. There are more intimate screens. They can huddle up together. One thing cable has done is to be able to port their content off their systems and into those devices. That is a first step that is really important. Then you have to think about how do you exist as a companion to the selfpublished, selfcreated kind of content because that lives on the internet. If you oneandone to be part of that experience, i dont think it is enough to ask a consumer to completely change ecosystems to go from watching periscope to watching game of thrones. Lets talk about that, speaking of periscoping and game of thrones. A lot of people wear scoping the first game of thrones. Then the c. E. O. Of twitter seemingly talking about what a victory it was. Do you look at that as a victory, the ability to live stream anything you want. The other day i periscoped my lunch by the San Francisco bay and i got 5,000 viewers who were very interested in my lunch. Sorry i missed that one. It was a gripping episode of shrimp salad. It does create problems for the industry. They sold this for a lot of money, and a lot more people watched it because of that. The way i think about disruptions is they tend to come with an enormous amount of good and an element of bad like all things. The good is an amazing experience in which you can have this dynamic almost spontaneous experience of people from around the world who are documenting and catalogging events that you never would have had access to. But what comes with that, in the instance you are talking about, there are opportunities to violate intellectual property and copyright. There are opportunities to frustrate models that have been built and a lot of people have been vested in. Those fighters were paid hundreds of millions of dollars on the Television Rights associated with that fight. The second thing i wind wore in some is what privacy means in a space like that. I have been playing with periscope and some of the snap chat stuff, and what i am intrigued by is not the people doing it, but the people caught doing it. The people who didnt agree to being broadcast around the world. I think society is going to be working through the meaning of that for a long time, but i think that potentially has a negative side. What companies do you think are going to be very important . You talked about bringing these Digital Companies in. Is it google with an ability to do a lot of these things are has been amazon many shows, has been apple . Who is the most powerful player right now from your perspective . I dont know that i would say the most important. There are a number you should have to intensely follow. I think google you always have to intensely follow not only because of their extraordinary dominant position in the search ecosystem. They are mostly how we find things, and they are always looking for ways to index, tag scrape and identify anything in the Digital Space through their algo rhythms. That is a powerful function. The jutanugarn space is fascinating. The first time i ever saw jutanugarn was my 12yearold showed it to me. I remember being amazed at that. As you look at the soaring of video clips and mini serious and shows that are being produced, it is something to watch. I also think amazon for a similar reason. What i am intrigued by, by both companies, the video isnt necessarily their primary business. They are using video to drive very profitable businesses that pull through. Amazon wants me to be a prime consumer and buy my shaving karim as well as watch a show. They can take risks and burn money in certain ways that would be harder for a traditional companies. They have been very, very profitable for several decades. Other companies, it would be harder to get market permission to take those kinds of risks. And then you have to watch, to finish your question, the rahim sword of groundup digital disrupters. If you havent seen the discovery functions on snap chat, if you have never looked at periscope has been played with vine, you owe it to yourself to look. There is an amazing amount of creativity going on there now. I know it is meaning fully different yated content. You can spend hours watching people fall down. When you are in this environment, what does the modern Cable Network look like, and then what does the modern Cable Company look like . At some point it will be the connectivity that is important and Everything Else rides on it. You have touched on it. The cable industry is the countrys leader in broadband infrastructure that makes all this possible. As the demand for videos soar, the necessity of that network being high quality increasing in capacity, heavily invested in is going to be at a higher premium. The greatest give to the country the cable industry has as distributors is providing that infrastructure and continuing to grow it currently at a rate of 50 increasing speeds per year, 16 billion last year alone in investment to continue to make that quality experience possible. That is an increasingly important part of the cable business. We shouldnt declare its demise too quickly. There are 102 million cable subscriber households in this country. That is not going to drop down to five overnight. There are still high quality programs and events that continue to be driven by an infrastructure that has a proprietary quality of service, Service Commitments that a cable infrastructure does. The intern is wonderful, but you get what you get as sling discovered when it had suggestion problems when you get a huge demand. And they had legal problems too. Legal problems as well. But the internet is best effort. Your bits are competing with all kinds of other bits, and there is not a permission within the regulatory structure to manage those bits with any priority. There are going to be needs for high Priority Networks that can take advantage of those swords of things. In that vein, Customer Service issues, commerce liking the internet. The Net Neutrality fight had a lot to to with that idea. They played that rather well. Sure they did. I am a Firm Believer that words and messages dont work if you are not liked. When i was in the army, people used to say george s. Patton said i dont have to be liked to lead. I think that is foolish. I think you have to be well regard by your customer base. You have to have a trust relationship with them to build. If that is afraid, you are ripe for the next pickup policy fight to be turned against you just to be based on reputation critique. I think the industry is highly conscious of that problem. They are very selfaware. They are not delusional about it. I think there are a number of very important committed efforts under way to change that perception over time, improve the quality of the product and improve the experience. What they have to recognize is that even if you are improving at a rate of 3 x, the Consumer Expectation and adaptation is increasing faster. One thing the internet has done is raise the expectation of consumers for any content. They want it here and now reliable to innovate every six months not every 18 months. If you are going to be in that game, you have to be in an innovation cycle. I was on a plain yelling about internet connect yift. You are in a tube of death and you are mad if things arent down loading fast enough. That is what people expect. That is right. We just have a few more minutes. When you are looking outwards at the industry what, is a cable is there a cable industry . Should it be called that . I know you put the x on the end. Those are good. It feels modern. Very modern. And we didnt capitalize anything. Small letters. Wow. We use a slash. That bothers people a great. Punks weighs is everything. Doctor punctuation is everything. Should it be called the industry industry anymore. It denotes we are a motorized horse kind of a thing. [laughter] that would be a car. That is an opportunity for you. A driverless car. You can text drink and watch television statement. They brought the deliverless cars the Driverless Cars in, and the only thing they were talking about is if the open carry laws could be done away with. I do hate the name. It has a proud history but it needs to be retired in some way. I think your past can be part of your glory, but it also can be a weight around your ankle when you are looking at a tumultuous future with new challenges. And it also doesnt fairly capture what they do. This industry has successfully deployed the most sophisticated infrastructure in the history of the world in the fastest amount of time and increasing quality of that at exponential rates. It should be more centered around its future as associated with the internet and less in the minds of consumers of the disruption it may with broadcast tv. It is a cultural change. It matters what you look like. It matters that i voted not to wear my tie this afternoon. A big move for you. A huge move for you. Spage quaking back in silicon valley. He is not wearing shirts anymore. That is why i smelled the chair. My last question in wrapping up, what is the last thing you would like to see invenused . Is it v. R. Has been complete surround entertainment . Give me something . I think it is going to be who will graphic holographic. I think there will be a day where game of thrones will be played out in almost three dimensions in your room. And do you have to be dismembered as part of that . Absolutely. That would be more dangerous to play in it with them, but i hope that is after me. Michael, thank you so much. Thank you. Thank you all for coming. [applause] ladies and gentlemen, please welcome the chairman and c. E. O. Of Comcast Corporation Brian Roberts. [applause] it is great to be back. Hearing michael just talk about how not to wear a tie, and we are at intx. Here we are. You are who you are. The timing is perfect. We had earnings yesterday at comcast. We had a terrific quarter. I want to thank our team. We have a lot of momentum. Let me just address my friends at timewarner cable and say thank you very much. You are completely gracious. But we are mooching on. Being here today allows us to show you what we have been cooking up in the labs. I am really excited to show you a few things and then invite you to come to the floor of the convention and see live and first hand our fabulous booth. So the cloud has really changed everything and it allows us to keep innovating at a pace that is really unprecedented for our industry. We wont call ours ourselves the cable industry anymore. Here is the x1 operating system. It is clean simple, elegant. You have the save features. All sorts of new enhancements there i am not going to do today. On demand continues to grow and get better and better. Usage is incredible. We have now had 38 billion orders since we have really launched on demand. Search is what i want to show you a little bit of today. That is the key to everything as the content quantity keeps increasing. We are up to Something Like 2. 4 million searches every day using x1. And then we have apps, the xfinity app section, and we keep expanding that. That will be a big part of our future as well. Today i am excited to say that we are officially finally launching the Voice Control remote. Let me explain what that means. It takes search to a whole new level. There is no extra charge to any x1 customer to have a voice remote. We purchased five million to six million devices for this year alone. If you are a customer in the room at the convention, come by our booth, and we will get you a voice remote, and you can take it home and play with it yourself has been we will send it to you. There are more than three million commands possible. That is just the beginning. We have shown you before changing chance and searching by name. But we are now taking voice to a whole new level. Today you can tune to any movie, but what if you cant remember the name of the movie . You cant just say life is like a box of chocolates. It will figure that out and automatically tune in. Mama always said life was like a box of chocolates. Now tom hanks looks a lot younger then. So you could say how old is tom hanks . We built search functionality right into the remote. We call it x1 answers. People are using their smartphone to do things like this. We thought we should put it all right into the remote control. The next thing we are working on is find the ferrest gump running scene. This would involve working with content companies, but it can take you right to the section of the movie, has been the show has been the sporting event you want to do. Great song you are watching. What is this song . Running on empty. So the product continues to come up with new ways to allow you to enjoy one show, searching and getting answers. Our folks in the labs have been really amazing. Show me the Comcast Timewarner cable merger. [laughter] get down [applause] that pretty much sums it up. [laughter] so we really are moving on. So let me switch gears. Lets show something completely different available for parents and their children. If you say go to kids mode automatically using your Voice Control, you are now in a zone that is completely safe for any children under 12 years old. If you pick a show, here i will pick i carly. We have a Wonderful Partnership with common sense media, go in, see a show, see what age is truly appropriate. And here we are. Now from here i could say create an i carly play list. This is a new feature we have been working on. You could then set for your children a whole series of shows that is their favorite. Then you could say ok, pick a different episode, let it play. And the i carly episode begins to play. Now if you leave and your kids want to switch out of kid zone, youre going to need a pass word. So all really easy for customers, all in their control and all using voice. Now you are happy with that and you want to go back and say lets watch a movie. We will pull up djurisic park. The movie begins, and you get a notification that says someone is at the home. You click this is xfinity home, the camera comes up, you can activate the door lock and someone can come in. We think that is really cool. We have now been saying ok, where do we take xfinity home as we have integrated it and begin to have more features there . Today we are pleased that we are announcing taking the platform to a whole new level, and working with third parties because the system is open, to try to help integrate it to make it easier for the consumer using voice has been your mobile app. So we have a partnership we are announcing with lutron, where all of the lutron lighting and home controls will be available on your xfinity app. The same with nest, for your thermstat. They have revolutionized that. August lock is making locks cool. All of those partners, you can use one app and it will control any device, including our device has been the third party devices. Now we are also focused on Customer Experience. We have talked about x1 talked about xfinity home. What neil has been saying, and a number of us, we want to make the Customer Experience our number one priority and our best product. We have taken a lot of the innovation and now putting it over here. Let me show you some things we are going to announce here at the show, and we are going to be doing a press event later this afternoon. The goal is to make it incredibly easy for customers to do business with us easier than ever before. It starts here with my account app. We have now added a feature called tech tracker. It will led you know in real time that james is 15 minutes away. You know who is coming. You are comfortable. When you are done, the job is complete. We then can let you rate whether you were pleased with the service. If we dont get enough stars, we know something wasnt right. Rather than wait for something to go wrong and you to have to call us, we would automatically call the customer. We started this in boston. We completed a trial. It was a huge success. We will now have this tech tracker across the entire footprint by the end of this year. Another feature we miller lite good call bad callback. Now 42 of our customers manage their accounts online has been via a mobile phone. So we want to make it easier for you to do that. Your time is valuable. That is the number one thing we hear from customers. So instead of you calling us we will call you. You schedule an appointment in 15minute increments. We confirm that is what is going to happen, and your call is scheduled. We have that rolled out now. One last thing that you cant come to the show and for me to do a bit after quick demo and not talk about broadband speed. I want to preseason our new future home gateway but let me take a quick look back at what the first generation, which may be in peoples houses still. Here is the second generation, including voice and broadband. That is our current modem. We have hired a bunch of fabulous designers inhouse working with third parties designing our own suite of future products. Let me show you what they are going to look like. They are really sleek and sexy. There is our team clapping. Please come to the booth. You will be the first ones to see is. This is something we developed in philadelphia and cigarette con valley. They are capable of delivering nine gigabits through routers. It combines incredible speed, but we are going to havism p. Video capable phone, wifi and all the xfinity home control all in that device. Then so that you have perfect reception throughout your house there, is mini me over there in the same suite. All of this is trialing this year and will be available across the footprint by 2016. So as you can see, we have a lot of exciting things going on, and we have sort of been working on how do we make it easier for customers to come and see it, and touch it and feel it . Here in chicago we piloted it has taken us a couple years something we call studio xfinity. We are doing a press event this afternoon. Let me show you a quick image. A totally different look. All of the products that we have talked about, we have hundreds of Stores Across the country. We have been upgrading them and trailing this new concept to see if customers can come and play and have an experience and experience the incredible bread this of products. We welcome you to play with all of that at the booth. Thank you very much. [applause] and now ladies and gentlemen, joining Brian Roberts for our next conversation mcgee welcome the host, the chairman and c. E. O. Of media link, michael kassan. Ands applause please welcome the chairman and c. E. O. Of the chernin group, peter chernin. Good afternoon, ladies and gentlemen, has been good morning. In considering how to frame todays discussion, i recall the classic movie scene. Colonel t. E. Lawrence takes the tip of a burnings match between his thumb and forefinger and slowly grinds the fire out. Doesnt it hurt says the young man . The trick is in not minding that it hurts. Is there a better metaphor for being in the moving video Business Today . With con sumetter behavior hurtling all over the place platforms proliferating and technology making a hash of the business, you have people who will take a lot of punishment and give some back. Today we are fortunate to have two of the most accomplished executives in the industry to tell us how to take a licking, has been give one. As the former president and c. O. O. Of news corp, peter was one of the most powerful News Executives on the planet. Now he is involved in everything from planet of the apes to india and china and is one of the most respected entrepreneurs in the over Top Television world as well as other innovative ventures. Brian roberts as you know works in a small family business, a pretty good business. After watching brian earlier i realized i cant call him the cable guy anymore. I am going to call him the pitch man. That was great. Clearly, while we always talked about the last mile when i saw what xfinity does in the house, it is the last inch. I promise not to be painful but educational as we get a chance to chat with peter and brian. Thank you. Brian, the video that you showed brian, the video you showed with the explosion come i think you already addressed the elephant in the room. What i would love to do is switch gears. Yesterday was a good day for comcast. The Earnings Announcement is a good example and a good picture as to how the marketplace is changing. Subscriber versus the broadband , obviously you talked about it yesterday. I would love to chat about that a little. Brian we have a fabulous company. We have been fortunate enough to be on a wonderful journey that seems to take many twists and turns. I pinch myself every day to work with the team of people and the Nbc Universal folks. Yesterday, all parts of the company seemed to be firing on all cylinders. We have rolled out more x1. Where going to increase the pace of that. We are getting Great Customer responses. The broadband, there are a few more broadband customers and growing fast. Video has leveled off. We have invested in the fastest inhome wifi, we redefine what we think broadband is. It has to be that whole last inch experience. Many of the things in the cable division. The team never lost its focus and for pat im grateful and , proud. Over at Nbc Universal, peter helped us have the confidence to jump at a perfect time to buy the company. The job that steve and the team have done is in my opinion one of the best experiences i have been part of in 30 plus years. We reported yesterday the four big divisions, the one that everyone is the leader with is the Cable Network. It contains to be the most cash flow part of the company. Its an incredible brand, usa nbc, msnbc, bravo come on and on. We had a big day with the Kentucky Derby and the super bowl and olympics and blacklist and the voice. Next week, we launch the new upfront season. We are the Number One Network 1849 for the second year in a row. We came from lastplace to first place. The two that just shocked us were the movie business. We have fast and 7, 50 shades of great, Jurassic World coming up. This will be the biggest year in universals 100year history. He is doing a fabulous job with the team at universal. Theme parks was the fastestgrowing part of comcast. We said, do we want to make the investment necessary in the parks . Over 50 growth and cash flow in the First Quarter thanks to harry potter and the new minions attraction and hotels and many other things just a great time in the company. We obviously cant look back, we can only look forward and with that kind of activity, its an amazing time. The only postscript i put on that is a positive one. Having worked with you guys when you were looking at nbc as well, the commitment you made back then to make the investment in programming and technology, ge was a Wonderful Company but they were not making those investments. As we know the results are great , and congratulations on that. Brian if you dont fall in love with nbc, dont do this particular deal. We have made investments everywhere from cable to technology to advertising. The list goes on. It has paid off. Lets talk about what brian does better than i do. His skinny bundle looks pretty good. I need some work online. What does all that mean at the end of the day . Some of the stuff weve had the privilege of working on and the things you are leading in the ott world, how does this all play out . You were a content creator. You ran studios. Its an interesting time. Peter if i knew that, i would be sitting someplace more fun today than right here. I think its a very complex question. I think what you are seeing is tremendous distribution explosion. I dont necessarily think im not convinced that you will see collapse of the handle. I think that is wildly overstated. I do think you will see the bundle rationalized in some ways. I think what you will see more than anything is this tremendous explosion of new alternatives. Largely ip delivered. You are already seeing it. Netflix is an extraordinary company. Youtube, the amount of viewing on youtube if you are trained trying to reach younger demographics it is explosive. You have these other alternatives. It will force the bundle to justify itself. That is not the worst thing in the world. When you mention youtube having been there at the beginning, you made Real Investments in some of the youtube directive. These days i dont sit with a content creator in the overthetop world or Multi Channel Network world where so much noise is happening where they dont talk about their off youtube strategy. It is now part of the checklist. You have the youtube strategy and you need an off youtube strategy. How do you think that plays out . Peter i think what you are seeing which is a great opportunity in the overthetop content space is that business has largely in a Youtube Business for the last five years. It has been where almost all advertising video has been viewed. What you are seeing now is enormous competition starting within the last six months. An enormous amount of video viewing on facebook, twitter starting to get video. Snapchat experiments are fascinating. A. O. L. Is doing a lot of video stuff. When you are seeing for the first time is enormous distribution competition which historically has always been great for content creators. One of the reasons why the cable channel business is so extraordinarily profitable today is that you had real districts distribution competition. You have cable, satellite and those channels had a lot of leverage in those negotiations. Distribution competition leads to leverage on the part of content creators. For the first time, you are seeing that and its why everyone is talking about off youtube strategy. Youtube is a great Distribution Partner and deserves a lot of credit for building that business. If you are a content creator the more competition, the better. You talk about the snap chats and the next gen i read something in the wake of the fight this weekend about the amount of people who watched on periscope and meerkat and different kinds of viewing experiences, yet the numbers were extraordinary in terms of pay per view revenue. Peter im on the board of twitter. There was no intention on the part of periscope guys to serve as a piracy device. I think the service has been live for about a month. They were moving as quickly as they can to respond to take down things as quickly as they can get them and its something they will perfect. I think the future of those devices is not to pirate other media and i dont think that is anybodys intention. Some of the other things periscope did behindthescenes the ability to live broadcast , things which otherwise would not be part of the broadcast event because you are on a linear feet is part of this great explosion opportunity. Brian piracy still represents the vast minority of how people consume. The fight was off the charts in terms of the high end of everybodys estimates. As we build a legal home theater, there will always be a n illegal home theater. Responsible companies are always trying to tap it down. Obviously the world of , Technology Makes it constantly blurring the lines. It will always be a cat and mouse game. I will say this about new forms of distribution, i dont love the phrase overthetop simply because i think this is a combined experience. It is not either or. Its not going over anything. If we do a great job of building a wonderful broadband, thats what this room is doing and thats what is enabling this. We thought for a long time that video from the net is a great thing for our businesses. Change is uncomfortable but its powering our growth. In terms of all these different services, if you take them all i think the value point you made, so far its demonstrating what a great deal it is to get the bundle. Its not even close when you add up all the individual parts, you cant come close. We need to tell that story. We need to be responsive to the market. Not everybody wants everything. It is a work in progress. This is not news to a savvy audience like this. How many people binge on blacklist . I do for sure. I love every moment of it. I have not watched one episode on nbc. I have watched every episode on a device other than that thing on my wall. My focus is usually on the advertising side of these questions. If i am an advertiser in terms of video consumption there is no question, the numbers are up in terms of advertising. It is an important part of comcast Nbc Universals Business Today more than it was four years ago. Brian advertising continues to be really strong. The upfront has been really hot. There is no question the kind of behavior and viewing you are talking about is happening all over. Its great that people want to see your content. How do you catch up and monetize is no different than the periscope conversation. Where we think we sit is the Cable Company is able to do certain things nbc is able , to do certain things and we are able to do things together to accelerate advanced and targeted ads to measure on other devices and help the ecosystem recognize the value that all parts are bringing. Im excited that we are in a good position to do that. At the intersection of entertainment, marketing, media, advertising and technology, its a busy intersection. Its one we are all living in or right now. All those things are converging and creating tremendous chaos. At that intersection, as an investor, where are you looking . Are you looking at all aspects of it . Are you looking more on the Technology Side or more on the entertainment side . They are not discrete, but they are. Peter show us your portfolio. We wont tell anybody. I think its less a question of what we are looking at, what i think are some interesting trends, perhaps. Potentially in my mind the most , interesting trend right now is brands. If you go back to what brian talked about five minutes ago with the mini Earnings Report of how well the company is doing, it was largely a litany of brands. Fast seven or harry potter or the nfl or olympics what you are seeing is brands are driving enormous value. I have enormous respect for what bob eiger has accomplished at disney because he bought some enormously successful brands. He integrated them into the family. I think what you are seeing is, as things get fragmented and disintegrated, what im real certain about is strong brands will not only survive, but they will thrive. I think what is under threat a little bit is the notion that the aggregation is the brand. A good example is if you look at various cable channels, cable channels which have strong brands will do just fine. Those cable channels which are a bit more amorphous will be challenged because they are aggregation mechanisms and people dont care about the mechanism. They care about the brands themselves. Brian they can aggregate now. Peter largely, every consumer in america is their own aggregator. They pick something from their broadband service, something from the broadcast network something on the mobile device and they create their own schedules. What will dominate that world is strong brands. Youve mentioned some of the things youve looked at and invested in our also in farflung places. As you left fox, you looked all over the world. One of the things we are copying with your success is what we hope michael will do with his own company, is have a chance to look at any situation, not something right down the center of the plate of the business you are already in. There has never been a more explosive time for value creation. Maybe some value loss or dislocation. That creates opportunity and that opportunity is not just in the u. S. Peter im sure you see it inside your movie business which is now somewhere in the neighborhood of 75 international. These big brands have enormous residents residents rs esonance all over the world. You are beginning to see that with various media outlets. We have a number of investments in india, which will be the Biggest Country in the world. A great place to invest in media. Weve invested in indonesia. The fourth Biggest Country in the world, 250 Million People all of them young and connected. One of the great connected societies, indonesia. A big youtube and facebook society. All very aware. Technology has made the world become much closer and has given you ubiquity of distribution. Because of technology, you can distribute any brand anywhere in the world to any device to any home to any person. In the long run, there will be some dislocation. The transition is not always easy. But the overall future is incredibly bright. There are a gazillion consumers out there that we now have access to. We used to have access to people with the t. V. And movie theater. You now have access 24 hours a day all over the world. That will continue to grow. Its something you both know well. There was historically this link between marketers, messages and content. That is how it was delivered. As we all know it was never , free. The Exchange Value was if you watch or listen to these commercials, i will give you the content. It was not free. It just did not feel like you are paying for it. You were paying for it with your attention. That has changed. If you are unilever or coke and you need to get that message out, how do you do it now . How do you play . At the same 3 00 in the morning that the brands are waking up the content creators , are waking up and the distributors. What is the advice . What is the remedy . Brian steve took all the parts of the company and put them under one person for the first time in the history of all the various parts and said when we sit down with cocacola, lets have a holistic conversation about digital, global, mobile, ondemand, live, every possible part that we can think of, how can we help you do professional special shorts on youtube and have it play on our websites . The tonight show is incredible. Most of the views are not on television. Yet, the brand is bigger than ever. There are so many clever people weve been looking on the cable side. We brought in Technology Companies to speed this along and give you more data. It all boils down to data. Its a tool, a resource to allow, for the first time, brands to know more about their customers where in the past, it has been a stab in the dark. All of us are going to help those customers have that kind of connection. We are trying to connect the customers and companies in a way that is positive for everybody. The freewheel play you made is the thing everybody points to in the industry as that next generation in terms of advertising let me take one second on that. It plays a small part in trying to switch to digital from the analog world. We talked about china. For comcast, our opportunities will be different than what most people are thinking. It is such a new world, we should keep our eyes open. It is not just live in the past. I went to china to visit where most of their people are and we have 150 software engineers, mostly phds and masters coming out of beijing university. Hiring another 100 or so a year. We are building a theme park in beijing. Fast seven had over 4 million over 400 million in china, the biggest movie in history of any movie in china im very excited that we will be on that journey there is no quick, soundbite answer. Brands will exist and thrive and need to reach consumers and all of us are chasing how best to do that and how to help the system continue the momentum it has had all these years. Peter i was at the full screen new front yesterday. If you look at the under 34 demos, we have 1520 creators doing more than 20 million views a month. More than virtually any cable channel. What it suggests is those creators are ultimately brands to their audience. The Fine Brothers are a brand. Everything old is new again. Its coming back to advertisers closely associating themselves with content brands. If you are an advertiser and you can get close to jimmy fallon is a good example. He has a reasonably sized audience on nbc but a huge audience beyond that. That is really the avenue of where advertisers will have to go. I think the old business was easy. You just by 9 00 on this channel or a block. It can be a great buy. Where it is not, you will be throwing your money away. I think that you are going to see brands get much closer to key creative brands on their own. This is a golden age of television, golden age of content. Customers and consumers will want it, and thats opportunity for brands to associate themselves with it. The grace fact that grace and jimmy fallon are in the same sentence is great. Also both on comcast. Grace has her new show on e we are out of time, but i appreciate you spending the time and sharing your thinking. Thank you all for your attention. [applause] . . And now, ladies and children, and now, ladies and gentlemen to host this mornings final , conversation, once again please welcome the coexecutive editor of recode, kara swisher. Kara we will have a talk with Tim Armstrong from a. O. L. We want to talk about where internet video is going. I have written two books about a. O. L. , which is a lot. I know the company very well. It iterated so drastically over the years and is continuing to do so. I thought tim would be a good example of whats been going on, the thought behind a lot of creation of original video and where video is going and how we are changing. So Tim Armstrong. , [applause] kara tim, i have interviewed you. Thank you for dressing up. I appreciate it. [laughter] tim theres a Microsoft Convention across the street. I was debating what to wear. I said to my assistant everybody is dressed exactly like i am. All these microsoft signs are all over the place. Are they getting back into cable . They said this is the Microsoft Convention. You are in the wrong place. Kara i was thinking of coming out here and cutting off his tie. Since he gave me millions of dollars in investment it might not be a good idea. It could go either way. It could be a adorable or not, maybe a bit of both. Lets talk about where things are going with video. You are famous for having things recorded of you. Tim had a meeting where he fired someone publicly. Probably not the best idea. You said theres not going to be any video or audio of it and i said there would be audio. Within seconds, there was audio of the whole thing. You just periscoped a similar meeting. What is wrong with you . Tim one thing that is really important to us is communication. Overall as a business. We have 5000 people roughly at a. O. L. Almost all of them have , gone through a handpicked process. Talent and communication are first and foremost on our agenda. We do these Company Meetings which we broadcast out quarterly. We set up global videoconferencing. We have a big infrastructure behind it. It is expensive. Last time we did, i said why dont we periscope it out . The reaction inside the company was, what is that . Why would you do that . I said the land of video is changing so quickly, if we dont get ourselves used to being transparent and having a Company Without walls, how do we use the best infrastructure . I periscoped the meeting. We gave people a half hour notice or so and said the Company Meeting would be on periscope. It was amazing to watch. About 2500 people joined the meeting. I am guessing hundreds of people outside the company joined it. It basically taught us that day that you can do things really quickly in fairly good quality life versus all the infrastructure weve built up. We saved money, it was instantaneous, our engineers i was watching my screen and i had emails coming in from our engineers saying next time i will build this. Later that day, we had things happening at a. O. L. , all of it on periscope. We could have had a sixmonth Management Meeting and we would have tested it once and put it in the back door. The fact that we did the Company Meeting that way, instantaneously, the whole company shifted to saying live video can be cheap and effective. Lets think about how it can be used for our products. This has happened before. There has been live streaming. It is a big idea right now in silicon valley. You are talking about dropping costs, dropping infrastructure. You talk about the new front. You spent how much money on content . Tim tens of millions of dollar a year on content. Kara these guys are spending billions. Why are you guys doing that . I like that you got Susan Sarandon to light up a pot cigarette on your video show. What is the goal . What do you think the rest of everybody is doing . Tim first of all, on a global perspective, theres 900 million paid t. V. Connections in the world. Roughly 2 billion people on smartphones. That number will go up to 4 billion in the next few years. Peter was just talking about how big distribution has gotten. In general as a company, we are doing two things. We are building a media platform. We provide Video Services and content and ads to 40,000 other publishers at this point. For our own properties, we are investing in what we think is content that will look like the future of content. The show you are talking about a show called connected. That show is driven by what i call machines, people call smartphones. The entire show is shot almost like a periscope from the viewpoint of someones phone. Susan sarandon is on that show and we have had good receptivity. But some of our shows we have invested money in our three highestrated shows have had 50 million users on them. Thats an incredible number when you take a step back. Thats an incredible number in the United States for internet stuff. When you take a really big step back, the fact you could reach eventually 4 billion people in next couple of years that 15 , million probably needs to be 100 million. Thats where we are investing in the big content brands like Huffington Post, putting video behind them will be impactful. Kara video seems to be the biggest. Youve been pushing this idea for a while. Now everybody else is doing it. Is it a big threat . Do you want to become the cable industry . Tim the way i look at this is there will be a set of companies from the cable landscape showing things. We Just Announced a big deal with nbc last week. That will put programming and adds together in a different way. There will be a number of companies that get together and do it together, internet and tv. There will be some companies that will get left on the sidelines because they have not moved quickly enough. There will be companies that dont get the proper amount of scale. I think we are at a tipping point. Ive been doing this now for 20 years. I think this is absolutely a time period almost like the beginning of the web. There is a year that happens where everything changes. We are in one of those times right now. It may be a couple of years, but i think we are in one of those changes. Kara someone called Traditional Media Companies distressed properties. You hear that from internet people. They imagine them buying up those companies or disrupting them completely. Do you imagine that would happen quickly . Tim i think there is we invested four years ago in video and content brands at a time when nobody wanted to touch content brands because internet was going to destroy everything everybody thought video would never be highquality enough. We were early investors in that. We had a company in peril that needed to be turned around. I know what the attributes of a. O. L. Were when i got there and what needed to happen. The biggest attribute at a. O. L. Was when you look at all the attributes, almost everything was down. If you look at the Traditional Media Companies right now, look at their p l, all their major lines of business are red. Which i am sure they are not. But if you look at it, you will see red. At a high level stat right now i have something we call 4m video on mobile is growing 40 , huge growth rate compared to others, 40 billion by 2020 that will transition from t. V. To mobile video if rings stay on track. Theres 4 of the population in the United States and 96 out of the United States. If you think about where things are now, basically those are going to end up being a significant shift. When theres 4 billion people on mobile machines basically cable boxes. Kara why do you call that machines . Tim if you watch your kids, they are not talking on the phone. They are operating machines. Internally in the company i , referred to this as a cable box in my pocket. I think thats a very important concept because when theres 4 billion of those things floating around, with lots of high quality video its a very powerful way to build a mega brand. Very few brands have thought about building in a 4 billion person universe on media on the screen. But you are going to have to. It is a big opportunity. Kara its just a watching machine, really. You say machine and it feels very terminator. Tim it is a beneficial machine but it is a machine. Periscope, i just replaced in my Company Meeting my iphone 6 plus with what is 30 machines and 30 people trying to do a global videoconference for us. That is how powerful it is. How we build the lightest company on the hardest technology we possibly can . When you look forward 10 years you will see a massive race for talent, massive race for infrastructure. You will see a massive infrastructure race on advertising. Kara lets compare the landscapes. Lets talk about the big players. I will go through each of them and tell me where you think they are going. The internet company. Google. You worked at google. 10 for 10 years. I think google is very search focused from a platform standpoint with burgeoning interest in significant markets outside of search. Kara would that be video . Tim video is one. Autos is one. You see what they are doing. Things they are doing are in big markets. This is true for a lot of big companies. If youre a big company and need to grow, you have to do things that are big to grow. You are seeing things like autos a whole bunch of companies become a big target in general. I think that is what google is doing. Kara do you imagine them buying a Cable Company . They keep talking about delivering their own fibers. Tim i will give you my end of the movie prediction for all of these companies in general. I think at the end of every Business Strategy is a human. A human is probably not going to sign up for 20 services. A human will not want to have 20 companies they are getting all their data to and will not want to figure out where the channels are on 20 devices. I think you will see a regulation of all of the companies try to complete compete in this space down to what Human Capacity is. Almost everything humans can handle and know about is around the rule of seven. My guess is as a human being you , will try to optimize with the fewest amount of partners, devices, places to get content and it will put tremendous pressure on the Internet Companies and Cable Companies to become one of the seven places you do things. I think the ad systems are the same things. Theres 200 companies i think there will be 715 Major Companies over time. I see the same thing happening video is a hot word right now. When we got into it, very few companies were into it. Now there are hundreds of companies. That is not sustainable. It may take five or 10 years. The same thing happened to auto companies. When they launched, they were local. Kara amazon. What do you think of their efforts . They put out some great shows. Tim amazon is doing a really good job of building a note moat around their business. Each of the Internet Companies has a different relationship with their users. You have a different relationship with facebook and google. Amazon has a different relationship. You will see the specialization of these platforms become more important. Kara lets talk about facebook. That is one of the companies where people are consuming an enormous amount. Much of the video is somewhat ridiculous i watched a snake eating an egg 20 times at least. That is the level of video. Then again, we put our president obama interview up and that is where we got most of our views. How do you look at facebook . Tim facebook has done a good job in video. The bottom line when you look at all these companies every one is , investing in noncommoditized areas. Value of content will skyrocket. Highquality content will skyrocket, the opposite of what a lot of people think. The second piece is advertising is going to get really expensive. Trying to convert a customer in digital we have all these companies on these platforms. Our ad prices have gone up. Double digits the last three years. I think the bottom line is consumers will end up getting a really big win out of this because you have the best companies in the world and most Competitive Companies in the world trying to get down to this rule of seven and there will be a lot of Companies Investing a lot of time and energy. Kara china, all of them can you imagine them being big players . Tim definitely. I have a board slotide i gave to the board last year. On the boards like, theres three things, the amount of users you need to be able to deal with everyday, the amount of content producers and the amount of ad dollars. That slide plugs in the fact that in five years all , these networks will be globalized. The other companies from other countries are more interested in coming here than a lot of companies are going there. When you go to china and look at the scale of the users they have on their services, if they come here, and will put your menace pressure on it will put tremendous pressure the Companies Like ours and everybody else to compete at a much higher scale. Kara apple. They are trying the watch thing. Tim i have the watch. I like it. I have been testing it. I have been using it. I have the Huffington Post on the watch. Probably cannot see it. Kara it is tiny. Tim i like it. Ive been using it for a week or so. Here is what apple does a great job of. Apple does a good job of thinking about the rule of seven. Human beings want curated information brands. Kara you were talking about taking your iphone 6 and becoming a broadcasting network, essentially. How do they play into this . They are very into their devices, they want you to use stuff on that. Are they going to become the Cable Company eventually . Tim i think there will be a massive fight for content and services. This is my prediction. I have said it publicly before. I think devices and networks have the potential to get massively commoditized. If i took everyones phone and taped it to a wall and we all stood 20 feet away, you would have a hard time telling the difference between a phone content is something that drives differentiation over time. When you look at things like sports rights or the live content stuff coming out today there will be a really, really significant amount of investment in content. It will require similar investment in the advertising side. Video is going to change things. This is the year we are going to hypermedia. The companies in this room have the chance to benefit but you have to hustle. Kara who will suffer most in that transition . Who is in trouble . Tim any company that doesnt see change as a weapon for the future will suffer. If youre not going willing to change, you will get blown over. Kara broadcast networks . Tim if you are not willing to put your content on the internet and mobile, you are playing with fire. Kara prediction . What do you imagine . Tim internet of things will change how everything is done. Multitouch attribution is part of that in advertising. Instead of the internet or one thing getting credit for everything, advertisers will know where theyre getting credit. I think internet of things mixed with Virtual Reality where every place you go, you can have a designed experience you look at the stuff in the news today , you can imagine the difference between reading it and getting a report versus having you in the situation yourself and being able to see what all the players are doing inside of the news feed. That will change things. You will be able to live inside of the information you see. When you live inside of that, it will give you a much different viewpoint of what the dynamics are. 4 of video is programmatic on phones right now. 4 of advertising experiences are programmatic. Driven by machines. Today is theres a baseball game, we would be two outs in the first inning and the other team has not even gotten up yet. I think the future will be much much more exciting than what you think about today. It is going to be bigger. Kara when you start with sports metaphors, i leave. Thank you so much. [applause] . This weekend, a look at the changing landscape of television and the internet. Industry leaders discuss the latest innovations and their insights on what the future may hold for consumers. The discussions were part of the threeday expo held earlier this month in chicago. Tomorrow, we will hear from the commerce secretary at 5 00 eastern here on cspan. Sunday night at 8 00, influence and image. We will look at the personal lives of three first ladies. Rachel jackson was called a bigamist and adulterer during Andrew Jacksons 1828 president ial campaign and died of a heart attack before he took office. Disneys becomes the white house hostess but is later his niece becomes the white house hostess but is later dismissed after a scandal. Later, Angelica Van Buren is the white house hostess. Sunday night at 8 00 eastern on cspans original series. Examining the public and private lives of the women who built the position o