NETFLIX KILLED THE CABLE TV STAR: Cable TV is Definitionally Disadvantaged for Use of Artificial Intelligence.

• Author: Patchunka, Casey

TABLE OF CONTENTS

1. Introduction 277 II. A New Reality for Cable TV: Hurting Advertisers and Hurting Viewers 278 A. Personally Identifiable Information is Essential to the Use of Consumer Data and Thus the Ability to Be Competitive in the Entertainment Industry 280 B. Artificial Intelligence Is Important to the Entertainment Industry in Order to Make Meaningful Use of PII to Enhance Consumer Experience 282 1. Programmatic Advertising Will Enhance Targeted Advertising and Improve Consumer Experience Because It Allows for Advertising Companies to Utilize Specific Consumer Data to Provide Relevant Content 284 2. Dynamic Channels and Personal Video Recorders Are Methods of Enhanced Customizable Advertising and Thus Able to Create a Better Consumer Product 285 C. Personally Identifiable Information Is Essential to the Use of Programs That Provide Consumers With the Content They Want and Advertisements That Suit Them 286 1. Disclosure Requirements for Personally Identifiable Information Pose More Restrictive Regulations on the Cable TV Industry Than on Those Regulated Under the VPPA 288 2. Policy Implications for Consumer Protection and Competitive Entertainment Industry Play a Role in Defining PII Regulations III. PII for Cable TV Compared with PII for Services Regulated Under the VPPA Shows Stricter Regulation for Cable TV289 A. PII Disclosure Differences for Cable TV and VPPA Systems Are 289 Significant Enough to Put the Cable TV Industry at a Competitive Disadvantage B. Possible Solutions for The Cable TV Industry and the Likelihood of Success for Each Option in Terms of Practicability and Effectiveness 291 1. Express Consumer Consent Requirement Option 2. Liberal Reading of [section] 551 Option 3. Rewritten Definition of PII Under [section] 551 Option 294 4. Rewritten Definition of PII Under [section] 2710 Option 294 C. The Rewritten Definition of PII Under [section] 551 or Rewritten 295 Definition of PII Under [section] 2710 Option Presents the Best 296 Opportunity for a Competitive Industry and Better Prices and 296 Services for Consumers 297 IV. Conclusion 298 I. INTRODUCTION

   It is a Friday night and you were stuck late at the office yet again, meaning that you had to race through the streets of Washington and the crowds on the Metro to make it home in time for the season finale of your favorite TV show. However, you got home ten minutes after the episode began, and you had no idea what was going on. Now, imagine if your TV knew that your boss keeps you late most Fridays and that the Metro tends to not run on time, resulting in your getting home just after the beginning of the episode of your favorite show on Friday nights. What about if your TV allowed you to time-shift the beginning of the episode to the time when you got home and settled in for a Friday night on the couch? Would this satisfactorily draw your attention away from Netflix shows you've seen ten times before?

   While your TV is unlikely to know the reasons why you turn your TV on at a certain time, the cable TV industry has considered time-shifting as an option for TV consumers based on the mass amount of data each household produces daily that can be computed to take on a form of intelligent information. (1) Artificial Intelligence ("AI") is likely to become increasingly present in the entertainment and technology industries.

   It is worthwhile for the cable TV industry to begin investing in and expanding the use of AI in the face of decreased advertising revenue and increased costs passed on to consumers, especially due to competitors such as Netflix or Hulu. The use of AI requires the use of personally identifiable information ("PII"), which is regulated more strictly for cable TV as compared to its streaming-based competitors, which are regulated under the Video Privacy Protection Act ("VPPA"). (2) This disparity poses a threat to the quality and cost of cable TV service, and thus, ultimately, the survival of cable TV in the future of the entertainment industry.

   To ensure that cable TV remains competitive, the courts and Congress have various options. The courts could interpret the definitions of PII under the VPPA in a stricter manner on par with the interpretation of PII in the cable TV realm. Because the definition of PII for cable TV is more restrictive, as it includes more data than its counterpart under the VPPA, a solution would be to change the VPPA definition of PII to be as restrictive as that for cable TV. (3) The courts could also read the definition in a liberal manner for cable TV PII, so it would be interpreted in the same way as PII under the VPPA has been. This solution would shift the cable TV definition to the less restrictive VPPA definition. (4) Legislative options include Congress re-defining PII in a way either more in line with PII under the VPPA or more in line with PII for cable TV. Ultimately, either the courts or Congress should utilize their roles to put platforms regulated under the VPPA and cable TV on equal footing when it comes to PII, as this is essential to the integration and use of AI.

   This Note will address the innovation of use of AI in the entertainment industry to fuel the use of consumer data to customize advertising, content, and timing of viewership. Section II discusses the new reality facing the cable TV industry as well as how and why AI and PII are essential to the industry remaining competitive. Section II outlines the ways in which the cable TV industry could utilize AI and PII to provide better services and content to consumers. Section III explains how the use of AI plays out differently for cable TV as compared to other entertainment sources because the use of PII is treated differently in definition and in disclosure requirements. Section III.A establishes why this dichotomy is important.

   Section III.B proposes four solutions to this problem, which would ensure that the cable TV industry would not be at a disadvantage when it comes to AI advancements. Some options better protect consumer privacy and others better allow for competition and thus lower prices and better innovation in the entertainment industry. Ultimately, to ensure a competitive entertainment market in terms of cost and content, the cable TV industry and those regulated under the VPPA must be regulated in the same manner. Without a level playing field, there is a risk that cable TV will be unable to innovate and compete with other entertainment options, such as streaming and other online services, ultimately resulting in reduced competition, lower quality content, and higher prices for consumers.

2. A NEW REALITY FOR CABLE TV: HURTING ADVERTISERS AND HURTING VIEWERS

   Cable TV is facing a new reality in the face of strong competitors such as Netflix and Hulu. This Section will discuss the current competitive environment that cable TV faces. One key to success for cable TV in this new competitive market will be effectively using consumer data and the PII of viewers to effectively advertise and develop new business models. This is important to the cable TV industry as it navigates the changing entertainment industry. It is no secret that the cable TV industry is competing for viewers and thus for income from advertising. (5) Current options for TV viewing include traditional cable TV services such as Comcast and DirecTV and streaming services such as Netflix and Hulu. (6) Cable TV is also facing competition from new forms of media that keep consumers entertained such as social media. (7) On Netflix, "the number of hours of video entertainment consumed has grown by about 700%" between 2010 and 2016, particularly for young adults. (8)

   About six in 10 young adults primarily use streaming services to watch TV. (9) For viewers ages 18-29 years old, 61% watch TV through online streaming services, compared with 31% of that same age group watching via cable or satellite subscription. (10) Compare this to the percentages for all adults in the U.S. in which 28% of adults watch TV primarily via online streaming services and 59% watch via traditional cable or satellite subscriptions. (11) TV ratings for viewers of all ages dropped 33% between 2013 and 2017, while TV ad prices increased 20% in that time. (12) In recent years, there has been a common trend of ad buyers shifting their TV ad budgets to the Internet. (13) For example, in 2016, one ad-buying agency announced it would move $250 million of its clients' TV budgets to YouTube. (14)

   Not only has the cost of cable TV ads risen in recent years; the cost of cable TV for consumers continues to rise every year. (15) So far, the use of streaming services has acted as a supplemental way to watch TV, rather than completely replacing cable TV with a streaming service. (16) However, this means that Americans are paying more than ever for TV, and this is unlikely to last much longer. (17) The average cost of cable TV rose to $103.10 per month in 2016. (18) From 2011 to 2015, cable TV subscription rates rose 39%; this is about eight times the rate of inflation. (19) Compare this with the prices for Netflix, which rose in 2017 to $10.99 a month for the standard plan and $13.99 a month for the premium plan. (20) Therefore, the standard Netflix subscription costs roughly 9% of the monthly cable TV subscription and only about $29 more for a whole years' worth of Netflix compared with one month of cable TV.

   In addition to the increased cost consumers are paying for TV each month, consumers are also becoming less loyal. (21) Two factors have substantially contributed to the increased numbers of "cord cutters," or consumers who are opting to get rid of cable TV--the increased cost of cable TV and the alternate options available in streaming services and other entertainment platforms. (22) These trends seem to be increasing over time--in 2013 and 2014, about 500,000 of 101 million subscribers were lost; however, in 2015, "traditional pay TV suddenly lost 1.1 m[illion] subscribers." (23)

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