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Friday, April 18, 2014

Video Streaming Not Hurting TV Ad Revenue

While Netflix, Amazon Prime, Hulu, and others are capturing subscription revenue and watching usage surge, broadcast and cable networks continue to grow as well.  According to latest figures in the first quarter of this year, ad revenue was up over 21% from last year's first quarter.  That is pretty healthy ad growth considering all the worries of cord cutting and streaming video. 

In addition, syndication grew 11% for the quarter while local cable advertising rose 4%.  Exciting times ahead as big data helps to drive better targeting and hopefully higher ROIs.  It seems the pot is big enough for both digital and linear to continue to do well. 
for the quarter was up 21.2% from a year ago. March spending was up 18%. - See more at: http://www.multichannel.com/news/marketing/tv-ad-revenue-grew-21-q1-smi/373935#sthash.mmCjxbn8.dpuf
for the quarter was up 21.2% from a year ago. March spending was up 18%. - See more at: http://www.multichannel.com/news/marketing/tv-ad-revenue-grew-21-q1-smi/373935#sthash.mmCjxbn8.dpuf
for the quarter was up 21.2% from a year ago. March spending was up 18%. - See more at: http://www.multichannel.com/news/marketing/tv-ad-revenue-grew-21-q1-smi/373935#sthash.mmCjxbn8.dpuf
for the quarter was up 21.2% from a year ago. March spending was up 18%. - See more at: http://www.multichannel.com/news/marketing/tv-ad-revenue-grew-21-q1-smi/373935#sthash.mmCjxbn8.dpuf

Thursday, April 17, 2014

Yahoo Or Else

As CEO Marissa Mayer attempts to reinvent Yahoo, their greatest strength so far may be their investment in China's Alibaba, their challenge continues to be how to grow usage and consequently advertising.  The secret plan, uncovered by re/code, may be to convince Apple to make Yahoo the default search engine on its iPad and iPhone devices.  Certainly this will take some financial inducement.  And is there an ROI that justifies the expense.  Its just a shame that Yahoo hasn't done more to educate consumers on how easy it is to manually switch the search engine on these devices. It also makes me wonder if an Apple/Yahoo partnership could lead to more business ventures as well including original content and distribution. 

Wednesday, April 16, 2014

Dad, What's Dial Up Internet?

My son recently asked me about a book he read that said that the character couldn't use the phone because it was being used by the computer.  This struck him as both odd and funny.  And as I tried to explain what dial up internet was like, it took him some time to get the concept.  For him and so many others of that generation, the internet is an always on phenomenon.  The computer is always connected, the tablet, the smartphone, all instantly have access to the web.  That the phone must be connected to the computer makes no sense; it is connected independently allowing us to talk on the phone while we surf the web. 

The idea of having to tell the computer to dial in to your ISP to access mail still exists in some parts, but for the vast majority of us with a broadband connection, those days are long gone.  One must go and watch the 1998 movie, "You've Got Mail", a film now 16 years old, older than my son, to see the characters dial in to AOL, here the familiar buzz, and learn that they have indeed got mail. 

I remember fondly all those AOL cd-roms being available free of charge to get the software to download and start your trial membership.  Since then, the AOL business model has changed from subscription membership revenue to an ad supported one.  But those days were not so far ago.  How quickly we forget the changes that have happened in our connectivity.  We are now so connected that anytime our broadband access fails, we agitate as our webpages no longer refresh or connect to the video we seek to watch.  An always on internet connection has become as important as shelter, food, and clothing.  What's dial up - that has now become a history lesson. 

Tuesday, April 15, 2014

Broadcasters Are Asking...What If

What if Aereo wins its case in the Supreme Court?  Certainly both Aereo and the broadcasters are wondering what happens once the case is decided.  For Aereo, they have announced in the media that without a Supreme Court victory, their business model will cease to exist.  And broadcasters are considering their options as well should they be on the losing side of this argument.

 While it is hard to imagine that broadcasters would drop their over the air signal, networks could consider converting to a cable model.  Then Aereo would be unable to acquire an over the air feed to retransmit.  Broadcasters could also consider selling direct to consumers its own platform of linear and on demand programming via the web.   Today, all offer shows and clips streamed through their own website or through Hulu or both.  Lastly, its  possible that broadcasters will do nothing to alter their signal. 

Through cable agreements, some broadcasters offer an authenticated streaming linear feed of their line-up to customers.  Cable operators like Comcast might just continue to pay license fees for the simplicity of the delivery of the signal, but would push back hard should broadcasters attempt to sell a streaming model directly.  I find it doubtful that cable operators would put together their own antenna farm unless they could justify economically a real cost savings. 

If I were to predict an outcome it would be that Aereo wins its Supreme Court ruling.  Broadcasters continue to license their signal and a full authenticated TV Everywhere model to cable operators, and so broadcasters continue to use the over the air airwaves.  At the end of the day, if broadcasters can show that more consumers are watching their programming, via cable AND Aereo, then they will continue to increase their ad rates and generate more advertising revenue.

And one day, should cord cutting start to take a meaningful bite out of license fee revenue, broadcasters will revisit the cable model and consider transitioning away from the over the air signal and freeing up airwaves back to the FCC for other new opportunities. 


Monday, April 14, 2014

Everyone Wants To Be A TV Network

If only it were so easy to pick great TV show, all the networks would be winners.  NBC would never had lost its dominance with "Must See TV" on Thursday nights and shows like "Hello Larry" would have never made it on the air.  But the process of selecting scripts to become TV pilots and pilots to be picked up for series is much more a matter of art than science.  And unfortunately, most TV shows that I like and want to watch seem to quickly be cancelled. 

Competition for programming has increased and so has the number of outlets.  When it was just broadcast, only a limited number of shows could actually find time slots; with the rise of cable TV, number of  slots have increased and the audience started to fragment.  But it also allowed some edgier programming to slip through and find a significant audience.  Shows like HBO's "The Sopranos" and AMC's "Breaking Bad"  were discovered and loved.  But with the size of the pot, or number of cable networks ever growing, audience size per network kept fragmenting.  Some networks have grown their ratings, many have not.  And broadcast continues to see eroding share. 

The savior for some programming has been technology.  From DVDs to DVRs to on-demand, viewers could watch shows whenever they wanted.  Two shows competing in the same time slot meant little when both could be seen hours or days later.  And now with the growth of streaming media, viewers can catch up with subscriptions to Hulu or Netflix. 

Not being content with licensing previously created shows, streaming media has now entered the original content game.  Netflix has found success with "House of Cards" and Amazon with shows like "Alpha House".  Today we learn that Yahoo also wants to enter the picture with long form TV content.  But with more platforms to choose from, the audience continues to fragment further. Capturing a meaningful audience size gets more and more difficult. 

The winner in all this is the viewer who now can choose from almost an infinite number of choices.  The challenge is in discovering which of the long form content is worth spending time with and which to ignore.  Where to find it and how to retrieve it become our goals; discoverability and search.  And how can you identify which shows are good and which are dogs?  With a couple of networks airing linear programming, measurement was easier to achieve.  Now it may be harder to compare, broadcast vs cable vs on demand vs streaming.  An ever increasing number of networks and platforms offering an ever increasing amount of original TV shows to an audience trying to find the best stuff.

Which brings me back to picking the best content to create.  As broadcasters have been well aware, it is not easy to pick the winners.  HBO could have picked "Mad Men" but declined it; AMC thought differently.  Making such decisions is a bit of an art and some luck.  And as the article in today's NY Times suggests, its a gamble.  But Yahoo smells advertising dollars from streaming long form content.  And if they pick right, they see financial rewards.  That is, if the audience can discover it, like it, and want to keep watching it.  Ask the broadcast and cable networks, it isn't easy.

Friday, April 11, 2014

How Much Would You Spend On A Smart Watch?

Wearable technology, like the potential of the Apple iWatch, the Samsung Galaxy Gear, the Pebble, Fitbit, Google Glasses, and more, has both the consumer market and the financial market on edge.  It is the next big thing and its development while nascent is expected to explode. 

With Apple, many expect that when they finally release their iWatch, its stock price will explode.  But given that a "stupid watch", can be had for under 10 bucks, what would you spend for a smart watch?  Samsung has priced its Galaxy Gear for around $300 while the Pebble can be found for a little more than $200.  Google Glasses, although not a watch, is expected to cost $1,500.  And according to today's news, an Apple iWatch could go for over $1000.  Other models could cost less, according to the NY Post article, but how much less to justify upgrading to the luxury model.

For early adopters, price will not be an issue for any of these devices.  But to get to scale, these prices will definitely go down. Ultimately, consumers will have to see the value that the device brings to justify buying these wearable technologies.  And if that demand can be generated, these devices will all become winners. 

Thursday, April 10, 2014

Are We Really Secure?

We seem so surprised.  Each time our security efforts are thwarted, we are shocked, think we have fixed the problem, and then find that it happens again and again.  Today it is the news that the Heartbleed bug opens up our secure data on sites previously thought impenetrable.  From banking to to tax returns, the https lock can be picked.  and unfortunately it seems for every piece of security and lock, there is someone able to break it.

Whether it is an internet bug or a teen breaking into the World Trade Center construction site, a closed door is an excuse for someone to try and sneak through it.  Airport security seems to continually find holes that allow guns on board and non-violent objects to be confiscated.  Even the lock on our house is a lame attempt to prevent someone without a key from opening it.  Break-ins happen all too frequently.  We only get upset though when it happens to us.  Unfortunately, even when we try to protect ourselves, the outcome may not justify the means.  Just ask Oscar Pistorius who is claiming in court his use of a gun was to thwart a break in only to discover that he shot his girlfriend instead. 

Our attempt at security, whether through the internet, at the airport, in our home, or at a commercial site mainly stop non-criminal individuals from even considering the possibility of committing a crime.  For those that want to break-in, there always seems that if there is a will, there is a way.  So why all the surprise to learn that the internet continues to attract "hackers" seeking the next challenge to solve.  The discovery of the Heartbleed bug is not shocking, it was only inevitable.  Higher walls will be constructed, more guards will be hired, bigger safes will be built, but no matter what security is created, there will always be folks seeking to undermine the system.  Are we really secure; not so much. 

So why security at all?  Frankly to make it as hard as possible for those seeking to commit such crimes to succeed.  Our hope is that we can keep the numbers as low as possible so that the vast majority of us are safe and secure.  There is no 100% security solution but clearly something is always better than nothing. 


Wednesday, April 9, 2014

Weather Channel and DirecTV Kiss And Make Up

It seems that DirecTV and Weather Channel both needed each other.  Despite the drop of the network 3 months ago and the launch of a competitive weather service, DirecTV still felt the pressure to relaunch The Weather Channel.  It came with a price cut and concessions on programming of the network, as well as TV Everywhere access, but a deal got done.  So my question is why?

I question the deal not because Weather Channel doesn't offer programming that appeals to a weather minded audience, but that it could be easily replaced with another channel called Weather Nation and consumers could still access weather content online.  Also when weather becomes the news, all the news channels carry weather reports.  So why did DirecTV negotiate a renewal agreement?  Here are the possibilities:

1) DirecTV was feeling pressure from consumers for the drop of the network and consumers were dropping DirecTV for alternative cable service.
2) The Weather Channel's minority owner NBC Universal was involved behind the scenes and some leverage was used for negotiation.
3) The launch of the morning weather show starring Sam Champion, although not a rating winner, demonstrated important and unique programming that DirecTV felt compelled to carry.
4) The need for added value to its subscribers with an agreement that gave DirecTV users access to content inside and outside the home on mobile devices.
5) The deal was so cheap and came with "marketing incentives" to help the bottom line.

Any or all of these reasons may have been the rationale for The Weather Channel relaunching on DirecTV.  Regardless, subscribers will once again get access to their programming. 

Tuesday, April 8, 2014

Cutting The Telephone Cord

With all the discussion centered around households cutting the cord to their cable service in favor of OTT services, we sometimes overlook the fact that households are cutting the proverbial telephone cord as well.  In fact, the drop in landline phones is huge.  "Nearly 40% of U.S. households now have no landline phone, and there are more wireless devices than people."  With the rise of cellular, there is no reason to share a house phone when people can call or text or email you directly on your mobile device.

Verizon and AT&T have both moved faster into the wireless space especially as they manage the competition from cable with IP enabled landline phone sevice.  No longer is copper the backbone of the house; most likely it is coaxial cable or fiber.  And as the WSJ indicates, the push is on by these telco heavyweights to "cut the cord" from copper and embrace an IP driven world.  "The new technology also is far less regulated."  That brings up a whole new set of issues in connectivity between platforms. 

And AT&T envisions a whole new way to connect customers.  "AT&T wants new and existing customers to eventually use broadband service, mobile phones or a conventional phone that connects to a router-like box. The box plugs into an electrical outlet and zaps signals to a cellphone tower."  No more copper, no more switching technology.  But change is not always easy to accomplish and many are naturally wary.  Ultimately, the challenges mentioned in the article will be managed. 

We are moving in an IP direction with mobile and wireless key elements in this change.  Government regulation may be behind but it will surely catch up.  And given the cost efficiencies, there seems nothing to stop AT&T, Verizon and other telcos to move away from wired copper to the home in favor of new communication platforms.