Tuesday, July 22, 2014

Netflix Surges As More Consumers Join

I joined Netflix first when it offered DVDs through the mail.  I lasted a year.  I preferred the immediacy and choice that cable offered.  How simple to scroll through on demand and watch shows and movies from a wide sources of content.  My daughter encouraged us, after the latest snow day this winter, to join Netflix again.  This time for its streaming content.  And we are now loyal users.

For each of us in the family, Netflix offers and recommends content that matches our interests.  Easy to discover content, easy to use, and easy to watch.  Like many others, I am currently fixated on Orange Is The New Black.    And it is fair to say that some of my TV time has switched from cable to streaming. 

I take my own experiences and can easily see why Netflix has been doing so well.  Since their misstep a few years back with trying to separate their DVD business from streaming, they have recognized the value of original content and used it to drive subscriber growth.  Whether it is OISTNB or House of Cards, it has led to both Emmy nominations and awards.  With their quarterly earnings announcement, Netflix continues to attract viewers, "signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs."  In the US alone, they have now over 36 mm households.  And while the stock market always wonders how long such growth can last, I expect Netflix will find new revenue models to further improve their value.
signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs. - See more at:
signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs. - See more at:

This years Emmy awards are next month and most likely Netflix original shows will win more statues.  That kind of publicity will cause more households to want to watch its programs.  And once they watch one episode, the Netflix feature that automatically loads the next show to start will keep them tuned in.  It encourages binge viewing, but it also encourages loyalty. 

Monday, July 21, 2014

To Better Compete, FIOS Improves Broadband

Verizon FIOS has a competitive advantage over cable; its broadband speed, mainly because of fiber to the home, is greater than cable's coaxial connections.  And as customers seeks more streaming media to view and upload more content to the cloud, the faster the connection, the better the experience.  FIOS can, with minimal investment, support that objective by increasing its upload speed to match its download speed.  "FiOS says the rollout should be done by the fall, and 95% of customers will receive it automatically."  And FIOS says this enhancement is being delivered at no additional charge.

While concern over net neutrality still mounts, most customers really just care that their content is accessible, without delay, when they want it.  When they encounter buffering, no matter what the reason, it creates a bad user experience.  The more speeds are improved, no matter the content, no matter the direction, the better the customer will value the service. 

FIOS growth has been slowing while cable operators have seen gains as well in broadband customers.  But as broadband continues to become more valuable than cable, FIOS may have the advantage when marketing superior broadband speed.  And while upload speed may not yet be as important as download speed, the need is coming.  Cable operators need to push more investment into improving their lines. The total broadband experience matters and slow internet only frustrates consumers who then start looking for a new provider. 

Friday, July 18, 2014

Microsoft Giving Up On Xbox Original Content

With the news that Microsoft was cutting jobs came word that their Xbox Division would also be giving up on an original content strategy,  Back in March, I wrote in my blog that I did not think it was in the best interest of either Xbox or the Sony Playstation to create exclusive video content when the primary intent for these devices was gaming.  Nadella must agree.  Per Re/code, "Microsoft will shut down the Xbox Entertainment Studios, ending an ambitious foray into original video programming."  Instead, the focus for Xbox for now will be video gaming.  I couldn't agree more.  Sorry to see Xbox Entertainment Studios go, but it was not a good fit. 

Given the device appeal as gaming, the clear driver is video games that stretch the uses and the imagination of the consumer, interactive, challenging, and fun.  It is a unique ecosystem that reaches an important core audience.  And while the extension of the product as a distributor of video content adds value to the device, exclusive entertainment content does not.  Microsoft is smart to leave that now to Netflix, Amazon and others and be an aggregator of these platforms.  Xbox now can create exclusive gaming content instead. 

As to video content, I would suggest that Xbox reach out to Apple; given the new direction of each, Apple might just be willing to let Xbox also connect to its iTune library.  That type of partnership could deliver terrific entertainment value to both parties.  For now, Microsoft is slimming down and focusing on its future.  It is the proper means to a stronger company. 

Thursday, July 17, 2014

Microsoft Slimming Down To Better Compete

With a plan to cut about 14% of their employees, Microsoft hopes that a smaller company is a stronger company.  Most cuts seem to come from their recently acquired Nokia phone business whose phone line was Android based.  The division will now devote its time and energy to phones running Windows instead.  Where the rest of the cuts come from will be known in the next few months.

Clearly though, cutting jobs is not the means to a more nimble, more customer focused company.  Corporate culture starts at the top and it will be Nardella's job to shape and instill a new mission and strategy down into the ranks.  That change will not come easy.  Where the other business units fit in to the new strategy has already caused some to speculate that XBox could be spun or sold off.  Given the success of XBox to the bottom line, such a move could also hurt the business.  On the other hand, it could also allow Microsoft to apply a more laser focus on what it needs to do well to stay relevant in the coming years.  These layoffs are simply the first step in a long process. 

Wednesday, July 16, 2014

Why Net Neutrality Matters

A funny take on a very real issue.  

Time Warner Says Its Content Is King

Time Warner, owner of HBO, CNN, TBS, TNT, Warner Bros. and more, sees its worth more than the huge sums being thrown at it by Fox.  It should come as no surprise that Time Warner is being pursued.  By streamlining themselves over the years, first by splitting off Time Warner Cable, itself up for sale by Comcast, and most recently its Time Inc group, Time Warner has turned itself into a video content pure play.  And while they have initially rejected the Fox and Rupert Murdoch offer, I believe this is more a negotiation process to get to a higher valuation.  As content is king, it demands  a premium price.  And if not Fox seeking to acquire, then perhaps CBS or Viacom or Liberty.  So let the dance begin, the end of Time Warner is approaching. 

Apple And IBM Becoming Friends

Back in 1984, Apple's Super Bowl commercial was clearly aimed at big business and its most present leader IBM.  Much has happened since then.  IBM sold off its PC business and put its emphasis into the corporate customer; Apple pursued the home customer with phones and tablets that have simply revolutionized the world.  And today, these once brand enemies are becoming partners.

Working together, Apple and IBM have forged a partnership to provide corporations with the devices and apps to improve productivity, manage communication, and drive revenue growth.  "The two companies said they hope to use the expertise of IBM's consultants and relationships with corporate customers to create business apps that offer the simplicity—a hallmark of Apple products—of today's consumer apps. The apps will draw on IBM computing services such as security, device management and big-data analytics."  The immediacy of these devices to support the business selling chain and to draw out improved data for analysis and response will surely be a game changer.  For one, it will lead to improved customer service, quicker managing of the order process, and a more secure experience.  Specifically how it will work will come soon.  "The companies said Apple and IBM engineers are together developing more than 100 new apps for various industries. "The companies said Apple and IBM engineers are together developing more than 100 new apps for various industries."  But it is a big step for Apple into the enterprise world and an opportunity for IBM to connect its services, through Apple devices, more effectively across industries. 

This partnership seems to be a win-win.  Where once they were rivals, now they are partners to an ever changing mobile landscape.  In the meantime, we will wait and see more specifically how they will put this partnership into action.  But should it prove effective, it certainly will produce another strong revenue stream. 

Tuesday, July 15, 2014

FCC Listening To Net Neutrality Comments

With the rise in merger activity likely affecting the future of broadband, there is no doubt that the FCC is taking a serious look at net neutrality.  Net neutrality requires that all digital content, whether it is e-mail or streaming content from Netflix, be handled the same way with equal access through the pipeline to the consumer.  And while some net neutrality remains in effect, some wonder whether there has been some throttling where some content essentially is able to bump ahead in the line. 

This Multichannel article provides an interesting take on what FCC Chairman, Tom Wheeler is facing.  First, John Oliver overwhelmed the FCC website with his take on the issue a few weeks ago and consumers continue to flood the site with comments.  According to the article, they have received over 600,000 comments and are extending the deadline to handle the influx. 

Issues regarding net neutrality verse the creation of HOV or high frequency toll lanes for those that pay more lay at the heart of the discussion.  So too the notion of reclassification of broadband as a utility, like electricity and water, could hurt growth of the industry.  A better broadband system requires a better infrastructure and that requires capital.  More competition is also required to enable consumers to choose their broadband provider and allow competition to help lower pricing.  And lastly disruptive technological innovation that improves speed and reliability is important as well.  Governmental regulation tends to limit growth not engage it.  How much the FCC tinkers could affect all these efforts. 

Our Loss Of Privacy Through Social Media

When was the last time you checked your privacy settings on any of your social network sites, last week, last month, never?  We may be under the false impression that we are sharing with just our "friends" or a particular group, but most of us are sharing our lives with the entire world.  The question to ask is do you care?

With each press of a like button, we tell advertisers that we want them to continue to pitch products to us; with every GPS link to our location and the place we are visiting, we tell the world that we are not at home.  For me, it seems like an invitation to the world that our house is empty as we regale the world with our vacation photos while we are on vacation.  And while we think we are only sharing with a specific number of people, our privacy settings may be saying otherwise.

It may simply be a fine line between sharing and privacy; how much we want to share and how often we want to share the events of our lives.  It is both a blessing and a curse.  For families and friends spread far and wide, social networking becomes a means to stay connected.  For those seeing financial inducement to share what you've purchased or where you are eating, it may offer discounts or more. Sites like Foursquare and Living Social are especially helpful in this matter.

But the negative effects include telling the world that you were invited somewhere that others were not.  In children, that seems to happen frequently when postings of gatherings and parties tell others that they were not included.  A level of social awkwardness amplified through sites like Instagram, Facebook, and others.  And because the information lives on for eternity, it remains a permanent reminder of who is in and who is out.  Heartbreaking at times for kids going through adolescence and figuring out their own self-worth.

There is no easy answers for social networking and privacy.  It comes with both benefits and risks.  But it is clear that we at least know the settings that are enabled on each of our social networking sites and how, where, and who we are sharing our lives with.  So take a moment to check your settings and consider with every post, the possible ramifications it might cause.