John Dvorak's Second Opinion: Why Disney should buy TiVo

From Market Watch:

"...But TiVo has become a verb and holds all the best patents on this sort of technology -- and it is addictive.
More importantly it can be effortlessly turned into a conduit for the next generation of TV -- IPTV. This is television delivered via an IP connection either over the Internet or over a private closed IP network.
Everyone knows that eventually IPTV will become the dominant form of TV show distribution. Just as news distribution is being converted online because you save money on paper, ink, printing presses and delivery trucks, a similar change will take place in broadcast media.
With online broadcasting you don't need expensive transmitters, antennas, licensed personnel and government licenses to operate. IPTV makes things cheaper.
That said, the form that IPTV will eventually take is not certain. The Web made the online newspaper popular since the web was a perfect platform for print-style content. This is not the same for video content.
Video content on the web is a novelty, a diversion. There has to be some link to the TV set in the den for the IPTV initiative to ever take off. This means some sort of set top box or a direct connection between the TV and the Internet.
TiVo is sitting in the sweet spot. And when I see a company like Disney playing around with a company like TiVo I begin to wonder if Disney is getting its feet wet in advance of a buyout deal. With a market cap just under a billion it might be too much to swallow, but it would give Disney a technology it could use and leverage.
While some observers in the movie business see Disney as moving away from the content creation business insofar as movies are concerned, it seems to be solidly into TV content which is perfect for TiVo. And it does have movies that need distribution.
Besides giving the company more control over content by controlling such a device it might find it a good vehicle for delivering targeted advertising to the viewers. This has been the holy grail of broadcast advertising. The possibilities are endless if you can control a box like this and make it even more popular.... "

Tivo has superior controls and easily links to cable and online content. It intuitively saves programming of interest and may be able to truly target it saudience with ad messages they want to see. A Disney Tivo partnership seems to have a lot of great potential.

Barnes & Noble launches mobile site

While it is important for Barnes & Noble to enter the mobile space, I'm not sure that they are solving a need by offering users more mobility to search for items online, place and track orders, locate Barnes & Noble stores and check stores for an item's availability. I was hoping to read that they were going to develop a competitive device to Amazon's Kindle that enabled consumers to both purchase hardbound and digital versions of books and magazines.

On my wish list would be to see Apple develop the competitive hardware and work jointly with B&N on software and downloads to gain another foothold in this digital space.

Lastly, there is no reason for B&N to purchase Borders, a competitive brick and mortar book store. I fear that most locations simply overlap and that they gain no additional synergies. The future is digital, not land.

Nets Should Embrace VOD

VOD vs DVR. It seems that in this changing entertainment landscape, consumer control is gaining traction. For networks to survive and expand their revenue base, it is obvious that they need to push VOD applications. With DVR, the consumer will fast forward commercials and cost nets money. But VOD needs to do more than disable fast forward and other trick features that eliminate the ad message. It needs to become the preferred choice of consumers. Make it easier to find, search, and play. Allow it to be more interactive and customizable so that the content remains relevent for the user. Don't assume that they want to see the ads; they don't. So the ads have to be either much more entertaining and feel less intrusive. Avoid clutter and create unique features that DVRs can't copy. Find the win-win and consumer will stop pre-recording and start reaching for their VOD button!

Why Do Consumers Dislike Their Cable Box

For the most part, consumers seem to like new electronics. If we deem it cool and desirable we are quick to purchase. So homes add devices to their TVs like Wii, Playstation, Xbox, Tivo, Slingbox, DVD players, VCRs, etc. But when it comes to the cable box, it is not put into that former category. In my own home, I own a number of TVs, but only one cable box, despite owning multiple TVs. And I prefer my Tivo to my cable DVR. The cable box has never been viewed as consumer friendly or desirable.

The problem seems to be that the cable box simply overlaps the functionality of the TV set, while those other devices prefer incremental benefit and value. And so, the announcement that Sony, along with other consumer electronic companies, are embracing tru2way, means that those cable functions can now exist inside the TV set, enabling the TV remote to be the singular means to access TV programming.

“The agreement will encourage the development and distribution of interactive and high-value digital content” that can plug into cable without set-top boxes, Sony said. “Key elements of the agreement relate to the deployment of a platform for ‘write once, run anywhere’ applications and to the incorporation of secure digital interfaces that protect consumers' home recording rights, along with copyright owners' rights to secure their digital content.”

Of course that gain means that the cable box will go away. So what will Motorola and Scientific Atlanta do about this loss of business. Eliminating their device, while helpful to consumer adaption of interactive television, means a significant change to their business model. In the short run, most consumers will not go out to replace all their sets, so cable boxes will still be required for some time to come. But change is in the air and bringing plug and play to the TV set will make all these devices far easier to manage from a single remote. And maybe the single remote is really what is most appealing to the consumer.

Content vs Distribution

Great article in Fortune about "The Jeff's" - Bewkes, Immelt, and Zucker - and the planned spinoff of Time Warner Cable from Time Warner Entertainment.

Where verticle integration was once key to control, Time Warners separation of content from distribution seems to indicate otherwise. Each entity would be free to go after more of its own to get larger and stronger. For Time Warner Entertainment, the chance to increase its content holdings with the acquisition of NBCU from GE. And for Time Warner Cable, the chance to work toward the acquisition of the Cablevision Systems, 3.0 million strong, in the NYC metro. Viacom made the decision to sell its cable systems a decade or so ago to concentrate on content ownership.

So, which would you rather be, content king or distribution king?

A look at other industries affected by technological change may provide a clue. For the railroad owner, changes in transportation made the airline owner more convenient and faster. The horse and carriage trade lost out to the automobile. Speed and convenience was again a factor in consumers switching providers. And with the internet, broadband beat dsl and dial-up; speed and convenience.

So now comes the entertainment industry. Cable pricing is going up faster than inflation. Consumers are tired of all the choice and would prefer a la carte, provided that the total cost remained cheaper. Content owners have found a way to directly reach viewers through an internet connection. Just watch the usage rates at Hulu continue to soar. While those that rely on a license fee are reluctant to change the model; aggressive upstarts with nothing to lose are reaching viewers directly through IPTV. As content owners separate from content distributors, watch as a new battle begins to emerge.

Ad-Hungry Nets Develop On-Demand Rivals To Tivo

No matter how easy the DVR and Tivo is to set, viewers would prefer to not have to do anything. And when shows go over their allotted time, these recording devices are not yet smart enough to automatically adapt. Just consider what happened this past week with the American Ido finale. Viewers that didn't add time to the back end heard Ryan Seacrest get cutoff as he announced that the winner was David ... How frustrating!

The downside to not pre-recording shows and relying on the cable VOD version of broadcast is that they can disable the trick features, including fast-forward. So you never miss a show, but you never miss the commercial either.

I still believe that most viewers would prefer to let their VOD manage all recording for them. Especially if it also enables the show to follow the viewer from TV set to TV set. The mobility of the recording is not yet offered with the DVR and this added flexibility could also be marketed as a benefit to the viewer. Start the show in your living room, finish it in the bedroom.

While I don't believe this broadcast VOD service would completely replace the DVR, it would enable viewers to watch shows that they forgot to record only to later here the water coller chatter the next day how funny or engaging the previous night's show has been. Or when the last 10 minutes were not recorded. Now the viewer can tune in and catch up with the shpw.

Cable's Next Revenue Stream

Apple and Steve Jobs are known as the innovators of next generation products, built to be ergonomically designed and easy to use. And so it is easy for folks to speculate where Apple will go next; and inside the home is the next frontier. But as it involves wire and wirless communication, it is also an opportunity for the cable industry. Cable has built the pipe to the home and it is time for them to design the communication inside the home as well. Devices need to speak to all the cable devices: cable box, modem, etc. Apple may try to build the product, but cable should manage the flow.

Today in the home, cable is barely scratching the surface when it offers to show the phone number of the telephone call on the TV set. How about easily pushing content from TV to TV; or letting me see who is at the front door while I'm watching TV in the kitchen.

Apple can build the product; cable can interconnect them in a meaningful way. The business must become more interactive and service oriented. Cable companies have the staff to deliver that exceptional service to make all the devices in the home, whether its the cable box or the pc, the picture frame or the refrigerator, the security system or the wireless phone or the clock radio, talk to each other.

Comcast Interactive Capital Invests in CDN GridNetworks

In a world of what you want when you want it, content remains king. And as consumers demand that this content follow them wherever they go, it offers new business opportunities. For content creators, the question is whether the current content accessible on one device is valuable on another or whether it needs to be massaged to be more valuable in a new format. Screen size, multimedia interactivity, all impact how the content is best enjoyed on different screens.

And behind this accessibility to content is the backbone. Cable provided a wired world to this enjoyment and consumption. And their large pipe quickly forced telcos to become competitive again or risk losing all their customers. And telco has the added advantage of wireless to add another delivery opportunity to support the consumer's desire for mobility.

This new investment by Comcast in gaining more control of the pipe along with the other announcments of partnerships with Sprint in the wifi world is indicative that this fight is going to the streets. The flow of content is big business as these assets are becoming larger and larger files that need space and speed to reach their ultimate destinations. And these announcements are good next steps to assuring that the river of content continues to grow so more content can flow to the user.

Senate Votes to Reverse FCC Decision Allowing Media Consolidation

Should media companies be allowed to own both a tv/radio station and the newspaper in a market? Does it hurt the consumer's ability to get all angles of a news story or is it essential to enable these institutions to survive?

In NYC, Rupert Murdoch owns TV stations and the NY Post; Cablevision is asking to own the cable plant on Long Island, plus News 12, and soon Newsday. And I say that's a good thing.

I am not in favor of government regulation. Less government is preferred over more. I am much more in favor of fair market conditions; lower the barriers to entry to assure that more players can come into the market. Let the consumer decide with their wallet where they want to get their news/information/entertainment. In addition, let new technologies create new means to communicate and share information. Open platforms that enable many more companies to market their products and services.

And so I see nothing wrong with media companies pursuing multiple platforms. It is their means to continued survival. Without allowing the big fish to swallow the little fish the other alternative is that these little fish simply die. If not a bigger company like Cablevision to buy Newsday, the alternative could be that Newsday simply stops publishing a Long Island paper.

Viewership and readership trends change and new avenues now exist via internet sites to provide multiple points of view. Different points of view can still be heard loud and clear. As long as these roads remain wide open, let free market conditions rule.

Amazon Kindle a $750 Million iPod-Like Business By 2010

I don't yet own a Kindle. I do own an iPod. I don't know anyone yet that owns a Kindle or hear anyone buzzing about it on my daily commute in and out of NYC. I always see someone with an iPod. If timing is everything, Amazon hasn't delivered the goods yet. If I were Barnes and Noble, I would be partnering with a company like Apple to create a more user friendly reader device with the same software friendliness that Apple has created with iTunes.

As newspapers and magazines see their print editions decline, and book retailers see their sales hurt, it is time for them to adapt to the same changes in digital download that is affecting audio and video. In essence, start to change or die. Borders chose the latter. And the trends of consumption are moving away from physical to electronic. While printed reading material will always exist, newer generations will feel more comfort with digital reading. The cost savings in manufacturing will enable higher profit margins in publishing. It may even allow advertising to invade book sales and provide an extra opportunity to target readers.

The Cable Box Has Great Potential

My problem with today's cable box is that it is slow to respond, unfriendly, and hard to navigate. It's primary duty is access to DVR and VOD. It is clunky, inflexible to my needs, and inconsiderate to my viewing habits. Recently, my family was watching a movie on demand that we purchased. In the middle of viewing, it abruptly turned to a show to be recorded. Why? Because both turners were set to record and the box couldn't even ask what we wanted to do with this conflict. So it stopped the movie. Disappointing.

At the same time, I am hopeful that we will someday look back and laugh at this early generation of connection. The converter box offers great potential. Combine the advantages of slingbox with the software of Tivo, add in connectivity to gaming a la Wii and Playstation and create a device that talks to all the devices in the home and puts the controls in the hand of the user. Remotely set your thermostat, get activity on your sump pump, know who is at the front door, watch a pre-recorded tv show or your local baseball game on the road, and then set a recording schedule for your dvr from your same hotel room. Wired, wireless, at home, and remotely, interconnectivity and communication is key. The cable box talking to all these devices and easy to use is essential. The company that can deliver this value will win the user and viewer.

Hollywood on Strike Again?!?!

The old adage goes that those who don't learn from their mistakes are bound to repeat them. The recent writers strike should have taught all the parties in Hollywood that a strike does no one any good. Want proof that Hollywood suffers, just look at the recent announcements of all the new shows premiering this Fall. Do you feel the excitement? Neither do I.

The old standards, American Idol for one, despite being the number watched series, is losing viewers. Different year, same format, same silliness, same inane banter. And its success has spawned so many similar shows, including dancing competitions, that the uniqueness and appeal have worn thin.

Broadcast in general has seen viewership decline as cable provides the comfort food of reruns and original series that reach valuable niches. And now online video adds another resource for entertainment away from the TV. The fragmentation of viewing choices naturally leads to a loss of viewership by the old guard.

And an actors strike will only further drive away viewers from broadcast. Both parties are at a loss and both have a financial stake to come to agreeable terms. Stop trying to come up with different rules for different platforms. At the end of the day video content is a stream to be consumed; where there is revenue, there are costs associated against it. Be creative, otherwise you will only further kill the golden goose and have to watch American Gladiator 24/7.

In the Age of TiVo and Web Video, What Is Prime Time?

The writers strike enabled TV viewers to find new programming to replace the shows they normally watched on broadcast. As these new shows became favored by viewers, they were added to their Tivo list. And as viewers come to their TV every evening to be entertained, they prefer the control and choice from DVR and VOD to pick and choose exactly what they want to watch when they want to watch it.

It now becomes far easier to watch a show on my schedule. Too tired to stay up and watch SNL, watch it the next day or the day after. Putting the kids to bed at 8; watch American Idol or Survivor later in the evening when they are in bed and the house is quiet. The prime time schedule, like the Fall being the time for new seasons to start, is a thing of the past. It's all open for the taking.

And something else I've learned from being a DVR/Tivo user, I am hard pressed to tell you where that show came from. Yes I see the channel name next to the show, and yes, I see the bug in the lower right hand corner constantly telling me the channel, but I am more connected to the show brand, not the network brand. Now there are some network brands that are the show. Hannah Montana is Disney Channel, and Spongebob is Nick; but others less so.

What doesn't change is quality. A good show needs to be developed and nurtured. Help it to find its audience and grow. Without the commitment to keep producing episodes, good shows will fail before they are given enough time and support to succeed. Removing the constrictions of prime time programming opens the variety of viewing choices available; breaking throught the clutter to reach your audience requires smart programming and smarter marketing people. The competition may have gotten more intense, but good shows can still be made.

Prediction: Broadcast TV Will Get Hosed In Upfront, But Not the Whole Story

The broadcast networks are feeling the heat of lower ratings, writers strike aftermath, and alternative entertainment options. But I wouldn't worry too much about their ability to make up the revenue from their diversification strategy. Disney had a terrific quarter, despite ABC, with gains in cable, theme parks, etc. Cablevision may have reported losses due to Madison Square garden, but so far revenues and profits are rising across all their other businesses, including their cable nets, business services, etc. NBC may feel the impact in their broadcast operations but are doing amazingly well with each of their cable networks.

Yes, viewers have moved away from broadcast television for a number of reasons; fragmentation exists with multiple channels reaching different demographic and psychographic interests. For cable programming, it has led to an increase in both viewing and in ad revenue. As each of these media companies diversify across multiple businesses, they each will maintain growth as viewership trends move from one platform to another. Maintaining a foothold in broadcast, cable, internet, gaming, etc., assures reaching the consumer wherever they go. Building synergies with each platform assures brand preference and value.

Microsoft Buying Facebook Not As Silly As You Think

Technology with content, the chicken and the egg. A potential perfect blending of scale with consumer access. Microsoft needs a win and needs a bigger footprint in social networking. Facebook could provide the perfect entry for Microsoft applications into everyday life. An interesting pairing!

Cable Ops To Form Wireless Broadband JV

Major cable companies Comcast, Time Warner, and Bright House may have ended one partnership with Sprint, but they are investing in another. In a deal valued at over $12 billion, cable is joining Sprint and Intel to invest in a new wireless venture designed to offer video, hi speed, and mobile.

SO the question to ask is does this make cable competitive with telco in the wireless spectrum - OR - does this create a monopolistic, national wireless pipeline that might require governmental oversight?

From the article, "“This [Clearwire] is going to be completely different,” the executive said, adding that each operator will determine on its own how the product will be priced, branded, and when and where each rollout will take place." Each cable entity will uniquely decide how to use this national highway in its pricing, packaging, positioning message to consumers. As a wireless venture, there are no physical boundaries; is this really possible, or is this rhetoric. Just wondering.

Digital Content Will Lead to the End of the Middleman: AP launches news service geared for iPhone

The information and entertainment business is changing rapidly as a result of digital distribution. The simplicity to transport content from creator to end user is leading to a wholesale change in the distribution chain. As evidence, watch as windows between dvd sales and VOD have been eliminated, TV shows are coming directly from NBC/Fox through their Hulu partnership to the viewer. Artists can talk directly to their consumer and provide a digital download. Yes today they still make a cd and sell through Amazon and Apple. But the path is leading to creating their own wholeowned distribution model and selling direct.

And AP, a longtime provider of news content to papers across the country, is offering content direct to consumer through the iPhone. Today, they are doing it in conjunction with their local newspaper partners, but in the future they may find that they can bypass this distribution channel and be a direct provider to the consumer, taking 100% of the profits. Yes, AP was created as a consortium of local papers, a not for profit entity to support its members; but the child is growing up and may one day have to leave the nest.

Barriers to entry have dropped significantly to allow old and new entrants a chance to speak directly to the consumer. Aggregators are still relevent to simplify the process of transport; but more companies may decide that they can be their own transport hub as they acquire brands across multiple platforms. Big fish will swallow little fish and will keep building and expanding their pipeline to speak directly to their consumer. Current distribution models are eroding and newer, more efficient models are adapting to this digital space.

Is 2008 the Year of VOD?

Will 2008 be the defining year for VOD. Certainly, VOD has been around for more than 5 years; has it really taken this long to find consumer acceptance? I first learned about VOD when I worked at Rainbow and had the opportunity to sell and launch their first free on demand service, Mag Rack. It was an amazing opportunity and allowed me to learn so much about the technical requirements to launch as well as the marketing priorities to build awareness and usage. As a free on demand service, we worked hard to demonstrate to the consumer that the videos were free to watch and easy to use. Back then, few understand that they had VOD access on their cable system.

As other channels expanded their free VOD offerings, they first used it as a dumping ground rather than an opportunity to showcase their best shows. Once they saw that their TV ratings were not negatively affected, quality improved and VOD usage and acceptance took off.

In my family, we use free VOD every day, and it has made us more comfortable when purchasing movies on demand. In fact, we recently made a conscious choice to not buy a dvd that would cost $20 and instead waited till we got home and rented the same movie for $5. While we don't get to own the movie in perpetuity, we did get to watch it and move in; no it wasn't worth buying it.

Is 2008 the year of VOD? I prefer to describe it as the year of digital download. With Apple's recent announcement with multiple studios to download films, along with studios bypassing the dvd windows to simultaneously offer movies for VOD and download at the same time with its dvd release, this does appear to be the year that VOD and digital viewership will have taken off. Viewing habits are shifting and dvd ownership is declining. I'm waiting to see what the next device looks like to store these video digital downloads.

Viacom Sees Q1 Earnings Jump Due to Rock Band

My 8 year old son wants Rock Band. He already has a Wii, PS2, and Nintendo DS. And believe it or not, we actually limit game time each day; otherwise, he would be working any one of these machines constantly. Will he get the whole band, or just guitar hero, I'm not sure yet; but at $190, its pretyy expensive for a young boy.

What is apparent is how important interactive gaming is to the future of entertainment. If he could play along to American Idol, it could be a rating boost. This next generation is limiting their TV time as they expand their enterertainment choices across new media. With so many hours in a day, something has to give and it isn't going to be his homework, so it is a reduction in TV viewing.

Thus it becomes clear that the best way to keep this audience engaged is to combine the best of both worlds. Watch Hannah Montana as you play with the microphone and dance moves; attack the Pokemon through the TV show. I expect more gaming tie-ins to programming; that's how we keep the younger audience further engaged to the TV programming and the brand.

ZeeVee’s Box Brings the PC to TeeVee

From New Tee Vee:
"Connecting your computer to your nice HD TV screen can get kludgy fast. A company called ZeeVee has an interesting solution that uses the existing cable wiring in your home to display what’s on your PC on an empty channel on your TV dial. Instead of requiring an additional receiver, it uses the HD tuner in your TV. No new-fangled wireless HD or old-fangled screen-scraping required."


Now if it can only be made idiot-proof.

iTunes to sell new films day-and-date

Throw out the old video distribution models. Technology has changed the time tables as media companies are throwing out distribution windows. Previously, a film would work its way throught different distribution windows allowing each new platform a chance to take some profit. But the rise of digital downloads and the slow death of dvds has finally eliminated the window between the dvd release of a movie and the VOD and digital download release. Customers seem to like the idea of rental vs purchase and want the immediacy of access. For that online customer, waiting 60 days for the dvd window to end before the film can be made available online, was not customer friendly. It also has led to more illegal means to access these films in digital format, and not paying for that download.

Those that prefer to buy or rent a dvd will continue to do so; those that want to immediately own it, will get it too. WIll there be cannibalization; some, but for the most part, that customer was already making the decision to pick one or the other format. To win back the dvd sales, film studios need to offer that customer that purchases the opportunity to both own the disc and make a downloadable copy for their pc. That would be the best of both worlds.