Digital Sales Surpass CDs at Atlantic

When is the last time you bought a compact disc? As an avid ipod user, I rather download tracks than purchase the physical media. So it comes as no surprise to learn that digital purchases are beginning to exceed compact disc. "Atlantic, a unit of Warner Music Group, says it has reached a milestone that no other major record label has hit: more than half of its music sales in the United States are now from digital products, like downloads on iTunes and ring tones for cellphones." Listeners have changed their music habits and are consuming differently.

What is also interesting to note is that digital purchases are not simply for the music track, but that revenue is coming in from additional usages like ring tones. It reminds me of the old story about baking soda. How do you get more sales of the product; more uses and more usage. You don't just cook with it, you put it in the back of your refrigerator to make it smell better. With digital downloads, you add it to gaming and other applications and music finds more uses and usage as well.

Obviously, the fear of digital downloading is content rights and protection. With perfect copies made accessible, the technical challenge to eliminate free file swapping is a challenge. Technical innovation and marketing efficiencies will move consumers to prefer legal means to download for better content and better results versus inferior copies and less desirable experiences.

TiVo Dials Up Mobile DVR Site - Real Convergence

Finally, some real useful convergence. And no I am not talking about seeing the phone number of the call coming to my telephone appear on my television screen. I am talking about something better. Connecting two useful devices together in a meaningful way. For us Tivo fans, sometimes we forget to record a show. Recently a friend of mine was rushing home last Saturday because he had forgot to tape his U of M college football game. But now, even if we are forgetful, we don't have to worry. One call from our cell phone to our Tivo quickly will set a recording. "The new mobile site, at m.tivo.com, lets subscribers with broadband-connected Series2 or Series3 TiVos schedule recordings, while it’s also available to anyone to browse and search television shows." No rushing home required. If networks want to put a stop to DVRs, the answer is simple - put every show on VOD. Until technology can insert into the DVR, there is more control with the VOD; content owners should be expanding its titles and gaining better control over the experience with its viewers.

And how does Tivo take this convergence to the next level. Simple, make it two-way. Like a slingbox, enable shows I've recorded on my Tivo to be viewed on my cell phone. Now my friend can watch his Michigan football game through his Tivo to his phone. Again, no rushing home.

DVR usage making big changes in television viewing

Does it matter how you schedule your TV network if content can be found on VOD, streamed or saved to the DVR for viewing. What percentage of your TV viewing is real time? As I watch my viewing pattern shift, I rarely watch a prime time show at its scheduled time. Shows remain saved in my Tivo so I can enjoy them at my leisure. And I tend to rely more on the DVR because it allows me to watch more of the actual show in less time; yes I fast forward through the ads. I am not the only one who owns a DVR. "Nearly 30 percent of the nation's TV homes have at least one."

So what is a programmer to do. If you rely on live news, you watch in real time. Networks like CNN and CNBC become DVR proof. If you watch sports, you tend to watch live or time delay a few hours so as to not get the final score early and ruin the emotions of the game. And live shows on TV have a sense of "anything can happen" that may just encourage people to get the live feed before it is edited and sanitized for later viewing. "'More and more people are changing the way they consume television,' said Alan Wurtzel, NBC's chief research executive. 'In the next few years, we will rewrite all the rules.'" It will not take that long. In less than two years, the impact will be even more pronounced.

Some broadcasters don't realize that between streaming their content on Hulu or making accessible on VOD or even being recorded the first time it airs on their dvr, it is not necessary to air the show again. Yet some networks are using their Saturday nights to dump repeat episodes of the same show that aired earlier in the week. Perhaps it saves money, but it is driving the viewer to seek these alternative choices at a faster clip.

Networks should be less concerned about when they watch; rather, they should be more concerned about what is interesting to watch. Good content will be watched and consumed; the challenge is making better content. More distribution choices means the content will be consumed in multiple ways. Remember though, the DVR requires proactive taping by the viewer; VOD allows the viewer to be reactive. If more programmers made their content available asap on VOD, they might just reduce the need to use the dvr.

Hollywood actors guild to seek strike

The economy is in a downward spiral, the entertainment industry has suffered badly from last year's writers strike, and every other union has agreed to a deal with the producers. So with faced with a lose - lose scenario, what should the actors do. If you guessed settle a contract, you would be wrong. The guild is planning on asking its members to strike. Let us just hope that the majority of actors in the union have a better understanding of the situation than its negotiating team. "SAG's national board has already authorized its negotiating committee to call for a strike authorization vote if mediation failed. The vote would take more than a month and require more than 75 percent approval to pass." So we could be starting the new year with another work stoppage, more unemployment, and a further blow to the economy. "But the studio alliance said it was untenable for SAG to demand a better deal than what writers, directors and another actors union accepted earlier in the year, especially now that the economy has worsened." In this case, I agree.

Beyond the troubles facing the entertainment industry, it seems that the union, regardless of the industry, has been hurting businesses from operating efficiently. From the automobile industry to New York's MTA, forced rules from unions in changing times create situations where there are jobs but no work. While there may have been a time when unions were necessary, I am hard pressed to feel for them when their demands seem untenable. Hopefully, the members of the SAG union will recognize the situation and work responsible for a cure. Another strike is not the answer.

Comcast will close its CN8 network

"CN8, the East Coast regional television network run by Comcast Cable, will shut down by year's end, resulting in the loss of local news programs and sports coverage for millions in New Jersey. The network -- launched in 1996 and spanning the East Coast from Virginia to Maine -- will convert to two smaller operations, said company spokesman Tim Fitzpatrick."

Now I always thought that it would be the local networks that would help differentiate the cable operator from its competition. That is why Verizon will never get access to the Comcast Networks, Time Warner's NY1, and Cablevision's News 12. Interesting to learn that Comcast no longer thinks that unique content is an important differentiator. Or perhaps they felt it was simply not strong enough to matter. Whichever the case, it is a moot point. Perhaps for us New Jersey residents who will lose CN8, Comcast will be kind enough to replace it with NY1. For me, content is still king.

Senate Passes Analog Extension Bill

Last month I said that the transition date would be a mess and as most people wait till the last minute to act, an added month would be needed. Well the Senate has heard the chatter. "The Senate on Thursday passed a bill that would keep some analog TV stations on the air for 30 days beyond Feb. 17, 2009 in order to provide public safety announcements and information about the digital TV transition." I believe that they will actually need more than a month. Consumers do not understand what is going on with TV signals. When they finally turn on their TV and see static is when they will finally have to act. "'While there are claims that hundreds of millions of private sector dollars have been spent making Americans aware of the DTV transition, it seems that most Americans have no idea what it really is even if they have heard of it,' the lawmaker said." And while some have heard the message, fewer have comprehended how it will affect them. Extending the deadline is a necessary first step.

Will Web Video Kill Cable TV?

If your under 30, you probably don't own a wired phone; all your calls come to your cellular phone. And today, there are some people who don't have cable TV; rather, they rely on their broadband connection to watch their shows. "Call it Cable 2.0: You get many of the same TV shows and movies, often with fewer commercials. Better yet, you get to watch what you want on your schedule, not the cable network's, and you don't have to pay for anything more than a simple broadband Internet connection."

But will the web replace cable TV? As a distribution platform, I believe yes. But the company that serves you your connection will still charge you for that subscription, with price points to encourage you to take more of their services. Today it is called the Triple Play, tomorrow it will have a different name but essentially will be marketed to do the same thing, keep you from switching to another provider.

The big content companies don't want to give you access without subscription and advertising. That is their bread and butter. NBC and Fox own Hulu; the last thing they want to do is watch their subscriber revenue decline as a result of people downgrading their cable service to rely on web access. Unfortunately, they are on a slippery slope. "Such services offer few live broadcasts, an obvious drawback to sports fans or news hounds. And while cable and satellite services are rapidly expanding their high-definition offerings to satisfy the demand of the growing number of HDTV owners, you'll find very few high-definition video streams today." For those reasons, the numbers that do drop cable completely may be negligible. As deals start moving to the web, the change may occur more quickly.

Cable has its own toolbox to make the set top box a more valuable asset to the home. How the STB differentiates the TV experience from a web based experience will be key to success. And cable should have the backing of the branded content providers who aren't ready to lose the subscription revenue piece of the pie.

PC Magazine Drops Print, Goes All Digital

For PC Magazine, print is dead. Will it drive other magazines and newspapers to follow, only time will tell. For a magazine devoted to computers, it makes perfect sense to drop its print format in favor of digital. It will be interesting to note how this change will affect the content and subscription. "For readers that prefer the traditional magazine feel, a digital version of PCMag will be made available to them. " Perhaps the time is right to make it especially for the Kindle and Sony Reader. This digital version should be different from its free web content. A digital subscription may be the answer.

I find it fascinating to see that the Wall Street Journal continues to make it work with both a print and digital subscription to its content. For some, the digital access may be the bonus; for others it may be the print edition that is nice, but the digital access that is most valuable. The trend is toward less printing and more online; PC Magazine may simply be leading the curve.

BBC America's Ancier: DVR Threat Must Be Solved

What is the threat - that viewers are skipping ads to watch the content. "The ability for viewers to fast-forward through ads using a DVR is the biggest challenge cable programmers face—and they must work with operators to figure out a solution, Garth Ancier, president of BBC Worldwide America, said in a keynote at the Future of Television conference here."

What is the solution, actually there are a few. First recognize why viewers started to use DVRs, too many ads during breaks. They found a technological cure to beat the system. It is nearly impossible to put the cat back into the bag. Still, networks should consider reducing the ad times on linear content and utilize product placement, interactive technology, and other approaches to reach consumers. Second, consider the Network DVR as an opportunity to segment and target ads more effectively and disable trick features when necessary; or perhaps put a brand ad on screen during trick feature usage. Lastly, enhance and expand VOD offerings to include all programming. If content is already recorded, the viewer won't have to take the proactive step to record their show in advance. VOD allows for pre-roll and other ad tricks. Still, if you overload the content with ads, the viewer will seek another alternative. To illustrate, look at Hulu. They limit their ads and have little or no negative consumer issues toward those ads.

These are just a few ideas to consider to solve the DVR threat. Most important it to view technological change as an opportunity, not a threat. Advertising on content is necessary to pay the bills; how it is done must be innovative, less intrusive, consumer targeted, and creative.

AOL is a Media Company

AOL finally has a strategy, or so they say. Its been a couple of years since AOL stopped being a portal and has had a tough time convincing people that it has what it takes to succeed. Unfortunately the AOL brand name has little cache or brand value. It's web properties, however, just may have a chance. Some of their more popular sites include Moviefone, TMZ, and 75 others. Those that front with the AOL name seem to me to have less appeal - AOL Money, AOL Music. If content continues to be king, then the AOL focus on solid content sites should eventually pay off. Still in a down economy, ads will continue to move from print to the web; building and growing content sites will allow Platfom A, their ad network, the chance to aggregate the value of all their content sites and increase their revenue.

So far, it is paying off. "According to comScore Media Metrics, traffic to the portal, which include 20 new niche such as men’s lifestyle channel Asylum.com, rose 7% to 54.3 million unique visitors in October from the same period a year ago. Page views more than doubled to 4.2 billion. The increases marked the 21st month of consecutive growth for AOL." Good luck with the road show.

Web Video Chips Away at TV

One study says that online usage complements TV viewing, others say it cannibalizes. Can we have it both ways? This study suggests the latter, but it also says "online viewers don't mind the commercials too much." My feeling is that compared to the glut on TV, web video advertising is a pleasure. Sites like Hulu limit commercials to just one spot compared to TV which could have 3 minutes of ads. Comparatively, of course you wouldn't mind online commercials.

Another interesting analysis, "almost 60 percent of the respondents said they were willing to provide to advertisers some personal information about themselves in exchange for something of value, such as access to high-quality music videos, store discounts or airline frequent-flyer points." If TV would cut back on the glut of spots and use its technology to target spots and offer interactivity, it would find a more willing viewer as well. Just imagine clicking on a TV spot that would email you a coupon to download and take in to the store. The web may have the connection, but viewers still prefer long form content on their TV set. It will be the interactive potential that will make TV the better choice for the advertising dollar. And this is what Canoe will be able to offer.

TiVo, Domino's Offer Pizza Delivery Service for DVR Subscribers

Order a pizza from your TV, if this sounds familiar, it's because we've seen this before. Now Tivo has announced that it has partnered with Dominoes to let their subscribers order a pizza delivery through their device. "The TiVo service will help Domino's reach customers who might otherwise skip through its commercials on their DVRs, the companies said." As a marketing partnership,it will put the brand in front of customers, but as a service, it will be a dud. Customers are still much more likely to order by phone; they have yet to use their PC to order from a menu. Cable operators used this same marketing ploy years ago to add features to its set top box; it did not work. Customers will gravitate to the device that is easiest and quickest to use. Until the application proves more useful than the phone, customers will find no reason to switch.


"TiVo Chief Executive Officer Thomas Rogers has added shopping and video-on-demand features to attract users as cable and satellite companies roll out their own DVRs. The Alviso, California-based company lost 178,000 net subscribers in the second quarter, finishing with a total of 3.6 million." Tivo should continue to push its partnerships across cable operators as the better DVR for the set top. In addition, it should partner with game boxes like Playstation, Xbox, and Wii, to be their interface as well. It is partnering with those companies that will bring Tivo more customers.

Cable industry group says the Web won't kill TV

Canoe Ventures has a plan, tie together the big cable operators to gain scale, target meaningful subsets within, advertise on brand name video content, and add a technological, interactive component. "Canoe has a direct pipeline into about 60 million cable-watching households in the U.S. and provides Internet service to a third of the country. It plans to use that reach." And with the cable box and remote, the ability to communicate with the consumer and get them to talk back. "For example, it's going to add voting and polling so consumers can vote for their favorite player during a football game or answer ...... the final question on "Jeopardy." It's also planning a feature that will allow you to click a button on your remote control to get a recipe, a sample or a coupon, and another feature that allows you to click on a movie ad to see the full trailer or on a video game ad to see a demo." Kinda cool.

Advertising on TV can no longer be a one-way experience. It is meant not only to build brand awareness, but advertisers also need to see meaningful results. It may not be to actually purchase a product or service, but to request more information be sent perhaps immediately to the TV, or perhaps the email address, or mobile phone, or even snail mail. It is gaining that interaction which is Canoe's next step.

The set top box provides valuable information to better target the message to the home; the cable box to interact. We rely on that box to allow the advanced features to work; VOD, DVR, and such. The challenge is getting the consumer to accept the set top box on every set. The home needs to be "connected" so that the box rests behind the set, not on top of it.

Cable Price Wars?

Is price the primary motivator for consumers to switch their cable provider? According to the survey mentioned, the answer is a resounding yes. Still it is interesting to find that cable operators in competitive markets have shown some sub growth. And while the low hanging fruit, consumers buying only one service from cable may switch to telco, the multiple service customer is growing. The triple play packaging strategy has proven very successful at retaining consumers. "It looks like that for all the technical innovation, the promise of the triple-play bundle isn’t about service, but about the bargain. " How elastic that price point is to the decision to switch needs to be analyzed.

But price is a factor and in a recessionary economy, will become more important in the consumer purchasing decision. But it is more than price for the consumer. Some channels, like NY1 and Newschannel 12 in New York, are exclusive to cable; its importance to the consumers' viewing experience will affect the choice they make. Latency, interactive features, and customer service should not be ignored. Some people will switch because of price; for many others, these other factors matter, too.

IBM to Install Broadband Over Power Line For 13 Rural Utilities

First cable operators had to worry about satellite providers, next came telcos, and now power companies. "Under the $9.6 million agreement, IBM will install IBEC’s broadband-over-power-line networks at electric cooperatives in seven states within the next two years." And while IBM is working with rural electric companies to provide broadband deployment, there is nothing to prevent them from taking this technology and deploying across the entire country. For these rural markets, it has not been cost effective to wire these homes for cable. At less than 10 homes a mile, the cost is extravagant. Existing power lines make deployment easier and helps connect the entire country, "closing the digital divide that exists between well-served and underserved America." As the technology improves, broadband over power lines will be able to provide a competitive product that could provide not only data, but phone and video as well, to all consumers.

The Connected Home - Solving The Digital Device Dilemma

There is a lot of talk about the portability of content, TV, PC, Blackberry, Phone, but how about the ability to simply move it effortlessly inside your own home. Record a show on one TV set in the living room to watch on another in the bedroom; move your songs from the pc to play on your kitchen speakers; Call your Tivo to remember to record a show. We are clearly in the early stages and it is clear the technology must operate under a common language to work most efficiently.

One idea that is just coming to fruition are using the cable backbone to connect phone with TV. When a phone call comes in, the TV displays the number, letting you know who is calling before getting out of your seat to answer the phone. Its a first step, but it recognizes the potential of connected devices. It is how cable operators can maintain a foothold on content, especially when it involves an interactive experience. And as these devices and interactions get more complex with the multitude of devices to connect, service provided by the cable operator can be its greatest asset. Most people are tech savvy and need devices that are plug and play; at the same time, they need to know they have an expertise readily at hand to support them if trouble arises. Per Apple's Steve Jobs, "The digital living room should come with the warning 'some assembly required,' he said. It's not an easy thing to set up, as evidenced by the number of people who buy high-definition (HD) television sets, hook them up incorrectly and can't use the service as intended."

As we keep putting more digital devices into our home, connecting them together becomes a necessary next step in this changing entertainment landscape.

Sony Pictures Puts ‘Pineapple Express’ iTunes Download on DVD, Blu-ray

How do you impact the revenue of dvd sales. Differentiation has helped - alternate endings, shorts, games, and other added features. Blu-ray came next, a better picture to complement your HD TV. But dvd sales have been declining as consumers are renting rather than buying content. VOD and streaming have replaced dvd purchases. Well Sony seems to see the writing on the wall and if you can't beat them, join them. Consumers want choice and cable operators have shown that bundling works. The result, is a dvd purchase gives you the stream for free. "The two-disc DVD and Blu-ray Disc offerings of Pineapple Express will include a free download of the film from iTunes, in addition to a downloadable digital copy for PCs or the PlayStation Portable." It is that flexibility that might just breathe new life into the dvd revenue stream. Consumers are seeking mobility and flexibility and Sony seems to be delivering it to them.

CTAM - Cable Has The Best Positioning

The cable industry likes how it is positioned against competition in the content distribution space, despite a bad economy. The use of bundling of communication services - cable, phone, and data, the consumer of these products is less likely to switch or drop services. "Cable subscriptions are still cheaper than taking the family to two movies a month, executives noted. The bigger challenge, going forward, is figuring out how to let consumers move content they have already paid for among the technological platforms they utilize." That mobility seems to be the next step in controlling the customer. Verizon and AT&T each bring a huge fourth component to the mix, wireless. What they have yet to do is build that product into a bundle as successfully as cable has done. And cable is looking to add a wireless partner as well.

"Ellen East, executive vice president and chief communications officer at Time Warner Cable, said her company is looking at a way consumers can authenticate themselves as paid subscribers when logging directly onto programmer’s sites. That authentication would allow the viewers to access television content on their PCs or mobile platforms. " It once again calls into question the relationship between content and distribution. Content owners are keen to control where they exhibit and how they are reimbursed; distribution companies offer the backbone and the ability to aggregate and monetize multiple pieces of content to the subscriber.

Consumers are looking for more ways to control when and where they are viewing content. And as we have become a more mobile society, the content needs to follow us, not us to it. It may not make a lot of sense that consumers may be watching long form content on tiny screens, but it is for them to decide what serves their need best.

Changing Face of Sports On TV

The NFL Network is back again, starting tonight with more football on TV, and less people watching. The trend continues of watching games get moved to higher priced channels.

Remember when tickets to pro games were priced at family friendly rates. Remember when local pro football games were only available on TV when the stadium was sold out; and when it wasn't, the local broadcaster or bank chipped in to buy the seats so the game could be shown on free TV. Remember when TNT and ESPN each got 8 games to air and football fans had to buy basic cable to watch more games. Baseball did it too with regional networks like Prism, Empire, then YES and SNY and others. TBS once the home of Braves games moved them to another network, Sports South to further divide the pot and increase the revenue. Our history is to keep moving our sports off free TV to tiers and now it seems to subscription. Back to football, remember when Direct TV sold a package to every out of market football game to the rabid football fan, causing them to drop their cable subscription to buy further up into a satellite subscription. And the NFL, hoping to further move fans to pay more for access, has built a set of games that only some cable operators are making available for purchase. While the NFL fights to be paid a license fee to make this channel available year round on basic, despite the fact that pro football games are only on for a couple of months. "'I’m disappointed people aren’t seeing the product,' Steve Bornstein, the president of the network, said Wednesday by telephone. 'That’s my frustration. We’re putting out a good product. It’s a product that people seem to be happy with. My viewership is up even though I have less subscribers than I did last year.'”

And what is the next step for the NFL. As the MLB has proved, create a subscription website that offers a mosaic of all the games to choose from. Buy one game a la carte or buy the subscription. TV makers are pushing internet into the TV set. Disney and others have pushed films into Tivo boxes. What is next for the NFL, the same thing. Bypass the cable operator and push subscription over the web and through other "connected" boxes. For those that want to watch their out of market games, it seems the logical next step.

FCC investigating cable TV pricing policies

The FCC continues to have a frosty relationship with the cable industry. While the issue may be how cable companies are tiering channels into higher priced packages, using the transition from analog to digital as the rational, it may just open another can of worms. Consumer confusion over the transition provides perfect cover to push digital boxes to every TV set in a cable home, even though these boxes are not necessary. More boxes, more fees, more opportunity to sell in more services. As the FCC looks into pricing practices, what else might emerge.

And how high can cable pricing go. Under today's economic conditions, will we soon hit the mark where homes opt out of cable and back to their over the air antennae. With a high speed line to augment their viewing habits, cable subscription may start to see a real hit.

Watching TV and Surfing the Web At The Same Time

Did they really underestimate peoples' abilities to multitask? How tough is it to surf the web and watch TV? In our own youth, we listened to radio or watched TV and did our homework at the same time. Could it be that different. The answer is no. But it took a Nielsen study for others to intuitively figure it out.

"The findings, part of a new study released by the ratings measurement company, revealed that broadcasters worried about losing viewers to the Internet may not have to fret after all - and explains a paradox between rising TV viewership and the growing popularity of new media....Overall, Internet usage has grown by about 9 percent compared to last year, the survey found, but TV viewing still dwarfs Internet usage. On average, people spend about 127 hours watching TV each month and 26 hours online."

It is not a zero sum game and internet surfing is not meant to replace TV viewing. And sometimes we even put down our mouses to enjoy the sit back experience of TV exclusively.

Is the Internet Killing Cable TV?

Programmers have been enjoying a duel revenue stream for quite a while; payment per cable customer and advertising revenue. Programmers then introduced VOD and viewers began enjoying video content with limited, if any, commercials to interrupt the flow of the show. And now, pressured to provide content on demand regardless of the device, added their shows on the web with Hulu, Joost, ABC.com, and many, many other platforms to stream and enjoy your favorite TV shows and movies. So why pay for cable when all this content is accessible elsewhere.

For some, continual price hikes from their cable operator has accelerated this desire to disconnect the cable box. The article calls these folks "cable-cutters". TV manufacturers, like Sony, are building TV sets that directly access the web. And don't forget Apple TV either. Tivo has partnered with numerous content providers to bring on demand through the web easily to the TV set. And when broadcasters go digital, video quality over the air will be as good as cable. Consumers are pushing back. "Thousands of hours of TV shows and movies are available for free on the Internet, or via paid download and rental sites — services made possible now that broadband service from cable and telephone companies is widely available. Local stations preparing for the digital-TV transition next year are already broadcasting free high-definition TV, sometimes at a higher level of signal quality than a cable system delivers."

A bad economy certainly does not help this trend. Cable operators have already taken notice. Those that disconnect from taking multiple products from their provider will see their discounts expire and their rates soar for an internet connection. Some will start putting a streaming meter on internet usage. Telcos are providing an alternative to cable in the streaming space. It may spell new opportunities for other wireless distributors to enter the market.

Today, the number of "cable-cutters" may be negligible; still, it is a slippery slope that cable operators should be aware of. First comes dropping premium channels, than dropping to basic service only. Price your service too high and watch the customers leave for greener pastures.