Netflix Should Concern Cable Operators

Netflix had a good quarter. A double digit rise in revenue, a 10% increase in subscribers, and riding the way of new TV sets launching internet enabled TVs. "The new subscribers added since the third quarter marked a record for the online rental company, which offers DVDs through the mail and streaming content for 12.3 million customers. Netflix also lost fewer customers in the fourth quarter, as the churn rate, or the number of people who don't renew their monthly subscription, dropped to 3.9 percent from 4.4 percent in the third quarter and from 4.2 percent in 2008's final quarter. The company added nearly 3 million new subscribers over the full year."

So where are those customers coming from? I suspect that cable might have to add Netflix to the list of other competitors, telco and satellite, stealing customers. Netflix is a cheaper alternative to premium services, like HBO, Showtime, and others. And it now offers customers both a mail service and online component. As consumers, especially in a difficult economy, Netflix has emerged as a better positioned entertainment value. Cable needs to wake up and pay more attention to the value and service they provide; Otherwise, customers will pick the lowest price alternative.

Happy With The iPad

First the good news. The iPad has finally arrived and consumers can finally see what Apple's tablet can do. Its price tag is extremely reasonable, starting at under $500 and it meets the basic expectations for e-book reading, music listening, and video watching. The bad news is that it looks like an oversized iPod and still requires connection through the AT&T platform. So how will consumers react?

I understand it lacks a camera; not sure that is a big deal. It has carved out another e-book niche that could allow them to sell books through their itune platform. And that may give Kindle a reason to worry. "Mr. Jobs said Apple so far had relationships with five major publishers — Hachette, Penguin, HarperCollins, Simon & Schuster and Macmillan — and was eager to make deals with others. Publishers will be able to charge $12.99 to $14.99 for most general fiction and nonfiction books." That according to today's New York Times.

For me, I am not an early adopter. I always expect that the first generation has too many limitations and future editions come too quickly. Apple is a perfect example of this with their iPod, iPhone, and other devices. I expect by end of year, iPad 2.0 will be at least 2x better. Second, the name lacks appeal; I guess all the other i(name) were taken. Damn you IHOP! Still, couldn't they find a jazzier name: iTab, iLet, or iHmm, to name a few. And lastly, what happened to the Verizon deal? I'm guessing that Apple still had to wait for it's AT&T exclusive to expire. For me, I think I will wait, too.

Some Web Subscription Doesn't Work

The WSJ created a successful model to keep its print subscription alive by putting its web content behind a wall. The NYT is planning the same thing. But will it work? It clearly hasn't worked for Long Island's Newsday. "Only 35 users have signed up to access Newday's web site since they put up their $5 a week paywall three months ago." If that number seems disturbingly low, it is. But is it a surprise? Is Newsday delivering unique information that a web surfer can't find elsewhere? I doubt it. Hence, the low number. For the NYT and others that build a pay wall, the content must be unique, exclusive, and demonstrated to be of perceived value for the user. WSJ has done it with unique business news content, exclusive interviews, branded columnists, and valuable knowledge. Aligned with its print, it became the best combination of print and web.

And while that number is low, it could be argued that Newsday is primarily used as a retention tool by Cablevision within its market. It's cable customers enjoy free web access while its competitor, Verizon Fios, and their customers must pay. Has that improved Cablevision's leadership in the market? It certainly can be positioned that way and help to explain why the number of paid subscribers is so low. More important for Newsday is to announce the number of unique and page visits to their web site, as well as gross ad revenue. That would certainly help to clarify its value.

Still there should be many more Fios customers that also read Newsday and would enjoy web access. Perhaps a better job of marketing the Newsday web subscription is required. Let's hope there is a brighter web future for Newsday.

Will Apple's Tablet Save Newspapers and Magazines and Change Behavior?

Yesterday, Apple announced great earnings of iPhones and computers. Tomorrow, Apple will introduce its Tablet to the world. Lots of speculation on what it can and can't do and lots of comparisons to other devices like its own iPhone, Kindle, and others. And lastly, through who's network, AT&T or Verizon, will it connect to the web. Tomorrow's announcement should be a doozy.

"Although Apple has proved its deftness at creating trendy devices and a digital store in which publishers could sell their wares, Gartner Inc. analyst Allen Weiner said there will be plenty of trial and error before newspaper, magazine and book publishers figure out the 'fine art' of creating digital editions that take advantage of the device's graphics and video." It is certainly hard to replace the simplicity and low price of printed material. It is easy to carry, easy to read, and even easy to throw away. Today, we stuff our pockets, pocketbooks, and even belt straps with devices to help us stay connected. A Tablet is certainly much bigger to carry.

So I wonder, who will create the idea bag for both men and women that will make this new device easily portable? Especially for men, this "Man Bag" needs to be the hot new accessory that will change how many carry other personal items as well. Including the Tablet, a "Man Bag" could carry a guy's wallet, keys, and gum. Men will finally have clean pocket lines and no more wallet bulges. Watch carefully. A device that changes human behavior is an absolute game changer!

Hulu mulls $5 charge for shows

Missed a TV Show? Want to watch a movie for free? Well Hulu has quickly found a following with the computer crowd, offering free access to tons of TV and Movie titles. Well that may soon end. "HULU, the free TV web site, has been floating the idea that it may start charging -- and now it's talking price. How much to watch shows online? About $5, according to published reports. A pay plan -- if it is adopted -- won't be in place until this fall at the earliest, officials told the Los Angeles Times."

So, would you pay $5/month to watch shows on your computer? As a cable subscriber, probably not. I suspect most users are not willing to pay and will scour the web for free access at places like TV.com and other sites. Others will go searching their on demand for this free content. Why pay if the milk is free elsewhere.

Will a subscription model work for Hulu? Is $5 below the threshold that consumers won't mind seeing it deducted monthly from their credit cards or checking account. My daughter had me sign her up for Club Penguin and I have $5 deducted every month. I forget it till I see it appear on my bank statement and each month I do, I wonder whether she is using the subscription or should I just cancel it. I then forget about it till the next month. I suspect Hulu hopes the same thing happens for them. People sign up and then let it slide every month. Heck it's only 5 bucks. And that will decide how successful this pay model will become.

Apple and Verizon Wireless To Work Together?

While it has been no secret that Apple is preparing to present its version of a tablet, it has been speculated whether it would run across the AT&T platform or through Verizon Wireless. Clearly, AT&T has been a problem for Apple, especially when it comes to phone calls. And now Apple may finally end that exclusive relationship and add Verizon to the mix.

"Apple is expected to name Verizon Wireless as one of its carriers with its anticipated unveiling of a new tablet device on Wednesday, sources told The Post. That means Apple head Steve Jobs will probably introduce a Verizon iPhone, ending AT&T's exclusive hold on the hot smartphone."

As a Verizon Wireless customer, that is why I have resisted switching providers to buy an iPhone. I was one of the first to switch to Verizon when number portability began. I was fed up with spotty signals, dropped calls, and couldn't wait to switch. Even an Apple iPhone couldn't seduce me to switch back. If it proves true, I might just have to pick an iPhone up.

Howard Stern Leaving Sirius to Return to Terrestrial Radio?

Sirius is trading under $0.70 and Howard Stern, its superstar, may be leaving. For Sirius, digital radio should be more than Howard. Access to all audio sporting events, non-stop music, and unlimited genre choice. For Howard, Sirius was 5 years ago, freedom from FCC violations and the opportunity to make tons of money. He may escaped one but not the other and his future may be back on FCC controlled radio.

Howard lost his wide audience when he moved to Sirius, and perhaps also lost his throne as King of All Media. Is ego more important than money, 5 years later? And can today's radio handle his shock jock antics again. It seems likely it is posturing to renew his Sirius deal, but I doubt the next contract will be as rich as the first.

N. Y. Times to Charge for Frequent Access to Its Web Site

The internet can't remain free. An advertising only business doesn't seem to be enough to carry a business. Broadcast needs license fees to augment is ad model and so do newspapers and magazines. And so, in a not so surprising move, will start to charge for viewing content. "Starting in January 2011, a visitor to NYTimes.com will be allowed to view a certain number of articles free each month; to read more, the reader must pay a flat fee for unlimited access. Subscribers to the print newspaper, even those who subscribe only to the Sunday paper, will receive full access to the site without any additional charge."

The Wall Street Journal was the first down this path and have successfully retained its subscriber model by offering web access with print. The NYT has been watching and is following suit. The question is who is next to follow, USA Today, NY Post? This is he beginning of change, more and more content will be going behind subscription walls.

Hello XBox, Goodbye Set Top Box

Not a fan of your cable company and its set top box. Be patient, change is a coming. Gamers, with access to XBox Live may soon be able to ditch their cable for programming through their game system. Xbox already enables movies on demand via Netflix and other apps, and is now starting to do deals to get cable programming directly.

"They want Xbox to be seen not merely as a gaming machine for teenagers, but as a media portal for parents and grandparents, too. The company is even producing shows for users: it is in the middle of the second season of '1 vs. 100,' an interactive version of a game show that was on NBC. The content ambitions do not end there. Microsoft has held in-depth talks with the Walt Disney Company about a programming deal with ESPN, according to people close to the talks, who requested anonymity because the talks were intended to be private....Similarly, users of the Sony PlayStation can tune into BBC shows and see Weather Channel updates, as well as stream Netflix. Last week, Netflix extended its streaming service to the Nintendo Wii."

Who needs a DVR when everything is accessible on demand. Even so, adding DVR capabilities to the XBox and enable access via antenna for broadcast programming and say so long to your cable subscription. Cable's loss will be Microsoft's gain.

The Tonight Show Is No Longer "The Tonight Show"

In Bill Carter's book, The Late Shift, written more than 15 years ago, he followed the trail of Leno and Letterman and how NBC poorly managed the changing of the hosts. Unfortunately, history seems to have repeated itself. We find ourselves with another debacle caused by NBC's handling of a shifting of hosts from Leno to Conan. And NBC keeps tripping over itself, including Dick Ebersol's unnecessary remarks about Conan.

Back when Johnny Carson was being forced out of The Tonight Show by NBC and Leno was being groomed as the successor, Dave Letterman was then the guy pushed out. Obviously, Dave survived and in fact blossomed in his new role at CBS. But a comment that Carson said to Letterman still seems to resonate. He told Dave that the Tonight Show after him would never have the cache it once had. With Leno scheduled to be at the helm, it would never be the same. Carson said to Letterman to make your new show that next piece of TV history. And Carson was right. The Tonight Show no longer represented the golden age of TV and Letterman has done well.

And today we seem to have deja vu all over again. NBC has made a mess and one host will find himself without a gig on their air. The Tonight Show's storied history has been smudged once again and it's future remains depressed. Can it be fixed. Eventually yes. But bringing Jay back is not really a fix, simply a bandaid. Is there more to this story, most likely yes. Perhaps we need Bill Carter to wrote The Late Shift, Part II, to get the fuller picture.

Jay In, Conan Out; NBC Going In Wrong Direction

Talk about not getting a fair chance. Jay had terrific programming in the 10pm hour to help push the Tonight Show. Conan had The Jay Leno Show. Why should audiences turn the channel back to NBC after being forced to turn it off at 10PM. So Conan ratings suffered.

But NBC believes that bring Jay back to 11:30 will also return it to its former ratings glory. "The Washington Post reported yesterday that barring a last-minute change of heart by O'Brien, Leno would return to his old job." Wrong. You can't have a do-over. Returning Jay to the Tonight Show is not the solution. So then what. You have lost Conan and you have lost the Tonight Show.

Rather, NBC should say goodbye to Jay like they planned to do 5 years ago. Put better programming at 10PM and let Conan and his Tonight Show grow back its ratings. The future is Conan, the past is Jay. It's obvious which way NBC should go, but as they continue to make mistakes, it is only natural to see them pick the wrong choice, AGAIN. NBC screwed with "Must See Thursdays", they screwed up with 10 PM, and they screwed up with the Tonight Show. Not a winning record.

So goodbye Conan. Perhaps once NBC gets a new owner, it can finally return to its former glory.

Conan O'Brien Statement: I Will Not Follow Jay At 12:05

Conan takes the high road. If only NBC would do the same. Here is a copy of Conan O'Brien's letter:

"People of Earth:


In the last few days, I've been getting a lot of sympathy calls, and I want to start by making it clear that no one should waste a second feeling sorry for me. For 17 years, I've been getting paid to do what I love most and, in a world with real problems, I've been absurdly lucky. That said, I've been suddenly put in a very public predicament and my bosses are demanding an immediate decision.

Six years ago, I signed a contract with NBC to take over The Tonight Show in June of 2009. Like a lot of us, I grew up watching Johnny Carson every night and the chance to one day sit in that chair has meant everything to me. I worked long and hard to get that opportunity, passed up far more lucrative offers, and since 2004 I have spent literally hundreds of hours thinking of ways to extend the franchise long into the future. It was my mistaken belief that, like my predecessor, I would have the benefit of some time and, just as important, some degree of ratings support from the prime-time schedule. Building a lasting audience at 11:30 is impossible without both.

But sadly, we were never given that chance. After only seven months, with my Tonight Show in its infancy, NBC has decided to react to their terrible difficulties in prime-time by making a change in their long-established late night schedule.

Last Thursday, NBC executives told me they intended to move the Tonight Show to 12:05 to accommodate the Jay Leno Show at 11:35. For 60 years the Tonight Show has aired immediately following the late local news. I sincerely believe that delaying the Tonight Show into the next day to accommodate another comedy program will seriously damage what I consider to be the greatest franchise in the history of broadcasting. The Tonight Show at 12:05 simply isn't the Tonight Show. Also, if I accept this move I will be knocking the Late Night show, which I inherited from David Letterman and passed on to Jimmy Fallon, out of its long-held time slot. That would hurt the other NBC franchise that I love, and it would be unfair to Jimmy.

So it has come to this: I cannot express in words how much I enjoy hosting this program and what an enormous personal disappointment it is for me to consider losing it. My staff and I have worked unbelievably hard and we are very proud of our contribution to the legacy of The Tonight Show. But I cannot participate in what I honestly believe is its destruction. Some people will make the argument that with DVRs and the Internet a time slot doesn't matter. But with the Tonight Show, I believe nothing could matter more.

There has been speculation about my going to another network but, to set the record straight, I currently have no other offer and honestly have no idea what happens next. My hope is that NBC and I can resolve this quickly so that my staff, crew, and I can do a show we can be proud of, for a company that values our work.

Have a great day and, for the record, I am truly sorry about my hair; it's always been that way.

Yours,

Conan"

Using Xbox As IPTV Set-Top

Tired of your setbox that controls your cabl TV. Wish it were more responsive and easier to navigate. Like how your gaming devices work. Why not use your gaming device to watch TV.

Microsoft's XBOX and AT&T's U-Verse are working together to make that a reality. No set top box, just the X box and access to all linear and interactive applications on cable. "With the feature, customers 'will be able to watch U-verse TV programming, including live, on-demand, HD and total-home DVR content, on their Xbox receiver,' AT&T spokeswoman Jenny Bridges said. 'The Xbox will enable the same viewing experience and same features that customers get today with a U-verse receiver.'"

For the younger demo comfortable with the XBox controller, it is much easier to use than the remote. In fact it allows easier movement across the entire screen unlike the remote's toggle like capabilities. In fact, the controller is a better device for the TV set. If I were on U-Verse, I would absolutely switch out my set top.

Cable companies, are you paying any attention to this or are you stuck in the 90's.

Leno Done At 10 PM; Should Start A Saturday Night Show

I predicted it in my blog November 30 and indeed my prediction came true. Leno at 10 is cancelled. Remember 5 years ago, NBC wanted Jay Leno out of the Tonight Show and away from 11:30 PM. NBC didn't want Leno to go to the competition. The solution, give him a10PM show, build cheap programming, and save money. What NBC didn't predict was that their local affiliates would complain because the 11PM new ratings would also suffer. So now they want to admit their mistake and return Jay to 11:30PM. The problem is that Conan is there and bringing Jay back won't bring back earlier rating success. The answer for Jay Leno is NOT a do-over.

The answer is to keep Conan at 11:30PM and move The Jay Leno Show to Saturday from 9 - 11PM. Turn his show into a comedy, variety, talk show. Currently, Saturday night is filled with repeats so a fresh show can only improve ratings that night. Perhaps consider moving Jay's show to Vegas and visit some of the great acts and personalities that fill the strip. Jay could become the next great host. But Jay has to update his act. Having watched comedy bits from his show, Jay is getting low brow, with too many sexual references, not acceptable for prime time. He needs to clean up the act. And a Saturday Night show could be the best solution for all.

NBC seems to want to go backwards and that won't work. Jay won't regain earlier ratings; that magic is lost. And letting Conan leave the network to move to Fox only starts competition that you were trying to avoid by keeping Jay in the first place. And Jimmy Fallon is your future so you don't want to screw that up either.

NBC has dug itself into a hole. The Saturday night show for Jay (or Conan) is the solution; a half hour Jay show from 11:30 PM to 12 is not. Get it right

Panasonic CTO: We Need 3DTV To Pull Out Of Slump

First of all, CES is one of the biggest shows I've ever attended. The variety of products being shown seems endless. And 3D seems to be a major announcement for both TV manufacturers and cable programmers. From Panasonic to Sony and Sharp, ESPN, Discovery, and others, 3D is the future of consumer in home entertainment. I disagree.

While it may be great for theatrical events like Avatar, it is less necessary for other programming. DO I really need to see The Biggest Loser in 3D! It's biggest stumbling block remains the glasses required to watch the shows. Cool at first, the glasses are a major drawback. My own kids take them off after a short while because they tend to be uncomfortable. The result, the unaided eye sees a blurry picture.

One day 3D will matter, but for the next 5 or more years, I see it limited to movie houses. What is more pressing in the home is a high speed connection to the TV enabling IP provided programming to reach the screen. As cable programming becomes more expensive, consumers will move their viewing habits to the internet for an a la carte programming experience.

And before 3D hits the home, the other service consumers will demand first is TV Everywhere. Microsoft has enabled it through their software in conjunction with AT&T. Sling is out there as well with the ability to move programming to other devices, too. TV Everywhere seems more appealing in the near future than 3D for the consumer.

Lastly, what was most interesting, perhaps even disturbing, was that the Consumer Electronic Show lacked a cable showcase. NBC was there, but no other programming. No Operators at all. No Comcast, No Time Warner, no one. The cable industry has tried to operate separate from the manufacturers and it seems that it will eventually be at cable's loss. Why aren't manufacturers touting cablecard devices integrated into their TV sets? Who should we blame? It seems cable. TV manufacturers are going around the cable operators with internet connections, not cable, and the operator will end up be on the losing end.

Dolan To Programmers: Don't Price Yourself Out of Business

Jim Dolan has some advice for cable programmers (Scripps are you listening). He says that "huge affiliate fee increases are running the risk of pricing themselves out of business..." And Dolan my be partly right; greed can become a real killer to a marketplace. As consumers get fed up, they seek alternatives.

An example is the DVR. As programmers put too many ads in their programming schedule, consumers discovered that by time shifting programming, they could also fast forward through the ads. Raising programming fees will lead to new solutions. And one might be bypassing the cable operator. If Cablevision takes programming off their line-up, the consumer may find they can access the same programming directly through the web. No programming fees, but no more negotiation hassles either. The programmer will deal directly with the consumer.

TVs are becoming IP connected, consumers are watching more and more from web sites like Hulu, TV.com and others. And consumers are dropping cable subscriptions for other programming connections. So yes Jim, programming could be hurt by drop of their programming on your cable line-up, but cable operators could be hurt AS WELL. As your partnerships between programming and distribution disintegrates, consumers will move to the safer ground of web based programming. And you both lose subscription revenue.

Redbox Achieves A Rental Record

Netflix scared Blockbuster and now it may be Redbox's turn to scare Netflix and On Demand. " The DVD rental provider, Redbox, said it broke its one-day rental record New Year's Eve with more than 2 million DVDs checked out by U.S. customers." For a dollar a day, consumers can watch their favorite movies. Compared to VOD at $4 - $5 dollars a day, Redbox is a financial keeper. It seems that consumers will put up with traveling to the local store to access a vending machine and they will put up with rentals and penalty costs for not returning dvds in time, rather than pay more for the convenience of a watching on demand. In a down economy, do Netflix, Blockbuster, and on demand have a new problem on their hands? Consumers change viewing habits for any number of reasons and price is definitely an important factor. As Redbox becomes more successful, watch as on demand competes with more same day and date releases as DVDs, longer viewing windows, and perhaps even LOWER prices.

Fox Not The Only Story, Cablevision Pulls Off Scripps

So much press on the Time Warner Cable and Fox negotiations, that poor Scripps got little attention. And while a last minute deal closed to enable Fox to remain on air in Time Warner markets, HGTV and Food weren't as lucky. Cablevision pulled off the air all of Scripps' channels and viewers have been without going into a fourth day. For my family, fans of Food Challenge, House Hunters, and other shows, serious trouble. Luckily, we don't live in a Cablevision market.

"Since the signals were pulled, Cablevision has been continuously running a "customer" alert on the channel positions, featuring Scripps and the two networks' logos." At the same time, Time Warner is also out of contract with Scripps but has kept the networks on air during this same period. I am confident that in each case, Scripps will formalize a contract with each.

In the meantime, what does a customer do. For us, we would have been actively using our DVR to at least watch our shows. VOD would have dropped the network fare as well and left us out cold. Customers could contemplate switching providers; but note, eventually, networks will have to also renegotiate with telcos and dish and the same hardball tactics will be used again. The day of free over the air TV is gone. Networks want their subscription revenue and customers will either have to work through third party distributors until the day we simply buy our channels directly, a la carte, one at a time, over the web, for viewing in our home and on our approved devices.