Is Cable Cord Cutting An Economic Or Digital Response?

As cable operators announce their quarterly earnings, it comes as no surprise that cable subscriptions are declining. But rather than cite the rise of broadband and OTT content, the decline of subscribers is attributed to the poor economy. Poor housing starts, unemployment, and household budgeting are the rationale behind cable subscription drops as well as to cord shaving, removing higher priced premium services and digital tiers from the bill. The truth is that cord cutting is a result of BOTH the economic slowdown and the rise of web content.

Broadband has become the most important of the three services coming into the home; cable phone and cable networks lag behind it. That connection to the web brings a ton of short and long form content, what you want, when you want, where you want, and at a fraction of the cost. And younger consumers especially are gravitating to the digital model. The economy will come back but the younger consumer will have been weened off of cable and onto web content.

Google is banking on that transition and recently announced their launch of new digital channels. Web content partners as well as Hollywood celebrities are jumping on board to each "program" their own "channel". Should any of this content prove compelling, their niche could become mainstream.

Cable companies are adapting by looking anew at their cable line-ups and figuring out ways to lower their costs. Time Warner Cable has built a lower cost basic model giving consumers the entry to a smaller tier of networks and to keep them connected to on demand. And the growth of broadband subscribers comes with a larger profit margin. But it may not be enough. Operators must continue to push their role as the ultimate aggregators of content, not just in the home, but also through a mobile platform. That means constructing deals with networks that enable both linear and on demand access to all programming. Operators are competing with the web for revenue. Want access to the NFL Redzone, buy the app from Verizon; want to watch a baseball game, buy the MLB web package. Alternatives to cable are popping up and consumers are finding more choice than every before.

Higher Cable Bills Encourage Cord Cutting

Whether it's the appeal of over the top distribution platforms or expensive cable bills, consumers are cutting off their cable bill. Time Warner Cable's quarterly report echos what other cable operators have been seeing a decline in their cable subscription business. At the same time, internet subscription has been rising.

Frankly, part of the problem comes from us as consumers; we have a growing appetite for more. Whether consuming food, cable, or apps, we are not satisfied with what we have; we want even more. And perhaps it is time to go on a diet. Asking for more is not always a problem - more bandwidth, faster internet speeds - sometimes we should just go on a diet.

And perhaps that is what cable operators may have to start to consider doing. Going on a diet with the number of cable networks on the line-up. With the average cable networks' license fees rising 3.5% annually, those costs are being forced on to higher cable bills to consumers. Cable operators are starting to look at ways to either move basic cable networks to higher, separately priced tiers, for consumers to choose to buy or not, or to consider the unthinkable, dropping cable networks. The latter is probably much harder to do but as contract renewals come up, certainly a consideration.

But where to cut? Does a network with a Nielsen rating less than .5 get pulled? Does a Network group get told we are only taking your top 2 or 3 channels? How many movie networks does a channel line-up need, or general entertainment networks, or women's networks, and yes even sports networks. As Networks have grown up they have broadened and spun off niche networks that have broadened and spun off their own niche networks. Perhaps it is time for cable network consolidation.

Certainly cable operators are being faced with the unenviable task of deciding what to do with their cable packages to retain subscribers. In today's economy, cost is clearly a factor. But once we get back to economic prosperity, no doubt gluttony and the desire for more will comeback again. And that being the case, networks and operators could hold out and not make any of these drastic cost cutting moves in the short term.

Content Always On And Available...Not Always

Pulling a page from the Disney marketing strategy, Warner Brothers has decided that the best way to create need is to create want. This is being done by pulling film titles out of general circulation so that a renewed desire is created. Disney has been successful at pulling their animation films out of circulation only to re-release them to a new audience. They have repeatedly done this, the most recent being the re-release of "The Lion King" in 3D. A DVD re-release is soon to follow. A whole new audience got to enjoy this film in a whole new format. And for little marketing cost, Disney saw a huge return.

Now it is Warner Brothers' turn with the Harry Potter franchise. With DVDs everywhere and the films constantly being played on ABC Family, it seems time to hide them away for a few years and build some new want for the movies. Can these movies, aimed at an older audience than Disney films achieve the same kind of renewed demand. It certainly is a strategy worth testing. At the same time, the concern could be that this franchise could be usurped by another franchise. As there are no new Harry Potter books to come out, audiences may prefer to watch other more relevant book to movie titles. Percy Jackson are you listening?

Could Siri Be The Brains Of The Apple TV?

With the death of Steve Jobs and the release of his biography comes word that Apple has been working on building a new kind of TV set. No official word from inside Apple, but a ton of speculation around what could be the neatest thing to hit TV sets, voice commands. Just as Siri is taking the iPhone to new heights, rumors are that Siri could also be the extra pop in the next evolution of TV manufacturing.

It makes me think of old Start Trek movies. Scotty speaking to the pc, "Computer,get me...". So why can't we simply get the TV to first recognize our voices and then reply as we address it. "TV, turn the channel to Bravo" or "TV, record all episodes of Saturday Night Live." "TV, display DVR recordings or TV, search web for Daily Show clips". No more remote. No more buttons. All voice commands. Siri may just be the future of TV.

Will An Internet Sales Tax Change The Consumers Use of E-Commerce?

A research question popped into my head as I watched Amazon report lower earnings and see its stock price drop 10%. Sales were up but profits dropped due to higher spending on production, technology, and acquisition. So the good news is that consumers enjoy shopping online on Amazon and other websites. And it made me ask, would consumer spending change should an internet sales tax ever be established. Certainly some states already charge a sales tax and California is pushing one, but for the most part, we save money by not paying tax with our purchase. In fact, when I purchase online, I also see if shipping is free as well, another factor in deciding whether it might be cheaper to simply drive and buy at the store.

What economic impact on internet spending would result if an internet sales tax was established? Obviously we would continue to make digital purchases online, music, videos, and of course, books. But would we continue to buy material goods through the web if the cost (with tax and shipping) actually exceeded what it cost from a store? Would Amazon and other web retailers' profits suffer even more?

Today's politicians are discussing new tax models and an internet sales tax could be one of those pieces of their puzzle. And while an internet sales tax might bring in additional revenue, it might also act as another barrier to our economic recovery. An e-commerce sales tax may sound like an easy solution but it might also come with many consequences.

Smaller Cable Co-op Seeking TV Authentication

The big cable MSO's aren't the only ones seeking a TV authentication model, so cable subscribers can access programs on non-TV devices. The smaller cable operators want the same thing, too. The NCTC, Costco for the smaller cable operators, creates deals in bulk with cable programmers. The more customers that take the network, the better and lower the license fee costs. So as a next step, the NCTC "has launched a plan to create a centralized authentication platform for multi-screen services like HBO Go or those planned around the the 2012 Summer Olympics in London." And per the Light Reading article, they are trying to build the service from the ground up rather than buy or latch on to another.

But the challenge that they will really need to work through will be the content deals associated with TV Everywhere. Unfortunately, these same networks will not be humming the Jessie J song Price Tag:

"It's not about the money, money, money
We don't need your money, money, money
We just wanna make the world dance,
Forget about the price tag"

Rather, each network will be asking for incremental fees to enable access to content. Some will offer on demand only, others may be willing to deliver a linear feed. But they each would like additional monies.

Ultimately though, content companies have to buy into TV authentication as a condition of maintaining an audience. Without TV authentication, subscribers will be more inclined to cut the cord and leave cable, reducing the total license fees that cable networks receive. At the end of the day, it's about the money. Subscription fees have hit the wall and customers are getting tired of paying more for cable.

Don't believe me. The perfect example is happening in the news today. Netflix a few months ago raised their prices to a point that caused widespread disenchantment with the product. The result, Netflix lost 800,000 subscribers. TV authentication is a means to give customers another reason to remain loyal to their cable provider. But if the price continues to rise, loyalty will erode, just as it did for Netflix. At the end of the day, it is about "the money, money, money".

We Still Use Cellphones When We Drive

Despite laws and fines, I continue to see people talking on their cellphones while they are driving. One woman refused to make the turn at the left turn light because she was too busy chatting. And my beep to remind her that the light was short and others behind her and me also wanted to turn, was met with the flipping of the bird. But her cellphone and driving use is not unique; people make and receive calls, read and write texts, and perhaps even surf the web. I have been guilty of cellphone use in the car and my wife has cured me of that habit. We are now always connected, but sometimes we should unplug.

We have gotten so comfortable being in an always on world, that we forget that it is sometimes to our advantage to be off the grid. For drivers it is the safety of the road, for them and us, and for users, it is not social media to engage when others are trying to engage us in person. Yes, I am guilt of that too. We look down at our cellphone rather than in the eyes of those that are talking to us. Socially wrong, yes, but not illegal.

Driving and using the cellphone is illegal. But whether it was or wasn't, it is simply unsafe. For ourselves and others on the street. We don't have to be always connected. And if we must, pull over and return the call.

Businesses May Want Their Cable TV, Too

It seems that Time Warner Cable, and hopefully other cable companies, have figured out that businesses want more than phone service. With their entry into digital phone, cable companies have been able to compete with the tradition phone companies for business service. And cable has been able to offer more than just a phone line with internet and cable television part of the triple play. So it would have been natural to assume that Time Warner Cable and others have been actively pursuing businesses with the triple play proposition FOR YEARS! Yet this article seems to indicate that this push is only a recent push.

Truth be told, I am not too sure how many businesses want cable TV. In the age of pushing workers farther and getting more hours out of employees, TV, like the internet could be seen as a distraction to work. Yet there is a value to put TVs in conference rooms and waiting areas. But do companies want to show more than basic broadcast? A basic connection may be more than enough for businesses, with little upside to sell up higher digital and premium packages.

"In addition, Time Warner Cable, unlike its telecom rivals, has no mobile phone offering. That could make a difference down the road as competitors bundle smartphone service with the rest of their business package." As mobility takes center stage, cable will have to fight back with its own wireless play. Today, that push has been with WIFI, but a cellular network for mobile is also essential.

NYT Transition Difficult But Profitable

No one said that change was easy. But if one doesn't continue to change and adapt to internal and external forces, then one will surely wither on the vine. For the New York Times and other print content companies, it is recognizing that digital is supplanting print. Simply look at the number of iPads and e-readers being manufactured. With Apple, Amazon, Google, Microsoft, and yes even Barnes & Noble putting dollars into digital tablets, consumers will only continue to purchase more devices and want more content to power them. Content companies that sell quality content to these devices should only benefit.

And The New York Times is capitalizing on digital. The transition is painful and much work is needed to grow, but they seem to be going in the right direction. Profit was up for the last quarter and "it’s continuing to make progress on its metered paywall, saying that it had 324,000 paid digital subscribers—compared to 224,000 in Q2—along with paid and sponsored relationships giving the NYTimes.com over 1.2 million digital users." Through subscription and advertising growth with this exclusive content, NYT can continue to be a leader in media. They should consider capitalizing further with this customer base with e-commerce activity to add another revenue stream to the mix.

Where the NYT has had issues, beyond the natural decline of print subscription, is with About.com. About is a terrific website but it has seen intense competition, both from other how-to websites as well as from viral You Tube postings. And it is hard to be a generalist when there are many other sites narrower in niche and more robust. Just sampling the site, it is easy to see that some pages are dated. A page on Baltimore wasn't updated since December 2010, 10 months ago. About has an amazing history, but it needs a facelift to remain relevant for the future. Like it's parent, it needs to change and adapt.

Ultra Violet Brings Cloud Competition

It's time to take the fight to the "clouds" as in storage, streaming and downloading. With Apple and Amazon developing their own cloud platforms, "a consortium of large Hollywood studios, gadget makers and retailers" have been also backing UltraViolet, a cloud storage locker to enable movie ownership across devices. Their hope is that combining the physical sale of a DVD with a digital copy will reinvigorate the DVD industry. But they are running in third place as Apple and Amazon have each released their own proprietary cloud product. And neither require a DVD purchase to own a movie.

To date, each have their unique pros and cons and the Wall Street Journal has a nice chart differentiating each service. Obviously too, cloud competition is in the nascent stage, with not enough movie content or device choices and flexibility to stream and/or download. As this business grows. more content will become available. I also expect that content deals will start to include exclusivity over one cloud than another, just like what Amazon has done with DC Comics and their digital graphic novels. If you can't differentiate cloud service by exclusivity and other unique attributes, then you are left with price wars. The studios and other content creators don't want that.

Can UltraViolet succeed against Apple and Amazon? Only if consumers once again want to embrace ownership of DVDs. The DVD manufacturers that have signed on to UltraViolet might be upset if a DVD purchase was no longer required. Will consumers embrace the cloud experience? Certainly the push is on and the iOS 5 system on the iPhone and iPad include an iCloud subscription. But I should tell you, I recently uploaded iOS 5 on my iPhone and have deleted my iCloud account. It seemed to have caused a faster draining of my battery life and so far, without it, I am seeing a longer usage. As we depend on our devices to do more and more, power consumption and longer battery life must become the next priority.

Are QR Codes Working? Maybe!

As a marketer, QR codes were meant to drive engagement with print materials and validate through analytics the appeal of print. For consumers, QR codes gave their smartphones more functionality and returned more relevant information. They were the secret source that put print and digital into the same room. Today's newspapers use QR codes to give more detail behind the story and ads include QR codes to drive prospects to their websites. But are these ugly squares of lines and shapes successfully transforming the business?

This article written in iMedia Connection actually defends QR codes. And while the title of the piece may assume otherwise, consumers are aware of QR codes, how they work, and how they can be of value. The problem is not with the consumer using QR codes, but with the advertiser and marketers relying on them as a tactic. "Instead of placing a QR Code on an advertisement at the last minute, marketers and creatives need to incorporate codes into a campaign during the early stages of development, and they must do so from the consumer's perspective, not their own. Just these few best practices alone can help boost consumer interaction and response rates."

An interesting read, especially as smartphones continue to become the de facto phone in our daily lives. And as phones can more quickly capture and translate these QR codes, engagement will improve as well.

WIFI, Embraced by Jobs, Competes With Telco

Terrific opinion article in this morning's Wall Street Journal that should be a must read by the FCC and DOJ. I never knew the impact that Steve Jobs had on WIFI, but I am certainly not surprised. He recognized the impact that mobility had on society and embraced it in his devices. And what I learned about usage did surprise me. "Notice, for one thing, that the biggest deliverer of data to smart phones and related devices isn't any of the wireless carriers. It's Wi-Fi, which accounts for 33% compared to 8% for AT&T and 18% for Verizon."

So as the DOJ fights AT&T in their cellular acquisition efforts, they forget to consider that competition comes from more than one source. Our wireless usage comes not from cellular but from WIFI. And with cable companies offering WIFI coverage and competition being offered by Lightsquared, does the consumer have to worry about AT&T Acquiring T-Mobile?

Ultimately, we should let the market figure out ways to enable competition to grow. Too much policy restricts and does not encourage innovation. But I think the article says it best, "In other words, let's have a little more faith in technical and contractual innovations to manage our growing bandwidth demand while Washington engages instead in a more orderly rethink of spectrum policy."

iOS 5 Upgrade Problems

My wife and I had two very different problems upgrading our iPhone 4 to the new operating system. My download and install took multiple hours. My wife's install was faster and then the screen locked up and iTunes demanded a backup password. After two hours of multiple attempts and Google searches, we ended up losing all her data in order to turn her brick back into a phone.

Do we like the new features of the iOS 5; I especially like the pull down menu and info on the locked screen. But I am experiencing a significant drain to my battery life. By the time night time approaches, the battery is at 5%. That is 15% lower than what I normally see on a typical day of usage. Last night, I deleted my iCloud account just to see if that would result in an improved battery life. It reinforces that the next notable improvement in technology must be a quantum improvement in battery life.

Will this stumbling block with iOS 5 upgrades hurt Apple? The bells and whistles resulting from the upgrade are great. Apple should respond and correct these installation issues ASAP. Regardless, customers are still looking forward; to the release of the iPhone 5 and iPad 3.

The Challenge Of Owning Content And Distribution

Hulu and its owners are facing a real challenge. No one wants to pay their price and their model causes friction with their other distribution partners. Owning both content and a distribution path seems to be causing great angst. Can a distribution window be worked out that makes every one happy?

For a number of cable operators, the ultimate decision was to sell or spin off one or the other. Viacom in the 1990's sold their cable operations; Time Warner, Inc. spun off Time Warner Cable, and Cablevision spun off Rainbow and MSG (although they all share majority sock ownership by the Dolan Family). The biggest exception of this decade was the acquisition of NBCU by Comcast. And that has made content deals with other companies a more difficult one, too.

Hulu, owned by ABC, Fox, and NBC (now non-voting because of Comcast), has a difficult job of working through its content deals for streaming without overtly hurting its other cable distribution deals. But as cable embarks on a TV Everywhere philosophy, those streaming deals do cause friction. But no one wanted to buy Hulu fearing that these companies wouldn't continue to offer great content to the new owners post sale. "There are risks in keeping Hulu. The venture rankles some of its media owners' biggest customers—cable and satellite operators, who see Hulu as a potential competitor." For them, Hulu causes cord cutting. "Some media executives said there is value in maintaining a direct connection to consumers, rather than handing it off to other companies." But that would affect their subscription fees as well as the networks' current ad sales model. So Hulu finds itself stuck in a can't sell, can't compete abyss.

Can Hulu create a streaming window that is competitive yet gives their cable customers a unique window too? Is a 1 season exclusivity enough? Or does Hulu push the older shows no longer accessible on a cable network? Or has this experiment out lasted its usefulness and it is time to close the shop? Decide where your fortunes lie, as content owners or as distributors, it may not be financially in your best interest to do both.

Netflix Righting A Sinking Ship

Netflix has been having a ton of bad press, with poor management decisions leading to a loss of subscribers, and a huge drop in its stock price. So to return to normalcy, Netflix backtracked from its Qwickster spin off (although they kept their 60% price increase). So what is their latest plan?

Well this latest move says it all, content is king. To right a sinking digital ship, Netflix is adding more content. The latest deal with the CW gives streaming rights to all their shows. "Netflix can begin showing episodes of all CW scripted shows (not unscripted ones) beginning the September after the season in which that episode aired. So, any episodes airing now will become available in Sept. 2012." Great opportunity to recapture the younger audience who have enjoyed shows like "Gossip Girl". The monies spent could reach a billion. A lucrative deal, but the timing of its start is questionable.

But will Netflix be around to start airing shows and pay out. The content doesn't flow to Netflix till next September, almost a year away. Customers, annoyed at Netflix, may not stay around much longer as their prices have gone way up. And once you lose a customer, it is harder to win them back. Netflix needs more good news to offer to enable a turnaround and keep customers on board. Content acquisition can do it but the timing to offer it is now, not next year; otherwise the Netflix ship may only continue to sink.

Premium On-Demand Derailed

DirecTv tried to offer theatrical releases 8 weeks after they hit theaters into the home at premium prices and the results were negligible. Universal and Comcast tried to put an even higher priced model together for a film released just three weeks after it hit the theater and that program has been dropped. "After drawing boycott threats from Cinemark and a few small theater chains across the country, Universal has decided that it will no longer release their Ben Stiller/Eddie Murphy vehicle, Tower Heist, on-demand." It seems the backlash from theater exhibitors has sent a message to online distributors, "don't mess with us."

But perhaps the analysts also saw that the consumer was not interested in paying such an exorbitant price, almost $60, for a 1 day rental. And while the thought was that families would throw a movie party and invite friends over to watch; in my family, that sometimes happens when my kids invite friends over for a sleepover and they are looking for something to watch on TV.

With the loss of DVD rentals, content creators, especially movie companies are seeking other windows to recapture lost revenue. But replacing a DVD window with a premium on demand window doesn't seem to accomplish that result. Rather than add revenue it causes a backlash that resulted in theaters dropping those films from screens. It seems, consumers, faced with an overwhelming array of online choice, prefer now to simply rent or buy digital copies. With renting, the choices are plentiful at prices far lower than the premium model. Subscriptions for endless titles at under $10 a month and even on demand from HBO, Starz, and others. For those that prefer to own, digital copies from Apple and Amazon top the list, also at prices far lower than a $60 rental.

With DVD sales declining, will consumers rent more or buy more digital downloads? Certainly Apple and Amazon are being aggressive as they build up their cloud-based services. And as car manufacturers better enable their back seat screens to connect with more than just a DVD player (iPods, iPhones, et al), consumers will buy more digital downloads for their families. Movie studios need to better embrace these new opportunities; distribution windows should continue to matter and it makes no sense to hurt theater owners when there is no revenue upside. The easier you make digital distribution, the more it will be used.

Smaller Cable Networks Growing Their Niche

First cable networks started taking viewers away from broadcast TV shows and now niche cable networks are starting to take ratings away from their big network rivals. "Analysts said niche players are benefiting at the expense of larger cable networks. After years of viewers fleeing broadcast for cable, the cable audience is now splitting into pieces." The top 20 networks are losing share to their smaller rivals. Will this trend continue? Well as audiences discover new shows, they will only continue to gravitate to them. The trend simply follows what initially cable did to broadcast. Choice begats an opportunity to change.

These smaller networks are benefiting because they are actually owned by their bigger "rivals". "Meanwhile, niche networks saw gains, including Style (up 68 percent), HLN (ahead 48 percent) and The Weather Channel (up 36 percent), thanks in part to Hurricane Irene." In truth, Style and Weather Channel are owned by NBCU (owner of USA, E!, and a ton more), and HLN by Turner (CNN, TNT, TBS). So despite where the audience goes, their ad sales team can still offer them placement. In fact, these smaller networks are being promoted across their bigger networks. Viewership may be moving around, but the owners of these cable networks are really the same players.

Hello Qwikster, It's New Coke; Welcome To the Dead Club

The idea may be sound, the execution is what killed it. Strategically, Netflix saw a changing business model and tried to get ahead of the curve. The customer wasn't ready to follow. It may have been the 60% price hike that ultimately done it in, but the idea was sound. At some point the DVD rental business will go away; just not today. And with such a negative attitude about Qwikster, the idea of selling it later to someone else lost its luster. The best thing you could do was simply kill it.

Coke also tried to stay ahead of tastes, seeing a need for their drink to be sweeter and more Pepsi-like. But the customer loyalty of the old brand mutinied when the brand changed too radically. Netflix customers did the exact same thing. And like New Coke, Qwikster is dead. Welcome to the dead brand club!

So was there any marketing lessons learned? 1. Perhaps for both Coke and Netflix, when things don't work, ask for a do-over. 2. The strategy may be sound, but so must be the execution. It is about the timing and sometimes pulling the bandage off too quick is not a good idea. 3. Responding in a timely matter is necessary. With Netflix, the response to the price increase alone should have been enough to reconsider announcing Qwikster. 4. Listen to the customer. Would the change be an improvement on how they used the brand? How does 2 separate services help the current Netflix customer to navigate, select, and use the service? It doesn't. 5. Doing nothing may be a possibility but doesn't move you or your brand forward. With every risk there is the possibility of failure. It is not the failure alone to worry about, but how one responds to it.

Content Distribution Windows Keep Shattering

Technological change has affected many industries. The iPod is noted for changing the music industry forever and cable has changed the face of TV syndication and the Movie Industry. The rise of multiple national cable networks means that the market to sell TV shows to multiple markets has gotten smaller; now shows are sold to one network like Comedy Central or TV Land for syndicated viewing. And along with cable on demand and streaming sites like Hulu, TV shows can be watched anytime not just outside prime time.

The movie industry has also seen its distribution windows drastically change. With DVD sales way down, distributors are seeking new revenue with premium pricing for same day as or even before theatrical release. Independent film companies have been pushing this plan. And now it is reaching the big budget film distributors. "Fallout in the exhibition industry continues over Universal Pictures’ controversial move to offer its upcoming Eddie Murphy-Ben Stiller comedy on premium video-on-demand just three weeks after it opens in theaters." Three weeks is hardly a window for theater owners and some are fighting back by not showing this film.

Will consumers pay a premium price to watch a first run film at home? It has not done well in past attempts. In addition consumers are seeing that the distribution windows have gotten much shorter. Where it once took a film more than a year to go from big screen to on demand, it now sometimes takes 3 months. And then shortly after it appears on a premium cable network like HBO or Starz. another 6 months and it lands on basic cable like fx or TNT. Consumers thirst for more seems to fill the pipeline with tons of films all passing through with lightening speed.

It is not just that the DVD has dies, it is that we as consumers are tired of the clutter of ownership. The iPod taught us that we can listen to what we want, when we want, where we want without filling up bookshelves with CDs. So too go the DVDs. How much the consumer will pay for the timeliness of the content is to be determined. Some may pay a premium price to watch in the home; most others will not. Theaters can't fight technological change, but they can make their experience a preferred one. Don't simply shut out the movie, but offer to make the experience a superior one.

Kindle Believes Content Is King, B&N Retaliates Like A Spoiled Child

Amazon is taking the digital book wars to an exciting level. First it was price discounts on earlier models and now it is content exclusivity. Their latest exclusive content deal is with DC Entertainment, owner of graphic novels, a perfect complement to the e-reader. And a move that has riled its leading competitor Barnes and Noble.

But I am sad to hear that B&N has responded in a very childish way. "Comic book industry blog Bleeding Cool reports today that Barnes & Noble e-mailed all of its employees yesterday and told them to remove all print copies of the books included in that exclusive from their shelves." The only people that get hurt from this move are B&N customers who are in the store looking for these print issues and B&N reputation and bottom line. How does removing these issues help you compete with the Nook? Frankly, it doesn't. It sounds like a pouty child taking back his or her toys.

I am a huge fan of B&N and I understand their displeasure. But if they believe that content is king, like I do, then they should work harder to build their own exclusivity partnerships. DC Entertainment is not the only game in town. But B&N needs to work smarter to attract other partnerships and exclusivity deals. For every DC, there are Lucas, The Simpsons, and other graphic deals to make. And Archie is just announcing its own line of superhero comics. And think beyond the box to video and audio opportunities as well. To pull print copies off the shelf does not grow your digital business. The game is young and far from over.

Apple Still Shines

Steve Jobs legacy will be felt for some time and Apple will continue to dazzle. Despite a mediocre response to the latest iPhone news, advance orders for the next generation of iPhone are doing quite well. "Apple Inc. said on Monday that pre-orders for its new iPhone 4S set a record last week with more than 1 million units snatched up online in the first 24 hours. The results top the previous one-day pre-order record of 600,000, set by the new unit's predecessor, the iPhone 4." That the iPhone is now available to Sprint customers is one reason, and there are many users that simply want the next generation of iPhone no matter what. The latest software update with Siri voice command may be the next winning idea for Apple.

And as Apple attracts more customers to its devices, it also attracts more users to its App store. It is a healthy business model that will enable Apple to continue to grow.

Steve Jobs' Business Lessons

Steve Jobs has left an amazing legacy on the business world. He built success from failure and didn't let failure stop him. Others might have quit, but Jobs never did. It may be fun to list his products that failed, from the Apple III to Lisa to the Newton, but he also gave us the mac, iPhone, iPod, and iPad. He transformed the music industry and built a retail empire that hired workers and delivered superior customer face to face service. Amazing given that his products could be noted for not needing human interaction.

He taught us to "think differently" and to never give up. And he never stopped. He turned the movie industry on its ear with the rise of Pixar and changed Disney as a result. He like Walt Disney made you believe in magic.

Apple will continue to prosper as will Disney, but the legacy of Steve Jobs will be felt for some time. He taught us amazing lessons of perseverance and passion. He made us believe and to see failure as the road to success. Simply put, we should follow from his example.

RIP Steve Jobs

This says it all. RIP Steve Jobs.

Is Microsoft Buying Yahoo?

A simple question. Yahoo is down and lacking leadership, Microsoft needs to expand its footprint. Bing has not been the answer and maybe Yahoo can help. "Given the wide reach of both Microsoft and Yahoo independently, a singular entity would already come with a great degree of demographic overlap."

And that is the challenge facing Microsoft in any of their efforts. They have become corporate while entrepreneurial technological companies take risks and push new ideas. Microsoft needs a leader. It is what Steve Jobs was for Apple. He was a visionary, a risk taker, an idealist, who sought to "think differently" and follow his gut. Without him, the challenge for Apple is to enable that same sense of entrepreneurship and risk. For Microsoft, current leadership has not led by example, they seem to simply follow.

So while a Microsoft-Yahoo merger could provide some synergies, it comes with many challenges too. It would require new risk taking to succeed. Otherwise, it will be noted as another failed attempt by Microsoft to get beyond their Windows and Office product line.

The Problem With Expectations, We Are Usually Disappointed

It is human nature for us to make expectations prior to outcomes. But I think for the most part, our fiction is always greater than the facts. It is when we are caught off guard that we are most excited. So it comes as no great surprise that yesterday's Apple announcement regarding the next generation of iPhones was dealt with the same way, large expectations, and little satisfaction.

But dig deeper into the announcement and the additional features of the iPhone along with another distribution partner in Sprint will lead to positive long term results. The problem with being an innovator is that your are constantly expected to be innovative. Likewise, the problem with being a comedian is that you are always expected to be funny. It is why comics sometimes deliver dramatic results to surprise and hopefully intrigue their fans.

Same too with Apple. It's only way to top expectations is to do something surprising. These press announcements don't allow for it; they encourage early expectations to be built and then fall into rubble. No, Apple needs to figure out a way to surprise its "fans" so that when it makes its next announcement it is unexpected yet significant. Perhaps that is what is up Apple's sleeve.

Yesterday's announcement will be quickly forgotten as financial results for Apple are released. Apple has the products, the pipeline, and the backbone to deliver content to their devices. But they need to stay innovative and unexpected as Amazon, Google, and others are on their tail.

Zune Is Out Of Tune, Microsoft To Focus On A Windows Phone

It seems another Apple competitor has raised the white flag. For other companies, it was to stop producing a competitive tablet and now for Windows, to not compete with the iPod. "We recently announced that, going forward, Windows Phone will be the focus of our mobile music and video strategy, and that we will no longer be producing Zune players."

So how will a user listen to music on the Windows Phone and why not keep the Zune as a brand extension? While Google and it's Android devices seem to have a strategic approach to compete effectively with Apple, Microsoft may be scattered. What is the Microsoft strategy for mobile and why isn't Zune a part of it? One hopes that Microsoft's history of failed product launches doesn't extend to the Windows Phone. But so far, the loss of Zune seems the rule not the exception.

Will Hulu Find A Right Price To Sell

It seems as companies have been kicking the tires of Hulu, they have been reluctant to pay the asking price. And while some bids have come close, the additional conditions asked to complete the transaction have proven stumbling blocks. "At stake is the question of whether Hollywood's content companies are ultimately going to be principal players in the new world of digital streaming, or whether they will remain licensors of their products -- outside vendors." That is to say, buyers of Hulu don't want to find themselves competing for streaming platforms with the eventual sellers of Hulu.

As streaming becomes easier to offer and costs to stream decline, distribution platforms become plentiful. A Hulu buyer should want some exclusivity in their content deals to market a competitive differentiation. And that may be needed in both their paid and free models.

What will the current Hulu owners do if they choose to not complete a sale? Perhaps incorporate Hulu into each of their own websites to give it more value. They will also have to figure out what content also gets shared with their cable distribution partners. Comcast, Time Warner, and others all want to offer this content on their VOD and streaming platforms to authenticated users. Clear competition against Hulu's own pay model. Should Dish buy Hulu, Dish would probably want to confirm that they have the exact same rights, if not better, for the content these owners are peddling to cable. A sticky place to be and one that surely complicates the sale of Hulu.

Consolidation In Cable To Compete Better

Strike the word local from the cable dictionary. In order to compete against telco and satellite services, the buzzword is consolidation. Comcast reorganized to three regions, Time Warner to two, East and West, and today it is Cox's turn. They first reduced from 11 to 9 and now are combining again into 7 operating divisions. Mark my words, by next year it will be under 5. As businesses mature, it is not necessarily a bad thing. Decisions rise up higher into the organization and local management goes away. What is left is service departments and a few customer service reps.

But in the face of competition, cable once argued that local was better. Where the telco and the satellite providers were national in scope, only cable cared about each community. Perhaps that strategy has proven less profitable as cable is now copying their competitors' national strategic management approach. But it also means less management jobs, and in today's economy, not helpful. Less costs for Cox and others, more operating profit.

But does this national approach spur more cable subscription? Can local help to better push cable over competition? It seems the approach is only about technological updates, more apps, mobile viewing, more on demand choice. Still, the missing piece may still be localism and should cable try to recapture this lost world, it might be a good differentiation move. Till then, stay tuned for more consolidation of cable operations.

Cheating On Your Spouse With Your Apple iPhone

Fascinating article today in the NY Time's Opinion Section regarding our iPhone addiction. And not simply an addiction, but love for the device. "The subjects’ brains responded to the sound of their phones as they would respond to the presence or proximity of a girlfriend, boyfriend or family member. In short, the subjects didn’t demonstrate the classic brain-based signs of addiction. Instead, they loved their iPhones." Do I love my wife less, no; do I feel a love for my iPhone, perhaps. I definitely feel a loss if it is not nearby. Call it an addiction or loss, but I agree it evokes an emotion in me.