Content Companies Will Remain Successful As Viewership Patterns Shift

Consider this article from Deadline Hollywood a no brainer. The analyst cited is "encouraged by the prospects for TV Everywhere — where pay TV companies make it possible for subscribers to watch their shows on mobile devices." That content accessibility across different platforms will encourage viewership and new revenue models. But this assessment of the media marketplace does not apply to all big companies. While she has high hopes for Time Warner Communications, News Corp/Fox, and CBS, she has doubts about ABC/Disney/ESPN and Viacom. Noticably absent in the article is the other major broadcaster/content company. Is NBC/Comcast a different animal because they are the only one that is both a distribution and programming company? Does that help them or hurt them more than the others?

Ultimately, one has to believe that content is king should remain the mantra. Creating content that is compelling and can be monetized across multiple distribution platforms seems to be key. Being smart enough to recognize the shifts in viewing habits of the viewer is essential. The syndication market may change, the DVD market may drop, the mobile space may grow, second screens may gel, and new undiscovered platforms are pushing to be formed. Staying forward in those trends to ride the changes without getting stuck in the past will drive future revenue and profitability.

Is Improvement in Cable Basic Sub Losses An Oxymoron?

Financial reports are coming out for fourth quarter and Time Warner Cable has announced smaller losses of Q4 basic subs with broadband and wireline reporting increases. Other cable company announcements will follow but most likely they too will report losses in their basic sub numbers as well. Where are these cable cord cutters going? Both FIOS and U-Verse have reported increases in this same period.

But what I like most in reading these articles has been how these basic cable losses have been described, "improvement in basic losses" which means that we are still leaking water from the dam, but at a slower stream. Is this a trend that will lead to an eventual rebound in growth or just a slowness until another crack in the dam occurs and more subs flee?

My point is this, a loss is a loss, and saying that your are improving in the area of basic sub loss is like the classic George Carlin oxymorons, "Jumbo Shrimp", "Hot Water Heater", and my favorite "Military Intelligence". You may have seen a small slowdown, but the problem is not going away. Consumers are shopping for better deals, switching providers, or just dropping their cable service.

Will lower priced entry into basic packages work? Better access to networks and on demand programming on mobile screens, better service? Staying ahead of the curve and preparing for increased online competition are essential for cable operators to remain more than just a broadband pipeline to the home.

Building A Broadband Channel Line-up To Compete With Your Cable Company

YouTube is building out its broadband lineup of channels and the question to cable operators is this, will a broadband channel aggregator divert enough subscribers and their viewership away from your cable line-up or will the TV Everywhere approach ultimately keep your cable subscribers engaged and paying?

Certainly a very serious threat by Google and YouTube is designed to attract and pull away viewership. Some of the channels being discussed seem very niche. But isn't that how cable first began before morphing into broader programming. Bravo was once high art, now it is pop culture. MTV is not music but young and hip lifestyle programming. In almost every cable networks' case, what started as a niche has grown into broader programming to increase ratings.

For YouTube, the initial channels may be limited in scope but are surely designed to expand and attract greater share as well. One such channel backed by IGN, a game publisher owned by News Corp, is to be called Start. Another is coming from Electus and IAC and will be a Food Channel. It will likely try to attract viewers that like Food Network on their cable line-up. YouTube is planning more than 100 channels to compete and perhaps cause cable subscribers to cut the cord.

Will these niche channels pose a threat to cable? Early on broadcast networks didn't pay attention to upstart cable either. But gradually, the broadcast viewership share was reduced as cable viewership rose. Is the same likely with the rise of these online channels? It is if cable operators and their respective networks don't embrace a TV Everywhere approach that offers authenticated viewers unlimited access to linear and on demand programming on any platform. And while some of this is enabled already for WIFI viewing "inside" the home, full accessibility must be granted to enable viewership anywhere and everywhere.

I believe full availability is necessary for cable to retain and maintain its base. Otherwise, consumers may perceive a choice and start preferring these online rising networks to limited cable only availability. While the quality of the programming online and on cable may get compared, the choice of access will be a non issue. Then it will be up to smart programmers and marketers to continue to innovate to keep customers watching and engaging with their respective networks across all platforms.

Rising Data Usage On Our Smartphones And Tablets May Cost Us More

We are being encouraged to use more data on our mobile devices. We can stream videos, listen to music, download and upload photos, and of course read emails. We are enticed with more cloud access to hold and share our data. And with the iPhone 4S, every time we chat with Siri, we are consuming more and more data. It is no longer a little taste of the data stream, it is complete hunger. But how and where we consume is key.

Wireless phone companies are encouraging us to use WIFI to remain connected. A 3G or 4G experience has limits and too much usage on their dime will result in higher monthly bills. Unlimited data plans may become a thing of the past as the infrastructure to support these streams are not large enough to handle the ever increasing sizes of data consumption. Can't handle it on the network, find a WIFI hot spot. Except the owners of these WIFI streams have limits too. Too many people on the stream will significantly affect the speed.

This problem will only continue to get worse. More content is being put into the web and these files are getting larger and larger. More people are getting smartphones and tablets, and utilizing data and WIFI to enhance their functionality. And the rise of connected TVs will only put more stress on an over-burdened network.

Both 3G/4G and WIFI will be stretched. The phone company will put limits on usage and charge more to those that exceed their monthly plan; cable companies want to convert their broadband plans from unlimited to usage to capitalize on this same growing appetite for web data. And the consumer will ultimately find themselves paying more to be connected.

Much needs to happen. More efficient bundling to reduce the size of streams and more capital expenditure infrastructure. We like our mobile experience and we want more. More content to consume, faster speeds, complete connectivity; but also at a manageable cost. And like it or not, we have tasted this "drug" and we like it; costs will unfortunately rise to remain "connected".

Netflix Rebounds

Excuse that third quarter bump in the road; despite some bad timing moves, Netflix seems to have recovered and grown. Strategically, it makes sense for Netflix to move off the DVD mailing business and embrace the world of streaming media, but how they tried to do it, will be noted as bad management decisions. Separating the businesses was not wise and some may argue that the massive price increase didn't help either. Netflix reversed its splitting decision but kept its higher pricing. Initially, customers dropped the service to express their anger; but now it seems they are returning. From a third quarter loss of 800,000 subs comes word of a fourth quarter gain of 610,000 customers. "U.S. online subscribers increased to 21.7 million, while mail-order DVD customers shrank to 11.2 million. The figures for each include people who get both services." Netflix will continue to move away from the mailing DVD business, but not with the same abruptness that they tried last year.

And as content remains king, Netflix is adding more streaming and exclusive content to its mix to keep its customers watching. But customers can be a fickle bunch and the increase in competition may also move customers to try and compare. Amazon, Hulu, and even Redbox are putting on more pressure. Additional viewing options are coming from Facebook and YouTube. And cable companies continue to build out their TV Everywhere model, giving customers on demand and live access on other platforms.

The costs for acquiring content will only increase. Movie studios will seek more to offset the loss of their DVD business. TV producers will also seek more to offset possible loss in the syndication market. But streaming subscription services might find new revenue opportunities as well. Increases in advertising may offset those costs.

Netflix may have recovered from its strategic blunder but it faces strong competition, rising costs, and a customer base that can just as easily turn away for a better deal. How Netflix competes and markets to a streaming savvy world will demonstrate that they ultimately made the right choice in pushing away from the mail order business.

Media M&A Activity May Grow This Year

The economy may slowly be improving, Apple reported phenomenal earnings, and the financial community is eager to see some merger and acquisitions in 2012. Will Apple buy a media company with almost $100 billion dollars in cash on hand; is Yahoo considered an acquisition with the loss of Jerry Yang? According to this article, "merger and acquisitions activity in the entertainment and media sector is expected to rise this year, according to PwC, spurred by OTT and social-networking companies, as well as online gaming firms." While last year saw the merger of NBC and Comcast, AT&T was not allowed to buy T-Mobile. So who is a likely buyer and who may likely get bought or merged? It is the start of a new year and we just might see a rise in M&A activity.

How Does Cable Stop Basic Sub Drops?

When you finally recognize that the economic model for delivery of cable programming is broke, how do you fix it to stop drops and start to again realize basic sub growth? For Cox Communication, the solution is a lower priced entry point into a basic cable subscription, "a low-cost video tier, rolling out a 20-channel package dubbed 'TV Economy' in several markets for $34.99 per month." Most notably absent is ESPN. Time Warner Cable and Comcast have already built a more basic package as well.

Given that most license fee agreements with programmers are based on penetration levels of its network to the total available base, Cox, like TWC and Comcast, must not be worrying that this package might be so popular that it will result in some networks monthly fees going higher due to missing a threshold benchmark. That is to say, that ESPN as an example, as a result of the popularity of this TV Economy package, reaches as a result less than 90% of the Cox total universe.

What is clear is that more must be done to reverse cables' trend of losing basic subscribers. As a cable VP of Marketing once shared with me many years ago, you can't sell someone more services until they are actually a basic customer. Once they are a basic customer, it is possible to sell in additional tiers of channels, premium networks like HBO and Showtime, and of course additional services like telephone and broadband. These basic subscribers also mean more potential eyeballs and more potential advertising revenue as well. The work starts at the basic sub level and this new "basic package" may be the means to reverse the declining sub trend. And while Cox is duplicating the efforts being tried by TWC and Comcast, so far basic sub decline has continued, although some may argue at lesser levels then before. Still a loss is a loss.

Verizon FIOS 6th Largest Cable MSO

Verizon FiOS is growing basic subscribers as the other cable MSOs report basic sub drops. "Verizon Communications is now a bigger pay-TV provider than Charter Communications, after the telco pulled in a solid net gain of 194,000 FiOS TV customers in the last three months of 2011 to stand at 4.17 million total." That increase moves FIOS to sixth place in number of basic subscribers. The top ten list is as follows:

1. Comcast Cable
2. Direct TV
3. Dish (Echostar)
4. Time Warner Cable
5. Cox Communication
6. Verizon FiOS
7. Charter Cable
8. AT&T U-Verse
9. Cablevision
10. Bright House

How far the cable industry has matured? The 10 largest cable operator, Bright House, is about one-tenth as large as the number 1 cable operator, Comcast. And the top 5 cable operators, currently both satellite providers and 3 cable operators, cover about 75% of all cable subscribers. Shortly, Insight, 13th largest MSO, will be sold to Time Warner Cable and others will likely merge as well. Consolidation in the cable universe coupled with shifting viewership from cable to satellite and telco providers.

Younger Audiences Prefer Their Online Content

While championship sporting events will continue to get huge audiences on the TV, everyday TV viewership has some serious competition. The next generation of key demographics are spending less time with network and cable programming and shifting a chunk of their viewing time to online. YouTube is drawing the largest audience with its assortment of channels and shows. "With 125 million viewers watching more than 1 billion of its videos a month, Machinima may be the most-watched channel that's not on TV." They are eyeballs diverted from traditional television.

It is this fundamental shift in viewing that will ultimately affect what exists in a cable line-up and what is best discovered online. Like the music industry that saw consumers prefer to consume songs over albums, viewers may be preferring to view shows over networks, in an on demand way. No more waiting for a show to start, these viewers want it when they want, where they want, and on the devices they want.

"Machinima is part of what's been called the "third wave" in video entertainment, each part of which revolutionized the entertainment industry, (Machinima Inc. Chief Executive Allen) DeBevoise said. ABC, CBS and NBC dominated the broadcast-television era. Cable and satellite technology opened the doors to new, more specialized entertainment channels, including HBO, ESPN, MTV and CNN. Now the Internet is poised to overturn the reigning paradigm yet again, he said." The platform before it does not die; but it must find away to adapt to compete in a changing landscape.

To me, that means that cable networks and shows must be made fully accessible across all devices, whether viewed in the home or not. Live programming must be accessible everywhere immediately and all other programming available to watch as demanded. Will consumers pay? Ultimately, consumers don't want to pay; some however may pay depending on the value that programming presents to them. But at today's cost for cable, the younger generation is turning away from that model to view online.

Machinima may just prove that an online network can not only exist outside the cable subscription world, but also succeed without a license fee revenue model piggybacked on its ad sales success.

Is Internet Shopping Unfair To The Retail Economy?

Smartphones and the web have been a consumer's friend when it comes to comparison shopping. It no longer requires a shopper to schlep from one store to another before settling on where to buy an item. Now that same shopper can read the tag on the item off their smartphone and find out if there is a better price. Others can do their shopping online from the comfort of their home before deciding whether to purchase right there or venture out to the store to pick up the item. But is some of it unfair and will it ultimately kill the retailer?

In regard to the unfair charge, retailers continue to argue that online immediately benefits by a discount know as the sales tax. Stores are required to charge this amount, but depending on the state, online does not. And depending on where you are from, that discount could be 7% or higher. With online stores offering free shipping, the only drawback may be the immediacy to receive an item.

For those consumers that are happy to buy in a store, they use online tactics to compare pricing on items. Is it cheaper to buy that item at Target or Walmart, Best Buy or PC Richards? Mass produced items available in many stores are most affected. And with information at a consumer's fingertips, there is no need to be over-charged again.

So how do retailers fight back? Certainly the push is on by them to convince both States and Congress to legislate sales tax for online purchases. Amazon has been fighting back for years. In the retail comparison fight, stores seek exclusivity of brands to differentiate. Mattress companies love to "create" lines that are exclusive to their store; you never see the same Serta model in Sleepy's vs. Mattress Discounters. Some do it with the creation of store brands. Costco loves to push their own Kirkland brand. And Target is pushing their own vendors too. "Target asked the suppliers to help it match rivals' prices. It also said it might create a subscription service that would give shoppers a discount on regularly purchased merchandise."

Change is forcing businesses to innovate and compete. While the sales tax example can be argued as an unfair playing field, comparison shopping has always existed. That it has become less burdensome for consmers to compare and contrast before purchase shouldn't be an issue. Consumers shop at certain stores for a number of reasons and price is not the only factor. Service, availability, specials, ease of returns, convenience and other factors all play into a successful retail business. Price is always one factor in sales, it just isn't always the only factor.

MSG Drop Continues, Time Warner Cable Still Isn't Carrying It

Three weeks and counting, and Time Warner Cable customers still aren't getting their Knicks or Rangers on MSG Network. Both teams are competitive this year, but what happens on the court or in the rink has no bearing on what is playing out between these two companies. Certainly the ads continue to populate the sports pages, but the longer it goes, does the loss become less and less relevant?

Are customers actually switching providers because TWC no longer carries these games? Some viewers simply drop by their local sports bar or visit a friend, some might find a website that carries the game, and others may decide that they can do without. Most likely, not many people have dropped their cable service. And certainly the ones that did leave didn't do much to hurt the bottom line. Eventually either MSG or TWC will blink, but both are also stubborn, so the battle may rage on for a while longer.

But this battle also symbolizes the issue facing cable operators, programmers and viewers. The rising costs of license fees quickly cause subscriber bills to rise. And the higher they go, the quicker consumers get fed up with the cost of cable and seek alternative distribution choices. It is the cable operators' ultimate worry that the rising costs of programming will cost them subscribers who cut their cable cord.

Will School Boards Embrace Apple's New Education Content Plan

The rise of the iPad, and of course the other Tablet clones, continues to grow in strength as more and more content populates its platform. Apple's announcement this week raises the bar with a plan to sell school textbooks online at a cheaper price than hardcover. "With students, school districts and universities snapping up iPads, Apple teamed up with publishers, including McGraw-Hill Cos. (MHP), to build interactive schoolbooks so the tablet can replace heavy tomes that have long weighed down backpacks."

Great news for college students that buy their own books; bad news for college bookstores who have enjoyed the revenue stream. Good news for school boards that buy books for their students; bad news for the parents that might be required to buy a iPad for their school aged children. A very expensive purchase depending on how much memory you buy. Good news for Apple who always seems to be the innovator; bad news to the other tablet clones that must race to close their own education deals.

Like any teutonic shift, a digital textbook movement will take some time. Most likely it will first happen at the college level where students already make book purchases. And like a computer, the tablet will become another required device for the college student. For the elementary and middle school student, the timing might take more time. Still having watched my son lug his backpack to and from school and carry in his arms huge notebooks and textbooks, an iPad might be quickly valued as a back saving device!

Could Kodak's Bankruptcy Have Been Prevented

It happens more times than not, industrial or technological change impacts an industry, opening doors for some and bringing others at the top of the hill to the bottom. Kodak, once a leader in the film and photography world, declared Chapter 11 today. Under the law, they get to wipe away some debt, restructure, and try to emerge leaner, meaner, faster, and smarter. But can the brand name, so tied to old technology and print material, change its brand perception to be seen as a future digital print leader?

So what are those plans? CEO Antonio M. Perez "said in a video statement on Kodak's website that the company has four objectives while in Chapter 11 -- obtaining the financing to reassure its employees, customers and other stakeholders that the company will stay in business; enabling it to pursue patent infringement claims against major companies including Apple Inc.; adjusting its "legacy costs" to a fairer level; and driving growth in the printing businesses Perez has declared are its future." So in English that means spend vast sums of lawyer fees to tie the courts up for years in patent disputes that they may or may not win, renegotiate pension payments, and continue onward in its printing business. Not so impressive.

Can Kodak find a new space to own? Between less documents being printed and more devices like smartphones able to take quality pictures, what does Kodak think it wants to be? Is it printers to rival HP, Canon, and others, or digital cameras that do more than a low priced Nikon, iPhone or Android device? Or is it an online platform to store pictures , create albums, and share like Flixter, Snapfish, and Shutterfly? Will they be consumer focused or will they pursue more commercial or industrial applications? It seems that while Kodak was trying to defend its core business, the world, the technology, and the consumer needs have shifted away.

And mind you, this has been going on for years. What has been Kodak been doing to remain a leader? Competition in the photography space has only gotten more intense as the world became digital. More vision will be needed by Kodak to rise from the ashes and emerge a leader again.

Linear Web Channels Keep Arriving

The world of the "connected" TV set relies on content to consume. Where short form content is best for "lean forward" viewing, the TV watching experience has always been about the "lean back", long form view. Once cable networks like Comedy Central, E!, MTV, and others started out with short form programming, but they recognized that their viewing and revenue success would be with full length shows.

As the web invades our TV screen, the ideal experience is "lean back" and web sites are complying with linear web networks with original shows. The latest addition to the linear web guide will come from AOL's Huffington Post, "preparing to launch a live over-the-internet video channel modeled on the 24-hour cable news networks." Where cable news nets like CNN, Fox News, and MSNBC receive cable license fees and advertising, a free web channel will attempt to survive on ad sales alone, while trying to draw viewers away from these cable nets to their web network.

With a web TV line-up growing with the addition of other web channels from YouTube and others, the internet is taking a direct shot at cable subscription fees and alternative programming distribution. Will these web channels further advance the cord cutting affecting basic cable subscription? Or is it simply the economic costs that are the real key driver of cord cutting? Clearly, the arrival of more web channels demonstrates the direction and push that is being taken to sample and perhaps one day fully switch over.

Online Nets Are A Disruptive Force To Cable

Remember when broadcast networks fueled our viewing interests and the Nielsen ratings. The rise of cable networks were seen initially as too niche to impact viewership; I mean, who would want to watch news beyond broadcast at the traditional dinner time and again 11 pm ET/PT hour. But cable networks kept scratching away and the rise of more and more of them began to peel off viewers from broadcast. Today it is cable who is known for its innovative, award winning programming while the broadcast share of total TV viewing continues to decline.

But time doesn't stand still and history repeats itself. That change in the TV landscape comes from the rise of web-based programming. Where cable took broadcast viewers, web programming will continue to attract the broadcast and cable viewer. And the web model has learned from its cable history; offering re-airings of older programming and sprinkling in some original shows.

Today that disruptive influence comes from Google and YouTube who are premiering two "web networks" and original shows with the "launch of new Hollywood-centric entertainment channels from Young Hollywood and a Penske Media-Ion TV partnership." These networks look to be distribute a linear schedule as well as offer programs on demand. "The launch of the two channels comes 24 hours after rival Hulu announced its latest original series, Battleground. The politically themed dramedy (executive produced by the guy directing Sony’s next big Spider-Man tentpole, Marc Webb) is Hulu’s first original scripted offering."

Like the early days of cable, some advertisers may shun this niche until it is more proven. Others will deem it experimental and siphon off a small piece of its budget to test its appeal. And like the early days of cable, the risk - reward model will likely pay dividends for the early adopters.

This technological shift toward broadband delivery does not necessarily have to hurt the cable and broadcast model. How readily they embrace it and pursue distribution that keeps them accessible across platforms is key. Even with the arrival of cable, most broadcast nets have survived (sorry CW and WB). The arrival of these web channels and programs will not result in a zero sum game. There will ultimately continue to remain room for the strongest in each distribution platform to survive.

Raising Cable Rates And Cord Cutting

Over the last few years, cable operators have watched their basic subscriber numbers drop as customers fled to alternative cable choices like satellite and telco. Operators would argue that while they lost "some" customers, others chose to buy into the full suite of cable, broadband, and telephone and the average revenue per customer had actually risen. But some are concerned that eventually the continued increase in cable subscription rates will cause these triple play customers to downgrade and eventually switch as well.

The recipients of these initial customer defections have been satellite and telco. Their base has risen at the expense of the cable operator. Their cost conscious customers may be in for a rude awakening. "DirecTV started notifying its nearly 20 million subscribers during this billing cycle that it will be charging more for its programming services starting Feb. 9." As programming fees increase annually, the need to keep profits in line causes this pricing change. But customers may object and how much it hurts their pocketbook may determine the future direction of basic sub growth or decline.

For customers, it means a big decision. Put up with the rising costs of TV programming or "cut the cord" and rely on alternative methods to watch your TV. For some it could be the installation of a digital antenna to retrieve over the air signals; for others a reliance on just a broadband connection to stream your shows and movies. And a number will try to negotiate with their provider citing competition and plan to switch unless a discounted deal can be offered. I admit to using this tactic a number of times.

And with the investment by streaming providers like Hulu and Netflix into original programming as well as a broader quantity and quality of TV programs, the choice to switch to a streaming model could get easier and easier. As customers buy only the streaming packages they want, they can get the shows they desire at a lower cost than a cable subscription. And that is what could ultimately upset the cable/satellite/telco operator cable subscription apple cart.

The Future of Programming Distribution Is On The Web

CES is winding down and the talk from the show is not 3D TVs as much as it is about connectivity to the web. Televisions, tablets, laptops, and smartphones all accessing online content, from social networking sites to YouTube and gaming. And even more pronounced, none of these discussions included partnerships with cable operators.

"YouTube announced in December that it logged 1 trillion hits in 2011 and is anticipating an even bigger year ahead as more politicians and newsmakers turn to the site to distribute Web ads, speeches and weekly video casts." Their push into niched channels seems a clear shot across the bow of the cable operator. And they are putting their money where their mouth is by investing tons of cash into acquiring content. Disruptive technology at its best. So you have consumers watching more and more hours online and web companies like YouTube delivering even more content to consume; where does that leave the cable operator?

The challenge facing operators is that the rising cost of network licensing fees are causing the subscription model to start to break. The easiest culprit to blame are the sports networks whose share of the costs is far greater than the bulk of other channels. It is why Time Warner Cable is fighting back so hard against MSG on a renewal fee that will only lead to a higher pass through cost to consumers. And the consumer isn't taking it anymore. They are striking back at their cable providers by cutting back on services or cutting the cord completely.

YouTube can expect to gain more viewership as TV manufacturers enable connectivity on their TV sets. With Apple expected to offer something as well, the roof could be blown off the industry. And as content quality improves, the best new series could be from folks like Google or Facebook. In addition, it will become far easier to surf and search the web for relevant content and viewers will begin to consume more web based content over cable networks. Networks that survive may have to learn a new business model, one that excludes a subscription fee but may instead discover a wider variety of new revenue streams such banner ads, mobile ads, and perhaps even product purchases, to enhance its :30 ad model.

Hulu Plus Growing - Does That Indicate Cord Cutting?

Lots of news coming from CES this week and one that caught my eye was that the subscription service arm from Hulu, Hulu Plus, has exceeded 1.2 million paying customers. What is interesting is the kind of deals Hulu Plus has created. Some programming license deals require a Hulu Plus customer to also be "authenticated" by a cable operator. "Those deals with give subscribers to those operators-none of which have been announced-access the next day to broadcast content streamed to their Xbox Live." Certainly some deals with programmers don't require an operator "authentication" to stream online TV content.

So is this good news for Hulu Plus customers? I'd love to find out what percentage of Hulu Plus customers have retained their cable subscription and what percentage has cut the cable cord. It seems by this announcment that the Hulu Plus strategy is migrating to a model that is trying not to hurt the cable subscription business. But can you have your cake and eat it too.

The consumers of Hulu Plus may find that the majority of content they thought they would get would give them the shows they want to watch with the burden of a high priced cable subscription. It now looks like Hulu Plus is moving toward another on demand platform for the cable operator. And if that same cable operator is already authenticating its customers on devices for web access, why should that same customer have any need to take a Hulu Plus subscription. It seems unnecessary.

It is obvious that TV content creators are experimenting as a means to determine the most ideal digital distribution model. We are becoming an on demand world where consumers want access to what they want to watch, where they want and when they want. And cost for this convenience is also a factor. Ultimately the consumer may pay more for their a la carte choices but feel more satisfied paying less overall for only the content they want to watch.

What Does The UltraViolet - Amazon Deal Offer?

There are multiple reports that Amazon is growing its cloud offerings with a deal to sell UltraViolet movies. Some sources believe the deal is tied to one of the UV partners, Warner Brothers, and no details of the agreement have been released. "Analyst Jan Dawson of Ovum said the biggest challenge to UltraViolet comes from the top competitors in online retail for entertainment: Apple and Amazon. Each of them maintains its own online 'lockers' for purchases. If Amazon really commits to UltraViolet, that would be a 'total game changer,' Dawson said."

So is Amazon considering converting its cloud to the UltraViolet solution or simply offering its customers more choices? While Amazon is know to sell both physical DVDs and downloads, will the new UV deal require a disc still be purchased or will UV adapt to enable a download only model? Clearly the studios got behind UltraViolet in an attempt to extend the product life of the physical DVD. It is hard to imagine that they will get off that requirement too quickly. If a digital only solution is part of the Amazon UltraViolet deal, then that represents a major strategic shift.

Would Apple ever agree to such a deal? Most likely not. Apple likes to work in its own closed platform. Studios would have to agree to an Apple iTune cloud model, one without the requirement of a physical DVD purchase. And Apple is not one to follow along.

So is the Amazon Ultraviolet deal a game changer? Amazon definitely gives the movement credibility. It likely enables an Amazon cloud consumer to have access to these films from their Amazon account. At the same time there are only a handful of titles available and consumers could just as easily buy them from the Amazon website or pick up from Target or Walmart and access through a Flixter account and through connected devices. We will definitely wait for more news to learn more what this new partnership means for Amazon and the UltraViolet movement.

Do DVR Users Still Watch The Ads?

According to Disney/ABC, "people watching television shows on video recorders sit through a similar number of commercials as those watching live." And their President of ABC Entertainment, Paul Lee, noted that the numbers watching are equivalent to those that watch the same shows live. Interesting perspective although I wonder if this is being said out of hope or reality. The article doesn't include statistics to back up his statement.

In my family, depending on who is watching DVR programming determines whether the fast forward button is pressed or not. For my wife and I, we are quick to retrieve the remote to skip ahead to the content. It seems with less time available to relax and watch TV, those precious minutes shouldn't be wasted on commercials. But with my kids, it is a different story. Once the show is selected to be watched through the DVR, the remote goes untouched. Commercials don't bother them; in fact, it is how they gain new wants. "As seen on TV" equates to I want that.

Perhaps too, it is laziest that most determines whether the DVR commercials get skipped or not. While they might not reach over to the coffee table to press the button, they will scream for a parent to do the "chore" for them. And so it goes untouched and the commercials play on.

And so I will surmise that for advertisers on kid oriented programming, your commercials are more likely viewed than for adult viewership. But as TVs become more web connected and voice control will bypass the remote, we may see more of us raising our voices to the TV to say "Siri, skip ahead past commercials."

Nook Competing With A Pricing Strategy

The marketing strategy of business works predominantly on two different scenarios, product differentiation or price differentiation. In the tablet and e-reader space, Barnes and Noble is employing the low price strategy to compete with Amazon and others. Their latest announcement, following on the heels of the idea to split the businesses, is to discount the price of the Nook; "the bookstore chain is offering discounted or free Nooks to those who purchase one-year subscriptions to the Nook editions of People or the New York Times. It’s the first time a major retailer has offered an e-reader free with a content subscription." Their Nook Tablet promotion offers a cash discount.

For those who are price sensitive, such a marketing move will draw consumer interest. And partnering with content is not such a bad idea. This particular promotion runs about two months so it will be noteworthy to measure the effect on sales for both partners. At the same time, pricing discounts are easily matched by competition until they become lose-lose for both.

I also wonder what happens to these new customers, especially the ones receiving free e-readers with their NYT subscription. Does B&N have a strategy in place to push additional product purchase by these consumers? Or is it naturally assumed that they will become enlightened consumers once they pick up their first Nook.

It also seems to me that with the push toward more tablets, the e-reader as a product may quickly become obsolete. The tablet offers more versatility and gives the digital reader more choices, including access to video stories connected to the written materials. Perhaps B&N recognizes that as well and sees this promotion as a means to unload inventory as it readies for its next generation of Nook Tablet.

What The F@#%&*$ Is Happening At the Supreme Court Regarding Obscenity on TV

The line between obscene and acceptable behavior on television continues to get fuzzier with different rules applying to broadcast and cable programming. Yet technology has made both best available via a cable or satellite signal as opposed to an antenna, so why should the rules be different? Whether it is swear words, body parts, or even blatant euphemisms, some activities go unnoticed while others get fined. Some even mouth the words even though there is no sound to hear. It seems silly to fine such behavior when the rules are not consistent.

Unfortunately the days pictured in "The Dick Van Dyke Show" when couple slept in two twin beds is over. "South Park" and Comedy Central Roasts may bleep some words, but they are not fooling anyone who watches, including my 11 and 9 year olds. Would it make it funnier if these words were not bleeped; definitely not. It might make it funnier if these words weren't even used, but that is a subject for later. Regarding language, sometime curse words are necessary and sometimes they are a crutch to try to make an unfunny line funnier.

Language aside, nudity is another issue that causes great grief among families. Are cartoon butts any different from real ones, does a breast shown on a Super Bowl halftime show such a big deal. Like language, is the nudity with purpose or a crutch to draw ratings at the expense of quality? And does Freedom of Speech cover both language and nudity on broadcast TV.

No doubt, I am not in favor of fines or punishment. Cable has already done its part to relax those rules and to enable language and nudity to enter the TV screen. An end of these rules may push broadcasters to be more open in what they allow. At the same time, shouldn't the public have the freedom to decide whether it is what they want to view or not. The right to boycott a show or its advertisers should be just as present as the right to allow so-called obscene behavior on TV. With free will, one can only hope that it is used prudently with the most important piece being the quality of what is being put on the TV for viewers to watch.

Is John Malone Responsible for B&N Desire To Split?

John Malone has been a master at building shareholder value for his companies. He acquires, he invests, and he splits his companies into separate stocks each producing value for its shareholders. It is what he has successfully done with Liberty Media, but his role as a shareholder of Barnes and Noble, may not do well by this strategy.

Like Netflix, B&N watched its share price drop significantly on the news of a possible split of digital and store. Certainly the remainder of the financial report did not help but as they say in the market, much of that was already priced in; it is the future that pushes a price's direction. B&N might have learned from the Netflix fiasco what not to do; unfortunately, it looks like history repeating itself.

I simply wonder if these two businesses, Nook and bookstore, have two separate P&L businesses, each competing with the other. As the Steve Job's book brilliantly articulated, Steve made everyone accountable for the whole business. The rise of the iPhone would hurt the iPod business, but rather than take a conventional business strategy to work independently, Apple worked together to move the iPhone forward despite a negative hit on the other business. If you also consider the DVD/streaming business, film distributors have been pressed to keep the DVD alive. These distributors had different teams with different P&Ls so the concern for lost DVD business actually slowed then down in releasing films on a new streaming platform. It is when the streaming and DVD businesses were combined that they could embrace the new world despite the fear in the old one.

Barnes & Noble faces the same challenge and separating the business will only quicken the death of the bookstore and not propel the Nook forward any faster. Working together as one unit is the key. One example would be to embrace the B&N reward card with the Nook. Currently the membership does not support Nook book purchases, only physical books. Why? It's affect for this family was to simply not renew our membership fee. And I am confident there are more marketing moves that B&N can undertake to improve and build a successful relationship between Nook and store.

Breaking up the B&N business is not the cure. It is in better operational and marketing strategies that embrace the synergies of the products and services they offer and the consumers that use them. I can only hope that wiser heads prevail.

Occupy Broadband

How's this for a headline, "Top 1% of Mobile Users Consume Half of World’s Bandwidth, and Gap Is Growing". So where are the protesters, the sit ins, the marches? The top 1% are taking more than their fair share and it will only get worse. Yet it is a story that doesn't seem to bother anyone.

Broadband seems to be like a natural resource, although one that will surely slow down get slower to use unless more capacity is found. And the demand will surely grow fast as more smartphones, tablets, and laptops hit the market, not to mention a greater reliance on cloud computing. Is it more capacity or perhaps a more efficient way to download so as to lessen the burden on the stream? Perhaps a combination of both.

"The world’s congested mobile airwaves are being divided in a lopsided manner, with 1 percent of consumers generating half of all traffic. The top 10 percent of users, meanwhile, are consuming 90 percent of wireless bandwidth." And it is not simply a USA issue, technology is worldwide and consumption across all continents continue to grow. Isn't Apple beginning to sell its iPhone into China.

Another recent article spoke about web access as almost a natural right, like food, shelter, and clothing. It recognized that the greater issue was the right to free speech and communication and limitations to that right in countries that regulate the web is like a barrier to freedom. Access to all is driving businesses today and the pipeline will only get more congested. As the other 99% adapt toward a broadband world, perhaps the gap will shrink, but the congestion will surely grow.

Hopefully NOT True, B&N To Split Off Nook Business

Here's a story that makes me give pause and hope that it is not accurate. Per the MSNBC site, Barnes and Noble plans to split off its Nook digital business from its retail business. I am dumbfounded and find this strategy a sure sign of the collapse of the B&N book business. I can only point them at the fiasco generated when Netflix announced its plan to separate its streaming business from its DVD business. Was no business lesson learned.

The Nook is a wonderful product for the digital age and the B&N bookstores are, like the DVD, a declining business. But there is tremendous synergy and sticking together longer. Like Apple, the store provide both a distribution and service platform that set it apart from its other rival, Amazon. The stores offer tremendous opportunities to adapt its retail business by expanding its merchandising with other goods. And the stores enable more marketing opportunities to futher the Noook brand. A separation of the two businesses does neither side any goog.

So hopefully smarter heads prevail; otherwise, such a split will lead to the loss of a great bookstore chain and a collapse of the Nook business as well. And that would be a great shame.

Consumers Still Using Netflix

Despite some of the biggest missteps in management, Netflix continues to push forward. Whether it will recapture the consumers it hurt remains to be seen, but the ones that have stayed with Netflix continue to use the service. "Netflix would now be the 15th most-watched TV 'network' in the U.S. and could be the second most-watched in Netflix homes, BTIG analyst Richard Greenfield wrote in a blog post Wednesday." That equates to a ton of hours being watched on connected devices. And higher in viewing hours than a number of channels.

It seems that current Netflix users still love the service. Still Netflix has a ton of work to do to re-engage its lost subscriber and try to bring them back to the fold. Streaming is the future for media and Netflix is pushing forward with original content to fill the demand.

At the same time, cable operators are becoming more competitive in this space. Comcast just announced its new long term deal with ABC/Disney to assure that the content it produces is available to Comcast subscribers on all devices including TV, computer, tablet, and smartphone. The concept of TV Everywhere paints Comcast as an aggregator of content delivering authenticated content to its subscribers, linear and on demand, whenever and wherever they want it.

The Netflix numbers are a sure sign that they are still in it for the long run and intend to keep pushing their streaming strategy.

Tivo Wins Again

After a very protracted fight, Dish finally succumbed to the law and paid TiVo for its DVR technology. Next up, AT&T, decided it was better to pay up rather than fight and is paying 215 million dollars to settle. "TiVo sued AT&T and Verizon in August 2009 alleging infringement of the Time Warp patent"; so the next question must be, what will Verizon do? Will they fight like Dish paying lawyer fees that will only raise their cost of doing business or will they rollover like AT&T and pay out a sum in order to settle. Clearly, TiVo appears to be the likely winner in that next match. TiVo also has pending litigation against Microsoft and Motorola Mobility, two more companies that must also be looking at the writing on the wall.

Of course, any time TiVo comes up in the news, speculation grows whether they may be a possible takeover target. With deals in place with a number of cable and satellite companies, TiVo has the potential to grow even larger. The timing has never seemed better.

I Know Why Movie Attendance And Revenue Are Down

With 2011 coming to a close, the latest movie industry report declares that attendance was down 4.2% and US revenue was down 3.4%. And from the Bloomberg article comes the reason for this downturn, "'It’s the movies themselves, it’s the economy and it’s all the competing technology,' said Paul Dergarabedian, president of the box-office division of Hollywood.com." So my question is, are these the real reasons for the downturn or is something else at play. Let's dive deeper.

1. It's the movies - we didn't have an Avatar this year, but we did have a Harry Potter and Mission Impossible. Were there less movies distributed in 2011 or more bad movies? Regardless, people like to be entertained and the movies are a release from reality. And yes, even bad movies get watched. Perhaps people don't care as much for 3D, but a number still attend 3D movies and pay more for that right. So I don't believe the drop in numbers is about the movies themselves.

2. It's the economy - the cause for every problem these days. But in the early days of movies, a bad economy and job loss was a reason people went to the movies. It was an inexpensive way to escape our problems, even if it was just for a couple hours. So why is the economy the culprit now? There is more here then meets the eye.

3. It's competing technology - blame on-demand, blame the internet, and you may be right. It is less expensive to watch a movie this way then at the theater. And with new releases hitting the smaller screen just 3 to 6 months after its initial release, the wait to watch is not so long. It is a reason for shifting viewership, but it also represents money back in the distributors' hands, simply through another window. But it shouldn't be blamed for lowering theater attendance. People like to escape their homes too and the movie theater offers the bigger screen, better sound, and especially that key word, "escape". Sure some indie films are direct to TV, but they are not the cause for lost theater attendance.

So why is attendance and revenue down? Perhaps, the cause is price elasticity of ticket prices. The cost for a family of four at the movies for tickets alone nears $40. In the cities, it is even higher. Could a rollback of 50% in price of a ticket encourage an increase in attendance? Perhaps a marketing test is in order. I believe that the price of tickets are too high, especially when you consider the other revenue that theater owners are gaining.

When ticket prices were lower, there was also no advertising on the screen. Today we pay a ton more to sit and watch multiple commercials. Is this revenue being separated from the revenue theater owners are receiving from receipts. Perhaps the bigger picture shows that theater owners are actually seeing total revenue growing. It's a true number I would like to see. By lowering ticket prices, attendance should rise significantly and advertisers will likely pay more for more eyeballs. A win-win scenario.

Lastly, one can not blame what you can't control. Technology is here and will continue to improve the home screen experience. But more can be done at the movie theater to keep customers coming in for more. How about more IMAX screens for popular movies. A 3D experience without glasses, and lastly the rise of the 4D experience with vibrating seats and other special effects in the auditoriium to make the movie watching experience more immersive. And make the theater a destination with more retail opportunity to buy items featured in films. As kids leave a movie, they are going to want to buy a Harry Potter wand or an Alvin plush doll or even a Mission Impossible poster. It is an opportunity that seems to be largely ignored.

It's easy to blame the movies themselves, the economy, and the technology; but the solution for theater owners is in your grasp. Don't blame, lead the change.

Perhaps Cablevision Not Ready To Sell

In an earlier blog, I mentioned that what happens between Time Warner Cable and MSG might give us some insight into whether TWC was a possible buyer of Cablevision. Given that both MSG and Cablevision are owned by the Dolans, it would give a clearer understanding of their relationship with TWC. In this world of cable, despite Cablevision and MSG now being separate companies, they are both owned with super shares by the Dolan Family. The link between MSG and Cablevision runs deep. And as it is January 2 and MSG and TWC could not agree on a renewal of their agreement. Result, MSG is off the air on TWC systems. Thus there must be no likely relationship brewing with Cablevision.

This fight, like so many before it, always comes with much name calling on both sides, across other media, print, radio, and the web. The fact that an agreement was not reached and the channel was pulled off the air simply demonstrates that the Dolans and TWC are not as cozy as one might have hoped. Since no hint of leniency was shown for MSG post agreement, it is less likely that TWC and Cablevision have been having serious discussions about a possible acquisition.

So Ranger and Knick fans living on TWC systems will not be seeing their teams for a while. How long depends on how far apart and how acrimonious the two sides are too each other. The longer MSG is off the air, the less likely TWC is a buyer of Cablevision. It is that easyto graph.

And with a rudderless Cablevision, without Rutledge to steer it, and no successor in mind, one wonders what is next for Cablevision. Is there another buyer in sight or will they simply drive forward on automatic for a little while longer? Stay tuned.