NY Times To Identify Native Ads As Paid Posts

The New York Times believes in separation of church and state, or in the world of media, the separation of editorial and advertisement.  And to assure that their readers also know the difference, the NYT,  per its publisher, "will set apart such articles online with a different typeface. It will also feature a color bar, the advertiser’s logo and, perhaps most importantly, the label 'paid post.'”  That they will take such measures to clearly differentiate is notable, it may undo the value of native advertising to make users think it is editorial content. 

What it does do is put The New York Times on higher ground in that they so actively showcase the differentiation for the sake of real journalism.  By creating such transparency between ad and editorial, they have set themselves apart from other news and information web sites.  Will others follow and do more to assure their readers of what is independent and what is sponsored; for the sake of the advertising community and the future of advertising, I hope so.

Have a Happy Holiday!

Hulu Confirms Why Owners Didn't Sell

For all the conflict whether the owners should sell off Hulu, the decision to keep onto their prized digital streaming distribution platform appears to have paid off.  In 2013, Hulu can count 5 million paying subscribers and $1 bullion dollars in revenue.  Yes Austin Powers, I said $1 billion dollars!  Not bad for a business that is only five years old. 

Hopefully the owners have now decided that they can indeed work together and build a common strategy in what is shaping as a very competitive streaming entertainment landscape.  Certainly, Hulu is not the leader in the category.  Netflix is twice the size and although it doesn't have the ad stream that Hulu does, it subscription revenue is almost four times higher.  And Amazon Prime, which operates its streaming business inside its mega retail environment, is equally as powerful.  For these and others in the space, it is still a very nascent business.  The growth potential remains enormous.

With Christmas around the corner, more and more consumers will be buying their gaming platforms, tablets, Roku and TiVo and Apple TV boxes, and they will all be looking for content to power these devices.  Streaming and downloads will continue to grow and the broadband infrastructure will have to figure out how to accommodate all this traffic.  And Hulu, Netflix, and others can continue to ride the growth curve.  So kudos Hulu owners for staying with the platform and not selling out; you have hit one milestone and, with a strong strategic plan, on the right path to future success.

Facebook Adding Video Ads

Search and display ads are nice, but Facebook hopes it can add a new revenue stream with video advertising.  "Facebook reportedly plans to charge $1 million to $2.5 million a day for video campaigns, depending on the size of the audience a marketer is trying to reach. But that price range could reduce advertiser interest."  Video ads might start running the moment you land on Facebook, although the plans seems to be to mute the audio until clicked on.  How Facebook users will react to autoplay ads remains to be seen; most likely, they have already seen this feature on other websites.  Still, it may prove distracting.

Regardless of this new video ad focus, Facebook's real challenge may be that the younger demo is moving away from Facebook to Instagram and that will only skew older the current audience to Facebook.  Will advertisers still want to buy this older demo or move budgets to Instagram and other websites?  For now, Facebook is right to add video ads although they may end up turning off the autoplay feature to gain more credibility of the ad views.  It is an important next step and one that might just find its way to Instagram, too.

Beyonce Proves Social Media Marketing Power

Without any fanfare or traditional promotional advertising, not even a traditional release date, Beyonce released a digital music album on iTunes using the power of social media to sell it.  And the results have been extraordinary.  "Beyonce's latest album broke iTunes sales records, Apple said Monday.  BEYONCÉ, which the singer announced on Facebook's Instagram mobile service, became the fastest selling album on iTunes with 828,773 purchased in its first three days, Apple reported.  The album also broke the U.S. first-week album record with 617,213 sold, the company added." 

Certainly others will try to emulate her strategy and not everyone can compete.  She comes with a huge following, a track record of success, and a high name recognition.  That this album made such a mark before any song was released or played to a radio audience demonstrates the marketing power her name alone must have. 

But recognition also needs to be payed to Instagram as the social driver of her iTunes' success.  The power of her appeal and influence and ability to sell through social media is quite powerful.  And she adeptly pulled it off.  Her audience, the ones that follow her on Instagram, responded to this unexpected Holiday present by quickly downloading and sharing their "find" to their followers.  Over 800,000 in only 3 days; in a word, unbelievable!

Charter Ready To Buy Time Warner Cable

Charter has a number in mind and it might not match what Time Warner Cable wants.  Whether they can find common ground or a low ball bid encourages a counter bid by another remains to be seen.  Perhaps Cablevision might be willing to prop up the bid with Charter in exchange for a big piece, say the NYC DMA.  Or perhaps Charter truly believes that given the continual loss of basic subscribers, Time Warner Cable's future earning potential could decline.  Still the value is in the infrastructure and the opportunity to gain more cost efficiency and more reach for broadband and wireless business opportunities.  And given the possible low initial bid, this acquisition process may take some time to close. 

Instagram Adds Best Friend Feature

It seems sometimes we don't want to share everything with everyone.  There are times we simply want to communicate with a smaller circle of friends, our "best friends" so to speak.  Well Instagram wants to let you private message your select few and has created Instagram Direct, "a new private messaging service built into the platform that will allow users to send a photo or video, along with a caption, to between one and 15 people." 

Now you can limit who gets to see that picture ... or can you.  While on first blush, used wisely, it enables smaller group messaging, but so does iMessage, for those on unlimited data plans.  "Because such messages don't count against SMS messages allotted by wireless plans, these apps effectively allow smartphone owners to communicate using only their data plans." 

Of course, teens, the largest demographic using Instagram should remain careful that anything posted is shareable.  Even a photo to a select few can get reposted and reposted again.  So be careful what kind of snarky or "mean girl" comments you might be considering sending in an Instagram Direct message.  Nothing is really private when it is posted.  Snapchat fans learned that the hard way, too.

Aereo Wants A Definitive Ruling

Question, when is a broadcaster not a broadcaster?  When they don't transmit over the air.  And does it matter where an antenna is located to receive those signals and display them on a screen?  According to Aereo, it does not.  Despite all the additional manipulations that Aereo does to move the signal from antenna to home, their bottom line contention is that they have every right as consumers have had to make copies since the days of the VHS tape.  Could they be accused from reselling the signal, costs to rent the antenna and provide additional value to the free signal.  And that seems to be the center of their argument.  So with a number of court victories already, Aereo wants a definitive ruling from the Supreme Court to end this continuous litigation.  "We want this resolved on the merits rather than a wasteful war of attrition,' said Aereo Chief Executive Chet Kanojia in a statement." For Aereo, such a move makes complete sense. 

And while Cablevision is not a fan of Aereo, they don't agree with the broadcasters argument as it relates to "cloud-based technology and future innovation", according to a spokesperson.  And so the issues that the Supreme Court are asked to review are far more complicated than just the acquiring and re-airing of signals.   And until the Supreme Cort decides to rule, lower courts will keep ruling within their jurisdictions. 

Cable Programmer Moving Toward Streaming Distribution

Given the high barriers to launching on a cable system, coupled with continual talk about even more cable operator consolidation, one cable network seems to have heeded my advice and struck a streaming platform deal.  "Bloomberg TV launched an app on Apple TV devices Wednesday morning that includes a live feed of the cable networks financial news programming as well as access to on-demand videos."  Most important to note is that this distribution deal does not require a user to be an authenticated cable customer. Other smaller, independent networks might just want to look at the Bloomberg model and see if perhaps they too have more to gain by gaining distribution on these OTT platforms.

Bloomberg contends that this deal is not meant to cause cord cutting and I would agree.  It certainly helps those consumers that have already cut the cord to gain a live linear news network into their home, but it won't be the driver that causes customers to cut the cord in the first place.  Consumers are defecting cable because of price and access to cheaper streaming options like Netflix and Amazon. Access to Bloomberg TV only adds more content to their mix.  A good number of customers are retaining their cable subscription and expanding their selection with streaming.  Those consumers can now finally receive the Bloomberg TV signal.

For Apple TV, these new content deals are a way to make their box a more valuable addition to the home.  In addition to Bloomberg TV, "Apple also added Disney’s Watch ABC app, Sony’s Crackle and the Korean TV app KORTV to the Apple TV Wednesday."  It also helps Apple to drive the value of its $99 box and encourage more purchases within its iTunes library.  And for both Apple and Blomber, I see a win on both sides. 

Sports Makes It Hard To Be A Cord Cutter

As many household know, sports fans can be crazy.  We will do most anything to watch our teams.  Out of market football fans find solace with DirecTv Football package while cable homes rely on NFL Redzone.  And for every type of sports interest from football to baseball to soccer to tennis, there is a channel or two devoted to it.  Which makes cutting the cable cord to watch the array of sports on TV almost impossible. 

The article in MarketWatch may represent more of a soccer interest but the author recognizes just how difficult it is to get access without paying for cable service.  An app here or there, an illegal streaming site perhaps, but the challenge in finding specific sports content without cable, "has made cutting the cable cord so difficult, if not impossible. "  Sure we can drop by the local pub to watch our games, but the cost of eating and drinking might just start to outweigh the cost of cable, as well as our own weight. 

Not every one is a sports fan, but there are enough in each household that cable cord cutting won't be at much risk till all games can be streamed a la carte.  And that is why broadcast and cable networks are willing to shell out big money for sports rights to air on their channels.  It is the glue that keeps us tuned to cable television.

Content Consumption By The Numbers

20 Crazy Santa Claus Photos
19 Snacky Foods
18 LOL Memes
17 Unselfish Selfies
16 Inexpensive Gifts
15 Best Movie Lines
14 Victoria Secret Lingerie Models
...
You get the picture.  Lately, web pages are filled with numbers with eye catching graphics and compelling subject lines that want us to click page after page to get to the number one reason. It is the success of David Letterman's Top Ten List that has been reworked for the web.  And the bottom line, more pages consumed, more time spent with the website, and more ad impressions. 

And who is doing this "content by the numbers" game well?  Almost everyone these days.  From Buzzfeed to Huffington Post, you can catch articles like "17 Santa Claus Photos That Make Your Skin Crawl" to "11 Things You've Always Wanted To Know About Lesbian Sex But Were Afraid To Ask".  From unusual to titillating, these headlines keep our fingers clicking on the pages, with photos, videos and articles to view, as well as display ads, pre-rolls, pop-overs and pop-unders, and everything inbetween.  It seems we are caught up in top 10 or whatever number suits your fancy.  So have fun clicking.  Me, I'm off to Business Insider to learn about "23 Spin-Off TV Shows That Totally Bombed".


 

Cable Convergence Part 2

Just because this morning's blog was about consolidation on the operator side doesn't mean that programmers aren't in play too. In my last paragraph, I suggested that smaller independent should consider merging with larger programmers.  Well, Variety has just learned that Discovery Networks, home for Discovery, TLC, and Animal Planet, may be kicking the tires on Scripps Networks (SNI), parent of HGTV and Food Network.  According to the article, "Knoxville, Tenn.-based SNI has been seen as a prime acquisition target for some time."

True or not, the one thing that can be stated, cable consolidation will only continue.  "If anything, a Discovery-Scripps tie-up may just be the beginning of further dealmaking in the sector. AMC Networks, Starz, Viacom and even Discovery itself have been mentioned as possible acquisition targets."  So in the coming weeks we may see changes on both the cable operator and cable network sides of the business.  

Cable Content Convergence Not To Fear

Today's NY Post talks about smaller, independent cable programmers fearing distribution growth from cable operator consolidation.  "The biggest fear is that a takeover by an operator paying higher fees of an operator paying lower fees will result in smaller programmers being offered the lower fees across the combined, larger system, executives and industry insiders said."  But that is true for all cable programmers.  The other fear is that it gets harder for smaller cable programmers not already distributed to gain a larger footprint as their are less cable operators to negotiate with.  In some cases, a programmer on one operator might even get dropped as the system is merged with another cable operator. 

For cable operators, consolidation means opportunities to renegotiate license fees lower as a result of exceeding certain subscription benchmarks.  A programmer in both consolidated properties will directly feel the effect of lower revenues per subscriber without any increase in subscriber size; the cable operator gets more cost efficiencies.

Gaining space on a cable operator has never been harder and requires deep pockets to spend "marketing dollars" to the cable operator for a channel spot.  I can only assume that an independent channel like Al Jazeera America must have spent a fortune to get back on to Time Warner Cable.  But they may also worry that if Charter acquires TWC that their deal could backfire. 

But cable consolidation should not be viewed as "bleak" according to one independent programmer. The rise of OTT means that other platforms exist to reach consumers.  There may not be high license fees to start but such was the case with cable in the early days, as well.  But OTT platforms would love to make themselves more valuable and interesting to consumers.  Independent programmers should be strategizing where to best position themselves.  Whether it is on gaming platforms like XBox One or Sony's PS4, upstart Aereo, or even struggling platforms like Intel Media.  And don't forget Roku, You Tube, Hulu Plus, and others.  Sure cable operators have the dominant platform today, but not the only one.

Of course there is one other way to try to get on a cable operator platform.  Smaller independents might just want to consolidate themselves.  Perhaps Discovery, ABC/ESPN, or NBCUniversal would be interested in acquiring you.  It is a dog eat dog world and the challenge to grow is to look outside the box or risk being eaten.

Apple Invades China

Despite some concerns that Apple didn't build a cheap enough iPhone, come this Thursday, "China Mobile, the largest wireless carrier in the world, will start taking pre-orders for Apple's iPhone".  And yet the expectations are running high that the iPhone will quickly gain significant market share.  Perhaps staying as a premier brand with a high price point along with the recent release of its iPhone 5s, with a gold back, China might just fall in love with the iPhone just as the US and other markets do. 

Of course, once China Mobile has the iPhone then so do consumers gain access to the iTunes library and the opportunity to buy apps, music and movies.  And for me gaining more users into the Apple infrastructure means access to more of Apple's products including iPads, Apple TV and more.  The China Mobile launch is certainly a big deal.

Time Warner Cable, For Sale Or Not

The year is close to ending and the M&A guys would love to announce one more deal before the end of the calendar year, but Time Warner Cable, may be playing a game of will they or won't they.  According to future CEO, current COO, Rob Marcus, denied the Bloomberg report that he was willing to sell at the right price but was in fact in it "for the long haul".  Of course despite the will they or won't they thinking, Charter has expressed interest and Comcast may be talking to its bankers as well.  Given the push toward broadband and the need for more efficiency by the cable operator to expand, Time Warner Cable may be in fact negotiating how such an acquisition could take place and how might current management be affected.  I suspect that a deal will get done and I don't see how Comcast can be involved unless they are willing to trade some systems to Charter for others.

NBC's Sound Of Music Steps In The Right Direction

Ahh the challenges of live television, missed marks, fumbled lines, sound issues, but still what a joy to see.  While the acting on last night's show may not be golden, the singing certainly was.  And I must give NBC high marks for doing something that rarely gets done anymore beyond sports and awards shows.  Live Television.  "30 Rock" did it a couple times and now a 3 hour theatrical production.  I have yet to see the ratings but I suspect that many people tuned in to watch.  I also expect to hear that others recorded it to watch at their leisure.  It may have had its flaws, but it is a great plus for broadcast television. 

I must admit to reading with laughter the snarky remarks coming from Twitter.  It offered tremendous fodder for creative commentary.  But it also indicated that many people were watching it.  While I personally like when theatrical shows are shown from the Broadway stage and in front of a live audience, I have to commend the set direction and flow from one set to another as well done.  The acting showed how important it is to have experience on the theatrical stage, but the singing was terrific.  I understand that the music was prerecorded which misses the extra appeal of a live orchestra.  And without an audience to applaud, the timing of the show was unimpeded, letting the production end at the planned time.  But it lacked that extra energy and isn't that what "LIVE" is all about.

So my hope is that broadcasters look at this production as a ratings and financial winner and plan to do more live programming.  It has been long missing on television and is a refreshing change to what is currently being shown. 

Microsoft Adds More Debt...Why?

With Microsoft launching its latest gaming platform, Xbox One to solid revenues and planning a change to its executive ranks with the retirement of Steve Balmer, the latest news may make you wonder.  According to Bloomberg, "Microsoft Corp. (MSFT) sold $8 billion of bonds in dollars and euros, a record offering from the world’s largest software maker".  Perhaps one reason is to take advantage of lower interest rates as many speculate that they will be rising; Microsoft says that the funds will be used for "general corporate purposes". 

Certainly, Microsoft has watched as Google, Samsung,  and Apple have taken the lead in the hardware race.  Their tablet, the Surface 2 lacks the buzz that other tablets offer.  And both Google and Apple have invested in the infrastructure to provide content to their devices.  With PC sales waning, Microsoft's success with Office may diminish too.  Today their best new product is the Xbox. 

So perhaps, Microsoft may be wanting to enlarge its cash war chest for a possible purchase.  A cable operator like Time Warner Cable or content creator like AMC Networks,  or perhaps an OTT content distributor like Netflix.  Where does Microsoft want to be in 5 years and what do they want to be known as, a hardware company, software company or a content company. 

Should Native Advertising Be Regulated?

As consumers become less susceptible to clicking on display advertising, web publishers have relied on other technological moves to assure that ads get seen and hopefully clicked.  From launching web pages under and over existing pages to expanding content to fill the screen.  All done to assure that access to free content enables revenue monetization.  While pre-roll of ads on video is one way to force consumption, another has been to use advertising that looks like editorial to encourage viewership.  Dubbed native advertising or content sponsorship, it has quickly become a successful means to increase web clicks.  Some sites highlight the block to indicate that it is sponsored, others might actually put a footnote or header to indicate it.  And still others let the native ad content blend seamlessly with the other editorial content.  But should it be a case of buyer beware?

Such was the case of a conference held to discuss native advertising.  "Consumer advocates, publishers and advertisers who spoke at the event generally expressed agreement with the idea that Web sites should make clear when they are running native ads -- at least when the ads directly hawk a product."  An example that has been used is that of a drug company that promotes an article about management of a health problem and cites its drug as a possible remedy but not other alternative options.  When not labelled clearly as sponsored, consumers may be confused in thinking that the drug mentioned was an "independent analysis" and a "best remedy"  And it is that possible confusion that has the FTC wondering how native advertising needs to be distinguished from editorial for the consumer.  

Not all native advertising sells products or services.  Some are actually used for content recommendation to encourage viewers to visit another website.  " In some cases, the sponsored content is just an item that advertisers think readers will find interesting.  But some advocates say that even those types of native ads should carry a disclosure, so consumers will know that the article didn't originate with the publisher."  So should all native advertising or sponsored content be treated equally?  I maintain that some notification may seem helpful, users are apt to overlook.  The idea of "caveat emptor" or buyer beware still should hold true.  Should these ads become more deceptive the consumer will engage and fight back and the marketplace will feel the effect. 

Charter Does Need A Cable Merger

In discussion about a possible merger, Charter CEO Tom Rutledge said that they don't need Time Warner Cable.  Yet as we are well aware, what we say and what we do are not always the same thing.  In a classic dating analogy, showing a bit of disinterest can sometimes work to make the other more attractive or to encourage more interaction.  So regardless of what is being said, it is painfully clear that Charter needs a consolidation partner and Time Warner Cable, given its size, becomes the best way to achieve scalability and cost efficiencies.  They also give them access to more of the LA DMA as well as to the entire NY state, including the number one DMA, NYC.  Other smaller operators would be able to achieve such immediate return, although Cablevision, is a cache unlike other markets. "Analyst Amy Yong of Macquarie Capital wrote 'It’s hard to ignore that Cablevision has some of the best zip codes in the country including New York, NY, Fairfield County, CT, and Bergen County, NJ. It just wouldn't return much cost efficiencies at the start.'"  

So I am reluctant to believe comments by the Charter CEO as anything more than posturing.  Major stockholder John Malone has other plans.  As an innovative financial whiz who has been quite successful in managing a portfolio of media companies, Malone clearly has a strategic plan in mind and knows that the pipeline to the home is crucial.  Charter lacks major markets and needs to merge to gain better coverage of the US market.  And if that means swapping and sharing with Comcast to get a deal done, Malone will move in that direction.  We have two major telcos, two major satellite companies, and perhaps we are getting closer to two major cable operators. 

Netflix Pushing Family Fare Exclusive Content

Let's face it, sometimes it is hard to say no to your little boy or girl.  And with the rise of tablets, our kids are sharing with each other all the great content they are watching online.  Netflix seems to recognize the value of programming that speaks to the younger audience and pushes their parents to purchase on their behalf.  And Netflix is becoming the must have purchase for the home. 

So, add another reason why more and more families may be buying a Netflix subscription for the Holidays.  "A deal with DreamWorks Animation represents the streaming service's largest push yet into original programming. Turbo F.A.S.T., a 26-episode series based on Turbo, a feature film about racing snails, will be released Dec. 24".  And more kid friendly shows are in the works.  Most importantly, these deals represent exclusive windows in which other streaming platforms won't have access. 

The kid demographic strategy offers a compelling reason for Netflix to pursue.  "Subscribers who watch kids' shows on Netflix tend to use the service more often, (chief content officer Ted) Sarandos says, and presumably see a better return on the $7.99 monthly fee. And kids often watch the same episodes over and over".  And an added benefit for the parents and ultimate purchaser of a Netflix subscription, no advertising to their children.  So given the rush to buy the next iPad or Surface or other mobile device, comes the need to buy content to run it.  And Netflix is making the case for being the perfect stocking stuffer. 

When Ads Are Really Content

Today's Wall Street Journal has a terrific article that looks at the rise of sponsored content.  Some websites clearly differentiate what is true editorial and what is a sponsored advertisement; others, have found the art of the "blurred line" between the two.  But given the success of branded content over traditional display advertising, the trend is moving more to content advertising.  In fact, "Spending on sponsored content is expected to grow 24% to $1.9 billion this year, a faster growth rate than for most other forms of digital marketing."  It is not necessarily a new way of advertising, but it is seen as potentially deceptive when the consumer cannot differentiate between ad and content. 

The success of sponsored or native ads means that it will not be going away anytime soon.  Whether it leads to some type of regulation remains to be seen.  The IAB (Interactive Advertising Bureau) has already formed a task force, according to the article, "to create their own standards."  Self regulation certainly beats federal regulation. 

Amazon Might Want Drones Over US Post Service

Just a month after announcing its partnership with the US Postal Service for Sunday delivery, Amazon now would like to deliver your packages by drone service. During this Sunday's 60 minutes, CEO Jeff Bezos announced, "Prime Air, a futuristic delivery system that the company says will get packages into customers' hands in half an hour or less, delivered via unmanned aerial vehicles."  Will Star Trek transporter service be coming soon after?

While initially appealing, one wonders just how practical such a delivery concept it can be.  Certainly package size and weight matters as does location and assurance of delivery.   And what are the insurance implications if a drone fails and falls from the sky, let alone if the package drops.  Such a delivery mechanism may be some day, but it is hard to imagine it being used within the next decade.  I have more faith in the US Postal Service to deliver the goods. 

Time Warner Cable Causing A Feeding Frenzy

It seems when you smell a wounded prey that the scroungers come to attack.  Once it became clear that Time Warner Cable could be picked apart, Comcast followed after Charter Cable and now here comes Cox Communications.  "The frenzy of deal interest comes as cable companies are trying to get bigger to deal with the industry's challenges, which include the rising costs of TV programming supplied by cable and broadcast networks." 

So who gets what pieces? Comcast would be happiest getting the New York demo and perhaps the Maine system, adding to its ownership of the Eastern corridor.  Charter would love to take California and some midwest systems.  And Cox might just love to own the Carolinas, Texas and Arizona.  Would Charter be open to taking a portion or perhaps they are ready to gobble up all of Time Warner Cable.  With Tom Rutledge , CEO of Charter at the helm, and a former Time Warner Cable executive, he has a pretty good idea what those systems offer and whether he is willing to share or not.  Either way, it continues to look like Time Warner Cable will be a footnote in cable history in a few short years. 

Apple Looking To Kinect

It seems that Apple likes the idea of motion sensor technology that they decided to buy it.  Watching the success of Microsoft's Xbox Kinect, Apple  "paid about $350 million to acquire PrimeSense, an Israeli start-up that developed the motion-sensing technology in Microsoft's Xbox video game console."  Not so much given they can use the money they won from Samsung's patent dispute to help pay for it.  And with so much cash on hand, they don't even need that.

So the question is when or where will Apple incorporate this newly acquired technology?  Will it go into the Apple TV, future iMacs, or all laptops, iPads and iPhones?  For that, we will just have to wait for the next Apple announcement.

Cable All About The Pipe To The Home

The future of cable is all about the infrastructure and the wires that connect homes to headends.  While first built to provide cable service, it now enables broadband, telephone and cable signals to function in two-way mode.  And it has become increasingly clear that the future of cable is the broadband pipeline.  "The cable companies — at least in the U.S. — have the fastest pipes into majority of homes. They are faster than phone companies and have a deeper footprint."  Despite the threat of cable cord cutting, consumers still rely on cable's wire to access their OTT subscriptions and videos.

So control of the US landscape is essential for efficiencies and economies of scale.  It also allows for WIFI expansion and new revenue streams.  Many talk about broadband moving from an all-you-can-eat model to a utility model based on usage; but, it opens up other revenue streams for security, cloud functionality, and more.  And it is why cable operators are circling Time Warner Cable with a possible feeding frenzy over their coverage area.  "So the cable industry, if it can consolidate, gets access to the most important pipe coming into people’s homes (after power and water) and the fewer cable companies there are, the more unified the rate structure might appear." Ultimately, a more monopolistic industry with fewer competitors to upend the egg cart. 

But will the FCC put any resistance to this level of consolidation.  It seems less with Charter, a smaller cable company swallowing up Time Warner Cable; but it raises red flags with the largest cable operator, Comcast, entering the picture.  It screams anti-competitive although it is part of the natural industry life cycle till other disruptive opportunities come along.  The FCC might just resist such merger talk but I think their best course of action is to encourage new companies to offer broadband access.  Open up new spectrum for broadband/cellular and encourage companies to enter the fray.  The electric companies already string this country with wires; can't they be encouraged to build out a broadband business.  LightSquared unsuccessfully tried to compete; offer them spectrum that works with their model.  It seems the best course of action is to encourage competition in a landscape that requires more and faster broadband access, at a reasonable cost.  Monopolies set and control pricing; competition lets the market choose. 

Time Warner Cable May Have Charter and Comcast As Buyers

It seems that merger and acquisition news in the cable industry has suddenly turned more active with Charter gathering financing and Time Warner Cable reaching out to Comcast about a bid as well.  A Charter deal is seen as improving the cost efficiencies of running a cable distribution platform while a Time Warner Cable and Comcast deal is more about gaining a more national footprint.  The latter move also comes with a ton of anti-competition issues; "Comcast/TWC would control 60% of the cable homes in the country, 30% of all pay television households and 36% of all broadband connections in the U.S., which could pose a very high regulatory hurdle." As Comcast already gets some of the cheapest content license fee deals, being the largest provider, a larger size would have to find cost efficiencies from a more streamlined operational platform.

The Time Warner Cable deal with Charter might be even more exciting for the Charter CEO, Tom Rutledge.  It would be full circle for him as he not only demonstrated his leadership skills in running Cablevision but actually came from Time Warner Cable.  And running a combined TWC/Charter operation might help him get the next prize, Cablevision, and its Long Island operations.  I don't see Comcast making an offer and dealing with regulatory approval; they have their hands full as the largest MSO.  But I do think a Charter/Time Warner Cable merger as much more likely.

Netflix, Hulu On Cable Just Might Make Sense

Sometimes our enemies make the strangest bedfellows.  It has happened many times before and it can happen again.  When IFC and Sundance Channel were fighting each other for share of the indie film audience, who would have ever imagined that one day both would be owned by the same company.  When cable and the phone companies would fight for share, who would have expected partnerships in certain markets.  And now we wonder would cable ever partner with an OTT programmer.

Well it just might make sense.  The reality is that the programming that subscription services like Netflix and Hulu Plus provide actually augment the choices available to consumers.  And especially as these OTT providers increase their stake in original programming.  The cable operators' concern is that Netflix and others will drive further cord cutting; but what if adding them to the line-up only makes the cable subscription service that much more attractive.  For consumer that seek more, they are likely willing to buy or keep their Netflix or Hulu Plus subscription AND keep their cable subscription.  In fact, they just might continue to buy premium networks like HBO and Showtime too.  Consumers essentially have an unquenched appetite for more video content.  And if cable operators can make its access to these OTT programmers easy, they just might remain loyal cable subscribers, too.

I am confident that cable operators have been doing their research.  I wouldn't be surprised to learn that a large percentage of cable households also have a Netflix subscription.  The key to the success of carrying them along with their other choices would be the utilization of the set top box and its search capabilities.  Making finding content easier and adding recommendation to the equation could make the cable operator the premier aggregator of video content to the home.  And doesn't that drive more revenue opportunities. 

Streaming Content Access Across OTT Platforms

Certainly not meant to be a complete list, here is a rundown of what streaming video access you might find across some OTT and gaming devices as you consider your holiday shopping:

PS4 - Amazon Instant, Crackle, Crunchroll, EPIX, Hulu Plus, NBA Game Time, Netflix, NHL GameCenter Live, Redbox Instant, VUDU, Yupp TV

Xbox One - Amazon Instant, Crackle, CW, ESPN on Xbox One, FOX NOW, FXNOW, Hulu Plus, Internet Explorer on Xbox One, Machinima, MUZU.TV, Netflix, Redbox Instant, Target Ticket, TED, Twitch, Unvision Deportes, Verizon Fios TV, VUDU, Xbox Video

Apple TV - iTunes, Crunchyroll, Disney, Disney Junior, Disney XD, flicker, HBO Go, Hulu Plus, MLB.TV, MLS, NBA League Pass, NHL Game Center, Netflix, PBS, Qello, Sky News, Smithsonian Channel, Watch ESPN, Weather Channel, WSJ Live, Yahoo! Screen, You Tube, Vevo, Vimeo

Chromecast - Google Play, HBO Go, Hulu Plus, Netflix, Pandora, You Tube

Roku - Amazon Instant, AOL On, AP, BBC, Blockbuster on demand, Crackle, dishworld, EPIX, Flixster, Fox News Channel, HBO Go, Hulu Plus, MLB.TV, MLS, NBA League Pass, NHL Game Center, NBC News, Netflix, Pop Flix, Sky News, Snag Films, Target Ticket, Vevo, VUDU, Warner Archive.

So depending which video content apps you prefer, your decision on buying a box for access depends on what they carry and distribute.  Of course, with the two gaming systems, you primary purchase decision might not even include streaming video.  And as for Apple TV, Chromecast, and Roku, you just might be able to access your video content from your blu-ray player or smart TV directly. 

Slingbox Standalone vs Slingbox Cable

Given the number of boxes aiming to connect with the television set, it makes sense to partner with the leader in the field, the cable set top box.  It is a strategy that TiVo has recognized and been following in order to gain a deeper household penetration.  But working with cable operators comes with a price, and that issue is working under the content licensing agreements as well.

Slingbox, as a standalone box, simply needs a wire between cable set top and the Slingbox, and then a wire to the TV set.  It may be a number of wires between the devices but it allows the Slingbox to talk to the cable box.  It then enables all mobile devices to access that cable box, through the Slingbox,  although the big downside is that only one user can watch a show at a time from this set-up.  TiVo offers an option for a CableCard to make it a cable set top box, although depending on the operator, it may not access the on demand features.

Under the standalone feature, a user has a complete TV Everywhere experience at his disposal.  Still, Sling the company, recognizes to gain more households, it may be necessary to follow the TiVo model and put their technology INSIDE the cable set top box.  But that ultimately limits the true value of the Slingbox.  By working with the cable operator, Sling would be subject to their licensing deals that for many networks limits access to streaming of their channels.  "TV Everywhere is a nightmare for consumers because of these unresolved issues," whether cable operators work with Sling technology or not. 

Sling may want to get closer to the cable operator but networks are already developing their own streaming apps for each of their channels.  It does give networks more control over their content but it becomes much more confusing for the customer trying to find which app to use to get to the content they want to watch.  An aggregated app, like the one a standalone Slingbox offers, seems the easiest to manage for users.  That is until someone comes up with an app that provides a complete line-up of content choices, linear and on demand and links to the app to best serve it to the consumer.  An extra step, but perhaps a likely next step as a go around of the cable operator.  Given the cost and difficulty of getting a TV Everywhere experience, it is why users have found alternatives with OTT and ditching the cable box completely.  And that is something Sling, TiVo and the cable operators really have to worry about. 

Roku Wants Market Share From Apple TV

The Holiday Season is upon us and Roku wants to be the OTT box for the home.  And they believe that they can take share of market away from Apple TV.   "Roku, which makes set-top boxes that stream video and subscription services to TV sets via the Internet, has stepped up the rivalry with an in-theater ad push touting its content advantage over Apple TV and other streaming players."  So while Roku is promoting its content strength, Apple has done nothing to upgrade its Apple TV product in 2013.  So is it going to be a fair fight?

Truth is, Apple TV and Roku have to worry more about the new gaming platforms coming from Sony and Microsoft.  The PS4 and Xbox One are meant to deliver a similar video streaming experience as well as be the gaming platform in the home.  And with 1 million PS4 sold in less than a week, will consumers buy more than one streaming media box. 

In the head to head, Roku has the better price and a rich variety of content partners.  "Roku sells several models at prices between $49 and $99, while Apple TV retails for $99. Some reports suggest that certain retailers will drop Apple’s price to $75 on Black Friday."  But Apple offers something Roku doesn't, and that is its iTunes library.  For those married to it, the Apple TV uniquely enables your HDTV to watch itune content; Roku and others do not.  But customers may not want to buy a discounted Apple TV box if they suspect that a new box is set to be released in 2014.  Roku may be striking while the iron is hot and that might just be the right call.  With Google's Chromecast competing as well, Apple TV may just be the box left behind. 

Streaming Media Could Add Another Competitor

The streaming media platform for renting and/or buying video content has quickly become a crowded space.  Of course, you have the big players, Apple, Amazon, Google, Hulu Plus, and Netflix.  Retailers like Walmart have Vudu and Target with "Target Ticket" want you to be both their brick and mortar and online source for video consumption.  And of course tons of free streaming video sites as well.  So access to online movies and TV shows for rental and purchase is abundant.  Yet, there is talk of a new entrant.

Cable operator Comcast wants to extend its on demand library of content to streaming and offer its own streaming service for rental and purchase with "plans to start selling movies for download and streaming through the cable operator's set-top boxes and its Xfinity TV website, according to people with knowledge of the plan...The initial offering will include a range of titles from several Hollywood studios that include new releases, older movies and some TV shows, one of the sources said."  Its one advantage, you already have a set top box in the home so no need to buy an Apple TV, blu-ray player, Roku box, TiVo, gaming system, tablet, laptop or other to watch their videos.  Unfortunately for cable operators, most households have more than one of these other boxes.

The article states that this new entrant would "offer a new path for Hollywood studios to generate revenue", but I wonder if cable operators are too late to the game.  Comcast may be considering it, but the other cable operators most likely haven't discussed.  With multiple boxes fighting for the TV shelf and already offering streaming media to compete with cable's on demand services, that window is already wide open.  Certainly adding a new bidder to the streaming rental and download space creates more competition and likely higher bidding for exclusive content, it does not, as the author contends, open a new distribution window.  Still, it is a space that cable operators must enter if they plan to compete with OTT platforms.  

I can see the potential of cable operators offering free download movies to triple play customers, high rental customers, and other incentives to encourage consumers to remain loyal to their cable operator.  A cable streaming service offers great marketing potential when competition is only getting fiercer.  So Comcast Cable and others, what are you waiting for?

Xbox One or PS4

We have a major decision going on in my family.  What gaming system do we get.  As neither is backwards compatible with its predecessor, there is no legacy allegiance to worry about.  And trust me, we have played with them all, Wii, Playstation, Xbox 360.  But with PS4 release today and the Xbox One next week, the urge to buy has been plaguing my son. 

Both are expensive systems, neither are perfect, but he wrestles nightly with which platform to get.  For me, the decision seems an easier one and that is to wait.  Why?  Like any release of a new system, software bugs exist and best to not be the guinea pig.  Also, both platforms have limited content choice for games as neither can use older games.  In fact, I might give an extra push and lean more toward the company that recognizes the ownership of games in their prior system and offers free downloadable versions or discounts for online game upgrades.  And lastly, while my son may want to lead the pack, the social elements of each platform rely on friends also on the platform.  I think he is best to learn which platforms his friends are leaning as well before purchasing a new system. 

There has already been a run on pre-orders of both systems.  Game Stop, Best Buy and others are opening at midnight for an early jump on sales.  And with the holidays peaking around the corner, a new gaming platform and its games make for great gifts.   But what is the rush.  The old platforms are still here and many will stay want to play those old PS3 and Xbox 360 games.  And who knows what discounts might await him in January.  But I can only suggest.  For gamers, young and old, the appeal of new platform, the both in many years for Sony and Microsoft, brings more power and storage, as well as better graphics.  The force may be too great for them to ignore or avoid. 

Netflix For The TV Screen

Certainly millions of subscribers are getting great satisfaction from streaming videos directly to their personal devices, from laptops to tablets and smartphones.  But sometimes we don't want to watch alone and the shared viewing experience that a TV screen provides enables a shared experience and future conversation about the show.  Recognizing that different platforms require different interfaces means understanding how consumers are interacting with their content and Netflix seems to embrace that wisdom.  "Netflix has unleashed an overhaul to its interface for televisions that extends more uniform, feature rich capabilities to apps running on a many TV-linked devices, including select Roku boxes, smart TVs, Blu-ray players, and Playstation consoles and the Xbox 360."  Netflix consumers enjoy watching on the bigger screens and assuring that the user gets the best experience in searching and streaming content is what makes for satisfied subscribers.  The more ergonomically suited the user experience becomes, the more likely subscribers remain engaged and happy with their Netflix subscription. 

Consumers Dropping Cable TV Service

It may be just a drip, drip, drip, but the high cost of cable TV, coupled with the rise of video content streaming on the web, may finally be turning consumers off cable TV completely.  Yes DirecTv and Dish both saw quarterly subscriber growth, likely due to the Time Warner Cable fiasco with CBS as well as to their cheaper offerings.  But a total number of subscribers have fled cable TV completely. 

"Veteran Wall Street media analysts Craig Moffett and Michael Nathanson calculated that the pay-TV industry — which includes cable, satellite and phone companies offering video service -- lost 113,000 subscribers during the third quarter."  Call it cord cutting but the reasoning behind this loss cuts much deeper.  It is the younger demo that no longer values cable and prefers to spend more time with web, social media, and gaming.  Should Q4 numbers show an increase in total customer drops, this cor cutting trend will hit hard.  Already cable operators are testing usage based broadband subscription packages.  Their intention, to recoup their revenues from high usage households dependent on streaming media platforms like Netflix, Amazon, and others.  And that usage, measured by recent reports, have been increasing rapidly.  Video streaming is dominating the broadband spectrum.  And so households that stick with cable operators for their broadband will see those fees rise faster and faster to make up for the loss in cable television revenues.

Consumers have little choice for broadband today.  Lower cost DSL service may find some relief and telco/wireless companies can provide packages of service that might just prove a better value.  But there is a need for more competition in this space.  When Time Warner Cable lost Q3 cable subs, they also lost Q3 broadband subscribers, a rare shift and one that portends more disaster for the cable operator. 

Broadband today continues to demand cheaper access and faster connection speeds.  Pipelines are easily clogged as high usage of heavy data video streams are requiring faster capital improvements.  But consumers will fight back if broadband usage fees rise dramatically.  Consumers are leaving cable for broadband and that trend will only quicken. 

The Future Of TV Sales

With the rise of tablets and smartphones, smaller screens are outselling bigger ones.  And we seem more likely to replace our iPhones and our iPads far more rapidly than our big screen HDTVs.  On the business side, sales of big screen TVs are slowing down.  "Overall, global flat-panel TV shipments were down 7 percent in August, the third straight month of decline compared to their levels during the same time a year ago in 2012."  The holidays are coming and expectations are that sales will rise, but manufacturers are concerned and will be aggressively lowering their prices to capture market share.

So why should Apple even consider this business.  Consumers have gotten comfortable with the box behind the TV set and seem less likely to upgrade their TV sets, even for an Apple television.  With gaming consoles like XBox and Playstation driving streaming and OTT, consumers care more about the content then an all-in-one TV set.  And that is why Apple should place more emphasis on their Apple TV product and focus on more ways to make it both cloud and hard drive ready.  Focus on content deals and pursue a rental business to complement its iTunes sale business.  Let the Apple TV box work behind any TV set and let others sweat over the big screen set.  And if you want to sell a big screen monitor; great.  Just let it work with all your devices. 

Superheroes Invading OTT Platforms

If sports doesn't become the content that propels OTT platforms forward, then maybe it will be the job of superheroes.  With The Awesomes on Hulu, the time has come for the next tier of heroes to emerge and Marvel/ABC is providing them with their recent deal with Netflix.  "Disney and Netflix announced a deal Thursday for four 13-episode series featuring Marvel Comics heroes Daredevil, Jessica Jones, Iron Fist and Luke Cage that will air on the video-streaming service over multiple years and will lead to a mini-event called The Defenders."These shows are scheduled for release in the next year.

Aimed directly at the teen audience, the key demographic by the way for video streaming, Marvel Studios and ABC are recognizing the power of superheroes in the disruptive world of streaming video.  And building synergy with its theatrical and linear properties will only continue to increase the value of their content across all platforms.  It is a brilliant strategic move for ABC to stay relevant in a changing environment.  And for Netflix, further push value of its streaming service and subscriber growth.  Exclusive content, with the Marvel name recognition, further demonstrates that content is king.

Why Did Dish Network Buy Blockbuster?

When Dish bought the Blockbuster chain a few years ago, the question most people asked was what was their to gain from buying a brick and mortar establishment that was already seeing loss of market share in the DVD rental business.  Netflix was struggling to convert from mail to streaming and Dish was still stuck with a brick and mortar business competing with a subscription mail business.  Clearly they were a step behind and a dollar short.  But Dish came in and bought the company, presumably for its content business.  And since then, nothing.  So what was Dish thinking and why did they spend their money on a losing investment that had continued to bleed dollars?

Stores were closed along the way and finally, this week, the announcement that the rest of the stores and mail order business was closing down.  From the official release, "'This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,' said Joseph P. Clayton, DISH president and chief executive officer. 'Despite our closing of the physical distribution elements of the business, we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.'"  But if the intention was to push the digital offerings, what has Dish been doing since they purchased the Blockbuster brand to compete in this space. 

While Amazon, Netflix, and Hulu have been investing in original content and building out their online brand, Blockbuster has been eerily quiet.  The brand name once synonymous with video content rentals has lost its leadership brand and its legacy stature.  It is a shell of its former self.  Dish has done little if anything to promote or differentiate itself in the online, digital space.  And with the loss of their stores, their awareness could even drop below Redbox, who continues to operate its vending business as it too finds a digital footprint.  So Dish has a big decision to make, do they put a ton of investment back into the Blockbuster brand to compete more effectively against Netflix and others, or is its best move to simply take the full loss and write off.  I am suspecting the latter is the better move.

My Son Wants An XBox One

As a teenager, my son has become addicted to the gaming platform.  Casual games are nice, but he truly loves the immersive experience and the big screen to play his games.  We started with Wii and Playstation and graduated to XBox 360 just as he became a teenager.  And with the release of new gaming systems from Sony and Microsoft, he has been vacillating between buying the next generation Playstation and XBox One.  It has not been an easy decision. 

So in our latest conversation, the XBox One is currently in the lead and he is disappointed that he is past the window pre-ordering at Game Stop and worriend that they will be out of stock for weeks after its launch.  But his choice for gaming system never took into consideration the added non-gaming features.  "The Xbox One is designed to support a TV content ecosystem that will generate ongoing revenue for Microsoft in parallel with the video game ecosystem at the core of the Xbox franchise."  He could care less.  For my son, the choice is all about the next generation of games and which box his friends might get in order to have a shared social experience in the game. 

And so I wonder, is a box capable of handling more than just its core function of gaming, of value to the consumer or not.  Will they appreciate that their same box can access videos as well as exclusive content from a Microsoft library or do they just want a box for gaming?  Can this all-in-one box give Microsoft new entry into a competitive product to Apple, Amazon, and Google, as well as synergy to its Surface tablet, or will consumers find limited interest outside the gaming platform?  Once in the home, I am interested to see how my son embraces these added features.  Certainly, it is the direction that Microsoft needs to take and I wish them well in driving this strategic plan to a successful end. 

Netflix Should Consider Adding a Transactional Movie Service

With an Emmy under their belt and an eye on a possible Oscar documentary, Netflix continues to emerge as a leader in the OTT streaming space.  With a monthly subscription service and a growing library of video content, Netflix continues to attract a larger paying audience.  The cost to acquire content will only increase as more competition emerges to challenge them in this space.  So what else is on Netflix's plate?

"First-run films would add a dimension to Netflix’s formula of offering viewers a mix of original series, with a library of movies and reruns."  But is there intention to offer these films as part of their subscription or to perhaps consider adding a transactional business to let consumers rent first run films, on-demand, at a per movie fee.  It would certainly shake-up cable's on demand presence and attract studio attention, especially if it included a more lucrative split to gain an exclusive window.  Cable operators are already feeling the heat of the battle from cord cutters choosing OTT over cable; this business model would be the next logical step in disrupting the status quo of on demand movies.  Consumers have already shown a strong interest in on demand through their cable service; a Netflix on demand model on top of their subscription service might just be happily received for access to first run content. 

Is It Time For Just 2 Time Zones?

I just read this article and thought it was worth sharing.  Given the rise of digital technology, communication and immediacy has become more and more important.  "Frequent and uncoordinated time changes cause confusion, undermining economic efficiency. There’s evidence that regularly changing sleep cycles, associated with daylight saving, lowers productivity and increases heart attacks."  How nice would it be to schedule calls between the two coasts and not worry about a 3 hour time difference.  

And how easy would the coordination of broadcast with east coast and west coast feeds to be able to have one feed for the entire country.  Live events at 8 pm on the east coast would be at 7 pm on the west coast.  The recently completed World Series games could actually start an hour earlier and still be prime time on both coasts. 

Ultimately, as the author points out, "The purpose of uniform time measures is coordination. How we measure time has always evolved with the needs of commerce."  It seems it might just be in our economic interests to consider such a plan.

Time Warner Cable Needs A Partner in Charter

Hit em when they are down.  The loss of both cable and broadband subscribers for Time Warner Cable has opened up the box once again for a potential merger with Charter Cable.  That TWC's losses were attributed to blacking out CBS and its sister channels for a month does not spell good news for any cable operator.  Each and everyone faces similar battles when license fee negotiations come up for renewal.

A friend from Los Angeles recently shared his story with me.  His family was a Time Warner Cable subscriber till CBS was dropped.  It was for them the last straw.  And being in a major DMA, they were fortunate enough to have alternatives.  TWC was limited in their response.  They offered a measly free movie to try and appease them.  Instead my friend switched to DirecTv for cable and AT&T for broadband and phone and discovered two immediate benefits, more channels and a total lower monthly cost.  Of course, I asked what he would do when or if CBS or another broadcaster was forced off their line-up as well.  He responded, with a wait and see attitude.  And what did TWC do to save the account.  Nothing when they notified them of their switch and nothing when they delivered their set top boxes back to TWC.  What irked them more, was a call placed by TWC to their home at 8am on a Saturday morning to try and win them back.  It was met with a firm hang up and a reminder that they had in fact made a good decision.

Consumers annoyed with current tactics and dropped channels will continue to seek alternatives.  Can a Charter merger save TWC? Not unless, once combined,  they go back to the drawing board with new, lower pricing models that take advantage of economies of scale.  That and a desire to do business differently or watch as more consumers leave, first for cheaper alternatives offered by competition, and soon enough streaming OTT platforms with enough content to encourage a steady stream of cord cutters.  That means not dropping channels unless you plan to keep them off.  Reducing the profit margin on cable subscriptions.  Better customer service and cheaper packages.  The trend toward OTT instead of cable is moving quickly and current operators are doing little to change their strategies. 

Both Time Warner Cable And CBS Hurt By Blackout

When contract negotiations failed and CBS was blacked out for a month on Time Warner Cable systems, the results proved disastrous for TWC.  For the third quarter of this year, TWC lost 306 k cable subscribers and 24 K broadband customers.  And given that TWC is in both Los Angeles and New York, consumer were able to switch to satellite or telco providers like U-Verse and FIOS.  It clearly hurt TWC in the financial wallet, but I speculate that CBS also felt it, with lost license fee and advertising revenues as well as higher marketing expenses to tell consumers to switch providers.  How fast consumers switched and how much CBS was hurt has yet to be heard.  But at the end, both sides lost.

So where does TWC go from here? The threat of competition from other cable providers as well as from streaming platforms, the continued loss of subscribers quarter over quarter, and the need to keep margins by lowering costs.  Is consolidation a sound strategic fit?  John Malone believes it to be so and would like to merge TWC with Charter to find more efficiency and lower license fees with a larger footprint to serve.  It may still end badly as customers are not happy with the high cost of cable and the wish to cut those costs through a la carte and lesser number of channels in cheaper packages. 

Also, consumers are placing more importance on broadband service and higher speeds than on its cable subscription.  And that may soon turn our cable companies into dumb pipeline providers.  Unless the pricing model for cable subscriptions gets reworked, that is the future we are seeing. 

Is Facebook In Trouble?

Yesterday, Facebook announced that its teen demographic is using Facebook less.  The once shiny toy has perhaps lost its luster, partly because older demographics have been embracing Facebook for casual gaming, picture sharing, and commenting on political and social issues.  The author speculates that a number of reasons have led to this decrease including, parents as friends, permanence of their posts, and seeing their "Facebook’s mobile app as bloated".  Still the news that teen usage was declining caused the stock market to sell the stock.  But is Facebook in trouble?

Certainly, the Facebook company saw competition coming to steal this core audience and as a result it acquired Instagram.  I find it likely that those Facebook teens as well as new users are finding Instagram as a preferred alternative.  The author agrees.  "Compare this to slimmer services like Snapchat and Instagram where it’s obvious what you’re supposed to do — view and share photos and videos."  For my own children, early teens, I prefer them having Instagram over Facebook.  Its simplicity allows me to see what is being posted and commented on.  While some argue Snapchat quickly deletes posts, it is not as temporary as some teens and their parents would like. 

Is Facebook in trouble; not really.  Facebook made the right move in buying Instagram; its two products now seem to reach different audiences and offers more revenue opportunities.  Still the shiny new thing may only be temporary as the next new social app emerges.  The one thing we know, teens are a fickle animal, likely to move on to the next shiny object.  But for Facebook, the real revenue opportunity, the 25 - 49 year old, remains strong and should serve Facebook for years to come. 

Could Intel Media Merge with Verizon And RedBox Instant?

Unfortunate as it might be, Intel is having a difficult time getting major content companies to agree to carriage deals on its new streaming platform.  Broadcast and cable networks don't want to risk their current relationships with cable operators that already pay them substantial license fees.  Intel Media is not alone; Apple has been trying the same strategy with little or no movement either.  So with a major investment in technology and a brand new set top box, what is Intel Media to do?

Well, according to All Things D, Intel is in talks with Verizon to sell or create a partnership with its Intel Media division.   "People familiar with the talks say the two companies are in advanced negotiations."  For Verizon, Intel Media comes with a new set top box that may be seen as more desirable than FIOS' current one, offering access to both linear and streaming video content, including Verizon's partner, Redbox Instant.  And Verizon's marketing muscle could help to deploy the Intel Media service, using their "OnCue" or another new brand name, beyond the FIOS wired footprint. 

But is the Intel built set top box enough for Verizon?  It comes with no big content deals or subscribers yet, it is a pure start up.  Where is the value that Verizon thinks it can unlock?  And if it is the box, would other boxes, like the new TiVo box, which essentially does linear and streaming like Intel, as well as DVR functionality, be an easier and better fit?  Certainly questions being asked in these high level negotiations. 

As a fan of streaming platform services being created by folks like Intel Media, Amazon, Samsung, Apple, and others, the key to success continues to be strong content.  The networks are not likely to risk their current revenue model with a disruptive technology that could hurt their revenue line.  OTT success is in distributing original content and exploiting highly valued content that may become available, like potentially the NFL Direct Ticket that DirecTv currently offers.  It will be only after streaming providers become more prominent that cable networks will crave the chance to be added to their service. 

Netflix Picks Up Dexter

When HBO's signature series, The Sopranos, left the premium channel, it found its next window of airings on basic cable on A&E.  The rise of streaming video has opened a new platform of distribution with Showtime announcing its deal for making available all seasons from Dexter on Netflix.  "A Netflix spokesman said it is an 'exclusive, multiyear' deal."  But certainly, once this deal expires, basic cable could be its next home.  But no longer is basic cable the next stop after pay channels.

The rise of video streaming with competition from Amazon, Hulu, and Netflix has created a new syndication window that has bumped cable and other windows down a peg.  How lucrative this window is for content makers and distributors remain to be seen.  Certainly, given the demand for streaming content, strong shows like Dexter, "set a ratings record for Showtime, averaging 2.8 million viewers", are important for demonstrating value that Netflix is delivering to its current and prospective customers.  Certainly we should expect future syndication deals coming to Hulu and Amazon soon.  And it continues to justify the notion that content is king.

Apple's Cash Problem, What To Do

With Apple's quarterly earnings report expected at close of day, investors wonder what Apple should do with all its cash. In fact, Carl Icahn has been pushing hard for more stock buyback to drive up share prices.  But like the author of today's WSJ article, Farhad Manjoo, I believe that is a short sighted move.  As a very small Apple shareholder, I want to see Apple us its funds to remain innovative in a fickle, changing digital marketplace.  Manjoo has some great suggestions for other uses of these dollars from building a Google search engine competitor to buying a cellular network.  Of his ideas, I like the latter better.

Apple has always prided itself in owning the complete product, hardware and software; the rise of the iPad has meant that introduction of third party apps, but they follow a rigorous approval process.  The piece that Apple lacks is the connection between consumer and device.  Buying or building a cellular/broadband network to best run its devices, from the Apple TV to the iPhone, would close the loop and prove a complete consumer solution.  Consumers need a network that can drive our wireless connectivity and assure our video streams and communication paths get to all our devices.  It is why Google is testing out its Google Fiber program in a few markets.  And why Apple should be in this space too.  A short term rise in the stock price; why bother.  I want more innovation and growth.

Cable Operators NOT Likely To Follow Aereo Model

While recent reports have emerged that DirecTv, Time Warner Cable, and other cable operators are considering a similar Aereo approach, using tiny antennas to obtain broadcast signals, the likelihood of this occurring is remote.  While it could result in operators not paying license fees for broadcast signals, they would be overpaying elsewhere.

Why is that the case?  ABC owns ESPN, Disney, ABC Family, and others, NBC owns Bravo, USA, MSNBC, and much more, CBS owns CBS Sports, Showtime, and an owner with ties to Viacom Networks, and FOX owns FX, FXM, Fox News, and more.  Each of these broadcast networks has too much to risk from losing license fees from broadcast.  And they would indeed use that leverage to keep license fees intact or raise their rates on their cable nets to recoup any losses.  It is the consolidation of broadcast and cable networks that will prevent the cable operators from following the Aereo business model.

Of course, this depends on broadcasters still owning affiliates.  Speculation that ABC would consider selling their O&O networks has been heard, too.  Aereo's continued success could hurt the valuation of such a sale.  Broadcasters have also rumored changing from broadcast status to cable status to stop the Aereo model from moving forward, too.  That latter move seems to have more viability.

Cable operators still have the upper hand.  They bundle broadband access with cable so that consumers end up paying much more for broadband only without a cable subscription.  Once consumers find alternative sources for broadband to the home, the cable operators' business model will be at most risk.  Until then, they are better off strategizing new packaging and pricing models and better service, like TV Everywhere, than emulating the Aereo business model.

Is It An Ad Or Editorial Or Both?

These days as we troll the web and glean content from our favorite sites, we are being exposed to ads in every form, from banner ads to pre-rolls, vying for our attention and our click.  But many users may not realize that some of those articles or highlights we click on may not be editorial but rather a paid advertisement.  Some might still call it an advertorial, but for many in the digital world it is known as native advertising.  "How to define native advertising exactly is still up for debate, and it can be defined quite broadly — as in: any advertising that integrates fully into the content within which it is placed."  And its goal is to blend advertising seamlessly among the content that we consume.

The results of using native advertising indicates that it does a better job of driving clicks than traditional banner advertising.  "Native advertising is being heralded as the savior of digital publishing, but as marketers' content treads increasingly on editorial ground, one of the big questions is: How should it be regulated?"  Or should it be regulated at all?  As users of the web, does the long time notion of "buyer beware" still hold true or should websites do a better job of clearly identifying sponsored content from independent editorial.

Some native advertising is not specifically about driving a brand message; rather, it is used to drive viewership to other sites that may provide additional content discovery and valuable editorial content.  Other native ads may drive to transition pages, only to be exposed to more native content before a second click to the intended web site and content.  And other native ads click to a website of pure advertorial content.  It costs the user a click or two, it drives analytics, but is it harmful?  I might contend that it also leads to a smarter web surfer; click me once shame on you, click me twice, shame on me.

The blending of editorial and advertising is not a new phenomenon.  Both print and video sites have been selling advertorial sections for as long as advertising has been around.  What may feel unusual on the digital platform is that the signs indicating that it is native advertising is either not expressively stated or hidden on the page.  According to "Ogden Publications CEO Bryan Welch. 'There will be no need to identify it,' he said. “I see everything blending.”  And that of course leads to my original thought, that the user or buyer beware.

Newspapers Continue To Show Red Ink

According to Gannett, the newspaper industry will lose 1 billion dollars in revenue this year.  Gannett, owner of USA Today and other newspapers also says that the rise of digital advertising is not enough to offset the losses of the print business.  But this loss wouldn't mark the first year of billion dollar losses.  "Data from the Newspaper Association of America shows that print advertising in the newspaper industry has been decreasing for about seven consecutive years, losing $1.8 billion in 2012."  So while the total loss in 2013 is less than the prior year, it is still a major hit. 

Gannett attributes some of those losses to it being a non-Olympic year, as well as to a slow economy.  The article fails to elaborate on what the effect of digital advertising is having and how fast that side is growing.  One would expect that the two revenue lines will eventually cross and it would be interesting to see the rising slope of digital to print and the steepness of the tend.  The print world will only continue to fall as tablets become an ever increasing part of our world.  New releases by Apple of its iPad line, new Microsoft and Nokia tablets, and of course Amazon's Kindle all rely on digital content and print content distributors need to better strategize their business model to build new subscription and advertising models that best offset these print losses.

Yahoo Knows That Content Is King - Hires Couric And Pogue

First came the announcement that David Pogue is leaving The New York Times to start a new chapter at Yahoo.  Now comes news that Katie Couric is coming on board as well.  "Sources said that Couric is now close to completing a deal to put a Web interview show right on Yahoo’s home page."  As CEO Marissa Meyers continues to put her stamp on Yahoo, it has become clear that she too regards content as king.  Original, exclusive content that drives viewership and grows ad revenue.

That established old media stars like Katie Couric (broadcast television) and David Pogue (newspapers) are moving to digital platforms follows a path of using branded content to attract users to new platforms.  Last month, Walt Mossberg announced that he too was leaving the printed world of The Wall Street Journal to start his own website.  Perhaps Meyers can convince Mossberg that his talents can best be merchandized with the backing of the Yahoo brand.

Using content to drive adoption and usage is an important strategy that demonstrates just how important content is to a platform's success.  It is not just that you build a site but that you house it with meaningful content that consumers will seek out.  And branded, well known, credible content is far easier to market than unknown, untested content.  Certainly, both can survive and prosper, but branded, established content potentially comes with a built in base of consumers that will follow the path to a new platform.  And that is certainly what Yahoo expects to happen.

David Pogue Leaves New York Times

After 13 years writing a column for the New York Times, David Pogue has accepted a position at Yahoo, writing articles and creating videos for the web.  A big loss for print, a big gain for Yahoo. 

From his blog, "Leaving The Times is a big deal. My years there coincided with the explosion of just about everything important in today’s tech — the Web, social media, e-books, smartphones, tablets, duck-faced selfies. It’s been an amazing ride...." 

Will Broadcasters Drop Their Over The Air Signals?

As Aereo disrupts the broadcast platform, it poses a potential threat to long term retransmission fees.  The more Aereo wins court cases, the more cities it populate, and the bigger the threat to the revenue model.  If Aereo can retransmit broadcast signals for free, why can't cable operators.  And that possibility concerns broadcasters. 

In the past, Fox Network threatened to move from broadcaster to cable programmer, and now we learn that ABC Network considered it as well.  "A cable network doesn’t broadcast its signal over the air like broadcast networks, preventing Aereo from taking the signal and re-transmitting it online to paid subscribers, as it is doing with the broadcast networks in certain markets."  Of course we have also heard other rumors that ABC/Disney parent would consider selling all their owned and operated affiliates as another possibility.  Clearly, Aereo's disruptive approach has gotten the broadcasters to reexamine their current revenue models.  Aereo's approach could also quickly deflate the valuation price of any affiliate sale, unless all affiliated stations converted from broadcast to cable. 

And while Aereo may be successful in building antenna farms, I am not convinced that cable operators would bypass license fees through a similar approach.  The cost of building and maintaining verse negotiating for more streaming access to broadcaster linear and on demand programs would justify maintaining the status quo of license fees for cable operators to continue to pay.  Plus, cable operators have more flexibility in building out its broadband and wireless platforms for authenticated customers with discounts for those that subscribe to cable.  Such a radical approach like converting broadcast to cable is like killing a mouse with an elephant gun; there are simpler solutions.

Aereo Launching In Its Next Market

Tuesday, October 22, 2013, Detroit DMA consumers will be able to cut their cable cord and still gain access to broadcast and some cable networks in their market without an antenna.  A broadband feed is all that is required to sign up and get Aereo delivered into your home.  And despite numerous attempts by the broadcasters to block Aereo, the courts have yet to agree and have allowed the business to rollout into additional markets.  According to reports, "Aereo says it expects to be in 22 cities this year."  The more success that Aereo has, the harder it may be to put the genie back into the bottle. 

Rather than fight Aereo, broadcasters should spend more of their effort working with their cable/telco/satellite operators to enable their signals to be authenticated for TV Everywhere.  Give consumers the value of getting their broadcast channels, not only on the TV set, but also on their mobile devices.  Increase the value by offering more on demand programs online along with the linear feed.  Consumers may just prefer maintaining their cable subscription for this added level of value.  And that minimizes the losses that Aereo might present in each market.

ABC Networks' O&O For Sale?

According to reports, Disney/ABC may be considering a sales of its eight owned and operated affiliated broadcast networks.  Although denied by the network, the timing might be right to separate the distribution side of the business from the content side.  And there may be a significant ROI, too.  "Disney CEO Bob Iger is interested in what the broadcast business could fetch now that station valuations are much higher than when the company last explored a sale in 2010." 

Of course, it was CapCities, the owners of broadcast networks that originally bought ABC, the content side.  That was prior to Disney buying the merged company.  Now with talk of unlocking shareholder value by concentrating on one side or the other, ABC/Disney may prefer to work in the world of content over distribution. They certainly aren't the first to make such a move.  Time Warner made the same decision when it spun out the Time Warner Cable business.  

Such a sale would certainly free ABC/Disney to construct interesting distribution partnership deals without having its internal businesses in a perpetual state of conflict.  It would enable more freedom to push a TV Everywhere approach for both linear and on demand streaming of all of its shows.  Still it would be hard to part with all the dollars flowing into the company from rising retransmission fees.  "RBC Capital analyst David Bank said rising retrans dollars are one reason Disney may be loath to part with the stations right now despite soaring valuations."  But if your strategists are telling you that the threat of companies like Aereo could disrupt the retrans model and future fees, it may be smart to gamble on other ventures, take your profits and concentrate on content focused ventures that better support the goals of the Disney/ABC brands. 

Certainly the rumors of a possible sale are flowing.  They will never be confirmed until the deal is consummated. Still, the timing and the opportunity to focus on content never felt more right.  To me, such a sale makes sense. 

Time Warner Cable To Bring Back Ovation Network

Despite dropping the Ovation Network the beginning of the year under the guise of controlling costs by dropping low rated channels, Time Warner Cable plans to relaunch the network the beginning of next year.  The rationale given, an increase in original arts programming on the network.  A wonderful benefit to present to the subscriber.  I am a fan of the arts and a fan of Ovation so my comments are not about the value that the network provides, especially as art programming is underrepresented on linear television.  It is simply that the original reason Time Warner Cable dropped the channel was to cut costs for little viewed programming. 

I doubt that the investment that Ovation is making in original programming will substantially change the ratings of the channel.  Other arts networks, like A&E and Bravo, ultimately moved away from high art programming for more "pop culture" shows to attract a broader audience.  I suspect that the deal was also predicated on a lower license fee cost and "marketing investment" back to Time Warner Cable.  Fine in the short run, but not consistent with its earlier "public push by the cable operator to cull its lineup of poorly rated channels. CEO Glenn Britt made much of that plan, aimed at controlling rising programming costs."  So if you start adding channels and costs, has your strategy changed?

Ultimately, low rated channels likely also have the lowest license fee costs to the operator; they would have little or no effect on the subscriber fees that are passed through to consumers.  Those higher fees tend to be tied to the highest rated cable networks and especially regional and national sports networks.  According to the article, "A Time Warner Cable spokeswoman said that the company continues to look at 'three primary factors: cost, viewership and unique content' when it comes to assessing the value of a channel."  SO will TWC start to drop other low rated channels.  It remains to be seen if we ever hear that cable operators are actually lowering their monthly subscription fees to consumers as a result of cutting costs.  Frankly, I doubt it.  And as cable costs rise, consumers will seek to shed those fees for streaming video alternatives.  And it is in the OTT platform that networks like Ovation could have the chance to shine and breakout. 

Are You Ready For More Football?

I love football.  I love the strategy, the athletics, the march down the field toward the endzone.  And there is nothing more enjoyable then a Sunday afternoon on the couch watching the game(s).  But truth be told, too much of a good thing can be too much.  So I find Sunday Night and Monday Night Football to test my enjoyable, unless of course it is my team.  And still, it is difficult to stay up to the bitter end. 

So when I read that the NFL is considering adding a second football game to the Thursday schedule, my heart sinks.  "The NFL's belief is that adding another Thursday game would generate more national interest, plus it would give the league a chance to sell rights to another round of games."  It may also be that not enough people are watching the NFL Network while in-market teams get the simulcast on a broadcast channel.  Truth is that the search for more money is what will likely find a cable network bidding for a second Thursday game.  But I believe it is also killing future fan interest in the game that I love.  Too much of a good thing can indeed be too much.

In an earlier blog, I wrote about the DirecTv agreement expiring next year and who might want to buy those rights.  I suggested that an OTT platform like Apple TV or Netflix or Amazon could afford the investment and attract additional subscribers to their base.  That kind of viewership deal makes sense, a second Thursday night game does not.  It pushes one more game off the Sunday afternoon line-up.  And as a fan, reduces the impact of watching results of games across the day.  It simply extends the game week too far.  My vote, let's limit football to Sunday and Monday.  Enough is enough.

TiVo Would Make It Easier For Cable Operators To Add Netflix

TiVo has the technology and the software ready to go to integrate Netflix with traditional linear and on demand programming.  Should it quickly be able to integrate all the content under a simple interactive search menu, TiVo could become the preferred cable set top box for cable operators.  And for those that already have a deal with TiVo, the ability to quickly support a Netflix addition to their offerings.  Certainly, a partnership between Netflix and cable operators would be a win for Netflix and consumers.  "For Netflix, forging ties with cable providers could fuel expansion by putting its Web-based programs alongside traditional TV shows" according to Tom Rogers, CEO of TiVo. TiVo would certainly benefit as well.

But like John Malone, CEO of Liberty Media, I wonder of such a deal, in the short term is good for the cable operator.  Would operators be better suited providing their own streaming video service and fully enable TV Everywhere of their current linear and on demand offerings.  For instance, why shouldn't cable operators be enabled to stream all the back seasons of Breaking Bad to authenticated viewers on any device as a result of its carriage of the parent network, AMC.  Netflix's edge would then be limited to original programming, not yet offered to cable. 

Cable operators though worry that not embracing services like Netflix could lead to full cord cutting.  Making it a choice within the cable infrastructure could result in consumers maintaining their cable subscriptions and not cutting their cable cord all together.  What should worry cable operators more is that their total cost of service is what is driving customers to drop cable.  Offering a Netflix option on the cable box works if cable customers can access without having to buy an expensive package of service. 

I would love to see some research on what percentage of Netflix customers also have a cable subscription, what percentage watch premium services like HBO, Showtime, and Starz, and what percentage has dropped premium channels or cable service completely in the past year.  Cable operators may find that Netflix is not a competitor to its business model but rather an additive choice that customers will embrace while also staying loyal to cable.  And if that is the case, Netflix should present those findings to cable operators and operators should be quick to start a partnership with Netflix.

Should Cable Operators Partner With OTT Or Syndicate Their Own?

Today's Wall Street Journal talks about Netflix's efforts to build a partnership with cable operators to place its app on the cable set top box.  For consumers it would make for easier usage; it might also lead to a more enhanced interactive menu and search screen that added Netflix programming alongside linear and on demand.  For cable operators, it could bring leverage when dealing with network contracts, offering programming otherwise blacked out on the linear network.  But there are risks too.  One that consumers bypass more expensive premium services like HBO or Showtime for a lower priced Netflix subscription.  Still if it encouraged Netflix subscribers to remain cable subscribers, cord shaving is certainly preferred over cord cutting.

But John Malone, CEO of Liberty Media has another idea.  Why partner with a competitor when we can work with our own partners to provide a streaming video service.  "Cable operators may be able to monetize TV Everywhere programming by forming a joint venture which would syndicate a product like Comcast's Xfinity TV or Hulu nationwide".  Consider too that Redbox has been in need of additional support and cable could come in as well.  There is certainly some logic to cable operators embracing a shared OTT strategy while maintaining their physical footprint for linear and on demand.  The core of such a partnership still requires a broadband line into the home and strengthens the value for the cable operators' customer base.  And the same advantages of a better onscreen search engine and simpler access across platforms can be created and offered. 

In fact, cable operators might actually have more to gain by Malone's vision of a syndicated OTT offering then by a 3rd party partnership.  Not that Netflix would not be well received by customers on a cable set top box, but that cable operators have more to lose.  Plus, the rise of other smart devices and TV sets already makes it fairly easy to access and watch Netflix programming on a television screen.  Malone sees a future where platforms converge.  He also sees the need for cable operators to continue to consolidate to better compete and gain further economies of scale.  And he might just be right.

John Malone Still Wants Cable Consolidation

John Malone and Liberty Media are keeping real busy.  Despite announcing more stock splits, Malone also sees consolidation.  He continues to press that a merger of cable operators like Time Warner Cable and Charter Cable makes a lot of sense.  Of course Liberty owns a sizable chunk of Charter stock and Malone constantly seeks opportunities to increase the returns on his investments. 

According to Malone at their investor meeting, he was "touting the benefits of consolidation to bring the industry together to solve its high cost and over-the-top competitive problems."  As Charter is smaller in size than TWC, a merger would see them benefiting from TWC better licensing agreements, the ones that lower the per sub cost for exceeding subscription benchmarks.  Of course, a potentially larger MSO could get better rates for the TWC systems too.  And while Malone likes to talk about his own companies, other cable operators like Cablevision could also benefit from merging with Time Warner Cable, a deal TWC has been wanting for quite some time. 

John Malone seems to have the knack for unlocking value from its properties.  He continues to grow businesses, then split them off as tracking stocks and then independent companies.  He announced at the same meeting plans to spin out QVC and other businesses from the Liberty Interactive company.   So keep your eye on Liberty and John Malone.  He continues to be a force in the economics of cable.