Cable Fees Add Up

In Les Misérables, the storekeeper's big number extols how to get more money from the customer, "charge them for the mice..." and all the other "extras".  In the airline industry, baggage, food, and perhaps soon, pillows and blankets, all cost extra.  For the cable industry, the big extra is the cable box.  As cable operators transitioned from analog to digital, TV sets all required a cable box to connect the cable wire to the TV set and unscramble each channel's signal.    More TV sets to connect in the home, the more cable boxes to rent, the more revenue per household.

In the past, Comcast offered "special adapters and that those adapters - two per household - would be free."  But not in Philly anymore or perhaps anywhere.  These are not the big boxes, the ones that access on demand or can DVR programs, or even pause and rewind the show being watched.  These low level adapters simply unscramble signals.  More costs to get access to what was once free to the consumer.

But perhaps this is just one more tipping point to move from big screen to tablet, from connected to wireless.   As costs rise, consumers will be less likely to want to connect more TVs.  Bedrooms will be more likely to find laptops and tablets, then TVs, for consumers to watch content.  It may even cause consumers to more quickly cut their cable cord.  It may be an attempt to grow the revenue stream and improve the profit margins of cable, but it may also lead to more detrimental results.

Netflix Is A TV Network

With tomorrow's launch of its premier series House of Cards, Netflix could be considered a TV network.  While it does not yet have a daily news show, I wouldn't be surprised if that was in their future.  What they do have is a mix of old and now new TV series.  First comes House of Cards, second is Arrested Development, and more is certainly in the pipeline.  Couldn't this describe a TV network.

In the infancy of cable TV, reruns were the staple of a network's programming wheel.  Each charged a monthly license fee that the cable operator passed on to the consumer, and each tried to find an advertising model to build a second screen.  With revenue growth came investment in original series, first just one to test the waters and then more as each series brought more and more revenue back to the network.  So now it is Netflix following the same cable strategy.

Unlike a cable network, Netflix is using the web to talk build a business model directly with the consumer.  With a monthly fee of $8, Netflix costs more than many single cable networks, but acts more like a cable operator in providing a library of content that exceeds what any one network could offer.  And consumers have been willing to pay the fee as it can be less expensive than a cable subscription.  Netflix hopes that offering exclusive original series, like what a cable network creates, can successfully bring more subscribers to their world.  Bring a successful ad model to augment subscription fees and Netflix will be a true competitor to cable.

You Tube Likes The Subscription Model

The formula that cable networks have masterminded, a dual revenue stream from advertising and subscription, has been quite successful.  So much so that even broadcast networks moved from "must-carry" basis to license fee to take advantage of subscription revenue.  Hulu and Amazon have each built their own subscription models as well.  So the news that You Tube wants to enter this world should not only been expected, but one could wonder what took so long.

Per the news, "YouTube has reached out to a small group of channel producers and asked them to submit applications to create channels that users would have to pay to access. As of now it appears that the first paid channels will cost somewhere between $1 and $5 a month, two of these people said."  Will consumers seek out these services and can You Tube prove the value?  Obviously, if the content is proved compelling, unique, and different enough to justify a fee, consumers will embrace it.  Selling unknown content, unlike Hulu and others selling known shows, may make the value harder to prove.  Others have used well known actors to entice views. So building a pay model is possible.

On the other hand, consumers may feel beaten down that they are asked to subscribe everywhere they go.  Cable continues to own the market and adding a TV everywhere approach to extend its content to multiple platforms helps to maintain their dominance.  Hulu, Netflix, and Amazon are building out successful models too.  With the right content, As You Tube and others add  to the mix, fragmentation results and the landscape looks cluttered until a tipping point occurs.  Ultimately, the big fish will eat the little fish and the fewer survivors will remain.

We Are Media Multi-Taskers

Do you multi-task?  Watch TV as you read the newspaper, read a book while listening to music, or at the very least drive and change radio stations?  Then you probably surf the web and watch TV at the same time, too.  So this research news should come as absolutely no surprise, "A new study from KPMG finds that 60% of American television viewers are devoted multitaskers, watching TV and accessing the Internet at the same time."  We seem to have short levels of attention and the web is a perfect distraction to active TV watching.

Many companies are hoping that we will multi-task with second screens that are connected to the TV and augment the content that we are watching; in some cases, like a live sporting event or awards show, we might align screens.  But it seems to me that most of the time, the two screens are doing different things.  From reading emails to playing games or checking on websites, we keep one eye on one screen as the other plays on.  Add another person into the room and into the equation and our heads are probably spinning as we concentrate on each activity.  Thank goodness the cable box has a pause button.

The other research finding confirms that more people still like to watch video on their big screen TV.  The flexibility of smartphones and tablets are great, but when it comes to long form programming, it is hard to beat the big HDTV screen.

Has Apple "Jumped The Shark"?

Apple, once seen as the cool kid in town, has faced tons of pressure from competition in the smartphone and tablet space.  And while Apple continues to upgrade its product line, it has been slow to announce the "next new thing", a line that Samsung has used in its marketing to knock down Apple.  So has Apple "jumped the shark", that popular expression best know when Fonzie tried the stunt on Happy Days and it was regarded as the moment the show turned from good to bad.  Has Apple lost its footing and been knocked off the mountain?

"Apple continues to lead in the tablet market with 53.8 percent market share in 2012, according to IDC. It sold 22.9 million during the last quarter of 2012, compared to 15.5 million during the same period in 2011. But its mark share slipped a little from the previous year as Android increased its share with 43.7 percent of estimated 2012 shipments."  But despite the numbers, Apple may longer be as "hip" to the younger generation as it once was considered.  But then again, hip and trendy never last forever.  Stable has always had a longer life span.  But in tech geek coolness, being hip is crucial and Apple needs another "hip" product to rise again.

Latest Social Networking Link - Vine

Is your social networking apps growing?  Are you paying enough attention to your current connections via Facebook, Twitter, Pinterest, etc. or are you in need of another connection?  If you haven't had enough, then say hello to Vine.  Growing quickly on the app charts, Vine enables members to upload and share short form videos.  "It lets users thread together tiny clips into one looping six-second video, with a UI very similar to Instagram’s."  And as it comes from Twitter, it might just have some opportunity to succeed.  "And if that weren’t enough, Vine actually stands to make Twitter a more valuable company and a stronger social network. Not only does it start the process of building a bridge from platform to true social network, but it creates another stream of user-generated content for Twitter that the company actually owns."  Time will tell whether it is a short term fad or has real future to it.

FYI, it is Vine.co, not Vine.com, which may just bring this healthy living site some new uniques to their traffic.

Transitioning From Print To Digital

The print world, newspaper and magazine subscriptions specifically, is dealing with a massive change in the media landscape.  Where once they enjoyed delivering print subscriptions via the mail and door to door service, they are facing a consumer that is shifting more and more from hard copy to digital.  The direction and pace are clear, just cite the rise in tablets.  But this paid business model is also facing the wrath of competition offering free access to print content.  Where once you had to buy a subscription to The National Enquirer or Us Weekly, today you can read similar coverage on TMZ on a website or app.  As "mom" would say, why buy the  cow when the milk is free.

And that is the struggle that print media faces as they manage this transition from print to digital subscriptions and online advertising.  The costs of printing and delivery may decrease, but can the revenue continue to grow?  As there are many ways to "skin a cat", publishers have too.  "Publishing companies like Hearst Magazines, Condé Nast and Time Inc are pursuing diverse strategies to drive up digital sales, and have all seen online readership numbers rise as a result."

People will pay for content if they perceive value.  Publishers can do that with a walled garden approach as well as marketing the value of those dispensing the information.  Digital also can be valuable because of the  time sensitivity it allows; printed news is old the moment it is on the paper while digital news can constantly be updated to reflect the most current information.  Digital also enables multimedia, video and audio, to augment the written word.  As long as the consumer believes their is value, they will pay for it.

The move from print to digital will not happen overnight; but it is moving down that path at the moment.  And at some point soon, publishers will meet and pass through that tipping point where there won't be a need to print a publication at all.

Netflix Amazes, Apple Disappoints

The stock market is all about expectations; not just what is achieved but what is determined by analysts to be the results.  Meet or exceed and get rewarded, miss and watch the stock price drop.  For Netflix, a company that changed its business model from DVD to streaming, the turnaround  has achieved results far greater than analysts projected.  "That bold outlook comes at a day when Netflix beat market expectations by ending 2012 in black as well as with more than 33 million worldwide subscribers."  With a push toward original content and managing subscriber growth, consumers are once again enjoying the Netflix business. To rebound from a bad business decision and end the year with solid revenue growth.  Still the numbers demonstrate what expectations do to market sentiment.  "The company booked a net income of $8 million. That may look low when compared to $35 million in Q4 of 2011, but is above its own Q4 guidance, which topped out at $2 million."

Apple may have had record sales and huge earnings, but compared to analyst expectations, they under delivered.  Does it make Apple a less successful business, no.  They have in fact been growing market share.  But in a growing competitive marketplace, it is that expectation that they can continue to grow at an outlandish pace.  Unfortunately, that is an impossible task to achieve on a continual basis.  Apple, like Netflix, will rebound, as long as it focuses on the business and grows as an innovator in the marketplace.

Original Content Growth To Gain Distribution

The content vs. distribution scenario is a bit of a chicken and the egg discussion.  Each is symbiotically attached to the other and rely complete on the other.  So to ask the question, which matters more, becomes an endless debate.  In a cable operators' world, exclusive programming content has been key in trying to differentiate itself from overbuilders and other competitors.  And regional sports networks have been channel that  has been used aggressively in that fight.  And in the world of market share, networks fight among them selves for programming that gets better ratings than another.  In the aggregate, cable has taken share from broadcast because of an increasing reliance on original programming.

So the next fight for share is between cable and broadband.  The concern of cord cutting by cable operators is because consumers are seeking their programming content outside their distribution path.  Like cable did to broadcast, the web may take share from cable.  So as we watch history continue to repeat itself, the push for original content is coming from folks like Netflix, Hulu, and now Amazon.  "The company recently acquired the rights to Zombieland, the 2009 horror comedy that featured Jesse Eisenberg, Emma Stone, and Woody Harrelson." The more compelling, the more interesting, the more desirable, the more likely this strategy will work again for broadband distribution.  Market share will again shift down the pipeline as consumers sense a better "value" for content from these online providers.  All distribution entities will continue to survive, but space is being taken by streaming distribution in this ever changing landscape.

Sirius - Adding New Channels

In a recent announcement, Sirius is partnering with Comedy Central to create a branded channel devoted to stand-up comics.  "The companies said Tuesday that they are hoping to launch the channel this spring, preferably around April Fools' Day. Sirius already has eight channels devoted to comedy, including Laugh USA, Blue Collar Comedy, Raw Dog Comedy and Jamie Foxx's Foxxhole."  This announcement got me to thinking what else was missing from the Sirius lineup.  This move certainly adds another comedy channel, but it doesn't sound so differentiating.

My idea stems from my youth; our ABC affiliate had its audio simulcast on radio when I was growing up.  While I don't believe that exists today, I believe it would create added value on today's airwaves.  Sirius should be programming audio feeds from both broadcast and cable networks.  Missing The Biggest Loser, listen to it in the car;  want to listen to Mad Men, turn to Sirius Channel XYZ.  To me, that assortment of programming would add tremendous value to the Sirius line-up and augment interest in TV programming.  And because it was just the audio feed, it would not compete at all with cable operators; rather, it promotes interests in networks and a desire to watch the shows when you are home.

I believe the addition of cable and broadcast audio feeds would be a great benefit to consumers and the added value would support additional subscriber growth.   While it is great that they are adding another comedy channel, having the real Comedy Central Channel on the line-up sounds even more impressive.

Can Cable Operators Grow Subscribers?

Today's New York Times article looks at the new marketing push by Time Warner Cable to win back customers.  And the question is, can it be done.  "The company says it will spend at least $50 million on broadcast, print, online and direct mail ads for the campaign, which it is calling 'The Better Guarantee.'” But will they and other cable operators be able to convince consumers to return to them after switching to competitors.  While opportunities to come back for broadband and phone service is possible, the high cost of a cable subscription may make that return difficult.  Can a better service guarantee help; unlikely, as price seems to be the real motivation for consumers to switch providers.

To date, basic subscribers have been leaving at a slow but steady rate. Cost savings are real motivation; but the time involved to switch back and to be at home for the service call may dissuade households from changing unless a real cost savings is offered.  Even with a 30 day money back guarantee, consumers have become wary, especially if they have felt being mistreated in the past.  "AT&T and two satellite providers, DirecTV and Dish Network, have also ranked above the industry average, while Time Warner Cable, Comcast and other cable providers have remained below the average."

Cable operators are feeling the bite from cord cutters so this marketing campaign is a necessity to try and reduce, if not turn around their quarterly cable sub losses.  While cable operators are still finding growth in broadband and phone subscribers, cable growth may prove elusive.  Households are already using broadband to find similar programming to replace their cable, from Aereo to Netflix to Roku.  Until costs for cable service can be significantly lowered, customers will continue to migrate to cheaper services, regardless of a guarantee pledge.

Aereo Sees Content Key To Subscriber Growth

Aereo is a great example of disruptive innovation, as it challenges the current market structure with a new kind of mousetrap, one that could ultimately change the nature of the core business.  Key to what they do is take over the air broadcast signals and repackages them to stream as a subscription service to the consumer.  And because those signals are picked up without paying the broadcaster a "retransmission fee", thus keeping their content costs at zero.  Great for Aereo, but bad for broadcasters who have been getting payments from cable operators.  Obviously networks have sued because it turns upside down the current economic model, one that has been the "fastest growing sources of revenues for station owners including ABC, CBS, Fox, and NBC."

But broadcast programming is not enough as Aereo expands beyond the New York City DMA.  "I think of what’s attractive on the Internet: news and certain categories. There’s interesting international programming that’s going to come in."  But as Aereo expands, it must also consider the costs that it spends to add content to the  mix.  The appeal for Aereo for those not happy with the high costs of cable is that it provides streaming access to network programming at a much low cost, only about $8/month, to the consumer.  For households on a budget, Aereo brings a competitive low cost alternative.

Will the FCC kill the Aereo model or will they approve their business?  As Aereo has found a "loophole" that works, this disruptive approach may have a great financial impact on the network business.

Competition Restricted When Distributors Own Content

The cable industry is something of an oligopoly, few companies controlling the marketplace.  For years, your only choice for watching cable networks was to by a subscription from the cable operator in the market. In major cities, some customers have access to overbuilders like RCN offering a competitive service; across the country, if you didn't take cable, you may have opted for a satellite service like DirecTv or Dish.  In the last decade, Verizon and AT&T came out with a competitive cable service although their footprint is also quite limited.  So the choices for cable service have been quite limited.

How nice to know that Google is trying to break into that space with their own fiber footprint and have been testing their service in the Kansas City market, but the incumbent, Time Warner Cable, does not appear pleased.  So how does TWC find a competitive edge, by restricting access to programming.  As they spun off almost all of their cable networks into Time, Inc. TWC does not have much leverage, but they do own a Regional Sports Network.  And Google believes that TWC is not negotiating in "good faith" for them to put on the line-up.  And Google wants the FCC to get involved.

But this is not the first time for this kind of fight.  Back when Verizon was introducing FIOS into the Long Island system, Cablevision was accused of withholding their sports network, MSG from Verizon.  Finally, the FCC was brought in and a deal was struck.  So to will be the case for Google.  But it is the issue that a market faces when their is limited choice and access is denied for new entrants.   In cases like this, when free market is stalled, regulation is needed when it helps to promote growth.

Editorial Limits On CNET Not Atypical

There has been a lot of buzz about CNET's Best CES Award; specifically, that their corporate parent, CBS, decided to intercede on the process due to their legal issues with the recipient, Dish Network and the Hopper. More interesting was that the decision went all the way to the top of the organization.  "News of the top office's involvement in the award snafu was reported Monday by the technology news site The Verge."

While we all wish that editorial lived independent from the economics, the truth is that this type of involvement is not so unusual.  Look no further then newspapers and TV and the effect editorial has on the advertising side of the decision.  How many times has an article, news story, or even a TV show been pulled because of the effect on advertising revenue.  Wasn't it just a couple years ago that History Channel decided to not air their Kennedy Miniseries.  While it eventually found another distribution partner, History made an economic decision over editorial.

Sure CNET was prevented from awarding their prize to the Hopper.  Still, they will be awarded by others.  And all this media still gives them the same accolades that they would have received even if they had won the award.  The overriding issue though still remains.  Editorial issues are never made in a vacuum.  The bigger the company, the more risk they face.  And at the intersection of editorial and economics, editorial rarely wins.

Is Apple Gonna have A Bad Fiscal Quarter?

The news sounds onerous as Apple has reported that it is cutting orders for parts for its iPhone 5.  "Rumor of Apple's iPhone order cuts have been circulating for a month. Interestingly, analysts have been raising their iPhone estimates lately. Many of them are anticipating Apple's March quarter is a mess."  So what is the problem?  For me, the challenge across the board is the frequency of hardware updates on a faster and faster basis.  With consumers on a 2 year phone subscription, phones can only be replace so often without paying a greater share for the latest toy.  As a consumer, if the current phone works fine, why keep replacing it, especially if the next hardware update is only  6 months  away.  The same holds true for Apple's other products.  Many have bought the iPad Mini over the holidays.  So to hear that the next generation model is less than a year away makes the consumer a bit frustrated.  Apple needs to rethink the timing of these hardware releases.

On the other hand, tweaking the software should happen frequently.  Adding more value to the product only keeps us loyal to the brand.  And for Apple to rebound, it means it needs another new product that adds value to the line.  The iPhone wristwatch, an Apple subscription service, an Apple TV; it is time to expand the line.   For now, the market sentiment may be negative, but I still believe that Apple has opportunity in front of them.

US Cable Subscriber Base Shrinking

According to reports, cable household subscribers may have finally hit the tipping point and will begin to decline.  "The number of Americans who pay for cable-like TV products is declining, says a research forecast that claims subscriptions peaked at nearly 101 million in 2011 but will decline to less than 95 million by 2017."  Blame the high cost of cable, blame the internet for bringing competition to the cable model, call it cord cutting, but subscriber numbers are declining.

But not to worry because cable companies are not about to go belly up.  For one thing, the decline is a long way from serious economic jeopardy. And second, these same companies are operating in a multi-platform world where they are finding revenue from content spread across the market.  And as the Paid Content article directly exclaims, "The first cable decline is a tipping point, not a revolution."

Internet Connectivity Everywhere At A Cost

For almost all of us, we are on the grid.  Wherever we go, we are found.  We can track our iPhone, but our iPhone also tracks us.  We can drive anywhere we want, but our EZ Pass tells others which check points where passed and how much to charge us.  And we can be constantly connected to the internet, whether through our TVs, phones, laptops, and yes, our cars.

Sirius has had a pretty exclusive connection to us in our cars with satellite coverage and a wide assortment of music, news, sports, and more to entertain us.  But the rise in internet connectivity has enabled competitors to enter this space as well.  "But Pandora is making a huge push to get into the car, a move that dovetails with ubiquitous wireless access that makes it easier to listen to its service.
'Internet-enabled radio in the car has already begun,' Pandora Chief Executive Officer Joe Kennedy said in an interview. 'It will grow as a snowball, initially small but growing exponentially.'"  And ultimately, more competition means lower prices to consumers.

Interestingly, according to the article, Sirius and Pandora each face different cost structures with Pandora paying out far greater royalty payments.  And to complicate the cost issue even more..."Traditional radio pays nothing at all to SoundExchange, although it pays composers to air their music."  

Wireless connectivity is big business these days and the above growth is just one indication why Dish Network wants to buy Clearwire and compete in the space.  Because at the end of the day, to be connected, we as consumers must also pay for access to wireless along with the services themselves.  And with more desire to be "always on and connected", wireless connectivity is moving more and more away from an all you can eat model toward a usage fee, with heavy users paying more to be connected. 

Cheaper iPhone, All About iTunes

Apple has dominated the "luxury" side of the mobile marketplace with high priced smartphones and tablets.  And while Apple leads market share on the tablet side at the moment, the iPhone is losing share to the lower cost market, especially in the international arena.  Sure older model iPhones have come with lower prices, but Apple sees the need to offer cheaper models "in a bid to grab more customers in developing countries". 

Some have argued that lowering prices on iPhones and Mini iPad tablets are resulting in a lower profit margin for Apple, but I believe that they are negating the value of further increasing the subscriber base to the infrastructure, namely the iTunes and App Store.  Others, like Amazon and have priced their Kindle product line with lower margins specifically to gain customers to their own store.  And they have the added advantage of the Amazon Prime subscription service to bring more value to the consumer and more revenue to the company. 

Apple's entree into cheaper products to grow the customer base should be followed by a similar approach to Amazon, a premium subscription service that brings added content at a monthly cost.  And while more customers could mean more purchases on the iTunes Store, companies and Wall Street both love to see a consistent, regular revenue line, that an iTunes subscription service offers. It is the iTunes and App Store that has the best opportunity to grow at double digit rates, bringing more and more revenue to Apple.  Cheaper iPhones may be the first step, but other lines, like the Apple TV box, and iPod, and yes iPad should definitely follow.  More products sold to more consumers means more sales on iTunes.  

3D TV Not Appealing

Back in November, 2010 I wrote a blog asking 3D or Not 3D and felt the glasses limited the value and enjoyment of a 3D set.  In other blogs I wrote, I suggested that I saw little incremental value both in the home and in the movie theater.  With rare exception on a couple of movies, 3D wasn't important to me.  And I guess others agree.

"This year at CES, very few television makers even mentioned 3D, Troy Wolverton of the Mercury News reports."  Today the push continues to build connected TV sets as well as to hype bigger screens with more pixels and better Hi Def experience.  And while my own instincts in 3D were proved right, I am sorry for those companies that invested in those products.  Would I revisit 3D; perhaps, when the experience can be created with a set of glasses to wear.  Viewers love to be immersed in the video experience, and once that can be created cleanly with a "hologram" like experience, I would be very interested.  Yes, once again, Star Trek science fiction pushing to be science fact.

So goodbye 3D for now.

Dish Network Wants To Be Your Broadband Provider

Dish Network has  a plan of action.  First, get FCC approval to use its wireless spectrum and second grow the business.  With that in mind, Dish has declared its intentions to move quickly by counter bidding on Clearwire to wrestle control from Sprint.  "Under the proposed deal, Dish Network would buy about 24% of Clearwire's spectrum assets for $2.2 billion, and Clearwire would build and manage a wireless network for Dish. Dish would also provide up to $800 million in additional financing to the struggling Clearwire."  So while counter-offering Sprint, a successful bid would also mean that Sprint and Dish would become partners in the ownership of the wireless entity.

What is Sprint going to do?  Given that they too are being purchased by Softbank.  And is this the best move for Dish?  Given some of the issues facing Clearwire, "Clearwire's frequencies are difficult to use", should Dish look to partner more closely with another wireless provider like Sprint itself or Nextel.

What Dish does know is that two way communication is key.  Google is building a wired market for broadband such as in Kansas City, but for Dish, the strategy is a wireless infrastructure to compete.  And ultimately for the consumer, more competition for wireless and broadband access is good news in keeping prices competitive. 

How Do You Turn On Your TV?

Such a silly question, right.  But how many remotes does it take to watch your TV.  I was recently at someone's house over the holidays and it took 3 different remotes to watch TV, one to turn on the TV, one to turn on the cable set top box, and one to turn on the receiver.  Hit a wrong button, change the wrong remote's channel button and you were SOL.  For our short time there, it was best to simply not touch the remote till all systems were on and working.

In our own house, we need one or two different remotes, and tend to leave the cable box on 24/7 to simplify the process.  Cumbersome, but eventually habit forming.  So perhaps the ultimate TV screen will be managed 100% from one device, whether a single remote, mobile app device, or physical buttons on the set.  Yes, they still exist and for one TV set we still use the set's buttons.

Want to move from a cable network to on demand to a DVD to web video, one remote.  Ahhh the simplicity.  And perhaps that is what will ultimately appeal to the consumer, the ability to control all, without fumbling with multiple remotes.  That is until, everything is 100% voice controlled: "Siri, please turn on the TV to ESPN.  Thank you, Siri."  Can I look forward to that at this year's CES?

Old TV Media Not Dying Anytime Soon

According to the David Carr article, old media, or more correctly, old video media isn't dying anytime soon.  With the stock market as an indicator of performance, "the Standard & Poor’s 500-stock index was up 13.4 percent, which was a significant advance, but legacy media giants like Comcast, News Corporation and Time Warner absolutely surpassed it in terms of share price."  Content and distribution companies have figured out how to utilize new media.  For content, it is about controlling how it is available outside TV, both in short and long form content, while protecting license fees across different distribution platforms. 

And while the cost of a cable subscription is rising at an alarming rate, subscription loss has yet to make a huge financial impact given other ways they have merchandised content.  And unlike the print and music business, the video business has not yet felt the impact of being displaced; rather, "New players have opened windows to sell content without cannibalizing the retransmission and affiliate fees that have turned into a gold mine for media companies."  And it is that additive revenue that is helping to improve the bottom line.  

And why will cable TV and old video media stay strong, by locking in content.  Need an example, just look at tonight's BCS National Football Title Game between Alabama and Notre Dame.  Not on the web, not on free TV; if you want to watch you will have to be an ESPN subscriber.  Exclusive content continues to matter and sports on TV remains a big driver for cable.  It's why DirecTv has tied up NFL coverage for all games outside the market.

B&N Next Move

Holiday numbers are coming in and while tablet sales have been brisk, Barnes and Noble has not been as lucky.  As a big B&N consumer, our family must visit their store at least once a month.  But we are also tablet users, specifically iPads, and use them extensively to play games, watch videos, and use other apps.  Yet we haven't migrated to e-books... YET.  I am sure we will, but there has always been something special about opening a book and paging through the chapters to get to the end of the book.  It is hard to replicate with a device that tells me the percentage of the book that has been read.  Still, I expect that we all will start buying e-books and the question will be from whom... Nook, Amazon, Apple?

So what can B&N do to rebound from a bad Q4.  "Sales from stores and the website sank 11 percent to $1.2 billion, the New York-based company said yesterday in a statement. Revenue at the Nook unit, which includes devices, accessories and content, fell 13 percent to $311 million."  I do not want to see B&N become another footnote, like Borders.  But tablets are invading our lives and the Nook lacks what Apple and Google possess, a real library of apps PLUS the integration of these same apps across devices like tablets, smartphones, and computers.  Not just books, but games, pictures, videos, music, too ACROSS devices.  I believe this integration is essential.

In the retail space, B&N has begun to diversify its product line, adding toys and gifts to its merchandising efforts.  But more diversification is necessary to succeed.  People still love to leave their home to shop and B&N can continue to be a destination.  What products to add, perhaps bring Game Stop into the mix.  And make Microsoft a bigger presence, selling not only Xbox but also their line of phones, tablets, and accessories too.

As to the digital side of the business, with competition fierce, an expanded partnership with Microsoft may be the solution to the issue of integration.  Tying in more closely to a Microsoft App store that gains credibility and expands the usefulness of the product line.  The Nook product line may be ranked superior for its hardware, but it is in the usefulness and ergonomics of the software with the hardware that I believe matters most to the consumer.  Getting the consumer to see that value may be most important.

Buying A Cable Network No Guarantee For Distribution

Al Gore's cable network, Current TV, may have reached near 60 million subscribers, but few tuned in and the network lost both on-air personalities and a following.  Those results have led to the eventual sale of the network.  And of all those companies seeking entry onto cable line-ups in the US, the buyer is Al Jazeera, owned by the government of Qatar.

But as anyone knows who has worked with contracts, changes in ownership, are but one factor that can make a contract null and void.  In the world of cable, format changes, programming changes, and other issues can also terminate an agreement.  And as cable operators look at their contracts with Current TV, they are now pondering what to do, renegotiate or drop.

Time Warner Cable has already decided that they will not carry the former Current TV, now to be named Al Jazeera America.  Will other operators follow suit or will they leave the channel on? Is there even an audience for the network or a concern that the viewpoints will not be well received by a US audience?  Current TV had its own troubles competing against bigger cable news networks including CNN, MSNBC, Fox News, BBC, as well as the news arms of our broadcast networks.  Given the niche that Al Jazeera brings, it is hard to believe that they will succeed but stranger things do happen. Plus, given the desire of cable operators to lower programming costs, the dropping of the former Current channel adds some economic relief.  Who else drops the service from their line-up remains to be seen.

iPhone iWatch

In February 21, 2011, I wrote a blog on an article appearing on CNN Money about turning the iPod into an iWatch.  Fast forward two years and that same idea has resurfaced but this time it is an iPhone iWatch.  As Apple ponders what will be the next thing, folks are speculating that Apple will do to the iPhone what they did to the iPod, build a next generation product that replaces the old technology.  As tablets are usurping laptop sales, the day may come when folks no longer need a smartphone but will rely on wearable technology.  "The early bet on what kills the smartphone is something like Google Glass. Wearable computers are widely believed to be the next computing fad."

For Apple, that could be the iWatch.  Easy to access, easy to wear, connectable to other Apple devices.  And perhaps add a "self winding" type mechanism, a device that is able to stay charged through movement.  Will people be willing to give up their smartphone or will this simply augment and improve the experience of using one.  One thing is clear, the iPad Mini proved consumers love devices in multiple sizes.

Can Intel Change The Face Of Cable?

Intel may be trying to do what Apple hasn't so far, build a new cable mousetrap that offers consumers their choice of programming, via the web, at a lower total cost.  How?  According to stories, they are building their own set top cable box that connects to broadband and delivers cable programming to the TV set.  It's called XBox, I mean Apple TV, sorry Roku; actually, it has no name yet.

But here is the problem, those best networks offering their TV shows are the same ones already getting license fees from cable operators like Comcast and Time Warner.  And these same networks may just be reluctant to upset the apple cart.  Why leave a guaranteed model which places you on the largest bundle of service for the chance to be picked a la carte by the individual consumer.  What is the win, a larger fee per user at the risk of less than 80% choosing your network.  And on top of that, these same top networks have second and third level networks that they also get license fees and carriage for distributing.  That's right, mixed in the purebreds are some possible mutts.  For these same programmers are doing what cable operators are doing, bundling their networks to assure fees and distribution.  Because once they are on the line-up they can begin to get additional advertising revenue billed as well.

Can Intel construct a deal to get programmers to come on board?  For smaller networks with little to lose, of course; but for the big guys, the ones that get the highest ratings, the opportunity is doubtful.  And that Intel can do a deal while Apple has been hard pressed to get more going with their own Apple TV box, let alone an Apple TV set seems a stretch for me.  Yes an Intel cable box could be in their pipeline; I just don't believe they will gain more channels than what is already accessible on other over the top devices.