Merger Mania For Cable Operators

With John Malone's investment in Charter Cable, many speculated that it was his way to get back into US cable operations.  Having owned TCI before selling it to Comcast and owning DirecTv before spinning it out into its own public company, Malone sees Charter as a means to an end.  Now that speculation has advanced to talks of mergers.  "Shares of Time Warner Cable and Cablevision Systems soared Thursday after reports that Liberty Media chairman John Malone was 'exploring scenarios' to construct a deal to purchase one or both companies through his latest cable holding, Charter Communications." 

Certainly a merger of all three cable operators, Charter, TWC, and Cablevision, would put them at a subscriber size just a couple million below Comcast Cable.  Time Warner Cable is already the second largest to Comcast, but with 10 million fewer.  This merger would put them squarely in equal footing to Comcast.  As a result, this new entity would see tremendous cost savings from lower licensing fees for network programming to better economies of scale in its infrastructure.  The one common piece to this three way merger is Charter CEO Tom Rutledge who has worked at all three cable companies. 

But good news for cable operators would mean bad news for the networks.  Lower revenues from existing business, fewer cable operators to sell to, and a more constrained business environment.  For the Department of Justice and FCC to approve such a merger, such requirements might be needed to be consumer beneficial such as allowing networks to sell to OTT platforms despite current license deals that may prevent or limit such arrangements through Most Favored Nation (MFN) clauses. That could mean that networks would be allowed to negotiate in good faith with Intel Media, Apple, Roku, Aereo, and others who offer a streaming video subscription business to consumers.  Of course that review will also lengthen the timeframe for such a deal to close. 

Eventually these types of consolidations and mergers need to occur for the cable business to compete in the face of changing technologies.  With the growth of broadband and wireless technologies to compete against the wired cable business, operators like Comcast and Time Warner and others need the cost efficiencies to adapt and compete in an ever changing environment. 

Aereo Finds A Fourth Market

Cable operators are afraid of cord cutting.  As much as the percentage of customers dropping cable is low, the trend points to it growing at faster and faster rates.  Operators have struck license deals with networks to limit them from selling to OTT providers.  These deals have made it hard for OTT companies like Intel Media and others from gaining access to these same networks.  But Aereo has found an elegant solution; take broadcast signals from off air through antenna farms and offer their streaming signals to homes in certain markets.  No payments to the broadcasters and Aereo successfully aggregates well known networks into a reasonable priced package of online entertainment.  And despite lawsuit attempts, Aereo continues to grow. 

Aereo is already in three large DMAs, New York, Boston, and Atlanta.  "At the TechWeek Chicago event, Aereo CEO and founder Chet Kanojia announced that the company plans to launch its services in Chicago on Sept. 13."  Some broadcasters have threatened to change their delivery model to thwart Aereo from taking their over the air signals but so far no one has followed through.  Consumers taking the Aereo service still have to subscribe to a broadband service, most likely from their cable provider.  And at some point, cable operators will stop selling a broadband only service or switch to a usage type model to capture back some of that lost revenue from customers who have dropped cable service for Aereo. 

Perhaps too cable operators need to start offering their networks to online devices and provide a true TV Everywhere environment.  "Aereo is currently supported on iPad, iPhone, iPod Touch, Chrome, Internet Explorer 9, Firefox, Safari, Opera, AppleTV (via airplay) and Roku devices, but not Android."  That may not stop consumers from switching because of price, but it may slow down some cord cutting.  It will certainly help demonstrate the value of being a cable subscriber. 

Strike Two For Dish Network - No Clearwire

Dish Network has been swinging but unfortunately also missing the ball.  Strike one was losing a bid for Sprint to Softbank and strike two is losing its bid for Clearwire to Sprint.  "The developments pose a dilemma for Dish Chairman Charlie Ergen as he tries to create a national wireless broadband service. He has been amassing airwave spectrum rights but has said that he needs additional licenses. He had hoped to secure that by acquiring a large minority stake in Clearwire –  and by acquiring Sprint."  So what to do next?  Does Dish Network have another swing left and who might it be?

Some are speculating that Dish may still have their eyes on Lightsquared, although that spectrum space has been questioned for its interference issues.  Others are speculating that dish may reach out to another wireless provider, perhaps T Mobile, to gain a national footprint.  And still others think the best course of action is for Dish Network and DirecTv to merge into a more powerful satellite competitor.  One wonders if this third scenario might raise the anti trade issues of a single consolidated satellite company, but if Sirius and XM could make it work, so should these two.  For me, I think the next step is a wireless play and perhaps a T-Mobile and Lightsquared combination may create synergies similar to what Sprint and Clearwire brought to the table.  For now, the next move seems to be Ergens.

Kids Content Helps To Drive Subscription Video

The race by video streaming aggregators to bulk up on content is on and ultimately could lead to more cable cord cutting.  The category that seems to get a ton of attention is kid friendly programming and deals are being cut left and right.  Netflix deal with Dreamworks Animation was yesterday's news; today, the latest content partnership deal is between Amazon and PBS. 

"Amazon says that the PBS KIDS shows will be available on its Kindle FreeTime Unlimited service, which, paradoxically for a service that bills itself as being 'unlimited,' is designed to help parents limit viewing time.  The new arrangement along with Amazon’s recent deal with Viacom to offer shows including Dora the Explorer, Go Diego, Go!, and The Backyardigans ”brings some of the most popular kids programming to Prime Instant Video, making it the perfect place for the whole family to catch up on all their favorites,” says Director of Digital Video Content Acquisition Brad Beale."  These are the same families that are using Amazon Prime to buy their diapers in bulk so it is a perfect fit.  Of course, not knowing the revenue model for such a partnership, the hope for each is that their is a ROI that makes sense for both parties.

So keep checking the boxes for kids programming.  Could Power Rangers be next or is a new provider lurking?  Stay tuned, same bat time, same bat channel.

Nook Tablet No More

Barnes & Noble has thrown in the towel in the tablet game, conceding to iPads and Kindles.  Consumers were no longer embracing their tablet and sales were plunging so B&N decided the best course was to stop producing them.  No doubt, Apple and Amazon are formidable competition and technology leader does not describe the core of B&N, a brick and mortar company.  Try as they might, consumers chose other devices.

And while the announcement calls for the en of their color tablets, B&N will still continue to build and sell their e-readers.  I am not sure I agree with that decision.  Amazon and Apple have built both the infrastructure and the device that consumers prefer.  The decision to keep Nook e-readers going is only delaying the inevitable.  Inevitably the B&N app will be an agnostic entry to downloading books, regardless of the device.  Or perhaps a closer partnership to Microsoft is in order if the decision is to embrace a proprietary library with Microsoft branded products. 

Sad too that the Nook did not save the B&N retail business.  "If Nook hadn’t done so badly, the poorly performing retail segment — which consists of both bricks-and-mortar stores and BN.com — would be getting more attention this morning: Retail revenues fell 10 percent for the quarter, to $948 million, and fell 5.9 percent for the year, to $4.6 billion."  More stores are closing than opening with the only bright spot being their college bookstores.

So what is next for Barnes & Noble?  I would profoundly miss their presence in the retail landscape.  While I buy digital books, I still also buy hard copies too.  B&N represents a place of discovery and entertainment.  I believe that while leaving the Nook business is the right move, diversifying merchandise in their retail stores to keep customers coming remains essential.    I want to see B&N survive and prosper. 

Are Cable Operators Beatable?

While cable operators are concerned about cord cutting and subscribers dropping cable services, they still have an ace in the hole with their broadband subscription service.  Add to that a telephone business for both homes and businesses, and cable operators like Comcast and Time Warner Cable are here for the long run.

And while consumers may be slowly dropping their cable service for streaming services like Netflix and Amazon and others, these same consumers may have a hard time accessing those big cable networks, like ESPN or Discovery, without a cable subscription.  Cable operators have negotiated agreements woth cable networks that make it hard, if not impossible, to sell these same networks to over the top (OTT) providers like Intel Media, Apple and others.  Consumers may be able to access certain shows through streaming but not the entire network.  And these cable operators are also trying to stop consumers from getting broadcast channels as well through streaming, just as Aereo is hitting multiple markets with their OTT service. Operators have responded with lawsuits to try and stop.

With so much control, cable operators may be making it difficult for OTT companies to create a competitive, "virtual MSO" model.  And Craig Moffett, of Moffett Research, believes that environment makes it difficult for companies like Intel Media to include top ranking cable networks on their streaming subscription service.  "And he thinks cable operators and other telecom providers remain well-insulated from virtual MSOs even under that third, most promising option."  Cable operators simply have to increase the price of their broadband service or change it to a usage-based system, making an OTT alternative a too costly alternative to traditional cable.

The only chance for survival may be when cable networks feel the loss of subscriber revenue from consumers cord cutting for these other sources of online entertainment.  Consumers have become more show loyal then network loyal and as that trend continues, networks may be less relevant than online show aggregators like Netflix. Will cable networks all go away; absolutely not.  The big networks will survive, but the smaller ones may just feel the need to chance it on these "virtual MSOs" to increase their subscription size. 

My DVR Works Better Than Yours

I can't tell you how often we complain in our house that the DVR misses the ending of almost every show we record.  In some cases, it misses the beginning too.  But we grin and bear it and try to move on with our lives.  It certainly adds another black market to the list when consumer start to shun cable for streaming.  And yet, it could be an easy fix.

According to Slate, our problems don't occur in other countries.  They have something called "accurate recording".  "A customer’s DVR, in turn, will not stop recording until it’s been signaled that the present and following information has changed."And according to the article, the US could have this feature.  "The issue, the source said, is that the broadcasters would need to provide them with real-time data on the start and end times of live events. That’s already happening in the United Kingdom and other places with accurate recording, but not in North America."  Seems an easy fix and a great marketing statement to tout.  Heck, we might even stop hating our cable boxes and cable company.

TiVo never seemed to have this problem.  Or perhaps it was because I could add minutes before and after to assure that I got coverage of the program.  My cable box does not have that flexibility.  Cable companies might suggest finding the show by searching on demand but that process remains cumbersome too.  And so we suffer in silence hoping that some executive will listen and improve the DVR experience. 

Next Cable Operator To Merge

Is Charter Cable the next major cable operator to merge with another?  For years, many have speculated that Cablevision, landlocked in the NY DMA, was a likely acquisition target.  As Time Warner Cable (TWC) is the owned the majority of NYC, they seemed the most likely partner.  But that deal has yet to materialize.  A Charter deal with Time Warner has promise, with synergies in the LA DMA, but other markets are less likely to benefit from having TWC systems nearby.  So if TWC is mentioned repeatedly, who would they prefer to merge with first?

In today's NY Post, speculation comes the Tom Rutledge, a former TWC and Cablevision executive now at Charter, would like to merge and run a bigger operation.  "Although Charter is half the size of Time Warner, the fourth-largest pay TV provider, Wall Street would like to see the two combined under the leadership of Rutledge."  And while that may be what Wall Street wants, TWC executives may have their own ideas as to who should be in charge, despite Rutledge having had a very successful career in cable.  And Charter may not sway the vote if it is true that Cablevision is interested in merging.  "All the deal talk has even put Cablevision patriarch Chuck Dolan in 'listening mode' after years of resisting a tie-up with Time Warner Cable, according to a source."  I think if TWC had its say, a Cablevision deal would be its first move.

One thing is clear, regardless of who merges, their is more need to consolidate to improve profit margins through lower license fees and cost efficiencies.  With an increased push toward streaming and a loss of basic cable subscribers through cord cutting, consolidation will enable cable companies to provide a better connection experience, both in the home and out, by expanding its infrastructure.  And who knows, maybe new businesses that can grow as a result of this larger footprint. 

Clearwire Big Winner As Sprint Raises Offer

Regardless of whether Dish or Sprint buy Clearwire, it is clear to me that Clearwire and its shareholders are the big winner.  Dish may have wanted the company but they also forced Sprint to raise their offer.  "Clearwire’s board of directors said it has endorsed the new Sprint bid, which values Clearwire at about $14 billion."  So what is Dish to do next, up their bid for Clearwire, go back and bid again for Sprint?  Should Sprint acquire the remaining shares of Clearwire, they will hopefully be able to utilize that spectrum to better compete against Verizon and AT&T in the wireless space.  And a bigger Sprint may be a better acquisition target.

Some rumors that Dish may follow up and partner with Google to raise its bid.  Certainly Google would also like to enjoy the uses of that spectrum for its broadband needs as well.  And Dish and Google might just find some other useful synergies as well.

Video On Instagram and Vine - Not A Fan

15 seconds or 6 seconds, fad or fancy, that's what strikes me as Instagram has added a slightly longer video feature to its photo sharing site.  I did not embrace Vine and I struggle to think that Instagram will be better served with its video feature.  I love sharing photos but find short form videos more kitschy then substantial.  But I am clearly the wrong demo.

My daughter is a big Instagram fan and I asked her opinion on video.  She seemed less than enthralled by it, but others may like sharing quick bite videos of them and their pets.  It may in the beginning create an overwhelming sense of clutter on the site, but  I see that fad interest quickly fading.   User generated content has great value and You Tube has certainly benefited from it; their appeal is that it is not limited by length so that messages can be fully shared, whether 6 seconds or 6 minutes.

At the end of the day, success must also be measured by the revenue that these videos produce.  Photos can be surrounded by a display ad but videos are ideally suited for pre-roll.  Are you really going to put a 15 or 30 second ad in front of a 6 or 15 second video?  Consumers will quickly revolt.  "On Thursday, (Instagram co-founder Kevin) Systrom dodged questions about how video on Instagram could represent new advertising opportunities, though said that Instagram  – which still does not sell any ads — will 'become a business over time.'” Let's hope they have something creative that consumers will accept.

The Money Is In Apps And Music

According to stats from iTunes, consumers spend most of their money on Apps and Music.  "Based on these latest numbers, (Horace) Dediu calculated how much iTunes users spend per year on different types of media. He says it’s 'about $9/yr on Software, $2/yr on books, $16/yr on apps $12/yr on music and $4/yr on video.'” This analysis is culled from his Asymco blog.  With videos and books offering the least amount of revenue, it speculates that their is missed opportunity in these buckets.

Clearly iTunes provides a huge revenue and growth opportunity for Apple.  Consumer need to upgrade and add more content to their devices drives purchases and the more devices connected to iTunes the better.  According to the site, iTunes currently has "575 million active iTunes accounts".  But if each account is like mine, a family with multiple users on the same account, that means that there is possibly 4x the number of users per account, each actively purchasing and downloading.  Add to that the number of devices and the need for content continues to increase.

Can AOL Make Patch Profitable?

Local was once the battle cry of cable operators.  To compete against the national, not in your backyard, satellite companies, cable operators touted local offices, local management, and local participation and pr in neighborhoods in which they operated.  And while some of that pr still remains, cable operators recognized that to be more profitable required economies of scale, regional offices over local, and national campaigns over regional ones.  Costs through consolidation were reduced and profits increased.

AOL's entry in local neighborhood news faces similar stumbling blocks.   Costs to manage sites on a local basis are both expensive and time consuming and the real ad dollars come from bigger buys.  You can try to aggregate all the sites into one number but it hardly beats one site with the same results.  "Patch, with more than 900 sites supplying news to communities or neighborhoods, has become a test case for both the online-news industry and AOL’s ability to transform itself from a dated dial-up service to an ad-driven Web publisher."  I am a fan of Patch; I check it out a couple times a day for local info on the community.  But I have found that the quantity of local news has decreased in favor of more regional news, making the site less relevant at times.  Can Patch be both local and profitable?

Consumers and users care about the former, stockholders about the latter.  And that is the conflict.  Can Patch be both relevant for the communities each site serves AND a revenue producer for the company?  One hopes that the better the quality of the content, the more clicks the site will get, and the more ad revenue it will return.  But the costs to drive content creation in each individual community must be high and so the ROI to pursue better content appears unlikely.   Companies like AOL, seeking to get to profitability, have to do what cable operators and others have done, cut costs through consolidation and raised prices on ads on the sites.  "The push for profitability has forced Patch to put single editors in charge of multiple sites, increasing burnout."   But I fear that less relevant local stories on these sites will only go to reduce its value and lower clicks.  A lose-lose scenario if ever there was one. 

I am a believe in Patch and only hope that they invest in more local content, partnerships with local and regional newspapers, and town governments.  Add more revenue opportunities through e-commerce and continue to pursue the local connections.  For me, Patch has become a resource to the neighborhood and one that I would hate to see go away.

Original Programming Will Drive Online Success

It took cable networks a number of years to realize that they needed solid original programming to compete with broadcast.  Billiards on ESPN and repeats of old sitcoms was just not going to be enough to drive ratings.  That formula has led to such great shows as Mad Men on AMC and others too numerous to mention.  Well borrowing from that same playbook, online streaming platforms has been even quicker to invest in original programming.

Netflix has announced its partnership with Dreamworks Animation to provide hours of fresh content.  Their strategy, going after the younger audience and ultimately the mom and dad to subscribe, is a smart one.  You Tube has been commissioning original programming as well.  And Amazon continues to invest.  "Amazon Studios is moving quickly to expand its original slate. After focusing on comedies and kids programming in its first batch of 14 pilots, five of which — two comedies and 3 kids shows — were picked up to series three weeks ago, the company is already setting its sights on the next target — launching a drama series."

For content creators, this newer distribution platform becomes another opportunity to license and sell its content beyond the current players of broadcast and cable.  New paths for distribution, both domestically and internationally, are opening up.  And with the growth of smart TVs, laptops, tablets, and iPods, an easy way to search and watch these shows.  A threat to traditional pay models and a better chance for success for streaming subscription services.

Is Microsoft Preferring Best Buy Over B&N?

In a move to expand its distribution of product and software, Microsoft is working closely with Best Buy to sell the value of its brand.  "The store-within-store format inside Best Buy will help Microsoft get its brand seen by electronics shoppers without having to make a big investment and sign a 10-year lease for a proper storefront."  And Best Buy becomes the aggregator of products for consumers to test and buy.  Best Buy is already offering space for Samsung and Apple to sell its products.  Now all Best Buy has to do is compete on price points, especially with online sellers of these same products.

Of course Best Buy makes great sense, although Microsoft is utilizing a follower strategy, being later to the market in this retail strategy.  Microsoft had an early opportunity to use its partnership with Barnes and Noble to do the exact same thing.  And with a number of B&N stores on college campuses, a chance to talk directly to a strong customer base.  A missed opportunity indeed.  But that partnership, built more closely around Nook, has gone nowhere.  Instead, B&N seems to be lowering prices on Nook and some have speculated that they will soon exit the tablet and e-reader space.  So is Microsoft backing out of B&N, too?

The Microsoft retail strategy to partner with Best Buy seems a necessary step as they may have bitten off more than they could chew by trying to open their own stores.  It may not differentiate Microsoft from others, but it enables better comparison shopping.  And hopefully on product and value, Microsoft will achieve its strategic goals. 

Dish Wants Wireless Distribution, DirecTV Wants Content

In the game of Who'd You Rather, the question to Dish Network would be who do you want more, Sprint or Clearwire.  While Dish's intention is clear, it seems to me the answer is both. Having the Sprint infrastructure along with additional wireless capacity from Clearwire would certainly help Dish to compete for wireless/streaming customers.  And SoftBank, the other pursuer of Sprint, sees it that way too.  And while Sprint is backing Softbank, Clearwire is backing Dish.  According to Bloomberg, "Ergen, the chairman and co-founder of the satellite-TV company, is angling for both Clearwire and Sprint as part of a plan to expand into wireless services."  And perhaps by controlling the wireless spectrum piece, Dish makes a Sprint deal less attractive for Softbank.

While Dish is angling for the wireless platform, DirecTv wants more content.  And they can achieve that by acquiring Hulu.  "Several sources with knowledge of the ongoing Hulu acquisition talks tell PandoDaily that a deal is imminent and that DirecTV is the likely victor."  Certainly, that acquisition has the potential of providing DirecTV with revenue streams from both subscription and advertising.  But it has pitfalls too as the current owners who are the content makers could limit the content that Hulu has been receiving.  Cable operators are writing agreements that potentially limit how networks can distribute their content outside the cable platform.  That can severely hurt companies like Hulu that rely on gaining access to these series. 

And so we have two different satellite companies taking different strategies to improve their overall business model.  And in the long run, that might be most beneficial should these two companies ever partner together to compete more effectively against cable and telco operators.  Because as far as the industry is concerned, size matters and consolidation is key. 

Is 3D TV A Thing Of The Past?

I have frankly never been a fan of 3D, whether in the movies or TV.  Perhaps it is because I have never liked the glasses or found the effects to improve the story.  And why wear glasses if you don't need them.  (I hold that same judgment for Google Glass).  So it appears that I am not alone and for 3D TV, the end is near.  ESPN has announced that their channel, ESPN 3D will disappear by the end of this year.  "Viewer demand aside, adoption among cable providers was also mixed; Comcast, DirecTV, Verizon FiOS have all carried ESPN 3D at various points. AT&T, however, pulled the plug in 2011, claiming the high costs of carrying the channel were outweighed by low demand."  And so lets expect that other 3D channels, if there are any, are soon to end as well.  Not surprising since TV manufacturers have been also moving away from producing 3D TV sets.

Where 3D interest has declined, web streaming interest has skyrocketed.  Recent reports have cable operators putting requirements into their programming carriage agreements to limit the rise of streaming network services like Aereo, Intel Media, and a possibler Apple TV service.   Concerning too for TV manufacturers building connected TV sets to easily play web based programming.  3D may be dead, but the battle for streaming media is alive and well.

If Content Is King, Why Is News Corp. Splitting?

News Corp, home of Fox Broadcasting, 20th Century Fox, The Wall Street Journal, and The New York Post, is splitting its publishing and entertainment businesses.  Thus the first two companies won't be connected to the latter two, post split.  So why doesn't a content company not want to take full advantage of its wide range of content creating businesses? "Last year, News Corp. decided to split itself after years of shareholder pressure to spin off the lower-growth publishing side of the business."  That's right, not all content is created equal in the eyes of shareholders.

As the printed word seems to have less value than video, print-based companies are finding it harder and harder to transition to a successful digital business.  And yet, I hope that this thinking is simply short sighted.  The printed word, regardless of the platform it is presented on, is a very powerful instrument.  Print has been especially hurt by the web and the glut of free content, like this very blog.  The old adage, why buy the cow when the milk is free, has been haunting all content, both print and video.  But exclusivity and uniqueness of content still impresses consumers enough that they are willing to buy it.  And there is still synergies of tying together print and video in a subscription service.

Perhaps the challenge of print is that the digital ad and subscription revenue has not yet caught up with the current model.  And the transition, while slow, is creating lower profit margins.  But I believe there is a light at the end of this tunnel and digital print subscription services can survive, especially if constructed with a multi-media array of content. 

News Corp print side could blossom with a stronger synergistic approach and new strategies to compete.  But without that ownership holding it together, it also opens the print side to engage in wider partnerships that it may have been dissuaded from entering under the current umbrella.  I believe that there is still a future in newspaper and magazine subscription businesses, especially when tied with related content that better utilizes the digital platform, and new strategies that grow incremental and additional revenue streams.  So despite an expected split, each side of News Corp can continue to prosper. 

More MSO Mergers In Our Future

As programming costs, that is the costs for all the channels on your cable line-up, continue to rise, more cost efficiencies must be found.  And at this week's National Cable Television Association's (NCTA) The Cable Show, one way to do it is through consolidation of cable operators.  "Doug Mitchelson, managing director at Deutsche Bank Securities, said that to the extent increases in TV content pricing 'becomes abusive, the industry will consolidate.' He suggested that eventually there could be three large U.S. MSOs, with two other big players besides Comcast, a trio that would have much more leverage to keep rates down."  That trend has been occurring for the last 20 years.  Today, Comcast and Time Warner Cable together cover over 50% of the cable universe already. 

Among the systems being discussed, John Malone's recent investment in Charter Cable has some speculating that more investment is in order.  "Industry sources have independently confirmed to Variety that Malone is interested in TWC, with the caveat that he is surveying the entire cable landscape for potential deals and has not engaged in formal due diligence on such a deal."  For years, Time Warner Cable (TWC) has been interested in the Cablevision properties and the chance to gain Long Island and their coverage in the NY DMA.  Behind Comcast and TWC is Cox Communication, the third largest cable operator with over 6 million basic customers.  A privately held company, Cox Cable  may at some point decide that they no longer wish to compete in this space.

Of course consolidation alone will not help improve profit margins.  Time Warner has already started paring down the smaller networks that they deem not valuable to their audience.  At some point, operators may have to make deeper cuts as they try to keep their subscription prices in line with consumer expectation.  If prices rise too rapidly, that may encourage more cord cutting, something cable operators are currently facing.  "Cord-cutting is worse for programmers than operators, (Marci) Ryvicker (managing director at Wells Fargo Securities) said, because cable providers have the option of offsetting video losses by increasing broadband pricing."  Unfortunately, sometimes short term profits get in the way of long term vision. 

As far as consolidation is concerned, it is an absolute certainty.  Beyond the small market mom and pop single cable systems, the industry will operate within a decade with three to five major cable operators of 1mm or more subscribers, 2 telcos (FIOS and U-Verse), and 1 or 2 satellites (DirecTv and Dish).  The FCC will certainly have their hands full while they enable all this consolidation to occur.  Because at the end of the day, broadband and streaming will become the key issue. 

Did XBox Hurt Its Future?

The Xbox One has yet to be released, but it certainly has raised the voices and irked a number of gamers.  "Earlier in the day, Microsoft had elicited groans from gamers when it announced restrictions on used games for the Xbox One and said players had to log onto the Internet for authentication."  With a price tag hitting $500 and an always on and connected platform, some wonder who the audience for the new box really is.  Perhaps too it is trying to be more than what gamers really want from a device, trying to replace the cable box in the home.  Will current XBox 360 owners upgrade or not and will the XBox One attract new users?

For Sony, the release of a new Playstation 4 at this time might just encourage some loyalties to switch to them.  First, the PS4 will cost $100 less.  "Sony also drew cheers from the audience at the Electronic Entertainment Expo (E3) in Los Angeles when it said the PS4 would run secondhand games and did not require an always-on Internet connection."  If gamers find compelling titles and a welcoming user experience, they might just find the share of market shift to their favor. 

Given the two different directions each platform is taking, the gloves are coming off, and a fight is imminent.  For other platforms, like the Nintendo Wii, timing is crucial for them to share how they wish to compete in a very tough gaming battle.  For this household, I can only share what my son, a current XBox user, is thinking.  He hates the authentication and always on issue as well as the fact that older games won't play on the new device.  It might just be time to look at the PS 4 and its games.  Put head to head, it will be fascinating to see which new platform, XBox One or PS4 wins this battle.

Social Media Can Hurt DVR Viewing

For live events and high involvement, edge of your seat viewing, it is harder and harder to watch them on a DVR on a delayed basis.  That is if you are also socially connected to sites like Twitter and Facebook.  So we are reminded in this story entitled "Game of Spoilers".  "The VCR, DVR and video on demand have freed us from the tyranny of TV schedules but the Internet imposes its own dictatorship — at least if the show is worth it. Raging at tweets for spilling the beans, or shouting "Shut up! I haven't watched it yet!" at your co-workers, proves increasingly futile."

Truth is, we have faced this issue for some time.  Want to watch a baseball or football game a few hours after the game may have already ended, don't check your Facebook feed.  But also don't turn on sports radio.  Want to watch the Oscars or last night's Tony Awards, stay away from Twitter as well as the next day's TV or newspaper.  Spoilers can get exposed at all times, especially for shows that knowing how it ends effects the enjoyment of the show itself.  Social media simply provides another means for revealing those spoilers.  And perhaps because it is so immediate and so pervasive, it is harder to ignore when we are delayed in viewing certain programming.

The article also correctly points out that not all shows possess the spoiler issue.  "Spoiling 'Big Bang Theory' is never an issue, says Thompson, even though its got a far larger audience than "Game of Thrones" — 18.68 million vs. 13.6 million, according to Nielsen."  Knowing its outcome doesn't hurt the comedy of the show. 

For advertisers hoping to keep their audience engaged and overcoming the other concern of the DVR, like fast forwarding through commercials, live and appointment viewing type programming can assure that a majority will watch at the immediate time and day the show is being presented.  And that means better ratings and higher ad revenue. 

TiVo's Win Is A Loss To Some Shareholders

TiVo may be the premier DVR on the market.  It may have the edge on the technology and the patents to back it up.  And they may be winning their legal fights, either by court order or by settlement, but sometimes good isn't good enough.  And shareholders not happy with the verdict sold their shares and watched the stock price go markedly lower.  Apparently, they expected a bigger payday.

Today, TiVo has a superior product; yet, as we all know, that technological superiority only lasts till the next technical improvement or disruption comes along.  TiVo still need to get deeper in with the cable operators where the heart of their growth lies.  TiVo needs to be integrated in every cable set top DVR box.  That is where the subscription revenue, ad revenue, and research revenue lies. 

Until consumers can buy their TiVo box at retail and install without a cable truck roll to get connectivity to the cable pipe, most consumers will let their cable company give them a generic DVR box.  If it is too much of a hassle, a majority of consumers won't take the extra time to do it themselves.  Should TiVo get the cable operators to agree to a simple connectivity and authorization online without a CableCard, then consumers might just be willing to buy their own set top box.

Shareholders may be bothered short term by the outcome, but long term, TiVo still offers a great product. 

How To Stop Cord Cutting And Raise Revenues

Want to hear an old idea that keeps popping up.  An idea that wants households to spend more and depress the growth in online streaming.  It is called broadband usage fees and it means that heavier streaming users would pay more, depending on the number of bytes fed through the system.  Think utility bills like electricity, gas, and water; this time for broadband.  "Some Wall Street analysts have suggested that cable operators could eventually start charging subscribers or broadband video providers based on broadband usage."  And John Malone, Chairman of Liberty Media, seems fully behind "'various tiers of connectivity,' possibly with built-in video offerings or bundles." And I am sure that these fees are hoping to encourage cable customers to retain their cable subscription and take advantage of lower cost bundles of broadband service.

Current streaming is already clogging the broadband pipeline and cable operators are charging more for higher speeds.  Not happy with unleaded, pay more for ultra supreme.  But consumers who find themselves charged by actual usage will want to have a counter attached to their system to keep track of how much cost is flowing out.  Hit your peak before the end of the month and you might feel the need to turn off broadband till the new billing cycle starts.  And don't forget to password protect your home WIFI; no one wants to pay for non-family members.

It harkens back to the day when we feared making a long distance phone call for an extended length of time. It took some time before we moved to an all you can call phone bill.  And no one wants to move backward.  We can only hope that through technological innovation and more competition, broadband access becomes ubiquitous and the cost of a stream so low that usage fees won't matter.

Content Deals Continue To Prove Its Title As King

A couple recent content deals only seems to confirm the importance of content to distribution.  When Viacom didn't renew its streaming deal with Netflix, there may have been some thought that cable operators convinced them to give it that exclusivity.  But that is clearly not the case as Viacom has struck a new streaming deal with Amazon Prime.  "In a letter to customers, Jeffrey P. Bezos, Amazon’s chief executive, said the deal gave Prime Instant Video more than 250 TV seasons and more than 3,900 episodes from Nick Jr., Nickelodeon, MTV and Comedy Central." The quantity and quality of shows can certainly bring enormous value to the Amazon subscription service.

Another renewal sure to please football fans, Verizon Wireless and the NFL have renewed their streaming service.  DirecTv may get all the games on TV, but Verizon Wireless once again has the streaming rights.  And for those hardcore fans that need their fix away from the TV set, Verizon can deliver an exclusive content experience. 

It is these types of content deals, offering exclusivity in the streaming space, that further differentiates and adds value to the online subscription model.   Whether consumers cut their cable cord to rely on streaming solely for their viewing entertainment or add these streaming services to their entertainment budget may just be the question that haunts cable operators. 

With competition growing in the online space, content deal negotiations will only grow and the costs for rights will only increase.  Content is King in the battle for distribution growth. 

Zynga Needs Another Hit

With the news that Zynga is laying off staff and closing offices, it speaks directly to the fickleness and changing interests of consumers.  Where once its games were the hot properties, from Farmville to Words With Friends, today it is Candy Crush Saga and Dots.  And tomorrow it will be something else.  The challenge for Zynga and every other company with a hot product or service is sustainability.  To be a one hit wonder is nice but it tends to rise too flash and drop just as sharply.  Companies that build a steady presence and look ahead at a pipeline of new ventures are the ones to stay relevant in the long run.

Zynga can survive if it can once again capture the hearts and minds of users with a next new game; otherwise, players will only continue to tire of the current games and seek out new challenges elsewhere.  It is happening to Zynga but it happens to every other company that seeks to stay competitive.  NBC for example saw its Must See TV on Thursday evaporate as show ratings declined and audiences didn't embrace the next series.  They fell from first to fourth place on Thursday nights.  Unlike Zynga, they have the advantage of other nights and other shows to keep surviving. Atari was once the king of TV gaming, but new products and new games changed the landscape.  And even Apple feels the pressure to keep innovating or to see product share decline. 

And so Zynga needs to cut costs while increasing its spend on new ideas.  Zynga needs another hit.  And for today's hot games; don't worry Zynga, they too will feel the same pressure you are feeling as the next new game hits the market.

If Your Product Starts With An "i", Does That Make It An Apple

Apple seems to be the king of the little "i" as most of its products start with this letter.  There is iMac, iPod, iPad, iPhone, iMovie, iTunes, and more.  So whenever we guess the name of the next product to come from Apple, like iWatch, we assume that it too will start with the little "i".  And so we now expect that Apple will announce next week a new streaming radio service to augment the iTunes brand with the name iRadio.  "Apple is said to have broader ambitions for iRadio than existing streaming radio services, including the ability to purchase a song from the iTunes download store after listening to it and software that predicts what tracks listeners will enjoy based on their existing iTunes collections."

Will iRadio indeed become the name for this new service?   We should know on June 10 at its developer conference.  Of course it may still depend on how many music deals are finalized.  With Pandora and others already serving this marketplace, Apple may need more differentiation to attract these current users to try their new service.  And Apple's marketing hardly ever disappoints.