Scripps Pushes Branded Content Across Its Networks

Its hard to know if viewers are watching commercials that invade their shows and movies.  Those two minute or longer breaks are the perfect time to switch the channel, go to the bathroom, look away from the TV to a tablet or smartphone, and other distractions to avoid watching those dreaded ads.  But make the advertising part of the show without hurting the credibility or momentum of the plot, and it becomes a very compelling win-win outcome.  Branded content, native advertising, and sponsorship done well can work great; done poorly, it is one long ad.

It seems that Scripps has found a terrific content sponsorship opportunity to coincide with Veterans Day.  Per today's NY Times, Scripps "is preparing an hourlong special — centered on the celebration of the Hawaiian homecoming of a wounded serviceman — that is to run on all six of its cable channels and be sponsored by major marketers like ConAgra Foods, Liberty Mutual Insurance and Union Pacific." As an indication of production integration into the format of the program, "There is a glimpse during the trailer of a scene from the special in which members of the military are served food bearing logos of a ConAgra brand, Marie Callender’s, that became the presenting sponsor of 'A Hero’s Welcome' as part of a cause-marketing initiative, the Comforts From Home Project, which benefits the U.S.O. and the USO2GO program."

A great cause, a great partner, and a great commitment to an important segment of our population.  Most important, it seems that the use of the product does not overwhelm the core element of the show.  This content sponsorship and promotion nicely extends across all of Scripps' available platforms.  Using its media synergy, ads are also being placed on its two magazine brands.  Hopefully, interest in the programming will translate to viewership and more branded content opportunities will emerge.

Amazon Still Pursuing Hardware At Their Own Peril

Last Friday, I wrote about Amazon's identity problem with their hands in too many places and their financial results deemed disappointing.  They have clearly embarked on a strategy of forsaking short term results for long term opportunities.  And they continue to invest across the board, sometimes at the risk of losing money. 

Hardware products continue to attract the attention of CEO Jeff Bezos.  According to the NY Times, "Amazon now looks to be preparing a full-scale ground invasion of the rest of the gadget landscape. In addition to a new Kindle reader, this year the company entered two new device categories, and it expanded the rest of its hardware lineup."   Their latest release is the Fire TV Stick, a Chromecast-like device to distribute OTT content on your TV.  At the same time, they are updating their Kindle e-reader and tablets.  Unfortunately, their attempt to get market share in the competitive mobile phone arena has failed.  Again from the NY Times, "Amazon disclosed last week that it was sitting on $83 million in unsold Fire Phones, and would be taking a $170 million write-down on that program."  With Apple and Samsung releasing larger mobile phones, many see cannibalization of  the tablet market. In fact, while Apple iPad sales slow, their iMac sales have grown. 

Is hardware the right business for Amazon; The e-reader market helped them to drive e-book sales.  But in the world of tablets, smartphones, and OTT, Amazon may not be so lucky.  Their strength as an e-commerce retailer might be better suited working with the Apple's Samsung, and Google, not competing against them. 

Digital Driving NFL Offenses, but Penalties Are Key

A terrific read in today's Wall Street Journal on technology's effect on NFL offense playmaking.  Where the sidelines once relied on photographic print outs to make their way down to the field, they now have tablets, courtesy of a Microsoft sponsorship putting their Surface tablets on the sidelines.  Instantaneously, players can see not only images of the last play but actual footage as well.  For the offense, it seems to have had an effect on yardage and scores. 

And according to the article, it has been a boost mainly to the NFL offense.  While tablets have been on the field for four years, according to the report, somehow this year is different.  I'm not sure that I believe that having this access favors the offense.   The defensive side of the ball gets the same information and can make similar adjustments.  As a fan of the NFL, I believe that it is the rule changes that have had a bigger effect on playmaking then tablets on the sideline.  New rules on defensive holding and illegal contact give a big advantage to offenses.  Penalties can enable offenses to get a fresh set of downs.  The NFL recognizes that more points on the scoreboard tends to make games more exciting, resulting in more viewership and fan interest.  With more penalties being called on the defense, the offense has more success. 

Yes, the technological changes have helped the offense, but they are there to help the defense too. Is it giving the offense an unfair advantage.  I'm not so sure. 

Layoffs Abound Across Cable Networks

Mergers across cable operators, the fear of cord cutting, and disruptive changes in distribution and content are driving a rise in layoffs in the cable industry.  This summer, we heard of layoffs at Fox and Al Jazeera America, last month it was CNN, Cartoon, TNT and Scripps (HGTV, Food), last week it was AMC Networks ( home of AMC, IFC, WE and Sundance), and today it is HBO.  Not surprising in that both CNN and HBO are part of the Time Warner and Turner conglomerate.  With layoffs hitting 10% of total staff, it is clear that consolidation and disruption in the cable and media industry are affecting the size of the workforce. 

It doesn't take a fortune teller to recognize that more layoffs will come in this fourth quarter.  The announcement that AMC has bought a 49.9% stake in BBC America with plans to run that cable network will likely come with additional layoffs too.  NBC and Disney saw their share of layoffs last year but could see more in the future.  This is not a knock on any of these companies; the industry has followed the classic life cycle curve and as it matures, less growth means less labor.  This change is inevitable but the hope is that from disruption springs new job opportunities for all. 

DVR Fails For SNL, While Yahoo! Screen Delivers

Our cable dvr is set to automatically record certain programs, but doesn't always succeed.  In most cases, it cuts off programs before they end and every now and then fails to record at all.  Such was the case when I turned to the dvr on Sunday to catch up on last night's Saturday Night Live only to find that it didn't record.  I looked through the history but it failed as well to tell me what went wrong.  And going to our cable's on demand function was no better as the SNL episode was not immediately accessible.  But thanks to streaming, I had another option.

Opening up the iPad, I clicked on Yahoo! Screen and there was every skit and all the musical performances from the show.  And while You Tube carries certain clips from the show, it doesn't show it all.  The best part watching was that I did not have to endure one commercial to watch; the worst part was that buffering created certain delays that forced refreshing in order to watch.  Once each clip played, I was shown a short promo to watch SNL on NBC  and then the next clip would automatically start to play.  Yahoo! Screen proved to be a great solution to a cable dvr catastrophe. 

iTunes Adapts To Meet Changing Demands

With Apple's quarterly financial news, most attention was paid to iPhones and iPads, but Apple also finds revenue from its iTunes business. According to the Wall Street Journal, "global iTunes sales—including movies, apps and books—increased to $4.6 billion in the third quarter, up from $4.3 billion in the same quarter a year ago."  Revenue is up despite the fact that music downloads are declining.  Consumers no longer feel as much a need to own when they can enjoy listening via streaming services.  Pandora and Spotify have become big winners as a result.

But Apple was not blind to this change in consumer purchase habits.  earlier this year, they purchased Beats and with the headphone business came a streaming business as well.  How they fe=it Beats into the Apple iTunes infrastructure remains to be seen, but they clearly recognized that a change was needed.  Still iTunes revenue has grown year over year and that is because the iTunes business is more than music.  It encompasses video, books, and apps too.  With the release of Apple Watch, more apps will be sold to run that product line.  And iTunes may also be the home for Apple Pay and the rise of other e-commerce type businesses. iTunes continues to face changing consumer interests while it continues to be the online store its products need for application and content consumption.  And iTunes revenue, already the size of some other Fortune 1000 companies, should only continue to rise. 

Is Amazon Trying To Do Too Much?

Amazon released its quarterly earnings yesterday and the results were poor.  Expectations have been high for the company, but revenue growth was low and losses are adding up.  On the financial front, troubling signs remain.  So what is the problem?

From an outsider prospective, Amazon may simply have an identity problem. Their success as an e-commerce and retail disruptor continues to propel them, but at low profit margins.  But they have ventured outside their e-commerce world as a technology/consumer electronics company (Kindle e-readers, Fire tablets and smartphones), a content creation company (Audible, Amazon Studios), and a content distribution company (streaming via Amazon Prime).  They have acquired numerous companies and have grown both domestically and internationally.  But in their race for both breadth and depth, Amazon may have been unable to focus on a few particular businesses as their attention is forced to take a more wide-angle view.  is it time to simplify?

Such a strategic move is not unique.  Microsoft is going through such a re-focus now with an eye centered on more cloud-based businesses.  Netflix pulled away from the dvd business to concentrate more fully on streaming.  Amazon remains an amazing online business that has helped consumers to find and receive almost any good they need from around the world.  But should phones and tablet be also a part of their DNA?  The content creation and distribution game is a lucrative one as any studio or network will tell you; one year you have the must-see show or movie, the next year, you have miscalculated and lose millions on bad picks. 

According to the NY Times, "Amazon’s story for several years has been that it is growing furiously, investing heavily and postponing profits until the halcyon days just around the corner when it will sell all things to all people all the time."  But always waiting for tomorrow is not necessarily a good thing.  It must be mixed with a live for today mentality; otherwise, one moment it is in front of us and the next it is behind us and we never had the chance to be in that moment. 

Unlike brick and mortar companies like Sears and Barnes and Noble, Amazon has more good days ahead of it.  Their quarterly results are a wake-up call, but they have the right assets to continue to prosper moving ahead.  My advice is to simplify and streamline to focus on doing what is most important.  As Jim Collins refers to in his book, Good To Great, have a hedgehog approach to doing a few key things well and get everyone on that bus to strive for greatness.

FCC Puts Cable Mergers On Hold, But Should Approve Them

The FCC review of the Comcast - Time Warner Cable and AT&T - DirecTv mergers has been temporarily suspended.  According to Reuters, "The FCC, which will determine whether the deals are in the public interest, said it will pause its self-imposed, 180-day shot-clock deadline to decide how to handle highly confidential documents related to agreements with media companies." Content companies simply don't want to make public who gets charged what for their networks.  

Simply put, the cost that Disney or Discovery or Scripps or any other network charges for each of their networks will be less for an operator the size of Comcast then for an operator the size of Cablevision.  It is one of the dirty little secrets of contract negotiation.  Larger operators get charged less per subscriber because on the aggregate level, they pay a large total sum for all their subscribers.  The larger their reach, the better the deal they can negotiate.  And monthly costs for cable programming can get expensive as operators multiply it by all the channels they bundle to consumers.  It is why their is the latest contract fight between Turner and Dish.

At some point, the clock on these mergers will resume and the FCC will be asked to approve or disapprove each respective merger.  Ultimately, both efforts should be approved.  Size efficiencies are necessary to assure blanket coverage of cable and broadband across the country.  Disruptive technology assures that content companies can reach consumers outside the cable paradigm.  Netflix, Hulu, Amazon, and even CBS and HBO GO are great examples.  I believe these mergers actually improve the competitive front in the cable/broadband space with fewer, although more powerful competitors.  Will prices rise; they always do.  But the cable industry is simply following the industry life cycle curve that many other industries also face.  As they mature, the number of companies competing become fewer, yet bigger.  Look no further than industries like Airlines, Oil, and even Media.  It is the norm.  What is also true is that disruptive changes always occur that lead to new businesses and new competitors.  And that is what makes our free economy work. 

Dish And Turner Engage In Latest Channel Drops

Another expired contract, another drop of channels until negotiations are resolved.  Today, the battle is between Dish Network and the Turner Channels, including CNN, Cartoon, and TCM.  Excluded in this particular negotiation are TBS and TNT.  And the loser at the moment are Dish customers who love these channels.  As I have said before, this chess game strategy of dropping channels to incite pressure has become part of the playbook between operator and network. 

Will customers drop their Dish subscription?  They might, but the next cable operator they sign up with will eventually go through a similar battle.  Just ask Time Warner Cable when it dropped CBS last year.  CBS may have learned some lessons from that last negotiation.  With its announcement of a streaming linear and on demand service, CBS can offer customers an alternative viewing choice.  Turner may feel a bit of a sting from the loss of 14 million customers from Dish.  Whether it is a long or short term drop, Turner might do well following the CBS model to build out a streaming platform of its own.

At the end, these streaming a la carte channels may solve some of these drop issues.  Customers who try to buy multiple a la carte services will only begin to recognize that the bundled cost of services provides a better value for a large number of channels.    Only when we care about a select few number of streaming subscription channels is a la carte the cheaper choice. 

Cable Nevers And Cord Cutters Aren't The Same Thing

As cable subscriptions drop, many cite the rising niche of cord cutters as the cause.  They are households who once had a cable subscription that decide to drop their service, likely for a broadband only video world.  Cord cutters may be motivated to their action due to the rising costs of TV programming that gets passed on to the consumer by price hikes.  The rise of streaming services like the new CBS streaming app and HBO GO to offer non-cable streaming access to its content is seen as a way to recapture these cord cutters.  But perhaps they are not the only non cable groups.

Cable Nevers, or households that have never had a cable subscription, may also be on the rise.  They are the next generation of home or apartment owners, fresh out of school, or on limited budgets, that determine that a broadband connection is more valuable to them then a cable subscription.  Under a household controlled by their parents, they enjoyed the fruits of cable, but on their own, they beg, borrow and steal to get access.  Some stay connected to their parents Netflix account, or their authenticated HBO GO subscription or perhaps an Amazon Prime account and some may connect to a Slingbox from a friend or family.  At the same time they enjoy access to a ton of free content from You Tube, Hulu, Crackle, and more.  And when they must watch a linear show, a local bar might just offer a game or two.

The threat of high costs of cable subscriptions may not be that current subscribers will cut the cord; we may be too addicted to give up on all that content.  The real worry is that the next generation of households will start their homes without a cable connection.  On limited budgets, their video entertainment will come from OTT connections and Cable Nevers they will remain.

CBS Streaming Service Already Available

While HBO announced its unbundled streaming service, it is not available; CBS not only announced but it is already available for purchase at this website.  At $5.99, consumers can access both the live stream from their affiliate and a large library of on demand TV shows, from I Love Lucy and Twilight Zone to NCIS and The Good Wife.  And while the NFL won't be available, some live sporting events and other live events will be made accessible on the streaming app. 

For cord cutters wishing to still get TV programming, it might be a good deal.  But take the CBS model and watch it get copied by other broadcasters and cable nets, and the costs to subscribe to multiple channels quickly rise.  Buy 10 streaming channels at $60 or 60+ cable channels from your cable operator for $60.  Still, happy with access to a few channels will certainly make a subscription to CBS a cheaper deal.

There is one other advantage that the CBS streaming model offers.  When broadcaster and cable operator get into a license fee battle and their channel is removed from a cable line-up once the contract expires, CBS can now promote their CBS app to access their channel and not promote switching to another cable provider.  It may not be a perfect short term solution, but it is certainly an elegant one. 

Online A La Carte Could Make Cable Subscriptions A Better Deal

Bundling, in the cable vernacular, has been seen by consumers as a bit of a dirty word.  Forced to take a number of channels that they would never watch, consumers heard the pitch that they would get better value for all its accessible networks.  Bundling applied to the services received as well; the Triple Play enabled consumers to purchase cable, broadband, and phone for one low price, getting discounts for being a multi-platform customer.  But as the costs for cable keeping inching up, customers have felt that a la carte would get them a lower price for only the services they truly wanted.

With threats of cord cutting and cable nevers, broadcast and cable channels are finally opening the door to a la carte subscription models.  HBO announced plans to offer their HBO GO digital subscription to non-cable customers and now CBS has announced their plans to offer a stand-alone digital content platform outside the cable spectrum.  Their hope, and that of others, like Univision, is that incremental revenue growth can be found in the digital subscription model.  Plus, it protects and competes on the same web platform with current online rivals like Netflix, Hulu, You Tube, and Amazon Prime.  Will CBS or Univision offer these digital services as added extras to authenticated cable customers like HBO offers with HBO GO?  The allure of an added revenue stream might just prevent them. 

Current cable subscribers might be encouraged by such content availability online and consider finally cutting their cable cord.  Those tired of paying exorbitant fees for their cable subscription could now get just what they want for less.  Or can they?  Online content usage shows that consumers have an insatiable appetite for video.  We keep searching for more and more to watch.  And as we sign up for more of these online services, the costs add up to the tipping point where a cable bundle just might start to become a better content deal.  And consumers that opt out of their cable subscription may start to see their Triple Play discounts evaporate.  They will pay more for broadband only service from cable, and even more to up the speed for download, as cable operators keep raising their prices. 

Cable operators are certainly hoping that cord cutting will be minimal.  Because consumers' demand for online content is growing, operators hope that subscribers will buy cable AND buy these monthly online digital services. And that might encourage networks to shift programming off on demand and onto their paid subscription models.  A la carte might just win the day but consumers will find that they are not only paying more but receiving less content as a result of cutting the cord. 

Could Cellphone Beacons Ruin Our Lives

As humans, we follow Pavlovian tendencies.  And with our mobile phones, it seems that every buzz or ring causes us to quickly stop what we do to look at our phones.  In some cases we even look at our phones when it is someone else's phone that is ringing.  But the worse problem is when we look down at our phone and end up tripping or running into something.  Embarrassing when we are walking, deadly when we are driving.

So the NY Times article on beacons may at first seem promising, it poses problems too.  "Beacons, tiny low-powered radio transmitters that send signals to phones just feet away, have quickly become a new front in the advertising industry’s chase to find you whenever, and exactly wherever, you are."  In a store, they can alert you to coupons and specials, notify you to new information, offer rewards, and other one-on-one engagements.  But they also cause us to look down at our phones and not around us in the space we are occupying.  We may think we can be good multi-taskers, but we end up not seeing what may be right in front of us. 

In some cases, beacons can create some unique opportunities; but, overused can become a big problem.  Used properly, "They could enrich museum experiences, deliver the right recipe in the grocery store aisle, take us on interactive tours of cities and towns, let us quickly and easily check in to hotels or even pay at the gas pump."  Misused and we will walk into other people, crash into a  cart, trip and fall, or simply be so busy looking down that we fail to see the world we are living in.  Unfortunately, I doubt that restraint will be used and we will need to become even more careful as we navigate around so many people looking down at their cell phones.

HBO GOes Without Cable

HBO just announced that in 2015 it will start to offer the HBO GO digital content, without a cable subscription.  While there are limited details, HBO has clearly been feeling the heat from Netflix, Hulu, Amazon and others.  And while HBO cable subscriptions continues to deliver valuable revenue, the threat of cord cutting can damage their leadership position.

I wouldn't be surprised to learn that HBO offered some deals with their current cable providers to move in this direction.  Such alternatives might have included revenue guarantees against current customers that might drop HBO cable for HBO GO.  I believe that HBO's research would indicate that they won't experience this shift in viewing.  I suspect that current cable/HBO subscribers will maintain their subscriptions and HBO GO being offered directly to consumers will actually result in more additive growth than shifting of platforms. 

There is certainly a risk that this move by HBO to offer HBO GO and the likely repercussions of other premium services like Showtime and Starz developing a similar move, will ultimately lead to greater cord cutting.  It may also lead to cable companies pursuing more a la carte offerings to deliver a lower priced set of networks for consumers still seeking a cable platform.  At the same time, cable companies must also push for a complete TV Everywhere experience that lets every linear and on demand channel to be accessible via authenticated viewership to its customers.  Till then, this move by HBO is a necessary one to stay competitive against its digital rivals.

The Proliferation Of Sports Networks

The Fall always seems to be the busiest time for sports on television.  You have the end of baseball, the start of football, hockey, and basketball, plus soccer and tons of college football games.  And for each of these games, a network, or two, or four, or eight, etc. to meet the need.  We have in fact over the course of a couple decades seen many of our games move off of network TV onto newly branded cable nets.  And for each new network that is created, the demand for live sports programming helps to raise content fees which ultimately get passed through to the viewer in higher subscription or license fees. 

Where once the broadcast networks were the face for professional and college sports, each has a cable network or more to off load its sports programming.  ABC has the well known ESPN brand including ESPN, ESPN2, ESPN News and more, NBC now has the NBC Sports Network as well as Golf Channel, CBS has its CBS Sports Network and Fox with Fox Soccer, Fox Sports 1 and Fox Sports 2.  Each pro league has its own network, too.  We have NFL and NFL Redzone, MLB Network, NHL Net and NBA Net.  Even non sports cable networks like TBS has deals to carry pro baseball and pro basketball.  And for regional college and professional interests, networks like YES, MSG, NESN, Sportsnet and more make sure your local team is covered.  Plus the Big Ten, SEC, and more.  Tennis Channel makes sure its fans get access to matches while outdoor sport fans have Outdoor Channel, Sportsman Channel, World Fishing Net, ONE World Sports, and more.  And each network wants a license fee for cable carriage.

Wonder why our cable bills continue to rise.  The proliferation of sports networks, especially the ones showing live games, is a primary cause for such high rates.  The demand for live sports are also rating winners too.  But too much of a good thing has the potential to kill the golden goose.  Consumers can only pay so much and need to shave the cable cord on channels or cut the cord on their cable subscription all together.  Its great to have access to such a diverse array of sports and dozens and dozens of channels to view them all, but too much may be too much. 

Multi Media Multitasking

Today's Wall Street Journal highlights a research analysis by two high school seniors on teens' ability to engage in multi media usage while undertaking various projects.   They presented their findings at a conference in San Diego.  "The findings: Though most teens perform better when focusing on a single task, those who are 'high media multitaskers'—about 15% of the study participants—performed better when working with the distractions of email and music than when focusing on a single activity."  A small percentage can satisfactorily complete their primary tasks while other attention grabbing stimuli is present. 

I, like those teens, grew up doing homework while a TV or music was on in the background.  I, too, found that it filled a void, and I was successful in school.  Did it slow down the time to complete tasks, likely.  Today, I have two teens, one who likes having the TV on while doing homework, the other prefers it off.  Some days the conflict requires the wisdom of Solomon to gain resolution. And whether multitasking or not, homework is completed.

We are constantly evolving creatures and our brains adapt constantly to changing internal and external demands.  The rise of digital media has only extended the supply and perhaps even the demand for multitasking.  Like Darwin's theory, we adapt to handle our new surroundings.   And that process is a constant one.  Teens have been more and more exposed to multiple media outputs, from video to music, Email, Tweets, Likes, etc.  And they are responding.  And while this current research indicates some teens are able to multitask successfully, we also know that depending on the situation it may not always be encouraged.

Listening to music or watching TV and doing homework may slow us down but all tasks can be done fairly well; Texting and driving is one example of multitasking that should never be encouraged.  Regardless of the research, multitasking does cause some distraction and those cases where life is at risk, it should be avoided. 

Comic Con NY

I had the pleasure of attending Comic Con with my son in NY this past weekend.  Along with the many characters we passed, we were encouraged to buy a ton of merchandise from t shirts to costumes, dancing dragons, swords and shafts, comic books, posters, and much much more.  The highpoint was certainly the people watching.  And despite the huge crowds, everyone seemed friendly, happy, and appreciative.

My biggest surprise, that the autograph section was filled with "former" celebrities charging $40 or more.  Outrageous.  So many great panels.  To assure a seat you have to get in line very early.  So much to see and do that one day may not be enough to see and do everything.  All in all, a wonderful experience.

Cord Shaving Hurting Expensive Networks

On March 11 2011 I wrote my first blog about cord shaving entitled It's Not Cord Cutting, It's Cord Shaving.   In it I wrote that "the rising costs of the cable subscription is resulting in purchase behavior changes."  Cable television continues to get more expensive and OTT services like Netflix continue to siphon funds that once went to cable TV. 

Fast forward three and half years and the topic of cord shaving may finally be taken more seriously.  In today's Wall Street Journal, the article titled Pay TV’s New Worry: ‘Shaving’ the Cord, discusses how "the top 40 most widely distributed channels in 2010—household names like CNN, ESPN and USA—have lost an average of 3.2 million subscribers, or more than 3% of their distribution, according to a Wall Street Journal analysis of data from measurement firm Nielsen."  Not really so new.  Customers have been cord shaving dropping their level of service to lower the price of their cable subscription.  The cost of packaging with too many of these cable nets have simply made the price of customer subscriptions cost prohibitive.  Step one, customers are cutting back or shaving nets off their subscription; but as costs continue to rise, step two will be to cut the cable cord entirely. 

Network license fee models generally require that not only are they placed on a channel line-up with the largest number of subscribers, but that their penetration of service against all customers is greater than 85 or 90%.  As subscribers continue to shave off nets with smaller packages of service, network penetration rates for that cable operator decreases. Consequently, the cable operator will have to either introduce these nets into the lower priced tiers or raise their cable rates to cover the penalty costs of not meeting the network subscriber penetration benchmarks.  The cycle is complete and customer cable costs will rise. 

Consumers can only shave off so much before the only recourse will be to cut the cable cord entirely.  Aereo tried to be that service that could inexpensively offer broadcast streaming programming.  The Supreme Court ruled against them.  Other customers are once again putting up antennas in their home to capture broadcast signals. 

The other great truth is that cable is no longer the number one priority for homeowners; broadband is.  Given all the content accessible via an internet connection, consumers would rather pay for their broadband subscription before paying for a cable subscription. Cord shaving today, cord cutting tomorrow. 

Content vs. Distribution vs. Data

If you have the chance, a terrific article by Will Richmond entitled Data Is The Real King, as Netflix Keeps Proving, adds another wrinkle to the debate as to who is king, distribution, content, or data.  As we move further and further into a digital world, data, uncovered at the individual level, has become more and more important, especially for driving revenue. 

As a result, the debate of which comes first the chicken or the egg, content or distribution, may be no more.  Instead, we may have to start looking at content and distribution and data as a three-legged stool, each needing the other two to stand upright and remain functional. 

Netflix, in the article's example, works in this new model.  It has thrived because of original content, accessibility across an agnostic array of devices, and data to enable Netflix to make risk averse decisions.  All three work in tandem to propel Netflix to new highs, continuing to reach more and more subscribers.

No one attribute is king.  Content, distribution, and data simply must share the crown.  At the same time, they must each communicate with one another effectively to continue to rule. If data, or the information they hold, is not shared with content and distribution, then the other legs become weak.  And if content or distribution falters, then data is limited and unable to deliver good information.  Perhaps the new mantra should borrow from the Three Musketeers, "All For One And One For All".

Apple's Next Announcement

It has been barely a month since Apple held a press conference to announce the iPhone 6 and future launch of the Apple Watch.  Another month and another announcement. This time word comes that Apple will introduce new iPad models, new iMacs, and a new computer operating system.  The date for this news conference will be just a week away on October 16. 

Come next week, I would also love to hear about improvements to the Apple TV and perhaps some upgraded laptop info.  With new products being released, I expect big growth on revenues in Q4 of this year for Apple.  Is it time to upgrade the iPhone or iPad, Apple sure hopes so. 

Turner Broadcasting Fires 10% of Its Staff

The mantra of do more with less seems to be part of many companies.  It applies mainly to labor.  Call it what you want, downsizing, layoffs, buyouts, job cuts, it ultimately means that workers are fired from their job without cause.  Rather than retrain its workers for new positions, the senior management believes that the costs of these workers outweigh the benefits they may have brought to the organization.  It is not unique to Turner; rather, it is typical.

Still in Turner's case, dollars that may be possibly saved by cuts in work force are going to other pockets.  Its not like the CEO or Presidents of the various divisions are being asked to slim down as well.  Will they be feeling economic hardship like a reduction in salary perhaps.  Could a 10% reduction in their salaries save a couple hundred of those job cuts?  Possibly.  Will Time Warner parent CEO Jeffrey Bewkes or CNN President Jeff Zucker reduce their paycheck?  Doubtful.  And while employee lives are being changed, Turner has negotiated, along with ESPN, to pay a good deal more for an extension of their NBA deal through 2025 and the right to continue to carry its content. Its hard for consumers to pay to watch that content if they are being fired from their jobs.

Ultimately, Turner will start hiring again at some point to replace the positions they lost.  Likely, those new hires will be younger and cheaper; good for them as they start their careers, but not for the older employees who lost theirs.   Turner, like other employers, will lose out on the experience and effectiveness that the senior employees had provided.  And that is a shame.  Unfortunately it is what corporations do. 

Redbox Instant To Stream No More

You would have thought that Redbox would have learned from the stumble by Netflix to move from a DVD delivered service to a streaming one.  Redbox, the red DVD vending machine that you find at shopping centers and supermarkets, partnered with Verizon to create Redbox Instant.  And working with Verizon's FIOS programming team, Redbox Instant would avoid the mistakes of a startup and deliver a powerful competitor to Netflix, Hulu and others.  Not!

Over the weekend, the partnership announced that they will be shutting down the streaming service.  So what went wrong?  Certainly not being inside the organization, it is hard to say; but as an outsider, the service never seemed to generate awareness, buzz, uniqueness, and ultimately demand.  As programmers, it failed to do what its competitors did, create original or deliver exclusive content that other streaming services could not offer.  While Netflix has its House of Cards and Amazon has its Alpha House, Redbox Instant created no such unique content.  As marketers, Redbox Instant did little to promote itself.  Yes you may have heard of or seen their kiosks, but how many consumers had heard of its streaming capabilities.  Awareness of Redbox Instant seemed low if existent at all. 

I'm disappointed in Redbox Instant.  I felt that they had an opportunity to grow from their physical form into a streaming powerhouse but that they never truly delivered on a strategic plan.  Given the size of Verizon, it is hard to believe that budget was an issue.  But if there were limited dollars, it certainly would have been a major factor.  Without the monies to invest in content and marketing, customers were not going to enter the door. 

Over their two years of existence, they barely sputtered out of the starting gate.  No major content announcements, n o major advertising, no free samples to try the service, no unique programming, marketing, or promotion at all.  And the shame of it all is that I believe that Redbox Instant had the potential to compete in a major way with its rivals.  And that is the greatest waste of it all.

Sprint With Legendary Entertainment

Sprint's parent, SoftBank, may have kicked the tires on Dreamworks Animation but has decided instead to invest in Legendary Entertainment.  Legendary's movie studio has produced notable films like The Hangover and The Dark Night while SoftBank owns wireless carriers in the US and Japan.  How SoftBank can leverage this content partnership deal with their businesses will determine how successful this strategy can work.  It may not be an easy path.

Exclusivity of content is what enables distribution platforms to compete.  In the wired and satellite space, you have the cable companies with telco and DirecTv and Dish.   And in the OTT subscription content space, the big guns are Netflix, Amazon Prime, and Hulu Plus.  What drives subscription of these services are the breadth and depth of content accessibility and availability.  Size matters!

The scope of the deal that SoftBank is doing with Legendary needs to expand greatly to a larger library of content.  One or two content output deals will not do it.  A bigger strategy is needed, one that SoftBank has yet to reveal.

Netflix Adds To Its Feature Film Distribution

Netflix is taking on more than just cable television distribution.  With their latest movie deal, Netflix wants to compete with movie chains as well.  The New York Times tells us that following their move to premiere its first feature film through The Weinstein Company, Netflix has signed a deal to distribute the next four of Adam Sandler's films through his Happy Madison production company.  "Netflix declined to comment on specific terms of the deal, but said the films would have the characteristics of theatrical releases, with similar-size budgets."

While recent films from Sandler have not been hugely profitable, he has a large following.  And his older films continue to delight audiences.  His reach seems to fit the market demo that Netflix wants to serve and Sandler's films tend to have a family enjoyment factor, like "Grown Ups" and "50 First Dates".  This arrangement between Netflix and Sandler looks to be a strong strategic fit.

HBO and other premium cable nets have been producing original features for a while.  Movie chains cannot afford to sit back as Netflix further disrupts their business model.  Today it may be one or two deals, but more will certainly be on their way.  Chains can compete by making the experience of going out to the movies that much more enjoyable.  Larger screens, better seating, improved refreshment offerings, etc.  And yet, at home viewing continues to improve as well.  And when cost is a factor, the home experience is a winner.  Movie chains must continue to adapt or face some extinction from alternative distribution offerings. 

Movie Chains Fight Back Netflix Plans

Congratulations to Netflix on the great PR they are getting.  For a move not expected to occur for 10 months, Netflix has caused an uproar in the movie industry with their latest move.  Their plan to offer a theatrical release of a film at the same time it plays on IMAX movie screens.  And movie theater owners are fighting mad. 

According to The New York Times, "Two major theater chains, Regal Cinemas and Cinemark, said Tuesday that they would not screen next year’s sequel to “Crouching Tiger, Hidden Dragon,” the first major motion picture that will make its debut simultaneously on Netflix and on a select number of Imax screens."  So their IMAX screens will not show the film.  Netflix probably doesn't care in the least.  Exclusivity only makes their distribution platform stronger. 

Still the question remains how this move affects the other partner, The Weinstein Company, who is producing this sequel.  How will this collaboration with Netflix play out in future releases for the film company?  Will Regal, Cinemark, and others decide to not screen another Weinstein film to show their displeasure toward the company?  Or will other film companies follow Weinstein and offer a similar distribution deal with Netflix?  We may just see this move as the start of a new distribution strategy.  Regardless, disruption is at work and Netflix awareness is growing.