We've Got A Security Problem Here

2014 may best be known as the year of the hacker.  Most prominent has been the hacking of Sony, causing personal emails to be shared, a movie to be denied, and threats to be held on management.  And most recently, Sony's Playstation network and Microsoft's XBox network have both been hacked as well, resulting in an overloading of those systems.  Gamers are furious and we can all fear that 2015 will consist of even more cyber security problems. 

The simple truth is that our internet security is at risk for all of us.  As long as we are connected to the web, we are subject to potential hacking of our private data.  And there are so many different ways that hackers try to get us, from bogus emails to tapping our devices when we use an open WIFI connection.  Secure is simply not secure enough.  And from individuals to huge corporations like Sony, we have huge security issues.

For some, the idea of hacking is just a game, a challenge to see if you can break the code.  But for others, the purpose of hacking may be more sinister.  Locks and passwords may not be enough; if there is a will, there seems to always be a way to break the code.  Isn't that what the movie, The Imitation Game, is all about.  Whether for good or evil purposes, many love the idea of a good challenge.  And we are constantly facing threats to our cyber data. 

2014 may represent a pivotal mark, but it wasn't the first.  Last year, it was Edward Snowden that shared classified government information.  We also had the hacking of financial data from The Home Depot and Target. And next year, I am quite certain that more corporations will face similar hacking issues.  We should all be worried; unfortunately, as long as their is secrecy and privacy, there will be others trying to expose it.  For good or evil purposes, it will be a constant in our lives. 

Another Year Ends, Another Network Blackout

What would an end of year be if a cable operator and a cable network weren't in the midst of a license fee renewal.  It seems that it is a constant occurrence with always the same outcome, a network or two gets dropped for a period of time and then it is reinstated at a later date. This year the battle is between Dish and Fox regarding just two of its channels, Fox News Channel and Fox Business Network.  As of this moment, carriage agreements have expired and both have been pulled from the Dish line-up.

And like before, there is the necessary pr and paid advertising telling customers their side of the story in a time where consumers are simply tired of being part of every battle.  Frankly a no win scenario.  Some consumers switch cable operators as a result of the loss of channels, most remain.  Dish and its customers are used to such drops and re-launches.  Remember the AMC fight, the CNN battle? The dance is ongoing with short term suffering for fans of those respective networks.

Of course there are two sides to every story and the cost of cable programming certainly drives at the heart of such negotiations.  Operators will have a hard time paying to carry every possible linear network; those costs cause cable bills to rise.  Sports are a huge component of those costs, yet those networks are the hardest to drop.  Also because most major networks are owned by multi network businesses, leverage becomes a big factor in driving all of its networks to be launched.  Don't think Fox won't use pressure from its Fox Broadcasting, Fox Sports, FX, and others to drive a Fox News and Fox Business renewal.  Size does matter in these fights.  For now, Dish customers have lost access to a couple channels; in the long run, they will be renewed and added back to the line-up.  It is how the dance is done.

Apple iPhone Portends Good Things To Come

With Apple's release of the iPhone 6 and 6 Plus, it regained market interest and put tons of pressure on other smartphone companies.  The latest iPhone release could also generate over 70 million units just in this latest quarter.  And with that number on the street, Apple should see even more good news in 2015.

For one, the release of the Apple iWatch likely requires the iPhone 6 to fully function.  With 70 million plus in sales, the iWatch could prove quite popular. In addition, Apple Pay also requires the latest iPhone.  With security issues facing us today and credit card numbers getting hacked as well, Apple Pay will enjoy increased acceptance and usage.  And that spells another driver in Apple revenue next year.  Lastly, more converts to the iPhone means more usage of the app store and growth in iTunes revenue.  A Beats music subscription might just attract new users too.

Beyond the iPhone and another model in late 2015, Apple will surely update its laptops, Apple TV, and iPads.  With schools embracing Apple computers and tablets and IBM partnering in enterprise applications, Apple can make significant inroads in new industries.  And lastly, Apple might actually surprise some of us with an Apple smart television set.  You never know. 

Dish Finds a Frenemy With Netflix

Demonstrating that cable and streaming content can live side by side, Dish Network has become the first major cable distributor to include Netflix on its set top box.  And like HBO or Showtime, Netflix will be treated as an add on package, purchased separately.  Consumers though don't need to jump from one box to another to enjoy all the content they want.  By including the Netflix app, Dish gives its customers convenience and simplicity in watching whatever content they choose. 

Per the Dish press release, "Additionally, in the future, titles available on Netflix could be integrated into the search functionality across live, recorded and Video On Demand programs for both the Hopper as well as DISH’s forthcoming OTT service."  To me, a fully integrated search feature encompassing all content on Netflix and cable would be truly valued by consumers.  Partnering with Netflix, Dish demonstrates that consumers simply want more content wherever accessible and that consumers will not drop Dish but value the content that is being offered through the set top box. 

Avoiding TV Ad Interruptions

As the holidays approach, gifts may include new Apple TV, TiVo, or Roku boxes, a Slingbox or Hopper or two, a subscription to Netflix or other services designed to help us avoid ad interruptions.  These products are popular, not just because they let us watch TV shows and movies, but because they let us skip through or avoid television ad messages.  And the more comfortable we get using these outlets, the more we seek them for our viewing pleasure. 

For content obtained off our TV, it is just as easy to record first and watch later with our finger pressed on the fast forward button every time an ad appears.  For cord cutters and those watching through OTT platforms like Netflix and Amazon Prime, shows can be viewed without ever an ad in sight.  We pause when we want to and not because an ad is present.  And so as TV ratings decline and we watch our shows on our DVR or mobile device, we can enjoy all our shows without those dreaded commercial break.

For advertisers, the challenge becomes watching ad rates go up for spots on linear TV viewing while viewership declines.  The economics seem off.  Consumers have grown tired of these ad interruptions with the only exception being big event programming like the Super Bowl where the ads become more interesting and note worthy.  For almost all other times, they are an intrusion. 

This trend toward ad skipping and ad avoidance with subscription programming will only continue to grow.  The current model seems broken and it may now be time to revisit the TV ad model.  Branded entertainment, product placement, show sponsorship may now become the ideal means to assure that advertised brands get noticed regardless of where or how the content is being consumed.  You can't avoid ads baked into the content of the show.  Till then, ad avoidance seems like to continue to grow.

The Digital Age At A Crossroads

While Sony's latest movie release, The Interview, may lack any sense of good taste, it is certainly in their right to produce and distribute it.  Why they chose to use an assassination of a live foreign leader, no matter how notorious, is beyond understanding.  But freedom of speech certainly gives them the right, even if it lacks a certain common sense.  Would the movie have even gotten made if it was about a current domestic leader?  Highly doubtful.

Still, two wrongs don't make a right and the work of hackers to infiltrate Sony and release sensitive information from their computers clearly crossed the line as well.  Worse comes threats made from these same hackers alluding to loss of life at movie theaters that go ahead and play the film.  Given such threats, some movie houses have already canceled showings of The Interview. 

The problem with all of this is that by succumbing to these hackers and their threats, it sets a dangerous precedent for future hackers to follow the same playbook.  Like they say about secrets, the moment you share something with someone else, it is no longer a secret.  And the moment we communicate digitally, it is there for eternity.  It may be meant to be shared with one or a few, but like secrets, others will try to access it.  In a world of great freedoms of expression, we sometimes forget our manners.

To the hackers exposing Sony secrets and threatening lives, one wrong move does not condone another.  And as a society, much must be done to stop these hackers from succeeding.  Not so this particular movie can play but that our freedoms remain intact.  And in the future, perhaps as a society we need to regain our politeness, our moral fiber, our consideration of others, for once something is said, it is there for an eternity. 

NBC Playing Nice With Corporate Parent

While CBS seeks to drive additional revenue through a subscription digital network service, NBC Broadcasting has chosen a different route.  Perhaps it is due to NBC being owned by a cable operator, but it also aligns both the programmer and distributor to the same synergistic goals, driving total revenue by backing an authenticated TV Everywhere platform. 

According to today's Wall Street Journal, "NBC is launching a live stream of its broadcast network, part of a broader effort at parent NBCUniversal to make more of its content available online via computers and mobile devices."  Not too many details in the article, notably if the signal will correlate to the subscribers home geography and its affiliates signal, or simply a national feed of the network.  And likely, there will be shows blacked out, including Sunday Night Football and other possible exclusions.  Other questions are whether it is just a live linear feed or if there will also be an on demand component.

Still, despite limited details, the approach by NBC clearly takes into account its parent company, Comcast Cable.  Requiring access to authenticated cable subscribers means added value to cable and an attempt to stop or slow down the rate of cord cutting.  Rather than be a revenue creator like the CBS or even HBO GO models, NBC is supporting the broader cable revenue model with hopefully greater total returns.

As to the marketing of the new authenticated service, NBC doesn't seem to like the TV Everywhere tag.  I agree.  It is reminiscent of the challenges that have plagued cable with the on demand tag being used in so many places it lost any traction with the cable brand.  But I'm not sold on “Watch TV Without the TV" either.  In a world of initials, perhaps branding it as "TVE" might be an interesting way to brand the digital feed of all its networks.  Brainstorming other phrases like Digital Broadcast (Cable) Everywhere.  Still, slowly but surely, TV Everywhere will one day become commonplace. 

Do I Know You?

Spam exhausts me.  From robo telephone calls to emails to regular mailings, I find the scope exhausting and unnerving.  And I suspect that most of you feel the same.  Its intrusive, and worse, a lot of it are scams. 

Lately, one such robo call, and you know who they are because it takes a couple seconds after you say hello for it to switch to either a live person or automated message, responds to my hello with the phrase "Don't hang up...".  I have no idea what comes next because I always hang up.  Another call that I get comes from someone who tells me that my pc has a bug and they have been notified to get in touch with me to help fix it.  Right!  Or you might just win that dream vacation!

On the email front has come a number of requests from Dropbox to tell me that a friend has sent me a file to open.  At first glance, one might click the hyperlink but truth is, the email does not come from Dropbox.  For each of these suspect emails, a quick look at the full email address indicates that it actually comes elsewhere, with many addresses containing the .edu email address.  Spam bank emails also want me to open some attachment too.  But the worst are the ones that look like they come from someone you may know, but clicking on the email address shows that only their name was borrowed, not their true email address.  At times, I believe I get more spam emails a day than real ones.  Delete, delete, delete.

I suspect that the many attempts occurring these days from spammers/scammers must ensnare a few or more people each day.  A shame for the unsuspecting who should be careful what they click or share with unverified accounts.  Unfortunately, its looking to be a growing business.  So be careful what you click. 

Does Instagram Really Have 300 Million Users?

Yesterday, social media erupted with the news that Instagram has more users, 300 million, than Twitter, which claims 284 million.  An impressive number indeed for both platforms, but is it real?  The question may be how many real, unique users do these social platforms have and how many are fake.  How many are unique individuals and how many are being used by companies as marketing tools for promotion?

In my own household, my children both have Instagram accounts, neither have a Twitter account.  I think the picture sharing is the primary appeal for usage.  But I have also learned that many teens have multiple accounts and some enjoy the game of creating fake accounts, "Finstas" I believe they are called, as joke accounts.  So between these fake accounts, corporate accounts, and other automated programs to falsely drive followers and clicks to sites, how many of these social media accounts are unique and real?  300 million sounds like a lot but what is the real number. 

Sling Media Derides Cable's Current TV Everywhere Platform

Sling Media doesn't mind slinging a little mud in its latest advertising campaign against cable TV.  As I've argued, cable needs to embrace a true TV everywhere approach to enable its authenticated customer to watch all its programming, both on and off the cable box.  Unfortunately, programming agreements and content rights management currently hampers the ability to push such a strategy.  But Sling Media has built the elegant work-around with a box that talks to the cable box and then streams it to other mobile devices. 

Sling's owner, Dish Network, integrates Sling into its box making it a more ideal approach, but cable operators have been reticent to bring Sling technology into their own cable box.  So to attract non-Dish customers to Sling, according to Deadline, "launched an ad and social-media campaign that ridicules TV Everywhere – the cable and satellite initiatives that stream programming to subscribers. The messages urge consumers not to get “C.W.A.P”, a Sling acronym for 'Can’t Watch Anywhere Pain.'” 

As I mentioned, buying Slingbox has its advantages but it also requires that you have a cable set top box that can be used specifically for streaming.  Those in the home can't use the cable box while it is being used by the Slingbox.  And only one channel can be streamed at a time so that different members of the household can't all "sling" at the same time.  Despite all this though, it does provide the opportunity to watch every linear and on demand show that comes off the cable box, through the Slingbox, and streamed to any mobile device around the world.  It is a true TV Everywhere approach. 

Will this ad campaign move sales of the Slingbox?  Most households tend to be technologically challenged.  Heck, we even need help from our cable company to set up our cable box, modem, and wifi.  For those in the know, the Slingbox can be an exceptional value. 

Suburu Uses Branded Content To Its Advantage

Armed with research on who buys its cars and where they are likely to reside, Suburu found a nice fit with IFC's quirky cable show Portlandia.  And while running ads along side the program is nice, integrating into the show is better.  So as Portlandia premieres its 5th season, Suburu cars will be featured inside the series.  Along with other marketing tactics, this branded content approach assure that viewers will see Suburu product placement as they enjoy the show.  And the benefit to Suburu seems well worth it.

For one, consumers won't be able to fast forward through it, the car is tied into the fabric of the content. Two, with the show based in the Northwest, it reaches a strong segment of the market that purchase Suburus. Third, the Suburu brand continues to be seen, post the initial run of the show, with repeats, on demand, and future syndication and streaming.  And fourth, it receives great press coverage including a full article in today's New York Times. 

Of course the biggest challenge to branded content or any content that is pre-taped and run months or years later, is when the unexpected occurs.  A negative news story, a recall perhaps, or possible indiscretions that turn a once popular program into a problem.  I speak most recently of two incidents, Stephen Collins and Bill Cosby, and the effect on their older shows, 7th Heaven and The Cosby Show.  Their negative publicity extends to the shows they appear on.  Unlike an ad that can be removed, when branded content is woven into the fabric of the show, it is there forever, through the good press and the bad.

But for now, the use of branded content by Suburu and others is a smart decision.  While its core message may not get presented, its brand awareness and engagement by the viewer can drive future interest and hopefully sales for the auto company. And the resurgence of branded content is a great means to fight ad skipping and the rise of streaming. 

Hey TV, Netflix Is Your Frenemy

What do you do with an entrant in your business that spends millions of dollars for your content but also is taking viewers away from your channels?  That is certainly the question poised in today's New York Times on the Netflix Effect on television. 

Consumers are watching television differently.  The cost of cable television has skyrocketed while society has become more mobile. Linear television makes us wait while on demand and streaming lets us control when, where, and how we watch our shows.  And while advertising pays for programs to be made, subscriptions can as well while eliminating the interruptions of commercial breaks.  As a result, Netflix has disrupted the traditional model.  Truth is that linear TV will not go away.  When we don't know what to watch, we can still graze across all the choices and find a show to watch.  And live events force us to wait to watch at the appointed hour.  Netflix and other streaming services simply provides us with more choice as well as more flexibility. And advertising free is a nice benefit.

Television has been slow to change their current model.  It took years for content companies and cable operators to invest in on demand.  And their authenticated TV Everywhere model still lags as a competitive solution.  Netfix Chief Content Officer Ted Sarandos has offered a possible idea for cable operators to pursue.  "Rather than debate what is driving that change, established television companies should change their business models, Mr. Sarandos said. As an example, he said that cable operators should invest in new technologies that would allow people to watch TV episodes weeks after they have been broadcast, but allow advertisers to insert up-to-date commercials."  My one change to that idea, not weeks later but the next day and to keep it accessible for a month or longer.  And lastly, enable authenticated devices outside the cable box to access the content. 

Ultimately, Netflix will be seen by the consumer as a complement to cable TV, not as a direct threat.   Consumers will seek the platform that serves the content they want to watch.  TV viewership may continue to migrate to streaming until a new balance is found.  But cable operators can pursue a more robust authenticated TV Everywhere model that delivers a great platform of easy to find, easy to view, and easy to monetize content that will serve future generations. 

Will FCC Approve Cable Mergers?

The FCC is back on the clock but no decisions will happen in 2014 regarding the two mergers on the docket, Comcast acquiring Time Warner Cable, and AT&T acquiring DirecTv.  Per Business Week, it is unlikely that any such approval or disapproval will happen till March at the earliest. 

Consolidation offers great cost efficiencies but it can also hurt competition and lower prices.  Given the high barriers of entry in the industry and limited competition due to franchise approvals in every community, consumers have already experienced limited choice for cable or satellite.  These two mergers do little to worsen the already limited playing field.

The FCC may be less concerned with cable and more concerned with broadband access.  Still, there is limited competition with buyer and seller in this market as well.  DirecTv doesn't even offer a broadband business and Comcast and Time Warner do not compete against each other.  Comcast would control a vast majority of the US market seeking to access cable and broadband.  But I don't believe it will stop these mergers from occurring.  Opening spectrum, encouraging new entrants to enter the space, and supporting investment in new wireless and broadband technologies to improve connectivity and speed are what consumers really want. 

Microsoft Misses With Nook

The partnership between Barnes and Noble and Microsoft is officially over although its hard to say that it ever really started.  Despite a $300 million dollar investment back in 2012, nothing particularly visible to the consumer ever occurred and Microsoft leaves with a loss.  So much potential, so little execution.

Truthfully, when the Nook partnered with Samsung on its tablets, it was apparent that Microsoft was no longer a part of the conversation.  But that may have been decided when Microsoft's new CEO, Satya Nadella took over.  Per CNET, "Since taking the helm in February, Nadella has said that he wants to focus Microsoft's business on the core elements of its operation, including the cloud and mobile."  And now B&N can begin to separate its Nook business from its bookstore business. 

It is a missed opportunity for Microsoft and B&N, but perhaps a win for Samsung, Apple or others.  Going forward, I believe that B&N should work with a device maker on a tablet that is specifically designed for students, ideally college and high school.  All textbooks should be digitized for this new device as well as designed for note taking on the pages and a means to capture and organize the  writing for test taking and report writing.  This new device is not meant for games or non academic purposes; rather, a unique featured device to support school curriculum.  I see it as a niche device not as general purpose as the current Nook, Galaxy, or iPad.  By engineering it with a writing instrument that can translate writing into digital, it will enable students to better organize classroom work with connected textbooks.  For B&N, its future and its growth is in the education market and it needs to embrace the industry quickly.

For Microsoft, the opportunity to seize on this market ends with this partnership.  Given their new direction, it is clearly the right move for Microsoft to terminate this agreement.  But it is the right move for someone else. 

NY Times Losing More Reporters

Pogue, Carter, and now ad columnist Stuart Elliott join the exodus of those leaving The New York Times.  Like Bill Carter, Elliott chose the buyout offered to him and others before layoffs were to be imposed.  And while the bottom line is that everyone is replaceable, their uniqueness can not.  But it certainly changes the value of the content for the NY Times.

Of course the only constant in this world is change and whatever comes next for the writing in the NY Times could be better or worse than what we are getting now.  The future is uncertain.  But like a good baseball team, we don't know who is in the NY Time farm system to rise from the ranks to replace these reporters.  Nor do we know if they plan to "trade" for them from another notable publication.  For now, all we do know is that an ever larger hole is opening that the Times will need to fill if they plan to stay a relevant media outlet.

Traditional TV Viewing Drops 4%

First and foremost, television is not dead.  It may have matured quite a bit, but opportunities still abound for those companies that see growth.  Still, the news out of Nielsen, from today's Wall Street Journal, is that "traditional television dropped nearly 4% last quarter, as online video streaming jumped 60%, according to a new report from Nielsen, crystallizing a trend for TV-channel owners amid ratings declines."  Expect that percentage to continue to drop. 

The simple truth is that there is only 24 hours in a day and the rise of new media means that old media must lose some usage as users aggregate to the new trends.  Print is feeling that effect from digital, radio felt it from broadcast and broadcast from cable.  Online viewing will simply take from those platforms.  But television, and the people that control them, can still drive success and growth. 

The notion of authenticated TV Everywhere with the cable operator bridging the gap of the cable box in the home with online access anywhere and everywhere still makes sense.  It enables customization, personalization, recommendation, and ultimately owns and tracks the viewer regardless of the device used to view the media on.  That consolidation and convergence creates an advanced advertising approach and data collection so valuable these days.  But until cable operators fully envelop the consumer in this bubble, consumers will find entertainment outside the cable box with other content and other OTT platforms. 

A 4% drop in traditional TV viewing is not the death of traditional TV.  Hopefully, it is a real wake up call to once again purse a TV Everywhere strategy.  Slingbox offers the technological tools to do it.  TiVo may as well.  Cable operators need to push it further and market the TV Everywhere value that they can one day deliver.

Bill Carter Leaves NY Times

If there was anyone with his finger on the pulse of television, especially late night television, it is Bill Carter.  As both a reporter for the NY Times and an author of books like The Late Shift, Carter is a recognizable name in the world of media.  But the financial issues of newspapers and the NY Times in particular have taken their toll and the result is a loss of talent.  Offered a buyout package with considerable weight, Carter chose to take the buyout and leave his NY Times post. 

The NY Times loss may just be someone else's gain.  Just as David Pogue left the Times for Yahoo, Carter might find open arms on the digital side of the world.  And for those of us seeking another book, he now has time to work on one.  Unfortunately for The New York Times, losing recognizable content creators like Bill Carter makes it harder for them to deliver best in class writing.  It only provides more impetus to also unsubscribe from the Times for online content. 

Fox Blacked Out On FIOS In RI Over Thanksgiving ... Heartless

While CBS and Dish agreed to an extension so as to not ruin their Thanksgiving break, Verizon FIOS and their Rhode Island Fox affiliate could not.  The result, the station " went dark to the telco’s customers at 3 a.m. on Thanksgiving after the parties failed to reach a renewal accord. That meant that some 400,000 FiOS customers missed the Dallas Cowboys’ Turkey Day turkey against the Philadelphia Eagles and may be without Fox’s NFL lineup on Sunday. "  And while we all know that eventually the two sides will sign a contract, causing license fees to rise and ultimately, customer subscription fees as well, current subscribers are simply on the lose-lose side of the negotiation and the outcome.

According to Cynopsis, "Fox led all Thanksgiving NFL telecasts with 32.0 million viewers for Eagles-Cowboys in the late afternoon window, marking it the network’s best regular-season telecast of any kind since 1998".   Given that 400,000 households couldn't watch the game, that number could have potentially been higher.  

According to reports, it was the Fox station owner, Cox Media Group, that chose to black out the signal to FIOS, a move that does little to help their negotiation, especially when done over a national holiday.  That neither side could find any sense of humanity to delay such a move, especially when no work would be done over this particular long weekend, should cause outrage across Rhode Island, if not nationally.  In fact, it was a heartless move.  For CBS and Dish, they may still move ahead to a blackout to push their negotiation stance, but at least they put the holiday and their viewers ahead of commerce.