Google And Apple Competition Growing With Digital Pay

In the smartphone race, functionality and useability continue to drive innovation and value.  The main two competitors, Apple and Google are leading the charge, each trying to out duel the other.  And while Android devices outnumber iPhones, Apple remains a closed architecture while Android is open, used by multiple mobile phone manufacturers.

The latest announcement is that Google has finally created a mobile pay application to rival Apple Pay.  According to Wired, "The service—which will be available on future Android phones as well as from the Google Play app store—operates much like Apple Pay. It stores your credit card details on your phone, and both in shops and online, you can pay for goods and services by touching the phone’s built-in fingerprint reader."  And it is the next iteration of Google Wallet.

Whether the introduction of Apple Pay caused consumers to switch devices or whether Android Pay will have a similar effect remains to be seen.  Still the challenge for Google is that, unlike Apple, it has to be integrated across multiple competing devices that all run under the Android operating system.  Within the Android world, Samsung also has its own version of a digital wallet called Samsung Pay.  What confusion that brings to the marketplace remains to be seen.

Clearly, the use of a digital wallet simplifies the purchase process.  For those that use it or perhaps apps like Starbucks to pay for goods and services, it becomes an easier convenience than pulling at a wallet.  And as consumer use grows, so to will the number of retailers that will enable it at their locations. 

Apple and Google are clearly pushing each other to become the predominant smartphone brand.  With each innovation comes new model phones, new revenue opportunities, and new partnerships.  And this competition seems ready to intensify. 

A Cable Oligopoly Is Forming

Time Warner Cable (TWC) wasn't an orphan for long.  Despite a too long engagement that was broken up between Comcast and TWC, a new suitor named Charter Communication, ultimately won their hearts.  And along with the acquisition of Bright House Networks, Charter will become the second largest cable operator in the nation.  Add a combined AT&T-DirecTv as the third major cable operator in the nation and you have your clear oligopoly.  Once swallowed up and absorbed, the only question will be how long before the rest of the cable operators get bought up. 

Can Cablevision really continue to operate as a stand alone operator?  Will they be plucked up next by Comcast or Charter in the next year or so?  Can Cox Communication remain private and will smaller cable operators seek out buy outs?  It seems that once Time Warner Cable was spun off from Time Warner, Inc., it's heart was no longer in the business of running a cable operation.  It is just not as sexy as owning content companies like Turner and HBO.  But did they ever consider what they could do if they were the one acquiring cable systems like Charter or even Cablevision?  I'm not sure.

It seems that the FCC will be okay with a Charter acquisition of Time Warner Cable as well as AT&T buying DirecTv.  It creates two mega entities large enough to compete with Comcast.  And while AT&T lacks the broadband size, their cellular business more than makes up for it.  Approvals seem a near certainty.

So what is next?  Beside Cablevision or Cox or another cable operator getting bought, I expect it is time for some mergers of content companies too.  Could it be Scripps or AMC or Disney or Discovery in the mix?  With less cable operators, networks need more leverage as well to get their higher prices.  Stay tuned. 

Everyone Wants To Have A Video Platform

There is a proliferation of video channels.  In fact the word channel probably doesn't apply though the word platform seems to general as well.  We no longer get video from broadcast or cable.  Short or long term video content is no longer only available on You Tube  or Hulu or Netflix or Crackle.  And video content is no longer limited to video only websites or apps.  Facebook and Twitter love to share an connect us with video as well.  Even social media companies like Snapchat, with disappearing messages, wants to offer video content from Discovery and other content providers.  Video content is so hot these days that platforms that were so focused on data or non video offerings have found compelled to bring video into their mix. 

And that brings us to Spotify, a music company offering streaming songs for free or in a subscription service, to decide that they too need to also be a video content company.  You might think that the video content would be rooted in music, like music videos or concerts, but that does not seem to be the case.  According to reports, video will come from such sources as ESPN and Comedy Central.  News, comedy and video sports content will all be added to Spotify's playlist of content.

As I watch this proliferation of content across so many sites, and as I watch niche sites become more generalized and mainstream, I recognize that once again history repeats itself.  Cable networks, once niche content providers, would limit their content to a particular format.  But to compete for the largest number of eyeballs and subscribers, to gain the larger share of the ad dollar pile, niche services all realize that eventually they must shift from niche to broad, from limited to general, in order to reach the widest and hopefully largest size audience.  For Spotify, as it is for others, that means moving away from your niche as a music service to be everything for everyone in order to keep growing.  This type of strategic shift is always inevitable. 

The Future Of AT&T

Where once AT&T was better known by the moniker of Ma Bell, today no such branding exists.  The break up of its telephone monopoly decades ago, the rise of cellular, and stiff competition from one of the few Baby Bell children, once known as NYNEX  and now as Verizon, that has created a very different voice landscape.  AT&T now finds itself needing to be more strategic and innovative.

That move actually started last year when AT&T announced its plans to acquire DirecTv.  With approval expected, AT&T CEO Randall Stephenson sees a change into a stronger data driven broadband entity.  Per the Deadline Hollywood article, it appears to include more investment in wired broadband via fiber optics and "wireless broadband to about 13 million homes, mostly in rural America."  How the DirecTv merger helps them get there remains to be seen.  While Stephenson likes the content offered on DirecTv, like the NFL Ticket, he may be limited in how he can distribute it.  I believe that Verizon actually owns the mobile license to the NFL.

What remains to be seen by AT&T is more clearly the synergy and growth that the DirecTv acquisition creates for the company.  Can it lead to growth of the cable platform and a wider rollout of triple play offerings?  Are there economies of scale in call centers, truck rollouts, marketing budgets, etc. ?  Clearly Stephenson seems quite optimistic in what he has to work with and how it "will transform his company into a juggernaut in the fast-growing streaming video market." I'm hoping he is right and that he can create a nationwide competitive broadband platform against cable franchise markets and other cellular networks.  We will wait and see. 

Dish Could Become Your Next Broadband Provider

It has been well known that Charlie Ergan, CEO of Dish Network,  has wanted to get more instrumental in the wireless and cellular marketplace.  He amassed an interest in LightSquared only to watch that company go bankrupt.  At the same time, he has been buying wireless spectrum over the years.  Most recently, he announced an OTT platform called Sling TV to offer a low cost content bundle to consumers.   And now he has announced his next move.

According to the NY Post, " is planning to take on Verizon and AT&T by creating a wireless video and data bundle, sources said."  And by using this wireless spectrum, Dish could potentially offer a triple play of services, video, data, and phone, to compete head on with MVPDs like Comcast, Charter and others.  The timing seems appropriate given that the AT&T-DirecTv merger could be approved by the FCC, limiting his appeal with the Dish satellite platform.  Already, Dish has lost about 300,000 video subscribers and given the rise of cord cutting, even more in the future.   With the demand for wireless access rising and competition limited, Dish's entry in the space, both as a delivery platform and content aggregator could make them appealing. 

The future media landscape clearly lies in mobile and Ergan's push in wireless makes enormous sense.  With few competitors and customers feeling price conscious, the chance to break in and disrupt seems opportune.  Lately, there has been much movement in this space, from the AT&T DirecTv merger to Verizon buying AOL.  I wouldn't be surprised, given Ergan's style, to look at more content acquisition as well. 

Digital Is About Knowing You Better Than You Know Yourself

For as irrational as a human being can be, the things we buy, the choices we make, the directions we take, are all being gathered in this brave new world through digital technology.  From credit card purchases to web searches, from GPS on our devices to video streaming, our movement, purchases, and other actions are being captured digitally and analyzed.  And with that abundance of information combined with our demographic data, we are being presented with marketing messages and images that may more likely appeal to our interests to watch, engage, consider, and perhaps even purchase.  The aggregate of all this data collected about us may ultimately know more about us than we know ourselves.  Scary, huh!

On the positive note, it means that ads are being customized to more specifically address our needs or appeal to our interests.  Te result, more effective and efficient advertising.  The downside is that we may no longer be anonymous.  We may consciously encourage to be found.  We announce our events, vacations, and other information on Facebook, we share our driving patterns and traffic info with Waze, we use mobile coupons and courtesy cards to get discounts and other savings when we shop.  The rewards are aplenty, but underneath all the positives is that we are trackable, pursued, and analyzed.  Under nefarious circumstances, could we be letting others more easily hack into our lives, steal our financial information, or worse, make it easier to steal our identity. 

Security is never spoken about until after the fact.  A breach of online data at a department store, lost disk drives with credit card information, or worse the theft of social security numbers.  And no matter how much is being done to protect our data, there will always be those seeking to hack into it.  It is the new mobile, digital world that we have entered.  And it will only get more complex. 

Is Verizon A Good Fit To Acquire AOL?

AOL needs a partner for growth in the mobile space and Verizon needs to embrace digital content; perhaps, that is the reason Verizon decided to buy AOL.  According to numerous reports, the deal will place AOL under new ownership but continue to be run by current CEO Tim Armstrong.  But the question to ask is whether such a combination can produce favorable synergy?  Verizon has certainly tried before but was unsuccessful in growing the Redbox Instant platform to compete with other subscription video companies like Netflix, Hulu, or Amazon Prime.  AOL offers a different set of digital content brands including Huffington Post, TechCrunch, and Engadget.  So how can Verizon help?

Clearly, Verizon is a telecommunications giant with the financial resources to support AOL brands and their growth strategies.  Verizon also brings the largest mobile platform in the US to assist  AOL in extending out its reach and usage stats.  But helping a horse find water doesn't necessarily mean that it will drink from the trough. Verizon must rely on AOL's own expertise with building and growing digital content brands.  And AOL might need to hire from the outside to gain additional help.

Owning more content will enable Verizon to monetize more of its mobile business and to hopefully enhance its data analysis across both its platform and competitor mobile platforms.   And through a better understanding of the mobile space, to create an even more accessible and intuitive expertise.  With content as king, Verizon hopes to do better to capitalize on content this time around.  For AOL, it seems like a huge opportunity to capitalize its strengths with a more powerful financial popular who is also the mobile leader at the moment.  Let's hope that this acquisition is indeed a good synergistic fit.

Can TiVo Build A Better Aereo?

It seems TiVo thinks it has come up with the secret sauce to build an Aereo type product that can't be sued.  And while the Multichannel article couldn't divulge just how it can be done, TiVo syas that it will share more later this Summer. 

Certainly, TiVo has already found some success working with smaller cable operators as an alternative cable box and OTT aggregator.  And the TiVo platform can also work in the home with a personal digital antenna connected to their device.  One can only wonder how they can deliver an Aereo type product without hurting some of the cable operator partnerships they have already created.  Of course the challenge for TiVo is that it needs a broadband provider to capture non OTA (Over The Air) signals and to share content with wired and WIFI devices. 

Broadband access is limited in a community.  One can get either from their franchised cable operator, from their telephone provider who can offer DSL service or from a cellular provider.  It is that limited competitive arena that eventually killed the Comcast Time Warner Cable deal.  TiVo's best strategy has always been to be the better cable box for cable operators willing to share their pipes with both cable programming and OTT programming.  As a stand alone strategy, customers seeking to cut the cord completely can access OTT programming through a number of other boxes like Rovi, Apple TV, Chromecast, Playstation and others.  A more crowded field that TiVo may find less upside. 

Is there an Aereo type strategy that TiVo can deliver?  I guess we will have to wait and see. 

Changes Afoot At ESPN

Is something up internally at ESPN?  Last week, we learned that Sean Bratches, EVP of Sales and Marketing was to leave the company by the end of the year. On Monday ESPN announced that another on Sean's team, David Preschlack, EVP of Affiliate Sales and Marketing, was also resigning.  Could this be fallout from the distribution contract issues between ESPN and Verizon?  The timing seems peculiar. And so one can only wonder what other shoe will drop.

Well, today, we have learned that Bill Simmons, long time veteran writer, will not see his contract renewed when it expires.  While certainly not connected to distribution issues, one can only start to wonder if ESPN is getting ready to clean house both on the distribution and content sides of the company. Should we start to see layoffs or resignations, it will be a more clearer indication that change and trouble is rising inside the sports company.

One thing is for sure, sports content has made sports networks like ESPN and others to charge the highest license fees of any of the basic networks.  Those costs can only be passed on for so long before distributors start to feel the effects of lost subscribers due to cord cutting.  Offering cheaper, more limited packages, that exclude sports content, is how Verizon FIOS is hoping to win back some of those cost conscious consumers.  How iron cloud the ESPN contracts are might be the issue that has resulted in the pending loss of two of their senior employees. 

Yelp Needs Help

Yelp, the local business review company, is not growing as fast as investors and analysts think it should.  As a user generated site of reviews on everything from restaurants to hotels to business services (even services like Photo Booth rentals for events), Yelp offers great search and recommendation for finding what you want near where you are.  But the challenge they face is how to better monetize such a service of loyal users and contributors. 

The Wall Street Journal is reporting that Yelp "is working with investment bankers and has been in touch with potential buyers in recent weeks, some of the people said."  And although traffic to the site is positive, growth may have plateaued.  Still, the company has aggregated a large database of businesses and reviews and has been a useful resource to many, including myself.  As a search engine, it is localized and relevant, and as a recommendation engine, it provides a wide array of reviews, from positive to downright snarky.  Content is king in this regard and they continue to nurture more reviews. 

Perhaps, Yelp needs a partner that can provide them with a larger array of complementary services.  I could see Yahoo and AOL as possible fits, although Google might like to get a hold of them as well. TripAdvisor might also see a strategic fit as well.  With a more strategic partner, Yelp could potentially expand into video content that augments the value of each of the businesses being reviewed.  Currently, Yelp uses photos that are uploaded.  But videos, could open up windows with additional advertising opportunities.  Videos might also encourage more time spent on the site.  In addition, a strategic partner would help drive more efficiencies to both lower costs as well as keep users engaged on more pages across the site. 

Whether Yelp decides to keep going independently or seek a merger to expand remains to be seen.  For now, Yelp has created a must have resource for finding places to eat, shop, and buy. I hope they only continue to grow. 

Will AT&T And DirecTv Merge?

Now that the Comcast and Time Warner Cable deal is kaput, attention turns to the next media merger.  While a merger would create a cable subscription behemoth larger than Comcast is currently, it would not impact the size of their broadband subscriber base.  That factor was the key stumbling block to Comcast getting its deal done.  DirecTv, as a satellite company, does not offer broadband service.  AT&T does.  Is that enough for the FCC to okay this merger?  Netflix doesn't think so.

In today's New York Times, Netflix "argued that a combined AT&T and DirecTV would have the ability and incentive to use its heft to harm online video distributors like Netflix to protect its core TV business." Actually, creating a video entity larger than Comcast might actually enhance competition.  Fundamentally, DirecTv and AT&T bring two different platforms together, satellite and fiber while the Comcast Time Warner Cable deal would have expanded their fiber distribution platform to control more than 50% of the broadband market.   Two very different outcomes.

Still, when looking at the merger of AT&T and DirecTv, the synergies that come into play seem more about negotiating cable content and getting more economies of scale on their contracts.  As to the broadband side of their business, AT&T still must rely completely on their own cellular and U-verse platforms to compete.  Of course should DirecTv satellites someday be able to provide two way broadband access to the internet, then new concerns might arise.  At the same time, Lightsquared and Dish have been currently unsuccessful in this approach.  Once spectrum opens to enable such opportunity, it would open new competition into the marketplace to challenge a merged AT&T - DirecTv entity.  And isn't that what the FCC really hopes happens in the broadband marketplace. 

GE Lights Up With Apple

According to re/code, GE is working with both Qualcomm and Apple to enable their next generation LED lights to work with Apple's HomeKit app.  Intelligent, efficient, and controllable seem to be the new elements of a smart home and GE is reshaping itself to fit this new world.  Beth Comstock, head of GE Business Innovation, says “LEDs plus software, it helps GE continue its Industrial Internet expansion, and I think the lighting business has a big role in GE’s future because of that."   Certainly the space is much larger than lighting and the hope is that GE sees fit to partnering with other manufacturers to assure an integrated experience across all devices in the home.   

Tesla's Battery Revolution Is Starting

Despite all the focus on Apple Watches and missed mergers, Tesla and Elon Musk continues to focus on energy.  Environmentally friendly, useful, and efficient, Tesla Energy looks to be making quantum leaps in energy storage and use.  Their latest announcement yesterday was to the point, "a suite of batteries for homes, businesses, and utilities fostering a clean energy ecosystem and helping wean the world off fossil fuels." Not just for the automobile, but clean energy to power your home and office.  

As a start, it may be viewed as a replacement to a gas-powered generator, useful for blackouts and other emergencies, but with great implications for future use.  Most excitedly, it is designed to use with solar to create a renewable, zero-emission, and ultimately inexpensive power source.  And like any first generation product, it will no doubt see improvements in the coming years.  

Of course adoption and ease of installation remain to be seen but given the risk of brown outs during the hot summer months and full blackouts could make this product a must have for some consumers.  And reducing the demand on our power grid makes this a worthwhile investment.