Friday, July 29, 2016

Amazon Shows Real Growth

The US Economy may be sputtering, but not Amazon.  Its online retail business, its cloud business, its subscription business all are growing in double digit figures.  And Wall Street seems to be happy with how Amazon spends its money too.  Per the NBC New report, they are building more distribution centers, investing in more online content, and spending where it matters to drive future growth and profitability. 

And while I have seen little about how well its products are selling, Kindles, Echos, etc., the infrastructure is expanding to manage it.  Where Amazon expects to be in 5 or 10 years remains to be seen.  Will its cloud business be the catalyst for future growth or is online retail the centerpiece of its empire?  And what future diversification is in store for the company?  For now, Jeff Bezos, CEO, isn't revealing his hand; but, he surely has some aces under his sleeve. 

Thursday, July 28, 2016

Is Alexa More Than A Fad

Check out the recent article in the NY Times called Alexa, What Else Can You Do?  Getting More From Amazon Echo.  It offers additional tips and tricks to make your device a more valuable component to your home and the center of your Smart Home.  It's a good idea but I wonder how many homes have embraced Alexa to such an extent.

We have Alexa in the home and its most useful feature seems to be to tell us a joke.  We have yet to connect it to the HVAC or any electrical device.  We don't subscribe to Amazon Prime so don't push our music through it.  And it is relegated to the kitchen with the need to shout to access it from a nearby room.  For us, for the moment, it is merely a fad.  But a fad that is simply ahead of its time before it converts to must have.  How long it might take to achieve necessity requires too many what ifs. 

Wednesday, July 27, 2016

Apple Products Stall As Services Rise

It seems that consumers are keeping their devices longer and that the need to upgrade iPhones or iPads too frequently is not necessary.  That's not to say that people aren't buying Apple products, they are; rather, that innovation hasn't been enough to cause consumers to change out their device. And as a product company, Apple can no longer rely on their present product line to deliver the growth that the market demands.  On the other hand, its service side continues to grow as theses products demand more apps, more cloud storage, more content to satisfy the need of the user.  Its service size, per financial reports grew 19% in the quarter and by itself is a $6 billion dollar business.  That is not a meager amount.

But Apple is more than that. And the Apple Watch has not yet become the must have device that people expect.  It is time for Apple to tell us why we need an iWatch, the Apple TV, or some not yet named product.  Will it be an Apple car?  I would rather see Apple license its technology into every other car manufacturer. Is it a Siri clone of the Amazon Alexa?  Is it a video streaming content subscription business?  Is it smart appliances in the home? 

And how will Apple show that it is once again a growth company.  An acquisition would make sense.  What about Sirius or Netflix or Viacom or CBS?  What about Microsoft?  It seems time for Apple to reveal more of their hand.  They can no longer rely on yearly product upgrades to maintain the fan fanaticism toward Apple.  It is time to get ahead of the curve again. 

Tuesday, July 26, 2016

Verizon Is Becoming A --BLANK-- Company

OK, fill in the blank. With the purchase of AOL last year and now Yahoo, Verizon is becoming a new kind of company.  It started as two baby bells, a spin off from Ma Bell and the merger of New York and New England markets which once was known as NYNEX.  Its name change to Verizon indicated that they were to be more than just a wired telephone company.  Yet they were criticized for a brand name that had no identity attached to it.  That didn't stop them.  They successfully pushed into wireless to become a towering force in mobile communication.  And they added cable with the formation of FIOS which would overbuild a number of cable markets in large DMAs like New York and Philadelphia.

But it is this push into digital content, first with AOL and now with Yahoo, that causes us to understand how Verizon is once again remodeling itself.  Once acquired, AOL and Yahoo businesses will likely merge to find important synergies.  Perhaps working more closely with their new video streaming service, go90, to drive further internet advertising dollars.  Add to that the data and research gleaned from the mobile wireless market and the app and website world and Verizon may have an inside understanding of what its users want and desire.

Verizon is working on its transformation from telecommunication giant to media mogul.  But the acquisition of Yahoo may not be enough to compete with the likes of Facebook and Google.  Facebook is winning because it is the platform that we proactively visit multiple times a day that aggregates content for us to consume.  And Google is the search engine of choice that takes us to places we desire to go and guides us on the better choices to make.

Verizon likely needs to add more to its mix of sites; an acquisition of Bing or even all of Microsoft might be something to consider.  A Yelp or TripAdvisor or other site that helps guide our decision making.  But more is needed for Verizon to further its transformation.  Yahoo alone is not enough.  But it looks like a good start. 

Monday, July 25, 2016

Redbox Sold!

On Friday I wrote a blog on Redbox trying a streaming business again.  Today, Redbox parent Outerwall Inc. has announced that it will be bought by private equity firm Apollo Global Management, per the NY Times.  Besides its more well known Redbox kiosks which rent out DVDs, the company also has a coin change business, Coinstar, that takes a fee every time consumers use the machine to convert change to dollars.

Will Apollo support the streaming side of the business or simply use this acquisition to try and spin it off to more capable hands?  We will wait and see. 

The VCR is Dead; Goodbye Old Friend

Technology is full of life changing moments.  With every change, our life is meant to get easier and easier.  But it has also spelled the death for the old technology before it.  There are too many examples to recount, but one that hits home for me is the announcement that the VCR, the videocassette recorder is dead.  Production of new models will cease and their use will become a memory as the digital revolution completely takes over.  Goodbye old friend.

I remember when we first got one in our home.  It was life changing allowing us to record and watch any show we wanted.  It also let us watch theatrical movies when ever we wanted.  And we could pause or stop them for the necessary potty break.  When I moved into my first apartment, the VCR was a gift from the folks.  I was ecstatic.  Now I could go out on a Saturday Night and know that SNL was being recorded for my Sunday viewing pleasure.  For those that knew how to program the VCR clock, TV was finally on your time.  Of course, tapes were limited to 6 hours at the most, but that was never an issue. 

Many people used their VCR to make endless recordings of their favorite series, keeping them in their video library.  I too would record my favorite movies to watch again and again.  Friends would borrow and some would even forget to return.  A number of years later, I was at a friend's apartment.  She had moved to LA and looking at her tape collection, I saw one of my copies.  I had always wondered where that tape had gone.

The VCR outlived its competition, from laser discs to betamax, but it couldn't outlive technological change.  The VCR was still analog and digital technology was emerging.  For many, the VCR made TV viewing easier; for others, they could never figure out how to set the clock.  The launch of the DVR, the digital video recorder, took away that problem and more.  We were no longer limited to the tape length of 6 hours although viewing was limited to the box that we saved our show on.  That iss ue has now been solved through digital streaming. 

The VCR was a breakthrough technology.  Not only could we watch time shifted programming, we had more controls, too.  We could fast forward through commercials and rewind to watch over and over our favorite parts.  It put TV into the hands of the individual.  It was the first device to deliver what you want, when you want it. 

I no longer own a VCR and yet I still have old tapes lying around the house.  For some, I feel the need to transfer off analog tapes and onto another for later viewing.  I would say to transfer onto a CD but that technology is likely the next to see production stop.  No longer do Apple computers include CD players in their laptops or desktops.  Cars no longer need them either.  Our digital memories are to be stored in cloud libraries, not physical ones in our study or family room. 

Millennials will pay little attention to the news announcing the end of VCR production.  They know only DVRs, on-demand, and streaming.  But the VCR was an important part of my youth and the way that TV viewing changed for me.  Goodbye old friend. 

Friday, July 22, 2016

Redbox Tries Streaming Again

When Redbox first partnered with Verizon three years ago, their joint venture, titled Redbox Instant, was seen as a possible competitor to Netflix and Hulu.  It was a strategy to expand from the DVD kiosk business toward a streaming one with a partner with a great deal of experience in mobile.  For whatever reason, that venture failed and Redbox Instant died last year. 

Since then, Verizon has been experimenting with their own subscription streaming mobile service. And now Redbox has decided to go it alone too with a new venture dubbed Redbox Digital.  But rather than be a monthly license fee subscription business, it appears that this new venture will attempt a transactional model.  According to Variety, "Redbox hasn’t said anything about pricing or catalog for Redbox Digital, but one can assume that it will largely mirror that of other services that allow users to pay to rent or own individual titles, including iTunes, Vudu and Google Play. That means that streaming rentals will likely be significantly more expensive than the $1.50 Redbox customers currently pay for physical disc rentals."

Why did the Verizon - Redbox Instant partnership fail?  What did each side learn as they independently create other digital streaming businesses?    And can either of these two succeed against the respective incumbents.  The opportunity is there as long as each can learn from their past mistakes. I'd love to help.

U-Verse Loses Subs While DirecTv Adds Them

AT&T may just consider itself a tale of two cities.  On one hand, they have the newly acquired DirecTv, a satellite service that saw a gain of 342,000 subs in the second quarter, while its competition, Dish, lost nearly as many.  And on the other hand you have the telco digital service, U-Verse, what FIOS is to Verizon, dropping those DirecTv gains and more. They lost "391,000 U-verse TV users in the second quarter" per Fierce Cable.  That's almost a 50,000 sub net loss for AT&T!  What happened?

AT&T also reported more broadband losses as they were not able to convert their DSL base to IP.  Did these customers go back to cable or did they ut the cord altogether?  The challenge AT&T faces is how to keep promoting and growing the DirecTv business without taking that business away from its telco side.  Is there synergy there to grow or a zero sum game?  The last quarter financials questions where the business is going. 

Thursday, July 21, 2016

Dish Loses Subs, What About DirecTv?

Today Dish announced that they lost over 280,000 subs in the second quarter.  In 2015 they lost 81k subs in Q2.  Springtime is not good for Dish.  Coupled with a loss in broadband subscribers as well, per Multichannel News, Dish is facing some true challenges. And they will soon find out how their competition is doing.  Is cord cutting at play for them or is something else occurring?

Later this afternoon, AT&T, owner of DirecTv, will be releasing its quarterly financials.  Many expect DirecTv to meet or beat its numbers.  According to the Wall Street Journal, AT&T expects both revenue and earnings to grow ahead of expectations.  DirecTv may just benefit from the deeper pockets of its parent.  Once the financials are released, we may be able to discern if DirecTv has captured some business from Dish churn.

Wednesday, July 20, 2016

The Future Of Fox News

It should come as no surprise that nothing lasts forever.  But we sometimes do seem surprised when news of change arrives.  Even more so, when that change is a result of the classic Lord Acton phrase, "power tends to corrupt, and absolute power corrupts absolutely".  We find it time and time again that those who see themselves above the law may not be inclined to follow those laws.  Such wisdom may now apply to Roger Ailes, CEO of Fox News.

The success of Fox News has been acknowledged as the direct result of Ailes.  He brilliantly created a tactic that paid millions of marketing dollars in exchange for basic launches on cable systems, built a conservative point of view and attracted a huge audience to it, and created such demand for the channel that those same cable operators ultimately paid back those marketing dollars and much more in higher and higher license fees.  Add a rising ad marketplace and Fox News under the command of Ailes flourished.  The news niche attracted viewers not happy with the viewpoints of CNN or MSNBC. 

But times are changing and the Murdoch empire, owner of 21st Century Fox, is now in the hands of Rupert Murdoch's two sons.  They may see a different direction for Fox News.  And the recent allegations about Ailes regarding sexual misconduct may simply be the catalyst for his dismissal.  Per the Daily Beast, Ailes is "poised to step down in the wake of a sensational lawsuit alleging sexual harassment, discrimination and retaliation, filed barely two weeks ago by fired Fox anchor Gretchen Carlson."  Whether Ailes is guilty or not may not change the ultimate outcome. 

What does a Fox News, without Ailes in command, looklike?  Do notable anchors and personalities on the channel stay or leave post-Ailes?  Some may even have out clauses in their contracts that make them null and void should Ailes leave the company.  Will the channel retain its conservative viewpoint or seek another.  20 years for Fox News is a long time but as I said upfront, nothing lasts forever.  Look at almost every other cable network and it looks quite different today from 20 years ago.  With the expected end of the Ailes era at Fox News, change is coming. 

Tuesday, July 19, 2016

Netflix "Ungrandfathered" Me

Hey Webster Dictionary, it's time to add a new word - ungrandfathered.  Per Netflix, it is the act of eliminating any price discount associated with being a long time subscriber and substantially raise your monthly fee to match with new subscribers.  And while Netflix may see a revenue bump, they may also face higher than typical churn rates too.  And with significant competition from Amazon, Hulu and others, Netflix can't expect rate increases to help their future. 

Of course, Netflix has more to worry about as my blog yesterday detailed.  When quarterly financials came out, Netflix failed to hit a number of metrics, including important growth numbers.  And while there was some growth, it was well short of expectations.  Churn will only erode those gains.  It is time for Netflix to actively find additional revenue streams to drive business growth.  And they must start soon. 

Monday, July 18, 2016

The Future Success Of Netflix

Nothing lasts forever.  Even Netflix knows that; they watched their DVD business erode while working to navigate the streaming world.  It was a bumpy ride along the way but the result so far has been quite impressive.  But growth appears to be declining, according to the Wall Street Journal, and international challenges and content costs aren't helping. 

In August, the remainder of the U.S. subscriber base will see its monthly fee rise to $9.99; for my household that is $2 more a month or a 25% increase.  Yet that is not enough to satisfy investors in the business seeking more future growth from the streaming giant against greater competition from Amazon and Hulu.  So what is Netflix to do as its Act 3?

Of the options to consider, Netflix might want to build out a streaming tier of live content, at an incremental cost, as a skinny bundle to drive more cord cutting. They could add more advertising to the mix, either with an ad supported option or with more sponsored content to the stream.  Netflix might consider growing through expansion; perhaps the purchase of a studio like Paramount or some cable networks.  For Netflix, standing still is not an option.  They learned that lesson from their DVD rental business.  Existing growth of its subscriber base will dry up and future revenue growth must come from other business platforms. 

Thursday, July 14, 2016

The Sharks Are Circling Viacom

Given the health issues surrounding Sumner Redstone and the management conflicts hitting Viacom, I am surprised that it has taken this long for the sharks to circle Viacom. But such seems to be the case with news that folks are looking at pieces of the company.  That piece is Paramount Studios, a once proud film making company that has had a hard time finding financial hits.  Spongebob is not as popular as Dory it seems.

According to Bloomberg, "Chinese billionaire Wang Jianlin’s Dalian Wanda Group Co. is in talks to buy 49 percent of Paramount Pictures from the company."  Whether such a deal gets approved remains to be seen but it shows that the company is having problems.  Still, if Redstone has any control left, why wouldn't he try to see his other company, CBS, take back Viacom and help recharge its engines.  With Comedy Central and Nickelodeon still valuable cable networks and a storied history from Paramount, the hope is that there is still value left to unlock.  New management for Viacom may be the answer and CBS could use the assets to stay strong and competitive against NBC and ABC. 

Wednesday, July 13, 2016

Comcast Outage Outrage

Are you a Comcast customer?  Then you were likely affected by the outage of service.  It seemed to have started earlier in the day when Comcast business phone customers lost telephone service.  And this wasn't a localized problem; rather multiple markets coast to coast were impacted.  Yet, it was barely reported by media and the possible outrage contained.  One must wonder the economic loss of business that resulted from this outage.  Not for Comcast but for those businesses that rely on the technology to deliver. 

Those outages became personal last night when our cable, internet and phone all went down in the early evening, preventing us from enjoying the MLB All Star Game, and our connectivity to the world.  Our initial call to Comcast required multiple dials to get from automated attendant to a real service rep.  They knew little of the problem in the area and spoke like no one else was having any problems at all.  No matter how pissed off I might have been, it would not quicken the repair to our service.   We were at the mercy of Comcast. 

Our dependency to the internet is especially disconcerting. We are linked to it with every key stroke and despondent when we are cut off.  Luckily, our cell phones are linked to a different provider, enabling us to ultimately get connected and feed our fix.  But, the loss of service was a reminder just how dependent we are. 

Monday, July 11, 2016

Video Snacking To Drive Revenue Growth

We are about to get overwhelmed with tons of short form video content as the long tail of video consumption is about to get longer.  In today's NY Times, Tronc, once known as Tribune Publishing, has revealed their plans to increase video content 1000% daily.  And other online publishers are following this trend.  With video content attached to every online article, the hope is that more viewers will stay on the page longer, click the video, watch the ads, and continue to snack on other articles and other video content.  A very sound strategy.

Whether the content is created specifically for the page or linked via syndication or other means, the direction is clear.  More video snacking with content that connects with the viewer should create a better user experience.  And hopefully drive online revenue higher.

Two online companies, Wochit and Wibbitz, seem to have the means to quickly and efficiently link content to articles.  "The two services’ automation features work in similar ways. They analyze, and may summarize, text, be it a script or a traditional news article, and then automatically find photographs and video clips to go with it." Whether users find the additional content useful to them or simply clutter may determine the long term viability of these services.  But done right, the use of video on the page should be good news for these content companies. 

Friday, July 8, 2016

Cameras Are Everywhere

In the wake of recent news events, the accessibility and use of cameras has provided a video record of what has often been a he said, she said exchange.  That 1 picture is worth a 1000 words may be true, but it may not be the whole truth either.  Still, that video cameras are everywhere is becoming a more important part of our daily lives.

It seems that every sidewalk has a video camera focused on it, every store has a video camera recording each corner, and in everybody's pocket there is a video camera, our smartphone, ready to record events as they happen.  And we are being record in our good times and in our bad.  Cameras are everywhere.

That it catches criminals and criminal intent is a very good thing, that it provides a potentially independent view of a situation is also good, and that it hopes to enhance security and provide protection is important.  But the reverse is a loss of privacy, individual freedom, and a likely permanent record of our actions, good ones as well as our indiscretions.  Personal privacy is lost for the greater good. 

I've always enjoyed catching video moments of my family's lives.  They are a permanent reminder of the events of our lives.  I'm happy too when citizens with their phones capture everything from silly moments to criminal activity.  The hope is that truth of the moment shines through.

But when it comes to media and the availability of these "videos", I worry that sensationalism outweighs truth, ratings over discretion.  Is it necessary to show everything, no matter how insensitive or gory it might be?  Does it make our society more compassionate or does it start to desensitize us?  There was once a time where media withheld material that wasn't relevant to the situation; today, the need to beat out other news organizations means that faces are no longer blurred, blood is no longer ignored, and pain and violence are showed in all its glory.  In the drive to show everything, we may be becoming more hardened to it.  Our scale of restraint has vanished.  And I worry that we, as a society, are heading down a very dark path. 

Wednesday, July 6, 2016

Netflix And Comcast Are Now Frenemies

In a not so surprising move, Comcast and Netflix have found a way to cohabitate.  Comcast customers that have the latest set top box, the X1, in their homes will be able to watch Netflix on their TV by simply switching to the Netflix channel.  Previously, users would have to switch inputs from the set top to another box, their Chromecast, Apple TV or Xbox, before accessing their Netflix subscription.  One less step, but for those looking for simplicity, an important one.

So why did Comcast agree to let Netflix in the front door?  Perhaps they recognized that Netflix was not the reason folks dropped cable.  Perhaps by being customer friendly, Comcast sees customers take full value of their cable subscription.  Perhaps it provides a bit of revenue or maybe even some additional research into the minds of their subscribers.  And perhaps they realize that set top boxes may one day be history and best to get some incremental value before it is too late.

Regardless, the press has reacted quite positively the news.  I suspect that customers will as well. And a happy customer may just stay a Comcast customer. 

Friday, July 1, 2016

Apple Should Not Buy Tidal

Subscription content services are a nice business to own.  They provide a nice monthly stream of revenue that can be accounted for with limited risks in subscriber loss.  Heck even cable has seen a very small percentage still from cord cutting.  In music, the big player is Spotify and Apple Music would surely like to beat them.  But recent news that they might purchase Tidal is not the answer.  Sure it has Jay Z but that does not a business make.  And it certainly won't make Apple Music any better or bigger.  Whether it secures any exclusivity is questionable, especially when you consider what Apple may have learned from the book side of the business and dealing with both book publishers and eventially the Judicial Department.

Still, the strategy of building better content businesses is a good one for Apple.  Could that mean buying someone as big as Netflix or perhaps even a Time Warner Inc, home of Turner, HBO, and Warner Bros?  I would love that move.  But maybe something smaller is a better first step.  Given the Viacom issues and Sumner Redstone lunacy, Showtime and sister networks might be a better idea.  Lionsgate is picking up Starz; once owned, they could be in play too.  And let's not forget Scripps or AMC.  Overall, I believe that video subscription should be Apple's next big content move.

And as for SIRI and the Amazon Alexa competition.  That is a blog for another time.