CBS's Newest Revenue Stream

The rise of streaming, the challenge to increase ad revenue as well as licensing of its network to cable companies all play into the strategic mix as CBS seeks revenue growth.  Certainly content matters and quality shows that generate buzz hope to find audiences that stay loyal to their plots.  And building new distribution outlets to grow as a business remain relevant.

In the case of CBS, they chose not to be a partner in the Hulu streaming business.  The other three broadcasters NBC, ABC, and Fox, and now Time Warner have ownership shares in the Hulu business.  Instead, CBS is trying something new, its own streaming subscription service called CBS All Access.  For a $5.99 monthly fee, subscribers get "more than 7,500 on-demand episodes from the current season and previous seasons of classic shows, as well as the ability to stream local CBS stations live in more than 150 markets across the U.S." according to Multichannel News.  And following the learning curve of other streaming services like Amazon and Netflix, CBS All Access will offer original productions too, "including Star Trek: Discovery, a spin-off of The Good Wife and a new digital edition of Big Brother."

The question this strategy hopes to answer, is it better to build a new service or partner with an existing one.  Is there enough content of interest to subscribers to entice them to join?  Can marketing sell the value of adding another streaming service charge to the entertainment household budget?  CBS is trying to make it easy to access its streaming service with Roku, Apple TV, Chromecast, XBox, Amazon Fire TV and more.  Accessibility does not seem to be a problem.

But I wonder if going it alone and not with Hulu, CBS studied whether a brand name associated with the broadcast network or one without a connection made more sense.  Will customers more likely embrace the subscription service because of the CBS name or feel that they should be getting this content already if they are current cable subscribers with on demand.  Would it have better suited the service to create a more unique name like Carousel or Tainment or StreamCity to compete in the streaming media landscape?  Was CBS All Access a better name choice to drive subscription revenue?  We will watch and see. 

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. 

Has Time Warner Lost Its Way?

The challenge for a company as it grows is how to successfully manage its parts in a way that makes the combined entity that much stronger.  But sometimes, too much growth or too many business units operating independently can cause bits of implosion.  They can distract from the core mission or lead to missed opportunities.  And when a company is public with active investors, the value of the parts being greater than the whole creates new pressures on the management team.

Time Warner Inc has been one of those companies under such pressure.  As an acquisition target of AOL, it led to complete disarray.  Once divorced from that mistake, it tried to right itself only to feel pressure to continue to split off pieces.  Time Warner Cable was spun off as was the Time Inc. company.  And what is left are the Turner cable networks like TBS and TNT, the HBO premium cable subscription network, and the Warner Bros movie studio.  But investors want more and believe that Time Warner needs to be either split again or sold to another with deeper pockets.

Recently, some rumors have emerged that Apple could be interested in buying them to support their Apple TV brand.  But if you look at the Apple business, they are a technology company and aggregators of content, from music to video to apps, that they can bundle and sell to customers through their technology.  They don't have the management experience to run a content company.  And owning an HBO or TBS might limit their ability to aggregate other video content.

A more likely scenario might be for Murdoch and the Fox team or Malone and the Liberty Media team to kick the tires on Time Warner.  And ABC might be interested too.  As for CBS, an ailing owner might make it harder for them to manage such a large acquisition.  Time Warner Inc has shown a willingness to part with companies and a spin off of HBO could be a more realistic move in the short run to allay investor concerns.  Although given the recent direction of the stock market these days, the timing to sell may not be right at the moment.

ABC Family Rebrands With No Clear Shape

If you have children in the house, they probably know where to find ABC Family on their cable box.  Between 25 Days of Christmas and X Days of Halloween and Y Days of Summer, ABC Family has created event programming to help package its shows and movies.  And with all the Harry Potter Films and Pretty Little Liars and other movies and shows, it is an easy channel to watch.  That is if you can handle all the commercials.  Heck, one Harry Potter Movie could take 4 hours to watch.

But not satisfied with the ABC Family brand, and others might know that before Disney purchased it from Fox, it was Fox Family, Disney has come up with a new name for the channel.  Beginning January 1, 2016, it will be called Freeform.  It seems "Family Friendly" may not be such a positive brand distinction.  To cast a wider net, the new name is meant to reflect the notion of being a "Becomer", according to Variety.

But for me, the name invokes shapelessness, without form or structure.  And while it may be trying to say that the channel will be something for everyone, such a lack of uniqueness will only make it seem like one more generic channel.  Changing the channel's name is like when news channels "refresh their set" to update their look and attract new eyeballs.  But a fresh coat of paint doesn't always work.  Can a new name like Freeform do any better than ABC Family.  I'm not so sure.  Especially as viewers have been much more directed toward shows, than channels.  At the end, it might not really matter.

An Apple TV Subscription Service

Yesterdays announcement of the Comcast Stream OTT service for cord cutters to get some TV networks and more, may be more a defensive strategy.  Not just against the increasing loss of cable subscribers to cord cutting, but to the rise of competitive OTT services.  While Sling TV does not offer broadcast nets and TabletTV relies on a digital antenna to capture OTA digital broadcast nets, the real competitor has yet to announce. 

Many outlets have been reporting that Apple is successfully negotiating broadcast network and affiliate deals for local broadcast market channels.  That means a person living in Des Moines would get their local ABC affiliate while the person in Syracuse would get their local ABC network.  With deals being finalized, Apple is said to have the platform ready to go to give consumers a low cost streaming line-up of channels for access across all devices.  It just may be that Comcast knows more of Apple's streaming plan as a result of its ownership of the NBC Broadcasting Network.  And knowing that NBC has FCC requirements to force it to follow what other broadcasters agree to may be why Comcast has announced its Stream service quickly.  Apple may make its own announcement later this Fall per The New York Post. 

The days of jiggling an antenna on the roof to get best signal quality may be decades behind us; still, the transmission of TV signals continues to improve dramatically.  The rise of streaming enables more interactive options, more screen choices, more flexibility, and perhaps more revenue opportunities too.  And Apple could change the very notion of what a cable franchise once meant.

Apple To Become Online Cable Operator

For years it has been speculated that Apple wanted to get into the television viewing business.  But in the last few years, the word television has changed its definition.  Watching content, whether on cable TV or through Netflix, whether on a big screen set or on a mobile device, all seems to fall under the umbrella of television viewing.  Rumors that Apple wanted to build big screen sets or a cable friendly set top box have all been bandied about.  The latest news might just be the direction Apple has decided to take.

The Wall Street Journal says that "The technology giant is in talks with programmers to offer a slimmed-down bundle of TV networks this fall, according to people familiar with the matter. The service would have about 25 channels, anchored by broadcasters such as ABC, CBS and Fox and would be available on Apple devices such as the Apple TV, they said."  Like Sling TV and Playstation Network, announced at the CES, and other aggregators, Apple hopes that its Apple TV device, recently reduced in price from $99 to $69 is the means to drive adoption.  Under the Apple ecosystem, subscribers of the service would be able to view content on any of its devices, from iPod to iPhone, from iPad to Apple TV.  Truly a TV Everywhere approach!

Interestingly, the one content provider not included at the moment is NBCUniversal, home of the NBC broadcast channel, Bravo, Syfy, USA, CNBC, and others.  Also NBCU is owned by Comcast, the largest cable operator, soon to be larger with the acquisition of Time Warner Cable.  While the new service is not planned to launch till later in the year, so too is the approval of the cable operator merger with the FCC.  Could this issue add an extra wrinkle to the approval process?  We must wait and see.

For consumers seeking a cheaper alternative with a smaller set of channels but access to content anywhere and everywhere, and additive premium content from Netflix and HBO Now, this new subscription service could be highly welcomed by the millennial audience.  Ideally this online audience would prefer to pick and choose the nets it wants within the package.  The concern over time will be as more nets do deals to be on the subscription service causing Apple to need to raise its monthly fees.  That is one of the issues that led to cable cord cutting.  That, and the inability to watch content away from home.  With this new online subscription service, TV Everywhere becomes a true reality. 

TiVo Claims Better Solution to Comedy Subscription Service

A few days ago, NBCU announced plans to create a comedy subscription service for streaming users to enjoy programs like The Tonight Show, Saturday Night Live, and more.  With a proposed monthly fee of between $2 and $4 dollars, viewers without access to the broadcast channel can enjoy these shows.  The problem is they already do, on You Tube, on Yahoo Screen, and in the SNL 40 app.  Why pay for the cow if the milk is free?

Obviously, once these agreements expire, NBCU could make a case for exclusive access but aren't these online tools helpful in building subscriber loyalty and moving them to want to watch the latest shows.  Could advertising dollars suffer in trying to start a subscription service? And aren't there alternative ways to watch these great shows.

TiVo thinks so and is touting their aggregation marketing plan that brings comedy programming from all the broadcast channels to your digital devices.  Per Fox Business, "The 'Comedy Collections,' culled from ABC, CBS, FOX and NBC, will be customized by TiVo subscribers into bundles of favorite sitcoms and late night shows. According to Rogers, the cord cutters -- or TV viewers who get content over the air (OTA) without paying a cable company -- will be able to easily do their bundling as well, thanks to TiVo's Roamio OTA (Over the Air) device."  With a digital antenna and a DVR box like TiVo or Slingbox, anyone can achieve the same kind of collecting and viewing.

The challenge for cord cutters and any of us that use a DVR to record and playback later is that we have to plan in advance to record certain shows.  With a streaming service, we simply have to check that a show is available then click to watch.  No advance planning or set up required and that has been the beauty and simplicity of streaming content services. 

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. 

Couple Cable Nets To Rebrand

Despite the fragmentation that is occurring in the cable net universe, the idea of networks staying true to their niche identities continues to evaporate.  We have watched as highly focused networks continue to broaden their format to embrace as wide an audience as possible.  And the result is that it has become harder and harder to differentiate one network from another.  Original programming does try to enable differentiation but overall the goal is to become more general entertainment to the masses. 

The latest round of branding goes to The Hub, a joint venture between Discovery and Hasbro.  The new network will be called Discovery Family (eerily familiar to ABC Family) and most likely going after the same demo.  The other network, TV Guide Network or TVGN will be rebranded as Pop, a broad entertainment net most likely reaching the same audience as TBS, USA, and others.  Will a new suit help these nets to drive more share of audience.  The pot is so fragmented now and with a leak in the boat as audiences embrace digital, total audience reach will be difficult. 

Football Equals Primetime Broadcast Ratings

This year, CBS begins to air Thursday Night Football to all its broadcast markets.  Certainly seeing the success that NBC has had with its Sunday Night Football games, CBS wants a similar outcome.  For both broadcasters, it attracts a large Nielsen rated audience in primetime as well as serves as a promotional vehicle to its other primetime shows.  It has previously worked for NBC in past years to raise its ratings and should do the same for CBS.

But this is not a new phenomenon.  For years, ABC was the proud owner of Monday Night Football across its broadcast footprint.  It was the home for Howard Cosell, Frank Gifford, "Dandy Don" Meredith and more recently John Madden.  But a few years ago, ABC made the decision to move its football franchise off broadcast and onto its sister cable network, ESPN.  And while it surely helped ESPN ratings and assured higher license fees, I'm not sure if their ABC parent wouldn't mind now having their Monday night franchise back. 

Now as a football fan, I worry that too many nights of football will kill the golden goose.  It's one thing to commit to a Sunday afternoon of football, but the more hours and more days, the harder it is to stay tuned in.  Sometimes too much of a good thing is simply too much.  Yes Thursday Night football was first on the NFL Network, but with its move to a broadcast network, it will surely ask for bigger rivalry games to attract bigger audiences.  Thursday Night, Sunday Night, and Monday Night might just be too many.  But as we have come to learn, its never about the fan, only about the revenue.

Aereo Loses Challenge In Supreme Court

In a strong majority decision, the Supreme Court ruled against Aereo today saying that their business violated copyright by stealing signals.  And I must admit that I am a bit shocked.  I saw the rental of the antenna through Aereo as a proper work around to forcing a homeowner to instal an antenna in the home.  And given that the signals are broadcast free over the air, I would argue that you can't steal what is free.  For those fans of the start up, cord cutters in particular, access to broadcaster signals through their service will be denied. 

So what is next for Aereo?  Shut down completely or start to negotiate individually with each broadcaster in each demographic for license fees to connect to the network.  And given the agreements these same broadcasters make for access to subscribers to Comcast, Charter, DirecTv and other, the license fees for a comparatively tiny subscriber base like Aereo will be too high to continue the business model. 

The other question that should be asked is how will content streaming and capture be treated based on this new ruling.  Will it have a notable effect or be limited to this specific ruling?  Content is king in this scenario and ownership enables content creators to negotiate those rights as they seem fit.  This ruling strengthens that position and places content ahead of distribution. 

The Necessity Of Media Mergers

Friday, I mentioned that the Univision news regarding possible suitors was the tip of the iceberg.  In today's Wall Street Journal, more speculation abounds.  Given the consolidation of cable operators, the slowing growth of TV advertising, and the threat of cord cutting to reaching more subscribers, content companies need to consolidate as well to leverage their value to a smaller base of operators.  In order to continue to raise subscription fees, content companies need to leverage their size as well along with the threat of loss of valuable programming.  That Time Warner Cable lost a significant number of subscribers during one such negotiation demonstrates how important that leverage can be.

While larger media entities like ABC and FOX may have the resources to weather a changing entertainment landscape, midsize media companies may need to consolidate to assure their long run stability.  The article looks at AMC, Scripps (HGTV, Food), Discovery, Viacom (MTV, Comedy Central) and even Time Warner (home of CNN, HBO, TNT) as smaller companies needing bigger parents. 

And while Netflix has been focused on digital distribution, they might also seek acquisition of a content creator to help fill their pipeline.  "Among studios Lions Gate Entertainment, maker of "Mad Men" and "The Hunger Games" movie franchise, is seen as a potential target. Sony Corp.'s studio is also viewed as a possible target."   Who is next to announce is anyone's guess.  But the authors agree with me that there should be more announcements coming. 

Merger Mania Part II

Just last week, following the third announced merger news of Sprint and T-Mobile, I speculated that the next would be a cable network.  Well, the pace of media merger mania is not slowing down.  According to The Wall Street Journal, Univision is having preliminary for sale discussions.  As its major competitor, Telemundo, is owned by NBC, another broadcaster could be interested in acquiring the broadcast network and its sister cable nets.  "Univision has been seeking to expand its offerings to attract more advertising and subscription revenues from pay TV operators. In the past two and a half years alone, it has launched nine cable channels, bringing the total to 12."  Given the growth of the Hispanic community and the great ratings that Univision continues to get, the network would be a fine addition for folks like CBS, FOX, and ABC.  Some think that Time Warner, home to the Turner property of networks, would be a great fit as well.

That a deal has not yet been struck may be a function of price/value.  Univision last turned over 7 years ago and the current owners may be seeking a bigger ROI.  Should a buyer be found, the FCC will have a very busy summer as they decide on all the merger matters before them, including Comcast -Time Warner Cable, AT&T - DirecTv, and Sprint-T-Mobile. And who will be next to sell.  I expect more to come this year. 

Live Well Network Won't End Well

When broadcast television networks were told that they had to convert their analog signals into digital ones, it opened up new distribution opportunities on network "subchannel" frequencies.  NBC Owned and Operated Networks experimented with news and weather, creating a network called NBC Nonstop.  But when that went nowhere, it was rebranded as Cozi TV, a collection of old classic shows and cheap original programming.  The ABC O&Os tried a similar path.  Their network, called Live Well, a health and lifestyle channel, existed on the ABC sub channel frequency, and like NBC was also carried on cable TV, mainly where its O&O had negotiated channel space with the cable operator.  And while both Cozi and Live Well had distribution, they were usually on harder to find channel positions. 

For Live Well, the end is near.  The network will cease operations the beginning of 2015.  Given the growth of other channels, like Me-TV negotiating for carriage and living in the subchannel space, this might offer opportunity for them to expand.  Smaller cable networks, like Veria Living, a health and wellness network, have also tried to increase distribution through sub channel carriage.  But as Live Well and I'm sure Cozi have found, it is extremely difficult to get discovered, yet alone viewed.  Live Well had the national ABC network to offer promotional marketing support, yet it failed to grow in stature.  Cozi needs the constant promotional support of NBC for it to stay around, too.  Its hard to expect another network to pay for carriage in the subchannel marketplace and attract the necessary eyeballs to charge enough ad dollars to cover all its expenses. 

So a fond farewell to Live Well Network.  I never actually watched you or knew what channel number to find you on, or what shows you carried, but with so much choice out there, its harder and harder to grow this fragmented audience into a real ratings powerhouse. 

The Next Media Merger

From the cable operator side, the road to savings and distribution lies with mergers.  The Comcast - Time Warner Cable and AT&T - DirecTv announcements may only be the tip of the iceberg.  Does Cablevision finally see the writing on the wall and decides to finally sell its Long Island franchise?  And what about Cox Communication and their cable future?

The same thoughts on media mergers should also look to the other side of the table and the cable networks and all their programming.  Yes, NBC and all its cable networks are a powerhouse as is ABC and its handful of mainly sports networks.  But what about the other networks?  Does consolidation and merger help them when dealing with these new operator behemoths?  Is it time for Discovery Networks to look around and what about Scripps, AMC Networks, Time Warner, Inc, and Viacom.  Are they buyers or sellers?  Sure the Fuse sale to NuvoTV was minor, but it did help them to grow their subscriber reach.  It seems the pressure to gain distribution and retain license fees is growing and smaller networks could use the power of larger multichannel networks to promote and pursue full basic distribution.

The FCC may have their hands full with the two recent merger plans, but that may make the timing of a network merger that much more necessary.  So don't be surprised to hear of more media changes.  The pressure to compete is mounting.

Aereo Needs Supreme Court Victory

This month the Supreme Court will hear from Aereo and the broadcasters about whether the Aereo business model is legitimate or stealing.  Aereo believes that it has the right to take the over the air broadcast feeds via their antenna farm and sell online access to consumers; Broadcasters like ABC, CBS, FOX, and NBC believe that Aereo should be required to pay for the content from their networks.  The decision will decide the fate of Aereo.

For those old enough to remember, households used to purchase antennas that they would put up on their roofs.  Homes were wired so that TVs inside the house could each access the antenna.  And some fancy antennas could even be made to rotate to help receive some remote signals.  As a boy living in the suburbs of Philadelphia, I remember turning that dial to access New York's Metromedia station to watch "Wonderama".  The day we switched to cable meant the loss of that station but the beginning of a whole new assortment of programming.

Despite broadcasters switching from analog to digital, they still use over the air transmission and consumers can continue to access broadcast TV from antennas.  That Aereo has build a business model that moves the antenna off the roof and into a centralized farm doesn't change for me the transmission.  So that instead of buying an antenna, consumers lease one instead.  And for that they get additional features including the ability to record programs for later viewing.  Consumers with antennas at their homes can do the same thing with boxes from TiVo and others.  That Aereo has simplified the reception and delivery issue for broadcast signals does nothing to change the fact that consumers could do the same thing with a store bought antenna and in home DVR box.  It is for that reason, from what I see as an outsider to the process, that would cause me to side with Aereo in this Supreme Court ruling. 

Certainly a loss for the broadcasters should do nothing to change the business model that they have in place with cable operators.  The expense for operators to build their own antenna farms so as to not pay broadcasters a retransmission license fee would likely outweigh the cost of the current contract. Plus all the broadcasters own cable networks too and would surely figure out a bundle type strategy to keep the status quo alive.  And should broadcasters decide to give up this spectrum and behave like cable networks, then the FCC could make a bundle selling this spectrum for additional wireless broadband opportunities.

So let the battle for broadcast rights move ahead.  I see Aereo coming out the victor, for if they lose, they will be no more.

ABC Streaming The Oscars ... With A Catch

At first glance, the news that ABC would be streaming the Oscar telecast on Sunday was good news to cord cutters and non cable households.  But the truth is in the fine print, you must first be an authenticated cable customer.  "In order to access WATCH ABC, you must have a cable subscription through Comcast, Cablevision, Cox Communications, Charter Communications, Midcontinent Communicaitons (sp), Verizion FiOS, Google Fiber or AT&T U-Verse in either New York, Los Angeles, Chicago, Philadelphia, San Francisco, Houston, Raleigh-Durham or Fresno."  Certainly added value for cable customers not able to watch through their cable box.

But what if ABC offered the Oscars to everyone, whether they bought cable or not.  Would they really lose broadcast viewership or would they gain a much larger number of consumers who would like to watch but aren't authenticated.  And if they can monetize the advertising of the video stream, could it be a profitable tactic too.  I'm sure the big worry is to risk losing license fees that they get from their cable operator partners.  Its why they are fighting Aereo. 

And wouldn't each ABC affiliate in each market want to show their own streaming feed to maximize their local ad load too.  By limiting to authenticated viewers only, the ABC Network most likely expects that it won't materially affect its affiliates ratings in each DMA.  But would opening the stream to all web enabled devices be more favorable than problematic.  Or is the concern that it could lead to letting the genie out of the bottle and lead to widespread cord cutting.  Doubtful. 

Cable Programmer Moving Toward Streaming Distribution

Given the high barriers to launching on a cable system, coupled with continual talk about even more cable operator consolidation, one cable network seems to have heeded my advice and struck a streaming platform deal.  "Bloomberg TV launched an app on Apple TV devices Wednesday morning that includes a live feed of the cable networks financial news programming as well as access to on-demand videos."  Most important to note is that this distribution deal does not require a user to be an authenticated cable customer. Other smaller, independent networks might just want to look at the Bloomberg model and see if perhaps they too have more to gain by gaining distribution on these OTT platforms.

Bloomberg contends that this deal is not meant to cause cord cutting and I would agree.  It certainly helps those consumers that have already cut the cord to gain a live linear news network into their home, but it won't be the driver that causes customers to cut the cord in the first place.  Consumers are defecting cable because of price and access to cheaper streaming options like Netflix and Amazon. Access to Bloomberg TV only adds more content to their mix.  A good number of customers are retaining their cable subscription and expanding their selection with streaming.  Those consumers can now finally receive the Bloomberg TV signal.

For Apple TV, these new content deals are a way to make their box a more valuable addition to the home.  In addition to Bloomberg TV, "Apple also added Disney’s Watch ABC app, Sony’s Crackle and the Korean TV app KORTV to the Apple TV Wednesday."  It also helps Apple to drive the value of its $99 box and encourage more purchases within its iTunes library.  And for both Apple and Blomber, I see a win on both sides. 

Superheroes Invading OTT Platforms

If sports doesn't become the content that propels OTT platforms forward, then maybe it will be the job of superheroes.  With The Awesomes on Hulu, the time has come for the next tier of heroes to emerge and Marvel/ABC is providing them with their recent deal with Netflix.  "Disney and Netflix announced a deal Thursday for four 13-episode series featuring Marvel Comics heroes Daredevil, Jessica Jones, Iron Fist and Luke Cage that will air on the video-streaming service over multiple years and will lead to a mini-event called The Defenders."These shows are scheduled for release in the next year.

Aimed directly at the teen audience, the key demographic by the way for video streaming, Marvel Studios and ABC are recognizing the power of superheroes in the disruptive world of streaming video.  And building synergy with its theatrical and linear properties will only continue to increase the value of their content across all platforms.  It is a brilliant strategic move for ABC to stay relevant in a changing environment.  And for Netflix, further push value of its streaming service and subscriber growth.  Exclusive content, with the Marvel name recognition, further demonstrates that content is king.

Cable Operators NOT Likely To Follow Aereo Model

While recent reports have emerged that DirecTv, Time Warner Cable, and other cable operators are considering a similar Aereo approach, using tiny antennas to obtain broadcast signals, the likelihood of this occurring is remote.  While it could result in operators not paying license fees for broadcast signals, they would be overpaying elsewhere.

Why is that the case?  ABC owns ESPN, Disney, ABC Family, and others, NBC owns Bravo, USA, MSNBC, and much more, CBS owns CBS Sports, Showtime, and an owner with ties to Viacom Networks, and FOX owns FX, FXM, Fox News, and more.  Each of these broadcast networks has too much to risk from losing license fees from broadcast.  And they would indeed use that leverage to keep license fees intact or raise their rates on their cable nets to recoup any losses.  It is the consolidation of broadcast and cable networks that will prevent the cable operators from following the Aereo business model.

Of course, this depends on broadcasters still owning affiliates.  Speculation that ABC would consider selling their O&O networks has been heard, too.  Aereo's continued success could hurt the valuation of such a sale.  Broadcasters have also rumored changing from broadcast status to cable status to stop the Aereo model from moving forward, too.  That latter move seems to have more viability.

Cable operators still have the upper hand.  They bundle broadband access with cable so that consumers end up paying much more for broadband only without a cable subscription.  Once consumers find alternative sources for broadband to the home, the cable operators' business model will be at most risk.  Until then, they are better off strategizing new packaging and pricing models and better service, like TV Everywhere, than emulating the Aereo business model.