Viacom Sees Q1 Earnings Jump Due to Rock Band

My 8 year old son wants Rock Band. He already has a Wii, PS2, and Nintendo DS. And believe it or not, we actually limit game time each day; otherwise, he would be working any one of these machines constantly. Will he get the whole band, or just guitar hero, I'm not sure yet; but at $190, its pretyy expensive for a young boy.

What is apparent is how important interactive gaming is to the future of entertainment. If he could play along to American Idol, it could be a rating boost. This next generation is limiting their TV time as they expand their enterertainment choices across new media. With so many hours in a day, something has to give and it isn't going to be his homework, so it is a reduction in TV viewing.

Thus it becomes clear that the best way to keep this audience engaged is to combine the best of both worlds. Watch Hannah Montana as you play with the microphone and dance moves; attack the Pokemon through the TV show. I expect more gaming tie-ins to programming; that's how we keep the younger audience further engaged to the TV programming and the brand.

ZeeVee’s Box Brings the PC to TeeVee

From New Tee Vee:
"Connecting your computer to your nice HD TV screen can get kludgy fast. A company called ZeeVee has an interesting solution that uses the existing cable wiring in your home to display what’s on your PC on an empty channel on your TV dial. Instead of requiring an additional receiver, it uses the HD tuner in your TV. No new-fangled wireless HD or old-fangled screen-scraping required."


Now if it can only be made idiot-proof.

iTunes to sell new films day-and-date

Throw out the old video distribution models. Technology has changed the time tables as media companies are throwing out distribution windows. Previously, a film would work its way throught different distribution windows allowing each new platform a chance to take some profit. But the rise of digital downloads and the slow death of dvds has finally eliminated the window between the dvd release of a movie and the VOD and digital download release. Customers seem to like the idea of rental vs purchase and want the immediacy of access. For that online customer, waiting 60 days for the dvd window to end before the film can be made available online, was not customer friendly. It also has led to more illegal means to access these films in digital format, and not paying for that download.

Those that prefer to buy or rent a dvd will continue to do so; those that want to immediately own it, will get it too. WIll there be cannibalization; some, but for the most part, that customer was already making the decision to pick one or the other format. To win back the dvd sales, film studios need to offer that customer that purchases the opportunity to both own the disc and make a downloadable copy for their pc. That would be the best of both worlds.

My Cable Company Wish List

When Viacom, Paramount, Lionsgate and MGM announced they were creating a new pay TV network, the big question pay television was asking became what draws customers to buy their service, original programming or movies. Obviously it is a percentage of each, but I would be hard pressed to to tell you which is more valuable to the purchase decision.

So I want to ask a bigger question, what type of service do you want from your cable company. As competition draws more intense and Verizon and AT&T enter more markets, what services draw the consumer to one service over another. Time Warner has invested in more advanced services, to improve the value of the cable box. Instead, I'd like to figure out a way to make the cable box invisible to the room. Hide the device behind the tv set and let it communicate wirelessly to a central server/converter box that can allow me to access my prerecorded shows to any tv set; that allows me to watch movies that I have downloaded on my pc to my set, that lets me customize my channel lineup so I can still search up and down my favorite channels; and works without latency or digital disruption. Make it work effortlessly. And make a remote control device as simple as the Apple ipod. And lastly, when a service problem occurs, to provide exceptional response, and not a 3 day delay to come out. That's what I want from my cable company.

Cable loses subscribers, satellite gains in Q1

While cable is attacking the phone's landline business, the telcos have been attacking cable's video and hi speed business. And while the telcos have lost phone revenues, it is not because of cable, but because of changing technological trends toward mobile communication. And with a recessionary economy, people need their cell phones, and can reduce their expenses by dropping the landline.

So does that make cable's strategy of going after the triple play business less successful? Cable has a real opportunity to take away a big portion of phone business in the home, but even more importantly, in the business sector. Providing phone and hi speed data services to businesses can become a lucrative opportunity for cable and should not be discounted when lookin at their revenue numbers.

Cable subscribers and cable revenue will decline; competition does that. But cable can still show huge revenue growth by entering into these other businesses that the phone company has had huge control over. Cable's business has an upside too.

On the consumer front, modem speed and fast connection are important marketing benefits to pursue; more homes have a hi speed line than a HD set. Consumers accept the modem because it hides behind the computer and does not interfere with the pc's ability to navigate. A cable box, on the other hand, takes controls away from the tv set. Most consumers prefer not to have a box; they are not comfortable with it and tend to limit the number of sets that they put a box on. The marketing benefit is to work closer with these manufacturers to improve their ergonomic value. Hey Apple mad an mp3 player a must have with the ipod. Until then, homes will do their best to work around the box or limit their numbers.

Sirius - XM Satellite Merger Being Delayed

So the FCC has delayed its decision on the merger of Sirius and XM Satellite. They have decided to not address it at their next meeting and have not placed it on their agenda. All this, even thought he Department of Justice has approved their merger. So what is the FCC waiting for, a unanimous vote, as suggested in this article, or something else. Whether unanimous or not, this merger should be approved and these delays are not helping. It is government getting in the way of market forces. Let a free market decide if paid radio is preferable to free radio and other entertainment options.

Has the FCC become so powerful that they should be more carefully watched themselves?

Listen To Your Customer

I attended a fascinating panel that consisted of real cable customers talking about their needs, what they valued, and what they wanted from their cable provider. And while they may not have represented a true cross section of America, their opinions were genuine and their desires real. What made it most eye oepning, is that the needs that they expressed were different from what a top cable executive spoke of as the direction their company was taking to remain competitive against telcos and satellite. It means that cable may lose their dominant position by picking the wrong strategy to follow.

From the panel, the top line learnings:

1. Hi speed is the number one reason for choosing a provider
2. Speed matters but few can tell how fast is fast; whoever markets the best reliability with that speed can win the race.
3. Only 20-40% of the TVs attached to a cable in the home also have a converter box; consumer don't care for the device and so don't see all the advantages of digital cable on all TVs. Few use VOD and only some use their DVR.
4. Price sensitivity - as consumers see cable as a commodity, a lower price matters.
5. Consumers are thinking about HD sets but many still don't have one yet. Like the converter box, they may get one HD set, but the rest will remain standard def.
6. Exceptional service matters - door to door sales reaches people directly, retention calls combined with discounting when signing a long term agreement can be effective. And customers listen to their neighbors; a bad experience spreads quickly and customers know if their provider was a JD Powers winner.

Interestingly, Direct TV is pushing the most HD and cable is attacking that message most. They hope that HD content will matter. It leaves open the opportunity for telco to push the hi speed advantages; especially as Comcast fights a peer to peer issue which hurts their market perception. Content is nice, but most people find that their favorite channels are available everywhere. Hi Speed matters most and whoever sells the best value for their package and delivers it with exceptional service will ultimately win.

Competition for your Digital Connection

So who should you connect with; who is your provider for phone, cable, hi speed? Are you working with one provider and taking the triple play discount or are you picking a little from each? Interestingly, the decision is being made by what is most important for you and your household based on a number of factors. And cable, telco, and satellite are doing their best to prove that they have the competitive edge.

Cable's edge today is the triple play, offering a discount my purchasing all three platforms from one provider. In addition, cable touts its VOD choice and is starting to push that advantage with HD VOD as well. That technological edge for them is also leading them to more advanced services like start over and look back, supporting the benefit of "what you want, when you want it". Lastly, cable brings strong local content, particularly with news channels, like NY1 from Time Warner in NY and News12 on Long Island from Cablevision. Channels not accessible to consumers on their competitor's platform.

Satellite continues to push HD linear channels as their strength. Some consumers even believe they get a better HD signal from satellite than cable. For Direct TV, it pushes the content edge with the NFL package, offering out of market games to the true NFL fan. But Direct TV may kill this golden goose as they charge more to the package to upgrade it to an HD feed of these games. Satellite sees the risk from VOD and has now found a way to enter this business with a competitive product. Whether the consumer is satisfied with its method for delivering or technology can improve the ability for satellite to become 2 way remains to be seen. It also affects their way to offer hi speed and has caused them to partner with telcos to offer a triple play like package.

Telco was feeling the heat from the loss of hard line phone and needed to enter the cable business to keep customers from switching. As cable becomes more adept at marketing to the commercial telecom business, telco revenues will be even more hurt. Telco has entered the cable and hi speed game with fiber to the home and tout a higher download and upload stream at a lower price. Consumers that need high bandwidths, whether for business or personal reasons, see this as a competitive reason to become telco triple play customers. With the exception of local content, telcos are offering similar VOD and HD choice as cable and seem to also play the price advantage in their marketing campaigns.

So content choice (local, sports, HD, VOD), speed, and price seem to be the three major factors determining which service is chosen by customers. And like any business that involves customer relationships, exceptional service matters, too. Because while it may not be easy to switch providers, bad service can become the impetus to make that change.

Do Content Owners Need Content Aggregators Anymore

It seems that content creators can bypass the middlemen and get to the consumer directly. Digital technology has lowered the barriers of entry so that films and shows don't need to find distribution platforms, they can do it themselves.

When Showtime/CBS and Viacom/Paramount split, many argued that this would unlock the value of both companies and enable each to more fully realize their potential. But the nature of this deal means that the Viacom side can simply create its own distribution arm and not rely on its former partner. So the split of companies also signified a split of synergies.

What is not being discussed is that their still requires a marketing skillset to enable content to break through the clutter and get noticed. Content aggregators can coordinate distribution schedules, provide a single shop experience, and be a known landing page for the consumer. But the case can be made for aggregators and content creators to be vertically integrated, both making video content and distributing it. NBC Universal has shown that ability to produce a film, send to a theater, show it on USA, air it on Hulu and digitally sell it.

It may get to a point that distribution windows will disappear. A film leaves the theater and goes to every possible distribution vehicle simulaneously. The old methods of selling exclusive windows may be over. A film would be available for dvd, VOD, digital download at the same time. And content owners can maintain their profits by managing the distribution windows themselves, using their own networks, and technology to control the digital rights to their content. Maybe Viacom and Showtime should think about coming back together!