First Disney, Now Tivo Partners With Netflix

Just a week after announcing its deal with Disney, Tivo has announced another major partnership. Joining forces with Netflix to provide the digital distribution arm for movies. And Comcast has announced that it is expanding its rollout of its DVR with Tivo into the Chicago market. Tivo seems to be successfully turning itself into the preferred box for DVR and streaming content, enabling the TV set to access an infinite assortment of content. It seems the only thing missing for Tivo is a partnership with Hulu, followed by putting a Tivo into your PS3!

Back to Tivo and Netflix, it seems like a win-win relationship. "Under the partnership announced Thursday, the latest generation of TiVo's digital video recorders will be able to beam selections from 12,000 movies and TV shows offered through Netflix's streaming service, which must be piped over high-speed Internet connections. TiVo's DVRs will start catering to Netflix subscribers in early December."

At the same time, a number of cable companies have announced that they are raising their monthly subscription rates. In a recessionary economy, is this the right move. While Netflix competes with premium nets like HBO and Showtime, consumers may find that they need to cut back on their spending. One move might be to reduce your cable bill down to basic channels only and buy a Netflix subscription. The cost savings may just be worth the move.

Mourning Old Media’s Decline

David Carr of the New York Times asks an interesting question regarding his article, "Stop and think about where you are reading this column. If you are one of the million or so people who are reading it in a newspaper that landed on your doorstop or that you picked up at the corner, you are in the minority. This same information is available to many more millions on this paper’s Web site, in RSS feeds, on hand-held devices, linked and summarized all over the Web." I am in the minority, I guess. I still get the New York Times delivered to my house and still enjoy reading the newspaper. At the same time, as I share it with my wife, I tend to go to the web to read stories in sections that she may have taken. And when I am in full commuting mode, I just might consider a Kindle to support my reading habit.

Newspapers, like cable television, has enjoyed a two-tiered revenue model of subscription and advertising. The growth of new technology has moved content outside the gated, subscription window, into an open access model. Consequently, the subscription model has lost as it is no longer necessary to "pay to play". Cable operators should take notice of this trend. As video content leaves the gated walls of its liner channel for Hulu and online consumption, the consumer may stop paying for its cable subscription and devotes itself to a web based experience. Any monetization will come from advertising until the industry figures out a new media subscription model.

Web based advertising is cheaper than print advertising. It is far easier to measure hits and target segments. At lower CPMs, it is harder for the gain in web advertising to offset the loss in print advertising. For the print industry today, it has led to a reduction in costs to offset the lower revenues. Mistakenly, some of that reduction is coming in the form of editorial cuts, the writers and creators of content. But without content, what do you have to monetize? "At the recent American Magazine Conference, one of the speakers worried that if the great brands of journalism — the trusted news sources readers have relied on — were to vanish, then the Web itself would quickly become a “cesspool” of useless information. That kind of hand-wringing is a staple of industry gatherings. But in this case, it wasn’t an old journalism hack lamenting his industry. It was Eric Schmidt, the chief executive of Google." Content is king and branded, respected content has value.

Web Video Revenue Problem Solved

How do you monetize web videos; well, according to Silicon Alley its product placement. They cite 6 reasons why product placement works including anti-skip, always connected with the video, and measurable. At the same time, Silicon Alley warns in a separate editorial that product placement can prove embarrassing. Not sure I totally agree; none of their examples seemed horrible. What may be worse is missed opportunities. One example would be M&Ms choosing to not be featured in the movie, ET; instead, Reeses Pieces were substituted as the candy that attracts the alien.

For advertisers trying to determine where to place their brand, the key is that the brand name should already be known and its brand message understood. While an unknown brand may be featured, it may be unrealistic to expect that the viewer makes a connection to the brand and its value or preference. Product placement is not the only way to be successful with web video. Hulu's strategy that less is more, is also proving valuable. Less clutter means more likelihood that the message is heard and the message resonates with the viewer. "Fewer ads make the ones on the site more memorable, Hulu executives say, allowing the site to charge higher prices for the ad units."

Newspaper To Stop The Printing Press To Focus on Digital

The Christian Science Monitor, one of the oldest papers, has made the decision to shut down the newspaper presses by next April and focus its coverage with email and web. Circulation of their daily has dropped to 52,000 and deficits are rising. "The Monitor will announce today that come April 2009, it will fold its tab-sized daily and relaunch as a glossy, oversized newsweekly format, while beefing up its Web site with more original reporting and frequent updates. The globally-focused newspaper also plans to create a daily, paid, e-mail edition that will include top Monitor stories, links to other stories and an original editor’s column."
Perhaps the time is ripe to stop all printing and create an e-version copy instead. The advertising dollar is moving online and their readers seem to prefer getting their CS news from the web. Still for a printing company, it is hard to stop printing altogether. At some point, however, Kindle or the Sony Reader or some other digital device is the next step to enjoy a downloaded copy of the news. That is where this trend is heading.

The CS Monitor is not the first to shut down. "Two smaller dailies have made similar moves in the past year. E.W. Scripps kept Kentucky Post alive at KYPost.com after folding the 27,000-circ paper along with sibling paper Cincinnati Post on Dec. 31, 2007. And in April, the 17,000-circ afternoon Capital Times in Madison, Wis., dropped its freestanding daily edition and beefed up its Web site."

Verizon Q3 Strong, Now 7th-Biggest U.S. Cable TV Provider

In just a couple of years, Verizon has grown from a start-up cable operator to the 7th largest MSO in the United States. That is quite a meteoric rise and their quarterly growth indicates that they are looking to overtake 6th place within the next few years. Unlike satellite providers, Verizon offers consumers the first real competitive choice for cable, internet, and phone. Where the cable landscape emulated the wild west only a decade or so ago, acquisition and consolidation has turned cable from a land of many to a land of few. Former cable companies, Adelphia, Century, TCI, Lenfest, and others were once part of that world.

Now, the top 10 list looks like this:
1. Comcast Cable - 24.5 M Basic Video Customers
2. Time Warner Cable - 13.3 M
3. Cox Communications - 5.4 M
4. Charter - 5.2 M
5. Cablevision - 3.1 M
6. Bright House Networks - 2.3M
7. VERIZON - 1.6 M
8. Mediacom - 1.3 M
9. Suddenlink Communications - 1.3M
10. CableOne - .7 M

It is easy to see that the list size drops precipitously and that size matters. Verizon has grown by being the true overbuilder across these other cable companies. AT&T, as the other telco has seen less growth but is currently at .5 M and expects to reach 1.0 M at the end of the year, which would then rank them at the 10th spot, pushing out CableOne.

Cable companies have been seeing growth of basics despite this competition. Is this because the telco companies are taking the low hanging, least desirable customers first, or is it more customers switching from Dish or Direct TV. Either way, as the telcos grow their footprint across the cable landscape, this list may change as a result of downward shifts to the cable company while the telco numbers soar. Perhaps more cable consolidation is in order to survive the telco onslaught...eat or be eaten!

Disney movies on tap at TiVo

Disney is moving aggressively into new media. A couple weeks ago, they announced their deal with Netflix and yesterday they announced a deal with Tivo. "TiVo is set to announce Thursday that hundreds of movie titles, most significantly from Disney, will be available to its broadband subscribers courtesy of deals with CinemaNow and Jaman." It adds another level of value to the Tivo brand. And Disney produces great content and can continue to monetize its library every few years as new parents seek great programming for their new families to watch. Will Snow White, Little Mermaid, Beauty and the Beast and all their other titles ever grow old. I doubt it. It is that rite of passage to share our favorite movies growing up with our own children.

What does change is the method of distribution. Where once the only place to go was the movie theater then The Wonderful World of Disney on Sunday Night TV, we have moved through VHS, dvd, and now download. Disney is successfully driving that trend. These new families are technologically savvy and prefer new media to old. Whether it is download to own or rent, or continue to purchase dvd or cd, the flexibility to deliver the content in whatever form the consumer desires makes it worthwhile. And as long as a digital copy cannot be easily shared and drm is working, Disney can be assured that their content remains valuable for the next generation as well.

Oprah Endorsing Amazon's Kindle

Seems like I'm not the only one that thinks Kindle is the future of reading. Oprah also agrees and is giving Kindle her thumbs up today on her show. If Oprah's Book Club recommendations are any indication of her affect on book sales, her endorsement should spike Kindle sales. "In an email to subscribers, Amazon says its founder Jeff Bezos will be appearing on Oprah to talk to her about her new favourite gadget."

Still, it is a down economy and consumers are cutting back on their spending, even their Holiday spending plans will be reduced. For Kindle to succeed, it simply needs to demonstrate how quickly the consumer will save money with Kindle versus paper. Focus marketing on cost savings and you will ultimately drive sales. Throw in the trees saved and you hit a double. Add Oprah's endorsement and it appears to be a walk off grand slam!

Network Audience Keeps Eroding

Broadcast viewership is down. And even when you count delayed viewing via DVR, the total number is still down. Less people are watching network TV. So what does it mean and is it problematic. Perhaps not.

It does not infer that people are turning off their TV sets to, god forbid, read a book. (I'm kidding) But there may be a number of reasons why broadcast viewing is down.

1. Cable networks - more choices and not just reruns. Original series are airing on cable and getting Emmys. TBS is airing baseball playoffs. ESPN has Monday Night Football. And cable content has been regarded as a higher quality to its broadcast counterpart.

2. Writers strike - when shows premiering this year are reworkings of old shows (aka Knight Rider), its hard to say that quality shows are coming to broadcast television. The quantity of new shows this year is way down and cable offers more fresh alternatives.

3. Internet viewing - the numbers are still small compared to total TV viewing and most content is still short form. Most people may argue that internet viewing is additive and does not replace TV viewing.

4. DVDs - still popular and Netflix continues to offer a compelling service. DVD sales may be down but its number is still impactful.

5. VOD - still small but not necessarily being included in the DVR figure. Still it is a growing alternative to broadcast TV.

Once there were only a few broadcast networks and cable was repeat and unwatchable shows. But that was then. Today, the broadcast networks also own cable networks so they have more ways to reach the viewers. Broadcast viewing may be down, but I bet TV viewing, whether live, delayed, or on-demand, remains healthy and strong.

Netflix sees half million Blu-ray subscribers

Netflix continues to embrace the technological shift. Not only are they deploying a download strategy, they are embracing the Hi Def world as well. And while the numbers are small, they believe that 500k of their base, or a little over half a percent, will pay a premium for HD movies on Blu-ray. Will an incremental dollar per month be felt by the Netflix customer? Or will their customer feel that this extra charge is unfair. "Netflix said the additional charge, to reflect the higher cost of Blu-ray discs, will be added to billing statements on or after November 5 and only to members who have previously enabled Blu-ray shipping on their Netflix accounts." Over the year, the added revenue impact could exceed $6 million dollars annually!

As the cost of Blu-ray players decrease, so too will the cost of discs. How long will this premium last? And will their best customers feel slighted by this added cost. Or will this increase be barely felt by this niche audience. For Netflix, the timing may be right.