Recession Winner: Cable Operators

Television becomes the heart of the house. And in a recession, TV has become the place to forget our troubles. Today, TV access is through a pipe, a pipe that also connects us to more variety of content options. As household begin to watch their monthly spending, it seems clear that overall, cable TV is a low cost alternative to outside entertainment.

For a family of four going to the movies for one afternoon, the cost can exceed $30, not including popcorn. Monthly HBO is on third less for a full month of movies. And while households may even choose to downgrade their cable service to eliminate premium networks, they won't shut it down completely. They will still want networks to watch and have access to VOD and DVR entertainment to record and watch the shows they want when they want. And ask most households which service is most important and most will say their internet access. It offers cable the best profit margin and brings a continuous stream of content options to the home. Just try pulling your child off the PC.

So cable will continue to enjoy a solid monthly cash flow. Cable entertainment may even become more important than other forms of entertainment. Broadway is seeing a slew of shows close; restaurants are seeing less patrons as more dine at home. And cable feeds the home in multiple ways: TV, Internet, Phone. "People don't stop watching TV, using the Internet or making phone calls during recessions. That means the cable operators -- which offer all three services -- stand to strengthen while most everyone else hurts during the next few months."

Digital Sales Surpass CDs at Atlantic

When is the last time you bought a compact disc? As an avid ipod user, I rather download tracks than purchase the physical media. So it comes as no surprise to learn that digital purchases are beginning to exceed compact disc. "Atlantic, a unit of Warner Music Group, says it has reached a milestone that no other major record label has hit: more than half of its music sales in the United States are now from digital products, like downloads on iTunes and ring tones for cellphones." Listeners have changed their music habits and are consuming differently.

What is also interesting to note is that digital purchases are not simply for the music track, but that revenue is coming in from additional usages like ring tones. It reminds me of the old story about baking soda. How do you get more sales of the product; more uses and more usage. You don't just cook with it, you put it in the back of your refrigerator to make it smell better. With digital downloads, you add it to gaming and other applications and music finds more uses and usage as well.

Obviously, the fear of digital downloading is content rights and protection. With perfect copies made accessible, the technical challenge to eliminate free file swapping is a challenge. Technical innovation and marketing efficiencies will move consumers to prefer legal means to download for better content and better results versus inferior copies and less desirable experiences.

TiVo Dials Up Mobile DVR Site - Real Convergence

Finally, some real useful convergence. And no I am not talking about seeing the phone number of the call coming to my telephone appear on my television screen. I am talking about something better. Connecting two useful devices together in a meaningful way. For us Tivo fans, sometimes we forget to record a show. Recently a friend of mine was rushing home last Saturday because he had forgot to tape his U of M college football game. But now, even if we are forgetful, we don't have to worry. One call from our cell phone to our Tivo quickly will set a recording. "The new mobile site, at m.tivo.com, lets subscribers with broadband-connected Series2 or Series3 TiVos schedule recordings, while it’s also available to anyone to browse and search television shows." No rushing home required. If networks want to put a stop to DVRs, the answer is simple - put every show on VOD. Until technology can insert into the DVR, there is more control with the VOD; content owners should be expanding its titles and gaining better control over the experience with its viewers.

And how does Tivo take this convergence to the next level. Simple, make it two-way. Like a slingbox, enable shows I've recorded on my Tivo to be viewed on my cell phone. Now my friend can watch his Michigan football game through his Tivo to his phone. Again, no rushing home.

DVR usage making big changes in television viewing

Does it matter how you schedule your TV network if content can be found on VOD, streamed or saved to the DVR for viewing. What percentage of your TV viewing is real time? As I watch my viewing pattern shift, I rarely watch a prime time show at its scheduled time. Shows remain saved in my Tivo so I can enjoy them at my leisure. And I tend to rely more on the DVR because it allows me to watch more of the actual show in less time; yes I fast forward through the ads. I am not the only one who owns a DVR. "Nearly 30 percent of the nation's TV homes have at least one."

So what is a programmer to do. If you rely on live news, you watch in real time. Networks like CNN and CNBC become DVR proof. If you watch sports, you tend to watch live or time delay a few hours so as to not get the final score early and ruin the emotions of the game. And live shows on TV have a sense of "anything can happen" that may just encourage people to get the live feed before it is edited and sanitized for later viewing. "'More and more people are changing the way they consume television,' said Alan Wurtzel, NBC's chief research executive. 'In the next few years, we will rewrite all the rules.'" It will not take that long. In less than two years, the impact will be even more pronounced.

Some broadcasters don't realize that between streaming their content on Hulu or making accessible on VOD or even being recorded the first time it airs on their dvr, it is not necessary to air the show again. Yet some networks are using their Saturday nights to dump repeat episodes of the same show that aired earlier in the week. Perhaps it saves money, but it is driving the viewer to seek these alternative choices at a faster clip.

Networks should be less concerned about when they watch; rather, they should be more concerned about what is interesting to watch. Good content will be watched and consumed; the challenge is making better content. More distribution choices means the content will be consumed in multiple ways. Remember though, the DVR requires proactive taping by the viewer; VOD allows the viewer to be reactive. If more programmers made their content available asap on VOD, they might just reduce the need to use the dvr.

Hollywood actors guild to seek strike

The economy is in a downward spiral, the entertainment industry has suffered badly from last year's writers strike, and every other union has agreed to a deal with the producers. So with faced with a lose - lose scenario, what should the actors do. If you guessed settle a contract, you would be wrong. The guild is planning on asking its members to strike. Let us just hope that the majority of actors in the union have a better understanding of the situation than its negotiating team. "SAG's national board has already authorized its negotiating committee to call for a strike authorization vote if mediation failed. The vote would take more than a month and require more than 75 percent approval to pass." So we could be starting the new year with another work stoppage, more unemployment, and a further blow to the economy. "But the studio alliance said it was untenable for SAG to demand a better deal than what writers, directors and another actors union accepted earlier in the year, especially now that the economy has worsened." In this case, I agree.

Beyond the troubles facing the entertainment industry, it seems that the union, regardless of the industry, has been hurting businesses from operating efficiently. From the automobile industry to New York's MTA, forced rules from unions in changing times create situations where there are jobs but no work. While there may have been a time when unions were necessary, I am hard pressed to feel for them when their demands seem untenable. Hopefully, the members of the SAG union will recognize the situation and work responsible for a cure. Another strike is not the answer.

Comcast will close its CN8 network

"CN8, the East Coast regional television network run by Comcast Cable, will shut down by year's end, resulting in the loss of local news programs and sports coverage for millions in New Jersey. The network -- launched in 1996 and spanning the East Coast from Virginia to Maine -- will convert to two smaller operations, said company spokesman Tim Fitzpatrick."

Now I always thought that it would be the local networks that would help differentiate the cable operator from its competition. That is why Verizon will never get access to the Comcast Networks, Time Warner's NY1, and Cablevision's News 12. Interesting to learn that Comcast no longer thinks that unique content is an important differentiator. Or perhaps they felt it was simply not strong enough to matter. Whichever the case, it is a moot point. Perhaps for us New Jersey residents who will lose CN8, Comcast will be kind enough to replace it with NY1. For me, content is still king.

Senate Passes Analog Extension Bill

Last month I said that the transition date would be a mess and as most people wait till the last minute to act, an added month would be needed. Well the Senate has heard the chatter. "The Senate on Thursday passed a bill that would keep some analog TV stations on the air for 30 days beyond Feb. 17, 2009 in order to provide public safety announcements and information about the digital TV transition." I believe that they will actually need more than a month. Consumers do not understand what is going on with TV signals. When they finally turn on their TV and see static is when they will finally have to act. "'While there are claims that hundreds of millions of private sector dollars have been spent making Americans aware of the DTV transition, it seems that most Americans have no idea what it really is even if they have heard of it,' the lawmaker said." And while some have heard the message, fewer have comprehended how it will affect them. Extending the deadline is a necessary first step.

Will Web Video Kill Cable TV?

If your under 30, you probably don't own a wired phone; all your calls come to your cellular phone. And today, there are some people who don't have cable TV; rather, they rely on their broadband connection to watch their shows. "Call it Cable 2.0: You get many of the same TV shows and movies, often with fewer commercials. Better yet, you get to watch what you want on your schedule, not the cable network's, and you don't have to pay for anything more than a simple broadband Internet connection."

But will the web replace cable TV? As a distribution platform, I believe yes. But the company that serves you your connection will still charge you for that subscription, with price points to encourage you to take more of their services. Today it is called the Triple Play, tomorrow it will have a different name but essentially will be marketed to do the same thing, keep you from switching to another provider.

The big content companies don't want to give you access without subscription and advertising. That is their bread and butter. NBC and Fox own Hulu; the last thing they want to do is watch their subscriber revenue decline as a result of people downgrading their cable service to rely on web access. Unfortunately, they are on a slippery slope. "Such services offer few live broadcasts, an obvious drawback to sports fans or news hounds. And while cable and satellite services are rapidly expanding their high-definition offerings to satisfy the demand of the growing number of HDTV owners, you'll find very few high-definition video streams today." For those reasons, the numbers that do drop cable completely may be negligible. As deals start moving to the web, the change may occur more quickly.

Cable has its own toolbox to make the set top box a more valuable asset to the home. How the STB differentiates the TV experience from a web based experience will be key to success. And cable should have the backing of the branded content providers who aren't ready to lose the subscription revenue piece of the pie.

PC Magazine Drops Print, Goes All Digital

For PC Magazine, print is dead. Will it drive other magazines and newspapers to follow, only time will tell. For a magazine devoted to computers, it makes perfect sense to drop its print format in favor of digital. It will be interesting to note how this change will affect the content and subscription. "For readers that prefer the traditional magazine feel, a digital version of PCMag will be made available to them. " Perhaps the time is right to make it especially for the Kindle and Sony Reader. This digital version should be different from its free web content. A digital subscription may be the answer.

I find it fascinating to see that the Wall Street Journal continues to make it work with both a print and digital subscription to its content. For some, the digital access may be the bonus; for others it may be the print edition that is nice, but the digital access that is most valuable. The trend is toward less printing and more online; PC Magazine may simply be leading the curve.