DVD sales plummet, Blu-ray unable to save the day

What does it really mean when DVD sales are falling. While prices have dropped, the unknown for me is whether the units purchased have dropped as well. I'm guessing they have too. For my family, I definitely have purchased less DVDs. When the kids were younger, many of my purchases were family-themed product, knowing that we would be watching these same films over and over again. And while movies are nice to own, I tend to first check out films on VOD. I can't think of a film that I need to own in my library. Perhaps people have gotten tired of filling up rooms with discs and might be more inclined to purchase digital copies that can be shared and moved among devices. I'd certainly rather bring a flash drive into the car for the rear DVD player than keep a dozen discs on the floor or in the door compartment.

"To be sure, Blu-ray is growing -- up 250 percent since 2007 -- but it still represents less than 3.5 percent of the overall market. Analysts now wonder whether Blu-ray will be able to pick up steam fast enough -- or if the future has already been handed over to online downloading and streaming alternatives. With companies like Netflix rushing into streaming as quickly as possible, that certainly seems like a strong possibility."

And Now Hulu Pulls Shows Off Boxee

First it was TV.com, and now Hulu will be taking its content off of Boxee. The problem is that the cat is out of the bag and it's hard to take a step back. Once content became accessible outside the confines of traditional TV, consumers were able to choose where they wanted to watch. That freedom of on-demand, coupled with the chance to receive this same content at a lower price meant that the old business model may not withstand the onslaught of new technologies. And who could lose - cable companies who depend on subscription revenue, DVRs who can be replaced by on-demand streams, premium networks that charge higher rates for newer movies, and TV networks that depend on eyeballs to charge high ad rates.

And while Hulu may lose eyeballs from restricting where its content can be streamed, customers are still seeking out alternatives to cable for their viewing pleasure. Why pull Hulu from Boxee? "One theory: Boxee makes watching video from sites like Hulu a lot like watching cable. As we noted a few hours ago, Boxee/Hulu means that paying $80 a month for cable TV is no longer necessary for some people. It also means we don't need to watch TV shows (and ads) live, or even fast-forward through them with our DVR." Comcast has already felt the effect of broadband viewing; while internet subs are growing, TV subscribers dropped in the fourth quarter.

Hulu may think it is stopping the drip from becoming a flood; today, the vast majority still watch content through cable or antenna. Boxee and devices like it that play video through the web onto the TV, are not going away. It may make it harder to watch Hulu on your TV set, but consumers are changing their viewing habits. I still believe that cable is the preferable way to watch content; cable companies need to step up and improve their set top box, their DVR and VOD functionality, and their access to web video so that its access to content remains most desirable.

Hulu vs. TV.com - Are They Really Rivals

Hulu is owned by NBC and Fox while CBS owns TV.com. And like broadcast channels, each is a platform for professionally produced content. In the world of TV, a series on one channel would never appear at the same time on another, but in the world of the web, the same content could be found on multiple sites. Till now. Hulu has taken its content off TV.com. "It's the first bit of powder to fly in what promises to be a feisty battle between the two Web TV destination sites." Have we gotten to the point where content doesn't have to be everywhere and viewers will build brand preference to sites that contain the content they prefer. "Hulu got a huge bump in September and November being the main place to find Tina Fey's SNL Sarah Palin impersonations on the Web." Why share that audience with your competitor; the viewer is likely to watch more than one video, why not keep them on your preferred platform.

TV survived with multiple broadcast channels each offering unique content. The same should hold true for the big video platforms. Each is defined by its content, Hulu as the home to NBC and Fox produced content, TV.com to CBS and CNET content, You Tube to user generated content. As their content libraries grow and with it their brand value, consumer will seek them out when tuning in to web videos.

So are Hulu and TV.com really rivals? Or are they each ultimately competing with cable companies for access to the viewer. In a separate article, the real question is "When Will Comcast Need To Worry About Hulu?" Younger customers are preferring a broadband connection to a cable line. Technology has changed the rules. Just as these same consumers have dropped landlines for mobile, cable may face the same dilemma. Last quarter, Comcast lost almost a quarter of a million subscribers. Did they go to telcos like Verizon and AT&T, or did they simply drop the cable portion of their subscription. Cable's triple play - cable, phone, and broadband - deals with two services that the younger consumer no longer desires. The broadband connection may be all that matters. How will cable survive? Can they still offer unlimited access for a monthly fee or will the broadband bill star to resemble a utility bill - like electricity, gas, and water - measured strictly by usage. As content moves off cable to the web, this may be the only means to stay profitable.

Liberty Beats Out Echostar for Sirius

The famous line in The Godfather, "It's not personal, just business" may not apply here. Clearly Sirius did not want to be ruled under Echostar and John Malone clearly wants to beat Charlie Ergan. And so, " Liberty Media Corp. will invest $530 million in financially struggling satellite radio company Sirius XM Radio Inc., the companies said Tuesday." As a shareholder of both companies, I am thrilled that my Sirius stock isn't completely worthless, although at pennies per share, it's not worth what I bought it at. As a Liberty shareholder, I'm not sure it's a good deal either.

Sirius faces too many challenges, a bad economy, a dropping auto industry, heavy competition from free radio, the web, and now iPhones and other cellular devices. Is there enough exclusive content to deserve a subscription or does the pricing policy need to be revisited.

And what happens when the next debt payment is due. Will Liberty still be there to drop more good money after bad. Are there synergies for Liberty to make the sum of the two companies more valuable than its individual parts. Liberty may have won the contest but was it only a booby prize.

Can Sirius Be Saved?

Was it just a year ago when the FCC finally agreed to let Sirius and XM Satellite merge. While the FCC thought they were preventing a monopoly, perhaps they were simply causing the destruction of an industry. If the FCC had allowed the merger sooner, would there be a different ending than the one being threatened, the bankruptcy of Sirius XM. WIth a debt payment due and Echostar buying up notes as a strategic move to gain the business post bankruptcy, will a white knight emerge. And will that savior be Liberty? And will it really matter?

For Mel Karmazin, either choice may be prove disastrous. "The Sirius XM boss is trying to decide -- as soon as today -- whether he'll take the satellite radio giant into bankruptcy or risk selling a significant stake to Malone and Ergen. Either way, he could end up kicked to the curb." That is, he could be forced out of his job, for essentially driving shareholder value into the ground. The consumer may have stopped embracing satellite radio and if that is so, it is the most difficult challenge to overcome.

I Want My Free TV

Despite the Government delaying the digital transition till June, some broadcasters are still moving forward with plans to switch over from their analog signal on February 17. As this opinion demonstrates, it is not that easy to simply plug into a digital converter box and enjoy free TV again. Are antennas capable of receiving these new signals? Are people really expected to go back on their roofs and re-position them? Or will they simply turn off. This transition may prove that it is not as simple as one might think.

"And this might be how we greet the digital television future: without television."

Fox TV’s Gamble: Fewer Ads in a Break, but Costing More

How do you stop people from fast forwarding or leaving the TV during the break, fewer commercials. That is Fox TV's latest strategy and at the very least, their heart is in the right place. Sure the ads cost more, but if they are watched and not skipped over, it could be worth it. The concern to me is whether the consumer will return to their old ways and watch the show without using trick features. Is :60 short enough for the viewer to not rush to fast forward anyway. And because Fox is the exception, not the rule, will viewers fall into old habits. The good news is that Fox tells the consumer that it is only a :60 break.

But is it working? "Fox says the shorter commercial breaks keep viewers more engaged and improve brand recall for advertisers. Viewers are also less likely to change the channel or fast-forward past the ads — but not to the degree that Fox would have liked. Perhaps more important, the network does not appear to be recouping all the costs of the experiment. It is unclear whether Remote-Free TV will be back next season." Obviously there is a cost return benefit and the premium charged may be too expensive to justify the spending for advertisers. It's kinda like paying more for a larger box only to discover that the packaging hides the fact that what is inside is equivalent to what was in the original size package.

So far, the results are positive. "Last fall Nielsen IAG, an ad research company, analyzed the effect of fewer commercials and found that brand recall was 22 percent higher for 'Fringe' than for 'prime time’s most involving dramas.' Shorter breaks are also resulting in somewhat less skipping of commercials, according to Nielsen." Perhaps it can be possible to retrain the viewer that shorter breaks don't require skipping. Hopefully the test is expanded to all prime time shows.

Charter Cable Files Chapter 11

Goodbye old debt, so long shareholders, welcome to the new and hopefully improved Charter Cable. "Charter Communications said Thursday that it has reached a deal in principle with certain debtholders in a restructuring that will reduce its debt by $8 billion and result in the St. Louis-based MSO filing a Chapter 11 bankruptcy petition." And while their is less debt, there is still debt. Financial results indicate improved revenues, but will it be enough to sustain them. Telco and satellite competition, lower advertising, could put Charter again in a bad situation. Is this new life short term or just a precursor to a pending merger with another cable operator. I believe the latter is most likely.

DirecTV Owner Said to Seek Deal for Sirius XM

Is Direct TV, through its owner Liberty Media, interested in obtaining Sirius XM Radio? Are there synergies that make this a good merger Sirius clearly has subscribers, mainly through deals with the automakers, but are these subscribers here for the long haul and can they be merchandised with Direct TV. Perhaps there are other reasons at play. There seems no love lost between John Malone, who heads Liberty, and Charlie Ergen, who leads his competitor Echostar. "Mr. Ergen and Mr. Malone are longtime rivals. In the past they have discussed a possible merger or joint venture to cut costs, but those talks stalled over antitrust concerns in 2002. Mr. Malone’s involvement with Sirius may just be a ploy to make a takeover by EchoStar more expensive, analysts suggest. If that is the case, Mr. Malone would be taking a page from Mr. Ergen’s playbook — EchoStar has been known for becoming involved in potential mergers to drive up the price a rival must pay."

Let's assume the former that there are synergies at play that could be mined with the merger of a radio and cable satellite company. Beyond marketing opportunities, could there be technical efficiencies that could save the radio business. Howard Stern, in a Reuters article, believes that satellite radio is a viable business and can survive."'I'm not concerned. I think satellite radio is great and will be a successful business and it will survive,' he said." As of today, Sirius has a large debt payment due, so timing is everything. Who controls Sirius may simply determine Howard and Sirius' future