Hulu's Digital Pennies May Now Be Quarters

While not much is said on how the premium model is going for Hulu, Ad revenue does not seem to be suffering. "The company will generate $240 million in revenue this year, up from $108 million last year, and $25 million in 2008, (CEO Jason) Kilar said on stage at the NewTeeVee Live conference." Impressive growth from a startup. But does it indicate something more.

As they share their usage metrics, it makes me wonder the Hulu Effect on cord cutting. With so many users and so many streams, are these same users keeping their cable subscription and enhancing their usage experience. Or as some speculate, they have found that they can drop their cable service and watch their shows online only. So what is good for Hulu may not be good for Cable Operators.

Will a Comcast NBC Merger Cause Customer Fees to Rise?

We worry about a number of things when mergers occur. Monopolistic conditions, higher barriers for competitors to enter, less innovation, and of course rising prices for a limited resource. So goes the latest argument assessing the merger of Comcast and NBCU. "William Rogerson, a former chief economist of the Federal Communications Commission, said the deal would lead to $2.4 billion in higher fees to consumers over the next nine years unless the commission and the Justice Department, which are assessing the merger, impose conditions."

The question is, where are those fees being imposed. If at the cable programming level, the biggest concern is cord cutting because of current rising fees. Consumers are moving in two directions with their cable company, all or nothing. The customers getting only cable are dropping their service completely. The others are becoming a two or three platform user, adding phone and/or broadband. Hence the Q3 financials from the cable companies are showing basic cable subscriber losses, and a rise in phone and broadband users. It is the haves and the have nots, all or nothing. Rising fees only exacerbates the cable problem.

As to digital content, assuring that NBCU content is not restricted to the cable platform only is an understandable concern. "Hulu is considered the digital jewel of the transaction. Having a stake in Hulu would help Comcast sidestep a big concern for cable companies, namely that users could start cutting subscriptions if they could see their favorite shows free online." Assuring that content remains available on the web would be a positive move.

So as cable subscription drops, cable companies are looking to raise the fees on broadband. Here is where the FCC has to decide whether they want to call broadband a utility or not. Otherwise, they have no right to impose limitations. I believe current utility companies should be encouraged to enter into this business without government limits. The electric companies for instance have an infrastructure in place and with tax inducements to expand into the broadband business, they could become a notable competitor to the cable and phone company in the market. And more competition is healthy.

Consequently, the concern for price gouging could be dismissed with a more positive approach to the problem, and not more regulation.

AOL and Yahoo Merger?

Last month, we spoke of the talk of merger between AOL and Yahoo. This rumor continues to have life as more is being written. Today's WSJ is examining the opportunity further. "Why get all hot over the prospect of an AOL/Yahoo merger? As The Journal notes, analysts say it could create a strong competitor in the market for online display ads -- a market that is expected to total roughly $20 billion worldwide this year, and could reach $50 billion over the next few years." With Google maintaining a healthy lead in market share, a merger may be necessary to gain some yardage in this foot race.

Is there synergy in such a merger? Will additional cost efficiencies or revenue projections improve as a result of this partnership? Frankly, I wonder if it will only show the overlap of usage and incremental market share will not be uncovered. What is missing is innovation. Partnership is needed with the right parties. Build the better mousetrap and users will move over to you. Google can be beaten.

Scripps and AT&T Agree

Having lived through the Cablevision and Fox negotiations, it is nice to see another network find quicker resolution. Fox was off the air for weeks; Scripp's channels, HGTV, Food, and others were off the air for three days. "The two sides had just begun gearing up a public relations offensive, launching informational sites like att.com/fighting4you and www.keepmynetworks.com aimed at targeting customer frustration at each other. U-verse's facebook page was flooded with comments from mostly angry fans of Scripps channels threatening to change their service if their programming was not restored." And so another deal is done but not before the customer is both brought into the fight and also inconvenienced. At the end of the day the viewer has lost time with their channels and will ultimately pay more for them. Simply put, the customers keep losing.

US News Quits Print Subscription Business

Add another magazine to the list. US News and World Report has decided to end its print subscription business to concentrate on web and special print issues. "After December, regular editions of the magazine would only be published online, The New York Times reported Saturday. Editors said an occasional special report might be released on paper." Certainly the cost to print and mail continues to rise; in addition, consumers are dropping their print subscriptions to get their news online. When the economics no longer work, it is time to face the reality and make a change. For US News, this new era starts in January.

Surprisingly, their focus in on free web content and not on a digital subscription model. With the rise of tablets, I'm surprised that they are not considering this strategy. Print will still be offered as one off issues, but only through newsstands, thus saving mailing costs. An interesting move that their editors describe as a growth move, but appears as more like waving the white flag.

What Does Election Mean For Net Neutrality

News has been a little quiet on the FCC's net neutrality moves. It seems they were waiting till after the election before taking the next steps. The FCC is trying to find ways to force all broadband distribution to treat equally all online content, regardless of file size and usage demands. And their attempt to get a bill passed has now gotten more difficult. "The widespread Democratic losses made an already uphill battle even tougher. More than a dozen incumbent congressmen who had voted for a similar Net neutrality bill in 2006 were voted out of office on Tuesday, most notably Rep. Rick Boucher, D-Va., a 28-year House veteran." Without congressional support for net neutrality, a bill unlikely to go through.

Should all online content be treated equally? Shouldn't a free economy enable companies to pay for better positioning. Isn't that what the NY Jets and NY Giants did with PSLs for season ticket seats. If an online company is willing to pay to get it's content through the pipe faster, shouldn't they be allowed. And why can't the broadband platforms benefit from offering prime positioning. It seems that is the way the world is headed and net neutrality will become ancient memory.

No Remote Needed With Kinect

Microsoft has faced a number of challenges lately. Beyond its Windows Platform, it has yet to see success in mobile phones, tablets, or music devices. Its one exception, gaming. Their XBox 360 has been a hit and now they have enhanced its features with Kinect, a hands free, motion detector device, that recognizes players and puts them and their physical actions into the game. "By all accounts, Kinect is loads of fun. The black rectangular device, used in conjunction with Microsoft's Xbox 360 console, lets your on-screen character faithfully mimic your movements. It'll have you flailing your arms to steer on-screen cars using an invisible steering wheel." No fear of throwing your remote into your TV screen either!

Expectations for success are high with analysts expecting 5 million units being sold this Holiday season. But at its high price tag, X Box customers must determine whether the extra feature is worth it. "That said, it's not essential.. And at $150, it's a pricey proposition. Buy it with the console and a few $50 games, and the price tag for fun can quickly rise to $400." We currently have in our home the XBox, the Wii, and an old Playstation 2, not to mention a DSi, and ipods withe game apps. My son's big ask this Holiday is not the Kinect but to add the Live feature to his XBox. Which way to go?

Certainly, before we make the decision on purchasing the Kinect, we will see if the games themselves are of interest to him. if the games aren't compelling, why would the Kinect device be needed. I look forward to seeing how the Kinect games stack up to the Wii games. That may ultimately determine how successful the Kinect will be.

3D or not 3D

3D may be an opportunity for theater screens to charge a premium and make more money, but does it make sense for TV Networks. So now ESPN is questioning whether it is a business they want to pursue. "But the 24-hour sports network is already making noises about the future of its 3-D effort, with one exec admitting that there's 'very little indication' whether the channel will continue in its present form—or indeed, even survive—for a second year." How well 3D TVs do this Holiday season may indicate to ESPN and other networks how much money they want to invest into another version of their current networks. The addition of an HD channel proved to be an expensive investment and Networks weren't able to get the cable operators to pay more for an HD signal. I'm sure the concern is that they won't get an extra penny for a 3D version either.

Others question how much the consumer wants 3D in the home, especially if they need to wear glasses to view. And viewers don't tend to watch TV without also multi-tasking; reading the paper, talking to their spouse or friends, eating, drinking, answering the phone. Well you can see that unlike the theater experience when the viewer has little distraction; at home, there are too many little things that divert from the viewing experience. Putting glasses on, taking them off, and putting them on can get tiring. Until 3D is accessed without glasses, I expect the investment in 3D Networks will also slow.

Election Online

It's election day and so it it is time to go out and vote. So vote early and often. Seriously, just vote. It remains the one true way our voices are heard.

As it related to the changing entertainment landscape. Well just look around. Political messages are not just on TV, radio, and print. They are on Twitter, Facebook, web pages and other online tools. And so it is not surprising that election coverage will also be accessed both on traditional media and online. "ABC, CBS and PBS will each stream part of their election-night coverage on the Web on Tuesday, and NBC and ABC plan six hours of results lasting into early Wednesday morning. The networks will involve some of the biggest and most popular websites — Google, Facebook, YouTube and Yahoo! — in delivering their versions of the news."

Content, regardless of what it constitutes, is being consumed across all media platforms. Live coverage, whether sports or election results, demonstrate the need to make it accessible anywhere, anyhow, anytime. Consumers no longer want to wait to get home or for the morning paper to learn results. They want the news to follow them and not the other way around.

As the elections choose a winner, so too will media consumption demonstrate how far we are trending toward online and mobile consumption. Much has changed in the last decade. And nights like these demonstrate how much farther we can still go.