Digital Wallet: Your Smartphone Is Your Credit Card

Check out this article on Huffington Post, especially near the end. "Visa is also working with cell phone companies to push forward phones equipped with Near Field Communications (NFC) technology. With NFC, a smartphone does the job of a credit card, so that instead of swiping a card, the shopper would be able to wave or tap a phone when paying for a purchase. While some smartphones, like the Google Nexus S, are set to have NFC technology baked in, Visa plans to offer cases and SD cards that provide compatibility for devices built in earlier times."

Who's ready to lighten or even replace their wallet? I know I am. As the article suggests, it is probably a "generational thing" how quickly someone would be willing to eliminate their wallet completely. For my son, it would be his preference. For my Dad, absolutely not.

NY Times Web Traffic Is Down...So What

Welcome to Economics 101 and price elasticity models and its effect on demand. Add a pay structure to a free web site and traffic to that site drops. Thus is the case with The New York Times website. Clearly, a pricing model to a formerly free website would have been strategized and measured. Without it, how could a subscription price be determined. The risks are measured, the loss of subs to the ad model against the gain from subscription pricing, and a price point that at most, led to a flat impact on the revenue projections. And according to the NYT, the actual results were anticipated. "An analyst also said today that the paywall may be working. 'Our framework suggests that even if The New York Times loses 20% of its web traffic, it will need to add about 107k subscribers to break even,' Citi analyst Leo Kulp said in a note to investors." Economic theory at work!

So what is left? Smart marketing. Building value of the product to the price point charged and satisfying the subscriber so that they remain loyal users. It is harder to find a new sub, easier to retain one. Keeping the website robust and its editorial invaluable are key. The rise of tablets and mobile devices and the demand for content should bring more subscribers to join up. Consumers want to make their iPads, Kindles, and Nooks as invaluable as possible and access to a NYT daily edition online can satisfy that demand.

Transitions from one technology to another can be difficult and in the short term, financially hurtful. But look at Netflix and see how they successfully moved from DVD toward streaming while its competitor, Blockbuster, was much slower to act. The same holds true for The New York Times. The long term gains should outweigh these short term struggles. The need to change to a digital pay model is necessary and can lead to a resurgence in subscriber growth.

Is Skype A Win For Microsoft?

With Microsoft paying a lot of money to acquire Skype, one has to wonder if this is a good investment of capital or a bad one. With its signature Office product, Microsoft may believe that a full integration of Skype into its suite will have enormous value to the business community. "Microsoft is betting that Skype can help change its fortunes. Skype is a leader in Internet voice and video communications, with 170 million users each month connected for more than 100 minutes on average. In the last year or two, video use has surged, now accounting for 40 percent of Skype’s traffic."

Skype helps make international calls cheaper. Skype helps grandparents see their grandchildren long distance. And while video calling has been the dream for telecommunication for years, most younger generation users prefer texting to calling. In the business would, video conferencing can work when you are also presenting powerpoint and other materials. In those instances, software like WebEx works well. But in most interactions between buyer and seller, the anonymity of a voice only call over video chatting remains the preference. We multitask so much when we are on a call and we don't want the other person on the call to know that we are not giving them our full attention. Otherwise, we might be caught reading our emails, drinking our coffee, or chatting with the mute button on to someone else in the room.

Can Microsoft take this expensive investment and find additional revenue? "Google, like Skype, has a free Internet phone call and video messaging service. So Microsoft, analysts say, is taking a bold step to grab a leadership position instead of risking falling behind Google in a crucial market and then facing the difficult task of trying to catch up." Is this space the best place for Microsoft to make this investment? Will users pay more for the Office Suite with Skype? Hopefully Microsoft has already put together a strategy to quickly capitalize on the software and make it, like the Office Suite, invaluable for the user. Or it may become for Microsoft another bust investment.

Tivo To Get VOD on Comcast

If you care what kind of car you drive, you might also care what kind of DVR you use, too. There is a difference between a cable DVR and a Tivo. But is it worth the added cost to upgrade?

Until now, it didn't make sense. Tivo boxes could record programs but could not access on demand features from cable. For Comcast, that upgrade is now happening. "Comcast and TiVo have partnered up to offer access to cable TV, broadband content, and Comcast's Xfinity On Demand library through TiVo Premiere boxes." Comcast still needs to come to the house and install CableCards. But no other equipment should be necessary.

The rollout, for whatever reason, seems slow. Only San Francisco is mentioned. Will Comcast and Tivo heavily market in Comcast systems when available? Will consumers upgrade? It seems the time to get this to market is late. With tons more content available digitally over the top, the consumer has already found alternatives that work. Gaming systems, DVD players, and TV manufacturers are selling electronics that easily access the web. Consumers are also watching outside the home using their same over the top subscriptions, Hulu, Netflix, and others. A Comcast - Tivo on demand box is nice, it just seems like they are 2 years late to market. If you already own a Tivo Premiere box in a Comcast market, the upgrade seems a no brainer; but if you don't own a Tivo, an on demand upgrade doesn't seem like enough to switch your DVR.

If You Can't Beat Em (Netflix), Join Em

There is something to be said for content companies to not also own the platform. They become more adaptable to a changing technological environment and hopefully quicker to recognize, strategize, and act. "As they delivered their quarterly earnings reports last week, companies including Time Warner Inc. and CBS Corp. were doling out praise for Netflix." Neither own a cable distribution platform, so each see that it is most important to follow the customer. And the customer is cord shaving and cord cutting. It also makes sense to be accessible everywhere so that your content is easy to find and view. Lastly, these media companies also hope that it is not a zero sum game so that doing deals with Netflix and others, along with cable operators, means incremental revenue gains.

It will be this philosophy that if you can't beat em, join em, that will entice more content companies to pursue a streaming platform along with its cable distribution. With customers flocking to Netflix and their subscriber base at 23 million and growing, a deal with Netflix doesn't seem like a bad thing.

Will TV Watching Become A 2 Screen Experience

As tablets and smartphones invade our daily lives, we are using them more. Not just to check e-mail or make a phone call, but to read a newspaper or magazine, play a game, or check on a baseball score. These small screens are so pervasive in our lives that they remain in use even as we watch TV.

But why do these two devices, the TV and the tablet, need to be doing different things? What if the smaller screen was an extension of the larger one. There are too many instances where it would make sense. Watch a sitcom on the HDTV and blog on the iPad with others in real time. Watch "Who Wants To Be A Millionaire" and play along on the smartphone. Watch a cooking show and download the recipe. Watch QVC and shop. Two screens working together to augment the viewing experience.

For cable companies, it brings another level of interactivity and lends itself to a second screen for advertising. While cable pushes forward with interactivity on the big screen, it is not what the customer wants. They do not want the clutter on the big screen. But coordinate it with a small screen and it may prove a winning combination. Clutter aside, the tablet and smartphone aren't going away. A coordinated effort could be the next generation of viewing behavior.

There's Money In That Broadband Wire

First Comcast announces a loss of video subscribers with a gain of phone and internet subscribers; today, Cablevision announces the same news. In fact, the gain of phone and internet subscriptions far outpace the loss of its cable subscribers. As a result revenues for both Comcast and Cablevision are up for the first quarter. It is also important to note that profit margins for the video business is far narrower than from phone and internet.

It certainly suggests that owning the pipeline is a smart move, more so to provide interactive connectivity to the home. Cablevision increased its subscriber base through it's acquisition of Bresnan late last year. Comcast, who is already the largest cable operator, may seek to streamline its areas of business to assure more economies of scale. Rumors are floating that Comcast may deal their New York Metro DMA systems to either Cablevision or Time Warner Cable. Comcast is unlikely to be the dominant provider in NY unless it decides on an acquisition strategy. With the spin off of Rainbow still planned by Cablevision, perhaps it allows the Dolan family to put it's systems up for sale as well. Comcast may want to consider that opportunity although it would require another fight with the FCC. If that is the end game, Comcast may just want to retain it's NJ and CT systems.

Sirius Subscribers Growing

Sirius had some pretty impressive growth for the first quarter of this year, adding almost 375,000 new customers and exceeding 20 million customers in total. And Sirius expects to add another million through the rest of this year. A healthy gain even considering the concern over automobile production due to the horrific problems in Japan.

Also the article notes that average revenue per Sirius subscriber remains flat. Hopefully higher subscriber numbers can justify higher advertising spending. Sirius needs to also market harder to get it's mobile app sold on every iPad, iPod, and iPhone which could help them significantly. It is an untapped audience that could add a significant group and extend listening for current auto subscribers.

All in all, the Sirius team seems to have found its focus, despite competition from so many others, as well from a struggling economy. For customers to pay for radio content, free on conventional radio, is a testament to the business model.

Is Nielsen Losing Its Touch

TV ownership, as measured by Nielsen is dropping. Blame it on the economy, on the digital signal transition, and perhaps on cord cutting; regardless, TV ownership is a couple percentage points lower. We have been talking about non-linear video viewing for years now, from DVR to On Demand and from streaming media to digital downloads, content viewership has changed. We are no longer strictly a linear TV Viewer.

For Nielsen, that seems like a brand new revelation. "That second reason (internet viewing) is prompting Nielsen to think about a redefinition of the term 'television household' to include Internet video viewers." Thinking about a redefinition? And notice that Nielsen is still limiting its measurement to internet and still disregarding other viewing platforms. They barely notice DVRs and still can't manage to understand on demand. And so as they think about a new term, "Internet Video Viewer" is still limiting. Advertisers want measurement of their ads in content regardless of how or where it is consumed. DVR, on demand, and streaming all matter. Perhaps it would be better for Nielsen to redefine its definition to reflect all "Content Video Viewers".

Yes, TV ownership has dropped, yet video screen ownership has risen dramatically. Tablets, smartphones, and computers can view both short and long form video. TV screens still represent 96.7% of households and DVR and On Demand content viewership is also rising. Nielsen needs to capture all this information as other research companies are already adapting to this new screen viewership model.