Will Netflix Hurt Itself and Slow Down Cord Cutting?

Have you mailed a letter lately? Are you emailing birthday cards instead of mailing them? Do you think $0.44 for a stamp seems like a crime? Well Netflix seems to want to move it's customer base away from mailings as well and to a streaming only model. That was the strategic decision a couple years ago when a streaming strategy was deployed and a change in the pricing model is only a next step in pushing consumers to wholly embrace streaming only. Why else insist on raising monthly membership fees by 60%.

"Netflix shared the news in a blog yesterday, explaining, 'We are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each.'" In addition, they are separating out the management teams into two silos, ultimately to grow one business while managing the maturity and downfall of the other.

And while there is initial outrage, the younger consumer has been more focused on streaming only anyway. It is their older customer who has been still using mailed DVDs. The Netflix move is to gear itself more toward that next generation consumer. But Netflix must also bolster its library of streamed products to remain competitive. Complaints abound that newer films aren't available for streaming and the library of product still pales against cables' on demand library.

But it is that $8 streaming price point, far cheaper than cable, that still will factor into cable cord cutting. Netflix will grow its library and compete effectively against cable. Customers will complain about the increases; some will downgrade service, others will still pay it. Netflix has a future strategy and it is clear that this move is short term pain for their long term gain.

Apple's Fourth Screen, the HDTV?

Terrific article today in AllthingsD.com on speculation that Apple will manufacture and sell Hi Def TV sets. "At $328 billion, Apple’s market capitalization is the second largest among U.S. companies. How much higher can it go? Plenty — particularly if the company launches that Internet-connected HDTV it’s rumored to be developing." An Apple TV set would stand with the Mac, Ipad and iPhone as a fourth screen for the consumer. The key, as the article notes, is differentiation. Unlike the other devices, an Apple HDTV set would have to manage TV viewing in a whole new way. And it is hard to imagine a big screen set with touchpad technology, so important in the other three devices.

What I would love to see from Apple is more of their Airplay and cloud technology incorporated behind the TV set enabling any TV to easily share content from numerous sources, the mac with iPhoto slide shows or iMovie videos, from the iPhone with recently taken pictures, or from the cloud with iTune theatrical movies and TV shows. Some might call that the essence of the Apple TV. Where Apple excels is the simplicity of connection, the easy of use, and the mobility across devices. Why build a TV set when so many other manufacturers are already selling at many different price points.

The article contends that the lack of cord cutting may make an Apple HDTV a non issue. I believe that more innovation and marketing of the AppleTV, currently available, is the connection Apple needs to own the fourth screen and the home.

Foursquare Adding New Partnerships

In a move that seems to have great appeal but little profit, Foursquare is partnering with Groupon, Living Social, and Gilt to provide daily discounts to costumers who check in at certain stores. "Through these accounts, merchants are able to deliver specials, including discounts and freebies, to users who check in at their locations." For a Foursquare user who "checks in", these surprise savings are sure to please. But as a marketing tool, I question the motive.

Coupons and deals are meant to drive consumers, some not previously planning to shop, to stores to take advantage of a special program. It seems to not make sense for the merchant to provide a savings to a customer already in the store, when other marketing tactics are available to drive purchase behavior, without resorting to discounting. Hopefully there is more to this program than meets the idea.

I could imagine when you open Foursquare you might be instructed to first check out the deals and that might then encourage you to travel to the store to take advantage of the discount. It might prioritize discounts based on location so that the nearer ones are highlighted first. Merchants might pay for better positioning and Foursquare would highlight them first, similar to a Google or Indeed listing. "Foursquare recently passed the 10 million user milestone." And that base could be useful for geographic marketing.

DirecTV's Theatrical Movie VOD Test Not Appealing

Movie houses were in an uproar that their theatrical business was once again being impacted with a shrinking window and a theatrical VOD push. But at a hefty price tag to view a movie at home, consumers seemed to balk. "Initial consumer response has been tepid to an experiment by four studios that signed up with DirecTV to offer movie rentals at home for $30 as little as 60 days after theatrical release, executives from three of those studios acknowledged privately because they were not authorized to speak on the record." Will this test continue, probably. Other price points will be tested and theatrical windows pushed again.

Mostly, I think the issue is timing. Given the bad economy, $30 can be a lot to spend. And when folks need to get away from their troubles, they can spend a little less and get to watch these same films in a better theater experience. And since these titles being tested are available almost everywhere, it is just as easy to travel than watch at home. For smaller, independent titles, that are in limited release, the idea of a theatrical VOD film being made available is much more desirable. When films are only seen in major cities, the rest of the country can only wait. For those kinds of titles, theatrical VOD makes much more sense today.

15 Billion Apple App Downloads and Growing, Step Aside McDonalds

Remember the good ole days when McDonalds would announce on their signs how many burgers were sold and eaten. As the chain grew, so did the numbers till finally the signs simply said, billions and billions sold. Well it seems that may soon have to be the case with Apple. "It has seen 15 billion downloads from 200 million iPad, iPhone, and iPod touch users. In other words, the average iOS user has downloaded 75 apps." And as the number of Apple devises sold only grows, app download number will only grow at a faster and faster rate.

Sure a good number of those apps are free, but their value makes the hardware only more necessary. Lots cost less than a dollar, probably what a McDonalds' hamburger costs today. Add all the songs and videos that this same devices also download, and a healthy little business has been born.

15 billion and growing exponentially until very shortly it will be larger than the population on the earth. And pretty soon it will be Apple that says, "billions and billions served".

Facebook and Skype Together - Do You Even Care?

I have Facebook, I have Skype, I have Facetime on my iPhone. I have an address book for each and if I wanted to, I could combine them. So the announcement of Facebook and Skype easing the communication across their two platforms simply makes me yawn. And I suspect others, too. "After all, Facebook's "awesome" news today was totally one-upped a week earlier by Google Hangouts, a Google+ feature that doesn't just let users video chat, but lets them do it with up to 10 people simultaneously (Facebook's Skype integration is just one-on-one)." No doubt a group party line seems more innovative although reminiscent of the time when operators were required to connect callers and neighbors could eavesdrop on other people's calls.

As to Facebook, sometimes I want to post or read other posts; I don't necessarily want to chat, let alone Skype. But if I am listed as online, it is hard to say that I was away. With the phone, I can simply not pick up and callers can think I am not at home. Is a Facebook-Skype collaboration problematic? No, convergence of apps and communication seems necessary, but with a mobile population and apps that make us look like we are always on, we may simply lose another bit of privacy.

As to the article in PC Magazine, Facebook in 5 years will thrive as long as it continues to innovate and be forward thinking. Otherwise, like others in its path (Prodigy, AOL, and others) they could find themselves moving from leader to has been.

Smart TVs To Rule Over CableCards and Set Top Boxes

CableCard Set Top Boxes are nearing 30 million and barely half a million CableCards are in Tivos and non converter box devices. On the other hand, TV manufacturers have shipped over 60 million internet connected TVs in 2011 alone with more already in the home. "Television manufacturers will ship 138 million connected TV units worldwide in 2015 -- with more than half-billion connected TVs having shipped by then" making the CableCard and set top box less relevant in the home. "An increasing number of connected TVs will include wireless support to be able to deliver content to devices such as smartphones and tablets in the home. According to DisplaySearch's forecast, more than 98 million TV sets with 802.11 wireless networking built-in will ship in 2015." The set top box has some catching up to do.

Remember that a number of years ago, CE manufacturers tried to play in the same sandbox with cable but the industry was not eager to allow outsiders in. The CableCard was a means by the FCC to force cable operators to enable outside devices for cable programming. But the CE manufacturers did not see the value of putting a CableCard slot in their machines. They preferred a more simpler approach, valuing the consumers need for connectivity to the world wide web. And the consumers' needs broadened to require mobile accessibility, wireless support was easily added. The CableCard remained stagnate, hidden under the stairway (a lame Harry Potter reference). It has yet to come out of hiding and the vast majority of consumers have no idea what a CableCard is. But they do know Netlix, Hulu, Amazon, You Tube, and Apple.

Have You Seen Your CableCard Lately?

Per FCC rule, cable set top boxes were required to use CableCard Technology, as opposed to internal security, so that other companies could off cable access without a cable box. And so, almost 30 million CableCards are out there. "The 10 biggest U.S. cable operators have to date deployed 582,000 standalone CableCards to subscribers for use in retail devices such as TiVo DVRs, according to figures the National Cable & Telecommunications Association submitted to the FCC Thursday." That means that less than 2% of consumers are using CableCards outside of their set top box in other devices like Tivo. Hardly good news for Tivo or for the CE industry.

In fact, I would say that the vast majority of consumers with cable boxes were even aware that a CableCard exists in the device. And certainly the cable operators are not encouraging consumers to get CableCards. "The FCC is currently considering a successor to the CableCard regime. The new "AllVid" regulation would force all multichannel video programming distributors -- including satellite and telco TV providers -- to deliver video to third-party hardware devices using a common set of technical interfaces." Certainly better news than what exists today.

Still CE companies are not waiting for cable operators. The rise of broadband enabled TV sets, Tivos, and blu-ray devices indicates that the push is for easier internet access. CableCards cannot help the TV Everywhere model. As authentication is required for multiple devices, CableCard technology is limiting. As more content makes its way through the web, the concept of CableCards becomes antiquated as connectivity is achieved both in a wired world as well as a mobile one. And cable operators are in desperate need for new agreements to offer access of content both inside the home and out.

So have you seen your CableCard lately, probably not. Best to one day look for it in a museum.

Good News For 3D, CBS Testing For Its Programs

CBS seems to be the first broadcast network actively looking at pushing forward with a 3D broadcast channel. "CBS may be bringing 3D versions of its shows to a 24-hour cable network, and it has already demonstrated 2D-to-3D converted programming privately to several operators, according to industry sources familiar with the project. The broadcast network is considering a strategy to gain distribution for the 3D channel through its retransmission-consent negotiations with cable, satellite and telco TV operators, according to one source." Certainly good news for all the CE companies with an eye on the next generation of products.

While 3D TV sales have slowed, it is partly due to the lack of meaningful 3D content to view. If you believe like me that content is king, then the advancement of 3D by a broadcaster is the push to invigorate demand. "To date, there has been a fairly limited supply of 3D content available through pay-TV operators since the current wave of 3DTV sets hit the market in early 2010. ESPN 3D launched last year and converted to a 24-hour service this past February, although the lineup remains largely reruns of previously aired events. The 3Net channel from Discovery/Sony/IMAX has just one distribution deal so far, with DirecTV." CBS would be the first broadcaster to market and no date the others will quickly follow.

Certainly 3D is a hot commodity, not just for programming, but for gaming as well. My son badly wants the 3D version of his DSi gaming system. And I do see the appeal for 3D when it comes to watching sports on TV. But as I need glasses to see, wearing another set of glasses over my own has always been irritating to me. Nintendo has achieved a 3D effect on it's gaming system without glasses. I look forward to the day when my large screen HDTV viewing on 3D without the glasses is the norm.