Hulu and its owners are facing a real challenge. No one wants to pay their price and their model causes friction with their other distribution partners. Owning both content and a distribution path seems to be causing great angst. Can a distribution window be worked out that makes every one happy?
For a number of cable operators, the ultimate decision was to sell or spin off one or the other. Viacom in the 1990's sold their cable operations; Time Warner, Inc. spun off Time Warner Cable, and Cablevision spun off Rainbow and MSG (although they all share majority sock ownership by the Dolan Family). The biggest exception of this decade was the acquisition of NBCU by Comcast. And that has made content deals with other companies a more difficult one, too.
Hulu, owned by ABC, Fox, and NBC (now non-voting because of Comcast), has a difficult job of working through its content deals for streaming without overtly hurting its other cable distribution deals. But as cable embarks on a TV Everywhere philosophy, those streaming deals do cause friction. But no one wanted to buy Hulu fearing that these companies wouldn't continue to offer great content to the new owners post sale. "There are risks in keeping Hulu. The venture rankles some of its media owners' biggest customers—cable and satellite operators, who see Hulu as a potential competitor." For them, Hulu causes cord cutting. "Some media executives said there is value in maintaining a direct connection to consumers, rather than handing it off to other companies." But that would affect their subscription fees as well as the networks' current ad sales model. So Hulu finds itself stuck in a can't sell, can't compete abyss.
Can Hulu create a streaming window that is competitive yet gives their cable customers a unique window too? Is a 1 season exclusivity enough? Or does Hulu push the older shows no longer accessible on a cable network? Or has this experiment out lasted its usefulness and it is time to close the shop? Decide where your fortunes lie, as content owners or as distributors, it may not be financially in your best interest to do both.
Monday, October 17, 2011
Friday, October 14, 2011
Netflix Righting A Sinking Ship
Netflix has been having a ton of bad press, with poor management decisions leading to a loss of subscribers, and a huge drop in its stock price. So to return to normalcy, Netflix backtracked from its Qwickster spin off (although they kept their 60% price increase). So what is their latest plan?
Well this latest move says it all, content is king. To right a sinking digital ship, Netflix is adding more content. The latest deal with the CW gives streaming rights to all their shows. "Netflix can begin showing episodes of all CW scripted shows (not unscripted ones) beginning the September after the season in which that episode aired. So, any episodes airing now will become available in Sept. 2012." Great opportunity to recapture the younger audience who have enjoyed shows like "Gossip Girl". The monies spent could reach a billion. A lucrative deal, but the timing of its start is questionable.
But will Netflix be around to start airing shows and pay out. The content doesn't flow to Netflix till next September, almost a year away. Customers, annoyed at Netflix, may not stay around much longer as their prices have gone way up. And once you lose a customer, it is harder to win them back. Netflix needs more good news to offer to enable a turnaround and keep customers on board. Content acquisition can do it but the timing to offer it is now, not next year; otherwise the Netflix ship may only continue to sink.
Well this latest move says it all, content is king. To right a sinking digital ship, Netflix is adding more content. The latest deal with the CW gives streaming rights to all their shows. "Netflix can begin showing episodes of all CW scripted shows (not unscripted ones) beginning the September after the season in which that episode aired. So, any episodes airing now will become available in Sept. 2012." Great opportunity to recapture the younger audience who have enjoyed shows like "Gossip Girl". The monies spent could reach a billion. A lucrative deal, but the timing of its start is questionable.
But will Netflix be around to start airing shows and pay out. The content doesn't flow to Netflix till next September, almost a year away. Customers, annoyed at Netflix, may not stay around much longer as their prices have gone way up. And once you lose a customer, it is harder to win them back. Netflix needs more good news to offer to enable a turnaround and keep customers on board. Content acquisition can do it but the timing to offer it is now, not next year; otherwise the Netflix ship may only continue to sink.
Thursday, October 13, 2011
Premium On-Demand Derailed
DirecTv tried to offer theatrical releases 8 weeks after they hit theaters into the home at premium prices and the results were negligible. Universal and Comcast tried to put an even higher priced model together for a film released just three weeks after it hit the theater and that program has been dropped. "After drawing boycott threats from Cinemark and a few small theater chains across the country, Universal has decided that it will no longer release their Ben Stiller/Eddie Murphy vehicle, Tower Heist, on-demand." It seems the backlash from theater exhibitors has sent a message to online distributors, "don't mess with us."
But perhaps the analysts also saw that the consumer was not interested in paying such an exorbitant price, almost $60, for a 1 day rental. And while the thought was that families would throw a movie party and invite friends over to watch; in my family, that sometimes happens when my kids invite friends over for a sleepover and they are looking for something to watch on TV.
With the loss of DVD rentals, content creators, especially movie companies are seeking other windows to recapture lost revenue. But replacing a DVD window with a premium on demand window doesn't seem to accomplish that result. Rather than add revenue it causes a backlash that resulted in theaters dropping those films from screens. It seems, consumers, faced with an overwhelming array of online choice, prefer now to simply rent or buy digital copies. With renting, the choices are plentiful at prices far lower than the premium model. Subscriptions for endless titles at under $10 a month and even on demand from HBO, Starz, and others. For those that prefer to own, digital copies from Apple and Amazon top the list, also at prices far lower than a $60 rental.
With DVD sales declining, will consumers rent more or buy more digital downloads? Certainly Apple and Amazon are being aggressive as they build up their cloud-based services. And as car manufacturers better enable their back seat screens to connect with more than just a DVD player (iPods, iPhones, et al), consumers will buy more digital downloads for their families. Movie studios need to better embrace these new opportunities; distribution windows should continue to matter and it makes no sense to hurt theater owners when there is no revenue upside. The easier you make digital distribution, the more it will be used.
But perhaps the analysts also saw that the consumer was not interested in paying such an exorbitant price, almost $60, for a 1 day rental. And while the thought was that families would throw a movie party and invite friends over to watch; in my family, that sometimes happens when my kids invite friends over for a sleepover and they are looking for something to watch on TV.
With the loss of DVD rentals, content creators, especially movie companies are seeking other windows to recapture lost revenue. But replacing a DVD window with a premium on demand window doesn't seem to accomplish that result. Rather than add revenue it causes a backlash that resulted in theaters dropping those films from screens. It seems, consumers, faced with an overwhelming array of online choice, prefer now to simply rent or buy digital copies. With renting, the choices are plentiful at prices far lower than the premium model. Subscriptions for endless titles at under $10 a month and even on demand from HBO, Starz, and others. For those that prefer to own, digital copies from Apple and Amazon top the list, also at prices far lower than a $60 rental.
With DVD sales declining, will consumers rent more or buy more digital downloads? Certainly Apple and Amazon are being aggressive as they build up their cloud-based services. And as car manufacturers better enable their back seat screens to connect with more than just a DVD player (iPods, iPhones, et al), consumers will buy more digital downloads for their families. Movie studios need to better embrace these new opportunities; distribution windows should continue to matter and it makes no sense to hurt theater owners when there is no revenue upside. The easier you make digital distribution, the more it will be used.
Wednesday, October 12, 2011
Smaller Cable Networks Growing Their Niche
First cable networks started taking viewers away from broadcast TV shows and now niche cable networks are starting to take ratings away from their big network rivals. "Analysts said niche players are benefiting at the expense of larger cable networks. After years of viewers fleeing broadcast for cable, the cable audience is now splitting into pieces." The top 20 networks are losing share to their smaller rivals. Will this trend continue? Well as audiences discover new shows, they will only continue to gravitate to them. The trend simply follows what initially cable did to broadcast. Choice begats an opportunity to change.
These smaller networks are benefiting because they are actually owned by their bigger "rivals". "Meanwhile, niche networks saw gains, including Style (up 68 percent), HLN (ahead 48 percent) and The Weather Channel (up 36 percent), thanks in part to Hurricane Irene." In truth, Style and Weather Channel are owned by NBCU (owner of USA, E!, and a ton more), and HLN by Turner (CNN, TNT, TBS). So despite where the audience goes, their ad sales team can still offer them placement. In fact, these smaller networks are being promoted across their bigger networks. Viewership may be moving around, but the owners of these cable networks are really the same players.
These smaller networks are benefiting because they are actually owned by their bigger "rivals". "Meanwhile, niche networks saw gains, including Style (up 68 percent), HLN (ahead 48 percent) and The Weather Channel (up 36 percent), thanks in part to Hurricane Irene." In truth, Style and Weather Channel are owned by NBCU (owner of USA, E!, and a ton more), and HLN by Turner (CNN, TNT, TBS). So despite where the audience goes, their ad sales team can still offer them placement. In fact, these smaller networks are being promoted across their bigger networks. Viewership may be moving around, but the owners of these cable networks are really the same players.
Tuesday, October 11, 2011
Hello Qwikster, It's New Coke; Welcome To the Dead Club
The idea may be sound, the execution is what killed it. Strategically, Netflix saw a changing business model and tried to get ahead of the curve. The customer wasn't ready to follow. It may have been the 60% price hike that ultimately done it in, but the idea was sound. At some point the DVD rental business will go away; just not today. And with such a negative attitude about Qwikster, the idea of selling it later to someone else lost its luster. The best thing you could do was simply kill it.
Coke also tried to stay ahead of tastes, seeing a need for their drink to be sweeter and more Pepsi-like. But the customer loyalty of the old brand mutinied when the brand changed too radically. Netflix customers did the exact same thing. And like New Coke, Qwikster is dead. Welcome to the dead brand club!
So was there any marketing lessons learned? 1. Perhaps for both Coke and Netflix, when things don't work, ask for a do-over. 2. The strategy may be sound, but so must be the execution. It is about the timing and sometimes pulling the bandage off too quick is not a good idea. 3. Responding in a timely matter is necessary. With Netflix, the response to the price increase alone should have been enough to reconsider announcing Qwikster. 4. Listen to the customer. Would the change be an improvement on how they used the brand? How does 2 separate services help the current Netflix customer to navigate, select, and use the service? It doesn't. 5. Doing nothing may be a possibility but doesn't move you or your brand forward. With every risk there is the possibility of failure. It is not the failure alone to worry about, but how one responds to it.
Coke also tried to stay ahead of tastes, seeing a need for their drink to be sweeter and more Pepsi-like. But the customer loyalty of the old brand mutinied when the brand changed too radically. Netflix customers did the exact same thing. And like New Coke, Qwikster is dead. Welcome to the dead brand club!
So was there any marketing lessons learned? 1. Perhaps for both Coke and Netflix, when things don't work, ask for a do-over. 2. The strategy may be sound, but so must be the execution. It is about the timing and sometimes pulling the bandage off too quick is not a good idea. 3. Responding in a timely matter is necessary. With Netflix, the response to the price increase alone should have been enough to reconsider announcing Qwikster. 4. Listen to the customer. Would the change be an improvement on how they used the brand? How does 2 separate services help the current Netflix customer to navigate, select, and use the service? It doesn't. 5. Doing nothing may be a possibility but doesn't move you or your brand forward. With every risk there is the possibility of failure. It is not the failure alone to worry about, but how one responds to it.
Content Distribution Windows Keep Shattering
Technological change has affected many industries. The iPod is noted for changing the music industry forever and cable has changed the face of TV syndication and the Movie Industry. The rise of multiple national cable networks means that the market to sell TV shows to multiple markets has gotten smaller; now shows are sold to one network like Comedy Central or TV Land for syndicated viewing. And along with cable on demand and streaming sites like Hulu, TV shows can be watched anytime not just outside prime time.
The movie industry has also seen its distribution windows drastically change. With DVD sales way down, distributors are seeking new revenue with premium pricing for same day as or even before theatrical release. Independent film companies have been pushing this plan. And now it is reaching the big budget film distributors. "Fallout in the exhibition industry continues over Universal Pictures’ controversial move to offer its upcoming Eddie Murphy-Ben Stiller comedy on premium video-on-demand just three weeks after it opens in theaters." Three weeks is hardly a window for theater owners and some are fighting back by not showing this film.
Will consumers pay a premium price to watch a first run film at home? It has not done well in past attempts. In addition consumers are seeing that the distribution windows have gotten much shorter. Where it once took a film more than a year to go from big screen to on demand, it now sometimes takes 3 months. And then shortly after it appears on a premium cable network like HBO or Starz. another 6 months and it lands on basic cable like fx or TNT. Consumers thirst for more seems to fill the pipeline with tons of films all passing through with lightening speed.
It is not just that the DVD has dies, it is that we as consumers are tired of the clutter of ownership. The iPod taught us that we can listen to what we want, when we want, where we want without filling up bookshelves with CDs. So too go the DVDs. How much the consumer will pay for the timeliness of the content is to be determined. Some may pay a premium price to watch in the home; most others will not. Theaters can't fight technological change, but they can make their experience a preferred one. Don't simply shut out the movie, but offer to make the experience a superior one.
The movie industry has also seen its distribution windows drastically change. With DVD sales way down, distributors are seeking new revenue with premium pricing for same day as or even before theatrical release. Independent film companies have been pushing this plan. And now it is reaching the big budget film distributors. "Fallout in the exhibition industry continues over Universal Pictures’ controversial move to offer its upcoming Eddie Murphy-Ben Stiller comedy on premium video-on-demand just three weeks after it opens in theaters." Three weeks is hardly a window for theater owners and some are fighting back by not showing this film.
Will consumers pay a premium price to watch a first run film at home? It has not done well in past attempts. In addition consumers are seeing that the distribution windows have gotten much shorter. Where it once took a film more than a year to go from big screen to on demand, it now sometimes takes 3 months. And then shortly after it appears on a premium cable network like HBO or Starz. another 6 months and it lands on basic cable like fx or TNT. Consumers thirst for more seems to fill the pipeline with tons of films all passing through with lightening speed.
It is not just that the DVD has dies, it is that we as consumers are tired of the clutter of ownership. The iPod taught us that we can listen to what we want, when we want, where we want without filling up bookshelves with CDs. So too go the DVDs. How much the consumer will pay for the timeliness of the content is to be determined. Some may pay a premium price to watch in the home; most others will not. Theaters can't fight technological change, but they can make their experience a preferred one. Don't simply shut out the movie, but offer to make the experience a superior one.
Monday, October 10, 2011
Kindle Believes Content Is King, B&N Retaliates Like A Spoiled Child
Amazon is taking the digital book wars to an exciting level. First it was price discounts on earlier models and now it is content exclusivity. Their latest exclusive content deal is with DC Entertainment, owner of graphic novels, a perfect complement to the e-reader. And a move that has riled its leading competitor Barnes and Noble.
But I am sad to hear that B&N has responded in a very childish way. "Comic book industry blog Bleeding Cool reports today that Barnes & Noble e-mailed all of its employees yesterday and told them to remove all print copies of the books included in that exclusive from their shelves." The only people that get hurt from this move are B&N customers who are in the store looking for these print issues and B&N reputation and bottom line. How does removing these issues help you compete with the Nook? Frankly, it doesn't. It sounds like a pouty child taking back his or her toys.
I am a huge fan of B&N and I understand their displeasure. But if they believe that content is king, like I do, then they should work harder to build their own exclusivity partnerships. DC Entertainment is not the only game in town. But B&N needs to work smarter to attract other partnerships and exclusivity deals. For every DC, there are Lucas, The Simpsons, and other graphic deals to make. And Archie is just announcing its own line of superhero comics. And think beyond the box to video and audio opportunities as well. To pull print copies off the shelf does not grow your digital business. The game is young and far from over.
But I am sad to hear that B&N has responded in a very childish way. "Comic book industry blog Bleeding Cool reports today that Barnes & Noble e-mailed all of its employees yesterday and told them to remove all print copies of the books included in that exclusive from their shelves." The only people that get hurt from this move are B&N customers who are in the store looking for these print issues and B&N reputation and bottom line. How does removing these issues help you compete with the Nook? Frankly, it doesn't. It sounds like a pouty child taking back his or her toys.
I am a huge fan of B&N and I understand their displeasure. But if they believe that content is king, like I do, then they should work harder to build their own exclusivity partnerships. DC Entertainment is not the only game in town. But B&N needs to work smarter to attract other partnerships and exclusivity deals. For every DC, there are Lucas, The Simpsons, and other graphic deals to make. And Archie is just announcing its own line of superhero comics. And think beyond the box to video and audio opportunities as well. To pull print copies off the shelf does not grow your digital business. The game is young and far from over.
Apple Still Shines
Steve Jobs legacy will be felt for some time and Apple will continue to dazzle. Despite a mediocre response to the latest iPhone news, advance orders for the next generation of iPhone are doing quite well. "Apple Inc. said on Monday that pre-orders for its new iPhone 4S set a record last week with more than 1 million units snatched up online in the first 24 hours. The results top the previous one-day pre-order record of 600,000, set by the new unit's predecessor, the iPhone 4." That the iPhone is now available to Sprint customers is one reason, and there are many users that simply want the next generation of iPhone no matter what. The latest software update with Siri voice command may be the next winning idea for Apple.
And as Apple attracts more customers to its devices, it also attracts more users to its App store. It is a healthy business model that will enable Apple to continue to grow.
And as Apple attracts more customers to its devices, it also attracts more users to its App store. It is a healthy business model that will enable Apple to continue to grow.
Friday, October 7, 2011
Steve Jobs' Business Lessons
Steve Jobs has left an amazing legacy on the business world. He built success from failure and didn't let failure stop him. Others might have quit, but Jobs never did. It may be fun to list his products that failed, from the Apple III to Lisa to the Newton, but he also gave us the mac, iPhone, iPod, and iPad. He transformed the music industry and built a retail empire that hired workers and delivered superior customer face to face service. Amazing given that his products could be noted for not needing human interaction.
He taught us to "think differently" and to never give up. And he never stopped. He turned the movie industry on its ear with the rise of Pixar and changed Disney as a result. He like Walt Disney made you believe in magic.
Apple will continue to prosper as will Disney, but the legacy of Steve Jobs will be felt for some time. He taught us amazing lessons of perseverance and passion. He made us believe and to see failure as the road to success. Simply put, we should follow from his example.
He taught us to "think differently" and to never give up. And he never stopped. He turned the movie industry on its ear with the rise of Pixar and changed Disney as a result. He like Walt Disney made you believe in magic.
Apple will continue to prosper as will Disney, but the legacy of Steve Jobs will be felt for some time. He taught us amazing lessons of perseverance and passion. He made us believe and to see failure as the road to success. Simply put, we should follow from his example.
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