NYT Transition Difficult But Profitable

No one said that change was easy. But if one doesn't continue to change and adapt to internal and external forces, then one will surely wither on the vine. For the New York Times and other print content companies, it is recognizing that digital is supplanting print. Simply look at the number of iPads and e-readers being manufactured. With Apple, Amazon, Google, Microsoft, and yes even Barnes & Noble putting dollars into digital tablets, consumers will only continue to purchase more devices and want more content to power them. Content companies that sell quality content to these devices should only benefit.

And The New York Times is capitalizing on digital. The transition is painful and much work is needed to grow, but they seem to be going in the right direction. Profit was up for the last quarter and "it’s continuing to make progress on its metered paywall, saying that it had 324,000 paid digital subscribers—compared to 224,000 in Q2—along with paid and sponsored relationships giving the NYTimes.com over 1.2 million digital users." Through subscription and advertising growth with this exclusive content, NYT can continue to be a leader in media. They should consider capitalizing further with this customer base with e-commerce activity to add another revenue stream to the mix.

Where the NYT has had issues, beyond the natural decline of print subscription, is with About.com. About is a terrific website but it has seen intense competition, both from other how-to websites as well as from viral You Tube postings. And it is hard to be a generalist when there are many other sites narrower in niche and more robust. Just sampling the site, it is easy to see that some pages are dated. A page on Baltimore wasn't updated since December 2010, 10 months ago. About has an amazing history, but it needs a facelift to remain relevant for the future. Like it's parent, it needs to change and adapt.

Ultra Violet Brings Cloud Competition

It's time to take the fight to the "clouds" as in storage, streaming and downloading. With Apple and Amazon developing their own cloud platforms, "a consortium of large Hollywood studios, gadget makers and retailers" have been also backing UltraViolet, a cloud storage locker to enable movie ownership across devices. Their hope is that combining the physical sale of a DVD with a digital copy will reinvigorate the DVD industry. But they are running in third place as Apple and Amazon have each released their own proprietary cloud product. And neither require a DVD purchase to own a movie.

To date, each have their unique pros and cons and the Wall Street Journal has a nice chart differentiating each service. Obviously too, cloud competition is in the nascent stage, with not enough movie content or device choices and flexibility to stream and/or download. As this business grows. more content will become available. I also expect that content deals will start to include exclusivity over one cloud than another, just like what Amazon has done with DC Comics and their digital graphic novels. If you can't differentiate cloud service by exclusivity and other unique attributes, then you are left with price wars. The studios and other content creators don't want that.

Can UltraViolet succeed against Apple and Amazon? Only if consumers once again want to embrace ownership of DVDs. The DVD manufacturers that have signed on to UltraViolet might be upset if a DVD purchase was no longer required. Will consumers embrace the cloud experience? Certainly the push is on and the iOS 5 system on the iPhone and iPad include an iCloud subscription. But I should tell you, I recently uploaded iOS 5 on my iPhone and have deleted my iCloud account. It seemed to have caused a faster draining of my battery life and so far, without it, I am seeing a longer usage. As we depend on our devices to do more and more, power consumption and longer battery life must become the next priority.

Are QR Codes Working? Maybe!

As a marketer, QR codes were meant to drive engagement with print materials and validate through analytics the appeal of print. For consumers, QR codes gave their smartphones more functionality and returned more relevant information. They were the secret source that put print and digital into the same room. Today's newspapers use QR codes to give more detail behind the story and ads include QR codes to drive prospects to their websites. But are these ugly squares of lines and shapes successfully transforming the business?

This article written in iMedia Connection actually defends QR codes. And while the title of the piece may assume otherwise, consumers are aware of QR codes, how they work, and how they can be of value. The problem is not with the consumer using QR codes, but with the advertiser and marketers relying on them as a tactic. "Instead of placing a QR Code on an advertisement at the last minute, marketers and creatives need to incorporate codes into a campaign during the early stages of development, and they must do so from the consumer's perspective, not their own. Just these few best practices alone can help boost consumer interaction and response rates."

An interesting read, especially as smartphones continue to become the de facto phone in our daily lives. And as phones can more quickly capture and translate these QR codes, engagement will improve as well.

WIFI, Embraced by Jobs, Competes With Telco

Terrific opinion article in this morning's Wall Street Journal that should be a must read by the FCC and DOJ. I never knew the impact that Steve Jobs had on WIFI, but I am certainly not surprised. He recognized the impact that mobility had on society and embraced it in his devices. And what I learned about usage did surprise me. "Notice, for one thing, that the biggest deliverer of data to smart phones and related devices isn't any of the wireless carriers. It's Wi-Fi, which accounts for 33% compared to 8% for AT&T and 18% for Verizon."

So as the DOJ fights AT&T in their cellular acquisition efforts, they forget to consider that competition comes from more than one source. Our wireless usage comes not from cellular but from WIFI. And with cable companies offering WIFI coverage and competition being offered by Lightsquared, does the consumer have to worry about AT&T Acquiring T-Mobile?

Ultimately, we should let the market figure out ways to enable competition to grow. Too much policy restricts and does not encourage innovation. But I think the article says it best, "In other words, let's have a little more faith in technical and contractual innovations to manage our growing bandwidth demand while Washington engages instead in a more orderly rethink of spectrum policy."

iOS 5 Upgrade Problems

My wife and I had two very different problems upgrading our iPhone 4 to the new operating system. My download and install took multiple hours. My wife's install was faster and then the screen locked up and iTunes demanded a backup password. After two hours of multiple attempts and Google searches, we ended up losing all her data in order to turn her brick back into a phone.

Do we like the new features of the iOS 5; I especially like the pull down menu and info on the locked screen. But I am experiencing a significant drain to my battery life. By the time night time approaches, the battery is at 5%. That is 15% lower than what I normally see on a typical day of usage. Last night, I deleted my iCloud account just to see if that would result in an improved battery life. It reinforces that the next notable improvement in technology must be a quantum improvement in battery life.

Will this stumbling block with iOS 5 upgrades hurt Apple? The bells and whistles resulting from the upgrade are great. Apple should respond and correct these installation issues ASAP. Regardless, customers are still looking forward; to the release of the iPhone 5 and iPad 3.

The Challenge Of Owning Content And Distribution

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.

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.

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.

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.