Higher Cable Bills Encourage Cord Cutting

Whether it's the appeal of over the top distribution platforms or expensive cable bills, consumers are cutting off their cable bill. Time Warner Cable's quarterly report echos what other cable operators have been seeing a decline in their cable subscription business. At the same time, internet subscription has been rising.

Frankly, part of the problem comes from us as consumers; we have a growing appetite for more. Whether consuming food, cable, or apps, we are not satisfied with what we have; we want even more. And perhaps it is time to go on a diet. Asking for more is not always a problem - more bandwidth, faster internet speeds - sometimes we should just go on a diet.

And perhaps that is what cable operators may have to start to consider doing. Going on a diet with the number of cable networks on the line-up. With the average cable networks' license fees rising 3.5% annually, those costs are being forced on to higher cable bills to consumers. Cable operators are starting to look at ways to either move basic cable networks to higher, separately priced tiers, for consumers to choose to buy or not, or to consider the unthinkable, dropping cable networks. The latter is probably much harder to do but as contract renewals come up, certainly a consideration.

But where to cut? Does a network with a Nielsen rating less than .5 get pulled? Does a Network group get told we are only taking your top 2 or 3 channels? How many movie networks does a channel line-up need, or general entertainment networks, or women's networks, and yes even sports networks. As Networks have grown up they have broadened and spun off niche networks that have broadened and spun off their own niche networks. Perhaps it is time for cable network consolidation.

Certainly cable operators are being faced with the unenviable task of deciding what to do with their cable packages to retain subscribers. In today's economy, cost is clearly a factor. But once we get back to economic prosperity, no doubt gluttony and the desire for more will comeback again. And that being the case, networks and operators could hold out and not make any of these drastic cost cutting moves in the short term.

Content Always On And Available...Not Always

Pulling a page from the Disney marketing strategy, Warner Brothers has decided that the best way to create need is to create want. This is being done by pulling film titles out of general circulation so that a renewed desire is created. Disney has been successful at pulling their animation films out of circulation only to re-release them to a new audience. They have repeatedly done this, the most recent being the re-release of "The Lion King" in 3D. A DVD re-release is soon to follow. A whole new audience got to enjoy this film in a whole new format. And for little marketing cost, Disney saw a huge return.

Now it is Warner Brothers' turn with the Harry Potter franchise. With DVDs everywhere and the films constantly being played on ABC Family, it seems time to hide them away for a few years and build some new want for the movies. Can these movies, aimed at an older audience than Disney films achieve the same kind of renewed demand. It certainly is a strategy worth testing. At the same time, the concern could be that this franchise could be usurped by another franchise. As there are no new Harry Potter books to come out, audiences may prefer to watch other more relevant book to movie titles. Percy Jackson are you listening?

Could Siri Be The Brains Of The Apple TV?

With the death of Steve Jobs and the release of his biography comes word that Apple has been working on building a new kind of TV set. No official word from inside Apple, but a ton of speculation around what could be the neatest thing to hit TV sets, voice commands. Just as Siri is taking the iPhone to new heights, rumors are that Siri could also be the extra pop in the next evolution of TV manufacturing.

It makes me think of old Start Trek movies. Scotty speaking to the pc, "Computer,get me...". So why can't we simply get the TV to first recognize our voices and then reply as we address it. "TV, turn the channel to Bravo" or "TV, record all episodes of Saturday Night Live." "TV, display DVR recordings or TV, search web for Daily Show clips". No more remote. No more buttons. All voice commands. Siri may just be the future of TV.

Will An Internet Sales Tax Change The Consumers Use of E-Commerce?

A research question popped into my head as I watched Amazon report lower earnings and see its stock price drop 10%. Sales were up but profits dropped due to higher spending on production, technology, and acquisition. So the good news is that consumers enjoy shopping online on Amazon and other websites. And it made me ask, would consumer spending change should an internet sales tax ever be established. Certainly some states already charge a sales tax and California is pushing one, but for the most part, we save money by not paying tax with our purchase. In fact, when I purchase online, I also see if shipping is free as well, another factor in deciding whether it might be cheaper to simply drive and buy at the store.

What economic impact on internet spending would result if an internet sales tax was established? Obviously we would continue to make digital purchases online, music, videos, and of course, books. But would we continue to buy material goods through the web if the cost (with tax and shipping) actually exceeded what it cost from a store? Would Amazon and other web retailers' profits suffer even more?

Today's politicians are discussing new tax models and an internet sales tax could be one of those pieces of their puzzle. And while an internet sales tax might bring in additional revenue, it might also act as another barrier to our economic recovery. An e-commerce sales tax may sound like an easy solution but it might also come with many consequences.

Smaller Cable Co-op Seeking TV Authentication

The big cable MSO's aren't the only ones seeking a TV authentication model, so cable subscribers can access programs on non-TV devices. The smaller cable operators want the same thing, too. The NCTC, Costco for the smaller cable operators, creates deals in bulk with cable programmers. The more customers that take the network, the better and lower the license fee costs. So as a next step, the NCTC "has launched a plan to create a centralized authentication platform for multi-screen services like HBO Go or those planned around the the 2012 Summer Olympics in London." And per the Light Reading article, they are trying to build the service from the ground up rather than buy or latch on to another.

But the challenge that they will really need to work through will be the content deals associated with TV Everywhere. Unfortunately, these same networks will not be humming the Jessie J song Price Tag:

"It's not about the money, money, money
We don't need your money, money, money
We just wanna make the world dance,
Forget about the price tag"

Rather, each network will be asking for incremental fees to enable access to content. Some will offer on demand only, others may be willing to deliver a linear feed. But they each would like additional monies.

Ultimately though, content companies have to buy into TV authentication as a condition of maintaining an audience. Without TV authentication, subscribers will be more inclined to cut the cord and leave cable, reducing the total license fees that cable networks receive. At the end of the day, it's about the money. Subscription fees have hit the wall and customers are getting tired of paying more for cable.

Don't believe me. The perfect example is happening in the news today. Netflix a few months ago raised their prices to a point that caused widespread disenchantment with the product. The result, Netflix lost 800,000 subscribers. TV authentication is a means to give customers another reason to remain loyal to their cable provider. But if the price continues to rise, loyalty will erode, just as it did for Netflix. At the end of the day, it is about "the money, money, money".

We Still Use Cellphones When We Drive

Despite laws and fines, I continue to see people talking on their cellphones while they are driving. One woman refused to make the turn at the left turn light because she was too busy chatting. And my beep to remind her that the light was short and others behind her and me also wanted to turn, was met with the flipping of the bird. But her cellphone and driving use is not unique; people make and receive calls, read and write texts, and perhaps even surf the web. I have been guilty of cellphone use in the car and my wife has cured me of that habit. We are now always connected, but sometimes we should unplug.

We have gotten so comfortable being in an always on world, that we forget that it is sometimes to our advantage to be off the grid. For drivers it is the safety of the road, for them and us, and for users, it is not social media to engage when others are trying to engage us in person. Yes, I am guilt of that too. We look down at our cellphone rather than in the eyes of those that are talking to us. Socially wrong, yes, but not illegal.

Driving and using the cellphone is illegal. But whether it was or wasn't, it is simply unsafe. For ourselves and others on the street. We don't have to be always connected. And if we must, pull over and return the call.

Businesses May Want Their Cable TV, Too

It seems that Time Warner Cable, and hopefully other cable companies, have figured out that businesses want more than phone service. With their entry into digital phone, cable companies have been able to compete with the tradition phone companies for business service. And cable has been able to offer more than just a phone line with internet and cable television part of the triple play. So it would have been natural to assume that Time Warner Cable and others have been actively pursuing businesses with the triple play proposition FOR YEARS! Yet this article seems to indicate that this push is only a recent push.

Truth be told, I am not too sure how many businesses want cable TV. In the age of pushing workers farther and getting more hours out of employees, TV, like the internet could be seen as a distraction to work. Yet there is a value to put TVs in conference rooms and waiting areas. But do companies want to show more than basic broadcast? A basic connection may be more than enough for businesses, with little upside to sell up higher digital and premium packages.

"In addition, Time Warner Cable, unlike its telecom rivals, has no mobile phone offering. That could make a difference down the road as competitors bundle smartphone service with the rest of their business package." As mobility takes center stage, cable will have to fight back with its own wireless play. Today, that push has been with WIFI, but a cellular network for mobile is also essential.

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.