Should Verizon Buy Netflix?

Build it or buy it may be the discussion inside Verizon these days on what to do about a movie rental business. It seems owning the wireless spectrum isn't enough, it is important to also have services to sell on that pipeline and the movie business can be lucrative.

As video consumption shifts more and more from DVD to online, so too changes the consumer preference to either own or rent. Studios pushing the sale strategy are pushing consumers with cloud ownership of digital copies with every DVD sold. And of course Apple and Amazon are there as well with their cloud strategies.

The movie rental business has been shaken up in recent months with the various missteps made by Netflix. And Blockbuster is trying to refocus their business with the help of their new owners Dish/Echostar. So now Verizon is considering making a play for Netflix and perhaps to help them re-establish their formal glory. "Chief Executive Officer Lowell McAdam told an investor conference on Dec. 7 that the company aims to move beyond its Fios TV service into the streaming-video business." And while the speculation is that Netflix is on the Verizon radar, why isn't Hulu also being considered. Hulu has indicated an interest in being sold while Netflix has not. Both require bandwidth that Verizon can support and Hulu offers a duel revenue stream of subscription and advertising. Plus Hulu doesn't have the burden of mailing DVDs and could support a theatrical film streaming service expansion.

Yes, I like the idea of Verizon pursuing a streaming distribution strategy. I just wonder if all the baggage hanging over Netflix will not allow them to recover and prosper again. My vote is for Verizon to consider a Hulu acquisition but should it be Netflix, the first order of business would be to roll back the pricing model, market to all former customers with an additional special incentive, and consider rebranding. How does NetFios sound?

Don't Write Off The Kindle Fire Or Amazon Just Yet

Today's New York Times' article might have left you feeling that Amazon's Kindle Fire was a failure. Sure there are complaints but that is not unheard of in this new unknown space. The tablet is still a very young product that has yet to reach its full potential and first generation problems can be cured if Amazon stays front and center with its customers. Empathize with them, recognize the inherent problems and come back ASAP with solutions; some may need to be short term fixes, others long term changes, but by being honest and agreeable with the customer, Amazon will retain them and continue to grow their share of the business. "Despite Amazon’s silence on the matter, analysts have been estimating the company will sell from three to five million Fires this quarter."

Amazon still needs to speak up loudly. Again history being a guide, how Tylenol quickly reacted t their packaging challenges many years ago enabled them to survive through a PR nightmare and remain a dominant brand. It is that truthfulness and commitment to act that can save or bury any brand. Even successful companies have made missteps. "All this would be enough to send some products directly to the graveyard where the Apple Newton, the Edsel, New Coke and McDonald’s Arch Deluxe languish. But as a range of retailers and tech firms could tell you, it would be foolish to underestimate Amazon." In fact, as many have seen, we learn much more from our failures than from our successes. Unfortunately some companies are not as quick to manage their mistakes. Look no farther than Netflix and the troubles they have had.

Amazon and the Kindle brand have built a ton of loyalty over the years just as Apple has had with its products. Communicating with that audience and managing that trust in a proactive way while resolving technical issues is the ultimate PR cure. Especially as articles, like the one in the NYT, appear. Otherwise, the opinion in the article's first two lines will be recited over and over again as fact..."The Kindle Fire, Amazon’s heavily promoted tablet, is less than a blazing success with many of its early users. The most disgruntled are packing the device up and firing it back to the retailer." And that is not the kind of perception Amazon wants to have floating around.

TiVo Having A Good Month

TiVo seems to be all over the news these days with more and more good news regarding its distribution. Earlier this month came word that DirecTv was pushing its TiVo box and now the rollout of TiVo on Charter in the Fort Worth system and full rollout by June 2012. This deal was announced almost one year ago so it is nice to read that it is actually available in market. "Charter-branded TiVo PremiereCharter's TiVo DVR will be $20 per month; during a limited promotion period, subscribers can get additional TiVos for $10 per month for 12 months."

"For TiVo, attracting subscribers through operators including Charter and DirecTV is critical to its future. For the quarter ended Oct. 31, TiVo gained 117,000 net subs, thanks to the rollout of a TiVo-based box by the U.K.'s Virgin Media -- its first net gain in more than four years." These US deals should give TiVo another strong quarter. As a TiVo fan, I look forward to seeing them drive distribution across the other major cable operators.

ABC Putting First Season Shows On Web

There always seems to be a little hesitancy when it comes to making TV shows available outside its linear time slot. Before web video, it was on demand and networks were extremely cautious about offering their best shows on this new distribution platform. When on demand first was offered, cable operators were lucky to find scraps of shows that networks were willing to offer. Some may argue that contractual issues prevented networks from placing shows on demand; most others were fearful that on demand would take eyeballs away from ratings and thus hurt their financial success. But there were some cable networks willing to take a risk with on demand. Some actually offered sneak peaks of their first run shows prior to their linear time slot. The result, audiences grew and ratings didn't suffer. Today we have more sophisticated research to show viewership and build ad revenue, but it has taken years to gain acceptance.

But technological change doesn't stop and the growth and demand for more online video runs rampant. So it is great to read that ABC is using the power of the web to grow interest and ratings of its first run series. "Looking to give a promotional push to two promising series, ABC will make their entire libraries available online over the next month. All episodes of new first-season shows “Once Upon A Time” and “Revenge” will be accessible on ABC.com or through the network’s iPad player." Especially for episodic shows, a great opportunity for new viewers to catch up and get engaged with the show.

Online can also provide better targeted advertising that appeals to the viewer. More interest, more viewers, and more revenue. Today's primary audience, Adults 18-49, are spending more and more of their time on their digital devices - laptops, iPads, iPods, and iPhones. Getting them to discover new TV shows is tougher given the clutter of choices that exist. Bringing shows to them online is the first step in re-engaging with them where they are most likely to view. I look forward to hearing from ABC how this digital tactic has worked to build stronger viewership and interest in their shows.

Is Research In Motion (RIM) For Sale or Going Bankrupt?

What is the long term future for Blackberry? Once the darling of all businesses, it has lost its edge to both the Apple iPhone and other smartphone devices. Blackberry has not adapted fast enough and it allowed others to successfully takeover its space and market share. In addition, it's take on the tablet market with the release of the Playbook demonstrated that they did not understand the needs of the consumer. "We are still shocked the Playbook does not have native email functionality". What is obvious is that RIM behaved like other market leaders; they were set in their ways, adverse to risk, and unable to innovate against its rivals.

So the question is what will happen to RIM. Analysts don't seem to believe that RIM is an acquisition target, although they continue to see a depressed stock price. But what if a company was kicking the tires on the maker of Blackberry and could build some synergy to advance themselves in the mobile marketplace. Google took that step with Motorola. So let me throw out one name offered to me this morning. Could Microsoft benefit from purchasing RIM? Blackberry still has its feet in the market and there are loyalists to the product. Microsoft has the operating system and as my friend speculated, Windows 7 could be built into the next generation of blackberry products. A risky purchase given the trajectory that RIM is headed but fresh legs through acquisition might just allow it to survive and prosper again. Food for thought as the mobile industry continues to expand.

Verizon and Cablevision Fighting Again

Even when I am not looking at the TV, the moment a certain music bed is played, I know that it is the Verizon FIOS ad regarding Cablevision's slow broadband speed. Then I look up to see a closeup of eyes moving in circles with the VO ..."Are you suffering from cable...vision." As an ad, it is memorable because of its unique music, copy, and video; but is it accurate? It seems it may have been true in March of this year but not anymore, not since Cablevision upgraded its plant. "According to Bloomberg, the suit states that the study was conducted before an upgrade of Cablevision plant boosted performance significantly. The Bethpage, N.Y.-based MSO said its average download speeds are more than 90% of advertised download speeds during peak hours and are above 100% of advertised speeds on a 24-hour basis." Yet, at this point, the ads are still running.

And while Verizon fights with one cable company, it has agreed to partner with three others as a result of a wireless transaction deal. At some point in the next three years, Comcast, Time Warner, and Bright House will be able to sell Verizon Wireless service packaged with a cable subscription.

Lastly, the fight between Verizon and Cablevision may not be as simple as it seems. It's not just about broadband speeds. Although MSG and AMC Networks are no longer owned by Cablevision, they do share a common family ownership. Lack of deals for the hi def channel of certain networks may have raised the notch for nastiness in this latest battle. And as the ad has successfully caught the consumer's attention, it simply spreads more salt into the wound between these two telecommunication giants. Who will win; perhaps, the damage is already done.

Every TV Seems To Need A Connected Box

The days of turning on a TV set and turning the knob to different channels are long over. Our kids have no idea what a UHF or VHF channel is and only use one button on the TV set for on and off. A channel is locked on to one frequency and then the work of the other box begins.

So how many different connected boxes are attached to your set? Of course there is the cable converter box offering us HD signals and perhaps even a DVR. Others love their TiVo box for recording shows and some have even gotten CableCards to access cable programming. Those that need their programming to follow them outside the home have attached a Slingbox to their set. And some have unplugged themselves from this cord but still need the connection to the web for their over the top boxes, including Roku. And with every new one you buy, is one finally unplugged? Perhaps you have added a Blu-Ray but disconnected your DVD player and your VHS player was removed years ago. And for the gamers in the family, a connection is needed for the Xbox, Wii, Playstation 3, or even a classic Atari (although I hope not).

And TV manufacturers have tried to incorporate connectivity to the web so homes can access their Hulu Plus or Netflix subscriptions through the TV directly and not through another box. But it seems there is a need for an external box whether we like it or not. Perhaps Apple should update their Apple TV box with Siri and enable it to talk to all the other boxes that connect to the TV set. Then at least we could reduce the number of remotes on our coffee table.

Can The Xbox Replace The Cable Box?

It seems today that every TV needs some type of box next to it to make it function better. In the early days, that box controlled the antenna which tried to tune in the best reception possible. Since then, the cable box has been the standard device to deliver a quantity of channels. But truthfully, the cable box has improved little in the eyes of the consumer and its clunky guide and search has hurt it. So is the Xbox the next box to take over our TV viewing?

"Beginning on Tuesday and continuing through the month, Microsoft will give a face-lift to its Xbox Live online entertainment service that will allow subscribers to watch a wide array of mainstream television programming from the Xbox 360 console." So if you subscribe to Xbox Live for its gaming interface, you can begin to choose whether you want to watch programming through its box or your cable box. Since Xbox requires an internet connection and owners likely also have a cable subscription, it may simply be redundant. What may sway users from using one device to another is in its access to guide and search. "Xbox Live users will be able to search for shows using voice commands and hand gestures, if they also have the popular Kinect peripheral for the Xbox."

Voice control via Siri is likely the next big news from Apple although it is not yet clear whether it will be in their existing Apple TV device or a newly manufactured TV set. Still where that programming comes from and how much is readily available is a big if.

In both the Apple and Xbox world, the missing component is the DVR. Will the Xbox enable shows to be copied for later use? Will Apple add a hard drive for DVR capture in their device? Is DVR still important in an on demand world? Certainly not everything is available on demand and customers still like the idea of ownership. "The Xbox is just one of many devices, including iPads and smartphones, on which cable operators and channels are making their content accessible. TiVo, for one, has announced a string of partnerships with cable operators to make its digital video recorder available to their customers. Unlike the Xbox, TiVo users get full access to all of the offerings of TiVo’s cable partners, Mr. Rogers, TiVo’s chief executive, said." But what if TiVo struck a deal to put its software in every Xbox.

In our household, the Xbox and cable box serve two different uses. The Xbox is playing video games and online chats with friends playing at the same time. The cable box for sit back viewing. While integrating the two boxes reduces the number of connections in the back of the TV set, they clearly have two different uses. And in a big household, two sets allows one to be used for gaming while the other is used for viewing shows. The Apple approach of simplifying search through voice may be more ideal for those just seeking the viewing option.

Will DVD Sales Rise From A Link With The Cloud?

When was the last time you bought a cassette tape? When CDs were created, no one tried to sell you a cassette with every CD you bought. Most likely because you were still buying a manufactured item. But with the rise of digital and now the cloud, the need for manufactured CDs and even DVDs is less and less. Yet, it seems that companies aren't ready to breakaway completely.

The rise of UltraViolet and in the UK, Blinkbox, is still being tied to the purchase of a DVD. All with the hopes of improving a dying distribution model. And while this strategy may lengthen the product life, the patient will eventually die and be buried. Such as it was for the 8 Track, the cassette, and soon the CD and DVD.

For the short run, a dual purchase makes everyone happy. "This is a fascinating link-up between atoms (DVD) and bits (streaming). The added value of the dual option could drive more plastic-disc sales at the checkouts." Ultimately, the customer no longer seeks to clutter their homes with jewel boxes of various shapes and sizes when their digital devices both store and play. The arrival of cloud based storage enables access of this same content wherever and whenever you want, although it requires that wireless access is present.

How long will this shared model last? The speed of adoption of tablets indicates that this process should only last a few more years at best. Notice that no tablet comes equipped with a DVD or CD reader; even laptops are being built without the hardware. Change is a coming and like the Laser Disc, the DVD will also become part of our history.