Can Wal-Mart and UltraViolet Save The DVD Industry

The movie industry has enjoyed  a long history of selling  first laser disks, then VHS tapes, and DVDs to consumers seeking to build a personal library of content to watch at a moments notice.  But the rise of on demand and streaming content has made the concept of ownership less necessary.  Add to that the space a video library takes up on bookcases and the idea of ownership on digital devices or in the cloud becomes far more convenient with much less clutter.  And as consumers, there is less of a need to buy a DVD player with the rise of digital access to video content.  


When my kids were younger, we made sure our car had a DVD  player with screens in the backseat to entertain during long trips.  Today, that system is unnecessary.  Instead, we have iPads and iPods to provide that personal entertainment platform.  And they can each watch what they want..  No DVD  required.


But like all of us, we tend to be reluctant to embrace change, preferring to hold onto it as long as possible till it is too decomposed to even recognize it any more.  Do stores even sell VHS tapes anymore?  So how much life is left in the DVD industry and is it time to quicken its death or prolong it through UltraViolet?


Companies like Netflix, Apple, and Amazon are moving forward on a digital only strategy.  But Wal-Mart is still staying the course and working together with UltraViolet to push a dvd/cloud partnership.  " Wal-Mart is launching a disk-to-digital service, aiming to drive adoption of Ultraviolet, and DVD purchases, rather than lower-margin rentals, and to prevent piracy."  As long as consumers are expected to buy a physical DVD, I don't expect it to succeed.  Why buy a disk only to immediately throw it away once the digital copy is accessed.

Can UltraViolet exist post DVD?  With the rise of multiple cloud services and digital being the platform of choice, the movie industry may best be served selling itself to other retailers unless it can come up with a compelling approach to make UltraViolet a better consumer choice.  For now, perhaps it deserves a better brand name.

Intel Wants To Enter The Cable Distribution Field

Google wants to sell its Motorola set top box business; Cisco wants to sell its S-A set top box business as well. And Apple wants to build a TV set to manage TV content without a box.  Now comes Intel with its own plan to build a box and its own web-based cable TV platform.  The end of EBIF technology perhaps and the rise of web based applications.


"The entry of Intel -- with its large bankroll -- into over-the-top video would add another potentially serious competitor to traditional pay-TV services, as consumers face a growing number of options for receiving video content over broadband from the likes of Netflix, Apple, Amazon.com and others." There sure is a lot of change in the cable landscape occurring these days.  But what each of these companies, Intel included, lacks, is the wireless platform to run it.


Cable built there TV business first and now the pipeline used is capable of delivering TV, internet, and phone. And customers rely on this pipeline for the web.  So what broadband stream will Intel and others use to get content through their box and onto the screen?  And what will the access cost be to the consumer?  Because if the cost for buying access on top of the course for an Intel box is higher than traditional cable, customers may be reluctant to switch.  


The other concern for Intel, Apple and others will be the cost to acquire content.  Cable operators enjoy best, lowest rates because of the number of subs they cover.  For start ups to traditional cable programming, their license costs per sub will most likely be higher.  And  that will not help them to bring a competitive offer to the consumer.  


For those two reasons, lack of a broadband pipeline and higher costs for acquiring content, may be what ultimately stops them from competing effectively.  The solution, for Intel and others, may be to work with cable operators, and not to compete.  For now, all we can do is sit back and watch.

Movies - Own, Rent, Subscribe, Watch With Ads - Many Choices

Theatrical films have been enormously impacted by the web.  Not so long ago there were clear and easy windows in which a newly released film would exist.  Start in the theater and then a year later find itself available for purchase on VHS.  Wait another  few months and the movie made itself to a pay service like HBO or Showtime, and then finally it hit commercial TV, with commercials finally inserted into it. Depending on how likely we wanted to watch the movie, we may have watched in the movies and then waited for its TV airing to see it again; or we missed the theatrical run, rented from Blockbuster, and enjoyed it for a week before returning it.  Old favorite films like Godfather or Star Wars would capture our attention each time they returned on the air.

Today the windows are far shorter and harder to distinguish.  Theatrical films can show up as DVDs just a few months later and find themselves available to rent on demand.  Cable networks sometimes bid more for a film so that it bypasses Pay TV and hits the air much sooner.  And the creation of digital copies and cloud ownership means that exclusivity windows become harder to enforce.  "New technologies, like iCloud, are making these conflicts more obvious, pressuring traditional media businesses to rewrite their agreements. Movie studios want consumers to buy more digital-movie downloads as DVD sales shrink and digital rental and subscription services, from which studios earn less, gain traction."  

Even the notion of the cloud has gotten fuzzy.  Apple has its cloud, Amazon a different cloud, and the movie studios are trying to rollout their own through UltraViolet.  At the end of the day, the consumer only cares about where they can find a movie and how effortless it can be to view it.  If they want to buy it, they will; if they want to rent it, they will seek out that option.  If they want to watch it with commercials because it is there at the moment ready to watch, they will do that too.  And while the pay channels may seem to be most affected, they have not been blindsided.  They have been seeing this trend for a while and it has been their motivation ( as well as Netflix), to diversify into original programming, in order to remain competitive and ahead of the problem.

Broadcast Networks Don't Want To Be Free

Broadcast networks, ABC, CBS, Fox, and NBC, would like to have the FCC change its rules and allow cable operators to encrypt their signals.  They together argue that enabling encryption will actually improve the delivery of their signals and improve innovation of digital content delivery.  And for the cable operator, it would reduce bandwidth issues and improve security.  But is it also good for the consumer?

"Critics of the rule change contend that putting MSOs on parity with other providers by allowing basic-tier encryption would force consumers to rent set-tops and limit choice, because they would no longer be able to receive "clear QAM" digital TV."  Still, it is all about serving content to authenticated consumers.  As long as broadcast networks also offer over the air, digital signals, then these channels can still be fully accessed by non cable subscribers.  In an ideal world, all broadcast channels would have a web presence, enabling a live linear feed of its programming to any consumer via the internet. Content that is geographically limited, like NFL football games, may need to be blocked, but typical network programming should be accessible and available regardless of a cable subscription or not.

Should Apple Buy Barnes & Noble?

UPDATE:  Former Cablevision chief financial officer Mike Huseby is the new CFO of  Barnes and Noble. There has been some suggestion that his expertise is in spinning off and selling companies.  He was involved with Cablesvision's spin off of MSG and AMC.  Whether his role is to get the company ready for sale or for growth remains to be seen.


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The recent announcement of the new iPad from Apple and constant wondering what Apple's next steps might be, pose an interesting speculation, should Apple buy Barnes & Noble.  What would Apple get?  How about a retail presence on over 600 college campuses.  Over 700 retail stores around the country.  Additional access to content publishers, the Nook e-reader, and greater impressions and presence in the marketplace.

If Apple truly releases its own TV set, it would likely want to sell them within their own retail environment.  B&N could be that retailer.  And if any company could transition a book retailer into a major digital player, it is Apple. The idea may be out of box, but isn't that what Apple is known for.

Netflix - Can't Beat Em, Then Join Em

It seems that Netflix has made a decision that TV Everywhere means also getting onto the cable platform.  Now CEO Reed Hastings is going the route of being added as potentially a subscription on demand choice on the cable line-up.  Similar to HBO or Showtime, but without a linear line-up attached  to it.  For cable consumers seeking more content, Netflix could provide a low cost addition, or simply be duplicated with what is already being offered by the cable operator.  Ultimately, Netflix's differentiation, like that of its pay TV rivals, will be in the original programming it is building to offer.

Does this move help to increase the distribution of Netflix?  I'd like to know what percentage of Netflix customers are also cable subscribers?  Is Netflix truly missing a potential audience or is it that the consumer likes that Netflix is a la carte and not tied into a cable subscription?  Pay cable subscription is already crowded with HBO, Showtime, Starz, and Epix.  It is hard to imagine that there is more to gain to try and be the fifth wheel.  Being outside the cable box with more maneuverability may just be the differentiating factor that keeps Netflix strong.

Another Cable Box Could Bite The Dust

Have we all seen the news where the father shoots his daughter's laptop?  Well now it seems the two largest set top box manufacturers want to kill off their set top box business.  First Cisco announced its plans to rid itself of its S-A boxes, now Google announces that it will also rid itself of the Motorola set top box business.  "Google is looking to unload the set-top box business it will inherit from Motorola Mobility even before it closes on the $12.5 billion acquisition, The Post has learned. ... And at least two other smaller cable-box players, Pace and Thomson’s Technicolor, are also expected to test the marketplace by putting their businesses on the block, sources said. Once the main conduit to the couch, the clunky cable box is viewed in many circles as an obstacle to a newer generation of software and devices capable of integrating TV and the Web."

Consumers have long hated how poorly the cable box managed accessibility, search, and channel surfing.  Latency issues, clunky interface, unfriendly, the set top box was hated even before the internet showed that there were faster, easier, and smarter ways to find, search, view, and even share videos.  The loss of the traditional set top box might just enable cable operators to seek out means to better integrate their service with other devices that are also internet connected.  Tivo, Roku, Apple, XBox and even TV manufacturers themselves all come to mind.

Will cable operators see the light and work closer with these other companies or will they decide to partner up again and buy up the S-A or Motorola set top businesses?  Frankly not a smart move but one that may be considered.  But if history is any guide, just ask Canoe Ventures, a set top box partnership will only delay the inevitable.

Cable VOD Could Be Much Better

Today's Paid Content article offers great insight into cable's problem with VOD.  While streaming content flourishes, cable VOD remains underutilized and lacking its full revenue potential.  "Simply put, at a time when consumers are actively sampling on-demand programming streamed via the internet, they aren’t exploring the VOD options that exist on the cable services embedded in their living rooms." 

The reasons are obvious.  First, there is less current content.  Shows that premiere on linear channels are slow to populate on VOD.  Second, search remains slow and clunky.  The interactive menu guide looks more like a Prodigy dial up window screen and lacks any ease of use, especially against today's internet streaming guides.  Third, any advertising is more intrusive than interesting.  Pop up ads cover the screen and are hard to dismiss.  And lastly, box issues cause latency, freezing, and interruptions.  Put all together, it creates a poor user experience.  For me, my on demand TV viewing is helped by the DVR; still it requires proactive work to record in advance of the show airing. 

Can VOD be fixed?  As the web has built a friendly system to access and view, consumers are seeking ways to access and stream to their connected devices.  Apple's future announcement could throw another wrench into the current cable VOD problem.  Perhaps the fix is for cable to truly embrace web streaming of its VOD library.  Better search, faster speeds, recommendations, can all help.  And as far as revenue growth, more targeted advertising that doesn't overly clutter the show that is being watched.

Measuring TV Viewership Much More Complicated

Ahhh...the good old days of TV ratings.  Send out a survey books, ask households to tell demographic information about themselves, and to recall the shows they watched and who in the family watched them.  Mail back the form, aggregate and analyze the sample data, and predict what the whole nation watched.  Add phone call sampling to the mix and get a quicker sense which shows were watched.  But today it is no longer that simple.
Today there are a ton more viewing choices, linear views on broadcast or cable, DVR views, and On-demand views.  Households watch shows no longer live, but also hours, days and perhaps even weeks later.  They watch on televisions, computers, tablets, and smartphones.  And as each view is a digital click, they can be measured and analyzed.  And because all these devices affect ratings, their order and popularity can continue to shift. 

As for advertisers paying to get their commercials viewed with content, there are limitations.  "Total popularity does not perfectly correlate with profitability, however, since the networks all agree to sell ad time based on a metric called “C3.” It measures the average viewing of the commercials within a show within three days of the first broadcast, so it excludes people who wait to watch Wednesday’s “Modern Family” until Sunday or Monday."  Certainly the push is on to extend the time period, but until then, advertisers can consider  those extra views bonused; unless of course, that  impression is simply built into the price of the spot. 

The data may more accurately tell who has the TV on.  Whether they paid attention to the spot remains to be seen.  Certainly, the more creative the commercial, the more likely there will be buzz and views around it.  The Super Bowl ads certainly demonstrate that.