You Tube Following Darwin's Law

The investment in tons of content for You Tube appears to be over.  It is "eat or be eaten" for more than half the content projects that You Tube funded.  "YouTube figures it will end up re-investing in up to 40 percent of its original channels by the time the renewal process is done."  So who gets picked and who doesn't?  Well most likely it just takes a look at Google Analytics and ad revenue generated over a period of time.  But should the  decision be all quantitative or is there something to be said for a good idea.

As broadcasters have come to know, not every series does well immediately out of the gate.  Some, including Seinfeld as a great example, need time to get discovered and enjoyed.  A little nurturing of the right content can go a long way.  And of course the costs associated with getting an idea on air.

But what is Google's true plan, is it to cut its total investments by 60% or take the total dollars and offer to the fewer content companies they are extending renewals to?  Is content creation still part of the You Tube strategy or do they have another direction in mind?  Certainly working the long tail of content may be a difficult one compared to usage generated from folks like Hulu and Netflix who each aggregate content from major broadcast, cable, and movie studio providers.  And perhaps there is more need to focus on a competitive subscription service.

As for the near future, we will let Darwin continue to rule and watch the more successful You Tube Channels survive while the others must either find alternative funding to stay afloat or go away.

Comics Go Digital

Comic Magazines seem to me to be a lost art. As kids find more colorful comic on the web, the desire to regularly buy the latest print editions seem an activity for past generations.  Still, our comic book characters continue to perform extremely well on the big screen.  Just look at The Avengers, Iron Man, and The Dark Night as a few examples.

It is time for the content of comics to merge with the digital generation.  "DC Comics is making all of its periodical comic books, like Superman, Batman and Wonder Woman, available digitally through Amazon, Barnes & Noble and Apple. With those companies all launching new tablets, DC clearly sees them as an important platform for reading comics."  Congratulations comic book fans.  Let's hope that DC takes advantage of the interactivity that also comes with digital.  At the same time, those stores still devoted to selling print copies better start to diversify their inventory to stay in business.

With the rise of more tables of different sizes into the hands of more consumers, comic content fits especially well. That tablets can do a terrific job of presenting this artwork in full rich colors can add a new appreciation to the material.  From zooming further into the picture to enhancing detail, the digital platform seems a real win for both consumers and DC.

Connected TVs and Online Content

With the quickening growth of internet connected TVs and the rise of content available online, consumers are finding it easier to cut the cable cord and focus on the broadband stream.  "Nearly 600 million televisions will be connected to the Internet by 2017, which is up from the 212 million expected at the end of this year, according to a new report from Digital TV Research."  Add to that the recent announcement that CBS has finally agreed to a deal with Hulu to provide its programming for digital streaming and TV programming is now more accessible to consumers without a cable connection. 

Consumers are buying these devices, from smart TVs to tablets and smartphones so that they can easily access content, print, audio, and video.  As it becomes easier and easier to watch full length shows and movies over the web, the need to subscribe to cable depends on the value the household derives from the subscription.  With each price increase, that decision gets revisited.   

It is easy to spot the trend, the question is when does it level off and at what level will cable subscription land.

 

More Cord Cutting Confirmed

Today's Wall Street Journal echos what Time Warner Cable reported, the loss of quarterly video subscribers.  Cablevision, Charter, Dish, Comcast, and others are all reporting sub losses.  The only exception for this quarter is DirecTv and they may be benefiting from subs switching from cable to a lower cost provider.  And it is apparent that this redistribution of video subscribers will only continue until costs for cable are reduced.

Cable Video Subs Dropping for Time Warner Cable

Whether we choose to believe that cord cutting is the reason cable operators are losing subscribers, the truth is that they are.  The high costs of a cable subscription service coupled with the cost for broadband access and hardline telephone service means that users are taking it all, dropping all services or cutting back.  And with a high cost to subscribe to cable services, the decision to drop the service when budgets are tight can be an easy one.  Especially as we rate our broadband access higher than cable. 

For Time Warner Cable, the proof in this loss of video subscribers is found in its quarterly earnings statement.  "Time Warner Cable lost 140,000 residential video subscribers, more than the 128,000 that analysts had estimated. The cable provider also added fewer Internet and voice customers than analysts projected, a sign Time Warner Cable is struggling to market the correct bundles of services to its customers, said Paul Sweeney, an analyst at Bloomberg Industries."  So while broadband and phone is showing gains, video is not.  But Time Warner Cable is not alone.  other cable operators are facing the same results.

Costs are most likely to blame.  As consumers find themselves spending more time on the webthan in front of the TV, the value proposition has changed.  And while consumers would prefer a lower cost cable bill, paying for the channels they watch, programming agreements make it difficult for cable operators to carve out lower bundles of service or offer a la carte pricing.  As Dish customers learned, if you can't watch The Walking Dead on AMC, you can watch episodes on the web.  And it is that transition that is hurting video subscriptions for all cable operators. 

We have become show watchers, not network watchers.  We barely know what network a show is carried on, especially when we DVR it or watch on demand.  We search for the show, not the network.  And as these shows are offered on Hulu, Netflix, and other platforms, we can choose the best platform value for our household to watch on.  Unfortunately, costs of service continue to rise.  And as consumers seek lower, cheaper ground to watch from, eventually, the costs to watch on these new digital platforms will rise as well, and consumers will eventually transition again. 

Current TV A Good Buy For A Digital Website

The USA Today article on Current TV makes a terrific argument for digital content to be multi-platform.  With Current TV up for sale, a likely buyer could be a web brand seeking to expand its presence through cable TV.  Sure, CBS could use additional cable networks to add to its roster.  Why they spun off Viacom always seemed a questionable move.  And other cable networks would love to have access to 60 million homes although any owner change could affect distribution.  But additional buyers should come from the web, according to Michael Wolfe, USA Today writer. 

"For the likes of The Huffington Post, Vice, TMZ, The Daily Beast, Gawker, BuzzFeed, CollegeHumor, Deadline Hollywood and Business Insider, Current TV could finally be a way to real money. These enterprises, having built major digital brands, now find themselves handicapped by digital business models."  His rationale, while web properties barely showed a profit, if any, Current TV "took in $101 million with nearly $12 million in cash flow."  Yes, there is still money in TV advertising.

Huffington Post/AOL seems a likely buyer.  With a streaming channel on their website, they could provide this additional content to cable homes and grow their audience substantially.  To be successful in this digital world seems to require being accessible across multiple platforms.  Cable networks have been able to use the web to share its content, both as clips and full shows. TMZ has gone the other direction, moving from a web presence to syndicated programming.  Success ultimately comes from being available across multiple platforms to reach an audience wherever they are.  While streaming media is making its way to the smart TV, full blown cable access, preferred by many still, may be the best way to grow both revenue and profit.  And for that reason alone, Current TV could be a great asset to the right media company.

Is Microsoft Buying Netflix?

With the release of their tablet, Surface, Microsoft may feel the need to have a content strategy, too.  For Apple, it is all about iTunes; for Microsoft, the rumor is that they are thinking of acquiring Netflix.  "Meanwhile, buying Netflix would be in keeping with Microsoft’s revamped philosophy on the Xbox 360, which treats the device more like an entertainment device and less like a video game console."  How Microsoft can use this for their competitive advantage remains to be seen.  Netflix has had a difficult time growing its streaming business while its DVD business drops.  That Microsoft can bring something new to Netflix is a big question mark. Netflix plays more like an agnostic player while Microsoft needs a content partner that can specifically make its own devices look and act superior.  My guess is that this is all rumor and not a strategic possibility.

All Hail The DVR

The must-have device in the home, it just might be the DVR.  For those of us that like to watch our shows on a big screen TV, the DVR is the ultimate device to watch what you want, when you want, and to be able to fast forward through the commercials.  In my home, the DVR is used regularly, except for watching news and sports.  Well, it seems my family is not alone.  " If the digital video recorder were a network — with you, the viewer, as chief programmer — it would rank as tops among total viewers and in the key young-adult demographics."  According to the report, DVR usage has jumped 30%, year over year.  And to measure the success of a TV show, it is now crucial to include  viewing post live, up to 7 days after the initial broadcast.  Sometimes longer in my household.

Of course the DVR requires us to be proactive.  To seek out and set a show or series "taping" in advance.  Yes I still say taping even though no real tape exists.  Blame my previous use of the VCR.  Still, it requires advance notice.  And when a time shifts due to unannounced changes in the schedule, the result is a missed recording.  Networks don't seem to care, they seem to purposely have their show run a few seconds if not a minute or two longer just saw the DVR misses copying the end.  Ultimately, each recording needs to be manually extended to try and catch the entire program.

Sometimes, the back up is the on-demand service that is provided.  For networks that have enabled their shows to be available on-demand, viewers have a second means to watch their shows.  Sometimes though, operators are required to disable the fast forward features so that we are required  to sit through the ads played.  Luckily the ad inventory seems to be less than on live TV; for now.

So all hail the DVR, our resource to watch TV on our schedule and not the networks.

New York Times Sees A Digital Lift

The New York Times seeks a similar strategy as Gannett, pursue the digital business while managing the decline of print.  If costs can be contained, a leaner company can also be a stronger one.  With that, the NYT saw a double digit increase in digital subscriptions.  On the other hand, "Print advertising at the company’s newspapers, which include The New York Times, The Boston Globe and The International Herald Tribune, shrank 10.9 percent, and digital advertising across the company fell 2.2 percent."

Pushing great, exclusive content, only available behind a paid wall, that is of value to the consumer, should propel the company forward.  As more and more tablets get into the hands of more people, the desire for content becomes greater.  Marketing to these consumers the value of a digital subscription is essential.  Getting them to part with their hard earned dollars is necessary, especially as there is also so much free content to consume as well.  For those, like me that have grown up on the NYT, the value proposition to digital is an easier one to make; for the younger audience, the push to compete against other news outlets for share of the digital market may be a bigger challenge.