Has Apple "Jumped The Shark"?

Apple, once seen as the cool kid in town, has faced tons of pressure from competition in the smartphone and tablet space.  And while Apple continues to upgrade its product line, it has been slow to announce the "next new thing", a line that Samsung has used in its marketing to knock down Apple.  So has Apple "jumped the shark", that popular expression best know when Fonzie tried the stunt on Happy Days and it was regarded as the moment the show turned from good to bad.  Has Apple lost its footing and been knocked off the mountain?

"Apple continues to lead in the tablet market with 53.8 percent market share in 2012, according to IDC. It sold 22.9 million during the last quarter of 2012, compared to 15.5 million during the same period in 2011. But its mark share slipped a little from the previous year as Android increased its share with 43.7 percent of estimated 2012 shipments."  But despite the numbers, Apple may longer be as "hip" to the younger generation as it once was considered.  But then again, hip and trendy never last forever.  Stable has always had a longer life span.  But in tech geek coolness, being hip is crucial and Apple needs another "hip" product to rise again.

Latest Social Networking Link - Vine

Is your social networking apps growing?  Are you paying enough attention to your current connections via Facebook, Twitter, Pinterest, etc. or are you in need of another connection?  If you haven't had enough, then say hello to Vine.  Growing quickly on the app charts, Vine enables members to upload and share short form videos.  "It lets users thread together tiny clips into one looping six-second video, with a UI very similar to Instagram’s."  And as it comes from Twitter, it might just have some opportunity to succeed.  "And if that weren’t enough, Vine actually stands to make Twitter a more valuable company and a stronger social network. Not only does it start the process of building a bridge from platform to true social network, but it creates another stream of user-generated content for Twitter that the company actually owns."  Time will tell whether it is a short term fad or has real future to it.

FYI, it is Vine.co, not Vine.com, which may just bring this healthy living site some new uniques to their traffic.

Transitioning From Print To Digital

The print world, newspaper and magazine subscriptions specifically, is dealing with a massive change in the media landscape.  Where once they enjoyed delivering print subscriptions via the mail and door to door service, they are facing a consumer that is shifting more and more from hard copy to digital.  The direction and pace are clear, just cite the rise in tablets.  But this paid business model is also facing the wrath of competition offering free access to print content.  Where once you had to buy a subscription to The National Enquirer or Us Weekly, today you can read similar coverage on TMZ on a website or app.  As "mom" would say, why buy the  cow when the milk is free.

And that is the struggle that print media faces as they manage this transition from print to digital subscriptions and online advertising.  The costs of printing and delivery may decrease, but can the revenue continue to grow?  As there are many ways to "skin a cat", publishers have too.  "Publishing companies like Hearst Magazines, Condé Nast and Time Inc are pursuing diverse strategies to drive up digital sales, and have all seen online readership numbers rise as a result."

People will pay for content if they perceive value.  Publishers can do that with a walled garden approach as well as marketing the value of those dispensing the information.  Digital also can be valuable because of the  time sensitivity it allows; printed news is old the moment it is on the paper while digital news can constantly be updated to reflect the most current information.  Digital also enables multimedia, video and audio, to augment the written word.  As long as the consumer believes their is value, they will pay for it.

The move from print to digital will not happen overnight; but it is moving down that path at the moment.  And at some point soon, publishers will meet and pass through that tipping point where there won't be a need to print a publication at all.

Netflix Amazes, Apple Disappoints

The stock market is all about expectations; not just what is achieved but what is determined by analysts to be the results.  Meet or exceed and get rewarded, miss and watch the stock price drop.  For Netflix, a company that changed its business model from DVD to streaming, the turnaround  has achieved results far greater than analysts projected.  "That bold outlook comes at a day when Netflix beat market expectations by ending 2012 in black as well as with more than 33 million worldwide subscribers."  With a push toward original content and managing subscriber growth, consumers are once again enjoying the Netflix business. To rebound from a bad business decision and end the year with solid revenue growth.  Still the numbers demonstrate what expectations do to market sentiment.  "The company booked a net income of $8 million. That may look low when compared to $35 million in Q4 of 2011, but is above its own Q4 guidance, which topped out at $2 million."

Apple may have had record sales and huge earnings, but compared to analyst expectations, they under delivered.  Does it make Apple a less successful business, no.  They have in fact been growing market share.  But in a growing competitive marketplace, it is that expectation that they can continue to grow at an outlandish pace.  Unfortunately, that is an impossible task to achieve on a continual basis.  Apple, like Netflix, will rebound, as long as it focuses on the business and grows as an innovator in the marketplace.

Original Content Growth To Gain Distribution

The content vs. distribution scenario is a bit of a chicken and the egg discussion.  Each is symbiotically attached to the other and rely complete on the other.  So to ask the question, which matters more, becomes an endless debate.  In a cable operators' world, exclusive programming content has been key in trying to differentiate itself from overbuilders and other competitors.  And regional sports networks have been channel that  has been used aggressively in that fight.  And in the world of market share, networks fight among them selves for programming that gets better ratings than another.  In the aggregate, cable has taken share from broadcast because of an increasing reliance on original programming.

So the next fight for share is between cable and broadband.  The concern of cord cutting by cable operators is because consumers are seeking their programming content outside their distribution path.  Like cable did to broadcast, the web may take share from cable.  So as we watch history continue to repeat itself, the push for original content is coming from folks like Netflix, Hulu, and now Amazon.  "The company recently acquired the rights to Zombieland, the 2009 horror comedy that featured Jesse Eisenberg, Emma Stone, and Woody Harrelson." The more compelling, the more interesting, the more desirable, the more likely this strategy will work again for broadband distribution.  Market share will again shift down the pipeline as consumers sense a better "value" for content from these online providers.  All distribution entities will continue to survive, but space is being taken by streaming distribution in this ever changing landscape.

Sirius - Adding New Channels

In a recent announcement, Sirius is partnering with Comedy Central to create a branded channel devoted to stand-up comics.  "The companies said Tuesday that they are hoping to launch the channel this spring, preferably around April Fools' Day. Sirius already has eight channels devoted to comedy, including Laugh USA, Blue Collar Comedy, Raw Dog Comedy and Jamie Foxx's Foxxhole."  This announcement got me to thinking what else was missing from the Sirius lineup.  This move certainly adds another comedy channel, but it doesn't sound so differentiating.

My idea stems from my youth; our ABC affiliate had its audio simulcast on radio when I was growing up.  While I don't believe that exists today, I believe it would create added value on today's airwaves.  Sirius should be programming audio feeds from both broadcast and cable networks.  Missing The Biggest Loser, listen to it in the car;  want to listen to Mad Men, turn to Sirius Channel XYZ.  To me, that assortment of programming would add tremendous value to the Sirius line-up and augment interest in TV programming.  And because it was just the audio feed, it would not compete at all with cable operators; rather, it promotes interests in networks and a desire to watch the shows when you are home.

I believe the addition of cable and broadcast audio feeds would be a great benefit to consumers and the added value would support additional subscriber growth.   While it is great that they are adding another comedy channel, having the real Comedy Central Channel on the line-up sounds even more impressive.

Can Cable Operators Grow Subscribers?

Today's New York Times article looks at the new marketing push by Time Warner Cable to win back customers.  And the question is, can it be done.  "The company says it will spend at least $50 million on broadcast, print, online and direct mail ads for the campaign, which it is calling 'The Better Guarantee.'” But will they and other cable operators be able to convince consumers to return to them after switching to competitors.  While opportunities to come back for broadband and phone service is possible, the high cost of a cable subscription may make that return difficult.  Can a better service guarantee help; unlikely, as price seems to be the real motivation for consumers to switch providers.

To date, basic subscribers have been leaving at a slow but steady rate. Cost savings are real motivation; but the time involved to switch back and to be at home for the service call may dissuade households from changing unless a real cost savings is offered.  Even with a 30 day money back guarantee, consumers have become wary, especially if they have felt being mistreated in the past.  "AT&T and two satellite providers, DirecTV and Dish Network, have also ranked above the industry average, while Time Warner Cable, Comcast and other cable providers have remained below the average."

Cable operators are feeling the bite from cord cutters so this marketing campaign is a necessity to try and reduce, if not turn around their quarterly cable sub losses.  While cable operators are still finding growth in broadband and phone subscribers, cable growth may prove elusive.  Households are already using broadband to find similar programming to replace their cable, from Aereo to Netflix to Roku.  Until costs for cable service can be significantly lowered, customers will continue to migrate to cheaper services, regardless of a guarantee pledge.

Aereo Sees Content Key To Subscriber Growth

Aereo is a great example of disruptive innovation, as it challenges the current market structure with a new kind of mousetrap, one that could ultimately change the nature of the core business.  Key to what they do is take over the air broadcast signals and repackages them to stream as a subscription service to the consumer.  And because those signals are picked up without paying the broadcaster a "retransmission fee", thus keeping their content costs at zero.  Great for Aereo, but bad for broadcasters who have been getting payments from cable operators.  Obviously networks have sued because it turns upside down the current economic model, one that has been the "fastest growing sources of revenues for station owners including ABC, CBS, Fox, and NBC."

But broadcast programming is not enough as Aereo expands beyond the New York City DMA.  "I think of what’s attractive on the Internet: news and certain categories. There’s interesting international programming that’s going to come in."  But as Aereo expands, it must also consider the costs that it spends to add content to the  mix.  The appeal for Aereo for those not happy with the high costs of cable is that it provides streaming access to network programming at a much low cost, only about $8/month, to the consumer.  For households on a budget, Aereo brings a competitive low cost alternative.

Will the FCC kill the Aereo model or will they approve their business?  As Aereo has found a "loophole" that works, this disruptive approach may have a great financial impact on the network business.

Competition Restricted When Distributors Own Content

The cable industry is something of an oligopoly, few companies controlling the marketplace.  For years, your only choice for watching cable networks was to by a subscription from the cable operator in the market. In major cities, some customers have access to overbuilders like RCN offering a competitive service; across the country, if you didn't take cable, you may have opted for a satellite service like DirecTv or Dish.  In the last decade, Verizon and AT&T came out with a competitive cable service although their footprint is also quite limited.  So the choices for cable service have been quite limited.

How nice to know that Google is trying to break into that space with their own fiber footprint and have been testing their service in the Kansas City market, but the incumbent, Time Warner Cable, does not appear pleased.  So how does TWC find a competitive edge, by restricting access to programming.  As they spun off almost all of their cable networks into Time, Inc. TWC does not have much leverage, but they do own a Regional Sports Network.  And Google believes that TWC is not negotiating in "good faith" for them to put on the line-up.  And Google wants the FCC to get involved.

But this is not the first time for this kind of fight.  Back when Verizon was introducing FIOS into the Long Island system, Cablevision was accused of withholding their sports network, MSG from Verizon.  Finally, the FCC was brought in and a deal was struck.  So to will be the case for Google.  But it is the issue that a market faces when their is limited choice and access is denied for new entrants.   In cases like this, when free market is stalled, regulation is needed when it helps to promote growth.