Postal Service Declines The Result of Digital

We all have seen the decline of the US Postal Service as, like any government organization, has high costs and lack of innovation.  And despite their motto to deliver through all types of bad weather, it is in fact the technology environment that has taken the biggest toll.

The quantity of mail flowing through the system keeps declining with the rise of online connectivity and consumer acceptance with the web.  We don't write letters to our family and friends, we send e-mails.  We don't mail our checks to the credit card companies, we pay online.  We don't send as many birthday or anniversary or get well cards because of the speed and ease of social media.  In fact, why send a birthday card when Facebook tells me who's birthday it is today and offers me a quick link to send them some birthday wishes.  I write less checks, I send less cards, I write less letters, I buy less postage stamps.  The world around the post office has changed while the institution stays the same.

So it should come as no surprise that  the Postal Service has decided to lower its costs and adapt to less quantity of mail by reducing its workload.  "The U.S. Postal Service plans to stop delivering letters and other first-class mail on Saturdays beginning Aug. 1, although packages will continue to be delivered."  I am confident that this change will go over with barely a whisper.  Most important mail is delivered digitally.  Packages of any importance don't have to rely on the US Post Office when Fed Ex and UPS are also on the job.  It is a big change for an institution that "started Saturday delivery in 1863."  But as much as we may want to weep nostalgic, change is the only constant/

Hulu Leads Free TV Streaming

"Hulu leads the market for free streaming television services in the U.S." When I read that first line, it took me a moment to clarify this achievement from others. So among streaming providers of television shows offered for free to viewers to watch, Hulu ranks first.  At the same time, viewers are also willing to go directly to the networks' websites to stream shows as well.  And while Hulu led with 43% of TV show streams, "CBS (CBS), the only major broadcast network that does not provide its content to Hulu in the U.S., was second in total streams last year, with 10%."

When you look at TV show streams from subscription based services, Netflix is number one.  In addition, the number of streams are equally split between paid and free TV content.  So where is You Tube in the mix; obviously, You Tube is much more about short form and UGC clips and so was not compared in this study. And while this study does not indicate whether this TV streaming usage has grown from the year prior, it most likely seems that as more TV content finds itself to the web, the number of streams is increasing as well.

Apple iPhone Is Top Smartphone

The new Blackberry is coming, Samsung has the next best thing, but at least for the last quarter, Apple sold more smartphones to lead the market share.  "Apple shipped an estimated 17.7 million phones in the U.S. in the fourth quarter to score a market share of 34 percent. Those numbers were a healthy rise from the same quarter in 2011 when Apple shipped 12.8 million phones and captured a 25 percent share."  Samsung was close behind with 32% share.  Yet despite leading the market, Apple's stock price plunged.  For it is not what you have done that impresses the market, but what you are expected to do.  And as the leader in the space, the only real direction is down. 

Many cite the loss of Steve Jobs, their leader for the problems; others, the lack of innovative products since his passing.  But could Steve really have put another rabbit out of his hat?  As George Costanza of Seinfeld fame knew quite well, its best to leave after your witty remark, at the top of your game.  Jobs did just that and Tim Cook, CEO of Apple may not have his "next big thing" ready to release.  It is why there is so much tweaking of newer iPad, iPhone, and iPod products.  And why there is so much hoping that an Apple TV set could deliver the goods.

For now, enjoy the fact that apple smartphones have the largest market share.  "Though Apple had reason to cheer last quarter, Samsung was the top dog for 2012 as a whole in both shipments and market share. And Apple's latest surge was certainly buoyed by strong demand from holiday shoppers. So Samsung could easily take back the crown this quarter."  And with the new Blackberry on the shelf, the race just keeps on going.

CableCard Distribution Rising

The news out of the cable industry is that CableCards are being deployed at a higher and higher rate.  Year over year, CableCards have grown by 8% to non-cable boxes like TiVo, and the top 9 cable operators saw CableCard deployment increase 22% to their own set top boxes.  "CableCards, developed by CableLabs, provide authentication and encryption to access cable TV programming."  

So that news means that more homes are using set top boxes. At the same time, most of these same top cable companies have also reported declines in the number of households taking a cable subscription.  So what does that mean?  More cards, less homes; obviously, the conversion of cable plants from analog and digital requires that every TV set needs a set top box to unscramble the programming signals.  This the increase in CableCard deployment is simply that, the requirement that more boxes be deployed in the field so all the TV sets in the home can watch cable TV.  If anything,the research may simply indicate that the average home has multiple TV sets.  Good to know.

Is HBO Go On Apple TV A Big Deal?

Would someone explain to me why having the HBO Go App on the Apple TV device is a big deal.  "Adding HBO to the lineup of Apple TV services including Netflix Inc. (NFLX) and Hulu Plus may help the iPhone maker bolster sales of a set-top box that has faced stiff competition from similar video-delivery devices from Roku Inc. and Microsoft Corp.."  But wait, don't I already have an HBO Go app on my iPad and iPhone.  And since I need a cable subscription to watch HBO, I most likely have a cable set top box since one is required on every set to get channels as well as on demand.  So while it may sound great that Apple TV has the service, unless HBO enables a consumer to buy an HBO subscription WITHOUT going through a cable provider, I am less impressed.

Cable Fees Add Up

In Les Misérables, the storekeeper's big number extols how to get more money from the customer, "charge them for the mice..." and all the other "extras".  In the airline industry, baggage, food, and perhaps soon, pillows and blankets, all cost extra.  For the cable industry, the big extra is the cable box.  As cable operators transitioned from analog to digital, TV sets all required a cable box to connect the cable wire to the TV set and unscramble each channel's signal.    More TV sets to connect in the home, the more cable boxes to rent, the more revenue per household.

In the past, Comcast offered "special adapters and that those adapters - two per household - would be free."  But not in Philly anymore or perhaps anywhere.  These are not the big boxes, the ones that access on demand or can DVR programs, or even pause and rewind the show being watched.  These low level adapters simply unscramble signals.  More costs to get access to what was once free to the consumer.

But perhaps this is just one more tipping point to move from big screen to tablet, from connected to wireless.   As costs rise, consumers will be less likely to want to connect more TVs.  Bedrooms will be more likely to find laptops and tablets, then TVs, for consumers to watch content.  It may even cause consumers to more quickly cut their cable cord.  It may be an attempt to grow the revenue stream and improve the profit margins of cable, but it may also lead to more detrimental results.

Netflix Is A TV Network

With tomorrow's launch of its premier series House of Cards, Netflix could be considered a TV network.  While it does not yet have a daily news show, I wouldn't be surprised if that was in their future.  What they do have is a mix of old and now new TV series.  First comes House of Cards, second is Arrested Development, and more is certainly in the pipeline.  Couldn't this describe a TV network.

In the infancy of cable TV, reruns were the staple of a network's programming wheel.  Each charged a monthly license fee that the cable operator passed on to the consumer, and each tried to find an advertising model to build a second screen.  With revenue growth came investment in original series, first just one to test the waters and then more as each series brought more and more revenue back to the network.  So now it is Netflix following the same cable strategy.

Unlike a cable network, Netflix is using the web to talk build a business model directly with the consumer.  With a monthly fee of $8, Netflix costs more than many single cable networks, but acts more like a cable operator in providing a library of content that exceeds what any one network could offer.  And consumers have been willing to pay the fee as it can be less expensive than a cable subscription.  Netflix hopes that offering exclusive original series, like what a cable network creates, can successfully bring more subscribers to their world.  Bring a successful ad model to augment subscription fees and Netflix will be a true competitor to cable.

You Tube Likes The Subscription Model

The formula that cable networks have masterminded, a dual revenue stream from advertising and subscription, has been quite successful.  So much so that even broadcast networks moved from "must-carry" basis to license fee to take advantage of subscription revenue.  Hulu and Amazon have each built their own subscription models as well.  So the news that You Tube wants to enter this world should not only been expected, but one could wonder what took so long.

Per the news, "YouTube has reached out to a small group of channel producers and asked them to submit applications to create channels that users would have to pay to access. As of now it appears that the first paid channels will cost somewhere between $1 and $5 a month, two of these people said."  Will consumers seek out these services and can You Tube prove the value?  Obviously, if the content is proved compelling, unique, and different enough to justify a fee, consumers will embrace it.  Selling unknown content, unlike Hulu and others selling known shows, may make the value harder to prove.  Others have used well known actors to entice views. So building a pay model is possible.

On the other hand, consumers may feel beaten down that they are asked to subscribe everywhere they go.  Cable continues to own the market and adding a TV everywhere approach to extend its content to multiple platforms helps to maintain their dominance.  Hulu, Netflix, and Amazon are building out successful models too.  With the right content, As You Tube and others add  to the mix, fragmentation results and the landscape looks cluttered until a tipping point occurs.  Ultimately, the big fish will eat the little fish and the fewer survivors will remain.

We Are Media Multi-Taskers

Do you multi-task?  Watch TV as you read the newspaper, read a book while listening to music, or at the very least drive and change radio stations?  Then you probably surf the web and watch TV at the same time, too.  So this research news should come as absolutely no surprise, "A new study from KPMG finds that 60% of American television viewers are devoted multitaskers, watching TV and accessing the Internet at the same time."  We seem to have short levels of attention and the web is a perfect distraction to active TV watching.

Many companies are hoping that we will multi-task with second screens that are connected to the TV and augment the content that we are watching; in some cases, like a live sporting event or awards show, we might align screens.  But it seems to me that most of the time, the two screens are doing different things.  From reading emails to playing games or checking on websites, we keep one eye on one screen as the other plays on.  Add another person into the room and into the equation and our heads are probably spinning as we concentrate on each activity.  Thank goodness the cable box has a pause button.

The other research finding confirms that more people still like to watch video on their big screen TV.  The flexibility of smartphones and tablets are great, but when it comes to long form programming, it is hard to beat the big HDTV screen.