More Consumers Not Watching Traditional TV

Nielsen released a recent study that is detailing just how much cord cutting has been occurring in the last 6 years.  According to their report, more than 5 million homes in the US don't have get cable or over the air TV service.  That number has more than doubled, from just over 2 million homes in 2007.  Described as "Zero TV Homes", these households tend to be younger than 35 and have no children.  "The main reasons 'zero TV' consumers cite for not having pay TV or receiving broadcast TV are cost (36%) and lack of interest (31%)."  So what do these households do for entertainment?

Not surprisingly, most actually own a television set and use it to connect to devices to watch from the internet.  Others let their computer screen be their source for entertainment.  Cable companies may not be worried as this group represents less than 5% of total US households.  Some may still subscribe to a cable company for broadband access only.  Still it is indicative of a growing trend.  With cost as a primary driver for dropping TV service, they may be harder to win back even as they grow older and have families.  With more reliance on internet programming and better programs available online, the interesting movement to watch will be just how quickly this "zero household" group grows. 

Nook Needs Exclusive Content Partnerships To Succeed

Barnes and Noble has announced new content partnership deals for its Nook tablet to help build up its library of content offerings and compete in the marketplace.  "The new partnerships deals involve Lions Gate Entertainment Corp. (LGF), MGM Holdings Inc., Viacom Inc.'s (VIA, VIAB) Paramount Pictures, Relativity Media, National Geographic, Little Pim and Film Buff."  Content is King and the strategy of building content is important to the success of their business plan.  But it is a very competitive landscape and others are doing exactly the same thing.  So if the strategy is to level the playing field against bigger names like Apple and Amazon, it may not be enough. 

The success of a content strategy, in my humble opinion, is in the exclusivity of content offerings that are created.  In the over the top (OTT) world, Netflix and Amazon have been investing in exclusive content to compete with cable.  Even in network and cable programming, the channels that have the better programming gets the ratings and the ad dollars.  It also enables leverage to the channel and its positioning on a cable operator's line-up.  Taking the cue from these other related industries, B&N must find its exclusivity to effectively compete with the Nook, whether in the general marketplace or in niches. 

A few off the top ideas for B&N to consider.  Exclusivity with magazine brands for an exclusive window of release ahead of general release.  Exclusivity of e-textbooks for college classrooms.  Even exclusivity of TV shows or movies.  Consider exclusive gaming and other apps that make the Nook as differentiated as possible from other devices.  At the end of the day, a me too strategy will not be enough for the Nook to succeed; other tablet libraries are already larger and B&N will have a hard time to catch up.  In my opinion, it will be differentiation in niche market offerings and content exclusivity that will most grow the Nook brand.

Has Facebook Gotten Boring?

Question, are you still a Facebook fan?  Do you go on as often as you did 6 months ago?  Are you posting as much as then?  Or have we all gotten a little bored with Facebook.  I ask because today another change is being made to the Facebook screen.  "Reports from various technology news sites expect Facebook to introduce a new image-enhanced version of the News Feed for the Web and for mobile phones"  And while they tell us that users are posting more, I am skeptical.

Perhaps it is because I represent an older demographic and I am seeing less postings from myself and my "friends".  I still check my Facebook, but I find myself doing it less and less.  I think it has become most useful in easily wishing others Happy Birthday on their special day.  But I have become less enthralled by it.  I just wonder if I am alone in that point of view.

I do like keeping up on my friends and their activities, where they are, what they are up to; but I feel that the clutter from suggested posts and other ads make it harder to get to what I really care about.  Sure I like to play the games through Facebook, but I don't feel the need to either share my score with the world or know what word a friend may have played in a game I am not competing with them in.

I may not be completely over Facebook, but any changes that only build more clutter may just turn me off for good.

Time, Inc. To Split From Warner Bros.

Last month, I speculated in my blog that once Time Warner spun off most of its magazines to Meredith, it should change its corp name back to Warner Brothers.  Well the deal with Meredith appears to have fallen through so step two is to split apart the two companies.  Goodbye synergy; print and video no longer make good bedfellows. "CEO Jeff Bewkes said that the spinoff would allow Time Warner to 'focus entirely on our television networks and film and TV production businesses.'"

True, print media is having a difficult time as it deals with its transition to a digital format.  But the content that is created for print has incredible value in a digital world and combined with video from the network and film side of Time Warner, the makings of great stickiness and revenue generation.  Breakups are never easy.  Now the Time, Inc. side of the business must rely on its own video abilities to augment the value of their brands through these digital growing stages.  The challenge of proving that a growing revenue model exists and that these print brands will succeed in the digital future may have been too tough for Time Warner.  Patience is a virtue but given Time Warner's need to grow profitability, that patience no longer exists.  Synergy cannot be found to make the marriage last and so divorce is forthcoming.  "Time Warner said its goal was to complete the deal by the end of 2013."

Where acquisition was once the name of the game, Time Warner has determined that divestiture is the future.   They spun off Time Warner Cable a couple years ago and now it is Time, Inc.'s turn.  Smaller, more agile, and hopefully, more profitable for the remaining entity, Warner Brothers.

Is Apple Finally Launching A Streaming Music Service?

It's one thing to offer downloads, it's another to offer a subscription service.  Why Apple has been slow to enter this space is unclear, but Apple may be reconsidering.  "Apple Inc has held talks with Beats Electronics LLC, the audio technology firm co-founded by influential hip-hop producer Dr Dre and music mogul Jimmy Iovine, on a potential partnership involving Beats' planned music-streaming service, three people familiar with the situation told Reuters."  

It is time for Apple to announce a full fledged subscription service - music, video, info - available across its product line.  As Apple has never worried about cannibalizing its current offerings, there should be no fear that a subscription service may affect download purchases.  The iTunes store will continue to survive and thrive.  And an Apple subscription service guarantees a measurable monthly revenue stream, something Wall Street would be pleased to see.  

Can we expect movement quickly?  It seems that Steve Jobs had been considering before his death.  "(Jimmy) Iovine said Jobs didn't want to pay the record companies enough, and thought the price would come down eventually."  The resurgence of music, thanks partly to iTunes, shows that not to be the case.  It seems that now might just be a good time, given recent stock performance, to pull the trigger and announce a subscription service. 

Media Has A Social Soundtrack

Great article in Huffington Post from Deb Roy called "Television's Future Has a Social Soundtrack"  As Twitter and Facebook enable immediate sharing of our thoughts and concerns, it provides great social measurement of events in our lives.  Since television offers us a window to the world, from presidential debates to award shows, from the Super Bowl to The Walking Dead, the second screen enables social commentary to share with the world.  "Just in the United States, tens of millions of people are talking to each other as they watch TV. This year's Super Bowl alone spurred over 24 million tweets."

Count me in the group.  I tweeted as well during the Oscars and enjoyed reading others' snarky tweets.  It also added to my engagement in the show I was watching. And as Roy points out, social media opens us up to other viewpoints and feedback. It also provides an expertise and recommendations to new programming.  "Hearing chatter about a show is becoming a common way to discover new programs and decide what to watch."  

This "social soundtrack" becomes for the user an important added value to our viewing behavior.  " If you are not part of the soundtrack yet, chances are that you will be soon."

The Fragmentation Of TV Sports Networks

No doubt that the cost of monthly cable service is becoming a major concern for households.  For some, it is becoming expensive to the point where consumers are cutting the cord and relying on the web for their video entertainment.  One of the biggest contributors to the cost of cable is sports programming.  License fees for sports networks are among the highest expenses for the cable operator.  And of course those fees get passed on to the consumer.

Sports programming also attracts an audience that offers more advertising opportunities. So where once sports was only found on broadcast channels, programming has pushed down to national and regional cable networks, as well as to the college and high school level.  And from a few sports networks, now we have many.  ABC has the leader in national sports with ESPN while NBC and CBS has been pushing forward their networks as well.  Now comes Fox Networks trying to build out their own national sports net.  "Fox has spent months working to convert Speed, a motorsports-centric network with 81 million subscribers, to Fox Sports 1. A companion service, Fox Sports 2, will replace another niche channel, Fuel."

But it is more than just national sports networks, the regional nets demand their monthly fees as well. NY has YES and MSG, Philly has Comcast Sportsnet, Boston has NESN.  And don't forget the rise of networks from the professional leagues as well, including the NFL Network, MLB, And NHL.  Even TBS and Turner get higher fees for their carriage of basketball and baseball.  College sport fans can also enjoy watching their teams on the Big Ten and Pacific-12 Networks.  And MSG has a network devoted to high school sports.  Is their fragmentation?  No doubt. 

Ultimately the costs of fragmenting can only lead to trouble. As costs of carriage rise, consumers will have a hard time paying for all these channels. At some point consolidation must occur as larger segmentation returns.  But that might take some time.  

Can The iWatch Save Apple?

First came talk of an Apple TV and now the push is on for an Apple iWatch; bottom line, is there another product in the line-up that can restore Apple to coolness and pull back up the stock price?  According to unconfirmed reports, the iWatch is coming with some valued features.  "Features under consideration include letting users make calls, see the identity of incoming callers and check map coordinates, said one of the people, who asked not to be identified because the plans aren’t public. It would also house a pedometer for counting steps and sensors for monitoring health-related data, such as heart rates, this person said." 

Would the younger audience even where a watch?  Would the older demo replace their current watches for an Apple iWatch?  For me, I am probably more likely to wear a watch then wear a pair of Google glasses.  Heck, I despise wearing the 3D glasses in movie theaters.  Wearable computers are certainly the fashion of the future.  But perhaps we should take our cue once again from Star Trek and look instead at a device that also acts like a pin.  If Captain Kirk wears one, maybe we should too.

NBC Considering Linear Distribution With OTT Providers

As companies have learned, sometimes you need to cannibalize the product in order to continue to grow.  Apple was willing to push iPhone sales knowing that it would cannibalize on iPod sales.  And NBC may be considering a similar strategy, cannibalizing on current distribution to achieve greater growth and hopefully larger revenue.  That means offering the linear feeds of its broadcast and cable channels to internet platforms. 

And there certainly would be takers.  Apple has been considering an Apple TV set for years and getting NBC channels distributed would add value to their efforts.  "Intel, for one, has publicly discussed plans to launch an over-the-top pay TV service in 2013 and says it has approached major programming providers." Sure NBC's cable arm Comcast has a large percentage of the US cable geography; still offering it to an internet platform would provide more access to the entire country, beyond the communities that they currently cover. 

The challenge would be for NBC in the agreements with distributors already in place.  There are most likely most favored nation (MFN) clauses that might interfere with offering their networks to IP platforms.  There might also be higher costs for carriage making the networks more expensive for the consumer to purchase.  But it could also be the first step in unraveling bundles of programming to consumers interested in cherry picking the channels they wish to watch.  That Comcast/NBC is "negotiating several 'full freight' requests" might just legitimize the next phase of network distribution in the IP world.