Dish Wants Spectrum

It seems that Dish is very intent on acquiring spectrum to extend beyond its satellite delivery.  Not only have they put a bid for Sprint/Clearwire but they are also bidding on the assets of bankrupt Lightsquared.  And Dish remains in the hunt with Sprint.  "Dish Network’s month-long attempt to acquire Sprint Nextel moved a step forward Monday after the wireless giant said it had received a waiver of various provisions in its merger agreement with Softbank that would allow it to conduct due diligence discussions with the satellite TV service provider." 

Of course both acquisitions come with hurdles and may take years to help Dish compete more effectively in the wireless space.  And the biggest challenge, overtaking the current leaders in the broadband and cellular space.

Target Adds Streaming Media To The Business Plan

The retail giant Target knows that to compete with Walmart in the brick and mortar space and Amazon in the online space, you have to offer competitive markets.  But with an early jump in streaming media, Target was left behind.  Till now.  "Target is currently testing a service called Target Ticket. According to a Web site running a beta version of Target Ticket, the service is providing 'instant access to 15,000 titles,' including new releases, classic movies and 'next-day TV' shows."  And Target will not only find themselves competing with the above group, but add also Apple, Netflix, Redbox,  and others to a growing list of distribution platforms. 

Like Amazon Prime, Target might use its branded credit card business as a means to incent usage through loyalty.  But Target will also learn that they not also need to increase the size of their inventory but look to exclusive windows and original content to better and more effectively compete.  Of course all this talk is about a beta test.  Where Target goes and how aggressively they choose to roll out such a program remains to be seen.  Still, the blending of physical and online stores continue to demonstrate the trend of retail to compete effectively in the marketplace.  And that is why Target needs to enter this space. 

Broadband Hurt By Lack Of Competition

David Carr's article in today's New York Times shares with us a new book.  "Susan Crawford, a professor at the school, has written a book, 'Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age,' that offers a calm but chilling state-of-play on the information age in the United States." It is unfortunate, but true, that there is a lack of broadband and wireless competition in this country and as any good economist can tell us, monopolistic industries tend to cause higher prices and less innovation.  As Professor Crawford shares, "that the airwaves, the cable systems and even access to the Internet itself have been overtaken by monopolists who resist innovation and chronically overcharge consumers."

When the concern was once about telephone, the government forced the break-up of AT&T into the Baby Bells.  One baby bell ended up owning AT&T while the other NYNEX became Verizon.  Cable, too has seen its share of consolidation with two cable operators owning a majority of franchises and two satellite providers.   But government intervention to force breakups is clearly not the answer.  That stopgap proved temporary at best.  Rather the solution is to simply encourage new broadband and wireless infrastructure to be built.  Google is trying to become a player but is currently in just a couple markets.  Lightsquared tried but is now in bankruptcy.  Clearwire is looking for a partner either with Sprint or Dish.  But are these few enough?

Other utilities are already touching the home.  Water, electric, and gas companies are all connected to the home.  Could government support encourage these utilities to expand into the broadband field?  The cost to build broadband infrastructure is expensive, communities continue to fight back the rise of cellular towers.  But if we are pushing to be a wireless, always on, society, then more competition and more improvement in the speed of the networks are desperately needed.  But government's support of new entrants does not appear likely.  According to Professor Crawford, "And because telecoms and cable companies have done a great job of developing relationships in Washington — as a business, it is more generous in terms of donations than the banking industry — there is little pressure from politicians or regulators."  And that spells bad news for consumers.

US Open Tennis Moves To Cable

We have seen the rise of regional and national cable sports nets, we have watched more and more sporting events move from free TV to cable.  Our NBA Playoff games are now on TNT, our Monday Night Football on ESPN, and boxing on HBO and Showtime.  Broadcast networks have let the cable networks rule the sports programming niche.  And so it should come to no surprise for anyone that the US Open Tennis final matches will move off CBS to ESPN.  Already weekday matches are found on ESPN and Tennis Channel, so this move only brings all the matches to one network.

Moving high profile sports events off broadcast to cable also helps cable operators and the cable networks.  These events are not likely to available to non-cable customers on the web and so it encourages consumers to stay subscribed to cable.  Sports may be a niche, yet there always seems to be a sports fan in every household.  Adding another signature sports event to cable only makes it harder to cut the cable cord.  Of course, the high costs of these programming events causes licenses fees to rise and subscriber fees to rise with it.  So at some point, the cost to view will become too costly for a larger and larger audience.

And so where does that take this trend?  Well don't be surprised if within the decade, a major sporting event is available as a subscribed PPV event.  It logically follows as the next way to capture a higher revenue stream.  As costs for rights skyrocket and old media outlets unable or unwilling to buy, new sources emerge; regardless, ultimately, the consumer will end up paying more. 

What If The Cable Providers Owned Hulu?

Today, Hulu is owned by three cable/broadcast networks - NBC, ABC, and FOX.  And according to reports, they can't seem to agree on the strategic direction of the company, free or subscription.  Most likely, because of the nature of the deals they also have with their cable distribution partners.  Jason Kilar, the founder of CEO is no longer running the show and the partners have been discussing plans to sell.

So while a number of names have been bandied about, now comes word that Time Warner Cable was interested in purchasing it.  Perhaps, too, the Comcast side of the NBC family would want to stay invested and work with TWC on the next stage of Hulu.  If owned by cable distribution companies, the thought is that Hulu would be used to provide content authentication for cable.  Possible, but a sure fire way to end the subscription side of the Hulu revenue business model. And ABC is already moving forward with its own authenticated streaming app for live programming.  If I were running Time Warner Cable, I would rather want to build my own TWC authenticated streaming app so that my brand remained front and center to the consumer.  That my own air line-up was linked to the app and that it was ergonomic in design and simple to use, both for search and recommendation, and for advancing the TV Everywhere concept.  I don't believe a Hulu acquisition delivers that to TWC or Comcast.

And while TWC may have their own reasons to wanting to buy Hulu, others are also kicking the tires.  "Last month, former News Corp. chief Peter Chernin was reported to have a $500 million bid for Hulu, which he helped found in 2007. Bloomberg reported earlier this month that Yahoo CEO Marissa Mayer was exploring a bid for Hulu as she looks to reignite Yahoo's online video strategy.  Amazon.com and Guggenheim Partners reportedly have also shown interest in Hulu."

Turner Follows ABC With Authenticated Live Streaming

Following on the news that ABC will be releasing a live streaming app of its broadcast network in local markets, TNT and TBS have announced a similar venture.  "TBS and TNT are about to become the first national entertainment networks in the industry to stream on-air content live across multiple platforms 24/7, including through the networks’ websites and a pair of newly created Watch TNT and Watch TBS apps."  As national cable networks, Turner (parent of TNT and TBS as well as other cable networks) doesn't need to contend with local broadcast affiliates, which adds wrinkles to the ABC streaming approach. 

Still, they need to revise their cable agreements to support this streaming initiative.  Which cable and satellite networks have signed on board remains to be seen.  But with a Summer launch of the apps, Turner still has time to negotiate deals.  I just wonder whether this addendum comes with any asks on the part of the network or various cable operators.  For operators, streaming brings great added value to the subscription service, but it may hurt local ad sales from lower cable viewership caused by viewers leaving the TV set and no local insertion advertising on the live stream.   Of course it could be argued that these live stream apps also help reduce churn and keep subscribers paying their cable bill.  A tricky negotiation for both sides to support a much asked for TV Everywhere environment. 

Viewers Love To Stream And They Love Their Mobile Devices

According to bandwidth management supplier, Sandvine, consumers online streaming continues to grow.  And not surprisingly, consumers are not just watching on their hardwired devices via broadband, but are actively using WIFI in their homes to stream content to their mobile devices.  And smartphones and tablets have enabled consumers to increase their video viewing habits.  "Median usage more than doubled – from 25.5 MB to 58.7 MB over the past year."  A healthy year over year increase and one powered by the availability of more and more content accessible online.

The players in the online streaming space are well known.  Per the tone of the article, Netflix remains at the top of the pile while others are also in the mix.  Also that more long form video is being consumed via mobile devices accessed through WIFI; as the study notes,  consumers are more accepting of this platform for their long term viewing.

This is good news to those content creators that presented at this year's digital upfronts.  Consumer demand for more long form streaming content is growing and users are watching it on both fixed and mobile devices.  The 1000 channel universe has come and gone; we have reached a level of an unlimited number of channels and shows from an ever expanding platform for content distribution.

ABC Brings TV Everywhere One Step Closer

In a world where video follows us, the broadcasters have been slow to get on board.  Viewers may like on demand programming, but they also like to be fed video in a linear format.  And ABC has seen the light.  "Marking a first for a broadcast network, ABC on Sunday announced the launch of its Watch ABC app to allow pay-TV subscribers access to live, linear streaming of viewers' local ABC station programming -- including network, local and syndicated content -- starting in the New York and Philadelphia markets."  For both the ABC affiliate in each market and the consumer, ABC live programming will be presented across mobile devices, tablets and smartphones.  And authenticated cable and satellite subscribers will be able to get this access at no additional charge.

This must come as good news for the operators.  It is a first competitive step against Aereo in offering the same streaming video content to their consumers.  Of course, the next step for operators is to package and heavily promote a low cost broadcast only tier and broadband package at a competitive rate to Aereo.  Price sensitive consumers might just come back to cable and new subscriber growth might just reverse the trend cable operators have been facing. 

It is interesting to note that despite streaming the live local market stream to authenticated devices, ABC is not putting the same commercials as TV in their stream.  "The live streams will carry different ads but the same ad break lengths, according to an ABC spokesman."  It has been noted that Nielsen does not measure usage on the streaming side so ABC will sell digital only ads.  TV advertisers might be concerned that they do not get this bonus coverage.  It may also prove a lucrative new ad revenue stream for ABC.

As this streaming app requires new cable deals in the markets being covered, not all operators have revised their agreements yet.  In the New York DMA, it looks like Cablevision, Charter, Comcast, and AT&T, no Time Warner, RCN, Dish or DirecTv.  To enable deals to get signed, ABC is first "previewing"the app in the New York and Philadelphia markets for 6 weeks before requiring authentication.  Sampling is a great way to demonstrate interest and promote usage to all before a potential plug is pulled on unsigned operators in the respective markets.  And a free preview might delay subscribers from signing on to Aereo to quickly. 

For ABC, this push toward live streaming is the next evolution for broadcasters and a welcome step for consumers and viewers.

Is Unbundling Cable The Answer - Sen. McCain Thinks So

As William Shakespeare once said, To Bundle Or Not To Bundle, That Is The Question," an age-old question that plagues us to this day.  So perhaps the real question to ask is whether bundling is a good thing or not.  The concept of bundling has been around a very long time.  Products that we buy come with other pieces, "all included" in our purchase; from electronics to vacuum cleaners those "bundled extras" make our purchase easier than trying to figure out all the pieces to buy, from cords to attachments.  In cable TV, bundling gives consumers access to a ton of channels at one price, some we may want, some we don't, but in a single purchase we have a big pile to access.   We tend to believe that if we only pay for what we watch, our price will decline, but that is not necessarily the case; buying in bulk enables all to share from the pile and keeps the individual channel prices low. 

Sometimes too we say we don't want to watch something until a show appears on a channel we never have watched before and we add that piece to our own favorite pile.  That case happened in my own family.  We never watched the Nat Geo Channel.  Unbundled we never would have paid for it.  Yet with their new show, Brain Games, advertised, my kids sought out the show and the channel and have now become viewers of both.  It was included in our package; had it been unbundled, I cannot say that we would have individually purchased the network to watch the show.  The result, the show, the network, and the viewer all lose. 

Certainly there are arguments to unbundle some more expensive programming with sports channels being the biggest culprit.  But the bill, called the Television Consumer Freedom Act, doesn't talk about expensive networks verse the inexpensive ones.  "The bill would require programmers to make their channels available to cable operators on an a la carte basis; does not allow the bundling of co-owned cable channels and TV stations in carriage negotiations;  and gets rid of the sports blackout rule for stadiums built with any public money."  The industry has matured rapidly where once broadcasters competed against cable, they now own cable networks.  Where once there were a ton of independently owned cable networks (like the old world of cable operators), today the big ones are all owned by the media giants.  In the world of cable, like elsewhere, the big fish have swallowed the little fish. There is consolidation in the industry with fewer players owning the networks.  

And while the motive of this bill to unbundle is to keep consumer costs low, it is unlikely to achieve that result.  Costs per cable network will rise and ultimately the consumer will pay more for less.  What can McCain do?  Encourage disruptive technologies to exist against the mainstream.  Aereo is one such player.  Netflix, YouTube, Google and others are all invading the media content and distribution space.  And with their arrival and development, monopolistic industries are put to the test.  Innovative disruptive is to be encouraged, not law making.  In the case of unbundling, it will only lead to other problems.