Cable operators are afraid of cord cutting. As much as the percentage of customers dropping cable is low, the trend points to it growing at faster and faster rates. Operators have struck license deals with networks to limit them from selling to OTT providers. These deals have made it hard for OTT companies like Intel Media and others from gaining access to these same networks. But Aereo has found an elegant solution; take broadcast signals from off air through antenna farms and offer their streaming signals to homes in certain markets. No payments to the broadcasters and Aereo successfully aggregates well known networks into a reasonable priced package of online entertainment. And despite lawsuit attempts, Aereo continues to grow.
Aereo is already in three large DMAs, New York, Boston, and Atlanta. "At the TechWeek Chicago event, Aereo CEO and founder Chet Kanojia
announced that the company plans to launch its services in Chicago on
Sept. 13." Some broadcasters have threatened to change their delivery model to thwart Aereo from taking their over the air signals but so far no one has followed through. Consumers taking the Aereo service still have to subscribe to a broadband service, most likely from their cable provider. And at some point, cable operators will stop selling a broadband only service or switch to a usage type model to capture back some of that lost revenue from customers who have dropped cable service for Aereo.
Perhaps too cable operators need to start offering their networks to online devices and provide a true TV Everywhere environment. "Aereo is currently supported on iPad, iPhone, iPod Touch, Chrome,
Internet Explorer 9, Firefox, Safari, Opera, AppleTV (via airplay) and
Roku devices, but not Android." That may not stop consumers from switching because of price, but it may slow down some cord cutting. It will certainly help demonstrate the value of being a cable subscriber.
Thursday, June 27, 2013
Strike Two For Dish Network - No Clearwire
Dish Network has been swinging but unfortunately also missing the ball. Strike one was losing a bid for Sprint to Softbank and strike two is losing its bid for Clearwire to Sprint. "The developments pose a dilemma for Dish Chairman Charlie Ergen as
he tries to create a national wireless broadband service. He has been
amassing airwave spectrum rights but has said that he needs additional
licenses. He had hoped to secure that by acquiring a large minority
stake in Clearwire – and by acquiring Sprint." So what to do next? Does Dish Network have another swing left and who might it be?
Some are speculating that Dish may still have their eyes on Lightsquared, although that spectrum space has been questioned for its interference issues. Others are speculating that dish may reach out to another wireless provider, perhaps T Mobile, to gain a national footprint. And still others think the best course of action is for Dish Network and DirecTv to merge into a more powerful satellite competitor. One wonders if this third scenario might raise the anti trade issues of a single consolidated satellite company, but if Sirius and XM could make it work, so should these two. For me, I think the next step is a wireless play and perhaps a T-Mobile and Lightsquared combination may create synergies similar to what Sprint and Clearwire brought to the table. For now, the next move seems to be Ergens.
Some are speculating that Dish may still have their eyes on Lightsquared, although that spectrum space has been questioned for its interference issues. Others are speculating that dish may reach out to another wireless provider, perhaps T Mobile, to gain a national footprint. And still others think the best course of action is for Dish Network and DirecTv to merge into a more powerful satellite competitor. One wonders if this third scenario might raise the anti trade issues of a single consolidated satellite company, but if Sirius and XM could make it work, so should these two. For me, I think the next step is a wireless play and perhaps a T-Mobile and Lightsquared combination may create synergies similar to what Sprint and Clearwire brought to the table. For now, the next move seems to be Ergens.
Wednesday, June 26, 2013
Kids Content Helps To Drive Subscription Video
The race by video streaming aggregators to bulk up on content is on and ultimately could lead to more cable cord cutting. The category that seems to get a ton of attention is kid friendly programming and deals are being cut left and right. Netflix deal with Dreamworks Animation was yesterday's news; today, the latest content partnership deal is between Amazon and PBS.
"Amazon says that the PBS KIDS shows will be available on its Kindle FreeTime Unlimited service, which, paradoxically for a service that bills itself as being 'unlimited,' is designed to help parents limit viewing time. The new arrangement along with Amazon’s recent deal with Viacom to offer shows including Dora the Explorer, Go Diego, Go!, and The Backyardigans ”brings some of the most popular kids programming to Prime Instant Video, making it the perfect place for the whole family to catch up on all their favorites,” says Director of Digital Video Content Acquisition Brad Beale." These are the same families that are using Amazon Prime to buy their diapers in bulk so it is a perfect fit. Of course, not knowing the revenue model for such a partnership, the hope for each is that their is a ROI that makes sense for both parties.
So keep checking the boxes for kids programming. Could Power Rangers be next or is a new provider lurking? Stay tuned, same bat time, same bat channel.
"Amazon says that the PBS KIDS shows will be available on its Kindle FreeTime Unlimited service, which, paradoxically for a service that bills itself as being 'unlimited,' is designed to help parents limit viewing time. The new arrangement along with Amazon’s recent deal with Viacom to offer shows including Dora the Explorer, Go Diego, Go!, and The Backyardigans ”brings some of the most popular kids programming to Prime Instant Video, making it the perfect place for the whole family to catch up on all their favorites,” says Director of Digital Video Content Acquisition Brad Beale." These are the same families that are using Amazon Prime to buy their diapers in bulk so it is a perfect fit. Of course, not knowing the revenue model for such a partnership, the hope for each is that their is a ROI that makes sense for both parties.
So keep checking the boxes for kids programming. Could Power Rangers be next or is a new provider lurking? Stay tuned, same bat time, same bat channel.
Nook Tablet No More
Barnes & Noble has thrown in the towel in the tablet game, conceding to iPads and Kindles. Consumers were no longer embracing their tablet and sales were plunging so B&N decided the best course was to stop producing them. No doubt, Apple and Amazon are formidable competition and technology leader does not describe the core of B&N, a brick and mortar company. Try as they might, consumers chose other devices.
And while the announcement calls for the en of their color tablets, B&N will still continue to build and sell their e-readers. I am not sure I agree with that decision. Amazon and Apple have built both the infrastructure and the device that consumers prefer. The decision to keep Nook e-readers going is only delaying the inevitable. Inevitably the B&N app will be an agnostic entry to downloading books, regardless of the device. Or perhaps a closer partnership to Microsoft is in order if the decision is to embrace a proprietary library with Microsoft branded products.
Sad too that the Nook did not save the B&N retail business. "If Nook hadn’t done so badly, the poorly performing retail segment — which consists of both bricks-and-mortar stores and BN.com — would be getting more attention this morning: Retail revenues fell 10 percent for the quarter, to $948 million, and fell 5.9 percent for the year, to $4.6 billion." More stores are closing than opening with the only bright spot being their college bookstores.
So what is next for Barnes & Noble? I would profoundly miss their presence in the retail landscape. While I buy digital books, I still also buy hard copies too. B&N represents a place of discovery and entertainment. I believe that while leaving the Nook business is the right move, diversifying merchandise in their retail stores to keep customers coming remains essential. I want to see B&N survive and prosper.
And while the announcement calls for the en of their color tablets, B&N will still continue to build and sell their e-readers. I am not sure I agree with that decision. Amazon and Apple have built both the infrastructure and the device that consumers prefer. The decision to keep Nook e-readers going is only delaying the inevitable. Inevitably the B&N app will be an agnostic entry to downloading books, regardless of the device. Or perhaps a closer partnership to Microsoft is in order if the decision is to embrace a proprietary library with Microsoft branded products.
Sad too that the Nook did not save the B&N retail business. "If Nook hadn’t done so badly, the poorly performing retail segment — which consists of both bricks-and-mortar stores and BN.com — would be getting more attention this morning: Retail revenues fell 10 percent for the quarter, to $948 million, and fell 5.9 percent for the year, to $4.6 billion." More stores are closing than opening with the only bright spot being their college bookstores.
So what is next for Barnes & Noble? I would profoundly miss their presence in the retail landscape. While I buy digital books, I still also buy hard copies too. B&N represents a place of discovery and entertainment. I believe that while leaving the Nook business is the right move, diversifying merchandise in their retail stores to keep customers coming remains essential. I want to see B&N survive and prosper.
Tuesday, June 25, 2013
Are Cable Operators Beatable?
While cable operators are concerned about cord cutting and subscribers dropping cable services, they still have an ace in the hole with their broadband subscription service. Add to that a telephone business for both homes and businesses, and cable operators like Comcast and Time Warner Cable are here for the long run.
And while consumers may be slowly dropping their cable service for streaming services like Netflix and Amazon and others, these same consumers may have a hard time accessing those big cable networks, like ESPN or Discovery, without a cable subscription. Cable operators have negotiated agreements woth cable networks that make it hard, if not impossible, to sell these same networks to over the top (OTT) providers like Intel Media, Apple and others. Consumers may be able to access certain shows through streaming but not the entire network. And these cable operators are also trying to stop consumers from getting broadcast channels as well through streaming, just as Aereo is hitting multiple markets with their OTT service. Operators have responded with lawsuits to try and stop.
With so much control, cable operators may be making it difficult for OTT companies to create a competitive, "virtual MSO" model. And Craig Moffett, of Moffett Research, believes that environment makes it difficult for companies like Intel Media to include top ranking cable networks on their streaming subscription service. "And he thinks cable operators and other telecom providers remain well-insulated from virtual MSOs even under that third, most promising option." Cable operators simply have to increase the price of their broadband service or change it to a usage-based system, making an OTT alternative a too costly alternative to traditional cable.
The only chance for survival may be when cable networks feel the loss of subscriber revenue from consumers cord cutting for these other sources of online entertainment. Consumers have become more show loyal then network loyal and as that trend continues, networks may be less relevant than online show aggregators like Netflix. Will cable networks all go away; absolutely not. The big networks will survive, but the smaller ones may just feel the need to chance it on these "virtual MSOs" to increase their subscription size.
And while consumers may be slowly dropping their cable service for streaming services like Netflix and Amazon and others, these same consumers may have a hard time accessing those big cable networks, like ESPN or Discovery, without a cable subscription. Cable operators have negotiated agreements woth cable networks that make it hard, if not impossible, to sell these same networks to over the top (OTT) providers like Intel Media, Apple and others. Consumers may be able to access certain shows through streaming but not the entire network. And these cable operators are also trying to stop consumers from getting broadcast channels as well through streaming, just as Aereo is hitting multiple markets with their OTT service. Operators have responded with lawsuits to try and stop.
With so much control, cable operators may be making it difficult for OTT companies to create a competitive, "virtual MSO" model. And Craig Moffett, of Moffett Research, believes that environment makes it difficult for companies like Intel Media to include top ranking cable networks on their streaming subscription service. "And he thinks cable operators and other telecom providers remain well-insulated from virtual MSOs even under that third, most promising option." Cable operators simply have to increase the price of their broadband service or change it to a usage-based system, making an OTT alternative a too costly alternative to traditional cable.
The only chance for survival may be when cable networks feel the loss of subscriber revenue from consumers cord cutting for these other sources of online entertainment. Consumers have become more show loyal then network loyal and as that trend continues, networks may be less relevant than online show aggregators like Netflix. Will cable networks all go away; absolutely not. The big networks will survive, but the smaller ones may just feel the need to chance it on these "virtual MSOs" to increase their subscription size.
Monday, June 24, 2013
My DVR Works Better Than Yours
I can't tell you how often we complain in our house that the DVR misses the ending of almost every show we record. In some cases, it misses the beginning too. But we grin and bear it and try to move on with our lives. It certainly adds another black market to the list when consumer start to shun cable for streaming. And yet, it could be an easy fix.
According to Slate, our problems don't occur in other countries. They have something called "accurate recording". "A customer’s DVR, in turn, will not stop recording until it’s been signaled that the present and following information has changed."And according to the article, the US could have this feature. "The issue, the source said, is that the broadcasters would need to provide them with real-time data on the start and end times of live events. That’s already happening in the United Kingdom and other places with accurate recording, but not in North America." Seems an easy fix and a great marketing statement to tout. Heck, we might even stop hating our cable boxes and cable company.
TiVo never seemed to have this problem. Or perhaps it was because I could add minutes before and after to assure that I got coverage of the program. My cable box does not have that flexibility. Cable companies might suggest finding the show by searching on demand but that process remains cumbersome too. And so we suffer in silence hoping that some executive will listen and improve the DVR experience.
According to Slate, our problems don't occur in other countries. They have something called "accurate recording". "A customer’s DVR, in turn, will not stop recording until it’s been signaled that the present and following information has changed."And according to the article, the US could have this feature. "The issue, the source said, is that the broadcasters would need to provide them with real-time data on the start and end times of live events. That’s already happening in the United Kingdom and other places with accurate recording, but not in North America." Seems an easy fix and a great marketing statement to tout. Heck, we might even stop hating our cable boxes and cable company.
TiVo never seemed to have this problem. Or perhaps it was because I could add minutes before and after to assure that I got coverage of the program. My cable box does not have that flexibility. Cable companies might suggest finding the show by searching on demand but that process remains cumbersome too. And so we suffer in silence hoping that some executive will listen and improve the DVR experience.
Next Cable Operator To Merge
Is Charter Cable the next major cable operator to merge with another? For years, many have speculated that Cablevision, landlocked in the NY DMA, was a likely acquisition target. As Time Warner Cable (TWC) is the owned the majority of NYC, they seemed the most likely partner. But that deal has yet to materialize. A Charter deal with Time Warner has promise, with synergies in the LA DMA, but other markets are less likely to benefit from having TWC systems nearby. So if TWC is mentioned repeatedly, who would they prefer to merge with first?
In today's NY Post, speculation comes the Tom Rutledge, a former TWC and Cablevision executive now at Charter, would like to merge and run a bigger operation. "Although Charter is half the size of Time Warner, the fourth-largest pay TV provider, Wall Street would like to see the two combined under the leadership of Rutledge." And while that may be what Wall Street wants, TWC executives may have their own ideas as to who should be in charge, despite Rutledge having had a very successful career in cable. And Charter may not sway the vote if it is true that Cablevision is interested in merging. "All the deal talk has even put Cablevision patriarch Chuck Dolan in 'listening mode' after years of resisting a tie-up with Time Warner Cable, according to a source." I think if TWC had its say, a Cablevision deal would be its first move.
One thing is clear, regardless of who merges, their is more need to consolidate to improve profit margins through lower license fees and cost efficiencies. With an increased push toward streaming and a loss of basic cable subscribers through cord cutting, consolidation will enable cable companies to provide a better connection experience, both in the home and out, by expanding its infrastructure. And who knows, maybe new businesses that can grow as a result of this larger footprint.
In today's NY Post, speculation comes the Tom Rutledge, a former TWC and Cablevision executive now at Charter, would like to merge and run a bigger operation. "Although Charter is half the size of Time Warner, the fourth-largest pay TV provider, Wall Street would like to see the two combined under the leadership of Rutledge." And while that may be what Wall Street wants, TWC executives may have their own ideas as to who should be in charge, despite Rutledge having had a very successful career in cable. And Charter may not sway the vote if it is true that Cablevision is interested in merging. "All the deal talk has even put Cablevision patriarch Chuck Dolan in 'listening mode' after years of resisting a tie-up with Time Warner Cable, according to a source." I think if TWC had its say, a Cablevision deal would be its first move.
One thing is clear, regardless of who merges, their is more need to consolidate to improve profit margins through lower license fees and cost efficiencies. With an increased push toward streaming and a loss of basic cable subscribers through cord cutting, consolidation will enable cable companies to provide a better connection experience, both in the home and out, by expanding its infrastructure. And who knows, maybe new businesses that can grow as a result of this larger footprint.
Friday, June 21, 2013
Clearwire Big Winner As Sprint Raises Offer
Regardless of whether Dish or Sprint buy Clearwire, it is clear to me that Clearwire and its shareholders are the big winner. Dish may have wanted the company but they also forced Sprint to raise their offer. "Clearwire’s board of directors said it has endorsed the new Sprint bid, which values Clearwire at about $14 billion." So what is Dish to do next, up their bid for Clearwire, go back and bid again for Sprint? Should Sprint acquire the remaining shares of Clearwire, they will hopefully be able to utilize that spectrum to better compete against Verizon and AT&T in the wireless space. And a bigger Sprint may be a better acquisition target.
Some rumors that Dish may follow up and partner with Google to raise its bid. Certainly Google would also like to enjoy the uses of that spectrum for its broadband needs as well. And Dish and Google might just find some other useful synergies as well.
Some rumors that Dish may follow up and partner with Google to raise its bid. Certainly Google would also like to enjoy the uses of that spectrum for its broadband needs as well. And Dish and Google might just find some other useful synergies as well.
Video On Instagram and Vine - Not A Fan
15 seconds or 6 seconds, fad or fancy, that's what strikes me as Instagram has added a slightly longer video feature to its photo sharing site. I did not embrace Vine and I struggle to think that Instagram will be better served with its video feature. I love sharing photos but find short form videos more kitschy then substantial. But I am clearly the wrong demo.
My daughter is a big Instagram fan and I asked her opinion on video. She seemed less than enthralled by it, but others may like sharing quick bite videos of them and their pets. It may in the beginning create an overwhelming sense of clutter on the site, but I see that fad interest quickly fading. User generated content has great value and You Tube has certainly benefited from it; their appeal is that it is not limited by length so that messages can be fully shared, whether 6 seconds or 6 minutes.
At the end of the day, success must also be measured by the revenue that these videos produce. Photos can be surrounded by a display ad but videos are ideally suited for pre-roll. Are you really going to put a 15 or 30 second ad in front of a 6 or 15 second video? Consumers will quickly revolt. "On Thursday, (Instagram co-founder Kevin) Systrom dodged questions about how video on Instagram could represent new advertising opportunities, though said that Instagram – which still does not sell any ads — will 'become a business over time.'” Let's hope they have something creative that consumers will accept.
My daughter is a big Instagram fan and I asked her opinion on video. She seemed less than enthralled by it, but others may like sharing quick bite videos of them and their pets. It may in the beginning create an overwhelming sense of clutter on the site, but I see that fad interest quickly fading. User generated content has great value and You Tube has certainly benefited from it; their appeal is that it is not limited by length so that messages can be fully shared, whether 6 seconds or 6 minutes.
At the end of the day, success must also be measured by the revenue that these videos produce. Photos can be surrounded by a display ad but videos are ideally suited for pre-roll. Are you really going to put a 15 or 30 second ad in front of a 6 or 15 second video? Consumers will quickly revolt. "On Thursday, (Instagram co-founder Kevin) Systrom dodged questions about how video on Instagram could represent new advertising opportunities, though said that Instagram – which still does not sell any ads — will 'become a business over time.'” Let's hope they have something creative that consumers will accept.
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