More Broadcast Networks Go Dark On Cable

While the current word may be that a short term agreement has prevented ABC/ESPN Nets from going dark on Dish Network, another broadcaster failed to stay on.  Media General's 18 broadcast networks got shut down at midnight when no renewal was reached with Dish Network.  "Media General's retrans agreement originally expired in June, but Media General extended negotiations for 90 days."  So Dish consumers in those markets are now without their stations during the most important time for broadcasters, the Fall season. 

Who is to blame?  Frankly, the blame should be shared among all parties, Dish, Media General, and even the FCC for enabling broadcasters to charge for broadcast networks and the use of over the air spectrum.  This fight between operator and broadcaster continues to repeat itself endlessly.  And while Dish and ABC may have put into place an extension, it may still end up with networks being dropped off Dish.  It was only last month that Time Warner Cable faced this same issue with CBS; it will only happen again.  Broadcast networks should not be enabled to charge; if they want to then free up the airwaves and become cable networks. It is time for the FCC to intervene.

DirecTv Producing Content

For distribution companies, the need for quality content to put in the pipeline is essential.  And for content companies, having a strategy of placement to assure a nice return on investment is essesntial as well.  For DirecTv, it has led to a couple of attempts, most notably, trying to buy Hulu and its content deals.  But that attempt failed as Hulu pulled back its for sale sign and DirecTv has been looking for other alternatives. 

While not as big a deal as Hulu, they have found their next opportunity in the indie film arena.  "The satellite operator struck a deal with startup movie studio A24 Inc. to partner with it in acquiring independent films in exchange for rights to offer them exclusively on its video-on-demand services 30 days before they hit theaters."  While that might do A24 any favors with movie houses, it does guarantee them a premiere window and access to its huge subscriber base.  Add to that the marketing muscle of DirecTv and all you need is a potential hit film to dangle to consumers as "only available on DirecTv".  Of course to be realistic, very few indie films break through; in fact, some don't get their true notice till after their theatrical run when they hit the premium and/or DVD window.  Still, for DirecTv, its a good first step.

For those of us that believe that Content is King, it becomes crucial for distribution companies to secure exclusive content agreements to differentiate itself from others.  Its been done in the premium window with HBO, Showtime, and Starz and its been done in the streaming window with Netflix, Hulu, and Amazon.  And as my last post stated, it is why Intel Media has yet to move ahead.  Content is what viewers tune in for; it is why they are willing to buy cable subscriptions, premium subscriptions and streaming subscriptions.  And the value of these subscription deals are improved when the content becomes accessible across multiple screens.  But for me, it is most importantly the quality or the perception of the quality of the content. 

So DirecTv's decision to partner with A24 makes sense. But it can only be the tip of the iceberg of more exclusive content agreements.  I expect more such deals for DirecTv as they and others compete aggressively for subscribers.  That means that demand will continue to grow and the cost for content acquisition will as well.  And that is good news for content companies.

Intel Media Having Trouble Starting Up

What if you built potentially the best mousetrap but couldn't find either the cheese or the locations to place it.  Well that might just be the troubles facing Intel Media, a business inside Intel building its own OTT box and platform.  According to the article, the box was built and it looked and worked great; problem was that there are no content deals to run through the platform.  So, according to Peter Kafka at All Things D, it is time to either find a strategic partner or close up shop.

I certainly hope for the former as I know a few people on the team and have the utmost respect in what they are doing.  Their challenge is the same one that Apple seems to also face, how to get real content deals with the major cable and broadcast networks.  Truth is, it may be impossible to get linear network deals with these content companies.  They are so deeply in bed with the traditional Pay TV distributors, cable, satellite, and telco, that it is not in their best interest to risk these guaranteed monthly subscriber fees.  And despite having a superior OTT box, Intel Media should recognize the challenges being faced to get such a device into the home.  TiVo has been facing similar challenges for years.  So even if Intel Media gets some content deals, getting consumers to pay Intel for their OTT box and content may be an extremely difficult task.

The article suggests partnerships with Amazon and Samsung although I fail to see immediately what benefit they would derive from such a partnership or how it would best serve Intel.  While its box may be designed for streaming, its DVR feature is most likely meant for linear channels.  For now, Intel Media faces a daunting task, neither content nor distribution and the corporate clock is ticking.  As the article suggests, with its new CEO, this business may become DOA.

VOD Matters

Missed last night's shows on CBS, don't worry, CBS will remind you that you can still watch them through video on demand.  As shows are rated based on both live and VOD viewing, it makes sense to continue to promote them and remind viewers of how easy they are to watch, or catch up, before the next new show airs the following week.  "CBS predicts that increased use of video on demand for time-shifted viewing, binge-viewing and catching up with missed episodes will be 'really transformative' for the television business,  Mr. Poltrack (chief research officer, David Poltrak of CBS) said."  Truth is, on demand has been around for a while and consumers have been using it more and more to watch their shows.  In fact, viewers used to record shows on VHS even before DVRs and even before VOD so Mr. Poltrak should also be reminding his audience to record and watch, too.

So why this news during Ad Week?  Perhaps the fact that CBS is promoting series the day they were viewed.  Certainly for shows that are important to the future of CBS for ratings and ad dollars, it makes sense to promote across the Fall Season, not only before its premiere  but after as well.  With so many premieres on so many networks, broadcast and cable, constant promotion, before and after the linear show date, makes sense for building interest and appeal and viewership, whether on linear or DVR or VOD.  Frankly, it sounds like a no brainer.

DirecTv Eyes OTT Video Platform

DirecTv was no doubt disappointed that their bid for Hulu was rejected.  It seems they still have an interest in adding a video streaming component to their business model.  "CEO Michael White said the satellite TV giant will probably launch a targeted over-the-top video offering, which will be on a smaller scale than Netflix or Hulu."  So the question to ask is, will DirecTv build or buy.

With Hulu off the table and Netflix an unlikely acquisition target, perhaps DirecTv should look at a streaming service like Redbox Instant. Currently in a partnership deal with Verizon, Redbox might like to have the resources of DirecTv as well to help them better compete in a streaming media world.  Whether Verizon and DirecTv could work together might be either a stumbling block or an opportunity for both companies to better advance their footprint as well. 

As far as Redbox Instant is concerned, it has been slow out of the gate to compete at the same level with Hulu, Netflix, or even Amazon Prime.  It has the technology and a current library to work from, a better position to be in for DirecTv, than to try to build another video streaming competitor from scratch.  Perhaps this idea is what White is alluding to at the Goldman Sachs Communacopia conference.  It would certainly make sense to partner rather than build at this moment. 

Native Advertising Makes Ads Look Like Content

How often do we go from website to website, barely looking at the banner ads that fill the top, side, or bottom of the screen?  Sometimes though, they are hard to ignore, especially when they are the same ad, with bright colors and moving images that attract our eye.  But how often do we click on them... rarely, never?  Like commercials on television, banner ads have been the means for advertisers to reach audiences.  But the clutter gets to be so much that we start to ignore and worse, avoid them.

The latest tactic to hit the web is certainly not a new one.  And yes, native advertising has been around for a while. But many viewers may not be aware that they are really ads.  For TV, think of it as integrated or product placement advertising.  Products or services being mentioned and used within the body of the show.  Hard to ignore because they are part of the fabric of the content.   For the web, native advertising looks and acts like content.  But they are indeed sponsored and paid for by third party advertisers hoping to get you to click on them and thus transported to their sites.

How can you differentiate between advertising and true content?  Some websites specifically tell you you that a particular box is sponsored content, others do not.  Words like "Around the Web" or Latest"  are used.  Click them and you open a new page of content, some that bring you to new web content helping sites to improve their ComScore and Google ratings, others to pure advertiser pages.  Facebook and Twitter put these "sponsored" or native ads right in your feed so that it looks like part of the content flow that you read.  It also may ask you to "Like" the content, share or retweet it, or click it and push out to another page.  What seems clear is that presenting ad messages in a more integrated way into content improves the interaction with the ad.  But it also blurs the line.  But let's be clear, it is not new to the world of advertising; it has been learned and reshaped to fit into the digital world.

“It has been found that the less an advertisement looks like an advertisement, and the more it looks like an editorial, the more readers stop, look and read. Therefore, study the graphics used by editors and imitate them. Study the graphics used in advertisements, and avoid them.”  - David Ogilvy

Content Tells Distribution To Lower Your Margin

In what might be referred to as "the pot calling the kettle black", Content company Disney/ABC CEO Bob Iger told a Goldman Sachs Communacopia conference in NY that cable and telco distribution companies need to start lowering their profit margins.  Likely this means lowering the price they charge to consumers although smaller margins can come from a host of other increased expenditures, including the high costs for content.  Certainly distribution companies might just consider lowering their prices should content companies like the one Iger represents also lowered the cost for access to networks like ESPN, Disney, ABC and other networks that they sell. 

I don't begrudge content companies and content distributors from making a reasonable profit, but the profits have run amok.  For Iger to tell his distributors that they are pricing too high and should seek other revenue streams to make up the slack will certainly not be well received.  Those same content distributors can simply ask Iger to take the first cost cut himself and seek other revenues streams as well.  And while it is certainly not a zero sum game, the growth in new revenue that Iger suggests is partly coming at the expense and declines in other businesses.

Iger can argue that distributors should seek lower margins in their video business.  But Iger should also look to ask for some lower margins in his world, too.   Both sides share the blame in the costs for cable TV while both have also been slow in enabling TV Everywhere to truly be ubiquitous.  I hardly doubt that either side will lower their margins when the pressure on both sides of the business is to grow the profits and increase the bottom line.  Before asking his distributors to lower their profit margins, Iger should practice what he preaches and do the same.  It is indeed "the pot calling the kettle black".

Can A New Owner Help Blackberry?

Before Blackberry was Blackberry, it was called Research In Motion (RIM) with the hottest cellular phone on the market.  It was the smartest phone of the day and loyalty, especially by business men and women, was through the roof.  But then Apple's iPhone came along and, despite a name change to its core product, Blackberry never recovered.  Not even with its attempt to compete with its own tablet. Where Blackberry hoped to retain, Apple was poised to innovate and soon loyalty, ever a fleeting thing, eroded.  And so, Blackberry market share went from first to worst and today, the company is poised to be sold.

So what is Fairfax Financial Holdings buying?  "Anaylsts (sic) say that although BlackBerry's hardware business is not worth anything, its service business and patents are still valuable."  While the company is said to have no debt, smartphone innovation continues to move at such a rapid pace, I wonder just how much real value those patents have.  While Blackberry is still trying to make its phone more appealing, the real value may be in the app library and paired devices that make the phone that much more valuable.  Can they really catch up?  With Samsung, Google, Microsoft, and others competing with Apple and its iPhone and iPad products, Blackberry might best be served partnering with someone else.  Google has Motorola and Microsoft has partnered with Nokia; it might just be necessary for the new owners of Blackberry to find their partner.  Otherwise, I suspect that in a few years, the Blackberry brand will be ancient history. 

Apple iPhones Selling Well

Despite initial disappointment that Apple's announcement earlier this month lacked any new information on new products like an iWatch or television, the news was all about the next generation of iPhones.  The stock market wasn't happy with the news and the share price tumbled.  But it seems that consumers still want the latest and greatest and it is expected that Apple will do quite well with this new iPhone release.  "Today's lines for Apple's new iPhones are likely the longest they've ever been and the company will sell up to 6 million units, according to Piper Jaffray analyst Gene Munster."

And who knows, maybe Apple will surprise us next month with more news.