Netflix For The TV Screen

Certainly millions of subscribers are getting great satisfaction from streaming videos directly to their personal devices, from laptops to tablets and smartphones.  But sometimes we don't want to watch alone and the shared viewing experience that a TV screen provides enables a shared experience and future conversation about the show.  Recognizing that different platforms require different interfaces means understanding how consumers are interacting with their content and Netflix seems to embrace that wisdom.  "Netflix has unleashed an overhaul to its interface for televisions that extends more uniform, feature rich capabilities to apps running on a many TV-linked devices, including select Roku boxes, smart TVs, Blu-ray players, and Playstation consoles and the Xbox 360."  Netflix consumers enjoy watching on the bigger screens and assuring that the user gets the best experience in searching and streaming content is what makes for satisfied subscribers.  The more ergonomically suited the user experience becomes, the more likely subscribers remain engaged and happy with their Netflix subscription. 

Consumers Dropping Cable TV Service

It may be just a drip, drip, drip, but the high cost of cable TV, coupled with the rise of video content streaming on the web, may finally be turning consumers off cable TV completely.  Yes DirecTv and Dish both saw quarterly subscriber growth, likely due to the Time Warner Cable fiasco with CBS as well as to their cheaper offerings.  But a total number of subscribers have fled cable TV completely. 

"Veteran Wall Street media analysts Craig Moffett and Michael Nathanson calculated that the pay-TV industry — which includes cable, satellite and phone companies offering video service -- lost 113,000 subscribers during the third quarter."  Call it cord cutting but the reasoning behind this loss cuts much deeper.  It is the younger demo that no longer values cable and prefers to spend more time with web, social media, and gaming.  Should Q4 numbers show an increase in total customer drops, this cor cutting trend will hit hard.  Already cable operators are testing usage based broadband subscription packages.  Their intention, to recoup their revenues from high usage households dependent on streaming media platforms like Netflix, Amazon, and others.  And that usage, measured by recent reports, have been increasing rapidly.  Video streaming is dominating the broadband spectrum.  And so households that stick with cable operators for their broadband will see those fees rise faster and faster to make up for the loss in cable television revenues.

Consumers have little choice for broadband today.  Lower cost DSL service may find some relief and telco/wireless companies can provide packages of service that might just prove a better value.  But there is a need for more competition in this space.  When Time Warner Cable lost Q3 cable subs, they also lost Q3 broadband subscribers, a rare shift and one that portends more disaster for the cable operator. 

Broadband today continues to demand cheaper access and faster connection speeds.  Pipelines are easily clogged as high usage of heavy data video streams are requiring faster capital improvements.  But consumers will fight back if broadband usage fees rise dramatically.  Consumers are leaving cable for broadband and that trend will only quicken. 

The Future Of TV Sales

With the rise of tablets and smartphones, smaller screens are outselling bigger ones.  And we seem more likely to replace our iPhones and our iPads far more rapidly than our big screen HDTVs.  On the business side, sales of big screen TVs are slowing down.  "Overall, global flat-panel TV shipments were down 7 percent in August, the third straight month of decline compared to their levels during the same time a year ago in 2012."  The holidays are coming and expectations are that sales will rise, but manufacturers are concerned and will be aggressively lowering their prices to capture market share.

So why should Apple even consider this business.  Consumers have gotten comfortable with the box behind the TV set and seem less likely to upgrade their TV sets, even for an Apple television.  With gaming consoles like XBox and Playstation driving streaming and OTT, consumers care more about the content then an all-in-one TV set.  And that is why Apple should place more emphasis on their Apple TV product and focus on more ways to make it both cloud and hard drive ready.  Focus on content deals and pursue a rental business to complement its iTunes sale business.  Let the Apple TV box work behind any TV set and let others sweat over the big screen set.  And if you want to sell a big screen monitor; great.  Just let it work with all your devices. 

Superheroes Invading OTT Platforms

If sports doesn't become the content that propels OTT platforms forward, then maybe it will be the job of superheroes.  With The Awesomes on Hulu, the time has come for the next tier of heroes to emerge and Marvel/ABC is providing them with their recent deal with Netflix.  "Disney and Netflix announced a deal Thursday for four 13-episode series featuring Marvel Comics heroes Daredevil, Jessica Jones, Iron Fist and Luke Cage that will air on the video-streaming service over multiple years and will lead to a mini-event called The Defenders."These shows are scheduled for release in the next year.

Aimed directly at the teen audience, the key demographic by the way for video streaming, Marvel Studios and ABC are recognizing the power of superheroes in the disruptive world of streaming video.  And building synergy with its theatrical and linear properties will only continue to increase the value of their content across all platforms.  It is a brilliant strategic move for ABC to stay relevant in a changing environment.  And for Netflix, further push value of its streaming service and subscriber growth.  Exclusive content, with the Marvel name recognition, further demonstrates that content is king.

Why Did Dish Network Buy Blockbuster?

When Dish bought the Blockbuster chain a few years ago, the question most people asked was what was their to gain from buying a brick and mortar establishment that was already seeing loss of market share in the DVD rental business.  Netflix was struggling to convert from mail to streaming and Dish was still stuck with a brick and mortar business competing with a subscription mail business.  Clearly they were a step behind and a dollar short.  But Dish came in and bought the company, presumably for its content business.  And since then, nothing.  So what was Dish thinking and why did they spend their money on a losing investment that had continued to bleed dollars?

Stores were closed along the way and finally, this week, the announcement that the rest of the stores and mail order business was closing down.  From the official release, "'This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,' said Joseph P. Clayton, DISH president and chief executive officer. 'Despite our closing of the physical distribution elements of the business, we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.'"  But if the intention was to push the digital offerings, what has Dish been doing since they purchased the Blockbuster brand to compete in this space. 

While Amazon, Netflix, and Hulu have been investing in original content and building out their online brand, Blockbuster has been eerily quiet.  The brand name once synonymous with video content rentals has lost its leadership brand and its legacy stature.  It is a shell of its former self.  Dish has done little if anything to promote or differentiate itself in the online, digital space.  And with the loss of their stores, their awareness could even drop below Redbox, who continues to operate its vending business as it too finds a digital footprint.  So Dish has a big decision to make, do they put a ton of investment back into the Blockbuster brand to compete more effectively against Netflix and others, or is its best move to simply take the full loss and write off.  I am suspecting the latter is the better move.

My Son Wants An XBox One

As a teenager, my son has become addicted to the gaming platform.  Casual games are nice, but he truly loves the immersive experience and the big screen to play his games.  We started with Wii and Playstation and graduated to XBox 360 just as he became a teenager.  And with the release of new gaming systems from Sony and Microsoft, he has been vacillating between buying the next generation Playstation and XBox One.  It has not been an easy decision. 

So in our latest conversation, the XBox One is currently in the lead and he is disappointed that he is past the window pre-ordering at Game Stop and worriend that they will be out of stock for weeks after its launch.  But his choice for gaming system never took into consideration the added non-gaming features.  "The Xbox One is designed to support a TV content ecosystem that will generate ongoing revenue for Microsoft in parallel with the video game ecosystem at the core of the Xbox franchise."  He could care less.  For my son, the choice is all about the next generation of games and which box his friends might get in order to have a shared social experience in the game. 

And so I wonder, is a box capable of handling more than just its core function of gaming, of value to the consumer or not.  Will they appreciate that their same box can access videos as well as exclusive content from a Microsoft library or do they just want a box for gaming?  Can this all-in-one box give Microsoft new entry into a competitive product to Apple, Amazon, and Google, as well as synergy to its Surface tablet, or will consumers find limited interest outside the gaming platform?  Once in the home, I am interested to see how my son embraces these added features.  Certainly, it is the direction that Microsoft needs to take and I wish them well in driving this strategic plan to a successful end. 

Netflix Should Consider Adding a Transactional Movie Service

With an Emmy under their belt and an eye on a possible Oscar documentary, Netflix continues to emerge as a leader in the OTT streaming space.  With a monthly subscription service and a growing library of video content, Netflix continues to attract a larger paying audience.  The cost to acquire content will only increase as more competition emerges to challenge them in this space.  So what else is on Netflix's plate?

"First-run films would add a dimension to Netflix’s formula of offering viewers a mix of original series, with a library of movies and reruns."  But is there intention to offer these films as part of their subscription or to perhaps consider adding a transactional business to let consumers rent first run films, on-demand, at a per movie fee.  It would certainly shake-up cable's on demand presence and attract studio attention, especially if it included a more lucrative split to gain an exclusive window.  Cable operators are already feeling the heat of the battle from cord cutters choosing OTT over cable; this business model would be the next logical step in disrupting the status quo of on demand movies.  Consumers have already shown a strong interest in on demand through their cable service; a Netflix on demand model on top of their subscription service might just be happily received for access to first run content. 

Is It Time For Just 2 Time Zones?

I just read this article and thought it was worth sharing.  Given the rise of digital technology, communication and immediacy has become more and more important.  "Frequent and uncoordinated time changes cause confusion, undermining economic efficiency. There’s evidence that regularly changing sleep cycles, associated with daylight saving, lowers productivity and increases heart attacks."  How nice would it be to schedule calls between the two coasts and not worry about a 3 hour time difference.  

And how easy would the coordination of broadcast with east coast and west coast feeds to be able to have one feed for the entire country.  Live events at 8 pm on the east coast would be at 7 pm on the west coast.  The recently completed World Series games could actually start an hour earlier and still be prime time on both coasts. 

Ultimately, as the author points out, "The purpose of uniform time measures is coordination. How we measure time has always evolved with the needs of commerce."  It seems it might just be in our economic interests to consider such a plan.

Time Warner Cable Needs A Partner in Charter

Hit em when they are down.  The loss of both cable and broadband subscribers for Time Warner Cable has opened up the box once again for a potential merger with Charter Cable.  That TWC's losses were attributed to blacking out CBS and its sister channels for a month does not spell good news for any cable operator.  Each and everyone faces similar battles when license fee negotiations come up for renewal.

A friend from Los Angeles recently shared his story with me.  His family was a Time Warner Cable subscriber till CBS was dropped.  It was for them the last straw.  And being in a major DMA, they were fortunate enough to have alternatives.  TWC was limited in their response.  They offered a measly free movie to try and appease them.  Instead my friend switched to DirecTv for cable and AT&T for broadband and phone and discovered two immediate benefits, more channels and a total lower monthly cost.  Of course, I asked what he would do when or if CBS or another broadcaster was forced off their line-up as well.  He responded, with a wait and see attitude.  And what did TWC do to save the account.  Nothing when they notified them of their switch and nothing when they delivered their set top boxes back to TWC.  What irked them more, was a call placed by TWC to their home at 8am on a Saturday morning to try and win them back.  It was met with a firm hang up and a reminder that they had in fact made a good decision.

Consumers annoyed with current tactics and dropped channels will continue to seek alternatives.  Can a Charter merger save TWC? Not unless, once combined,  they go back to the drawing board with new, lower pricing models that take advantage of economies of scale.  That and a desire to do business differently or watch as more consumers leave, first for cheaper alternatives offered by competition, and soon enough streaming OTT platforms with enough content to encourage a steady stream of cord cutters.  That means not dropping channels unless you plan to keep them off.  Reducing the profit margin on cable subscriptions.  Better customer service and cheaper packages.  The trend toward OTT instead of cable is moving quickly and current operators are doing little to change their strategies.