Broadband Has A "Need For Speed"

We expect that when we pick up the telephone that it is immediately ready to make a call.  We expect that when we turn on the TV, that a TV show appears.  We expect when we flick on the light switch, that electricity immediately comes on and our lamp turns on.  Yet when we sit in front of our computer or tablet, we must wait for our web page to refresh.  Sure it comes on and the wait may be a few seconds (or longer), but we continue to wait.  Add more devices to the stream, and delay time mounts. 

If this is you, then you are not alone.  The speed is only as fast as the internet connection that you have and coaxial cable to the home has its limitations.  As Tom Cruise said in the movie Top Gun, we have a need for speed.  Today's best wired choice is optical fiber but that is not how most of the US is wired for broadband.  "The United States ranks in 14th place behind countries like Sweden, Japan, South Korea, Romania and Macau in fiber connectivity."  In fact, " only 7.7 percent of broadband subscribers have optical fiber connections, the fastest and highest quality available." 

The capital costs to update our infrastructure must be enormous and the cable companies may have little motivation to invest unless they can gain a bigger return.  Google is investing in a few markets and Verizon FIOS as well.  Our only other hope is wireless broadband although the speed may not match as well to a wired fiber connection. 

Unfortunately for all that the US has accomplished, broadband speed does not rank us high in the world.  How then can we ramp up our connectivity speed without costing consumers an arm and a leg?  It may just take a quantum leap in building new processes for refresh and load that can handle packets of data that are only getting more and more heavy.  Till then, we can only watch and wait as the little wheel tells us our content is loading and will be ready shortly.

Aereo Needs Supreme Court Victory

This month the Supreme Court will hear from Aereo and the broadcasters about whether the Aereo business model is legitimate or stealing.  Aereo believes that it has the right to take the over the air broadcast feeds via their antenna farm and sell online access to consumers; Broadcasters like ABC, CBS, FOX, and NBC believe that Aereo should be required to pay for the content from their networks.  The decision will decide the fate of Aereo.

For those old enough to remember, households used to purchase antennas that they would put up on their roofs.  Homes were wired so that TVs inside the house could each access the antenna.  And some fancy antennas could even be made to rotate to help receive some remote signals.  As a boy living in the suburbs of Philadelphia, I remember turning that dial to access New York's Metromedia station to watch "Wonderama".  The day we switched to cable meant the loss of that station but the beginning of a whole new assortment of programming.

Despite broadcasters switching from analog to digital, they still use over the air transmission and consumers can continue to access broadcast TV from antennas.  That Aereo has build a business model that moves the antenna off the roof and into a centralized farm doesn't change for me the transmission.  So that instead of buying an antenna, consumers lease one instead.  And for that they get additional features including the ability to record programs for later viewing.  Consumers with antennas at their homes can do the same thing with boxes from TiVo and others.  That Aereo has simplified the reception and delivery issue for broadcast signals does nothing to change the fact that consumers could do the same thing with a store bought antenna and in home DVR box.  It is for that reason, from what I see as an outsider to the process, that would cause me to side with Aereo in this Supreme Court ruling. 

Certainly a loss for the broadcasters should do nothing to change the business model that they have in place with cable operators.  The expense for operators to build their own antenna farms so as to not pay broadcasters a retransmission license fee would likely outweigh the cost of the current contract. Plus all the broadcasters own cable networks too and would surely figure out a bundle type strategy to keep the status quo alive.  And should broadcasters decide to give up this spectrum and behave like cable networks, then the FCC could make a bundle selling this spectrum for additional wireless broadband opportunities.

So let the battle for broadcast rights move ahead.  I see Aereo coming out the victor, for if they lose, they will be no more.

Long Form Video Content Matters

While short form video content, a few minutes or less, allows viewers to watch tons of different clips, it has its limitations.  For one, it makes it hard to put a 30 second ad before a 2 minute clip.  Viewers will quickly tire of not getting their video served, lose interest, and leave the site.  And while 10 and 15 second pre-roll ads are nice, they don't pay enough.  Cable television networks learned this many years ago when they transitioned from short form clips to full length shows.  The early days of MTV, Movietime (now E!), and Comedy Central are a few examples of networks that experienced that move.

It seems that long form content is where the real dollars are.  It enables subscription revenue, longer pre-roll and mid-roll ads, and keeps viewers on the site longer.  Amazon, Hulu, Netflix, and You Tube are all embracing long form content.  "Not only is AOL moving toward more original programming, which gives it greater control over the content and a bigger slice of the money it generates, but AOL is also taking a successful overseas program and translating it for an unfamiliar US audience. It was Netflix's strategy with its hit "House of Cards," which was based on a UK series."  And AOL hopes to capitalize on this strategy with advertising. 

No short form content will not go away; but the addition of long form programs demonstrates that streaming is following the same product life cycle that cable did before it.  AOL now becomes another major competitor in the OTT space and more competition to the traditional linear cable model.  Cord cutters rejoice, additional online content continues to come your way. 

Microsoft Office Comes Too Late To The iPad

With this week's release of the movie "Noah", a now distinct animal was late to board the ark.  Noah had just closed the doors and the animal and his mate were left out to the elements.  Today, with the announcement that Microsoft Office is available on the iPad, Apple CEO Tim Cook could have said the same thing.  He didn't but it still won't matter.  iPad users have found other alternatives to Microsoft Office, some that work quite well in collaborative user environments. 

The Office app may get downloaded and some may actually use it, but will it spark additional revenue in the Office suite of services?  I doubt it.  The rise of cloud based applications from Google and others have made the Office a less important piece of software.  In addition, PC sales have dropped while tablet sales continue to grow.  And users have found apps to support their business and personal needs.  Microsoft's Office has come late to the ark and while it may be lucky enough to get inside, will most likely be soon ignored. 

Personally, I have always liked the Microsoft Office suite and use it daily on my computer.  But it is a different story on my tablet.  That Microsoft has finally acknowledged the need to play in the mobile sandbox is great and with its new leader, the hope is that their is innovation on its way, to become the next generation Microsoft.  It is the potential of what can come next out of Microsoft that I look forward to hearing about.  As to Office on iPad, let the downloads and revenue numbers speak for themselves.

If Comcast Can Do It, Then Why Can't Dish

The maturity of the cable industry, the rise of broadband streaming platforms, and the need for more cost efficiencies have led to Comcast pursing an acquisition of Time Warner Cable.  And if Comcast can do it, then why can't Dish.  That's the thinking of Dish Chairman Charlie Ergan to reach out to his competitor DirecTv to merge.  But while Comcast and Time Warner Cable don't compete given that they each oversee different markets, Dish and DirecTv compete 100% for satellite coverage.  Yet the rationale for the latter to merge makes complete sense.

The threat of wired and wireless cable, telco, and broadband carriage from businesses from Comcast to Verizon to Netflix are much more of a threat to business for Dish then competing with DirecTv.  As they lack an owned broadband platform, they are both much more at risk from future growth.  Combining businesses may not give them programming cost efficiencies, but it will give them technical ones. 

Still a Dish- DirecTv merger has no chance to move forward until the Comcast - Time Warner deal is fully vetted and approved.  Then a real case can be made for these two satellite behemoths to continue.  Ultimately though, as Ergan has correctly tried to do with his efforts with LightSquared, the satellite business needs a two-way broadband connection to position itself against cable and telco.  That is truly the means for getting a more competitive broadband landscape for consumers. 

Movie Attendance in US Dropping

Despite the insatiable interest in movies, attendance at movie houses are dropping.  Revenues grew slightly but only because of increases in ticket prices.  And technology may be partially to blame for this drop in demand but it isn't the only reason.

Consumers today have far more choice to watch movies, from premium cable channels and same day as theater movies on demand through your cable box to subscription streaming services that can provide an all you can eat buffet for a month at less than the cost to individually go to the movies.  And for many on a budget, their entertainment appetite can be satisfied.

But for those that seek a night away from home and desire a "just released" movie, going to the theater becomes a date night or time to hang with your friends.  But for that important college age group, they are choosing to not go that route.  "Frequent filmgoers from 12-24 are likely spending much of their previous moviegoing time watching a variety of other screens."  And that also includes the rise of gaming devices like XBox and Playstation.  They are also on a budget and may be more particular but which movie they will watch in a theater and which ones they will wait for its later release on another platform.

So what are the solutions? There is some speculation that movie prices may drop although only on a pre-determined night and certainly not a weekend.  But I think that will not win back the millennial audience.  That demographic needs for the movie house to once again become a destination point, not just for watching movies, but as a gathering to relax, play, and share.  My ideas range from a one fee to stay all day to a refreshing of the lobby with seating and arcade games and wireless.  From there, sell a richer assortment of refreshments and merchandise.  I might borrow the marketing efforts of gamers and offer to certain films added extras not available elsewhere, ranging from merchandise to mobile links to additional content to connected game play. 

As to the older demographic, the key is convenience, comfort, and cost.  Off peak discounts continue to work as well to stay within their budget.  There is nothing like a night out, away from the home or apartment and with the company of friends and family.  The movies may be watched quietly, but it is and always will be a social experience that allows us to communicate our likes and dislikes about the film and to transport us to other times, worlds, and ideas.  Attendance may be down but there is opportunities to get it growing again.

Disney Acquires More Online Content

The mouse wants to be more hip and that means going where the millennials roam.  While Disney produces tons of content, new generations of viewers are more web focused.  So to capture that audience, Disney is acquiring Maker Studios, an online content company with substantial distribution on You Tube. 

As we know, this online millennial demographic can be very fickle.  Maker has been able to reach them with discovered talent including PewDiePie, but as Disney knows, what is in the pipeline is also important.  Also key for Disney is the synergy of such a purchase.  How will Maker Studios fit in with its broadcast, cable, and theme park businesses?  Will PewDiePie get a show on Disney XD?  This acquisition is clearly opportunistic for Disney and gets them closer inside the You Tube platform and its data, but is that where Disney really wants to be?  Could they have used their current stable of Disney talent to migrate from the cable platform to the online space without investing in the Maker business?

Yes Maker has currently proven itself as a leader in online video content and Disney sees that as a important piece of the puzzle.  In a make it or buy it world, I wonder if Disney's acquisition of Maker Studios best serves its long term interests.  Disney continues to create a large stable of new talent for its young audience base; that they could do the same in building out a stronger online base would have seemed a more preferred strategy.  Yet they have chosen to acquire and the hope is that Maker Studios talent base will bring new ideas to the Disney model and integrate well with all the businesses. 

Consolidation Meets Indie Film Market

Industry consolidation isn't anything new.  On the operator side of the world, all the news is about the proposed Comcast acquisition of Time Warner Cable.  And on the independent film side, the latest plan is that MSG Networks is buying 50% of Tribeca Enterprises and the Tribeca Film Festival.  So where is the consolidation, in the hands of the Dolan family. 

Before MSG spun off, it was part of a larger company, Cablevision Systems, which also owned Rainbow Networks.  Each was spun out into its own public company with Rainbow rebranded after its largest network, AMC Networks which is also the home for IFC and the Sundance Network, both independent film networks.  All these companies, Cablevision, AMC and MSG are owned by the Dolan family with patriarch Charles Dolan heading Cablevision and son Jim heading MSG.  And Jim also sits on the board of directors of AMC. 

Ultimately, with the purchase of Tribeca Film, Jim Dolan will be involved in all three independent film companies - IFC, Sundance, and Tribeca.  Three major players who are also involved in production and distribution of independent films.  Consolidation indeed.  The purchase of Tribeca Films may not kill the world of independent films, but it certainly limits it.  But such is the nature of an industry's life cycle, birth, growth, and maturity.  And we now simply see indie films as smaller budgets run by bigger companies. 

Cord Cutters Take A Small Bite

The headline reads that TV subscriptions fall but when you look at the number of cable cord cutters in 2013, about a quarter of a million homes, total cable subscription remains north of 100 million subscribers.  In total drop, that equates to a quarter of 1 percent.  So, will the number of cord cutters continue to increase, the answer is yes, but given consolidation of cable operators, the rise of broadband subscription, and the close ties of cable operators and programmers to authenticate the TV Everywhere experience, it seems unlikely that cord cutting will impact the economic model for quite some time.

Certainly there will be a transition to a more IP world through the cable box, but the box to the home will still be controlled by the cable operator, offering important revenue opportunities and big data for research and better advertising.  Most likely, OTT content like Netflix will end up working along side the cable universe and no longer seen as a competitor to cable; rather, as another option for the cable customer. 

Unfortunately the costs for cable will continue to rise, causing more households to cut the cord.  But I expect that cable operators will smarten up and figure out new revenue models to win back those cord cutters and creating a better cable/broadband experience for a reasonable monthly fee.  Because as a connected customer, the cable operator has more opportunity to sell in more services too, like security and e-commerce.  As for the cord cutter news, a .25% drop may be a tickle on the back of the throat, but how big it gets remains to be seen.