Microsoft's Changing Focus

The old adage that what gets you there can't keep you there seems to run across every industry and every company.  It seems especially so in the technology industry where the pace of change ever increases.  And for Microsoft, in particular, what got them there, licensing Windows and Office content on every computer, isn't keeping them there either.  They have been usurped by companies like Apple, Google, and others who keep reinventing themselves and delivering new products and services.  According to Satya Nadella, new CEO of Microsoft, now it is Microsoft's turn. 

His memo to Microsoft employees lets them know that they are no longer a device or services company; rather, "Microsoft is the productivity and platform company for the mobile-first and cloud-first world."  With this new direction, many wonder where Xbox fits in this new strategy.  Should it be sold off or is there a place in this new business model.  For now, given its current success, no changes are planned.

For the rest of Microsoft, employees are wondering if it means layoffs especially from its acquisition of the Nokia mobile phone business.  Can Microsoft turn this new mission into a reality and once again claim market share?  What new tools and apps does Microsoft have to attract more customers to their platform?  Many believe that Nadella has the skill set to make this turn around happen.  In the end, the technology industry continues to evolve quickly and Microsoft could be the ones to lead consumers through the next turn. 

Should Content Owners Consolidate Too

While battles loom regarding the proposed distribution consolidation occurring, those on the content side expect the same.  Speaking at the Allen & Co. Conference, David Zaslav, CEO of Discovery Networks, believes that "'In the next couple of years, I think it's likely there will be consolidation on the content side,' he said."  Discovery has been mentioned both as a potential buyer of content as well as a possible seller of its content business.  Others mentioned include Scripps, AMC Networks, Viacom, and even Time Warner, holder of TBS, TNT, and HBO.

And while there are challenges brought in by the increased size brought on by cable consolidation, the rise in digital disruption continues to alter the playing field.  How we get our broadband access, what we want to watch, and where we want to watch our content, have made traditional linear programming that much harder to grow.  Live programming, sports, events, award shows, have all been best at driving linear viewing.  The success of World Cup ratings in the US is the most recent example to cite.

Consolidation of content owners could provide some level of leverage against the big cable distributors.  It certainly assures carriage of better watched networks while hoping to support an increase in carriage of smaller cable networks. Their challenge continues to be their niche appeal.  Success of smaller cable networks that have found audience growth has come from broadening their programming format, building show brands, and driving reach and interest.  But in the end, these networks become hard to differentiate one from the other for the sake of the bigger rating.  Consolidation of content owners may simply help these niche networks to stay around a little bit longer. 

Analysts Think Content May Not Be King For Long

There are some that worry that content will no longer be king as media distribution platforms continue their consolidation.  With the FCC looking at both the planned merger of Comcast and Time Warner Cable and AT&T with DirecTv, analysts fear that the power will shift from content to distribution.  The solution though is not content consolidation, according to Barclays Capital’s Kannan Venkateshwar.  Given the fixed costs of content production, less synergies can be derived if content creators merge; their power will not be enhanced in negotiating with these potentially larger distributors. 

While his insights ring true, I am not so sure that I agree that the merging of cable distributors will change the fact that content is and will continue to be king.  Good content drives viewership and builds value.  Netflix has emerged as a strong player with original content like "Orange Is The New Black" and other digital properties are doing the same, whether it is for subscription or ad revenue or both.  Yes, cable has the strongest platform, but their high cost continues to hurt future growth. The younger generation continues to embrace broadband and digital streaming, uncovering new content like You Tube's PewDiePi. 

As a result, content creators actually face a lower barrier to entry to getting their content produced and viewed.  The challenge for digital content to better compete with cable consolidation requires an aggregator that can not only combine and present all the digital channels, but deliver a search and recommendation engine across these content properties to help the consumer best choose what to watch.  Cable distributors have their interactive screen guide for linear and on demand, helping cable customers to find shows across all networks.  The Apple TV device, Amazon Fire, Roku, and others certainly work to the first point of delivering digital content, but need that aggregated search app to aid in the content discovery. 

So, I wouldn't worry that the threat of content distribution mergers will lessen the power of content.  Disruption is already occurring and content will continue to remain king.

Cameras Everywhere

Here in NY, the latest news was that a women left her baby at a subway station and casually walked away.  A good Samaritan made sure the infant was watched till police showed.  The news reports at the time indicated that no cameras were at this particular stop and so no footage available of the woman.  But hours later, other footage was found that showed the woman pushing the stroller elsewhere and she was eventually discovered.  What is particularly noteworthy is that we have become more and more used to cameras and surveillance in our lives.  At every airport, store, and even on streets, cameras seem to be almost everywhere.  And we seem ok with that.

Certainly in an age where terrorism affects us, cameras help to find perpetrators and victims.  It is used as a defense to help thwart potential crimes and we live by the notion that a good defense is a good offense.  Take for example the story a week ago of a trucker who watched a state trooper speed and talk on his cell, honked his horn and caused the trooper to pull the trucker over.  Quickly, the trucker started filming the interaction with his smartphone which led, not to a ticket for excessive honking, but to an apology from the trucker for not following the rules of the road, no cell phone while driving.  Without the video, a ticket would certainly have been the more likely outcome.

It demonstrates that we have become okay with cameras recording us in life just as we have the same ability with our smart phones to video our interactions.  Camera security is now more prevalent in our homes as wireless and remote cameras protect us from break-ins and help lead to capture. Cameras are in every store too recording us entering and leaving as well as waiting at the cash register. 

But the rise in camera coverage in almost every step we take comes with a price.  A loss of anonymity for one thing, and perhaps a bit of individual freedom.  Private may never be private anymore.  With every recording, everything we say or do becomes a permanent record.  Donald Sterling, "former" owner of the LA Clippers, certainly feels this way.  His anti-social rant was captured and shared with the county, resulting in his loss of team ownership. 

Overall, the use of cameras, both publicly and privately, tries to assure that safety and security are improved.  But it is at the cost of some personal freedoms.  And while it provides an added level of information, we also know that we can't be naive to believing that it represents all the facts either.  Technology also enables clever editing, Photoshopping, and other visual and audio tricks.  Still cameras are a tool that we as the public seem to be very comfortable knowing that we are always being recorded. 

Music - Rent Or Buy

The music industry is facing a difficult hurdle as the rise of streaming services like Spotify, Pandora, and others are affecting the sales of downloadable music.  Consumers seems happy with a monthly subscription service that in fact lets them listen but not own their music.  The result, "listeners in the United States used such audio and video streaming services to listen to 70.3 billion songs in the first half of 2014, an increase of 42 percent from the first half of 2013."  Unfortunately, "According to Nielsen, 120.9 million albums have been sold so far this year, down 14.9 percent from the first half of 2013. Of those albums, 62.9 million were on CD (down 19.6 percent) and 53.8 million were digital downloads (down 11.6 percent)."  What isn't clear is whether the net effect is good news or bad news, revenue wise, for the music industry.

Certainly, on the video side, the success of Netflix and Amazon Prime, echos a similar path as streaming video growth expands.  Its effect on dvd sales must be equally noticeable.  No longer is there a need to buy the movie or TV series if the content is just as easily offered in a streaming subscription service.  The challenge, of course for both video and music are the license fee rights.  When they go away, the content is no longer accessible by the subscriber.  Netflix subscribers just saw that recently as some content vanished as new content entered the library. 

At least with ownership of content, music and video, it is owned in perpetuity, or until we lose the cd or scratch the dvd.  Oh well.

Apple and Google Becoming Great Rivals

I think as humans we all enjoy great rivalries.  We were pitted to our screens to watch World Cup action, we root passionately for our sports rivals, especially Red Sox and Yankees, and in the corporate world we have had notable rivalries like ATT and Verizon in the cellular world, Starbucks and Dunkin Donuts in coffee, and lately Apple and Google. 

The latest indication of this rivalry is the acquisition of Songza, a music streaming service by Google, a month after Apple buys Beats.  Last week Google announced Android based smart watches while we all wait for Apple to finally announce its own iWatch smartwatch.  Each competes with devices and libraries, while Google has gone a step further with a build-out of fiber in a few communities.  It makes one wonder if Apple will turn around and buy a cable company.  And while Google has You Tube, some also speculate that Aple needs to buy a content company (Disney was a suggestion) as well. 

And while their business models and strategies don't overlap completely, it is clear that each looks as the other as a rival in the technology field.  The race is not a two man race.  Amazon makes a significant third leg of this stool.  It also competes with devices and content and may one day announce their own smartwatch. 

Google may be Apple's current rival but certainly not its first.  For many years, the rivalry with Microsoft has taken center stage.  But Microsoft has made a number of mistakes including Zune, its iPod substitute.  The Surface tablet may be out there but it pales in comparison to what Google and Amazon are offering nor is there any real smartphone offering.  And Microsoft has had best success most recently in gaming with XBox, competing much more with Sony and Playstation. 

Rivalries make for excitement and keep the competitive juices humming.  We are in store for more announcements by Google and Apple in the coming months.  Will it last as long as a Red Sox and Yankee rivalry, we will just have to keep watching. 

Twitter Shakes Up Executive Team To Spur Growth

Twitter has lost a COO, CFO, Head of Engineering, and VP of Consumer Products as it tries to pursue new growth opportunities.  But Twitter user growth has slowed while losses mount.  But let's be fair to Twitter, their usage is growing, just at a slower pace than previous quarters.  "Twitter’s membership in the first quarter rose 25 percent from a year earlier to 255 million, decelerating from 30 percent growth in the prior period and 39 percent in the third quarter of 2013."  And while 255 million users sounds impressive, it also matters how many are active users. 

Certainly great content helps drive users to share their thoughts through the service.  World Cup matches provide a great example of this as does all the snarky comments for every major awards show.  Still, users may also be growing tired of the service and the limit of 140 characters.  They say a picture paints a thousand words and sites like Instagram and Facebook may be providing too great a competition to the mix.  And the younger demos seem to lately prefer the Instagram route.  Or as I mentioned yesterday, we may simply be getting tired of too much sharing, especially when their ramifications lead to the need to apologize for our too quick tweeting.  Users may finally have figured out that it is time to put down that keyboard. 

For Twitter, the challenge to grow should not overshadow the need to drive revenue over costs and to build out a profitable business.  Changes in the type indicate that the current strategy was not working well enough and a new direction might be needed.  What that new direction will be could interesting.  May I suggest creating subset feeds, some that are categorized as strictly news, sports, or entertainment so that more relevant tweets reach us more quickly.  Just a thought.

Facebook Controlling What We See

I sometimes wonder if social networking is not such a good thing.  It's nice to acknowledge someone's birthday, share photos with friends and family, and engage in meaningful social discourse over politics and policies; but it also comes with a cost.  From coveting our friends vacation destinations, celebrity connections, to social miscues of not being invited to another friend's party, to the despair of cyber-bullying, it brings the full range of both positive and negative behavior.  And this is what we do to ourselves.

When we read that Facebook is experimenting on us, determining whether we see more positive vs. negative posts, then we might want to reconsider the value it brings and whether the animal has broken free too many times from the pen. 

Facebook, Instagram, and other social networking apps are a great sharing opportunity but do we have to be so open to what we share.  Are we doing it to satisfy ourselves or to let the world know just how exciting our life is.  Or should I say, how much more our life is than your life.  Is that the ultimate reason we share?  Psychologists could have a field day understanding why we post and engage in such an open way.  I frankly don't want to read that you visited Dunkin Donuts although I am sure that Dunkin Donuts loves it.  I do love seeing pics of family and friends and to see news of graduations, weddings, and babies.  What that line in the sand is between sharing and boasting is not a clear one.  And perhaps we need to do a better job determining which posts get viewed by which of our groups - family, friends, and acquaintances. 

But I don't need Facebook determining for me what I see or inundating me with too many ads that clutter my feed. Let me decide who can see what I post and what I want to see.  I'm starting to be more careful what I post these days.  And maybe, just maybe, we will all get tired of "eavesdropping" on other peoples' lives through social networking and concentrate more on leading our own lives. 

Will The Demise Of Aereo Hurt Broadcasters?

An interesting article in re/code that argues that the shutdown of Aereo is actually bad news for broadcasters.  As the younger generation continues to spend more and more time on their mobile devices, they have made bigger stars of some You Tube celebrities than TV ones.  From Bethany Mota to PewDiePie, to many that my kids know of and I have no clue who they are.  Still, that is who my kids are watching and broadcast, especially linear broadcast becomes more and more irrelevant. 

As the article note, Aereo made broadcast more accessible to that streaming crowd and opened up accessibility to the cord cutters.  Without it, viewers have to either find new ways to access broadcast programming or continue to skip it for Netflix, Amazon Prime, You Tube and others.  And the broadcasters have lost access to the future generation of potential viewers.  It is over the long run then that broadcasters have more to worry about. 

Aereo was admonished for copyright infringement stemming from the rental of an antenna on a remote antenna farm.  Other companies are now trying new ways to skirt the ruling.  Rather than rent, the antenna needs to be purchased and installed in the home; a box attached to it, captures and transmits wirelessly to authorized devices.  Does ownership of equipment change the result?  Certainly, Slingbox has been doing similar capturing and streaming for some time now.

For now, Aereo has lost and the broadcasters believe they have won.  But as viewership shifts from wired to streaming, from linear to on demand, consumers will seek out shows from multiple devices at times that best suit them and on platforms that are easy to access and appeal to their interests.  Tomorrow's audience may simply not care what broadcasters are pitching on old technology.

A battle may be lost, but the war is certainly not over either.  Much can happen to reshift interest back to broadcast.  New technologies, new strategies, new content.  I have consistently argued that linear wins with live programming.  It hits a home run when it is available on every platform.  And there are many examples to justify it including The World Cup matches on ESPN and streamed online, NBC's Sound of Music, NFL Football, etc.  Once broadcasters truly embrace streaming of their content, their future will be much brighter.