Thanks For The Memory

The new Apple iPhones have been announced and my kids are ready for their upgrade.  The reasons range from battery problems to the chic factor, but regardless they both want to get their hands on the iPhone 6S.  Am I made of money?  Of course not and Apple knows that too so with their latest announcement comes word that they are willing to provide my kids with annual upgrades to their phone for a monthly fee. 

So the next question is how much memory to choose and frankly, selling a 16 GB phone is a joke.  Given the number of photos taken, songs and videos, not to mention apps, 16GB is used up before we even start.  And the phone requires unused memory each time a new version of iOS needs to be installed.  Of course Apple makes more money with higher memory options and likely better profit margins as well.  So why does Apple even bother to sell a 16GB phone when they know that 64 GB is more the minimum needed; in fact it might just be time to offer a 1MB version.   Wait a few more years and even that amount of internal storage won't be enough. 

The Future Of TV Is Apps

The latest version of Apple TV was announced yesterday and with it an announcement from CEO Tim Cook that the future of TV is apps.  No longer will we ask to turn to a certain channel; now we can say switch to this app or that.  Not such a farfetched idea but Cook may be a little late to the game.  The new Apple TV will be enabled to offer both streaming content from apps like Netflix, HBO and more as well as gaming apps.  And all will be accessible via Siri as well as a new remote.

But other boxes are already in the marketplace offering both video streaming and games.  The biggest two in the space are Playstation and Xbox while others are enabled for video streaming like Chromecast and Roku.  And others like TiVo try to bridge the gap between cable boxes and streaming.

Still the release of the Apple TV and their new TV app store marks another growth opportunity for Apple.  Because as we start using devices to access apps on our TV, we open ourselves to new screens for on screen advertising, a game that Apple has yet to enter.  Still with eyeballs comes opportunity.  And it potentially could lead to possible e-commerce opportunities too.  That will be Apple's future growth opportunity...advanced advertising. 

The initial success of this new Apple TV box depends on just how cool the interface is, how ergonomic and easy it performs, how exclusive is the content that can run on it, how fast it functions, and how excited people are to try it and buy it.  That remains to be seen.  The potential is awesome.

As to the Cook comment that the future of TV is apps, I believe he is correct.  With content being enjoyed across apps like Netflix, Hulu, Amazon, HBO GO, WatchESPN, and many more, content companies have already been positioning themselves for the app space.  Consumers are embracing these apps mostly because of the mobility and TV Everywhere approach that they offer.  And now we are asking what app are they watching that show on. 

Verizon Tries Again with Streaming Content

For those that recall, Verizon has tried its hand at streaming media already.  Their service was called Redbox Instant, a partnership with the grocery store red box DVD rental service, to compete head to head with Netflix.  Redbox Instant was dropped almost a year ago.  Today, another streaming service has been announced.  Called Go90, it is a mobile app for the phone to stream video content.  The 90 refers to turning the screen 90 degrees from vertical to horizontal for optimal viewing and the GO aligns itself to other streaming services like HBO GO .  But this video service is not built to compete with premium content like Netflix or HBO; rather, it seems set to offer more basic cable type of video fare. 

Also different from the Redbox Instant model, Go90 is being delivered ad-supported, with no subscription price, to to anyone with a smartphone.  While Verizon customers may get an optimal experience, others will hopefully also receive a reliable video stream.  Will Go90 be a cable killer, unlikely.  I suspect that most of the content will be older in nature.  It will certainly help those that prefer mobile viewing with more content at their disposal.  Will Go90 be a financial success; that too will remain to be seen. 

Next Generation Apple TV

Apple's big formal public announcement is still two days away, but rumor, speculation, anonymous sources, and more are providing enough fodder to keep us intrigued.  We expect another update to the iOS operating system, a next model iPhone, a slightly larger iPad (perhaps ideal for enterprise customers) and finally a new generation Apple TV set top box. 

But as we have always learned, a TV box is more than just hardware, it needs content to run it as well.  And for it to be successful, exclusive content that only works on the device.  For that, various articles, including today's NY Times, expects gaming to be that hook.  Are we expecting Pong to make an appearance, literally one of the first games for the TV set.  Or will we get something that makes wanting to play a mobile game better suited for the TV set and not the iPad or iPhone.  Certainly not Candy Crush or Angry Birds, I hope. 

Siri is expected to play a bigger part on the hardware side of the Apple TV along with a new remote.  As much as it is nice to control the TV set from your iPad or iPhone, there are times when changing the channel and using these devices are mutually exclusive.  And switching back and forth from 2 applications not enjoyable.  Perhaps not a big deal but good to have options on different ways to control the functions of the box. 

Will a refreshed Apple TV start to take market share away from Roku, Google Chromecast, or other OTT boxes?  Apple will need more than gaming and the rumor mill says they have yet to get enough content to create a subscription service to match Amazon, Netflix, or Hulu.  To this I continue to say it may be time to buy, not build from scratch.  More will be learned in just a couple days.  Perhaps we will also get some more surprises out of Apple.  And if the announcement excites many, a good Holiday Season may be in our future. 

Hulu Offers A More Expensive Ad Free Subscription Service

How do you like your streaming video, with ads or without?  Most subscribers are likely to say 'without' and Hulu seems to have finally heard that message.  While Netflix charges between $8-$9 dollars a month for an ad free service, and Amazon offers its ad free service, with free shipping, for $99/year, or approximately $8.25 a month, Hulu will now ask customers for $12 a month for its new ad free service.  Of course, if you want to save a few bucks a month, you can still get Hulu for $8 a month with ad interruptions. 

So now streamers, which video subscription service is right for you?  Of the big three above, each offers TV shows and movies and each have their own exclusive content deals; Amazon has Transparent, Hulu has Seinfeld, and Netflix has House of Cards.  And now comes word that Apple might just want to break into this group with a content offering as well.  What does a consumer do?  Buy one service or all of them?  And what about HBO, Showtime, and Starz?

And how do we search and find content that we want to watch online?  The TV Guide Magazine can no longer help us and our cable guide is a dinosaur trying to hunt and peck for linear and on demand content.  Where can I go so to find a movie starring the recently departed Dean Jones?  Who has the streaming rights this month to Love Bug or That Darn Cat or Blackbeard's Ghost?   And how do you want to watch them, with ads or without?

Amazon New Feature A Winner

The worst part of a streaming service is when there is no WIFI or when you are forced to buy it (hotel, airline, etc.)  And it is those times when you rely on it for watching a video or listening to music that the value of a streaming subscription is worthless.  Well, it seems Amazon Prime has heard those complaints and has instituted a new feature.  According to Business Insider, Amazon Prime subscribers "can now download movies and TV shows on your smartphone or tablet for offline viewing."  And it is available on any device, not just certain Amazon Fire devices.  It also means that customers on certain data plans can download content and potentially avoid needing expensive data plans on their cellular phones.  Applause, applause to Amazon for a great feature that brings tremendous benefits to its customers. 

Apple Wants Original Content

As an admitted fan of Steve Jobs and Apple, I have enjoyed watching the company and using their products.  In my blog on Aug 21, I mentioned, and not for the first time, that Apple should consider buying a content company.  I suggested the purchase of CBS, Scripps, or Viacom, but wouldn't mind them buying Netflix either.  Today's Huffington Post speculates that Apple is indeed interested in producing original content to compete in the streaming space. 

In an age of build or buy, I might re-suggest to Apple that their expertise is not content creation.  But they have the free cash to buy and purchasing a content company with both a library of content and the talent that goes with it may be the best means to jump start their entry into the content space.  I've offered a few suggestions already, but maybe another is in order.  I think that Tim Cook, CEO of Apple and John Malone, CEO of Liberty Media might consider some sort of partnership approach.  Both bring an expertise from different sides of the media space and both see a global vision to their business strategy.  A healthy collaboration of content, distribution, and technology might be the synergy that we need to affect a quantum leap in the media landscape. 

Should Apple get into the content business, absolutely!  But I propose that buying media companies and building out a partnership with Liberty might be the ultimate one-two punch to compete in the distribution space. 

The Glut of Video Content

In my blog on August 7, I suggested that there were too many cable networks, resulting in bloated cable line-us and high subscription pricing.  My suggestion, that it was time to drop cable networks, reduce the glut, and hopefully try to lower prices.  Today's NY Times takes a different direction, but sees a similar solution.  In the article, Soul Searching in TV Land, writer John Koblin finds that there is too much content on TV and notes that "Mr. Lombardo and other executives say it is harder than ever to build an audience for a show when viewers are confronted with so many choices and might click away at any moment." 

There are so many original shows being created and aired, that fragmentation leads to lower ratings.  In the Golden Days of TV, many shows may have been created as pilots, but with fewer outlets, only the best could make it to series and to air.  There is no need to wean out anymore so that many more shows make it to the screen, either on a linear line-up or a streaming service.  We are inundated with choice.  Add to that all the older series now accessible on services like Netflix, Hulu, or Amazon, "So a new season of 'Scandal,' for example, is also competing against old series like 'The Wire.'”

With so much content at our fingertips, it may be harder and harder for quality shows to get noticed and viewed.  Fragmentation of content choices also makes it harder and harder to find; we rely more on social media to tell us what is trending and where to find it.  Fragmentation has also made it harder for networks like Univision to grow even for Hispanic viewers.  With so much choice, revenue is harder and harder to increase.  The NY Times also speaks to this issue in the same edition. 

Too much, whether candy or content, leads to a tummy ache, or revenue challenges.  The economic laws of supply and demand apply to video content like anything else.  It may be time to reduce the supply to maintain the right balance for demand. 

Can Apple Ever Exceed Market Expectations?

It seems that the big worry on Apple centers strictly on its iPhone product.  Its growth, year over year, is more important than any other of its products, whether it is the Mac, iPad, or even the Apple Watch.  Financially, Apple may be doing quite well but market sentiment seems to be that it is a one product company that lives or dies on sales of its iPhone.  Still the stock market is a bit like gambling, high on expected short term outcomes, low on long term strategy.

Still, while Apple has been seen as strictly a technology company, its competitors seem to do more diversification.  We are already expecting a news conference to be announced to tell us about next generation iPhones, Apple Watches, Apple TV boxes, and more.  It's iTunes and App Store and its new Apple Music subscription service continues to grow, adding more and more revenue and profit to the bottom line.  But these are all technology platforms.

It is Apple's future plans that intrigue a number of us.  Will Apple create a self driving car or are they better suited to partner with a current company like a Tesla?  Should Apple invest in content creation and consider buying a media company.  A CBS Broadcasting Network or assortment of cable networks like Viacom and Scripps might be a smart way to diversify into content.  Is content distribution in their grasp and could buying Netflix or Hulu a means to be in the OTT space?  Or does Apple see itself as the center of IoT (The Internet of Things) and it is time to invest and partner with major appliance manufacturers or HVAC manufacturers like Honeywell to make Apple the centerpiece of the connected home. 

Time may be ripe for Apple to declare a new strategic direction to generate a buzz and declare a commitment to the future. No doubt Apple iPhone growth must slow; the Apple Watch may not be enough to satisfy the market.  It may be the right time to shake up the world again.