As Cable Rates Rise, Expect More Cord Cutting

Programming license fees continue to rise and cable operators respond by raising monthly subscription rates to its customers.  According to Multichannel, cable rates are expected to rise about 3% in 2016.  It amounts to a few dollars more each month but consumers are already getting tired of any and all increases.  Comcast rates are rising just as they planned to move channels off basic to more expensive digital tiers.  That means that consumers are paying more for less.  Skinnier packages don't necessarily mean lower costs. 

What will subscriber levels look like this year.  Some cable operators have seen a slowdown in lost customers and try to point to a reversal in the trend toward more cord cutting.  First quarter subscriber levels should dispel those myths.  As OTT networks like Amazon Prime, Hulu, and Netflix continue to push more original programming, and customers become more inclined to use them over cable TV for their video offerings, the value of cable decreases.  Cord cutting will only become more severe.  And for households on a limited budget, cable TV will stop becoming a must have for the home. 

Millennial usage has significantly shifted from the big screen television set to the handheld tablet or smartphone.  Their primary video consumption, driven partly by peer pressure, to watch and binge on OTT programming.  And if this next generation sees less value from cable, then when they leave their parents' home for their own residence, cable TV will not be a necessary utility for their new home. 

The wire to the home will be seen only for broadband consumption, not for cable or for phone.  And if cellular companies can make wireless packages that keep the price point for data reasonable, then consumers may make the cell phone company the primary provider of broadband services.  That is the trend facing the cable operator and that is the challenge that this industry must focus to find its next growth opportunity. 

Comcast Pushes Channels Off Basic

The NY Post has reported that Comcast is taking underperforming networks off their basic tier to reduce costs.  The networks targeted include Pop (the former TV Guide Channel, Spike and CMT (both Viacom owned networks) that are being moved to a more expensive digital tier.  It may not be a drop but it certainly reduces their subscriber base.  The article says that Comcast is creating skinnier bundles and reducing costs but it is unlikely that those costs will be passed directly on to consumers; rather, it may only delay the need to raise the costs of the basic tier. 

Unfortunately, when you look a little deeper, these three networks are hardly the financial reason why a cable subscription is expensive.  They are pennies per month in license fees compared to sports programming and other more popular cable networks.  And they were chosen because Pop is an independent network and Viacom has very little leverage with its other sister networks MTV, VH1 and Comedy Central.  None have the cache or demand that they once had. 

Comcast and other cable operators are already feeling the heat from cord cutting.  And big cable networks like ESPN are suffering directly with lost subscriber fees.  This article may only be detailing Comcast's first steps at taking more bolder steps to create a skinnier basic package to retain its cable customer base.  Cutting cable costs and promoting faster broadband service with a cable subscription are two ways cable operators like Comcast can reverse the cord cutting trend. 

Amazon Prime Has A Deal For You

Amazon Prime has found more streaming media success when the Golden Globes awarded them for their latest original series, "Mozart In The Jungle". To celebrate their win, Amazon Prime is reducing their annual subscription by 26% for new subscribers.  "Subscribing will cost $73 — down from the regular $99 — from 9 pm PT Friday until 11:59 pm local time Sunday night." according to re/code. Quite a savings and sure to drive subscription numbers!

Has Time Warner Lost Its Way?

The challenge for a company as it grows is how to successfully manage its parts in a way that makes the combined entity that much stronger.  But sometimes, too much growth or too many business units operating independently can cause bits of implosion.  They can distract from the core mission or lead to missed opportunities.  And when a company is public with active investors, the value of the parts being greater than the whole creates new pressures on the management team.

Time Warner Inc has been one of those companies under such pressure.  As an acquisition target of AOL, it led to complete disarray.  Once divorced from that mistake, it tried to right itself only to feel pressure to continue to split off pieces.  Time Warner Cable was spun off as was the Time Inc. company.  And what is left are the Turner cable networks like TBS and TNT, the HBO premium cable subscription network, and the Warner Bros movie studio.  But investors want more and believe that Time Warner needs to be either split again or sold to another with deeper pockets.

Recently, some rumors have emerged that Apple could be interested in buying them to support their Apple TV brand.  But if you look at the Apple business, they are a technology company and aggregators of content, from music to video to apps, that they can bundle and sell to customers through their technology.  They don't have the management experience to run a content company.  And owning an HBO or TBS might limit their ability to aggregate other video content.

A more likely scenario might be for Murdoch and the Fox team or Malone and the Liberty Media team to kick the tires on Time Warner.  And ABC might be interested too.  As for CBS, an ailing owner might make it harder for them to manage such a large acquisition.  Time Warner Inc has shown a willingness to part with companies and a spin off of HBO could be a more realistic move in the short run to allay investor concerns.  Although given the recent direction of the stock market these days, the timing to sell may not be right at the moment.

Apple Continues To Impress

Despite worries that iPhone sales may not exceed expectations, the company continues to demonstrate that it is more than a one trick pony.  According to a new study by Juniper Research, the Apple Watch "estimates 17.1 million smartwatches shipped globally last year, with the Apple Watch accounting for 51.5 percent of shipments — or 8.8 million devices sold."  Yes more than half of all global smartwatches sold is an Apple Watch.  And the smartwatch business is still a nascent growing new industry.

The second bit of good news announced recently is that its new streaming music venture, Apple Music, has passed 10 million subscribers in only 6 months of business according to Financial Times.  And according to the article, Apple Music could possibly surpass its main competition Spotify in 2 years.  Not a bad business model to be in, one with a measurable, regular monthly revenue stream.

Of course there is always the next generation iPhone, the new iPad Pro, the push to the Apple TV, and perhaps an inkling in the future of a possible Apple Car.  Apple is clearly Not a company resting on its past laurels. 

Netflix Continues Its Expansion

News out of the CES is that Netflix is now available as a subscription service in 130 more countries.  And while China is not yet one of those international sites, no doubt they are on the radar.  But what is making Netflix a bigger competitive threat is that much more programming buzz is coming from the service.  The latest release is a 10 part documentary called "The Making Of A Murderer", a Serial like analysis of the penal system in a smaller town and an innocent man unable to find his freedom for 18 years.  And in a follow up twist, newly released, found guilt of murder.

Of course if lighter fare is more to your liking, Netflix has that too.  This December, they presented A Very Murray Christmas starring Bill Murray.  A holiday treat sure to make you smile.  It is this assortment of original programming along with movies and TV series that have made Netflix a must have OTT video subscription service.  It may also become enough of a rationale to lead to full on cord cutting.  With a something for everyone approach and a wide array of choices, Netflix and its expansion continues to dominate the media landscape. 

If Self Driving Cars Like Automated Voice Answering, Then We Are In Trouble

I can't tell you how many times I ask for a "Representative" when engaging with a company's voice answering system.  They are more likely to waste your time trying to get to the right information then they are being useful.  And ultimately I need a human being to accomplish the task I am calling about.  Too much automation restricts innovation.

So with talk turning to self driving cars, I wonder what happens without a human connection.  A self driving car may handle a highway or help with parking, but the human assist is equally important. Construction on roadways, mistaken objects for animals and vice versa, and other out of the ordinary circumstances.  While computer assist provides added safety; solo it may not.  The human driver brings something a machine cannot 100% replicate. 

But with so much investment in self driving vehicles, insurance companies will be quick to sell self driving passenger insurance to each and every human being.  Mistakes will occur and "self driver" insurance may be the only way to compensate for blame.   

What To Watch, How To Watch It

Remember the good old days when channel surfing meant hitting channel up or down on your remote and quickly seeing what was on each channel.  Stay a few seconds to watch and decide to commit or move on to the next network.  And when there were only 30 or so channels, the process didn't take too long as you quickly moved through the cycle and back to the beginning.  The rise of cable allowed for more choices and the process took longer but you also had more options.  But as the technology moved from analog to digital, the latency rate to access each channel got longer.  Switching channels was no longer instantaneous; it now took a couple seconds for each channel to pop up.  And channel surfing became a lost art.

But the rise of digital cable also brought a more extensive cable guide with title and description.  We now hit page up or page down to view the multitude of channel data.  A title was all we really had to go on.  And so familiarity with the title was all we could use to decide whether to press it or not.  We now have OTT devices like Apple TV or Chromecast or Amazon Fire or XBox to connect to our TV set input and add to our possible choices.  And that enabled another selection of programming from Netflix, Hulu, Amazon Prime, Crackle, and more.    Surfing is now completely out of the picture.

It feels as if we have almost unlimited choice from linear, on demand, and streaming platforms.  We also have more flexibility where we watch, on the HD set, the iPad or tablet, or iPhone or other smartphone.  But what do we watch and where do we watch it?  Has the overwhelming choice of video content led to overload?  Will we continue to binge non-stop or hold up our hands and say "It's too much, I give up."  Most likely not but sometimes the better choice might just be a good book.

And when we do decide to watch something what do we do first.  How do we pick anymore across multiple input clicks and multiple screens within each platform?  Do we pick something new or find an old reliable show that always entertains, almost like comfort food?  Surfing is unwieldy, choice of content is so spread out that finding what is new or interesting or recommended is not yet easy to do.  It is a huge problem in search of a viable solution. 

Apple Siri Should Meet Amazon Echo

ALEXA...What's the weather today?  ALEXA...Tell me a joke.  ALEXA, the name we speak before asking a question is the device called Amazon Echo.  As a marketer, I am surprised that Amazon didn't make ECHO the go to word to help solidify the branding of the device everytime we use it.  Perhaps it should be renamed Amazon Alexa.

Still, the Amazon Echo is a fun device to keep in your home.  It can connect to other "connected devices" to turn on a light or change the house temperature, it can play music from a Prime account, and it is always at the ready whenever you ask it.  It may not yet be a must have device for the home, but it certainly has the potential.

So Apple, where is your Echo?  It might just be time for Siri to find itself in a standalone device that can access all the Apple devices and apps of the owner.  And given the infrastructure that Apple has already created, it could dominate the home.  With just one ask, SIRI...What is the weather today? SIRI...Call Mom.  SIRI Play Apple Music.  SIRI...What is on my calendar today or how far is the store from my house or what are my latest stock prices or what Reminders do I have for today.  And with a software tweak, an APPLE SIRI device could distinguish multiple iCloud devices within the home.  Then others could ask about their individual calendars or contacts or whatever. 

An APPLE SIRI device could extend the value of the iPhone or Apple Watch.  And because it is plugged in, there are no worries about the next recharge.  Apple, it may be time to build an APPLE SIRI device now for next Christmas.  I am confident that it will do extremely well.