On Friday I wrote a blog on Redbox trying a streaming business again. Today, Redbox parent Outerwall Inc. has announced that it will be bought by private equity firm Apollo Global Management, per the NY Times. Besides its more well known Redbox kiosks which rent out DVDs, the company also has a coin change business, Coinstar, that takes a fee every time consumers use the machine to convert change to dollars.
Will Apollo support the streaming side of the business or simply use this acquisition to try and spin it off to more capable hands? We will wait and see.
Monday, July 25, 2016
The VCR is Dead; Goodbye Old Friend
Technology is full of life changing moments. With every change, our life is meant to get easier and easier. But it has also spelled the death for the old technology before it. There are too many examples to recount, but one that hits home for me is the announcement that the VCR, the videocassette recorder is dead. Production of new models will cease and their use will become a memory as the digital revolution completely takes over. Goodbye old friend.
I remember when we first got one in our home. It was life changing allowing us to record and watch any show we wanted. It also let us watch theatrical movies when ever we wanted. And we could pause or stop them for the necessary potty break. When I moved into my first apartment, the VCR was a gift from the folks. I was ecstatic. Now I could go out on a Saturday Night and know that SNL was being recorded for my Sunday viewing pleasure. For those that knew how to program the VCR clock, TV was finally on your time. Of course, tapes were limited to 6 hours at the most, but that was never an issue.
Many people used their VCR to make endless recordings of their favorite series, keeping them in their video library. I too would record my favorite movies to watch again and again. Friends would borrow and some would even forget to return. A number of years later, I was at a friend's apartment. She had moved to LA and looking at her tape collection, I saw one of my copies. I had always wondered where that tape had gone.
The VCR outlived its competition, from laser discs to betamax, but it couldn't outlive technological change. The VCR was still analog and digital technology was emerging. For many, the VCR made TV viewing easier; for others, they could never figure out how to set the clock. The launch of the DVR, the digital video recorder, took away that problem and more. We were no longer limited to the tape length of 6 hours although viewing was limited to the box that we saved our show on. That iss ue has now been solved through digital streaming.
The VCR was a breakthrough technology. Not only could we watch time shifted programming, we had more controls, too. We could fast forward through commercials and rewind to watch over and over our favorite parts. It put TV into the hands of the individual. It was the first device to deliver what you want, when you want it.
I no longer own a VCR and yet I still have old tapes lying around the house. For some, I feel the need to transfer off analog tapes and onto another for later viewing. I would say to transfer onto a CD but that technology is likely the next to see production stop. No longer do Apple computers include CD players in their laptops or desktops. Cars no longer need them either. Our digital memories are to be stored in cloud libraries, not physical ones in our study or family room.
Millennials will pay little attention to the news announcing the end of VCR production. They know only DVRs, on-demand, and streaming. But the VCR was an important part of my youth and the way that TV viewing changed for me. Goodbye old friend.
I remember when we first got one in our home. It was life changing allowing us to record and watch any show we wanted. It also let us watch theatrical movies when ever we wanted. And we could pause or stop them for the necessary potty break. When I moved into my first apartment, the VCR was a gift from the folks. I was ecstatic. Now I could go out on a Saturday Night and know that SNL was being recorded for my Sunday viewing pleasure. For those that knew how to program the VCR clock, TV was finally on your time. Of course, tapes were limited to 6 hours at the most, but that was never an issue.
Many people used their VCR to make endless recordings of their favorite series, keeping them in their video library. I too would record my favorite movies to watch again and again. Friends would borrow and some would even forget to return. A number of years later, I was at a friend's apartment. She had moved to LA and looking at her tape collection, I saw one of my copies. I had always wondered where that tape had gone.
The VCR outlived its competition, from laser discs to betamax, but it couldn't outlive technological change. The VCR was still analog and digital technology was emerging. For many, the VCR made TV viewing easier; for others, they could never figure out how to set the clock. The launch of the DVR, the digital video recorder, took away that problem and more. We were no longer limited to the tape length of 6 hours although viewing was limited to the box that we saved our show on. That iss ue has now been solved through digital streaming.
The VCR was a breakthrough technology. Not only could we watch time shifted programming, we had more controls, too. We could fast forward through commercials and rewind to watch over and over our favorite parts. It put TV into the hands of the individual. It was the first device to deliver what you want, when you want it.
I no longer own a VCR and yet I still have old tapes lying around the house. For some, I feel the need to transfer off analog tapes and onto another for later viewing. I would say to transfer onto a CD but that technology is likely the next to see production stop. No longer do Apple computers include CD players in their laptops or desktops. Cars no longer need them either. Our digital memories are to be stored in cloud libraries, not physical ones in our study or family room.
Millennials will pay little attention to the news announcing the end of VCR production. They know only DVRs, on-demand, and streaming. But the VCR was an important part of my youth and the way that TV viewing changed for me. Goodbye old friend.
Friday, July 22, 2016
Redbox Tries Streaming Again
When Redbox first partnered with Verizon three years ago, their joint venture, titled Redbox Instant, was seen as a possible competitor to Netflix and Hulu. It was a strategy to expand from the DVD kiosk business toward a streaming one with a partner with a great deal of experience in mobile. For whatever reason, that venture failed and Redbox Instant died last year.
Since then, Verizon has been experimenting with their own subscription streaming mobile service. And now Redbox has decided to go it alone too with a new venture dubbed Redbox Digital. But rather than be a monthly license fee subscription business, it appears that this new venture will attempt a transactional model. According to Variety, "Redbox hasn’t said anything about pricing or catalog for Redbox Digital, but one can assume that it will largely mirror that of other services that allow users to pay to rent or own individual titles, including iTunes, Vudu and Google Play. That means that streaming rentals will likely be significantly more expensive than the $1.50 Redbox customers currently pay for physical disc rentals."
Why did the Verizon - Redbox Instant partnership fail? What did each side learn as they independently create other digital streaming businesses? And can either of these two succeed against the respective incumbents. The opportunity is there as long as each can learn from their past mistakes. I'd love to help.
Since then, Verizon has been experimenting with their own subscription streaming mobile service. And now Redbox has decided to go it alone too with a new venture dubbed Redbox Digital. But rather than be a monthly license fee subscription business, it appears that this new venture will attempt a transactional model. According to Variety, "Redbox hasn’t said anything about pricing or catalog for Redbox Digital, but one can assume that it will largely mirror that of other services that allow users to pay to rent or own individual titles, including iTunes, Vudu and Google Play. That means that streaming rentals will likely be significantly more expensive than the $1.50 Redbox customers currently pay for physical disc rentals."
Why did the Verizon - Redbox Instant partnership fail? What did each side learn as they independently create other digital streaming businesses? And can either of these two succeed against the respective incumbents. The opportunity is there as long as each can learn from their past mistakes. I'd love to help.
U-Verse Loses Subs While DirecTv Adds Them
AT&T may just consider itself a tale of two cities. On one hand, they have the newly acquired DirecTv, a satellite service that saw a gain of 342,000 subs in the second quarter, while its competition, Dish, lost nearly as many. And on the other hand you have the telco digital service, U-Verse, what FIOS is to Verizon, dropping those DirecTv gains and more. They lost "391,000 U-verse TV users in the second quarter" per Fierce Cable. That's almost a 50,000 sub net loss for AT&T! What happened?
AT&T also reported more broadband losses as they were not able to convert their DSL base to IP. Did these customers go back to cable or did they ut the cord altogether? The challenge AT&T faces is how to keep promoting and growing the DirecTv business without taking that business away from its telco side. Is there synergy there to grow or a zero sum game? The last quarter financials questions where the business is going.
AT&T also reported more broadband losses as they were not able to convert their DSL base to IP. Did these customers go back to cable or did they ut the cord altogether? The challenge AT&T faces is how to keep promoting and growing the DirecTv business without taking that business away from its telco side. Is there synergy there to grow or a zero sum game? The last quarter financials questions where the business is going.
Thursday, July 21, 2016
Dish Loses Subs, What About DirecTv?
Today Dish announced that they lost over 280,000 subs in the second quarter. In 2015 they lost 81k subs in Q2. Springtime is not good for Dish. Coupled with a loss in broadband subscribers as well, per Multichannel News, Dish is facing some true challenges. And they will soon find out how their competition is doing. Is cord cutting at play for them or is something else occurring?
Later this afternoon, AT&T, owner of DirecTv, will be releasing its quarterly financials. Many expect DirecTv to meet or beat its numbers. According to the Wall Street Journal, AT&T expects both revenue and earnings to grow ahead of expectations. DirecTv may just benefit from the deeper pockets of its parent. Once the financials are released, we may be able to discern if DirecTv has captured some business from Dish churn.
Later this afternoon, AT&T, owner of DirecTv, will be releasing its quarterly financials. Many expect DirecTv to meet or beat its numbers. According to the Wall Street Journal, AT&T expects both revenue and earnings to grow ahead of expectations. DirecTv may just benefit from the deeper pockets of its parent. Once the financials are released, we may be able to discern if DirecTv has captured some business from Dish churn.
Wednesday, July 20, 2016
The Future Of Fox News
It should come as no surprise that nothing lasts forever. But we sometimes do seem surprised when news of change arrives. Even more so, when that change is a result of the classic Lord Acton phrase, "power tends to corrupt, and absolute power corrupts absolutely". We find it time and time again that those who see themselves above the law may not be inclined to follow those laws. Such wisdom may now apply to Roger Ailes, CEO of Fox News.
The success of Fox News has been acknowledged as the direct result of Ailes. He brilliantly created a tactic that paid millions of marketing dollars in exchange for basic launches on cable systems, built a conservative point of view and attracted a huge audience to it, and created such demand for the channel that those same cable operators ultimately paid back those marketing dollars and much more in higher and higher license fees. Add a rising ad marketplace and Fox News under the command of Ailes flourished. The news niche attracted viewers not happy with the viewpoints of CNN or MSNBC.
But times are changing and the Murdoch empire, owner of 21st Century Fox, is now in the hands of Rupert Murdoch's two sons. They may see a different direction for Fox News. And the recent allegations about Ailes regarding sexual misconduct may simply be the catalyst for his dismissal. Per the Daily Beast, Ailes is "poised to step down in the wake of a sensational lawsuit alleging sexual harassment, discrimination and retaliation, filed barely two weeks ago by fired Fox anchor Gretchen Carlson." Whether Ailes is guilty or not may not change the ultimate outcome.
What does a Fox News, without Ailes in command, looklike? Do notable anchors and personalities on the channel stay or leave post-Ailes? Some may even have out clauses in their contracts that make them null and void should Ailes leave the company. Will the channel retain its conservative viewpoint or seek another. 20 years for Fox News is a long time but as I said upfront, nothing lasts forever. Look at almost every other cable network and it looks quite different today from 20 years ago. With the expected end of the Ailes era at Fox News, change is coming.
The success of Fox News has been acknowledged as the direct result of Ailes. He brilliantly created a tactic that paid millions of marketing dollars in exchange for basic launches on cable systems, built a conservative point of view and attracted a huge audience to it, and created such demand for the channel that those same cable operators ultimately paid back those marketing dollars and much more in higher and higher license fees. Add a rising ad marketplace and Fox News under the command of Ailes flourished. The news niche attracted viewers not happy with the viewpoints of CNN or MSNBC.
But times are changing and the Murdoch empire, owner of 21st Century Fox, is now in the hands of Rupert Murdoch's two sons. They may see a different direction for Fox News. And the recent allegations about Ailes regarding sexual misconduct may simply be the catalyst for his dismissal. Per the Daily Beast, Ailes is "poised to step down in the wake of a sensational lawsuit alleging sexual harassment, discrimination and retaliation, filed barely two weeks ago by fired Fox anchor Gretchen Carlson." Whether Ailes is guilty or not may not change the ultimate outcome.
What does a Fox News, without Ailes in command, looklike? Do notable anchors and personalities on the channel stay or leave post-Ailes? Some may even have out clauses in their contracts that make them null and void should Ailes leave the company. Will the channel retain its conservative viewpoint or seek another. 20 years for Fox News is a long time but as I said upfront, nothing lasts forever. Look at almost every other cable network and it looks quite different today from 20 years ago. With the expected end of the Ailes era at Fox News, change is coming.
Tuesday, July 19, 2016
Netflix "Ungrandfathered" Me
Hey Webster Dictionary, it's time to add a new word - ungrandfathered. Per Netflix, it is the act of eliminating any price discount associated with being a long time subscriber and substantially raise your monthly fee to match with new subscribers. And while Netflix may see a revenue bump, they may also face higher than typical churn rates too. And with significant competition from Amazon, Hulu and others, Netflix can't expect rate increases to help their future.
Of course, Netflix has more to worry about as my blog yesterday detailed. When quarterly financials came out, Netflix failed to hit a number of metrics, including important growth numbers. And while there was some growth, it was well short of expectations. Churn will only erode those gains. It is time for Netflix to actively find additional revenue streams to drive business growth. And they must start soon.
Of course, Netflix has more to worry about as my blog yesterday detailed. When quarterly financials came out, Netflix failed to hit a number of metrics, including important growth numbers. And while there was some growth, it was well short of expectations. Churn will only erode those gains. It is time for Netflix to actively find additional revenue streams to drive business growth. And they must start soon.
Monday, July 18, 2016
The Future Success Of Netflix
Nothing lasts forever. Even Netflix knows that; they watched their DVD business erode while working to navigate the streaming world. It was a bumpy ride along the way but the result so far has been quite impressive. But growth appears to be declining, according to the Wall Street Journal, and international challenges and content costs aren't helping.
In August, the remainder of the U.S. subscriber base will see its monthly fee rise to $9.99; for my household that is $2 more a month or a 25% increase. Yet that is not enough to satisfy investors in the business seeking more future growth from the streaming giant against greater competition from Amazon and Hulu. So what is Netflix to do as its Act 3?
Of the options to consider, Netflix might want to build out a streaming tier of live content, at an incremental cost, as a skinny bundle to drive more cord cutting. They could add more advertising to the mix, either with an ad supported option or with more sponsored content to the stream. Netflix might consider growing through expansion; perhaps the purchase of a studio like Paramount or some cable networks. For Netflix, standing still is not an option. They learned that lesson from their DVD rental business. Existing growth of its subscriber base will dry up and future revenue growth must come from other business platforms.
In August, the remainder of the U.S. subscriber base will see its monthly fee rise to $9.99; for my household that is $2 more a month or a 25% increase. Yet that is not enough to satisfy investors in the business seeking more future growth from the streaming giant against greater competition from Amazon and Hulu. So what is Netflix to do as its Act 3?
Of the options to consider, Netflix might want to build out a streaming tier of live content, at an incremental cost, as a skinny bundle to drive more cord cutting. They could add more advertising to the mix, either with an ad supported option or with more sponsored content to the stream. Netflix might consider growing through expansion; perhaps the purchase of a studio like Paramount or some cable networks. For Netflix, standing still is not an option. They learned that lesson from their DVD rental business. Existing growth of its subscriber base will dry up and future revenue growth must come from other business platforms.
Thursday, July 14, 2016
The Sharks Are Circling Viacom
Given the health issues surrounding Sumner Redstone and the management conflicts hitting Viacom, I am surprised that it has taken this long for the sharks to circle Viacom. But such seems to be the case with news that folks are looking at pieces of the company. That piece is Paramount Studios, a once proud film making company that has had a hard time finding financial hits. Spongebob is not as popular as Dory it seems.
According to Bloomberg, "Chinese billionaire Wang Jianlin’s Dalian Wanda Group Co. is in talks to buy 49 percent of Paramount Pictures from the company." Whether such a deal gets approved remains to be seen but it shows that the company is having problems. Still, if Redstone has any control left, why wouldn't he try to see his other company, CBS, take back Viacom and help recharge its engines. With Comedy Central and Nickelodeon still valuable cable networks and a storied history from Paramount, the hope is that there is still value left to unlock. New management for Viacom may be the answer and CBS could use the assets to stay strong and competitive against NBC and ABC.
According to Bloomberg, "Chinese billionaire Wang Jianlin’s Dalian Wanda Group Co. is in talks to buy 49 percent of Paramount Pictures from the company." Whether such a deal gets approved remains to be seen but it shows that the company is having problems. Still, if Redstone has any control left, why wouldn't he try to see his other company, CBS, take back Viacom and help recharge its engines. With Comedy Central and Nickelodeon still valuable cable networks and a storied history from Paramount, the hope is that there is still value left to unlock. New management for Viacom may be the answer and CBS could use the assets to stay strong and competitive against NBC and ABC.
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