Cable loses subscribers, satellite gains in Q1

While cable is attacking the phone's landline business, the telcos have been attacking cable's video and hi speed business. And while the telcos have lost phone revenues, it is not because of cable, but because of changing technological trends toward mobile communication. And with a recessionary economy, people need their cell phones, and can reduce their expenses by dropping the landline.

So does that make cable's strategy of going after the triple play business less successful? Cable has a real opportunity to take away a big portion of phone business in the home, but even more importantly, in the business sector. Providing phone and hi speed data services to businesses can become a lucrative opportunity for cable and should not be discounted when lookin at their revenue numbers.

Cable subscribers and cable revenue will decline; competition does that. But cable can still show huge revenue growth by entering into these other businesses that the phone company has had huge control over. Cable's business has an upside too.

On the consumer front, modem speed and fast connection are important marketing benefits to pursue; more homes have a hi speed line than a HD set. Consumers accept the modem because it hides behind the computer and does not interfere with the pc's ability to navigate. A cable box, on the other hand, takes controls away from the tv set. Most consumers prefer not to have a box; they are not comfortable with it and tend to limit the number of sets that they put a box on. The marketing benefit is to work closer with these manufacturers to improve their ergonomic value. Hey Apple mad an mp3 player a must have with the ipod. Until then, homes will do their best to work around the box or limit their numbers.

Sirius - XM Satellite Merger Being Delayed

So the FCC has delayed its decision on the merger of Sirius and XM Satellite. They have decided to not address it at their next meeting and have not placed it on their agenda. All this, even thought he Department of Justice has approved their merger. So what is the FCC waiting for, a unanimous vote, as suggested in this article, or something else. Whether unanimous or not, this merger should be approved and these delays are not helping. It is government getting in the way of market forces. Let a free market decide if paid radio is preferable to free radio and other entertainment options.

Has the FCC become so powerful that they should be more carefully watched themselves?

Listen To Your Customer

I attended a fascinating panel that consisted of real cable customers talking about their needs, what they valued, and what they wanted from their cable provider. And while they may not have represented a true cross section of America, their opinions were genuine and their desires real. What made it most eye oepning, is that the needs that they expressed were different from what a top cable executive spoke of as the direction their company was taking to remain competitive against telcos and satellite. It means that cable may lose their dominant position by picking the wrong strategy to follow.

From the panel, the top line learnings:

1. Hi speed is the number one reason for choosing a provider
2. Speed matters but few can tell how fast is fast; whoever markets the best reliability with that speed can win the race.
3. Only 20-40% of the TVs attached to a cable in the home also have a converter box; consumer don't care for the device and so don't see all the advantages of digital cable on all TVs. Few use VOD and only some use their DVR.
4. Price sensitivity - as consumers see cable as a commodity, a lower price matters.
5. Consumers are thinking about HD sets but many still don't have one yet. Like the converter box, they may get one HD set, but the rest will remain standard def.
6. Exceptional service matters - door to door sales reaches people directly, retention calls combined with discounting when signing a long term agreement can be effective. And customers listen to their neighbors; a bad experience spreads quickly and customers know if their provider was a JD Powers winner.

Interestingly, Direct TV is pushing the most HD and cable is attacking that message most. They hope that HD content will matter. It leaves open the opportunity for telco to push the hi speed advantages; especially as Comcast fights a peer to peer issue which hurts their market perception. Content is nice, but most people find that their favorite channels are available everywhere. Hi Speed matters most and whoever sells the best value for their package and delivers it with exceptional service will ultimately win.

Competition for your Digital Connection

So who should you connect with; who is your provider for phone, cable, hi speed? Are you working with one provider and taking the triple play discount or are you picking a little from each? Interestingly, the decision is being made by what is most important for you and your household based on a number of factors. And cable, telco, and satellite are doing their best to prove that they have the competitive edge.

Cable's edge today is the triple play, offering a discount my purchasing all three platforms from one provider. In addition, cable touts its VOD choice and is starting to push that advantage with HD VOD as well. That technological edge for them is also leading them to more advanced services like start over and look back, supporting the benefit of "what you want, when you want it". Lastly, cable brings strong local content, particularly with news channels, like NY1 from Time Warner in NY and News12 on Long Island from Cablevision. Channels not accessible to consumers on their competitor's platform.

Satellite continues to push HD linear channels as their strength. Some consumers even believe they get a better HD signal from satellite than cable. For Direct TV, it pushes the content edge with the NFL package, offering out of market games to the true NFL fan. But Direct TV may kill this golden goose as they charge more to the package to upgrade it to an HD feed of these games. Satellite sees the risk from VOD and has now found a way to enter this business with a competitive product. Whether the consumer is satisfied with its method for delivering or technology can improve the ability for satellite to become 2 way remains to be seen. It also affects their way to offer hi speed and has caused them to partner with telcos to offer a triple play like package.

Telco was feeling the heat from the loss of hard line phone and needed to enter the cable business to keep customers from switching. As cable becomes more adept at marketing to the commercial telecom business, telco revenues will be even more hurt. Telco has entered the cable and hi speed game with fiber to the home and tout a higher download and upload stream at a lower price. Consumers that need high bandwidths, whether for business or personal reasons, see this as a competitive reason to become telco triple play customers. With the exception of local content, telcos are offering similar VOD and HD choice as cable and seem to also play the price advantage in their marketing campaigns.

So content choice (local, sports, HD, VOD), speed, and price seem to be the three major factors determining which service is chosen by customers. And like any business that involves customer relationships, exceptional service matters, too. Because while it may not be easy to switch providers, bad service can become the impetus to make that change.

Do Content Owners Need Content Aggregators Anymore

It seems that content creators can bypass the middlemen and get to the consumer directly. Digital technology has lowered the barriers of entry so that films and shows don't need to find distribution platforms, they can do it themselves.

When Showtime/CBS and Viacom/Paramount split, many argued that this would unlock the value of both companies and enable each to more fully realize their potential. But the nature of this deal means that the Viacom side can simply create its own distribution arm and not rely on its former partner. So the split of companies also signified a split of synergies.

What is not being discussed is that their still requires a marketing skillset to enable content to break through the clutter and get noticed. Content aggregators can coordinate distribution schedules, provide a single shop experience, and be a known landing page for the consumer. But the case can be made for aggregators and content creators to be vertically integrated, both making video content and distributing it. NBC Universal has shown that ability to produce a film, send to a theater, show it on USA, air it on Hulu and digitally sell it.

It may get to a point that distribution windows will disappear. A film leaves the theater and goes to every possible distribution vehicle simulaneously. The old methods of selling exclusive windows may be over. A film would be available for dvd, VOD, digital download at the same time. And content owners can maintain their profits by managing the distribution windows themselves, using their own networks, and technology to control the digital rights to their content. Maybe Viacom and Showtime should think about coming back together!

New York Times swings to loss in first quarter

Some interesting highlights from the article:

First-quarter revenue at the company's newspaper properties fell 5.7%, to $719.7 million.
Ad revenue fell 9.2%, while circulation revenue rose 1.9%.
Classified advertising, traditionally the prime source of revenue for newspapers, plunged 22.6%, reflecting declines in help-wanted, real estate and automotive ads.

Print advertising is declining and circulation rose in the quarter. Also, About.com, a subsidiary of NYT saw growth as well. "While online revenues are rising, that growth isn't coming nearly fast enough to offset losses in print advertising and circulation."

But don't think that they are not a meaningful business, in the first quarter of 2008, revenue was still $747.9 million.

Their business is about getting readers to consume their brand across all platforms. They are a content producer and need to push the envelope more on the value of the opinions and news they present; otherwise, alternative outlets, including Murdoch's many brands (WSJ, Fox, NY Post, etc.) and even the internet publication Huffington Post , the Drudge Report , and others will eclipse the New York Times as the go to page for news and opinion.

Is this quarterly report the wake-up call the New York Times needs to become even more aggressive in this new media space? Or are they too late? Do other print or web publications replace your need to use the NYT for your daily news fix? Let me know.

Is network-based DVR an IPTV savior?

Cablevision recently talked about providing a network based dvr. And were successfully stopped from proceeding. Time Warner has made some subtle changes to the model and presented it as Start over and Look Back, with early success.

Technology is turning the distribution model on its knees and once the cat is out of the bag, it is hard to put him back in again. Such has been the case with the dvr and commercial skipping. The appeal of IPTV delivered programming is that it enables more flexibility in viewing and more interactivity between the user and the content. No matter when you view content, the material can be updated to remain relevant and interesting to the viewer.

The hurdles remain are high. Content ownership and syndication; technology allows the owner of the content direct sell through to the user without selling access to different windows. Can content owners make up the revenues lost from selling access to different windows ( North American rights, premium rights, VOD rights, etc.) to other partners and get higher returns from direct access to the viewer. Can Turner Classic Movies survive as a network if Sony can sell its films directly to the home. And how far will it go. Will AMC Network give up its cable license fee to get ubiquitous distribution as a stream. Do cable companies end up as simple content delivery networks, managing communication lines like the phone company once managed their phone business. How this data is managed and moved, both at the set top box and at the network level will determine how these businesses will evolve.

These licensing models have been around for a long time; technology and IPTV delivery changes the business. “We have to make sure the business models intersect, for service providers and content owners,” said Enrique Rodriguez, corporate vice-president of Microsoft TV, in an NAB interview. “We need to establish a set of discussions.”

More Than 10 Billion Videos Served

Numbers for online video usage rose in February and that's without counting the launch of Hulu and itunes. Wow! There is an insatiable desire for online viewing, and more is coming. But is this a false high, and the numbers will settle down once the newness goes away, or is this the inevitable direction for all video usage? The vast majority of those views are from You Tube. It will be interesting to see where Hulu emerges on the list in next momths report. I have found Hulu to be a very satisfying viewing experience for professional content, where You Tube offers more viral content.

As noted in the article, "consumers may have more options for watching TV shows on demand and for watching content on TVs that's currently online-only." I have found that first hand. I recently put our Tivo on a wireless network and used it to download video from Channel Frederator. While I enjoyed the experience, I didn't season pass it; I'll continue to watch those shows on my computer, and leave my Tivo for longer form content.

To me, the end game is not the length of the content, but where and when I choose to watch it. I want the flexibility to watch it on my terms. And for me, the small screen is ideal for short form content, the big screen for long form.

Can You Enjoy a Book on a Cellphone

Today's article really asks what will the device look like that consumers will embrace and will finally lead to a switch from print and paperback to digital reader. Is the blackberry or cellphone a preferred size to read more than emails. Are the Kindle or Sony Reader the right sized devices that people will prefer. On my recent airline trip, no one around me was using a reader. Most still had old fashioned newsprint. And in my travels, I have seen only one Kindle being used and no Sony Readers. They have not captured the consumers attention like the ipod and iphone.

But I believe that these digital devices are a natural progression. Perhaps it is price point, perhaps it is the mindset of buying and discarding the paper that has to be changed, but clearly, this generation is more concerned with saving our natural resources and a digital reader can do that as well as be the next "wow" device. I think if Apple got in the mix and created a reader that utilized the same screen touch application that the iphone does, Apple could have another winner on their hands. That is clearly what Amazon is afraid of, and Apple should see digital print as another avenue for growth.