The Line, Ep 1: The FutureSpace Showdown Begins

From the folks at SNL:



Very funny! There are 7 episodes to enjoy. Some great online content.

VOD vs DVD

When Pay Per View became popular, movie studios worried that movie theater revenue would decline. It didn't. Radio didn't kill TV, on-demand hasn't killed linear TV. Each finds its place as technology changes usage and preferences. And so to read that the movie studios are afraid of losing DVD revenue by releasing the same movies on-demand is simply misguided.

"'We believe VOD day-and-date with DVD would be a grave mistake for the movie industry, as it would dramatically increase the volatility of the business,' wrote Pali Research analyst Richard Greenfield in a report last year. Jeff Bewkes of Time Warner sees it differently, "'No, we have not seen cannibalization so far,' Bewkes said. 'I don't think it's right to think that the margins are lower. So we think that since we haven't seen cannibalization on sell-through, that it's going to increase margins and profitability going to day-and-date.'"

And while I understand Greenfield's fear, I agree with Bewkes. It is stopping their ability to maximize their revenue. As video stores close, consumers not interested in purchasing the DVD will remain patient till the VOD window opens up.

I do believe their are ways to differentiate the DVD experience from the VOD experience enough so that a day and date approach does not cannibalize each others profit margin. What makes the DVD different are the extras, additional footage and features, unique games, and other "exclusives" that simply have to be marketed correctly to the consumer. For the viewer who simply wants access to the feature film, VOD is not only profitable but may also offer another "opportunity" to sell the viewer to purchase later to take advantage of those extras. In short, VOD enables sampling and the ability to rent first before buying. To me, that represents the opportunity to own the customer twice!

Some studios remain cautious to this opportunity, others are embracing it. It remains our nature to be cautious about change; but it is happening and those that take advantage of it will benefit by leading the charge.

Kindle Has A Bright Future

Mobile, On-demand, Futuristic, and potentially, Economical, the Kindle looms as how print content is moving to be consumed. And when the financial community updates its forecast to see the upward potential, it optimistically represents the direction the consumer is headed. Citi's Mark Mahaney "thinks instead of being a $750 million business that accounts for 3% of the company's sales next year, the Kindle will be a $1.1 billion business that accounts for 4%." It could be the Christmas gift to get this year!

I'm interested to see what the next generation Kindle looks like and what Sony, Apple and others do to compete in this space. Kindle is to Amazon's print download as the iPod is to Apple's music download. When you recognize that bits are bits, Amazon should find a way to make its Kindle also be an audio and video device, while Apple creates a reader that embraces print downloads.

"Mahaney's projections are not predicated on Amazon releasing a new version of the device this year. But they are predicated on the Kindle moving 150,000 units in Q4 -- something that's only going to happen if the Kindle becomes a must-have holiday gift. But he figures that's a relatively modest bet, given the success of other gadgets in years past." Should Amazon release a new version prior to the holiday season, I wouldn't be surprised to see these estimates go even higher.

Content is King!

The success of The Dark Knight, the improved profit margin from VOD, premium networks like HBO, have finally convinced Time Warner Cable that its future success is dependent on creating great content. "If you build it, they will come", an oft quoted line from Field of Dreams is the mantra these days. "For now, Mr. Bewkes is staking the company’s future on three big content providers: Warner Brothers, Turner Broadcasting (which includes TNT, TBS and CNN) and HBO. To ramp things up on the entertainment front, he’s also been overseeing internal discussions about acquisitions in film and television — including a possible takeover of NBC Universal, should its parent, General Electric, decide to sell, according to executives and bankers who requested anonymity because they were not authorized to disclose details of the discussions."

At the same time, Time Warner is finally moving forward to unravel itself from AOL, a move that smelled rotten the moment it was announced that AOL was buying Time Warner and not the other way around. "Elsewhere in the company, it’s all about downsizing. Time Warner’s cable operation is being spun off, eviscerating the once-popular corporate notion peddled by business consultants and merger specialists that content and distribution should reside under one roof." Where previously owning and distributing content was a necessary synergy, now it appears that this combination no longer holds true. While Time Warner is spinning off its cable properties, Cablevision shareholders are at the same time discussing the sale or spin off of its programming arm, Rainbow Media. Will Comcast soon be announcing that it too will spin off its various programming nets, E!, Golf, Style, and others?

"For Mr. Bewkes and his team, the core of the strategy is a wager that the media pendulum will swing away from distribution and back toward content." And so we watch as others mimic this strategy and content and distribution separate. But mark my words, this is cyclical and within 10 years, that pendulum and the need for synergy will once again reunite content and distribution. That is the changing entertainment landscape.

Sirius XM: Tune in next year

What was Mel Karmazin thinking? Strategically speaking, they have been talking merger for more than a year. Six months ago, they got approvals from the Justice Department to merge. AND it took SIX months for the FCC to approve the final merger. So in ALL that TIME, Sirius hasn't been PREPARING for what seemed like an INEVITABLE future. Frankly speaking, they are missing the boat. To take another six months to release a new radio designed to receive both Sirius and XM transmissions is outrageous. Mel should be jumping up and down!

"This is a bit of a shocker even to analysts who follow the industry. The companies did promise that the merger wouldn't mean subscribers needed new radios. But some analysts expected broader programming changes and dual-mode radios to be available soon after the merger closed."

In six months, a new version of the iPod could be released. In six months, new phones and radios capable of receiving internet radio signals will be released, in six months, this merger could be the beginning of the end. I call this delay a true missed opportunity and one that they strategically should have been ahead of. Unless they have up their sleeve another method to provide current customers of each device all available content, they are in trouble. "Developing a new radio would have required manufacturers to make a big gamble on the merger's approval. Still, a nine month delay before a full fledged interoperable radio goes on sale could seem like a long time...Oddly, long before the merger, the Federal Communications Commission mandated that the two companies develop an interoperable radio. And in 2000, the companies said they put together a team to develop a dual mode radio. Progress on that front has been somewhat limited as the companies and the FCC spent years squabbling over the interpretation of the rule."

Online First, Newsprint Second

The Philadelphia Inquirer, one of the oldest daily newspapers in the country, doesn't get it. Old school was to print first, share online later; New school is to get the information online first and stay relevant and important to your users. But despite the realities of the today's new media world, "the Inkie plans to buck the trend of online first...the Inquirer risks making itself less relevant for those who already have made the transition online and losing their attention—and with that, becoming less relevant for advertisers." How odd.

While paid subscription is important to revenue, so is advertising dollars. It is apparent that subscriber growth is waning and the current generation prefers online to print. Papers should be working on more online applications like Kindle and distributing breaking news through e-mail alerts to improve its value and reach with its subscriber base. Through this transition, offer print subscribers free Kindle downloads. Or even better, offer discount to purchase multiple Kindles so the whole family can have their own device.

For the Philadelphia news junkie, if The Inquirer doesn't stay relevant, they will seek alternative sites to become their key news and information source. They will kill their brand preference and like their print edition, soon become obsolete.

Let Your Fingers do the Typing - Who Uses The Yellow Pages Anymore

Last night, the new Yellow Pages book was dropped off at the front door. I took it to our hallway desk, placed it on the shelf, and removed last year's copy to put into the recycling box. And then I asked myself, "self, I asked, when was the last time I used this book to get information?" The answer is long enough that I don't remember opening it. So now I wonder, do I really need to keep this current edition.

Frankly, when I need to find something, I Google it on the web. And not only to find out where a store or product or service might be found, but to seek out advice and comments from others online that may have also sought out this same information. The web has become so convenient to get this information, I forgot to even consider using the Yellow Pages directory as a reference.

And I'm not the only one. "The percentage of internet users who use search engines on a typical day has been steadily rising from about one-third of all users in 2002, to a new high of just under one-half (49%)."

The yellow Page book is very Americana. It had the brand identity as the predominant source of information. And yet they have not seemed to capitalize on their brand in the online arena. The Yellow Pages brand, owned by AT&T, exists but has not broken through the clutter to become a well known online search tool. And business does not look good.

When Idearc spun off from Verizon a couple years ago, I thought there was hope for Super Pages to enhance its identity and become the online reference point for consumers. They have not fulfilled that goal either. "Over the next five years, Borrell Associates Inc. are expecting 39% of the ad spending on print yellow pages to vanish. After 12 years as an advertising medium, the Internet has finally reached small-business owners with viable marketing opportunities in the form of keyword advertising, interactive directories and low-priced online video commercials. The recession appears to be triggering the shift."

This transition that consumers are making from print to web extends not only through the yellow pages but to all types of print material that can be better searched, sorted, refreshed, and relevant on the web than as a printed page. It seems to already have happened with the yellow pages, other types of print will follow.

Hulu in Hi Def (Why do some still want to call it Hula?)

Unfortunately not all of Hulu's content is in HD, but I'm sure that will come very soon. Why this is big news at all indicates that it must be a slow news day. Previously, they have added HD movie trailers and clips. So now they have added TV episodes and my favorite video, Dr. Horrible's Sing-Along Blog. ABC has already been showing HD content on their broadband player. "And in terms of HD, Hulu, ABC, and CBS all have a leg up on Apple TV and Amazon Unbox, which don't offer any TV episodes in HD. The Xbox Video Marketplace has had HD shows for download since its launch back in fall 2006"

Still it is inevitable that all content will be shot in HD and pitched to consumers. On the receiving side of the equation, consumers are more dependent on the speed of their broadband connection, the player that is streaming the content, and the monitor that the user is watching it on. All those elements affect what the final product looks like.

The bigger news for Hulu is that they are presenting the content without their "limited commercial interruptions". And that obviously won't last for long.

Will the Network DVR Kill Tivo?

The court reversal enabling Cablevision to move ahead with a network DVR has many repercussions. For one, it will enable more homes to take advantage of the DVR capability. And while that may mean more fast forwarding through commercials, technology is already adapting to overlay ads through the various trick features. Network DVRs make this ability easier to manage and more opportunity to adapt the ad message to individual households.

It may also affect consumer purchase decisions to acquire a Tivo box; as its core feature is being replicated. For Tivo, this court reversal was probably expected; they have been working on more download opportunities using their box as an interface to the web. In addition, their superior navigation capability may be something Cablevision might want to partner with to maximize the usefulness of their network DVR device. Tivo has also embarked on an e-commerce strategy with Amazon.

Network DVRs remind me of the direction computer software is also taking. Devices, connected to the web, utilizing centralized business software and sharing data inside network drives. Devices have been dumbed down as network computing allows more sharing and easier exchange of information. It is no surprise that a network DVR approach would follow this trend.

"If the legal process -- which could potentially include taking the dispute to the Supreme Court -- were to eventually permit network DVRs, the ramifications for the TV business could be significant, noted Sanford C. Bernstein analyst Craig Moffett, who called Monday’s decision a 'huge win for cable operators.'” In the short run, Cablevision may still have to wait to proceed with the network DVR; but precedent has been set with Time Warner's Start Over and Look Back and its other network advance services. So all speed ahead with Network DVRs. It is the direction we are headed.