Network DVR Closer to Reality

Cablevision's idea to move the DVR to the headend appears to gain some weight as the Supreme Court has rejected arguments by studios and content creators. "The media companies have argued that the use of network DVR, where the programs are stored on the cable company’s servers—in the cloud, as today’s lingo would call it—and “streamed” on demand when users request/record it, violates copyright laws" But is there really a difference between saving shows remotely or saving them on a centralized server. Probably not. My biggest concern is that the current DVRs used by cable companies offer a limited search and playback experience.

Unlike Tivo, their functionality and design are clunky. What's to change even though the programs are saved centrally. Ultimately, it is the software and viewer experience that will determine success. And perhaps it offers Tivo a valuable opportunity to offer its expertise to Cablevision to create a better user experience.

Or will the DVR become an outdated, obsolete product. Once content is available online for distribution across any platform, will the concept simply go away. Why copy for later when it is always available, always on-demand.

US TV prepares for $2bn ad shortfall

How bad will the economy be to TV ad revenue, both broadcast and cable, over the next few years; how about 2 billion dollars in the red. "The Global Media Intelligence report by Screen Digest, the media research firm, says some of the decline will be clawed back by US TV networks by online video advertising, which it expects to triple during the next four years...Screen Digest forecasts US broadcast and cable advertising revenues will fall from $69bn in 2008 to $67bn by 2013." That seems like an awfully big number to absorb. And its affect will certainly continue to hurt the job market and the economy at large over this time period. Online video advertising growth may offset this figure, but it is hard to expect it to have a substantial impact. Some may argue otherwise, but until advertisers feel comfortable with the research and measurable results, that growth may remain stalled.

Hulu, TV.com Getting Higher Ad Rates Than Their Network Counterparts

With less clutter, no fast forwarding, and a closer, more attentive viewing experience on the personal computer, it makes absolute perfect sense that sites like Hulu and TV.com are able to ask for higher CPMs. "Running an ad during The Simpsons on Hulu, for example, costs about $60/CPM, Bloomberg reports; running the same ad during prime-time on TV costs about $20-$40/CPM—or over 60 percent less in some cases." But is it really more profitable?

The challenge facing content creators, broadcast networks and cable especially, is embracing this new distribution path without losing an important revenue stream, cable subscription revenue. Authentication help to maintain a multi-platform customer, but not if it is undermined by free content, outside the security belt. What is in Hulu and TV.com's best interest may not be in the interest of its individual partners. So the question asked, can a higher CPM offset any revenue lost.

As I see it, monthly cable fees charged by cable programmers to distributors tend to grow at an annual inflation rate. It is also a guaranteed revenue stream, changed only by the growth and loss of subscribers in the cable operator footprint. And with the rise of telco distributors, overbuilding cable neighborhoods, the possibility of higher subscriber fees and more cable penetration. The switch to digital also improved subscriber growth. Should enough programming become available on the web, consumers might be encouraged to drop their cable portion of their bill for broadband access only.

It then represents a very slippery slope for sites like Hulu and TV.com and their respective programming partners. I'm sure they would hate to kill off their golden goose. And so the last question to ask is, what should happen to these sites to enable viewers to still watch on their computers, but not give up their cable connection. Perhaps authentication must come to these sites as well.

For Comcast, FIOS Represents Just Another Market

Even though Comcast and FIOS compete, it shouldn't stop a partnership! In an unusual move, Comcast will sell advertising spots in FIOS markets that overlap its own markets. "Comcast Spotlight, the cable company's ad-sales arm, announced a deal Wednesday with Verizon Communications, under which it will sell local advertising on FiOS TV in at least 10 markets, where both Comcast and Verizon currently provide television service." For advertisers, it certainly assures that their message is seen on cable, regardless of who the service provider may be. Potentially profitable for both companies.

What would really be ironic is if this deal would finally allow FIOS to advertise its services on Comcast and Comcast do the same on FIOS. That would certainly be detente!

TV Everywhere

How do you protect your cable subscription revenue? First, assure that your content networks don't give everything away to the web; and second, provide your subscribers with access to TV content on other platforms. "The major worry is that if cable networks do not protect the fees from paying subscribers, and offer most programming online at no cost — as newspapers have done — then customers may eventually cancel their cable subscriptions." That is the slippery slope of the internet today, provided by these same content companies charging cable operators fees for network carriage and then turning around and posting shows at no charge on Hulu, TV.com, and other websites. As these sites get more content, cable may find itself in a losing battle.

It sounds kinda nice to have access to cable and broadcast channels on the computer. I recently got to watch Monday's US Open final streamed via MSNBC. No authentication required. The TV Everywhere concept would require that you as a cable subscriber are authorized to watch networks on the web. "The first test of the new system, which will authenticate cable subscribers online and make available programs on the Web for no additional charge, will be announced Wednesday, between Comcast and Time Warner. The trial will involve about 5,000 Comcast subscribers, and television shows from the Time Warner networks TNT and TBS."

It is one thing to be authenticated in your own home, but how can I as a "authenticated" subscriber be able to watch this content away from my home. At the office, in a hotel, away from home, I want the mobility to watch where I am and not to be tethered to my wired home. It sounds eerily similar to what Slingbox offers. So unless cable is offering this capability, I say skip it. If mobility is what you are after, Slingbox is the cure. Cable should strike a deal with Slingbox and put it in every set top box. That strategy might just retain cable subscription and beat Hulu and the web.

Do You Own A Blu-Ray?

Recently, my son asked me if we were buying a Blu-ray. We currently have quite a collection of standard DVDs in our library, but lately we have been watching a lot of movies on-demand. And for the record, we don't have the hi-def screen either although that is a planned purchase. But a blu-ray player is not.

Our viewing habits have switched and the DVDs become more useful for long car and airplane trips, while VOD has become the first choice for watching at home. And I believe we are not alone. "U.S. consumers have given Blu-ray a lukewarm reception, despite buying an increasing number of high-definition TVs, according to Harris Interactive." Somehow owning content, once an important part of the video experience, has given way to the rental. And immediacy and choice has positioned VOD as a leader.

I also imagine that a stand alone blu-ray player is not the best use of funds. As gaming consoles become a bigger part of the TV experience as well, they also offer blu-ray capabilities. Will they be used for that purpose, perhaps secondarily, as gaming use swells in volume. So what will happen to blu-ray. I imagine overtime, PCs, portable players, HDTVs, etc will all e capable of playing blu-ray and standard DVDs. And standard DVDs, like LPs and cassettes will head into the attic, reminding us once again of simpler days.

Twitter Looking For Revenue Model

Twitter, short messages to tell others what is on your mind, has long been absent an advertising message. For those that like to follow businesses, however, ads are expected. For example, follow Gary Vaynerchuk and Wine Library tweets and receive messages on upcoming specials, free shipping, and other tidbits about wine. In this case Wine Library gains "fans" and a social network to share messages and Twitter the company gets nothing.

If your interest in a product leads to a search for guidance and ultimately a place to buy an item, Twitter might just gain on the handshake. "E-commerce, including links to products and turnkey payment mechanisms, is a likely revenue stream for Twitter, said Todd Chaffee, a Twitter board observer and general partner at Institutional Venture Partners, which has invested in Twitter. That gives us one more hint about how Twitter will make money." But can that generate enough cash flow? I find all the message coming through as too much and my inclination is to turn it off or really filter. I have personally become less of a fan of Twitter. As a Facebook friend of Wine Library to get this same messaging.

For Twitter to make money, they may need to associate an ad message with each Tweet, and that may not be as welcome to its users. As more advertising comes onto its pages, it may just kill this golden goose.

Tivo - What is More Important, Content Or Distribution

For broadband connected Tivos, some great news, Tivo can now upload TV.com content. "TV.com users that have a TiVo Series2 or Series3, TiVo HD or TiVo HD XL DVR, are now able to schedule recordings directly to their DVR via TV.com. To record single episodes or entire seasons of shows users can click the 'Record to TiVo' button on TV.com show pages and the request will be sent directly to their TiVo DVR." Tivo continues to represent a leadership position in the DVR functionality and experience. For Tivo, content is king!

Great news for Tivo fans, but is it ultimately in Tivo's best interest? It seems that this content is the same content CBS and its partners put on cable and over the air. It seems that Tivo ultimately competes with cable as a means to watch your favorite shows. Perhaps Tivo should make more effort to partner with cable and telco as their DVR provider. It would provide an ultimately higher revenue stream and push the VOD/DVR experience through cable as opposed to around it.

Currently, Tivo is expanding its reach with Comcast and Direct TV and in a technology fight with Dish. The more content that Tivo can access directly from the web, the less valuable a cable subscription could become. It becomes a slippery slope as more live content (news, sports, etc) becomes available without a cable box.

Dish Still Trying to Work Around Tivo

Dish owes money to Tivo for using its technology on Dish DVR devices, Court appeals have delayed that payment and allowed Dish to continue to use this technology, and Tivo continues to not get paid. And so Dish is back in court to find another way around this patent infringement in order to continue to allow its DVRs to continue to be used by their customers. Otherwise, Dish has one of two options: 1. Turn off their DVRs and upset their customers until new technology can be deployed, or 2) Pay Tivo for its technology, embrace its patent, and let your customers continue to derive pleasure from their DVRs.

It seems the old adage, "I'd rather fight, than switch" is in play here. For some reason, Dish has a basic issue with Tivo preventing it from coming together to reach a common ground. Some times children simply can't learn to play in the same sandbox and despite how much money it will cost Dish, they would rather fight. For me, I'm holding on to my Tivo stock, cause I expect another windfall.