How Does Hulu, TV.com Jive with Authentication

Cable companies frustrate me. They scramble television channels and require each TV to add a converter box to watch them, and then they charge you extra for those cable boxes. Consequently, you are being asked to pay more for the same channels. And the box they require you to take is neither user friendly or reliable, adding more to one's frustration levels. And as cost of service rises and frustrations grow, customers seek alternatives. Some go to telco for price deals, some drop cable all together. I replaced a Tivo box with a converter box to get HD and VOD. The price rose $21 a month. In a year, I could have purchased a Tivo HD upgrade box. And while I won't get VOD, I would get a better box and HD via a CableCard. But before I make that choice, I call the cable company and, lo and behold, I fine a promotion to lower my cost to only $10 more a month. I mean I am a triple play customer who buys VOD movies and premium channels. Regardless, I will start to price compare with Fios. And then check in again with Tivo.

But I am not alone, networks are also making it easy to drop cable. With shows on Hulu and TV.com, all one needs is a broadband connection to watch a number of shows. No converter box, just an internet connection. As long as these networks embrace these free services, authentication won't mean much. It is these kinds of services that are cannibalizing cable affecting basic cable subscription. And should these same free services change to a subscription model, well hello Netflix, Blockbuster, and digital antennas.

With fingers in both cookie jars, I expect free will go away as authentication procedures can be set and subscription dollars maintained. With ad dollars declining, subscription is seen as equally as important to the bottom line.

Reader’s Digest to File for Bankruptcy

Sure Chapter 11 allows for reorganization, and not necessarily the end of the magazine, still it represents change to one of the oldest magazines and the clearest indication that things don't last forever. "The magazine was founded in 1922, summarizing articles published elsewhere, and grew quickly. The company developed other publications, and went public in 1990." The magazine will continue to print, although circulation continues to decline. And while it will come out of bankruptcy a smaller, less costly business, it still faces huge hurdles to remain viable. The world has changed and Reader's Digest must change with it; otherwise, this restructuring is simply one step closer to oblivion.

The Value Meal Comes to Media

McDonalds' must have had the right idea when it started offering meals for a buck for other fast food restaurants were quick to follow. And today we have Redbox offering DVD rentals for a $1. And while there may be lots of steam, others will most likely be quick to follow them, too. Apple did it with the $0.99 song on iTune; I still remember when Cablevision offered the Triple Play, cable, phone, internet for $99, a price unheard of in the industry. It grew in popularity that the naysayers soon followed with similar packages. Redbox, like McDonalds, Apple, and Cablevision, has set a new standard and the consumer has embraced it. Complain as they may, this new pricing model may simply become the norm.

And so what other media companies will follow this same low price model to improve their subscription. Which newspaper or magazine will come out with a $1 an issue price, well below the normal rate. In today's economy, lower pricing may be the only way to keep subscription levels high.

If You Don't Like The Ratings, Make Up Your Own

The big media boxes might not like the ratings that Nielsen delivers, but at least they are a neutral party. So while it sounds opportunistic for the broadcasters to team up with big advertisers to devise a new measurement system, it may also be problematic. Which ratings service would you trust, one driven by the companies that you are buying advertising from or from a third party source. The answer seems pretty obvious. And Nielsen is certainly doing its part to stay on top of new technologies and new viewing habits. "Back in May, Nielsen became a part of is own TV measurement supergroup, when it hooked up with comScore, Rentrak, TiVo and TNS Media in an attempt to better define and value viewer data generated by set-top boxes." So I ask you again Mister Advertiser, which ratings company would you most trust. It seems like this new venture doesn't have a leg to stand on!

Sony Plans to Adopt Common Format for E-Books

Sony has seemed to learn their lesson - creating a unique format doesn't necessarily win you market share. The beta - VHS wars for consumer acceptance must still have battle scars, even though the DVD has replaced the videotape. And so Sony is working with the format and not against it. "On Thursday, Sony Electronics, which sells e-book devices under the Reader brand, plans to announce that by the end of the year it will sell digital books only in the ePub format, an open standard created by a group including publishers like Random House and HarperCollins." Good news for the growth of the E-book and hopefully profitable news for Sony.

On the other hand, Amazon, the current market leader with Kindle, uses its own proprietary format. But leading and staying in the lead are two different things and the electronic book is still a very immature business. I still recall the early day of internet service providers (ISP); Prodigy was the leader until upstart AOL came out with a faster, better, more user-friendly model. Today, AOL is still around; Prodigy not so lucky. Sure there were other factors, but maintaining number one position takes constant innovating and marketing. Prodigy did neither.

Issues with E-book readers, most especially digital rights management, will affect innovation and usability. The customer must see, understand, and use the benefits. Books are read and shared; e-books may need to follow a similar route. The issues are more complex with a digital format, but solutions can be found.

Blockbuster is a Copycat!

Blockbuster follows a typical follower strategy, duplicate what the leader in the marketplace does, as oppose to differentiate. When Netflix started to take market share away from them with mail order subscription, Blockbuster copied them. And now as Redbox begins to take market share through a lowcost, everywhere vending strategy, Blockbuster follows again. "Success breeds competition, and Blockbuster says it will have nearly 3,000 kiosks renting and selling discs and games by the end of this year, growing to 10,000 in late 2010." I guess if you can't beat them, copy them!

More Than Half of US Own an HDTV

According to a CTAM study, "about 53% of American households now have a high-def TV, compared with 35% in 2008 and 23% in 2007 ". So why are there still so few HD channels and why aren't there more HD shows on their channels. Unfortunately many consumers may be unaware. Excited to open their HD set, they may not see that their picture may be "stretched" to accommodate the screen. And while the picture will absolutely look better than what they had before, it is not true HD that they are watching. Consumers may mistakenly assume that 100% of the programs on their HD version of a channel is HD; that is not true. In fact,very few channels offer 100% HD programming. The challenge is knowing the difference.

HD viewing requires an HD show on an HD channel through an HD converter box on an HD TV set. Digital is not HD; while some networks may offer digital channels off of the main channel (X.1, X.7), they are not necessarily HD programming. We are in the midst of a transition and over time HD programming will become the norm. To those who recall the black and white to color transition, this must be similar, although it was far easier to know which was which.

Is The TV Ad Model Broken?

A universal truth is that choices constantly are shaped and changed. Build a better mousetrap and many will eventually see its benefits and flock to it. Some, resistant to change, will stay rooted with what works just fine. The sophistication and swiftness of change finds its early adopters and eventually, even the old models must change or die. Take radio as an example. Despite technological change that made the TV affordable, it may have stopped being the lead media choice, but found its value in other ways. As the web threatens both TV and radio, radio saw opportunities to be both terrestrial and web based to be everywhere for its listeners. TV may be slower to adapt, but may also find advantages in a multi-platform approach.

Within TV you have many "levels": broadcast, cable, premium, etc. Broadcast has primarily stayed an ad supported model while cable found a profitable middle ground by being both ad and license fee. And broadcast is jealous. But for some broadcast stations, a solution was found. Some used FCC rules to choose fee rather than must carry status. Univision recently moved away from that model and closed license deals with the major cable operators. Other broadcast networks, CBS, ABC, NBC also own cable networks. They used their size to push carriage for their smaller cable nets. And while that might not be felt in the broadcast channel's P&L, it certainly resonates as revenue for the company as a whole. So don't feel so sorry for the broadcasters.

"Murdoch grabbed headlines across the globe last week with his swing-for-the-fences suggestion that all News Corp. Websites will move to a subscription model. A shift of some sort may not be so far away for broadcast television either." Content is king and has value; Positioned across multiple platforms there are opportunities to uncover new revenue streams. But don't forget the consumer. Change can also lead to new innovation. The DVR was invented, not just for time-shifting purposes, but because of the desire to "skip" commercials. Viewers reached their threshold as the ratio of ads to content in a given hour increased. The same will happen on other platforms too as viewers feel inundated by ad messages. Don't let greed get in the way of success.

TV Everywhere may be one approach to assure that a customer on cable has access to content on other platforms. A walled garden approach that encompasses a multi-platform reach may just be acceptable for the consumer. And it will assure they don't leave a TV pay model for the same content offered on the web. Yes, smaller companies will bypass the license fee approach to hit the niches. But the vast majority will want professionally created content from the big media brands; they just want it everywhere and anywhere.

Cable vs. Telco vs Satellite - who's growing?

Growth is measured inside cable in a number of ways. The first is obviously the number of cable subscribers, but inside that subscriber number is also growth of which subscribers upgrade to the more expensive services - digital cable, digital tiers, premium channels, and the growth of transactional services like movie and event rentals. But the business is more than just television, growth is measured across other businesses like broadband and phone. It can be a very competitive business.

With the emergence of the telephone companies, Verizon and AT&T into the mix, it might be easy to forget that cable's first competition was the satellite companies. Well Primestar and others might be gone, but Direct TV and Dish still remain and they appear to be doing quite well. "DirecTV continued to outpace the competition and analysts' estimates in the second quarter, growing revenue by 9% and adding 224,000 net new subscribers, a 74% increase over the prior year." Cable is seeing growth inside its businesses, but basic may be another story, Direct TV's "cable competition continued to lose basic customers in the period -- Time Warner Cable shed 57,000 customers in the quarter and Comcast lost 214,000 basic subscribers -- DirecTV managed its second straight quarter of growth. The satellite giant gained about 460,000 net new subscribers in the first quarter." And so the fight for customers and the marketing to win back those that have left will most likely start to ramp up even more than before. You can't keep growing by selling more services to your existing customers enough to offset the loss of total customers to your store in the first place. There is real competition in the cable marketplace.