Web Not Cannibalizing TV Viewership, Rather It Strengthens It

The fear that a new technology will destroy an old one is probably as old as the story of creation. That the rise of web use in a day would in a zero sum game, bring TV viewership down by an equal amount. That is not the case! "Nearly 60% of TV viewers now use the Internet once a month while also watching TV." Yes TV viewers do multitask.

The rise of social networking, the need for shared experiences, and the content on the big tube comes together into a converged usage model. We watch the Oscars, Super Bowl, American Idol, or other program, and simultaneously share our thoughts at the virtual water cooler, through Facebook, instant messaging, or other online program. As more people put their computer into the same room as their TV, that percentage will only rise. And as TV manufacturers add internet access directly into the TV, we could literally approach 100% simultaneous web and TV usage. That convergence is here and actively being embraced.

In addition, this study by Nielsen shows a rise in DVR usage as well as mobile and online. "Online video consumption is up 16% from last year. Of note, approximately 44% of all online video is being viewed in the workplace." I presume, the lunch hour is being used for that time to catch up while eating your sandwich. Let's hope our productivity doesn't suffer too much!

FCC Seeks Public Comment on Comcast NBC Merger

As part of the merger process, the FCC is asking for public comment by May 3. Just wondering, does the FCC even know about the internet or blogs? Besides my own, there exists more public comment than you can shake a stick at. So why not synthesize what is being written to get a greater sense of what the implications of this merger could be. "The FCC process is just one part of a comprehensive regulatory process for the $30 billion joint venture between the No 1 U.S. cable operator and NBC Universal, which as well as a national TV network also owns cable networks, including USA Network, CNBC and MSNBC. The transaction, which has caused an uproar with consumer groups and smaller cable providers, is also being examined by the Justice Department's antitrust division."

Antitrust, do ya think? Businesses and government have faced issues with vertical integration for too many years. Movie studios and theatres are the best example of restricting vertical integration. Unfortunately, the difference between broadcast ownership and cable ownership is the slippery slope that we have slid down from. Hard to say no to broadcast ownership for cable operators when cable network ownership has been granted for years. Still the line in the sand must be drawn.

On the side, just watched the last episode of 30 Rock, where NBC is being bought by Kabletown. Hilarious! Talk about biting the hand that feeds you. But in its satire comes a lot of truth.

Barnes & Noble Planning For Their Future

Nothing stands still, especially business. Unless you adapt to a changing environment you are bound to lose your way. Hence the decline of Blockbuster. But Barnes & Noble seems to understand that change is necessary. Technology is changing the bookstore; the rise of the Kindle, e-book, and now iPad. So B&N is reshaping their future. "Barnes & Noble named the president of its Web site as its new CEO -- a surprise move that signals a new focus on digital media for the book retailer." A bold move and a smart move. Brick and mortar stores can be complementary with the web. One does not mean the destruction of another; TV didn't replace radio,on demand didn't replace movie houses. But as the new entrant arrives, the former must adapt to reclaim their space. For radio, a move to more talk radio and less sitcom; for movie houses, a move to more 3-D. The old establishment must reinvent itself to find its new hook.

Barnes & Noble can do the same thing. Consumers still like leaving their homes and going to stores. They will bring their kindles and iPads with them if you provide a reason and opportunity to use it. And once you get them into the store, figure out what else you can sell them. Build complements of the web and the store and Barnes & Noble will be a long term survivor in a changing entertainment landscape!

Blockbuster Bankrupt?

A classic case of a company not changing to stay profitable in a changing environment. "Movie rental chain Blockbuster Inc. said in a Securities and Exchange Commission filing that it may have to file for Chapter 11 bankruptcy protection if unable to generate enough cash flow to meet or restructure its debt commitments." Beaten on the rental side and sales side too. As other companies underpriced them, Blockbuster became a follower and not a leader. Reacting not acting. And so they lost market share to Netflix with unlimited rentals, to Redbox with cheaper rentals. Blockbuster even lost on the gaming front, allowing companies like Game Stop to come in with new and used games. It seems Blockbuster had the edge but lost the vision.

Because Blockbuster is a brick and mortar business, it is not in their best interest to compete with mail order or VOD. Instead, they must figure out how to bring customers BACK into their stores. For video, it is lower prices and no penalties. They need to aggressively enter the gaming fray and offer competition immediately to Game Stop. And they must push a game rental component, to rent before you buy, as an added inducement to join them. Kids love downloads and offer opportunities by bringing your handheld into the store to download characters or games, simply for coming in. Heck, once in the store, you have a greater chance of getting a sale.

Blockbuster must change its model and adapt to changing times; else, this bankruptcy will be a Chapter 7, not a Chapter 13.

Is My Space For Sale?

Publicly, News Corp is stating its commitment to My Space, but rumor has it that the site is for sale. So News Corp took an up and coming site and turned it into a dog while it's competitor, Facebook, continued to grow and grow. So who who wants to buy a dog? Per the article, "A separate gossiper close to News Corp management tells us News Corp is asking private equity firms for $700 million." Is it worth that much?

And can a new owner turn My Space around or does it have too much baggage that it would need a whole new brand name, strategic direction, and marketing push to recapture the social network user. And given all that, wouldn't it be cheaper to start from scratch. At $700 million I would say so.

Facebook Most Popular Website

From today's Cynopsis: "Facebook surpassed Google as the most popular U.S. site for the week ending March 13 in terms of weekly share of visits, according to Hitwise, amassing 7.07% of all U.S. Visits. Facebook also reached the #1 ranking on Christmas Eve, Christmas Day and New Year's Day as well as the weekend of March 6 and 7. Google trailed close behind last week with 7.03% of visits, followed by Yahoo Mail (3.8%) and Yahoo (3.67%)." And where is My Space? While Facebook grows, My Space falters.

More interest in social networking than searches! No wonder Google tried to enter the fray with Buzz. Has Facebook hit its stride or is it a temporary pinnacle and changing interests will find users getting bored with Facebook shortly and looking for the next thing.

Will Disney Spin Off ABC?

In a very interesting turn of events, Disney is saying that they would consider spinning off their broadcast and affiliate networks from their cable properties. All this as Comcast is trying to merge a broadcast network NBC with it's cable properties. "Chief Executive Bob Iger said on Wednesday that the top U.S. media company was keeping its options open for dealing with TV network ABC and its struggling news division, including a spin-off." Certainly this was said in a shareholder meeting and may simply indicate that all options (even remote ones) are available, it may not mean that it is actively being considered. Still to talk spin off amidst a FCC review of a possible merger indicates two different management strategies.

The final decision will be a financial one. If broadcast can build a stronger revenue base, and retransmission fees from cable companies are one such option, the long term outlook for broadcast may be too promising to spin off today. Should regulation emerge to protect the consumer from dropped broadcast services, these new fees, if any, may not be enough for Disney to keep ABC. The results of the NBC-Comcast merger may provide some clue for a possible Disney-ABC spin off.

Could Retrans Affect the Comcast-NBC Merger?

As the FCC and DOJ review the planned merger of NBC and Comcast, MSOs and others are seeking guidance on retrans rules. "According to a copy of a letter being sent to the House and Senate Commerce Committees from Time Warner Cable, Cablevision, Dish, DirecTV, the American Cable Association and others, cable and satellite operators want the committees to take a new look at the Cable Act and retransmission consent in light of what they say is the current imbalance in favor of broadcasters and a "broken system" in need of repair... Also signing on to the letter were Charter, Insight, Mediacom, Suddenlink, Bright House Network, and OPASTCO, the small telco lobby."

So what is most interesting about this above quote. Not who is not included in this letter. Comcast is not taking part in this request. And it is because they do not want to further rock the boat. But a long shadow hangs over these merger proceedings precisely because of ABC and Cablevision, and in the next few months, ABC and Time Warner Cable. And how easy we forget that at midnight at the end of last year, Fox was ready to be pulled off of Time Warner Cable.

Technology and economics have changed the model of "free TV". Yet, every broadcast network owns cable nets too. For ABC, its sports is managed by ESPN; for NBC, its news comes from MSNBC. CBS spun off its Viacom properties but still owns College Sports Network and Showtime. Public interest though must still be considered if broadcast nets are also available over the air. Cable companies haven't built converter boxes to work effortlessly to switch from an antennae to cable. They built the mousetrap and we must figure out how to work with it or around it.

Google CEO: mobile computing reshaping Internet

The cellphone has changed computing! "Google's CEO says mobile smartphones are transforming the Internet" in so many ways. For both Google and Apple, the smartphone adds a convenience in exchange for a smaller screen. I've seen it firsthand. Need a railroad schedule, its at your fingertips; need directions or GPS, just tap a few keys. And do it without being tethered to a computer screen; rather, on a device that comes with you than you going to it.

Given its compact size, the smartphone becomes a must-have accessory 24 hours a day, seven days a week. And with that number of eyeballs comes subscription revenue and advertising opportunities. Convenience, portability, internet access, knowledge. The proliferation of apps simply helps to expand the value of the device.

And so I wonder if a tablet device, too small to replace a computer, to large to fit in a pocket, will become the next must-have device. Will men start carrying manbags for their tablet, comb, and wallet? Or will the smartphone be good enough to handle the computing and reading and viewing needs of the consumer? Or will we need both! Stay tuned.