Netflix Has More Cable Subs Than Many Cable Operators

Netflix subscriptions have hit a milestone, exceeding 20 million subscribers. Few cable operators come close to that number. And while the subscription fee is far lower than a cable subscription, so are the costs. "Netflix said it added 500,000 subscribers during the quarter, giving it a total of 20 million, and expects to end the first quarter with 21.9 million to 22.8 million." That is some exceptional growth.

As winter snows have kept us homebound, we have pushed through our on demand choices, free, premium, and yes even transactional. Trying to find shows that would appeal to a boy and girls' sensibilities as well as their parents. Not too violent, not too romantic, but enough to appeal to the very wide interests of my family. Not easy. And yes, we also make concessions, one action movie for one romantic one. But as we sift through the on demand choices, we wonder, should we consider adding Netflix. And with that purchase, do we drop a premium, two, or more.

So I wonder, is Netflix an additive purchase by these 20 million consumers or a shift? Are these new subscribers dropping services or even cord cutting to take advantage of a Netflix subscription, or are they adding to their choice? Is Netflix playing a zero sum game against cable or simply augmenting the playing field for consumers eager to get content across more devices? I certainly would love to see that percentage of homes that have both a cable and Netflix subscription and those that have dropped a premium in favor of Netflix. An interesting research study of the entertainment landscape.

Tivo Sues Dish, Microsoft Sues Tivo

The waters are certainly muddy in regard to DVR intellectual property. Their are suits galore, and you can add Verizon and AT&T to the list. "Citing its customer AT&T, Microsoft on Monday filed complaints with the U.S. District Court for the Western District of Washington and the International Trade Commission against TiVo, alleging the DVR company infringes four Microsoft patents." Each company claims the other stole one patent or another and each is seeking licensing agreements in an effort to halt going to trial. Yet as the Dish and Tivo suit has shown, resolution takes years and years AND YEARS to untangle. And so what does it all mean? I can assure you this, the only ones winning will be the lawyers.

No Wallet Required - Use Your Phone Instead

How many credit cards, bank cards, business cards, medical cards, and other papers are you holding in your wallet? How about membership cards from Costco, CVS, the supermarket, all wanting to track you and your purchases. So that bulge in your pocket or pocketbook only gets bigger as more and more companies want to give you another card to hold. Well recently, Starbucks announced that you can buy its coffee with just a wave of your smartphone. And Apple is right there too. "Apple Inc. plans to introduce services that would let customers use its iPhone and iPad computer to make purchases, said Richard Doherty, director of consulting firm Envisioneering Group." A wave of your phone and your credit card is processing the purchase.

Sure there are always downsides. Your phone could get stolen; so can your wallet. Other problems though could include no battery left to power a transaction or a simple dropped and broken phone could leave you stranded without funds or information. Still there is something to be said for a thinner wallet now that the smartphone has become an equal part of your apparel.

Will Apple be a competitor with the credit card companies? I doubt it, unless Apple would decide to use its cash to buy a company like Pay Pal to handle the transactions. But, I believe that working together could be a win-win partnership for Apple and the credit card companies.

Tivo Snags Another Cable Operator

Count Charter, a top 5 cable provider to a lengthening list of cable operators now offering a Tivo set top box. Along with Comcast and Cox (although I have yet to see a full rollout), others include Suddenlink, RCN, and Direct TV. "Under the deal -- which represents one of TiVo's biggest service provider wins in years -- Charter this year will launch TiVo's Premiere DVR in unspecified markets, along with forthcoming multiroom DVR features. The MSO also will use the TiVo guide on non-DVR set-tops."

Even more exciting, is the level of sophistication that Tivo adds to the Charter and Tivo-enabled home. "The initial TiVo market launches in Charter territories will include Web applications, such as access to local news, sports and weather, as well as Facebook and Twitter updates, right from the TV, plus access to Charter's VOD library, including more than 900 high-definition titles." Truly added value and appeal.

As the volume of choice on television increases, Tivo has proven itself superior with better search capabilities than anything that other set top boxes offer. Add to that the expertise they bring, recording shows that it intuitively thinks may be of interest to the home. It is ultimately those devices that bring better search and recommendation to the home, that as a result, brings value to the consumer. And value hopefully translates as acquisition and retention for the cable operator.

10 Billion Served

No, not McDonalds' hamburgers, rather 10 billion iTune downloads and growing. So it is no wonder that online competition exists. The latest into the fray is Sony. "'Music Unlimited powered by Qriocity,' which Sony unveiled in September, started in the U.K. and Ireland in December and in France, Germany, Italy and Spain this weekend. It’s available on Sony’s Playstation 3 game console, Blu-ray Disc player, Bravia televisions, personal computers, and will be on smartphones using Google Inc.’s Android operating systems." So non-Apple devices can now get an online music store. As Apple and it's devices own the market share, should Apple even be worried? Doubtful.

Still, should the same providers of such content choose to stop offering to Apple, it would certainly affect sales. I doubt any such move would be in the best interest of the content companies, especially given the market share that Apple serves. And as Apple products have proved superior to other smartphones and music players, it is hard to imagine that such an offering will have a big dent on Apple. As long as Apple continues to innovate and improve, they will keep attracting more users and such their iTune and App stores will only continue to provide a greater source of revenue and growth.

Verizon Challenging Net Neutrality

Cable companies don't seem to like net neutrality and neither do the telcos. It is now Verizon's turn to try and overturn net neutrality regulation. "Verizon argues in its appeal that the FCC's Dec. 21 order exceeds its authority, is arbitrary and capricious and an abuse of its discretion, and is unconstitutional as well." My concern with net neutrality is that it paves the way for usage billing. I would hate to constantly monitor how many bits and bytes I consumed to know what my bill would be. I prefer the buffet where I can have unlimited helpings for one price.

With more and more devices consuming broadband, I am also fearful that the internet bill would become too high. In my home, the computers are either hard wired or wifi connected to broadband. Same with the ipods. I frankly wouldn't know what our average consumption is per day. But I can tell that our usage is growing.

I also know that the highway is only so big and that traffic jams will only get worse. Consumption hogs will hurt others. Ultimately, the consumer is best served through competition, not regulation. Allowing other companies to enter the industry, lower the barriers to entry, and creates more choice for consumers. And encourage innovation as ways to make the broadband highway speed along at a faster clip, getting more content from point A to point B without any disruptions.

Too Many Cable Channels?

Ok, so the linked article is about HGTV and Food Network losing viewers to competition from other cable networks. A couple decades ago, broadcast meant general market programming to the widest audience. Cable networks were formed to take over the niches that a broad network wasn't going after. One channel for all news, one for all music, one for food, and so on. Their viewership may have been strong, but as an aggregate, they provided an alternative to over the air. And as they were available by cable systems, an advertiser could buy a cable ad inexpensively and only reach the town or towns they needed. With broadcast, it was always about the DMA.

But cable networks found that a niche wasn't enough. They wanted "broad coverage" across the country and local ad insertion was harder too. Cable systems began owning the DMA and preferred selling bigger not smaller slices. Cable networks wanted more eyeballs for their shows too. So the niches became broader as well. And they began to overlap. Hence multiple cable networks for news, finance, sports, and yes, even food. Was that show on Food or TLC, Bravo or A&E? In the beginning, each cable net had its own niche; today, they bump each other constantly, competing for shows and eyeballs. And in each networks' attempt to reach a wider audience base, the shows themselves are aimed at a much less esoteric level.

So are there today too many cable networks? As long as people are watching, almost all with stay around. Others will simply change their name and start again. Hence Discover Health is now OWN. But this broadening of content is not a new phenomenon. Broadcast stole audience from radio. Cable is stealing audience from broadcast. And internet content is following the same strategy of going after the niches. But with history as a guide, those niches will soon become mainstream.

Apple Dazzles Again

Whatever the impact of the Steve Job's announcement that he was taking a medical leave did to the stock price, the subsequent financial release of earnings and performance caused a swift bounce back. Apple excels and continues to outperform all expectations. "Investors focused on Apple's success in boosting production of iPads, which happened faster than analysts predicted. Shoppers also bought iPhones as fast as Apple could make them, helping drive the company's fiscal first-quarter net income up 78 percent from the prior year." Apple knows what the customer wants and is the leader in getting it to market first.

Without Steve Jobs at the helm, the concern is whether there are others inside the company with the same vision to innovate. At least for now, there seems to be much in their pipeline to sustain them for quite a while. Heck Microsoft has been selling the same product for decades.

Other interesting news, while Jobs has stepped down at Apple, he is still retaining his seat on the Disney board. Certainly not as essential a position, but one that hopes means that Jobs will be back from his medical leave to continue to run Apple. Here's to hoping for his good health.

FCC Approves Comcast NBC Merger

One approval down and one to go. The FCC today has approved the merger of Comcast and NBC and the Department of Justice is expected to also approve. Obviously, the conditions for merger have been agreed to and we are on our way to a new mega-brand. "FCC Chairman Julius Genachowski approved of the joint venture late December, saying that ultimately the union would benefit consumers as Comcast promised to add 1,000 hours of news and informational programming to some channels, contribute $20 million in venture funds for minority programs, and $9.95 broadband Internet service for low-income households." Will the consumer gain in this transaction/ to me, the key remains competition. Encourage more competition in the wireless industry so that content can be accessed without a wire through multiple platforms.

For the new Comcast-NBC, the likely official turn the keys over date will be the last Friday in January. And with any merger, I am sure the employees on both sides of the fence are wondering, what does this new company mean to them and their job. WIll they be in or out? In short term all those questions will also be answered.