You Tube's latest announcement, a better organization of its content into channels and a push toward more original programming, adds another reason for the consumer to downgrade (shave) or cut their cable subscription. And You Tube believes it can legitimately compete against cable and satellite for viewers. "The site is planning a series of changes to its home page to highlight sets of 'channels' around topics such as arts and sports. About 20 or so of those channels will feature several hours of professionally produced original programming a week, some of these people said. Additional channels would be assembled from content already on the site." Last month, You Tube acquired NextNewNetworks as one step to acquiring original content. Along with Hulu, Netflix, Apple, Amazon, and others, the web is becoming a serious alternative to cable viewership.
In this CNET article, cord cutting remains hard for most households to accomplish. "Between 2008 and 2009 alone, the firm said that 550,000 households cut the cord. Last year, it estimates 1 million households did the same." And those that do sometimes find themselves missing some of the programming unavailable yet on streaming platforms and come back to cable. Still the cable operators are today more affected then telco or satellite as their basic subs are leaving to go to the lower priced alternatives suc as FIOS, U-Verse, Dish, and Direct. Dish may already feel concerned with eventual cord cutting and has just bought out Blockbuster as a potential move to enter the streaming space.
The programmers seem pleased with this new stream and I suspect they don't see these new deals as revenue neutral. Liongate's recent agreement to sell Mad Men syndication to Netflix assumes that this new distribution platform won't hurt its cable and on demand deals. It is why Networks aren't excited about giving away streaming rights to cable for mobile devices when others are willing to pay for those streaming rights. And since cord cutting has not hurt the industry yet, programmers are enjoying the revenue from another revenue stream.
As for You Tube, their mission is now to keep their viewers engaged for longer periods of time. While they enjoy attracting a huge number of uniques, short form video encourages viewers to leave and not necessarily watch more. It is the same strategy some cable networks had when they first introduced their channels. Count TV Guide, E!, Comedy, MTV and others who moved their programming to 30 minutes and longer to keep eyeballs longer, grow ratings, and capture higher ad revenue. Where short form programming was once ideal on the web, viewers have not gotten more accustomed to viewing TV shows and movies on computers, tablets, and smartphones. And that is what is presenting serious competition to the cable platform.
Thursday, April 7, 2011
Wednesday, April 6, 2011
Dish Satellite Acquires Blockbuster
Blockbuster Video, once the darling of the rental DVD business has gone bankrupt and now sold to Dish Network. The question is why. Where is the synergy between a satellite company and a brick and mortar retail chain. And does Dish have the magic to reinvent Blockbuster to compete again.
Blockbuster's management missed the boat when accessing its competition; Netflix brought an online and mail alternative while Redbox delivered a vendor strategy to bring the DVD closer to where the consumer shopped. Redbox also hurt Blockbuster with a cheaper rental alternative. Dish needs to reinvent the Blockbuster brand to get back into the game. But does a satellite company understand the retail game.
I recall a decade ago when Cablevision bought Nobody Beats The Wiz out of bankruptcy. With so much debt owed Cablevision for its media buys, owning The Wiz must have been better than writing it off. Yet their success as a satellite company could not fix the problems of The Wiz and today the brand is long gone. I fear the same will be true for Blockbuster.
A complete overhaul of Blockbuster and perhaps a name change too to reinvigorate the brand. Expand from DVDs to add game products. Compete in the used market with Game Stop and seek other entertainment software to the mix. Push further into the subscription model to compete with Netflix and others and use a low cost strategy to gain a customer base. Will it be enough? Let's just say the odds aren't in Blockbusters favor.
Univision Ratings Catching Up To NBC
As the latest Census revealed, the rapid growth in the Hispanic population is quickly being felt. In media, the launch of more Hispanic cable networks including Nat Geo Mundo and others are to take advantage in this large population as Hispanic TV isn't niche programming anymore. "Univision last week attracted more prime-time viewers than NBC, the second time in four weeks that the Spanish-language network edged out one of the Big Four." And while Univision is not consistently beating out NBC and NBC has had some programming issues of late (Jay Leno Show), it shouldn't take away the direction that viewership and ratings are going. From the big three to four when Fox joined and now the five with Univision taking a seat at the table.
It certainly isn't lost on NBC the need to embrace the Hispanic population. In fact, "separately on Tuesday, NBC corporate parent NBCUniversal said it was launching a sales initiative called 'Hispanics at NBCU.'" No doubt other networks, wether publicly or not, will embrace similar initiatives. But it shouldn't extend as a hiring initiative. More importantly, it means more multicultural faces on TV shows too.
It certainly isn't lost on NBC the need to embrace the Hispanic population. In fact, "separately on Tuesday, NBC corporate parent NBCUniversal said it was launching a sales initiative called 'Hispanics at NBCU.'" No doubt other networks, wether publicly or not, will embrace similar initiatives. But it shouldn't extend as a hiring initiative. More importantly, it means more multicultural faces on TV shows too.
Tuesday, April 5, 2011
Hulu Plus Could Cause More Cord Shaving
As we discuss the cable operator's concern with downgrades and other cord shaving tactics, let's not forget the success that Hulu is having. Hard to believe, but its subscription service is attracting consumers and is poised to exceed one million subscribers this year. And with a two tier revenue stream of subscriber fees and advertising, Hulu is turning those digital pennies into digital dollars quicker than anyone might have predicted. "Mr. Kilar (Hulu's CEO) also reiterated that the company is on track to approach $500 million in revenue in 2011, up from $263 million in 2010. Its first-quarter revenue grew 90% from 2010."
The warning signs are there for the cable operators to act and to act loudly. What starts out as a small leak in the dam could quickly become a serious problem as more consumers switch to online only for their video consumption. Cable operators must do more to establish themselves as the communication aggregator in the home. Bring on mobility; develop a video security business; build out a national WIFI consortium with the other cable operators; become the indispensable link to the home and its inhabitants. Otherwise, consumers will keep shaving and cutting their service.
The warning signs are there for the cable operators to act and to act loudly. What starts out as a small leak in the dam could quickly become a serious problem as more consumers switch to online only for their video consumption. Cable operators must do more to establish themselves as the communication aggregator in the home. Bring on mobility; develop a video security business; build out a national WIFI consortium with the other cable operators; become the indispensable link to the home and its inhabitants. Otherwise, consumers will keep shaving and cutting their service.
Consumer Reports Supports Cord Shaving
In this May's issue of Consumer Reports, the cable operators are ranked for service with FIOS and AT&T U-Verse coming out on top. In addition, the magazine reports a growing trend toward cord cutting and cord shaving. "While only 1.4% of consumers have cut the cord in the last two years, 7% of current pay-television subscribers are considering canceling their service, according to a Consumer Reports survey."
In fact, Consumer Reports provides suggestions to help consumers lower their monthly cable bills, "including dropping premium channels such as HBO and Showtime; canceling TV service in favor of free, over-to-air broadcast supplemented by a service such as Netflix; and downgrading to a lower-speed broadband tier."
It is precisely this trend that is pushing the cable operators to build mobile apps to augment their delivery of programming and extend the reach of their platform. It is why programmers who fight these mobile apps may find their revenues from license fees begin to drop as consumers shave services to lower their bills. Unless programmers are getting the same license fee from these alternate distribution platforms, they may be in fact getting Netflix pennies for cable dollars.
For now, the premium networks have a far greater chance to be hurt by Netflix and Amazon then the basic networks. For cable subscriptions, consumers are switching providers in their neighborhoods to the lower cost service. So while cable basic subscription drops, telco and satellite subscription is still rising. But as the trend to downgrade accelerates, even those providers will eventually see drops in their base. Adding value to the cable subscription with access to the linear line-up, DVR, and on demand channels remotely can help slow down or perhaps even reverse cord cutting and cord shaving.
In fact, Consumer Reports provides suggestions to help consumers lower their monthly cable bills, "including dropping premium channels such as HBO and Showtime; canceling TV service in favor of free, over-to-air broadcast supplemented by a service such as Netflix; and downgrading to a lower-speed broadband tier."
It is precisely this trend that is pushing the cable operators to build mobile apps to augment their delivery of programming and extend the reach of their platform. It is why programmers who fight these mobile apps may find their revenues from license fees begin to drop as consumers shave services to lower their bills. Unless programmers are getting the same license fee from these alternate distribution platforms, they may be in fact getting Netflix pennies for cable dollars.
For now, the premium networks have a far greater chance to be hurt by Netflix and Amazon then the basic networks. For cable subscriptions, consumers are switching providers in their neighborhoods to the lower cost service. So while cable basic subscription drops, telco and satellite subscription is still rising. But as the trend to downgrade accelerates, even those providers will eventually see drops in their base. Adding value to the cable subscription with access to the linear line-up, DVR, and on demand channels remotely can help slow down or perhaps even reverse cord cutting and cord shaving.
Monday, April 4, 2011
YES Says Cablevision's iPad App Is Unauthorized
Time Warner Cable wasn't the only cable operator to get backlash from their programming partners... YES Says Cablevision's iPad App Is Unauthorized: "YES Network, the regional sports network home of the New York Yankees and N..."
Cablevision Launches Its iPad App
While Time Warner Cable could only go out with a few dozen linear channels, Cablevision is launching its App with 300 live channels. And like TWC, Cablevision believes it has the rights to stream these channels inside the home. "The company insists the streaming option, which requires WiFi but not internet access, is covered by existing contracts that allow it to transmit to screens within the home. It also says it meets advertising standards." Technically, I would love to learn more how Cablevision's methods differentiate from TWC. I would also believe that the Cablevision legal team have also poured over their agreements to confirm their rights. And Cablevision doesn't tend to back off from a legal challenge.
From the article, the technical elements are both physical and customer requirements. "The tech requirements include Optimum digital cable, at least one digital cable box, an Optimum cable modem and WiFi. But subscribers don’t have to get broadband; Cablevision will supply an internet-blocked modem that works with the cable network and the WiFi network. The terms of service spell out several conditions for use, including the need to password protect the home network for security and a ban on using Apple (NSDQ: AAPL) Airplay to transfer audio or video viewed through the app to any other device inside the home." It seems Cablevision has taken additional steps to assure that more channels are accessible. But if I was a customer, I would want to play the app outside my home or at least in the backyard. Customers may agree to the terms but that doesn't mean they will heed them.
For Time Warner Cable, the next steps now include advertising. I saw the full page ad in The New York Times this morning. Will this PR effort help; I doubt it. With such animosity between Programmer and Operator, the only thing that matters are dollars.
From the article, the technical elements are both physical and customer requirements. "The tech requirements include Optimum digital cable, at least one digital cable box, an Optimum cable modem and WiFi. But subscribers don’t have to get broadband; Cablevision will supply an internet-blocked modem that works with the cable network and the WiFi network. The terms of service spell out several conditions for use, including the need to password protect the home network for security and a ban on using Apple (NSDQ: AAPL) Airplay to transfer audio or video viewed through the app to any other device inside the home." It seems Cablevision has taken additional steps to assure that more channels are accessible. But if I was a customer, I would want to play the app outside my home or at least in the backyard. Customers may agree to the terms but that doesn't mean they will heed them.
For Time Warner Cable, the next steps now include advertising. I saw the full page ad in The New York Times this morning. Will this PR effort help; I doubt it. With such animosity between Programmer and Operator, the only thing that matters are dollars.
Friday, April 1, 2011
TWC Adds 17 New Channels To iPad App Overnight
TWC Adds 17 New Channels To iPad App Overnight: "The channel count on Time Warner Cable's iPad app is now up to 37 national ..."
Networks Pulled Off Time Warner Cable App
It seems the TWC lawyers are rethinking their position on their current programmer agreements in enabling streaming of channels on their newest App. "Time Warner Cable pulled 12 networks from Discovery Communications, Fox Cable Networks and Viacom off its iPad streaming-video application on Thursday". And though they claim that the agreements offer TWC these streaming rights, better to work together than bicker.
At the end of the day, what TWC really wants is full live streaming rights of channels that they can offer on a tablet or smartphone to authenticated customers; not strictly inside the confines of the home, but everywhere and anywhere. Will consumers pay dollars for this added feature or will it be demanded as added value to their already high cable bills? Programmers expect higher license fees for new distribution platforms while operators are trying to embrace the new technology to retain and perhaps even grow the subscription base. Without these rights, the threat of cord shaving or worse, cord cutting, remains present.
It may also be in the Networks best interest to work out an extension of these rights. Unless license fee deals are better with streaming media providers, a lost cable sub's revenue will not be matched or exceeded with fees from Netflix or others. And with Hulu and Netflix gaining ground, cable operators and programmers should work together. But be careful, if Networks are getting higher license fees from new platforms, then they will not be compelled to give these streaming rights away to cable operators. And higher fees will only translate in higher cable bills.
At the end of the day, what TWC really wants is full live streaming rights of channels that they can offer on a tablet or smartphone to authenticated customers; not strictly inside the confines of the home, but everywhere and anywhere. Will consumers pay dollars for this added feature or will it be demanded as added value to their already high cable bills? Programmers expect higher license fees for new distribution platforms while operators are trying to embrace the new technology to retain and perhaps even grow the subscription base. Without these rights, the threat of cord shaving or worse, cord cutting, remains present.
It may also be in the Networks best interest to work out an extension of these rights. Unless license fee deals are better with streaming media providers, a lost cable sub's revenue will not be matched or exceeded with fees from Netflix or others. And with Hulu and Netflix gaining ground, cable operators and programmers should work together. But be careful, if Networks are getting higher license fees from new platforms, then they will not be compelled to give these streaming rights away to cable operators. And higher fees will only translate in higher cable bills.
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