Per Peter Kafka, we can now take Google out of the running for buying Hulu. He gives a couple reasons for taking their name off the list, including obviously the takeover plans for Motorola. He cites regulator approval and Hulu owner approval. But was Google ever a serious buyer for Hulu?
You Tube is already Google's platform for video on the web. They have the platform, the ad model, and the content. Wouldn't a Hulu deal just complicate a successful formula. They are already negotiating content deals with the same networks and programs. Are the Hulu deals that much more valuable? I never considered Google a likely buyer for Hulu.
So that leaves Apple, Yahoo, and others. The same questions to Google can be posed to these prospective buyers too. Is the Hulu platform valuable? Are it's content deals better than the deals each company has already struck with its content partners? And can these assets contribute to the long term plan? For me, Apple can build a better mousetrap and negotiate its own content deals. In fact, I'd rather see Apple buy Yahoo and grow its online content business to offset its hardware side. And where does that leave Hulu? Unfortunately, dying on the vine.
Tuesday, August 16, 2011
Monday, August 15, 2011
Google Buying Hardware Company
No, it is not Home Depot, or Ace, Google has set its sights on Motorola Mobility. Its one thing to make the Android software and search engine, it's another to also make the products that the software goes inside. With the acquisition of Motorola, Google gains a firmer entry into cable boxes, the Xoom tablet, and smartphones. Now they are more like Apple then ever before. Should Apple buy a search engine like Bing or Yahoo to stay on par with Google?
A good move for Google or likely to cause them to lose focus in managing internal cultures and organizational changes? Can Google turn these Motorola devices into more must have devices. At the same time will other companies that support the Google Android software start to look at Google as more of a competitor than partner? And does Apple need to react or stay their own course, regardless of a Google-Motorola merger? Interesting times.
A good move for Google or likely to cause them to lose focus in managing internal cultures and organizational changes? Can Google turn these Motorola devices into more must have devices. At the same time will other companies that support the Google Android software start to look at Google as more of a competitor than partner? And does Apple need to react or stay their own course, regardless of a Google-Motorola merger? Interesting times.
Another Cable Operator Bites The Dust
Like most industries, the big fish eat the little fish. So too in the case of cable operators. The number 2 cable giant, Time Warner Cable, has agreed to purchase the number 9 cable operator, Insight Communications. Insight was once twice the size. About six years ago, it sold off half its operations to Comcast and went private. Today they are about three quarter of a million subscribers, with systems in the Midwest.
It is this consolidation that continues to change the state of the communication industry. Satellite has two main competitors, DirecTV and Dish; Telco has three, AT&T, Verizon, and Sprint. Cable still has more, including Comcast, Time Warner Cable, Cablevision, Charter, Cox, Mediacom, and others. To compete effectively in the communication and distribution platform business, cable needs more consolidation for more effective coverage of the US and more efficiency of operations.
At the same time, as these consolidations occur and industries become oligopolies, these industries start to enter into a "too big to fail space". Today we have fewer banking companies, car companies, accounting companies, and now cable companies. In the banking and car businesses, the government swooped in to save them when they became less adept to change and let power corrupt them. Are we in to the same mistakes occurring in the cable industry? Consolidation builds power, but it loses competition, the stuff that keeps them on their toes. As long as telco, cable, and satellite don't start merging each other, competition will keep excessive power at bay.
It is this consolidation that continues to change the state of the communication industry. Satellite has two main competitors, DirecTV and Dish; Telco has three, AT&T, Verizon, and Sprint. Cable still has more, including Comcast, Time Warner Cable, Cablevision, Charter, Cox, Mediacom, and others. To compete effectively in the communication and distribution platform business, cable needs more consolidation for more effective coverage of the US and more efficiency of operations.
At the same time, as these consolidations occur and industries become oligopolies, these industries start to enter into a "too big to fail space". Today we have fewer banking companies, car companies, accounting companies, and now cable companies. In the banking and car businesses, the government swooped in to save them when they became less adept to change and let power corrupt them. Are we in to the same mistakes occurring in the cable industry? Consolidation builds power, but it loses competition, the stuff that keeps them on their toes. As long as telco, cable, and satellite don't start merging each other, competition will keep excessive power at bay.
Friday, August 12, 2011
How Much Is Hulu Worth?
Lots of news these days of consumers dropping their cable and satellite services for an internet only connection to the home. And that cord cutting is affecting license fee revenue to networks. Some of those same networks, NBC, Fox, and Disney, today also own a piece of Hulu, a web platform for streaming TV shows and movies. And now Hulu's investors are waiting their big pay day as they put their platform up for sale and "are expecting bids of at least $1.5 billion for the site and its licenses."
But perhaps because of cord cutting, these same content companies might want to retain a piece of the web platform for future revenue growth. "It’s possible, for instance, that some of Hulu’s owners could hang on to their stakes, which could push the purchase price down. Alternately, a buyer could ask the company’s network owners to increase the length of Hulu’s exclusive online license, and end up paying even more for those rights." For buyers, the length of the existing deals and future deals will determine the value of Hulu. Without enough meaningful content and some agreement to offer exclusivity of content for a period of time, it's valuation may not be as high as possible. Web users have an insatiable appetite for video consumption, and Hulu's content partners may need to go even deeper into their libraries to satisfy the consumer demand.
The list of buyers that may be interested include Apple, Google, Yahoo, and Amazon. For each, the question remains, can they negotiate better license fee deals for content rather than buy through Hulu? Is the Hulu platform better than what they are each currently using? Is the Hulu value justified over a period of time? And will Hulu's premium subscription continue to find future growth? As the financial wizards sharpen their pencils, the strategic thinkers need to envision how the Hulu platform can benefit their business plans.
But perhaps because of cord cutting, these same content companies might want to retain a piece of the web platform for future revenue growth. "It’s possible, for instance, that some of Hulu’s owners could hang on to their stakes, which could push the purchase price down. Alternately, a buyer could ask the company’s network owners to increase the length of Hulu’s exclusive online license, and end up paying even more for those rights." For buyers, the length of the existing deals and future deals will determine the value of Hulu. Without enough meaningful content and some agreement to offer exclusivity of content for a period of time, it's valuation may not be as high as possible. Web users have an insatiable appetite for video consumption, and Hulu's content partners may need to go even deeper into their libraries to satisfy the consumer demand.
The list of buyers that may be interested include Apple, Google, Yahoo, and Amazon. For each, the question remains, can they negotiate better license fee deals for content rather than buy through Hulu? Is the Hulu platform better than what they are each currently using? Is the Hulu value justified over a period of time? And will Hulu's premium subscription continue to find future growth? As the financial wizards sharpen their pencils, the strategic thinkers need to envision how the Hulu platform can benefit their business plans.
Thursday, August 11, 2011
Amazon Also Bypasses Apple App Store
Yesterday, it was Wal-mart's Vudu service that was bypassing the Apple App Store to enable rental and download distribution on the iPad. Apple's 30% fee for revenue gained through an app has led others to find end around approaches as well. Amazon's Kindle reader can now buy from the web and read books on an iPad. "This new web application is Amazon's way of deftly getting around Apple's restrictions on in-app purchases without giving Apple a piece of the action. Rather than pay Apple their cut, Amazon pulled the iOS Kindle app's in-app link to the Amazon Kindle store. You could still buy Kindle books, but you would have to surf to the Amazon Web site in a browser to actually buy them and send them to you device."
Did Apple shoot itself in the foot with its high fee? It seems when individuals and companies feel threatened, they often find ways to build a better mouse trap to get around the problem. For Amazon, Wal-mart, and others, an easy web approach can work, especially if purchasing can occur with few clicks. The Apple App Store is keen on that, but a website approach, done well, could be just as satisfying for the end consumer.
As the article notes, this innovation now takes the conversation away from apps and back to web browsers. "As adoption of HTML5 matures, I'm sure there will be far fewer drastic differences between browsers as all of their implementation reach a stable plateau. Still, there's always a way to do things "better"--how long will it be until browsers start breaking away with their own extensions, just like the HTML add-ons that plagued users during the first browser war?" A fascinating next step.
Did Apple shoot itself in the foot with its high fee? It seems when individuals and companies feel threatened, they often find ways to build a better mouse trap to get around the problem. For Amazon, Wal-mart, and others, an easy web approach can work, especially if purchasing can occur with few clicks. The Apple App Store is keen on that, but a website approach, done well, could be just as satisfying for the end consumer.
As the article notes, this innovation now takes the conversation away from apps and back to web browsers. "As adoption of HTML5 matures, I'm sure there will be far fewer drastic differences between browsers as all of their implementation reach a stable plateau. Still, there's always a way to do things "better"--how long will it be until browsers start breaking away with their own extensions, just like the HTML add-ons that plagued users during the first browser war?" A fascinating next step.
Wednesday, August 10, 2011
No App, No Problem!
As if spouting a line from the movie Blazing Saddles, Wal-mart's Vudu service says, "We don't need your stinking apps" to Apple. But they do want to be seen via the web on Apple iPad devices. "Last month, Wal-Mart -- the world's largest retailer -- integrated Vudu into Walmart.com, which now provides links to the streaming-video service alongside DVD search results. Movies are available from Vudu to rent for 99 cents to $5.99 or to buy starting at $4.99. No app, but accessed, rented or bought via the website and watched on an iPad or other approved CE device, "including the Sony PlayStation 3 and Internet-connected HDTVs and Blu-ray Disc players from Funai Electronics (Magnavox, Sylvania), LG Electronics, Mitsubishi Digital Electronics, Panasonic, Philips, Samsung, SANYO, Sharp, Sony, Toshiba and Vizio."
With deals from most every major movie distributor, this service truly competes with Apple's not yet announced rental service. The challenge and opportunity for Apple will be to present a better, more ergonomic viewing and library experience. An Apple app can potentially mean less clicks; it could also enable a better search engine to find most efficiently exactly what you are seeking. But Vudu's advantage is that it has been released first and has the opportunity for better awareness through the Wal-mart store.
At the same time, Wal-mart made another decision. "Separately, on Tuesday Wal-Mart announced that it is exiting the digital music business and will stop selling digital music online effective Aug. 29." Funny to leave a business that could benefit from working with Vudu. To consumers, a digital download is a digital download whether it is video or music. To drop the music side of the program makes little to no sense.
So the digital video distribution platform is getting more crowded - Vudu, Netflix, Hulu, Apple, and of course cables' VOD, all offering movies and shows on multiple devices. The DVD business may be in decline, but streaming media is only growing.
With deals from most every major movie distributor, this service truly competes with Apple's not yet announced rental service. The challenge and opportunity for Apple will be to present a better, more ergonomic viewing and library experience. An Apple app can potentially mean less clicks; it could also enable a better search engine to find most efficiently exactly what you are seeking. But Vudu's advantage is that it has been released first and has the opportunity for better awareness through the Wal-mart store.
At the same time, Wal-mart made another decision. "Separately, on Tuesday Wal-Mart announced that it is exiting the digital music business and will stop selling digital music online effective Aug. 29." Funny to leave a business that could benefit from working with Vudu. To consumers, a digital download is a digital download whether it is video or music. To drop the music side of the program makes little to no sense.
So the digital video distribution platform is getting more crowded - Vudu, Netflix, Hulu, Apple, and of course cables' VOD, all offering movies and shows on multiple devices. The DVD business may be in decline, but streaming media is only growing.
You Can Re-Negotiate Your Cable Bill
Yesterday's blog focused on Cablevision's quarterly loss, but the problems in cable are not limited to Cablevision. "Cable, satellite and phone companies that provide TV services lost a combined 380,000 video customers in the second quarter, up from the 162,000 subscribers they shed in the same period a year ago." Today's print edition of the NY Post has a chart outlining all the deals that cable is offering to lure new customers to join. Among them, free access to NFL Sunday Ticket, cashback offers, and multi-platform discounts. But what should you do if you don't want to switch cable providers.
Certainly the cost to switch in terms of time spent waiting for the installer to show up at your door may offset the financial gain. But nothing should stop current customers from re-negotiating their monthly bill. That's right, just pick up the phone and threaten to switch. It may take a couple passes from customer service rep to manager to win-back department, but the half hour on the phone could shave multiple dollars off your bill or give you free upgrade to premium content from HBO, Showtime or Starz. Deals may last six months, some a year, but they can give you the same level of serve for less money.
Cable companies don't want to lose any more customers and it is cheaper to discount in order to retain than to install a new customer. So if you have some time, make the call and push for your best deal.
Certainly the cost to switch in terms of time spent waiting for the installer to show up at your door may offset the financial gain. But nothing should stop current customers from re-negotiating their monthly bill. That's right, just pick up the phone and threaten to switch. It may take a couple passes from customer service rep to manager to win-back department, but the half hour on the phone could shave multiple dollars off your bill or give you free upgrade to premium content from HBO, Showtime or Starz. Deals may last six months, some a year, but they can give you the same level of serve for less money.
Cable companies don't want to lose any more customers and it is cheaper to discount in order to retain than to install a new customer. So if you have some time, make the call and push for your best deal.
Tuesday, August 9, 2011
Competition Cuts Cablevision
In such difficult economic times, its hard enough to watch the stock market plummet and tons of shareholder value evaporate. Harder still to watch a company become what everyone asked and watch the business model change as well. Such is the case for Cablevision. Asked to spin out networks, both the Rainbow arm, to be renamed AMC Networks, and the MSG arm, are separately owned companies, and Cablevision is a "pure-play" cable distribution operator. But it didn't help in the second quarter, "losing 23,000 basic video customers and missing analysts' consensus on practically every growth metric in the period."
Well Cablevision is also one of the smartest cable operations in the country and their marketing group has delivered innovative programs to the market place. The triple play idea was successfully pushed first by Cablevision; Optimum Rewards gave their best subscribers additional savings. Sure they have stumbled some, but their batting average remains high.
Well as Cablevision most likely knows, it comes down to either new users, new uses or higher prices. With competition from FIOS and the web causing cord cutting and cord shaving, price increases may only exacerbate the video subscriber drop problem. The pipe to the home still has value and perhaps Cablevision is already considering new uses to sell like security systems and better ways to capture business customers. And even perhaps new price packaging to win-back customers from competition.
As Cablevision has been a leader in the cable industry, the news out of Cablevision's quarterly report may only reflect what is also being felt across every other cable operator today. Cable customers taking broadband but dropping subscription services. It is a pattern that has been going from quarter to quarter to quarter.
Well Cablevision is also one of the smartest cable operations in the country and their marketing group has delivered innovative programs to the market place. The triple play idea was successfully pushed first by Cablevision; Optimum Rewards gave their best subscribers additional savings. Sure they have stumbled some, but their batting average remains high.
Well as Cablevision most likely knows, it comes down to either new users, new uses or higher prices. With competition from FIOS and the web causing cord cutting and cord shaving, price increases may only exacerbate the video subscriber drop problem. The pipe to the home still has value and perhaps Cablevision is already considering new uses to sell like security systems and better ways to capture business customers. And even perhaps new price packaging to win-back customers from competition.
As Cablevision has been a leader in the cable industry, the news out of Cablevision's quarterly report may only reflect what is also being felt across every other cable operator today. Cable customers taking broadband but dropping subscription services. It is a pattern that has been going from quarter to quarter to quarter.
Nook Smart Marketing To Students
My son is not yet a teen, but he is clamoring for an e-reader. He's away at camp, but he will be very jealous when he sees that his mom has a Nook. Well, he and other students may have another reason to purchase one, Barnes and Noble has put together a promotion that offers some nice freebies with the purchase of a Nook. "Users who register their new Nook by October 31 will receive coupon codes for twelve Barnes & Noble Classics e-books, twelve SparkNotes e-books (which, oddly, do not match the selection of Classics), three Nook Study Guides and four Nook Color apps. B&N values the content at $107.28." B&N is not being overly generous with their gifts, the titles available are self-published.
"This promotion is an interesting reminder that Barnes & Noble is also a book publisher, and although it is publishing public domain works, it can still find interesting things to do with them." Smart marketing to build value of the Nook brand. At the same time, I would love to see how B&N uses it's Nook to also bring consumers back into their stores. Sure the key to owning an e-reader is the ease of downloading without leaving your home. Still, the success of brick and mortar stores will depend on blending together on-line with in-store.
This latest marketing push by B&N should certainly cause it's competitors, like Amazon, to react. Amazon is not encumbered with a store presence and may have more flexibility in its marketing approach. And as it comes to the student consumer, the company that can get e-book versions of high school and college textbooks may be the real winner at the end of the day.
"This promotion is an interesting reminder that Barnes & Noble is also a book publisher, and although it is publishing public domain works, it can still find interesting things to do with them." Smart marketing to build value of the Nook brand. At the same time, I would love to see how B&N uses it's Nook to also bring consumers back into their stores. Sure the key to owning an e-reader is the ease of downloading without leaving your home. Still, the success of brick and mortar stores will depend on blending together on-line with in-store.
This latest marketing push by B&N should certainly cause it's competitors, like Amazon, to react. Amazon is not encumbered with a store presence and may have more flexibility in its marketing approach. And as it comes to the student consumer, the company that can get e-book versions of high school and college textbooks may be the real winner at the end of the day.
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