Multi-Platform Content starting From A Different Direction

For years, it seems, content has moved from video to print. ESPN created a successful magazine to further reach its video audience; Food Network and HGTV has also been building a magazine brand to enhance its brand. The strategy seems to have paid off as the magazine has a built in audience to attract. But this strategy has been less attractive coming the other way. Sports Illustrated tried to build a cable brand called CNNSI, but it is now defunct.

So now comes word that Condé Nast will try to build video content as an extension of its magazine brands. "A Condé Nast insider told WWD that (Dawn) Ostroff is planning to hire a small handful of development people — aka D-girls — to plumb Condé’s titles for script ideas and to hit the town and pitch them." While these are shows and not an entire network, the challenge to grow the brand is just as real. I applaud the effort. I believe that good content can extend across multiple platforms. The three key issues to successful growth are quality content, strong distribution, and solid marketing support.

With a built in audience from the magazine, you would think it would be easy to market to your targeted audience. But as CNNSI proved, Sports Illustrated could not move viewers over to their new network. It still lacked enough distribution and awareness to impact ratings. And Condé Nast will need to determine in what new form this content will be delivered, as web video, TV shows, theatrical films, etc. Video now comes in many flavors. Still, it is an important next step and strategically building a Condé Nast seems to be a right move in the evolution and growth of their titles and brands.

AOL Still Has Paying Subscribers!

Talk about hard to believe, AOL continues to receive revenue from customers needing dial up access to email and the web. According to the article, there are 3.5 million dial up customers paying about $17 a month. That is $714 million dollars annually for dial up. That to me is an amazing figure for a dead service. So why can't AOL transition into a new digital business when it has such a cushion still to work with?

AOL still has a strong e-mail service, a number of strong content properties, and a dial up business that is still attractive to certain customers with limited internet needs. What it still needs is people with vision to help set its future course in a direction that integrates web and mobile to its growth. Otherwise, their past will surely keep them from innovating the future.

Where Did All The Cable Subs Go?

As Time Warner Cable, Comcast, Cablevision and others have been announcing their loss in cable subscribers, the question has been where have all the cable subs gone. The cause has been attributed to cord cutting, low housing starts, and of course, the economy. But now comes word where a good bit of these subs may have switched to. "DirecTV added 327,000 net new subscribers in the third quarter, soundly beating analysts' estimates of 203,000 net new additions." That certainly covers all of the lost cable subs in Q3.

It certainly puts to rest for now the argument that cord cutting and housing starts are to blame. And not knowing the cost for DirecTV, hard to tell if the switch produces a ton of economic saving. DirecTV believes the higher sub growth is due to their NFL Sunday Ticket promotion. If so, then the motives for change are actually due to content. Content is King and in this case, that content is NFL Football.

Will SiriusXM Fall Into The Netflix Hole?

As we are proud to say, "it's the economy, stupid", we still seem to follow the same mistakes rather than learn from them. Netflix clearly fumbled the ball with a huge price increase at the wrong time. And Netflix continued to heap on more misery upon itself with a whole changing of the business model. So is it Sirius' turn to fumble with a price increase?

Sirius had troubles this past quarter with subscriber growth and a price increase on January 1 will only further erode subscription. "The company also had a harder time getting customers to commit to its service once its promotions end. It acquires most of its new subscribers by offering free trials of its service when people buy new cars. The conversion rate of trial subscribers who became full paying subscribers fell to 44.4 percent in the third quarter, down from 48.1 percent a year earlier." The price elasticity model is in place whether these companies want to see it or not. Consumers are rebelling at higher prices by seeking cheaper alternatives or cutting off altogether.

But it seems clear that Sirius is not about to change its pricing policy. CEO Mel Karmazin has said that the company has not heard any issues with its price increase; then again, they haven't put it into effect either. Once consumer receive their bills, there will no doubt be backlash. How it willcompare to what happened with Netflix we can only wait and see.

Content Companies Follow The Money

Whether streaming media deals encourage cord cutting or not, content companies still want to maximize their ROI on produced content. For Disney, that means selling TV content to OTT (over the top) platforms including Amazon and renewing with Netflix. For Amazon, deals like this one and others drive value for their new Kindle Fire. Content is the gas that runs the engine.

For Disney and other content companies, negotiating these deals requires a complex series of windows that give cable operators their first window for TV content and allows enough time before this same content is accessible on OTT devices. How long that window needs to be has most likely been determined through extensive research. Consumers willing to wait till content hits this secondary window will be more willing to cut the cord with their cable operator. Content companies are banking that the choice isn't a zero game of one platform or another and that these content deals only increase the revenue on produced content.

But the demand by Amazon, Netflix, Apple, and other OTT platforms for access to TV content will only put pressure on Disney and other content creators to keep shortening the windows so that fresher content reaches their smaller screens. This trend is already occurring with theatrical films reaching on demand, premium, and basic cable in shorter and shorter windows. TV content deals will most likely follow in a similar pattern and that will continue to cause more cord cutting by consumers from their cable providers.

Is Cable Cord Cutting An Economic Or Digital Response?

As cable operators announce their quarterly earnings, it comes as no surprise that cable subscriptions are declining. But rather than cite the rise of broadband and OTT content, the decline of subscribers is attributed to the poor economy. Poor housing starts, unemployment, and household budgeting are the rationale behind cable subscription drops as well as to cord shaving, removing higher priced premium services and digital tiers from the bill. The truth is that cord cutting is a result of BOTH the economic slowdown and the rise of web content.

Broadband has become the most important of the three services coming into the home; cable phone and cable networks lag behind it. That connection to the web brings a ton of short and long form content, what you want, when you want, where you want, and at a fraction of the cost. And younger consumers especially are gravitating to the digital model. The economy will come back but the younger consumer will have been weened off of cable and onto web content.

Google is banking on that transition and recently announced their launch of new digital channels. Web content partners as well as Hollywood celebrities are jumping on board to each "program" their own "channel". Should any of this content prove compelling, their niche could become mainstream.

Cable companies are adapting by looking anew at their cable line-ups and figuring out ways to lower their costs. Time Warner Cable has built a lower cost basic model giving consumers the entry to a smaller tier of networks and to keep them connected to on demand. And the growth of broadband subscribers comes with a larger profit margin. But it may not be enough. Operators must continue to push their role as the ultimate aggregators of content, not just in the home, but also through a mobile platform. That means constructing deals with networks that enable both linear and on demand access to all programming. Operators are competing with the web for revenue. Want access to the NFL Redzone, buy the app from Verizon; want to watch a baseball game, buy the MLB web package. Alternatives to cable are popping up and consumers are finding more choice than every before.

Higher Cable Bills Encourage Cord Cutting

Whether it's the appeal of over the top distribution platforms or expensive cable bills, consumers are cutting off their cable bill. Time Warner Cable's quarterly report echos what other cable operators have been seeing a decline in their cable subscription business. At the same time, internet subscription has been rising.

Frankly, part of the problem comes from us as consumers; we have a growing appetite for more. Whether consuming food, cable, or apps, we are not satisfied with what we have; we want even more. And perhaps it is time to go on a diet. Asking for more is not always a problem - more bandwidth, faster internet speeds - sometimes we should just go on a diet.

And perhaps that is what cable operators may have to start to consider doing. Going on a diet with the number of cable networks on the line-up. With the average cable networks' license fees rising 3.5% annually, those costs are being forced on to higher cable bills to consumers. Cable operators are starting to look at ways to either move basic cable networks to higher, separately priced tiers, for consumers to choose to buy or not, or to consider the unthinkable, dropping cable networks. The latter is probably much harder to do but as contract renewals come up, certainly a consideration.

But where to cut? Does a network with a Nielsen rating less than .5 get pulled? Does a Network group get told we are only taking your top 2 or 3 channels? How many movie networks does a channel line-up need, or general entertainment networks, or women's networks, and yes even sports networks. As Networks have grown up they have broadened and spun off niche networks that have broadened and spun off their own niche networks. Perhaps it is time for cable network consolidation.

Certainly cable operators are being faced with the unenviable task of deciding what to do with their cable packages to retain subscribers. In today's economy, cost is clearly a factor. But once we get back to economic prosperity, no doubt gluttony and the desire for more will comeback again. And that being the case, networks and operators could hold out and not make any of these drastic cost cutting moves in the short term.

Content Always On And Available...Not Always

Pulling a page from the Disney marketing strategy, Warner Brothers has decided that the best way to create need is to create want. This is being done by pulling film titles out of general circulation so that a renewed desire is created. Disney has been successful at pulling their animation films out of circulation only to re-release them to a new audience. They have repeatedly done this, the most recent being the re-release of "The Lion King" in 3D. A DVD re-release is soon to follow. A whole new audience got to enjoy this film in a whole new format. And for little marketing cost, Disney saw a huge return.

Now it is Warner Brothers' turn with the Harry Potter franchise. With DVDs everywhere and the films constantly being played on ABC Family, it seems time to hide them away for a few years and build some new want for the movies. Can these movies, aimed at an older audience than Disney films achieve the same kind of renewed demand. It certainly is a strategy worth testing. At the same time, the concern could be that this franchise could be usurped by another franchise. As there are no new Harry Potter books to come out, audiences may prefer to watch other more relevant book to movie titles. Percy Jackson are you listening?

Could Siri Be The Brains Of The Apple TV?

With the death of Steve Jobs and the release of his biography comes word that Apple has been working on building a new kind of TV set. No official word from inside Apple, but a ton of speculation around what could be the neatest thing to hit TV sets, voice commands. Just as Siri is taking the iPhone to new heights, rumors are that Siri could also be the extra pop in the next evolution of TV manufacturing.

It makes me think of old Start Trek movies. Scotty speaking to the pc, "Computer,get me...". So why can't we simply get the TV to first recognize our voices and then reply as we address it. "TV, turn the channel to Bravo" or "TV, record all episodes of Saturday Night Live." "TV, display DVR recordings or TV, search web for Daily Show clips". No more remote. No more buttons. All voice commands. Siri may just be the future of TV.