Al Gore's cable network, Current TV, may have reached near 60 million subscribers, but few tuned in and the network lost both on-air personalities and a following. Those results have led to the eventual sale of the network. And of all those companies seeking entry onto cable line-ups in the US, the buyer is Al Jazeera, owned by the government of Qatar.
But as anyone knows who has worked with contracts, changes in ownership, are but one factor that can make a contract null and void. In the world of cable, format changes, programming changes, and other issues can also terminate an agreement. And as cable operators look at their contracts with Current TV, they are now pondering what to do, renegotiate or drop.
Time Warner Cable has already decided that they will not carry the former Current TV, now to be named Al Jazeera America. Will other operators follow suit or will they leave the channel on? Is there even an audience for the network or a concern that the viewpoints will not be well received by a US audience? Current TV had its own troubles competing against bigger cable news networks including CNN, MSNBC, Fox News, BBC, as well as the news arms of our broadcast networks. Given the niche that Al Jazeera brings, it is hard to believe that they will succeed but stranger things do happen. Plus, given the desire of cable operators to lower programming costs, the dropping of the former Current channel adds some economic relief. Who else drops the service from their line-up remains to be seen.
Thursday, January 3, 2013
Wednesday, January 2, 2013
iPhone iWatch
For Apple, that could be the iWatch. Easy to access, easy to wear, connectable to other Apple devices. And perhaps add a "self winding" type mechanism, a device that is able to stay charged through movement. Will people be willing to give up their smartphone or will this simply augment and improve the experience of using one. One thing is clear, the iPad Mini proved consumers love devices in multiple sizes.
Can Intel Change The Face Of Cable?
Intel may be trying to do what Apple hasn't so far, build a new cable mousetrap that offers consumers their choice of programming, via the web, at a lower total cost. How? According to stories, they are building their own set top cable box that connects to broadband and delivers cable programming to the TV set. It's called XBox, I mean Apple TV, sorry Roku; actually, it has no name yet.
But here is the problem, those best networks offering their TV shows are the same ones already getting license fees from cable operators like Comcast and Time Warner. And these same networks may just be reluctant to upset the apple cart. Why leave a guaranteed model which places you on the largest bundle of service for the chance to be picked a la carte by the individual consumer. What is the win, a larger fee per user at the risk of less than 80% choosing your network. And on top of that, these same top networks have second and third level networks that they also get license fees and carriage for distributing. That's right, mixed in the purebreds are some possible mutts. For these same programmers are doing what cable operators are doing, bundling their networks to assure fees and distribution. Because once they are on the line-up they can begin to get additional advertising revenue billed as well.
Can Intel construct a deal to get programmers to come on board? For smaller networks with little to lose, of course; but for the big guys, the ones that get the highest ratings, the opportunity is doubtful. And that Intel can do a deal while Apple has been hard pressed to get more going with their own Apple TV box, let alone an Apple TV set seems a stretch for me. Yes an Intel cable box could be in their pipeline; I just don't believe they will gain more channels than what is already accessible on other over the top devices.
But here is the problem, those best networks offering their TV shows are the same ones already getting license fees from cable operators like Comcast and Time Warner. And these same networks may just be reluctant to upset the apple cart. Why leave a guaranteed model which places you on the largest bundle of service for the chance to be picked a la carte by the individual consumer. What is the win, a larger fee per user at the risk of less than 80% choosing your network. And on top of that, these same top networks have second and third level networks that they also get license fees and carriage for distributing. That's right, mixed in the purebreds are some possible mutts. For these same programmers are doing what cable operators are doing, bundling their networks to assure fees and distribution. Because once they are on the line-up they can begin to get additional advertising revenue billed as well.
Can Intel construct a deal to get programmers to come on board? For smaller networks with little to lose, of course; but for the big guys, the ones that get the highest ratings, the opportunity is doubtful. And that Intel can do a deal while Apple has been hard pressed to get more going with their own Apple TV box, let alone an Apple TV set seems a stretch for me. Yes an Intel cable box could be in their pipeline; I just don't believe they will gain more channels than what is already accessible on other over the top devices.
Friday, December 28, 2012
DirecTv Follows Dish With Price Increase
Just one week after Dish announced their plans to raise their subscription fees to consumers, DirecTv has followed suit raising their rates as well. "On Thursday, the satellite service announced that beginning Feb. 7, it
will boost monthly subscription fees by about 4.5%. The hike is a
response to an 8% rise in carriage fees demanded by cable channels
included in DirecTV’s service, Reuters noted." So costs for programming are rising 8% but as consumers we should be happy because DirecTv is only raising their rates 4.5%. Regardless, both are rising too fast.
But here is the problem, inflation is not rising that fast and consumers are not seeing their salaries rise that high either. And worse, the "fiscal cliff" may be here soon and consumers will also face higher taxes resulting in less disposable income. So what is a DirecTv customer, or a Dish customer, or any cable customer going have to do as they watch their costs for service continue to rise?
The choices are pretty obvious and the rate of increases (4.5% by DirecTv as an example) continue to push more families to look at alternatives. There is cord shaving, cutting back on premium channels, taking lower levels of service, to lower their monthly costs. Some might give everyone in the family their own cellphone and drop their hard line phone bill as well. More drastically, families will be more inclined to completely cut the cord and drop their cable service all together. With Netflix, Amazon, Hulu, and others offering compelling content, consumers will pay less while being more selective in their viewing choices.
The facts are clear. Rates for cable are rising faster than inflation and income declines and higher taxes may only exacerbate the cord cutting phenomenon. Fiscal cliff... we are inching closer to the cable cliff.
But here is the problem, inflation is not rising that fast and consumers are not seeing their salaries rise that high either. And worse, the "fiscal cliff" may be here soon and consumers will also face higher taxes resulting in less disposable income. So what is a DirecTv customer, or a Dish customer, or any cable customer going have to do as they watch their costs for service continue to rise?
The choices are pretty obvious and the rate of increases (4.5% by DirecTv as an example) continue to push more families to look at alternatives. There is cord shaving, cutting back on premium channels, taking lower levels of service, to lower their monthly costs. Some might give everyone in the family their own cellphone and drop their hard line phone bill as well. More drastically, families will be more inclined to completely cut the cord and drop their cable service all together. With Netflix, Amazon, Hulu, and others offering compelling content, consumers will pay less while being more selective in their viewing choices.
The facts are clear. Rates for cable are rising faster than inflation and income declines and higher taxes may only exacerbate the cord cutting phenomenon. Fiscal cliff... we are inching closer to the cable cliff.
Friday, December 21, 2012
Can Blackberry Rebound?
With Apple taking a majority of the US Smartphone market and corporate IT departments and employees embracing the iPhone, the Blackberry continues to lose customers and market share and "says it lost subscribers for the first time in the latest quarter, as the global number of BlackBerry users dipped to 79 million." And while actual numbers were better than analyst estimates, Blackberry is clearly moving in the wrong direction.
Blackberry is scheduled to release its latest smartphone, but can they win back customers? Certainly design is critical and everyone is emulating the touch screen approach, but also important are the applications that run and how how is the functionality of the phone is to use. For personal use, I have an iPhone; my company cell phone is a Blackberry Bold. Functionally, the Blackberry is a brick to me. Confusing buttons, functionality that is not easy to understand, and a temperamental touch screen. I can see why people are switching to Apple and Android devices.
Will the new Blackberry attract users back to the fold or is it too little too late? The Blackberry image from its older models may be hard for consumers to except a new look and a new approach. Current Blackberry customers may be set in their ways with their current phones, ones that they have mastered over time, and not appreciate that the newest phones may be more clone-like than consistent with the brand they have grown up with. What is clear is that Blackberry was once the leader and has been thrown off the top of the hill. They must now fight with the new leader to retake the top and that requires continual innovation and imaginative marketing.
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Blackberry is scheduled to release its latest smartphone, but can they win back customers? Certainly design is critical and everyone is emulating the touch screen approach, but also important are the applications that run and how how is the functionality of the phone is to use. For personal use, I have an iPhone; my company cell phone is a Blackberry Bold. Functionally, the Blackberry is a brick to me. Confusing buttons, functionality that is not easy to understand, and a temperamental touch screen. I can see why people are switching to Apple and Android devices.
Will the new Blackberry attract users back to the fold or is it too little too late? The Blackberry image from its older models may be hard for consumers to except a new look and a new approach. Current Blackberry customers may be set in their ways with their current phones, ones that they have mastered over time, and not appreciate that the newest phones may be more clone-like than consistent with the brand they have grown up with. What is clear is that Blackberry was once the leader and has been thrown off the top of the hill. They must now fight with the new leader to retake the top and that requires continual innovation and imaginative marketing.
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Hulu - Free or Pay, Successful or a Loser?
Hulu seems to have a problem; it doesn't know what it wants to be. With multiple owners with different ideas of Hulu's strategy, they are going nowhere fast. Perhaps the biggest question posed by it's owners, should Hulu be a free website or subscription. According to the Wall Street Journal, Disney wants Hulu to be a free service, getting revenue through advertising; Fox/News Corp wants a pure subscription model.
Operating as a mixture of both has perhaps limited their ability to eke out a profit. The result has been that Hulu remains dwarfed by competitors like Netflix, Amazon, and You Tube. Less video views, less unique viewers, and less paid subscribers. And Hulu is not only losing money, it is asking its owners to pony up additional dollars to invest in more content. But is there enough incentive by its owners to want to work together to build out a business that eventually cannibalizes on the revenue they get from cutting their own deals with cable operators and others? Why share your content's revenue when you can keep it all for yourself.
It may be a no win situation. "The fact is, (CEO Jason) Kilar has, in a couple years, built a Web brand that you have heard of. " But with multiple owners with different, competing interests, it seems necessary for Hulu to find a single owner and a committed strategy to compete effectively.
Thursday, December 20, 2012
Dish Network Announces A Price Increase
This post is not meant to single out Dish Network. The truth is every cable operator will be raising their monthly subscriber fees. The issue is that these price hikes tend to be larger than the inflation rate. And for consumers facing less income due to job cuts, smaller bonuses, and what is expected to be higher taxes, the cost of cable is looking more and more like a luxury than a staple in the household.
For Dish, their claim is that they haven't raised rates in 2 years;regardless, "Dish Network will increase the price of its core TV bundles between 7% and 20% effective January 2013, with most packages rising $5 per month." Yes, 20% increase. The very size of the increase sounds incredulous. But Dish Network, as I am sure other cable operators believe, will expect that the number of subscribers dropping their service will be smaller than the amount raked in by these higher prices. And that is because the monthly increase isn't the only price increase that Dish customers will see. Premium packages, including Spanish Tiers, will see price increases. So too, the cost of some older cable box monthly rentals in the home.
What effect will these price increases have on their customers? Will a higher number than expected cut the service? Dish argues that the need for raising prices is because of higher programming costs. Time Warner Cable, seeing the same issue, is dropping services. Dish tried with AMC Networks till their lawsuit with Voom resulted in signing a new carriage agreement. But Dish might just look for other networks to drop to lower those programming expenses.
So this is what consumers will be facing with cable cost increases, and lesser channels on the line-up. And as more and more TV sets become internet enabled, subscribers may just look more closely at cutting their cable cord for broadband enabled viewing. Household budgets can handle only so much and these announced increases could cause Dish and others even more subscriber losses.
For Dish, their claim is that they haven't raised rates in 2 years;regardless, "Dish Network will increase the price of its core TV bundles between 7% and 20% effective January 2013, with most packages rising $5 per month." Yes, 20% increase. The very size of the increase sounds incredulous. But Dish Network, as I am sure other cable operators believe, will expect that the number of subscribers dropping their service will be smaller than the amount raked in by these higher prices. And that is because the monthly increase isn't the only price increase that Dish customers will see. Premium packages, including Spanish Tiers, will see price increases. So too, the cost of some older cable box monthly rentals in the home.
What effect will these price increases have on their customers? Will a higher number than expected cut the service? Dish argues that the need for raising prices is because of higher programming costs. Time Warner Cable, seeing the same issue, is dropping services. Dish tried with AMC Networks till their lawsuit with Voom resulted in signing a new carriage agreement. But Dish might just look for other networks to drop to lower those programming expenses.
So this is what consumers will be facing with cable cost increases, and lesser channels on the line-up. And as more and more TV sets become internet enabled, subscribers may just look more closely at cutting their cable cord for broadband enabled viewing. Household budgets can handle only so much and these announced increases could cause Dish and others even more subscriber losses.
Wednesday, December 19, 2012
Digital Pennies Growing Nicely With Online Ads
Compared to television, online ad spending is still small, but one thing is clear, online ad spending is growing rapidly. "According to the to Interactive Advertising Bureau, total online ad revenue reached $9.26 billion in the third quarter of 2012, which is up six percent from the previous quarter and 18 percent from Q3 figure of $7.8 billion a year ago." And with the rise of tablets and smartphones, online advertising should continue at this healthy pace for quite some time.
Of course, online businesses are still trying to figure out better mousetraps to monetized their content. Smaller screens, targeted advertising, paid search, and other means to attract an audience and advertising dollars. The virtually infinite number of online sites and choices has created a very long tail from which to choose. Online, unlike other media platforms has become so vast and fragmented that the top of the pile grows through acquisition and integrated marketing efforts while smaller sites hope to find traction to grow its audience and reach. And unless these sites can find a business model to sustain themselves financially, they must eventually fade from site.
The online marketplace is a very young place, unlike the cable and print platforms. But the similarities are clear. Eventually, the big fish will either absorb the little ones or the little ones will thrash around until they can grow themselves into bigger fish or simply fade away.
Of course, online businesses are still trying to figure out better mousetraps to monetized their content. Smaller screens, targeted advertising, paid search, and other means to attract an audience and advertising dollars. The virtually infinite number of online sites and choices has created a very long tail from which to choose. Online, unlike other media platforms has become so vast and fragmented that the top of the pile grows through acquisition and integrated marketing efforts while smaller sites hope to find traction to grow its audience and reach. And unless these sites can find a business model to sustain themselves financially, they must eventually fade from site.
The online marketplace is a very young place, unlike the cable and print platforms. But the similarities are clear. Eventually, the big fish will either absorb the little ones or the little ones will thrash around until they can grow themselves into bigger fish or simply fade away.
Time Warner Cable - Penny Wise, Pound Foolish
At first blush, Time Warner Cable (TWC) appears to be acting as a protector of the consumer, dropping cable networks to keep the costs of service down and thus the cost of monthly cable service for consumers. By dropping networks they believe lack enough interest, the back end of the long tail of programming content, only the most popular is viewed and so should be paid for. And so, in TWC's mind those unfortunate networks include Ovation, and others,"including Current TV, Hallmark Movie Channel, IFC and WE tv—whose carriage agreements are 'due to expire soon' and which could be dropped 'in the near future.'"
But for the most part, these "low rated" channels are also the lowest cost channels. Their fee structure is less than a number of the bigger channels including USA, ESPN, and Fox News. Of course, each of these channels are part of a media empire also owned by broadcasters, NBC, ABC, and FOX, respectively. Their fees, and their sister networks, are not only higher, but most likely their annual license fee increases are growing faster than our current annual inflation rate. So any drop of penny services by Time Warner won't protect consumers from the price increases of other services. Time Warner Cable consumer bills, like other cable operators, will still continue to climb.
At the same time, TWC has invested in a regional sports network, demanding huge license fees by cable operators for carriage of their new network. It is more than a question about sports verse the arts, it is a question about how to best manage a cable operator business that is getting more and more expensive to operate. Dropping smaller, less viewed channels like Ovation may appear to be a solution, but it is like plugging a whole in the dam with your finger; it will not fix the bigger problem.
But for the most part, these "low rated" channels are also the lowest cost channels. Their fee structure is less than a number of the bigger channels including USA, ESPN, and Fox News. Of course, each of these channels are part of a media empire also owned by broadcasters, NBC, ABC, and FOX, respectively. Their fees, and their sister networks, are not only higher, but most likely their annual license fee increases are growing faster than our current annual inflation rate. So any drop of penny services by Time Warner won't protect consumers from the price increases of other services. Time Warner Cable consumer bills, like other cable operators, will still continue to climb.
At the same time, TWC has invested in a regional sports network, demanding huge license fees by cable operators for carriage of their new network. It is more than a question about sports verse the arts, it is a question about how to best manage a cable operator business that is getting more and more expensive to operate. Dropping smaller, less viewed channels like Ovation may appear to be a solution, but it is like plugging a whole in the dam with your finger; it will not fix the bigger problem.
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