The Monetization Of Digital Content

As content gets digitized, whether from print, audio, or video, it essentially loses its wrapping, the pieces around it that differentiate it from something else.  For books, it can be hard cover or softcover with any number of covers to make it appealing.  For music, it can be presented as album, cd, cassette, etc.  And as video, as VHS, DVD, or presented by a TV channel with wraps and intros to keep us tuned in.  But the content itself is intact and unchanged, except perhaps for special Director Cuts or extended versions. 

For distributors cutting deals to sell this digitized content, the classic marketing decisions must be made.  For cable distributors, it is aggregating the mix of channels at a price point that works and building a platform that assures that the service is always on.  For music, it is sold as a standalone song or within an album, and the ease of streaming or download.  And book sellers on having a large library of content and the ease of purchase and download.

The challenge for all distributors is figuring out how to best appeal to the consumer so that they choose your infrastructure to buy from and to create a hopefully long term, loyal customer base.  But consumers can be fickle and their interests can change with any internal or external force, from pricing changes to technological innovation.  The successful distributor can react as well as be proactive to assure that their relationship with the consumer continues to grow. 

And that is what makes the entertainment and media landscape so interesting and appealing to me; the constant change that enables innovation and growth.  For cable, the rise of video on demand and interactivity on the TV set; for book sellers, the rise of e-readers and tablets, and for music, different ways to consume and enjoy, from downloading and purchase to streaming online or from Sirius and even still from radio. 

Change is the constant force that assures that nothing stays the same forever.  Consumers love innovation that improves the quality of their lives.  We no longer can wait for the newspaper to be delivered to our door or for our news telecast at 11 pm, we need it now and digital has enabled instant accessibility.  It is hard to imagine getting it any faster, but I'm sure we will.  We also want it at an affordable price, willing to pay more if we can be convinced it provides greater value.  And we want the extras that make the experience that much more satisfying.  The challenge is figuring out what all those things are for all of the content we seek to consume.

Amazon Prime Adds More VOD Content

Content creators, even established networks like HGTV and Food Channel, are constantly seeking new distribution growth to build revenue streams.  Cable has been for a while the predominant way to view video content and the development of video on demand (VOD) offered consumers more ways to access and view.   But consumers are dropping cable and the web has become the destination for today's and tomorrow's viewer.  To reach those consumers, Scripps Interactive has partnered with a new distribution partner, Amazon.

Subscribers to Amazon prime will now have access on demand to multiple series from HGTV and Food.  Not only can they stream and watch, but consumers can purchase and download episodes as well.  While this is clearly good news for both Scripps and Amazon, I must wonder what Scripps' current distributors, Comcast, Time Warner, Cablevision and others think of this deal.  True, shows are being available to paid subscribers to Amazon Prime, but it must still feel like a competitive threat.  And while it is strictly on an on demand basis and not a linear feed of the network, viewership is moving more and more to an on demand world with the only exception being live programming.

Kudos to the Scripps team on what will be seen by many in the cable industry as playing with fire.  In the long run, deals with these alternative platforms, the ones currently disrupting the media industry, should ultimately keep the Scripps brands accessible to every home. And distribution is certainly the name of the game.

Apple, We're Waiting

Here's hoping the bloom is not off the rose, or that the shine not off the Apple.  At yesterday's shareholder meeting, Apple CEO Tim Cook admitted that while the stock price isn't where it should be, the company is performing well.  "True to Apple's secretive nature, Cook didn't provide any further product details, although at one point he said the company is considering entering other categories besides its popular line of digital music players, smartphones and tablet computers."  Of course there has been a lot of speculation as to what that next product might be, like an Apple TV set or an iWatch.  

But as other companies come out with their versions of these products ahead of Apple, I must wonder if that is indeed where Apple is headed.  They have had a tendency to lead the market with revolutionary new products, not merely spit out a copied product.  What might Apple possible be able to include in an iWatch that would make it better than the other products already in the marketplace like Pebble and others. And why hasn't Apple released a competing subscription music and video service to compete with Pandora and Netflix.  What is their next big thing?

For many of the shareholders, there is still a lot of confidence in what Apple has up their sleeve.  Others are expecting more immediate moves.  I can only hope that patience will be well rewarded.

TiVo Cable Strategy Working

Working with cable operators rather than around them seems to be working for TiVo.  While some consumers might be willing to buy their own standalone DVR box, most prefer to let their cable provider include and install.  Building set top deals with these distributors has enabled TiVo to roll out more and more boxes.  

"The DVR company added 222,000 net new customers through cable partners during the period, its fourth quarter of fiscal 2013, to reach 2.12 million. It lost 13,000 TiVo-owned subs to stand at 1.03 million. ... TiVo’s biggest MSO customer by far is Virgin Media in the U.K., which added nearly 900,000 net TiVo subs in 2012 to reach 1.3 million total, or 35% of its video-subscriber base."  Ultimately, that led to a healthy increase in revenue for the company.  

While internationally TiVo appears to be doing well, they must still solidify their Virgin Media relationship now that Liberty is acquiring Virgin.  Domestically, TiVo still has work to do to get into the leading cable operators like Time Warner Cable and Comcast. As the Mercedes of set top boxes, they deserve to be offered by cable operators to their subscribers.

Digital Claims Another Print Publication

We must appear as a very impatient race.  We can no longer wait patiently for mail to arrive at our home, we  need our email delivered instantly.  The same holds true for news and other information.  Timely means instantaneous and print can never deliver the latest news.  In fact, when it is wrong, it demands a retraction that takes more time to appear and is usually hidden away in some corner.  In the world of digital, fast is efficient and changes can be updated on the fly.

So digital has claimed another victim.  In the entertainment world, the source for all info had been the print publication Variety.  "The 108-year-old entertainment trade magazine announced Tuesday that it will no longer publish a daily print edition as if it shifts more resources to digital."  In addition, its website, Variety.com, will no longer require a subscription to view.  With its owners sister site Deadline.com offering similar information, it seems that Variety could not keep the current model working.  Hopefully a new streamlined model can continue to build on the Variety brand.

AMC Networks Misses Numbers - Time To Sell?

AMC Networks released their Q4 numbers and the Dish drop had a big effect on numbers.  "AMC Networks says it generated $15.2M in net income in the quarter, -48.5%".  Obviously, the networks are back on Dish but the damage was done.  In addition, AMC has announced a new syndication deal, selling one of their signature series, Breaking Bad, to Sundance Channel in an attempt to bolster their ratings.

So the question remains, is it time to sell the channels? Unless AMC and its sister channels have another new series up their sleeves, capable of getting the kind of ratings Breaking Bad, Walking Dead, and Mad Men have been generating, the timing may be ripe to sell while the network is hot.

Second Screen Alive And Well At The Oscars

For those of us that are fans of big TV events like the Oscars, watching these telecasts have become a lot more interesting because of second screens like Twitter.  I admit to personally reading and writing tweets during the telecast on Sunday. And I am not alone.  "Viewers of Sunday's 85th Academy Awards generated 8.9 million Oscars-related tweets. Twitter users sent 2.1 million tweets during the red carpet and 6.8 million during the awards show, according to Twitter."

At first, my interest was in reading what others had to say about the pre-show and awards in real time.  It was water cooler talk and jokes offered immediately.  No longer was it necessary to wait to the  next day to see if friends saw and thought the same things about what was on air.  But the more you read tweets, some good, some bad, most a bit snarky, you find yourself wanting to contribute as well to the conversation.  In fact, I think it made the telecast more entertaining as a result.  

I understand too that folks attending the festivities were using other sites, like Facebook, Vine,and Instagram to share pictures and videos of the action.  For those seeking a more immersive Oscar experience, the second screen was added value.  Yet for the networks offering these live showcases, the concern may be how to personally profit from their use.  They may generate an increase in viewership; Oscar ratings were up for both E! and ABC for their shows.  But, I am sure they would love to control the second screen app being used to interact.  With it comes more ad dollars and more revenue to the  respective networks.  And that is always a good thing.  In fact, I'm happy to discuss some ideas any time.  

Nook Strategy Not Working

Barnes & Noble attempt at building a digital strategy appears to have lost its footing.  Despite the world moving to tablet devices, Nook has not been able to capture a market share and produce a growing business.  "Navigating the digital revolution has been a tougher initiative for Barnes & Noble, as its Nook e-readers and tablets face stiff competition from Amazon, Google and Apple."  So what went right and what went wrong.

Analyzing the landscape, B&N already felt the competition from Amazon and other retailers in the book-selling marketplace.  But B&N also has been building out their merchandising to keep audiences coming to their stores.  And financially, the bookstores have been staying profitable.  Stores also kept adding more and more retail space to sell Nook devices.  But that also tends to directly hurt the hard copy side of the business.  Still it was a move to keep B&N customers as they transition from print to digital.

As nice as e-readers may be, the consumer quickly grew to prefer full featured tablets to e-readers.  Apple's iPad has the largest market share and Amazon was farther ahead with its infrastructure of apps and content.  Worse, the partnership with Microsoft never seemed to take a big step forward, especially when they introduced their own tablet, the Surface.  Nor did Microsoft embrace using the B&N retail space to help roll out the Surface and make Nook their official reading app.  Whatever financial support Microsoft gave to Nook never seemed to have a consumer connection.

Now comes word that B&N may split the company moving out the Nook and college bookstore businesses into separate entities.  Not being tied to the Nook may let B&N strike other partnership deals with other hardware providers.  And hopefully a leaner Barnes & Noble may be able to add another merchandising partner to their stores.  Perhaps a call from Amazon or Google may be a good start.

Sports Programming Causes Higher Cable Fees

Players demand higher salaries, owners want bigger profits, ticket prices go up and so does the cost of TV rights to air games.  And ultimately, the payer of all these fees is us the consumer.  So it is that cause and effect that has led cable operators to raise their monthly cable subscription rates to consumers taking sports programming.  "DIRECTV last September added a $3 monthly sports fee to the bills of new customers in roughly 20 percent of U.S. markets. ... Verizon followed DIRECTV's lead, adding a $2.42 surcharge for sports in select markets with all markets getting it by April."  And third on the list is Cablevision, adding $3 a month to cable bills for rising sports costs.  

None of the articles I read mentioned particularly which sports networks were in this package.  Was it just the regional sports networks (RSN) like YES or SNY in New York or did it also include national sports networks like ESPN.  Still, the question will be, will consumers accept this high increase to their monthly bill or will it only lead to more cord shaving and cord cutting.  Will consumers stop taking the sports package or go as far as to stop taking their cable subscription all together?  The one fact is crystal clear, cable rates are not going down and as each cable operator follows suit with these higher package fees, the web may be the only escape.