As Charter Communication grows, so does Liberty Media. First came the announcement that the FTC approved Charter's purchase of Optimum West, the former systems owned by Bresnan and sold to Cablevision. Now comes word that Liberty Media is buying a quarter stake in Charter. "The acquisition of a stake in Charter, the eighth biggest pay-TV
operator with 4.2 subscribers, would be Malone’s first big investment in
a U.S. cable operator since he sold Tele-Communications Inc. to
AT&T (T) for $48 billion in 1999." Of course, Liberty also had a piece of DirecTv before spinning it out into a separate run company.
So if Liberty Media is looking to get into the distribution game, might they look at buying an additional cable operator. While John Malone and Charles and Jimmy Dolan haven't tended to see eye to eye, Cablevision might just be a target for acquisition as well. And to the Dolan advantage, it could lead to a bidding war with Time Warner Cable who would see adding the Cablevision footprint as a more valuable asset. For now, we can only watch and see what intentions Liberty will have with their Charter investment.
Tuesday, March 19, 2013
Monday, March 18, 2013
Do Its Owners Want To Keep Hulu?
Despite Hulu's success, its owners, Fox, Disney, and NBC may not want to stay with them. NBC/Comcast has no active management of them because of its cable ownership and Disney has been mulling selling out. With the departure of its CEO, Jason Kilar, Hulu's future ownership is uncertain. And yet, all these ownership issues coming while Hulu is actually performing quite well.
"Hulu’s monthly unique visitors totaled 24.1 million last month, who watched 709.9 million total videos, according to comScore. Meanwhile, Hulu served 1.44 billion ads in February 2013, representing 583 million minutes." And Hulu believes ComScore may not be representing all its numbers from multiple over the top (OTT) devices. Not only does Hulu have a successful ad sales model, it has built a subscription revenue model that tops some cable operator numbers, with "more than 3 million paying customers for the $7.99-per-month Hulu Plus service, according to Kilar." And Hulu subs are growing while cable subs continue to decline.
Perhaps ownership would prefer not being both content and distribution owners. By ridding themselves of ownership of Hulu, they are free to charge Hulu higher rates for carriage of their product. Perhaps too, they face the conflict that comes from negotiating license fee deal with cable operators with Most Favored Nation clauses that limit their profitability? Or their problems with ownership are because they have differing strategic views on the future direction of Hulu? So while Hulu may be performing well, internal issues exist they may change the ownership and direction of the brand. Hey Apple, care to buy Hulu?
"Hulu’s monthly unique visitors totaled 24.1 million last month, who watched 709.9 million total videos, according to comScore. Meanwhile, Hulu served 1.44 billion ads in February 2013, representing 583 million minutes." And Hulu believes ComScore may not be representing all its numbers from multiple over the top (OTT) devices. Not only does Hulu have a successful ad sales model, it has built a subscription revenue model that tops some cable operator numbers, with "more than 3 million paying customers for the $7.99-per-month Hulu Plus service, according to Kilar." And Hulu subs are growing while cable subs continue to decline.
Perhaps ownership would prefer not being both content and distribution owners. By ridding themselves of ownership of Hulu, they are free to charge Hulu higher rates for carriage of their product. Perhaps too, they face the conflict that comes from negotiating license fee deal with cable operators with Most Favored Nation clauses that limit their profitability? Or their problems with ownership are because they have differing strategic views on the future direction of Hulu? So while Hulu may be performing well, internal issues exist they may change the ownership and direction of the brand. Hey Apple, care to buy Hulu?
Friday, March 15, 2013
Time Warner Cable Wants To Keep Customers Loyal
In New York City, Time Warner Cable has operated for years a very successful local news channel dubbed NY1. For New Yorkers, the network offered an array of news and informational programming matched directly to the city they live in. For those not in the Time Warner Cable (TWC) NYC area and a TWC subscriber, access is impossible. Only TWC subscribers get NY1. That limitation though is also an advantage as the channel is both well regarded and exclusive.
But TWC believes that current customers, defectors to rival platforms in the market, including FIOS, RCN, and the satellites, DirecTv and Dish, and of course cord cutters might not know that they would lose NY1 if they left TWC. "To hammer home that point, NY1 will undergo a 'rebranding' and name change to TWC News." So why is this change happening now after so many years in the marketplace. "The changes are the result of market research that found Time Warner subscribers were not aware that Time Warner owned NY1." Rebranding is scheduled for this Fall.
Of course, many fans of NY1 are not happy to hear of a name change. And while it more directly connects the news channel to the corporate parent, it is hard for me to imagine that New Yorkers don't already know that NY1 is a Time Warner network. And while I believe that exclusivity is essential to save subscribers from fleeing, my gut tells me that those consumers willing to switch from TWC to a rival cable operator or cut the cable cord completely know exactly what they are losing and gaining in the process. For subscribers, I believe that the price point is overwhelmingly more important to their decision to switch than any channel exclusivity. In today's economic market, price sensitivity to cable continues to be an increasingly bigger problem. So name change or not, I believe it won't change the consumers decision to switch to a lower cost provider.
But TWC believes that current customers, defectors to rival platforms in the market, including FIOS, RCN, and the satellites, DirecTv and Dish, and of course cord cutters might not know that they would lose NY1 if they left TWC. "To hammer home that point, NY1 will undergo a 'rebranding' and name change to TWC News." So why is this change happening now after so many years in the marketplace. "The changes are the result of market research that found Time Warner subscribers were not aware that Time Warner owned NY1." Rebranding is scheduled for this Fall.
Of course, many fans of NY1 are not happy to hear of a name change. And while it more directly connects the news channel to the corporate parent, it is hard for me to imagine that New Yorkers don't already know that NY1 is a Time Warner network. And while I believe that exclusivity is essential to save subscribers from fleeing, my gut tells me that those consumers willing to switch from TWC to a rival cable operator or cut the cable cord completely know exactly what they are losing and gaining in the process. For subscribers, I believe that the price point is overwhelmingly more important to their decision to switch than any channel exclusivity. In today's economic market, price sensitivity to cable continues to be an increasingly bigger problem. So name change or not, I believe it won't change the consumers decision to switch to a lower cost provider.
Thursday, March 14, 2013
Redbox Expands From Kiosk to Streaming
The Redbox model has been about accessibility with kiosks near where we shop to pick up a DVD rental for the evening. And while the business model has worked well, the consumer still is moving to instant accessibility. Like Netflix, Redbox has realized that they too needed to expand in order to grow the business. The result, Redbox Instant, a joint venture with Verizon, to deliver a new streaming video competitor to Netflix, Amazon and others. "The video service offers subscribers four DVD rentals as well as unlimited streaming of number of movies for $8 a month."
Coming later to the party poses some challenges, especially a smaller library of streaming shows and movies. And what matters to the consumer is that the library of product to consume is not only desirable to watch, but that the library is actively growing to manage the voracious appetites of the customer. So yes, size does matter, but so does exclusivity of content. Demonstrate to the market that the offering is both plentiful and unique and Redbox Instant will capture market share. It will be harder to compete from a lower cost standpoint as the monthly costs of under $10 a month makes it difficult to price too much lower.
Redbox Instant has been in beta mode with speculation of a public launch next week. Can Redbox steal away subscribers from their competitors or are customers willing to buy into more than one streaming service? Differentiate the value and I believe the latter is true. At the end of the day, build a better viewing experience and customers will come.
Coming later to the party poses some challenges, especially a smaller library of streaming shows and movies. And what matters to the consumer is that the library of product to consume is not only desirable to watch, but that the library is actively growing to manage the voracious appetites of the customer. So yes, size does matter, but so does exclusivity of content. Demonstrate to the market that the offering is both plentiful and unique and Redbox Instant will capture market share. It will be harder to compete from a lower cost standpoint as the monthly costs of under $10 a month makes it difficult to price too much lower.
Redbox Instant has been in beta mode with speculation of a public launch next week. Can Redbox steal away subscribers from their competitors or are customers willing to buy into more than one streaming service? Differentiate the value and I believe the latter is true. At the end of the day, build a better viewing experience and customers will come.
Wednesday, March 13, 2013
I Want My, I Want My...Vevo TV
With costs of cable rising and younger audiences moving from cable to online for their entertainment, a new channel has emerged that may just be to broadband what MTV was to cable, Vevo TV. "Vevo took another step towards becoming a full-on music TV network Tuesday with the launch of Vevo TV, a 24-hour live stream of curated programming. The channel is using MTV-like VJs, and is at launch available on the web as well as on mobile devices, Roku boxes and Xbox 360 gaming consoles." New technology for a new audience.
While Vevo might like to offer its TV channel to cable operators, operators will most likely be resistant to adding it to their line-ups as it competes with them on the over the top platforms (OTT). That issue changes of course should Vevo TV become more popular than MTV and other cable music services and cable operators need it to compete. But by then, the damage may be done as more and more households add OTT devices like Roku, XBox, Apple TV, and others into their home. By then the cable box becomes less relevant. Cable could instead bypass this obstacle by opening up their cable box to the web and these services. Still it may be too late as households become more accustomed to using their online boxes for programming. And that is a competitive threat.
For online channels watching this Vevo experiment, their success with an online TV channel may just be the push for them to also release their 24/7 channels as well. And for services like Roku and XBox that are aggregating online content, it could prove a winning formula to competing for share of the cable household.
Tuesday, March 12, 2013
The Challenges Of Video Content Distribution
The intersection of video content and distribution becomes a negotiation for both parties. Each needs the other, but their respective needs may not be completely aligned. The perceived value of your content can decide how much leverage you may have in striking the right distribution deal. Distribution companies seek content to add value to their pipeline. The size of their audience also helps determine the kind of content deals they can negotiate. Each takes their respective strengths (and weaknesses into the negotiation.
In the world of cable television, that fight (negotiation) has been going on for years. Channels get pulled off cable line-ups during renewal periods for agreements. Niche networks fight for any distribution they can get and larger networks, with multiple channels, use their better networks to help lift distribution for their smaller networks. It is the fight that Cablevision is in today with Viacom.
For content creators, it is about eyeballs and the revenue it can generate. For distributors of content, it is about exclusivity and appeal to also increase viewership and revenue. So in the world of internet video, why is it still a challenge for content creators to get distribution. The web provides ubiquity enabling video viewership by anyone to any device. And yet, video companies still seek distribution deals.
Frankly, it comes down to tonnage. There are so many channels, so many shows, so many short videos that viewers and consumers in general have a difficult time finding what they want. Heck, most don't even know what to ask for. Distribution companies, whether a cable company like Comcast or Time Warner, an online video service like Hulu or Netflix, or even branded You Tube channels and other websites push their value as aggregators and recommenders of content to consume. What is known becomes watched, some unknown becomes viral and noticed, and most becomes part of a long tail of limited views.
How we are discovered is essential. For the most part, the bigger the project, the better the financing, the stronger the buzz, and the marketing behind it help to propel content to awareness, interest, and consumption. Distributors prefer exclusivity so as to make their platform the only place to watch. Cable operators want networks to only put shows on their line-up and not online so as to not present to consumers alternative options for viewing. New episodes on network only, year old episodes on Hulu. Content owners want ubiquity, the more choice for viewing, the more opportunities for revenue. Distributors want exclusivity; the higher the value of the perceived content, the higher the value of the platform presenting it. And so negotiations between distribution and content becomes fraught with issues on windows of ownership and exclusivity to make both sides happy.
For the long tail of content, ubiquity is essential to simply get noticed. The hope being that discoverability can eventually lead the content creator off the tail and onto wider viewership where multiple revenue streams may be possible. For these content companies, association with an aggregator that can help them to better market their content and build awareness and engagement is essential to success. We are known by the company we keep and content is no different. Being on sites or networks or screens that reach a similar interested audience is valued to build that engagement, interest, and value. It is a long term game that occurs with each and every piece of content that gets created.
In the world of cable television, that fight (negotiation) has been going on for years. Channels get pulled off cable line-ups during renewal periods for agreements. Niche networks fight for any distribution they can get and larger networks, with multiple channels, use their better networks to help lift distribution for their smaller networks. It is the fight that Cablevision is in today with Viacom.
For content creators, it is about eyeballs and the revenue it can generate. For distributors of content, it is about exclusivity and appeal to also increase viewership and revenue. So in the world of internet video, why is it still a challenge for content creators to get distribution. The web provides ubiquity enabling video viewership by anyone to any device. And yet, video companies still seek distribution deals.
Frankly, it comes down to tonnage. There are so many channels, so many shows, so many short videos that viewers and consumers in general have a difficult time finding what they want. Heck, most don't even know what to ask for. Distribution companies, whether a cable company like Comcast or Time Warner, an online video service like Hulu or Netflix, or even branded You Tube channels and other websites push their value as aggregators and recommenders of content to consume. What is known becomes watched, some unknown becomes viral and noticed, and most becomes part of a long tail of limited views.
How we are discovered is essential. For the most part, the bigger the project, the better the financing, the stronger the buzz, and the marketing behind it help to propel content to awareness, interest, and consumption. Distributors prefer exclusivity so as to make their platform the only place to watch. Cable operators want networks to only put shows on their line-up and not online so as to not present to consumers alternative options for viewing. New episodes on network only, year old episodes on Hulu. Content owners want ubiquity, the more choice for viewing, the more opportunities for revenue. Distributors want exclusivity; the higher the value of the perceived content, the higher the value of the platform presenting it. And so negotiations between distribution and content becomes fraught with issues on windows of ownership and exclusivity to make both sides happy.
For the long tail of content, ubiquity is essential to simply get noticed. The hope being that discoverability can eventually lead the content creator off the tail and onto wider viewership where multiple revenue streams may be possible. For these content companies, association with an aggregator that can help them to better market their content and build awareness and engagement is essential to success. We are known by the company we keep and content is no different. Being on sites or networks or screens that reach a similar interested audience is valued to build that engagement, interest, and value. It is a long term game that occurs with each and every piece of content that gets created.
Monday, March 11, 2013
More Consumers Not Watching Traditional TV
Nielsen released a recent study that is detailing just how much cord cutting has been occurring in the last 6 years. According to their report, more than 5 million homes in the US don't have get cable or over the air TV service. That number has more than doubled, from just over 2 million homes in 2007. Described as "Zero TV Homes", these households tend to be younger than 35 and have no children. "The main reasons 'zero TV' consumers cite for not having pay TV or
receiving broadcast TV are cost (36%) and lack of interest (31%)." So what do these households do for entertainment?
Not surprisingly, most actually own a television set and use it to connect to devices to watch from the internet. Others let their computer screen be their source for entertainment. Cable companies may not be worried as this group represents less than 5% of total US households. Some may still subscribe to a cable company for broadband access only. Still it is indicative of a growing trend. With cost as a primary driver for dropping TV service, they may be harder to win back even as they grow older and have families. With more reliance on internet programming and better programs available online, the interesting movement to watch will be just how quickly this "zero household" group grows.
Not surprisingly, most actually own a television set and use it to connect to devices to watch from the internet. Others let their computer screen be their source for entertainment. Cable companies may not be worried as this group represents less than 5% of total US households. Some may still subscribe to a cable company for broadband access only. Still it is indicative of a growing trend. With cost as a primary driver for dropping TV service, they may be harder to win back even as they grow older and have families. With more reliance on internet programming and better programs available online, the interesting movement to watch will be just how quickly this "zero household" group grows.
Friday, March 8, 2013
Nook Needs Exclusive Content Partnerships To Succeed
Barnes and Noble has announced new content partnership deals for its Nook tablet to help build up its library of content offerings and compete in the marketplace. "The new partnerships deals involve Lions Gate Entertainment Corp. (LGF),
MGM Holdings Inc., Viacom Inc.'s (VIA, VIAB) Paramount Pictures,
Relativity Media, National Geographic, Little Pim and Film Buff." Content is King and the strategy of building content is important to the success of their business plan. But it is a very competitive landscape and others are doing exactly the same thing. So if the strategy is to level the playing field against bigger names like Apple and Amazon, it may not be enough.
The success of a content strategy, in my humble opinion, is in the exclusivity of content offerings that are created. In the over the top (OTT) world, Netflix and Amazon have been investing in exclusive content to compete with cable. Even in network and cable programming, the channels that have the better programming gets the ratings and the ad dollars. It also enables leverage to the channel and its positioning on a cable operator's line-up. Taking the cue from these other related industries, B&N must find its exclusivity to effectively compete with the Nook, whether in the general marketplace or in niches.
A few off the top ideas for B&N to consider. Exclusivity with magazine brands for an exclusive window of release ahead of general release. Exclusivity of e-textbooks for college classrooms. Even exclusivity of TV shows or movies. Consider exclusive gaming and other apps that make the Nook as differentiated as possible from other devices. At the end of the day, a me too strategy will not be enough for the Nook to succeed; other tablet libraries are already larger and B&N will have a hard time to catch up. In my opinion, it will be differentiation in niche market offerings and content exclusivity that will most grow the Nook brand.
The success of a content strategy, in my humble opinion, is in the exclusivity of content offerings that are created. In the over the top (OTT) world, Netflix and Amazon have been investing in exclusive content to compete with cable. Even in network and cable programming, the channels that have the better programming gets the ratings and the ad dollars. It also enables leverage to the channel and its positioning on a cable operator's line-up. Taking the cue from these other related industries, B&N must find its exclusivity to effectively compete with the Nook, whether in the general marketplace or in niches.
A few off the top ideas for B&N to consider. Exclusivity with magazine brands for an exclusive window of release ahead of general release. Exclusivity of e-textbooks for college classrooms. Even exclusivity of TV shows or movies. Consider exclusive gaming and other apps that make the Nook as differentiated as possible from other devices. At the end of the day, a me too strategy will not be enough for the Nook to succeed; other tablet libraries are already larger and B&N will have a hard time to catch up. In my opinion, it will be differentiation in niche market offerings and content exclusivity that will most grow the Nook brand.
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