As streaming video is the backbone of an aggregated media service, the field has been attracting new entrants to the market. of course, there is Hulu, Netflix, Vudu, Redbox, and Amazon. HBO GO is considering a streaming model without a cable subscription. And yesterday, Spotify announced its plans to add to its music service with video streaming. So considering the interest and growth in this platform, one set of owners wants to cash out.
"Hulu's board has approached companies that might be interested in buying the over-the-top video provider, Reuters is reporting." Its owners, Disney/ABC, News Corp/Fox, and Comcast/NBC, have differing ideas of the business. Comcast/NBC has limited involvement because of its cable ownership, "News Corp. would prefer a TV Everywhere model while Disney supports an ad-supported model." And so, once a price is agreed upon, two of the partners might just sell their shares to the third, or all three will be exiting the business. Perhaps, a download business that Apple iTunes has enjoyed might consider buying in as a quick entrance into the streaming field.
Of course, this release is not new news; it has been in the press for some time. But given the growth in the industry and the insatiable demand for online video content, doesn't even partial ownership of an aggregated model offer some enhanced benefits? Do they each believe that the consumer will hop from site to site in search for content to consume rather than prefer a platform that can search and recommend across all content? Given that each of these partners represent multiple networks, they may think consumers will be happy searching within the parent brand, but consumers care more about the title of the content, not who presents it. Selling Hulu might just be for them a misstep.
Tuesday, March 26, 2013
Monday, March 25, 2013
HBO Without A Cable Subscription
HBO has long been regarded as a major asset to cable operators. As a premium cable service, it charges subscribers an incremental fee above a basic cable subscription, that is then split with the cable operator. And viewers that want HBO must first buy cable. Cable operators like this arrangement very much.
HBO continues to draw viewers with its mix of movies and original series. Its shows, like Game of Thrones, gets terrific press. But HBO has its challenges, too. For one, there is no traditional advertising on the network. Content is shown without commercial interruption. So HBO must find additional revenue through resale of content via syndication and DVD. And as we know the DVD revenue model. HBO must also recognize that cable subscription is dropping too. "Increasingly, consumers are dropping traditional cable packages to rely solely on subscription services like Netflix or a la carte services like Amazon Instant Video." Ultimately, less cable customers means less customers buying HBO.
Seeing these changes in the distribution landscape and watching as their authenticated TV Everywhere approach, HBO GO, has found value. "HBO GO users can access content via a laptop, tablet, phone, through a gaming console, or other streaming devices. The service has 6.5 million registered users versus 29 million for HBO as a whole." HBO may just be considering a major new disruptive revenue model. Offering HBO GO without an HBO subscription. Not an easy change to make. Current contracts with cable operators may have clauses that must be dealt with. Will HBO work with its cable operators to construct such a model or go outside the wall to sell directly to over the top (OTT) companies?
As HBO is owned by Time Warner and also sells its basic cable networks like TNT and TBS to cable operators, it may be problematic to work outside the existing model. A collaborative, partnership model makes more sense for the large company. At the same time, the web knows no geographic boundaries. Cable operators would have to create an online partnership, like Hulu Plus for example, to sell and OTT only subscription to channels. Broadband has been a real game changer to cable and the rules have yet to be written. No opportunities continue to emerge.
HBO continues to draw viewers with its mix of movies and original series. Its shows, like Game of Thrones, gets terrific press. But HBO has its challenges, too. For one, there is no traditional advertising on the network. Content is shown without commercial interruption. So HBO must find additional revenue through resale of content via syndication and DVD. And as we know the DVD revenue model. HBO must also recognize that cable subscription is dropping too. "Increasingly, consumers are dropping traditional cable packages to rely solely on subscription services like Netflix or a la carte services like Amazon Instant Video." Ultimately, less cable customers means less customers buying HBO.
Seeing these changes in the distribution landscape and watching as their authenticated TV Everywhere approach, HBO GO, has found value. "HBO GO users can access content via a laptop, tablet, phone, through a gaming console, or other streaming devices. The service has 6.5 million registered users versus 29 million for HBO as a whole." HBO may just be considering a major new disruptive revenue model. Offering HBO GO without an HBO subscription. Not an easy change to make. Current contracts with cable operators may have clauses that must be dealt with. Will HBO work with its cable operators to construct such a model or go outside the wall to sell directly to over the top (OTT) companies?
As HBO is owned by Time Warner and also sells its basic cable networks like TNT and TBS to cable operators, it may be problematic to work outside the existing model. A collaborative, partnership model makes more sense for the large company. At the same time, the web knows no geographic boundaries. Cable operators would have to create an online partnership, like Hulu Plus for example, to sell and OTT only subscription to channels. Broadband has been a real game changer to cable and the rules have yet to be written. No opportunities continue to emerge.
Friday, March 22, 2013
Follow The Disruptive Trend
According to Mark Greenberg, head of EPIX TV, "the path forward for TV is to embrace change, competition, as well as
consumer choice and control in order to be relevant to new generations." Truth be told, the entertainment industry, just like every other business, and across every environment, follows Darwinism and the evolution of change. Eat or be eaten, adapt to survive or perish. By following that concept, Greenberg recognizes and adheres to that understanding for survival.
And while there may be no timetable for the pace of change in the entertainment environment, that change is evident. We see it today as alternative, over the top platforms are taking root, and cable companies are concerned that households are moving past the cable cord for the internet to consume media. "The mantra of the digital age has been 'adapt or die,' Greenberg said. But the real mantra should be 'disrupt or be disrupted' and now is the time to 'get back into the disruption business.'” For both content and distributors that means figuring out how to make TV Everywhere a complete solution, regardless of the device. It also means more flexible pricing models for consumers at price points that keep customers subscribed.
Consumers are drawn to these newer disruptive models for entertainment for a number of reasons. One, that You Tube channels and videos are attracting niche interests. Videos on X box games or how to instruction attract a younger demo. Two, the online social communities, like Facebook and Twitter, can promote and recommend interesting content and enable a viral demand to view. Three, the rise of mobile platforms, tablets and smartphones, bring the content to us, rather than making us go to a TV room to view. And Four, the growth of over the top (OTT) devices, like Xbox, Roku, Apple TV and others bring more than just broadcast and cable networks to the TV, they bring internet access to a larger inventory of short and long form programming, on demand and at our fingertips.
So Mark Greenberg is right, "the path forward for TV is to embrace change, competition, as well as consumer choice and control in order to be relevant to new generations." It is a classic rule of nature as old as Charles Darwin himself. In that struggle to survive, one must adapt to change. As Herbert Spencer, Darwin's contemporary, once said, it is "the survival of the fittest".
And while there may be no timetable for the pace of change in the entertainment environment, that change is evident. We see it today as alternative, over the top platforms are taking root, and cable companies are concerned that households are moving past the cable cord for the internet to consume media. "The mantra of the digital age has been 'adapt or die,' Greenberg said. But the real mantra should be 'disrupt or be disrupted' and now is the time to 'get back into the disruption business.'” For both content and distributors that means figuring out how to make TV Everywhere a complete solution, regardless of the device. It also means more flexible pricing models for consumers at price points that keep customers subscribed.
Consumers are drawn to these newer disruptive models for entertainment for a number of reasons. One, that You Tube channels and videos are attracting niche interests. Videos on X box games or how to instruction attract a younger demo. Two, the online social communities, like Facebook and Twitter, can promote and recommend interesting content and enable a viral demand to view. Three, the rise of mobile platforms, tablets and smartphones, bring the content to us, rather than making us go to a TV room to view. And Four, the growth of over the top (OTT) devices, like Xbox, Roku, Apple TV and others bring more than just broadcast and cable networks to the TV, they bring internet access to a larger inventory of short and long form programming, on demand and at our fingertips.
So Mark Greenberg is right, "the path forward for TV is to embrace change, competition, as well as consumer choice and control in order to be relevant to new generations." It is a classic rule of nature as old as Charles Darwin himself. In that struggle to survive, one must adapt to change. As Herbert Spencer, Darwin's contemporary, once said, it is "the survival of the fittest".
Thursday, March 21, 2013
Walking And Web Surfing A Problem?
I enjoy reading Ralph Gardner's Urban Gardner articles in The Wall Street Journal. And while his writings don't typically match this blog's content, I was drawn in to today's article, Too Much, Too Soon. In it he makes a very logical point regarding Google Glass, "However, there's something I'd like to say to the good folks at Google
before it's too late: Don't. Please just drop the idea. I know it sounds
really exciting; even I'm really excited. But it's not smart. It will
come to no good for a whole bunch of reasons."
For the most part, he questions our ability to do two things at once. It may be fine to wear a Google Glass while at our desk or sitting on our couch, but another thing all together when we are outside on the street and sidewalks. Will Google Glass distract to the point where we forget where we are walking and get knocked over by someone else, or worse, step into the street and get hit by a car. Will we think we can wear these glasses while driving a car? We certainly have been told time and time again not to text and drive." But that's the point: Just as with smartphones, it doesn't matter how cutting edge, even architectonic, these devices are. We, their masters, remain profoundly dumb, inept, clumsy, antediluvian. And for Google's sake, will the first fatality that comes from someone wearing their Google Glass result in a lawsuit and possible class action suit.
Ralph certainly envisions an upside of information at your fingertips, "Let's say you're walking down the street and spot an especially alluring fellow pedestrian. It will be only a matter of time until you'll be able to aim the lens of your device at his or her face, and using face recognition technology get the individual's address, work history, marital status, measurements and hobbies." We are in fact already an open book on the web. Despite the possible uses of Google Glass, the threat of injury, of oneself or others, seems so real. We have a hard enough time concentrating on where we are going, let alone have distractions cross our path. Hopefully, Google has thought this through.
For the most part, he questions our ability to do two things at once. It may be fine to wear a Google Glass while at our desk or sitting on our couch, but another thing all together when we are outside on the street and sidewalks. Will Google Glass distract to the point where we forget where we are walking and get knocked over by someone else, or worse, step into the street and get hit by a car. Will we think we can wear these glasses while driving a car? We certainly have been told time and time again not to text and drive." But that's the point: Just as with smartphones, it doesn't matter how cutting edge, even architectonic, these devices are. We, their masters, remain profoundly dumb, inept, clumsy, antediluvian. And for Google's sake, will the first fatality that comes from someone wearing their Google Glass result in a lawsuit and possible class action suit.
Ralph certainly envisions an upside of information at your fingertips, "Let's say you're walking down the street and spot an especially alluring fellow pedestrian. It will be only a matter of time until you'll be able to aim the lens of your device at his or her face, and using face recognition technology get the individual's address, work history, marital status, measurements and hobbies." We are in fact already an open book on the web. Despite the possible uses of Google Glass, the threat of injury, of oneself or others, seems so real. We have a hard enough time concentrating on where we are going, let alone have distractions cross our path. Hopefully, Google has thought this through.
Wednesday, March 20, 2013
Liberty Media May Want More Cable Companies
John Malone and Liberty Media may be itching to get back into the cable platform business. Having once owned TCI 15 years ago, their recent cable acquisitions may be indicative of more to follow. When Malone did own TCI (Tele-Communications, Inc), they were known for not investing in the infrastructure, building out the plant to enable more bandwidth. It was sold to AT&T and ultimately has found its way in to Comcast.
Today, they are back in the cable game. In 2009, "Liberty Global agreed to buy the cable network Unitymedia for $3 billion from investors including BC Partners and Apollo Global Management." He bought into a Puerto Rican cable company, OneLink Communications, last year and will be closing on a 27% position in Charter Communications this year. So, is John Malone planning to build up an international cable business?
So who else might Liberty Media be looking to acquire? Cablevision, with 3 mm subscribers, has tremendous value, especially with its systems in the New York City market. Cox Communications, though privately owned, could be a consideration as well, with over 4.5 mm customers. Of course, Liberty could also start buying up smaller cable operators, at 1 mm subs and under, but the synergy with Charter may be harder to find. Still, any additional acquisition by Liberty Media will only confirm their strategic plans.
Today, they are back in the cable game. In 2009, "Liberty Global agreed to buy the cable network Unitymedia for $3 billion from investors including BC Partners and Apollo Global Management." He bought into a Puerto Rican cable company, OneLink Communications, last year and will be closing on a 27% position in Charter Communications this year. So, is John Malone planning to build up an international cable business?
So who else might Liberty Media be looking to acquire? Cablevision, with 3 mm subscribers, has tremendous value, especially with its systems in the New York City market. Cox Communications, though privately owned, could be a consideration as well, with over 4.5 mm customers. Of course, Liberty could also start buying up smaller cable operators, at 1 mm subs and under, but the synergy with Charter may be harder to find. Still, any additional acquisition by Liberty Media will only confirm their strategic plans.
Tuesday, March 19, 2013
Charter Buys Optimum West, Liberty Media To Buy Piece Of Charter
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.
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.
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.
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