TiVo Would Make It Easier For Cable Operators To Add Netflix

TiVo has the technology and the software ready to go to integrate Netflix with traditional linear and on demand programming.  Should it quickly be able to integrate all the content under a simple interactive search menu, TiVo could become the preferred cable set top box for cable operators.  And for those that already have a deal with TiVo, the ability to quickly support a Netflix addition to their offerings.  Certainly, a partnership between Netflix and cable operators would be a win for Netflix and consumers.  "For Netflix, forging ties with cable providers could fuel expansion by putting its Web-based programs alongside traditional TV shows" according to Tom Rogers, CEO of TiVo. TiVo would certainly benefit as well.

But like John Malone, CEO of Liberty Media, I wonder of such a deal, in the short term is good for the cable operator.  Would operators be better suited providing their own streaming video service and fully enable TV Everywhere of their current linear and on demand offerings.  For instance, why shouldn't cable operators be enabled to stream all the back seasons of Breaking Bad to authenticated viewers on any device as a result of its carriage of the parent network, AMC.  Netflix's edge would then be limited to original programming, not yet offered to cable. 

Cable operators though worry that not embracing services like Netflix could lead to full cord cutting.  Making it a choice within the cable infrastructure could result in consumers maintaining their cable subscriptions and not cutting their cable cord all together.  What should worry cable operators more is that their total cost of service is what is driving customers to drop cable.  Offering a Netflix option on the cable box works if cable customers can access without having to buy an expensive package of service. 

I would love to see some research on what percentage of Netflix customers also have a cable subscription, what percentage watch premium services like HBO, Showtime, and Starz, and what percentage has dropped premium channels or cable service completely in the past year.  Cable operators may find that Netflix is not a competitor to its business model but rather an additive choice that customers will embrace while also staying loyal to cable.  And if that is the case, Netflix should present those findings to cable operators and operators should be quick to start a partnership with Netflix.

Should Cable Operators Partner With OTT Or Syndicate Their Own?

Today's Wall Street Journal talks about Netflix's efforts to build a partnership with cable operators to place its app on the cable set top box.  For consumers it would make for easier usage; it might also lead to a more enhanced interactive menu and search screen that added Netflix programming alongside linear and on demand.  For cable operators, it could bring leverage when dealing with network contracts, offering programming otherwise blacked out on the linear network.  But there are risks too.  One that consumers bypass more expensive premium services like HBO or Showtime for a lower priced Netflix subscription.  Still if it encouraged Netflix subscribers to remain cable subscribers, cord shaving is certainly preferred over cord cutting.

But John Malone, CEO of Liberty Media has another idea.  Why partner with a competitor when we can work with our own partners to provide a streaming video service.  "Cable operators may be able to monetize TV Everywhere programming by forming a joint venture which would syndicate a product like Comcast's Xfinity TV or Hulu nationwide".  Consider too that Redbox has been in need of additional support and cable could come in as well.  There is certainly some logic to cable operators embracing a shared OTT strategy while maintaining their physical footprint for linear and on demand.  The core of such a partnership still requires a broadband line into the home and strengthens the value for the cable operators' customer base.  And the same advantages of a better onscreen search engine and simpler access across platforms can be created and offered. 

In fact, cable operators might actually have more to gain by Malone's vision of a syndicated OTT offering then by a 3rd party partnership.  Not that Netflix would not be well received by customers on a cable set top box, but that cable operators have more to lose.  Plus, the rise of other smart devices and TV sets already makes it fairly easy to access and watch Netflix programming on a television screen.  Malone sees a future where platforms converge.  He also sees the need for cable operators to continue to consolidate to better compete and gain further economies of scale.  And he might just be right.

John Malone Still Wants Cable Consolidation

John Malone and Liberty Media are keeping real busy.  Despite announcing more stock splits, Malone also sees consolidation.  He continues to press that a merger of cable operators like Time Warner Cable and Charter Cable makes a lot of sense.  Of course Liberty owns a sizable chunk of Charter stock and Malone constantly seeks opportunities to increase the returns on his investments. 

According to Malone at their investor meeting, he was "touting the benefits of consolidation to bring the industry together to solve its high cost and over-the-top competitive problems."  As Charter is smaller in size than TWC, a merger would see them benefiting from TWC better licensing agreements, the ones that lower the per sub cost for exceeding subscription benchmarks.  Of course, a potentially larger MSO could get better rates for the TWC systems too.  And while Malone likes to talk about his own companies, other cable operators like Cablevision could also benefit from merging with Time Warner Cable, a deal TWC has been wanting for quite some time. 

John Malone seems to have the knack for unlocking value from its properties.  He continues to grow businesses, then split them off as tracking stocks and then independent companies.  He announced at the same meeting plans to spin out QVC and other businesses from the Liberty Interactive company.   So keep your eye on Liberty and John Malone.  He continues to be a force in the economics of cable.

Aereo WIns Another Federal Case Ruling

While other OTT companies have been unable to retransmit broadcast signals over broadband, Aereo continues to succeed.  In the latest Federal court case, "Judge Nathaniel M. Gorton said Hearst had not proven that Aereo would cause 'irreparable harm' to the broadcaster's business and thus could continue to operate in the Boston area."   And so, Aereo continues to notch court wins to continue to operate its business.  Of course, all these issues regarding the resale and use of over the air signals will eventually need to be heard by the US Supreme Court.  For now, Aereo continues to have the right to resell broadcast signals for broadband reception. 

See It, Buy It Through Twitter

While Twitter mulls a stock offering, their business strategy continues to progress.  Just announced, a partnership with Comcast to connect Comcast services with Tweets.  "In the first step of the partnership, Comcast engineers created a new feature called “See It” that will give millions of Xfinity TV customers the ability to instantly access TV shows, movies and sports directly from a Tweet."  other opportunities include the ability to one click to services like Fandango to purchase movie tickets.  In addition, "The companies also announced an advertising partnership with NBCUniversal in Twitter’s Amplify program which drives awareness of TV programs by embedding sponsored, real-time video clips in tweets."  Should users embrace these new features, Twitter will indeed have found a whole new set of revenue monetization opportunities to enhance future shareholder appeal.  Get the whole article here. 

Another Month, Another Apple Event

Wasn't it just a month ago that Apple held an event to announce new models of the iPhone.  Well, its a month later and Apple is expected to announce another "Event" to highlight upgrades to its iPad lineup of products.  "People familiar with Apple’s plans tell AllThingsD that the company will hold its next invitation-only event on Tuesday, October 22. The focal point of the gathering will be the latest updates to the company’s iPad line, but the new Mac Pro and OS X Mavericks will likely get some stage time as well, I’m told."  Will we ever hear news about new product launches, like an iWatch?  Or do we have to wait till next month for that announcement and the month after that for announced upgrades to Apple TV.  Frankly, to many "Events" just come across as too many.

Samsung Watch Ad Impresses

I haven't had the chance to see the new Galaxy Gear watch by Samsung, but I have seen plenty of print ads and watched the new TV commercial.  Talk about breaking through the clutter, the ad evokes great memories and harkens back to the time when we all wished we had a watch phone.  Check out the ad below:


Whether consumers embrace their watch and paired phone remain to be seen, but the advertising absolutely hits the right chord.

To Apple TV And Others - How To Win The OTT Box Wars

For OTT Set Top Box companies that work with cable operators, TiVo, XBox and some others, their key has been enabling authenticated viewing for cable customers to enjoy their cable TV programming.  Most still rely on a CableCard to authenticate users.  But the challenge for Apple TV, Intel Media, Roku, Amazon (and their recent announcement of their intent to build a set top box) and others, remain gaining access to content.  Content is King.  But so far, offering Netflix, Amazon Prime, You Tube or other content hasn't been enough to gain considerable market share.  Gaming boxes like Microsoft, and TiVo have done much better it seems in offering other content options to the value proposition.

So how can Apple TV, Intel Media, and others find content to make their boxes indispensable when cable and broadcast networks have been reluctant to deal given their current license fee agreements with cable and satellite companies.  They should look no farther than how cable got its foothold with the basic tentpoles of content: sports, news, and music.

For some of these OTT companies, price is no issue, and so it is time to think big.  Regarding sports, I would recommend reaching out to the NFL.  For football fans, the DirecTv Sunday Ticket has been most desired by the cable companies.  They would love to take the deal over from DirecTv.  Apple, Intel, Amazon, and Microsoft all have the resources to compete for this contract.  And the football fan has proven that they will pay for access to these games.  Plus offering it in a stream allows these companies to bring added features including multiple camera angles, box in box, and other viewing options. 

As to news, it is time to build a national news network.  The model worked well for CNN when it first started out.  Offer young reporters a chance to be discovered, invest in regional coverage, and follow the Ted Turner blueprint to create a news network.  While certainly CNN didn't have the same competition when it started, there is an advantage in streaming and offering across all platforms.  Build loyalty through a TV Everywhere approach and be aggressive in news gathering and reporting. 

Music was the earliest to embrace streaming and an OTT set top box may not be able to reinvent this wheel.  Still, enabling ease of access, offering more concert coverage, and pushing new ideas is a great start.  That You Tube is developing its own music awards show to compete with MTV and others demonstrates that kind of creativity. 

So for streaming OTT box companies, there is in front of you a tremendous opportunity to compete with cable operators for consumers and users to your platform.  Content is king and I believe that acquiring special content like the NFL and building out tentpole programming will drive further acceptance of your devices and subscription services.  Major Cable Networks may be reluctant to work with you now, but other great content may still be worth pursuing.

Amazon Wants Its Own Set Top Box To Send Its Content

Its one thing to have the content and another to have the distribution.  While Netflix has relied on third parties to distribute its subscription services, Amazon has taken a more technological approach.  Like Apple, Amazon built its own tablet to run its content.  And like Apple and its Apple TV box, Amazon now wants to distribute a set top box to stream to the television set.  "The device is code-named "Cinnamon," and will have apps for playing games and streaming video and music from other companies, not just Amazon, according to the WSJ. It will be released for the holiday shopping season." Certainly there are other devices already streaming Amazon content to the TV, but Amazon has hgad a strategy of selling devices at near cost to drive usage.  I suspect an Amazon set top box will also be priced cheaply (definitely below Apple TV's retail price of $99) to encourage new consumers to enter the marketplace.  And by pairing its Kindle with its new set top box, Amazon customers get an integrated usage experience sure to please the user. 

What apps and other video streams will be featured on the new Amazon box?  No word yet but I would doubt that other subscription services would be made available.  Perhaps free OTT like You Tube or even Vimeo or Crackle could be a possibility.  With so many OTT boxes for consumers to add, including their own cable TV box for now, Apple TV, Roku, new Smart TVs like Samsung and certain blu-ray players, and gaming consoles like XBox and Playstation, is the consumer ready for one more.  Certainly Amazon benefits by pairing this new box with its own best selling tablets, but other devices do the same thing through apps installed on tablets already.  The market is quickly becoming more crowded and consumers will have to decide which set top box or how many boxes they wish to connect to their TV set; or perhaps the answer is none as Smart TVs will be enabled to do all the work.