Could Intel Media Merge with Verizon And RedBox Instant?

Unfortunate as it might be, Intel is having a difficult time getting major content companies to agree to carriage deals on its new streaming platform.  Broadcast and cable networks don't want to risk their current relationships with cable operators that already pay them substantial license fees.  Intel Media is not alone; Apple has been trying the same strategy with little or no movement either.  So with a major investment in technology and a brand new set top box, what is Intel Media to do?

Well, according to All Things D, Intel is in talks with Verizon to sell or create a partnership with its Intel Media division.   "People familiar with the talks say the two companies are in advanced negotiations."  For Verizon, Intel Media comes with a new set top box that may be seen as more desirable than FIOS' current one, offering access to both linear and streaming video content, including Verizon's partner, Redbox Instant.  And Verizon's marketing muscle could help to deploy the Intel Media service, using their "OnCue" or another new brand name, beyond the FIOS wired footprint. 

But is the Intel built set top box enough for Verizon?  It comes with no big content deals or subscribers yet, it is a pure start up.  Where is the value that Verizon thinks it can unlock?  And if it is the box, would other boxes, like the new TiVo box, which essentially does linear and streaming like Intel, as well as DVR functionality, be an easier and better fit?  Certainly questions being asked in these high level negotiations. 

As a fan of streaming platform services being created by folks like Intel Media, Amazon, Samsung, Apple, and others, the key to success continues to be strong content.  The networks are not likely to risk their current revenue model with a disruptive technology that could hurt their revenue line.  OTT success is in distributing original content and exploiting highly valued content that may become available, like potentially the NFL Direct Ticket that DirecTv currently offers.  It will be only after streaming providers become more prominent that cable networks will crave the chance to be added to their service. 

Netflix Picks Up Dexter

When HBO's signature series, The Sopranos, left the premium channel, it found its next window of airings on basic cable on A&E.  The rise of streaming video has opened a new platform of distribution with Showtime announcing its deal for making available all seasons from Dexter on Netflix.  "A Netflix spokesman said it is an 'exclusive, multiyear' deal."  But certainly, once this deal expires, basic cable could be its next home.  But no longer is basic cable the next stop after pay channels.

The rise of video streaming with competition from Amazon, Hulu, and Netflix has created a new syndication window that has bumped cable and other windows down a peg.  How lucrative this window is for content makers and distributors remain to be seen.  Certainly, given the demand for streaming content, strong shows like Dexter, "set a ratings record for Showtime, averaging 2.8 million viewers", are important for demonstrating value that Netflix is delivering to its current and prospective customers.  Certainly we should expect future syndication deals coming to Hulu and Amazon soon.  And it continues to justify the notion that content is king.

Apple's Cash Problem, What To Do

With Apple's quarterly earnings report expected at close of day, investors wonder what Apple should do with all its cash. In fact, Carl Icahn has been pushing hard for more stock buyback to drive up share prices.  But like the author of today's WSJ article, Farhad Manjoo, I believe that is a short sighted move.  As a very small Apple shareholder, I want to see Apple us its funds to remain innovative in a fickle, changing digital marketplace.  Manjoo has some great suggestions for other uses of these dollars from building a Google search engine competitor to buying a cellular network.  Of his ideas, I like the latter better.

Apple has always prided itself in owning the complete product, hardware and software; the rise of the iPad has meant that introduction of third party apps, but they follow a rigorous approval process.  The piece that Apple lacks is the connection between consumer and device.  Buying or building a cellular/broadband network to best run its devices, from the Apple TV to the iPhone, would close the loop and prove a complete consumer solution.  Consumers need a network that can drive our wireless connectivity and assure our video streams and communication paths get to all our devices.  It is why Google is testing out its Google Fiber program in a few markets.  And why Apple should be in this space too.  A short term rise in the stock price; why bother.  I want more innovation and growth.

Cable Operators NOT Likely To Follow Aereo Model

While recent reports have emerged that DirecTv, Time Warner Cable, and other cable operators are considering a similar Aereo approach, using tiny antennas to obtain broadcast signals, the likelihood of this occurring is remote.  While it could result in operators not paying license fees for broadcast signals, they would be overpaying elsewhere.

Why is that the case?  ABC owns ESPN, Disney, ABC Family, and others, NBC owns Bravo, USA, MSNBC, and much more, CBS owns CBS Sports, Showtime, and an owner with ties to Viacom Networks, and FOX owns FX, FXM, Fox News, and more.  Each of these broadcast networks has too much to risk from losing license fees from broadcast.  And they would indeed use that leverage to keep license fees intact or raise their rates on their cable nets to recoup any losses.  It is the consolidation of broadcast and cable networks that will prevent the cable operators from following the Aereo business model.

Of course, this depends on broadcasters still owning affiliates.  Speculation that ABC would consider selling their O&O networks has been heard, too.  Aereo's continued success could hurt the valuation of such a sale.  Broadcasters have also rumored changing from broadcast status to cable status to stop the Aereo model from moving forward, too.  That latter move seems to have more viability.

Cable operators still have the upper hand.  They bundle broadband access with cable so that consumers end up paying much more for broadband only without a cable subscription.  Once consumers find alternative sources for broadband to the home, the cable operators' business model will be at most risk.  Until then, they are better off strategizing new packaging and pricing models and better service, like TV Everywhere, than emulating the Aereo business model.

Is It An Ad Or Editorial Or Both?

These days as we troll the web and glean content from our favorite sites, we are being exposed to ads in every form, from banner ads to pre-rolls, vying for our attention and our click.  But many users may not realize that some of those articles or highlights we click on may not be editorial but rather a paid advertisement.  Some might still call it an advertorial, but for many in the digital world it is known as native advertising.  "How to define native advertising exactly is still up for debate, and it can be defined quite broadly — as in: any advertising that integrates fully into the content within which it is placed."  And its goal is to blend advertising seamlessly among the content that we consume.

The results of using native advertising indicates that it does a better job of driving clicks than traditional banner advertising.  "Native advertising is being heralded as the savior of digital publishing, but as marketers' content treads increasingly on editorial ground, one of the big questions is: How should it be regulated?"  Or should it be regulated at all?  As users of the web, does the long time notion of "buyer beware" still hold true or should websites do a better job of clearly identifying sponsored content from independent editorial.

Some native advertising is not specifically about driving a brand message; rather, it is used to drive viewership to other sites that may provide additional content discovery and valuable editorial content.  Other native ads may drive to transition pages, only to be exposed to more native content before a second click to the intended web site and content.  And other native ads click to a website of pure advertorial content.  It costs the user a click or two, it drives analytics, but is it harmful?  I might contend that it also leads to a smarter web surfer; click me once shame on you, click me twice, shame on me.

The blending of editorial and advertising is not a new phenomenon.  Both print and video sites have been selling advertorial sections for as long as advertising has been around.  What may feel unusual on the digital platform is that the signs indicating that it is native advertising is either not expressively stated or hidden on the page.  According to "Ogden Publications CEO Bryan Welch. 'There will be no need to identify it,' he said. “I see everything blending.”  And that of course leads to my original thought, that the user or buyer beware.

Newspapers Continue To Show Red Ink

According to Gannett, the newspaper industry will lose 1 billion dollars in revenue this year.  Gannett, owner of USA Today and other newspapers also says that the rise of digital advertising is not enough to offset the losses of the print business.  But this loss wouldn't mark the first year of billion dollar losses.  "Data from the Newspaper Association of America shows that print advertising in the newspaper industry has been decreasing for about seven consecutive years, losing $1.8 billion in 2012."  So while the total loss in 2013 is less than the prior year, it is still a major hit. 

Gannett attributes some of those losses to it being a non-Olympic year, as well as to a slow economy.  The article fails to elaborate on what the effect of digital advertising is having and how fast that side is growing.  One would expect that the two revenue lines will eventually cross and it would be interesting to see the rising slope of digital to print and the steepness of the tend.  The print world will only continue to fall as tablets become an ever increasing part of our world.  New releases by Apple of its iPad line, new Microsoft and Nokia tablets, and of course Amazon's Kindle all rely on digital content and print content distributors need to better strategize their business model to build new subscription and advertising models that best offset these print losses.

Yahoo Knows That Content Is King - Hires Couric And Pogue

First came the announcement that David Pogue is leaving The New York Times to start a new chapter at Yahoo.  Now comes news that Katie Couric is coming on board as well.  "Sources said that Couric is now close to completing a deal to put a Web interview show right on Yahoo’s home page."  As CEO Marissa Meyers continues to put her stamp on Yahoo, it has become clear that she too regards content as king.  Original, exclusive content that drives viewership and grows ad revenue.

That established old media stars like Katie Couric (broadcast television) and David Pogue (newspapers) are moving to digital platforms follows a path of using branded content to attract users to new platforms.  Last month, Walt Mossberg announced that he too was leaving the printed world of The Wall Street Journal to start his own website.  Perhaps Meyers can convince Mossberg that his talents can best be merchandized with the backing of the Yahoo brand.

Using content to drive adoption and usage is an important strategy that demonstrates just how important content is to a platform's success.  It is not just that you build a site but that you house it with meaningful content that consumers will seek out.  And branded, well known, credible content is far easier to market than unknown, untested content.  Certainly, both can survive and prosper, but branded, established content potentially comes with a built in base of consumers that will follow the path to a new platform.  And that is certainly what Yahoo expects to happen.

David Pogue Leaves New York Times

After 13 years writing a column for the New York Times, David Pogue has accepted a position at Yahoo, writing articles and creating videos for the web.  A big loss for print, a big gain for Yahoo. 

From his blog, "Leaving The Times is a big deal. My years there coincided with the explosion of just about everything important in today’s tech — the Web, social media, e-books, smartphones, tablets, duck-faced selfies. It’s been an amazing ride...." 

Will Broadcasters Drop Their Over The Air Signals?

As Aereo disrupts the broadcast platform, it poses a potential threat to long term retransmission fees.  The more Aereo wins court cases, the more cities it populate, and the bigger the threat to the revenue model.  If Aereo can retransmit broadcast signals for free, why can't cable operators.  And that possibility concerns broadcasters. 

In the past, Fox Network threatened to move from broadcaster to cable programmer, and now we learn that ABC Network considered it as well.  "A cable network doesn’t broadcast its signal over the air like broadcast networks, preventing Aereo from taking the signal and re-transmitting it online to paid subscribers, as it is doing with the broadcast networks in certain markets."  Of course we have also heard other rumors that ABC/Disney parent would consider selling all their owned and operated affiliates as another possibility.  Clearly, Aereo's disruptive approach has gotten the broadcasters to reexamine their current revenue models.  Aereo's approach could also quickly deflate the valuation price of any affiliate sale, unless all affiliated stations converted from broadcast to cable. 

And while Aereo may be successful in building antenna farms, I am not convinced that cable operators would bypass license fees through a similar approach.  The cost of building and maintaining verse negotiating for more streaming access to broadcaster linear and on demand programs would justify maintaining the status quo of license fees for cable operators to continue to pay.  Plus, cable operators have more flexibility in building out its broadband and wireless platforms for authenticated customers with discounts for those that subscribe to cable.  Such a radical approach like converting broadcast to cable is like killing a mouse with an elephant gun; there are simpler solutions.