Time Warner Cable Causing A Feeding Frenzy

It seems when you smell a wounded prey that the scroungers come to attack.  Once it became clear that Time Warner Cable could be picked apart, Comcast followed after Charter Cable and now here comes Cox Communications.  "The frenzy of deal interest comes as cable companies are trying to get bigger to deal with the industry's challenges, which include the rising costs of TV programming supplied by cable and broadcast networks." 

So who gets what pieces? Comcast would be happiest getting the New York demo and perhaps the Maine system, adding to its ownership of the Eastern corridor.  Charter would love to take California and some midwest systems.  And Cox might just love to own the Carolinas, Texas and Arizona.  Would Charter be open to taking a portion or perhaps they are ready to gobble up all of Time Warner Cable.  With Tom Rutledge , CEO of Charter at the helm, and a former Time Warner Cable executive, he has a pretty good idea what those systems offer and whether he is willing to share or not.  Either way, it continues to look like Time Warner Cable will be a footnote in cable history in a few short years. 

Apple Looking To Kinect

It seems that Apple likes the idea of motion sensor technology that they decided to buy it.  Watching the success of Microsoft's Xbox Kinect, Apple  "paid about $350 million to acquire PrimeSense, an Israeli start-up that developed the motion-sensing technology in Microsoft's Xbox video game console."  Not so much given they can use the money they won from Samsung's patent dispute to help pay for it.  And with so much cash on hand, they don't even need that.

So the question is when or where will Apple incorporate this newly acquired technology?  Will it go into the Apple TV, future iMacs, or all laptops, iPads and iPhones?  For that, we will just have to wait for the next Apple announcement.

Cable All About The Pipe To The Home

The future of cable is all about the infrastructure and the wires that connect homes to headends.  While first built to provide cable service, it now enables broadband, telephone and cable signals to function in two-way mode.  And it has become increasingly clear that the future of cable is the broadband pipeline.  "The cable companies — at least in the U.S. — have the fastest pipes into majority of homes. They are faster than phone companies and have a deeper footprint."  Despite the threat of cable cord cutting, consumers still rely on cable's wire to access their OTT subscriptions and videos.

So control of the US landscape is essential for efficiencies and economies of scale.  It also allows for WIFI expansion and new revenue streams.  Many talk about broadband moving from an all-you-can-eat model to a utility model based on usage; but, it opens up other revenue streams for security, cloud functionality, and more.  And it is why cable operators are circling Time Warner Cable with a possible feeding frenzy over their coverage area.  "So the cable industry, if it can consolidate, gets access to the most important pipe coming into people’s homes (after power and water) and the fewer cable companies there are, the more unified the rate structure might appear." Ultimately, a more monopolistic industry with fewer competitors to upend the egg cart. 

But will the FCC put any resistance to this level of consolidation.  It seems less with Charter, a smaller cable company swallowing up Time Warner Cable; but it raises red flags with the largest cable operator, Comcast, entering the picture.  It screams anti-competitive although it is part of the natural industry life cycle till other disruptive opportunities come along.  The FCC might just resist such merger talk but I think their best course of action is to encourage new companies to offer broadband access.  Open up new spectrum for broadband/cellular and encourage companies to enter the fray.  The electric companies already string this country with wires; can't they be encouraged to build out a broadband business.  LightSquared unsuccessfully tried to compete; offer them spectrum that works with their model.  It seems the best course of action is to encourage competition in a landscape that requires more and faster broadband access, at a reasonable cost.  Monopolies set and control pricing; competition lets the market choose. 

Time Warner Cable May Have Charter and Comcast As Buyers

It seems that merger and acquisition news in the cable industry has suddenly turned more active with Charter gathering financing and Time Warner Cable reaching out to Comcast about a bid as well.  A Charter deal is seen as improving the cost efficiencies of running a cable distribution platform while a Time Warner Cable and Comcast deal is more about gaining a more national footprint.  The latter move also comes with a ton of anti-competition issues; "Comcast/TWC would control 60% of the cable homes in the country, 30% of all pay television households and 36% of all broadband connections in the U.S., which could pose a very high regulatory hurdle." As Comcast already gets some of the cheapest content license fee deals, being the largest provider, a larger size would have to find cost efficiencies from a more streamlined operational platform.

The Time Warner Cable deal with Charter might be even more exciting for the Charter CEO, Tom Rutledge.  It would be full circle for him as he not only demonstrated his leadership skills in running Cablevision but actually came from Time Warner Cable.  And running a combined TWC/Charter operation might help him get the next prize, Cablevision, and its Long Island operations.  I don't see Comcast making an offer and dealing with regulatory approval; they have their hands full as the largest MSO.  But I do think a Charter/Time Warner Cable merger as much more likely.

Netflix, Hulu On Cable Just Might Make Sense

Sometimes our enemies make the strangest bedfellows.  It has happened many times before and it can happen again.  When IFC and Sundance Channel were fighting each other for share of the indie film audience, who would have ever imagined that one day both would be owned by the same company.  When cable and the phone companies would fight for share, who would have expected partnerships in certain markets.  And now we wonder would cable ever partner with an OTT programmer.

Well it just might make sense.  The reality is that the programming that subscription services like Netflix and Hulu Plus provide actually augment the choices available to consumers.  And especially as these OTT providers increase their stake in original programming.  The cable operators' concern is that Netflix and others will drive further cord cutting; but what if adding them to the line-up only makes the cable subscription service that much more attractive.  For consumer that seek more, they are likely willing to buy or keep their Netflix or Hulu Plus subscription AND keep their cable subscription.  In fact, they just might continue to buy premium networks like HBO and Showtime too.  Consumers essentially have an unquenched appetite for more video content.  And if cable operators can make its access to these OTT programmers easy, they just might remain loyal cable subscribers, too.

I am confident that cable operators have been doing their research.  I wouldn't be surprised to learn that a large percentage of cable households also have a Netflix subscription.  The key to the success of carrying them along with their other choices would be the utilization of the set top box and its search capabilities.  Making finding content easier and adding recommendation to the equation could make the cable operator the premier aggregator of video content to the home.  And doesn't that drive more revenue opportunities. 

Streaming Content Access Across OTT Platforms

Certainly not meant to be a complete list, here is a rundown of what streaming video access you might find across some OTT and gaming devices as you consider your holiday shopping:

PS4 - Amazon Instant, Crackle, Crunchroll, EPIX, Hulu Plus, NBA Game Time, Netflix, NHL GameCenter Live, Redbox Instant, VUDU, Yupp TV

Xbox One - Amazon Instant, Crackle, CW, ESPN on Xbox One, FOX NOW, FXNOW, Hulu Plus, Internet Explorer on Xbox One, Machinima, MUZU.TV, Netflix, Redbox Instant, Target Ticket, TED, Twitch, Unvision Deportes, Verizon Fios TV, VUDU, Xbox Video

Apple TV - iTunes, Crunchyroll, Disney, Disney Junior, Disney XD, flicker, HBO Go, Hulu Plus, MLB.TV, MLS, NBA League Pass, NHL Game Center, Netflix, PBS, Qello, Sky News, Smithsonian Channel, Watch ESPN, Weather Channel, WSJ Live, Yahoo! Screen, You Tube, Vevo, Vimeo

Chromecast - Google Play, HBO Go, Hulu Plus, Netflix, Pandora, You Tube

Roku - Amazon Instant, AOL On, AP, BBC, Blockbuster on demand, Crackle, dishworld, EPIX, Flixster, Fox News Channel, HBO Go, Hulu Plus, MLB.TV, MLS, NBA League Pass, NHL Game Center, NBC News, Netflix, Pop Flix, Sky News, Snag Films, Target Ticket, Vevo, VUDU, Warner Archive.

So depending which video content apps you prefer, your decision on buying a box for access depends on what they carry and distribute.  Of course, with the two gaming systems, you primary purchase decision might not even include streaming video.  And as for Apple TV, Chromecast, and Roku, you just might be able to access your video content from your blu-ray player or smart TV directly. 

Slingbox Standalone vs Slingbox Cable

Given the number of boxes aiming to connect with the television set, it makes sense to partner with the leader in the field, the cable set top box.  It is a strategy that TiVo has recognized and been following in order to gain a deeper household penetration.  But working with cable operators comes with a price, and that issue is working under the content licensing agreements as well.

Slingbox, as a standalone box, simply needs a wire between cable set top and the Slingbox, and then a wire to the TV set.  It may be a number of wires between the devices but it allows the Slingbox to talk to the cable box.  It then enables all mobile devices to access that cable box, through the Slingbox,  although the big downside is that only one user can watch a show at a time from this set-up.  TiVo offers an option for a CableCard to make it a cable set top box, although depending on the operator, it may not access the on demand features.

Under the standalone feature, a user has a complete TV Everywhere experience at his disposal.  Still, Sling the company, recognizes to gain more households, it may be necessary to follow the TiVo model and put their technology INSIDE the cable set top box.  But that ultimately limits the true value of the Slingbox.  By working with the cable operator, Sling would be subject to their licensing deals that for many networks limits access to streaming of their channels.  "TV Everywhere is a nightmare for consumers because of these unresolved issues," whether cable operators work with Sling technology or not. 

Sling may want to get closer to the cable operator but networks are already developing their own streaming apps for each of their channels.  It does give networks more control over their content but it becomes much more confusing for the customer trying to find which app to use to get to the content they want to watch.  An aggregated app, like the one a standalone Slingbox offers, seems the easiest to manage for users.  That is until someone comes up with an app that provides a complete line-up of content choices, linear and on demand and links to the app to best serve it to the consumer.  An extra step, but perhaps a likely next step as a go around of the cable operator.  Given the cost and difficulty of getting a TV Everywhere experience, it is why users have found alternatives with OTT and ditching the cable box completely.  And that is something Sling, TiVo and the cable operators really have to worry about. 

Roku Wants Market Share From Apple TV

The Holiday Season is upon us and Roku wants to be the OTT box for the home.  And they believe that they can take share of market away from Apple TV.   "Roku, which makes set-top boxes that stream video and subscription services to TV sets via the Internet, has stepped up the rivalry with an in-theater ad push touting its content advantage over Apple TV and other streaming players."  So while Roku is promoting its content strength, Apple has done nothing to upgrade its Apple TV product in 2013.  So is it going to be a fair fight?

Truth is, Apple TV and Roku have to worry more about the new gaming platforms coming from Sony and Microsoft.  The PS4 and Xbox One are meant to deliver a similar video streaming experience as well as be the gaming platform in the home.  And with 1 million PS4 sold in less than a week, will consumers buy more than one streaming media box. 

In the head to head, Roku has the better price and a rich variety of content partners.  "Roku sells several models at prices between $49 and $99, while Apple TV retails for $99. Some reports suggest that certain retailers will drop Apple’s price to $75 on Black Friday."  But Apple offers something Roku doesn't, and that is its iTunes library.  For those married to it, the Apple TV uniquely enables your HDTV to watch itune content; Roku and others do not.  But customers may not want to buy a discounted Apple TV box if they suspect that a new box is set to be released in 2014.  Roku may be striking while the iron is hot and that might just be the right call.  With Google's Chromecast competing as well, Apple TV may just be the box left behind. 

Streaming Media Could Add Another Competitor

The streaming media platform for renting and/or buying video content has quickly become a crowded space.  Of course, you have the big players, Apple, Amazon, Google, Hulu Plus, and Netflix.  Retailers like Walmart have Vudu and Target with "Target Ticket" want you to be both their brick and mortar and online source for video consumption.  And of course tons of free streaming video sites as well.  So access to online movies and TV shows for rental and purchase is abundant.  Yet, there is talk of a new entrant.

Cable operator Comcast wants to extend its on demand library of content to streaming and offer its own streaming service for rental and purchase with "plans to start selling movies for download and streaming through the cable operator's set-top boxes and its Xfinity TV website, according to people with knowledge of the plan...The initial offering will include a range of titles from several Hollywood studios that include new releases, older movies and some TV shows, one of the sources said."  Its one advantage, you already have a set top box in the home so no need to buy an Apple TV, blu-ray player, Roku box, TiVo, gaming system, tablet, laptop or other to watch their videos.  Unfortunately for cable operators, most households have more than one of these other boxes.

The article states that this new entrant would "offer a new path for Hollywood studios to generate revenue", but I wonder if cable operators are too late to the game.  Comcast may be considering it, but the other cable operators most likely haven't discussed.  With multiple boxes fighting for the TV shelf and already offering streaming media to compete with cable's on demand services, that window is already wide open.  Certainly adding a new bidder to the streaming rental and download space creates more competition and likely higher bidding for exclusive content, it does not, as the author contends, open a new distribution window.  Still, it is a space that cable operators must enter if they plan to compete with OTT platforms.  

I can see the potential of cable operators offering free download movies to triple play customers, high rental customers, and other incentives to encourage consumers to remain loyal to their cable operator.  A cable streaming service offers great marketing potential when competition is only getting fiercer.  So Comcast Cable and others, what are you waiting for?