Was Cord Cutting Overblown

DirecTv dealt another blow against cord cutting in the US with another quarter of subscriber growth.  At 12,000 net additions, the number may not be large but it certainly indicates that households still want their cable television.  Consumers not happy with their cable service may be just as willing to shift from cord to satellite as long as they can continue to get their TV programming. 

Also part of the discussion continues to be whether AT&T will make a serious bid for DirecTv or perhaps Dish Network to enhance and grow its cable platform.   A combined AT&T DirecTv venture would reach 26 mm households, almost as large as a post Comcast Time Warner Cable merger.  With John Malone's interests in DirecTv and Charter, this becomes a very interesting scenario to watch. 

The Value Of Online Advertising

The online advertising marketplace continues to be a growing business, with metrics and analytics galore to assure that the right advertisements are being targeted to the right audience.  Yet with all this data, are ads even being seen at all.  "By many estimates, more than half of online video ads are not seen, either because they are buried low on web pages or run in tiny, easily ignored video players on those pages, or run simultaneously with other ads."  Sure CPMs for some of these ads may only be pennies, it is likely that the total dollars of these media buys are significantly wasted.  This weekend's NY Times article should have ad agencies and media buyers in an uproar. 

The truth is that there is a ton of online content out there, literally, and the number of pages and videos are growing exponentially.  On each page and with each video, space exists for ad insertion.  The supply seems endless, perhaps even approaching infinity.  And while some tier one content has great value, most occupy the endlessly long tail of niche viewership.  It is a field day as buyers and sellers use automated exchanges to target and place ads across all these sites.  "When there is unoccupied ad space, a computer starts a sort of Dutch auction with a number of ad networks."  But the space that is being filled could be "below the fold" on the page, or automatically run a pre-roll even if it is barely visible.  And in some cases, quality "family" products may find themselves placed on less than desirable web pages, as noted in the article. 

So is anyone angry?  Does there seem to be a noticeable uproar or is this digital world deemed acceptable as is? Perhaps in exchange for such high quantity of online ads at low CPM prices, the percentage that is waste is manageable.  I hope not given that the percentage calculated called 57% of online ads unwatchable.  The online world has become so fragmented that many of these ads have lost their value entirely.  And it is why sponsored and native content may have the best opportunity to deliver ROI for advertisers seeking results from their online ad budgets. 

As far as this article is concerned, I hope it is a wake-up call to the digital community to tighten up their act.  Otherwise, budgets may soon be leaving this piece of the business. 

Is DirecTv and AT&T The Next Cable Merger?

With all the talk centered around Comcast's proposed acquisition of Time Warner Cable, the news that AT&T might be interested in DirecTv may have come as no surprise.  Given that a larger Comcast would cover more than 30 mm subscribers, another competitive presence would be needed to keep them in check.  Some wondered if a DirecTv and Dish Network merger would be the possible solution.  The problem is that they lack a broadband business to match the size of Comcast.  With AT&T and DirecTV, more synergy occurs, enabling this possible new entity to better sell a triple play of services.  And perhaps it may get Verizon itching to do something similar.  Could a FIOS and Dish Network business model be the next possibility?

Whether any of this happens remains to be seen.  How real an AT&T and DirecTv deal is remains to be seen.  Some even think that AT&T would prefer to hook up with Dish.  The idea for either is valid.  To compete with Comcast and a post Time Warner Cable acquisition, the need to get bigger quickly seems of utmost importance.

Broadband Usage Looking Like A Los Angeles Freeway

The FCC is hard pressed to maintain net neutrality, equal access for all content, large and small, across the broadband pipeline.  But companies like Netflix are hedging their bets by paying for faster routes with providers like Comcast and Verizon FIOS.  As a result, broadband pipelines are looking like LA freeways in that they have regular lanes and HOV lanes.  These high occupancy lanes give special treatment to multi-passenger vehicles and; in fact, LA is selling express passes for solo drivers that also want to use these lanes.  Unfortunately, the remainder of the lanes become more congested with other drivers either unwilling to pay extra for HOV or carpooling. 

The loss of net neutrality simply turns highways from equal access to all into freeways like the 110 or the 10 in Los Angeles.  While good for bigger companies like Netflix, it hurts the rest of the content field seeking to avoid traffic jams but unable to pay the "convenience fee"  And like always, consumers will eventually pay more to cover these content streaming costs. 

Until technological innovation comes along to reduce the size of content streams or improve the speeds of transport, the fast rise of digital content consumption by consumers will only continue to clog the broadband pipes.  Net neutrality sounds like a good idea but it doesn't solve the underlying problems of broadband congestion.  I believe the FCC should do more to encourage additional broadband competition; open more airwaves, encourage new players to enter, and allow competition for platforms to be best for consumers. 

What's Your Home Screen?

When you open up your browser, whether its Chrome or Firefox or Safari or even Internet Explorer, what is your home screen?  Do you go to Google search or Apple.com or have you never changed it from its initial pre-set?  It seems to me that the greatest opportunity for success in the online space will come from the internet company that can best educate consumers to lead them to make such a "bold" change. 

I say this because of all the news coming out of Yahoo at its Newfront presentation to build new portals and new long form original content.  From a new site to be called Yahoo Travel to shows from Katie Couric, Netflix like series, and concerts from Live Nation, Yahoo is aggressively building content to reach consumers and generate additional advertising revenue.  Content is king in this scenario and I love the approach.  At the same time, I adhere to the principal that if a tree falls in a forest and nobody hears it, does it make a sound.  Once these shows are produced and ready for consumption, what can be done for an audience to hear about them and seek out these content choices.

And that is what brings me back to the home page.  I believe that a superior home page experience still needs to be built and promoted.  An aggregated experience that is both adaptable for consumers' needs and frequently updated to push categories and topics of interest to help drive consumers to new and interesting content.  Content is important but so is "discoverability" of that content and reminders that is it easily reachable. 

So what is your home page?  Mine is Feedly but I am open to change.  Convince me to make Yahoo my home page or tell me what other options are there to provide a non-biased window to content that best suits my needs and interests.  At the same time, it shouldn't be so cluttered that it looks like a mess.  I believe there is still an opportunity to build a better "home base" that even when consumers leave their home page to explore other web content, they still want to come back to their home page for new updates and discovery.  "If you build it, they will come" and I haven't seen anyone build the best home screen yet.  Prove me wrong.

The New Cable Map

Once Comcast is approved to acquire the Time Warner Cable systems, and that seems only a matter of time, agreements seem already in place with Charter Communication to swap some systems, spin out others, and create a new cable order.  The death of Time Warner Cable will leapfrog Charter into the number two position for cable subscribers.  And while it will be significantly less than what Comcast will manage, it will more than double the subscriber numbers for Charter. 

For Comcast, it will enable them to cover the eastern markets of the US, from Maine down to Florida.  Subscribers from Time Warner include Portland, all the major cities of New York, and Charlotte and other North Carolina and South Carolina markets.  Charter will swap markets in Connecticut and California and elsewhere enabling Comcast to have major share in most of the top 10 DMAs.  While this map doesn't include current Comcast markets, it provides some nice detail on the markets that will trade hands.

While Charter has never had much impact in major DMAs, the acquisition of these subs will give them some strong clusters in states like Ohio and Wisconsin.  Looking at this map is like watching the a military operation as it splits up its spoils from a once mighty regime. 

So where did Time Warner Cable go wrong?  Once part of a larger Time Warner company, ranked 2nd in cable operations, to a soon to be forgotten footnote in the history of cable television.  That would certainly make a great blog one day, perhaps even a book on the rise and fall of the Time Warner Cable empire.  For now we watch as Comcast soon gains approval to consume and share some pieces of the carcass called Time Warner Cable.  

Cable Operators Take TiVo And Netflix

Three small MSOs have agreed to let their TiVo set top cable box integrate Netflix into the mix.  It means that cable customers in those communities with a leased TiVo box from the cable operator will be able to subscribe directly to Netflix and receive incrementally more TV shows and movies.  And even more importantly for the customer, TiVo "will offer integrated search that spans not just Netflix, but also the live TV lineup and the operator’s video-on-demand service. Netflix will also be displayed like a 'channel' in the guide."  So searching for a show like Breaking Bad, a consumer would see that it can be accessed on different platforms,  through Netflix, on AMC's channel, and perhaps even on demand.    And for consumers, a meaningful benefit.

I also believe it is ultimately good news for these cable operators.  Consumers will enjoy the benefit of one box accessing multiple platforms of programming.  And it will demonstrate that Netflix and other OTT video services are not necessarily cable cord cutters; rather, they can live harmoniously on the same infrastructure.  And these same consumers will be taking both cable and broadband service from their respective MSOs to access their content.  Hopefully other MSOs will learn from this initial launch and recognize that OTT may be less a threat and more a partnership.  

will offer integrated search that spans not just Netflix, but also the live TV lineup and the operator’s video-on-demand service. Netflix will also be displayed like a "channel" in the guide. - See more at: http://www.multichannel.com/news/tv-apps/three-us-msos-launch-tivonetflix-mix/374096#sthash.4rxOOsmY.dpuf

will offer integrated search that spans not just Netflix, but also the live TV lineup and the operator’s video-on-demand service. Netflix will also be displayed like a "channel" in the guide. - See more at: http://www.multichannel.com/news/tv-apps/three-us-msos-launch-tivonetflix-mix/374096#sthash.4rxOOsmY.dpuf

Sirius Continues To Grow

Each year the Auto Show comes to New York and each year, new model cars and concept vehicles are shared with the public.  And on the showroom floors it seems every new car being sold offers a subscription to SiriusXM even as some start to remove cd and dvd players from the dash.  The rise of digital content and satellite radio creates a complete entertainment solution. 

For Sirius, consumers of new cars are enjoying their 3 month free trial of the service and more and more seem to be deciding to keep paying a monthly subscription.  "Sirius added 173,480 net paying subscribers in the quarter ended March 31, raising the total to 25.8 million."  With subscription fees and advertising, revenues for the quarter rose as well, despite competition from digital media and traditional radio. 

So what does the future hold for Sirius?  Are they an acquisition target or is there a limit to their growth goals?  The good news, because of advertising as well, Sirius had a "better-than-expected 11 percent rise in quarterly revenue".  Given the quarter subscription increase was only 0.68%, the challenge continues to be how to create more meaningful growth for the business.  For now Sirius has a good story to tell, its what happens next that should keep us tuned in.

Aereo Just A Remote Antenna And Cloud DVR

As the Supreme Court listens to arguments regarding the Aereo service, many also speculate what a ruling either way will do to future cloud based services.  Broadcasters are concerned that this disruptive model will kill is license fee revenue model, although it would also increase its viewership reach.  Aereo argues that it is simply selling a technological service to receive and transmit free programming. 

Today's Business Insider article argues that a ruling against Aereo will also negatively effect the future of cloud based services.  Previous rulings have enabled cloud based DVR service; in fact, Cablevision was the cable operator behind an N-DVR push.  And when you look at the basic model, Aereo is simply leasing remote antennas rather than placing one on your roof and adding enhanced cloud based DVR capabilities in exchange for a monthly fee.  BI's argument, and a compelling one is this: "Make no mistake, large media companies hate technical innovation. TV and movie studios also believed that DVRs and VHS cassettes would kill their businesses. In fact, they enhanced them. Aereo is simply a remote personal video recorder."

Should Aereo lose its court case, it claims no "Plan B" and would cause an end to its business.  But it is argued that such a ruling would be counter to previous rulings enabling cloud based content capture and transmitting services.  And would lead to "Any company whose business model relies on letting viewers store copyrighted material on a remote server for later viewing could find itself suddenly illegal" including services like Dropbox.  The concern is that a ruling would significantly alter further innovation for all cloud based services.

Broadcasters argue that it will kill their business model although they have argued that before with the rise of cable, VHS, and DVR services. Some have threatened to move from over the air to a cable based model.  While they argue the possible loss of license fees, I am skeptical that cable operators will move to an antenna based system as a result so no significant loss of revenue.  I believe that as long as broadcasters use over the air to transmit, consumers should be allowed to lease antennas from Aereo or other to capture and stream programming.  If we can do it with a DVR why not with Aereo.