What a shame that Radio Shack couldn't figure out a way to rebound from a dying business strategy and re-emerge as a leader again in a new mobile world. But stuck with a name that reflects old technology, and a marketing campaign that fell flat, Radio Shack is on the verge of bankruptcy.
But others may benefit from the Radio Shack failure. Amazon has watched as Apple has used a retail strategy to build stronger customer relationships and grow business. Microsoft is also starting to venture into the retail world. And now it might be Amazon's turn to create a retail presence. By opening up stores using some of the Radio Shack footprint, Amazon would be able to let customers better interact with its product line, especially as its products are not currently getting much market share. They could push better the Amazon brand and value and let consumers interact with its devices, including the Kindle, Fire tablet, and of course its Fire smartphone. It would also provide a point of purchase for service issues as well as marketing events.
The challenge of acquiring Radio Shack locations might be the initial size of some stores. In many malls, they occupy a much smaller square footage than say an Apple store and thus would limit foot traffic. But that might be a short term problem as they renegotiate leases with malls for larger spaces. Having a retail presence seems a strong strategic move to compete better in the product marketplace.
Wednesday, February 4, 2015
Tuesday, February 3, 2015
Broadband To Be Considered A Utility Service
As our President faces the last 2 years of office, he no longer has to worry about reelection, rather about his legacy. And so, as it pertains to the world of the web, he is pushing all out for full net neutrality. Like water, electricity, and gas and oil to the home, Obama and the FCC want to regulate broadband service just as fiercely.
Net neutrality assures that no matter what the content, whether a simple email message or full HD video, the internet would treat both pieces of data exactly the same, transmitting them at the same speed as everything else. No blocking of content, no throttling or slow down of speed of certain data. All will be treated exactly the same.
But it is that same heavy use of government oversight and regulation that can also slow down or even stop a free economy from doing what it does best, innovate to create new solutions to old problems. With such freedom comes new opportunities, new industries, and new businesses. But add government to the mix and while data is free, innovation may be what gets throttled instead. That is certainly the line that broadband providers like Comcast and others fear buy a heavily regulated broadband industry.
Content creators and other users of the web hope that net neutrality assures that their work gets equal access and that they do not have to resort to paying broadband providers to get into the HOV lane. Netflix agreed to pay providers to assure that their subscription service wasn't penalized; they would love to not have to pay for play.
Is there a middle ground that assures equal access without over regulating the process? Ultimately, a solution is needed. Broadband access has become more essential to the home then ever before. Some might even rank it above heat and water. Still, at the end of the day, what is most needed is to lower barriers to entry in broadband platforms and encourage more competition. That is ultimately what will enable consumers to find the best possible value for the best price.
Net neutrality assures that no matter what the content, whether a simple email message or full HD video, the internet would treat both pieces of data exactly the same, transmitting them at the same speed as everything else. No blocking of content, no throttling or slow down of speed of certain data. All will be treated exactly the same.
But it is that same heavy use of government oversight and regulation that can also slow down or even stop a free economy from doing what it does best, innovate to create new solutions to old problems. With such freedom comes new opportunities, new industries, and new businesses. But add government to the mix and while data is free, innovation may be what gets throttled instead. That is certainly the line that broadband providers like Comcast and others fear buy a heavily regulated broadband industry.
Content creators and other users of the web hope that net neutrality assures that their work gets equal access and that they do not have to resort to paying broadband providers to get into the HOV lane. Netflix agreed to pay providers to assure that their subscription service wasn't penalized; they would love to not have to pay for play.
Is there a middle ground that assures equal access without over regulating the process? Ultimately, a solution is needed. Broadband access has become more essential to the home then ever before. Some might even rank it above heat and water. Still, at the end of the day, what is most needed is to lower barriers to entry in broadband platforms and encourage more competition. That is ultimately what will enable consumers to find the best possible value for the best price.
Monday, February 2, 2015
More OTT Aggregators Coming
As cable prices continue to rise, consumers eager for more provider alternatives will soon have multiple ways to watch TV networks without a cable subscription. Certainly shows from different cable networks end up coming to Hulu, Amazon, and of course Netflix, but they tend to be from past seasons and not the current one that is airing on the respective network. But now these networks are making distribution deals with OTT services to offer their networks across streaming platforms.
Recently, Dish announced its own OTT service called Sling TV. And now we have Sony, working through its Playstation division deliver its OTT streaming service, dubbed Vue. According to Gigaom, "Sony announced in recent months that it has struck agreements with CBS, NBC and Fox as well as Viacom, Scripps and Discovery for Vue." That means that networks like HGTV, Food, Discovery Channel, MTV and others will be included in this service. Most interesting, NBC, owned by Comcast Cable, will also offer both its broadcast network as well as its cable channels including Bravo, CNBC, USA, and more.
Given the threat of cord cutting and the desire to be accessible to the next generation of consumers, the move to streaming is a necessary one. Certainly the cable companies need to also create an authenticated streaming version of their entire cable line-up, accessible through streaming and available inside and outside the home, to best compete with competitors like Sling TV and Vue. At the same time, the networks need to not lose their relevancy against other OTT providers like Netflix who value the show over the network and are pursuing their own original programming strategy. Otherwise, these same networks will fear a complete erosion of not only their license fee model, but eyeballs to their network and the ad dollars they charge.
Recently, Dish announced its own OTT service called Sling TV. And now we have Sony, working through its Playstation division deliver its OTT streaming service, dubbed Vue. According to Gigaom, "Sony announced in recent months that it has struck agreements with CBS, NBC and Fox as well as Viacom, Scripps and Discovery for Vue." That means that networks like HGTV, Food, Discovery Channel, MTV and others will be included in this service. Most interesting, NBC, owned by Comcast Cable, will also offer both its broadcast network as well as its cable channels including Bravo, CNBC, USA, and more.
Given the threat of cord cutting and the desire to be accessible to the next generation of consumers, the move to streaming is a necessary one. Certainly the cable companies need to also create an authenticated streaming version of their entire cable line-up, accessible through streaming and available inside and outside the home, to best compete with competitors like Sling TV and Vue. At the same time, the networks need to not lose their relevancy against other OTT providers like Netflix who value the show over the network and are pursuing their own original programming strategy. Otherwise, these same networks will fear a complete erosion of not only their license fee model, but eyeballs to their network and the ad dollars they charge.
Thursday, January 29, 2015
Networks Starting to Say Who Needs Cable
License fee negotiations between network and cable operator tends to be acrimonious these days. Where once this relationship was more friend than enemy, today, that frenemy relationship has become a more business relationship. As a result, each time a network is up for license fee renewal, the likely outcome includes a period of being dropped before returning to the line-up.
But networks are also watching the success of subscription services like Netflix, Hulu, and Amazon, and are pushing forward with more OTT deals outside the cable-network boundaries. Last year, CBS and HBO unveiled each of their OTT subscription services. And Showtime soon followed the HBO announcement. WWE offered a subscription service and just this week announced that they have reached one million subscribers. Today, we have Viacom announcing that their children's network, Nickelodeon, is also planning to sell an OTT, direct to consumer, subscription service too. Its success could lead to other networks in its stable, MTV, VH1, and Comedy Central doing the same thing. And not having to work with a middleman like the cable operator may become more appealing as consumers get tired of paying high cable rates.
Consumers wanted a la carte and now they are likely to get it. Unfortunately, buy too many of these OTT subscription services and your entertainment costs will soon exceed the cost of your cable subscription. The bundling of cable networks may have driven the total costs too high, but it did offer something for everyone. A la carte may seem cheaper but only if a small portion is all you desire. Cable operators had fair warning to fix their programming strategy but it got out of control. Its time to revisit and fix their offerings and pricing. Enable TV Everywhere to authenticated customers to create a better must have subscription. Cable can fix this mess but the time is now.
But networks are also watching the success of subscription services like Netflix, Hulu, and Amazon, and are pushing forward with more OTT deals outside the cable-network boundaries. Last year, CBS and HBO unveiled each of their OTT subscription services. And Showtime soon followed the HBO announcement. WWE offered a subscription service and just this week announced that they have reached one million subscribers. Today, we have Viacom announcing that their children's network, Nickelodeon, is also planning to sell an OTT, direct to consumer, subscription service too. Its success could lead to other networks in its stable, MTV, VH1, and Comedy Central doing the same thing. And not having to work with a middleman like the cable operator may become more appealing as consumers get tired of paying high cable rates.
Consumers wanted a la carte and now they are likely to get it. Unfortunately, buy too many of these OTT subscription services and your entertainment costs will soon exceed the cost of your cable subscription. The bundling of cable networks may have driven the total costs too high, but it did offer something for everyone. A la carte may seem cheaper but only if a small portion is all you desire. Cable operators had fair warning to fix their programming strategy but it got out of control. Its time to revisit and fix their offerings and pricing. Enable TV Everywhere to authenticated customers to create a better must have subscription. Cable can fix this mess but the time is now.
Wednesday, January 28, 2015
Networks Quickening Their Demise
With viewership erosion due to streaming video, network ratings and consequently ad revenue are suffering. But rather than seek ways to grow eyeballs, networks would rather add more ad minutes to stabilize and try and grow revenues. But according to two different research studies, as mentioned by Deadline Hollywood, "Major TV network owners led by Viacom, A+E, and Discovery significantly
increased the amount of prime time commercial minutes in their shows in
Q4, helping to compensate for a decline in viewing." It seems adding ad minutes is both short-sighted as well as likely to drive viewers to flee networks faster.
Advertising is necessary to support content creation and cable networks in particular have enjoyed a two stream revenue model of subscription and advertising dollars. But adding more ad minutes that interrupts content is what has driven users of TiVo and DVRs to embrace their trick features and fast forward through ads. And millennials have discovered the joy of subscription services like Netflix to enjoy content without any ad interruptions. It is that next generation that is leaving traditional viewing patterns.
For now, networks are seeking short term results but it is leading to long term losses. According to the research, "the most aggressive network owners were those with the worst ratings trends". That is to say, more ads lead to lower ratings. Perhaps it is time for TV networks to become more innovative with their advertising issues. It is time to break away from the notion of ad breaks and think more outside the box; otherwise, sticking with the current approach is hurting your long term outlook.
Is it time to consider again network sponsorship of shows, ad integration inside programs, and other ad efforts. Less ad breaks insure viewers stay on the channel and deliver a higher attention span. The longer the break, the easier it is to switch channels. Less clutter, more impact. It is time for networks to reassess their ad strategy. What has worked in the past is now not working at all. The model is broken and needs to be fixed.
Advertising is necessary to support content creation and cable networks in particular have enjoyed a two stream revenue model of subscription and advertising dollars. But adding more ad minutes that interrupts content is what has driven users of TiVo and DVRs to embrace their trick features and fast forward through ads. And millennials have discovered the joy of subscription services like Netflix to enjoy content without any ad interruptions. It is that next generation that is leaving traditional viewing patterns.
For now, networks are seeking short term results but it is leading to long term losses. According to the research, "the most aggressive network owners were those with the worst ratings trends". That is to say, more ads lead to lower ratings. Perhaps it is time for TV networks to become more innovative with their advertising issues. It is time to break away from the notion of ad breaks and think more outside the box; otherwise, sticking with the current approach is hurting your long term outlook.
Is it time to consider again network sponsorship of shows, ad integration inside programs, and other ad efforts. Less ad breaks insure viewers stay on the channel and deliver a higher attention span. The longer the break, the easier it is to switch channels. Less clutter, more impact. It is time for networks to reassess their ad strategy. What has worked in the past is now not working at all. The model is broken and needs to be fixed.
Monday, January 26, 2015
Cablevision To Sell WIFI Phone
In a move to try and displease cell phone companies, Cablevision has announced its plan to sell a WIFI only mobile phone service. Dubbed Freewheel, not to be confused with the Comcast-owned enterprise service, FreeWheel (a capital W changes everything), Cablevision sees a market for low cost mobile phone customers. Cablevision customers can add on this new service for only $9.95/month while non-Cablevision customers can subscribe for less than $30 a month. The service has one phone choice at the moment, the Motorola Moto G.
Certainly, the $10 a month price point undercuts all other cell phone carriers so the ideal market is Cablevision's own footprint where it has been expanding its WIFI capabilities. But will the new service attract a sizable customer base to call it a successful business idea? The low price point may sway some but as a society we have becoming increasingly mobile and the service will certainly have more dead spots than any cellular service. And with cell companies already in a price war to attract new customers, coupled with more choices of smartphones, the Cablevision price difference without great connectivity, may not matter.
My other question is how is Cablevision planning to sell its service. Has it gotten Best Buy or Target to offer it in any of its stores? Cablevision once tried to enter the electronic business itself when it bought and ran Nobody Beats The Wiz for a number of years. That chain is now a memory. Cablevision could try to sell its phone in its own service centers but they don't tend to be too retail friendly either. Online might be a consideration but consumers like to touch and try before buying; isn't that why the Apple stores are so successful.
Cablevision's push into a WIFI phone seems one more attempt to compete with Verizon who overbuilds it across almost all of its franchise markets. And while WIFI certainly augments the capabilities of a smartphone, the ability to be always available to accept a call or text may limit the appeal of a WIFI only phone. Can Cablevision make it a successful business... I wonder.
Certainly, the $10 a month price point undercuts all other cell phone carriers so the ideal market is Cablevision's own footprint where it has been expanding its WIFI capabilities. But will the new service attract a sizable customer base to call it a successful business idea? The low price point may sway some but as a society we have becoming increasingly mobile and the service will certainly have more dead spots than any cellular service. And with cell companies already in a price war to attract new customers, coupled with more choices of smartphones, the Cablevision price difference without great connectivity, may not matter.
My other question is how is Cablevision planning to sell its service. Has it gotten Best Buy or Target to offer it in any of its stores? Cablevision once tried to enter the electronic business itself when it bought and ran Nobody Beats The Wiz for a number of years. That chain is now a memory. Cablevision could try to sell its phone in its own service centers but they don't tend to be too retail friendly either. Online might be a consideration but consumers like to touch and try before buying; isn't that why the Apple stores are so successful.
Cablevision's push into a WIFI phone seems one more attempt to compete with Verizon who overbuilds it across almost all of its franchise markets. And while WIFI certainly augments the capabilities of a smartphone, the ability to be always available to accept a call or text may limit the appeal of a WIFI only phone. Can Cablevision make it a successful business... I wonder.
Thursday, January 22, 2015
FIOS Not Seeing Cord Cutting
Verizon released its fourth quarter earnings, and unlike some cable operators, FIOS grew basic subscribers, an increase in additions over the same period last year. They also cited an increase in internet subscribers, also larger an increase than a year ago. On the wireless side of the business, the subscriber base grew as well with an increasing number of customers accessing smartphone capabilities for their cell phones.
According to Multichannel, "Verizon said it added 116,000 FiOS video customers in the fourth quarter, up from 92,000 in the year-ago period, and tacked on 145,000 FiOS Internet subs, up from 126,000. Verizon ended 2014 with 5.64 million FiOS video subs, good for a penetration rate of 35.8%, and 6.61 million FiOS Internet subs, for penetration of 41%."
Verizon said it added 116,000 FiOS video customers in the fourth quarter, up from 92,000 in the year-ago period, and tacked on 145,000 FiOS Internet subs, up from 126,000.
Verizon ended 2014 with 5.64 million FiOS video subs, good for a penetration rate of 35.8%, and 6.61 million FiOS Internet subs, for penetration of 41%.
- See more at: http://www.multichannel.com/news/technology/verizon-fios-drives-sub-growth-q4/387132#sthash.3SUAx27g.dpuf
Of course the demand on both wired and wireless is for faster speeds and more connectivity across devices. Verizon clearly needs to invest in additional bandwidth as rivals try to undercut them on pricing. As to the question of cord cutting, Verizon continues to defy the odds, taking new customers as opposed to seeing overall declines in their yearly base. Pricing and margins may have to decline in order to maintain that subscriber growth. Still, given how connectivity has become almost a utilitarian demand by households and individuals, Verizon seems poised to remain the leader in the marketplace.
Wednesday, January 21, 2015
Netflix Delivers, What's Next
For those eager to watch a new programmer, disrupting the current channel line-up, and delivering new and syndicated content to the masses, look no further than Netflix. It continues to drive viewership, both domestically and internationally, with an eye on further expansion and growth. In its latest financials, it grew more than 4 million subscribers in the fourth quarter of 2014 and has a global subscription base of more than 57 million. With additional countries to launch and content to create, consumers are actively engaging with their Netflix subscription.
In fact, according to Variety, Netflix "accounted for 34.2% of all downstream usage during primetime hours, up from 31.6% in the second half of 2013, according to network-equipment vendor Sandvine. .... YouTube dropped to 13.2% of total peak downstream usage in March from 18.6% in the second half of 2013, according to the report. Amazon Instant Video continues to gain, but still accounts for only 1.9% of downstream traffic vs. 1.6% last fall, while Hulu usage increased slightly from 1.4% to 1.7% share." Further down that list is HBO GO at 1.24%. Whether selling HBO GO outside a cable subscription will drive subscription and usage remains to be seen.
So how big can Netflix get? With about 30 million US subscribers and a cable universe that exceeds 100 million households, Netflix still has room for domestic growth along with its international push. It drives its revenue as an ad free, subscription model, but one has to wonder when Netflix decides to enter the advertising game. It may learn from networks like Bravo, AMC, and others that successfully transitioned from ad free to sponsorship to advertising. Don't be surprised to see sponsorship or perhaps display or video advertising to appear on Netflix's home page.
Given the market interest in continual revenue growth, a subscription only model might need to be revisited. They could perhaps look at sites like Hulu and Spotify and others that offer a free, ad-supported version and a subscription version to drive faster growth. And increasing subscriber fees will once again have to happen. Increasing fees by 10 cents a month would improve current revenue an additional $68 million annually. No wonder the stock market is humming over Netflix.
In fact, according to Variety, Netflix "accounted for 34.2% of all downstream usage during primetime hours, up from 31.6% in the second half of 2013, according to network-equipment vendor Sandvine. .... YouTube dropped to 13.2% of total peak downstream usage in March from 18.6% in the second half of 2013, according to the report. Amazon Instant Video continues to gain, but still accounts for only 1.9% of downstream traffic vs. 1.6% last fall, while Hulu usage increased slightly from 1.4% to 1.7% share." Further down that list is HBO GO at 1.24%. Whether selling HBO GO outside a cable subscription will drive subscription and usage remains to be seen.
So how big can Netflix get? With about 30 million US subscribers and a cable universe that exceeds 100 million households, Netflix still has room for domestic growth along with its international push. It drives its revenue as an ad free, subscription model, but one has to wonder when Netflix decides to enter the advertising game. It may learn from networks like Bravo, AMC, and others that successfully transitioned from ad free to sponsorship to advertising. Don't be surprised to see sponsorship or perhaps display or video advertising to appear on Netflix's home page.
Given the market interest in continual revenue growth, a subscription only model might need to be revisited. They could perhaps look at sites like Hulu and Spotify and others that offer a free, ad-supported version and a subscription version to drive faster growth. And increasing subscriber fees will once again have to happen. Increasing fees by 10 cents a month would improve current revenue an additional $68 million annually. No wonder the stock market is humming over Netflix.
Friday, January 16, 2015
Google Glass Reboot
The future of wearable technology is not glasses... at least not yet. Google has decided to stop selling this ahead of the curve product as it figures out how to make it more useful for the consumer. And while the team plans to improve upon it before its re-release, they recognize that changes need to be made.
According to the Wall Street Journal, "The updated gadget will be cheaper and have longer battery life, improved sound quality and a better display." They will also look at combining it with existing eye wear for those of us who already need glasses simply to see. Of course functionality and ergonomics are at the heart of Google Glass. Do consumers really want to wear glasses, especially if they don't have to. Perhaps Google should partner with Lenscrafters or Pearl Vision Center to get better research on how consumers choose their frames.
And just for fun, may I suggest to Google that they drop the idea of glasses altogether. Just watch Star Trek and the only character to wear glasses was Geordi La Forge and that was because he was blind. Instead, Google should consider a fashionable pin accessory,
one used in the Next Generation episodes, with a camera and bluetooth ear piece for communication. We've borrowed everything else from Star Trek, why not this too.
According to the Wall Street Journal, "The updated gadget will be cheaper and have longer battery life, improved sound quality and a better display." They will also look at combining it with existing eye wear for those of us who already need glasses simply to see. Of course functionality and ergonomics are at the heart of Google Glass. Do consumers really want to wear glasses, especially if they don't have to. Perhaps Google should partner with Lenscrafters or Pearl Vision Center to get better research on how consumers choose their frames.
And just for fun, may I suggest to Google that they drop the idea of glasses altogether. Just watch Star Trek and the only character to wear glasses was Geordi La Forge and that was because he was blind. Instead, Google should consider a fashionable pin accessory, one used in the Next Generation episodes, with a camera and bluetooth ear piece for communication. We've borrowed everything else from Star Trek, why not this too.
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