AOL Now Officially A Verizon Company

Once AOL was the lead platform to access the internet.  The movie, You Got Mail, was a love letter to the company's email service and the familiar voice was known by all.  And AOL, once so powerful, that it went on to purchase Time Warner.  But all good things must come to an end and as the industry quickly changed and dial up was no longer the means to connect, the value of AOL dropped precipitously.  At the end of the day, Time Warner spun AOL off into a separate company and divorced themselves completely.

Today, AOL is now officially a Verizon company.  Per Multichannel, "Verizon Communications said it has closed its proposed $4.4 billion acquisition of AOL, a move that aims to beef up Verizon’s mobile, over-the-top video and advanced advertising strategies." No longer an e-mail favorite, AOL's main attraction seems to be content with the Huffington Post a favorite.  Along with its powerful ad technology, Verizon hopes to capitalize on the yang of content to their yin with cellular distribution.  Is there synergies that can be better monetized?  Certainly, the strategy is aiming to do just that. 

While AT&T pushes ahead with a DirecTv acquisition and Comcast expands its content and distribution platforms in various ways, Verizon is left trying to grow the digital content space.  And the AOL acquisition may not be enough.  I suggest looking at other content companies.  Could Netflix be a future acquisition target?  Could Hulu be back on the merger table?  It seems that the direction for Verizon is to continue to expand on this front in order to remain competitive in this rapidly changing space.  As for the AOL brand.  Don't be surprised if it gets phased out in a year or two.  The once powerful Prodigy and Compuserve brands are already just a footnote in the history of the internet.  AOL is likely the next brand to vanish.

Comcast Founder Passes Away

Ralph Roberts, founder of Comcast Corporation, has passed away at the age of 95.  And while his son Brian has been running the organization for quite some time, it was Ralph Roberts with his partner Julian Brodsky, that started the organization in the early 1960s.  Purchasing a small cable operator and setting up shop in Philadelphia.  From there, it was a series of acquisitions ( and some that didn't, like the most recent Time Warner Cable merger attempt), that has grown the MPVD or multi-platform vidio distributor (traditionally known as an MSO or multi-system operator) into the largest operator in the USA. 

Ralph and his team turned the company from a cable company into a multi-business platform powerhouse of cable, telephone, and broadband.  And with the purchase of NBCUniversal, a leader in content creation and distribution, Comcast only continues to grow.  While their have been a number of outsized personalities in the cable industry, including John Rigas of Adelphia fame, Roberts was known to be a gentleman.  His entrepreneurial efforts and ongoing philanthropy, notably in the Philadelphia area, will surely cement his legacy.  I am certain he will be missed.

Can Twitter Be Saved?

Oh we got trouble, right here in San Francisco, with a capital T that rhymes with pitter and it is called Twitter.  And trouble leads to change as Dick Costello has stepped down as CEO, replaced by co-founder Jack Dorsey.  The 140 character list of self expression, rants, snarky comments, and news is now pictures, video links, and SPONSORED CONTENT.  And depending how many people you follow, lots of repeated tweets.

Public relation firms must love Twitter as it lets them push stories and drive brand engagement without really having to spend any money.  But for the most part, scrolling down the feed, I start to see a lot of white noise, including my own tweet links.  In fact, I find myself spending less and less time reading the feed.

Certainly there are some exceptions.  A big entertainment event like the Oscars or Grammys can bring some wonderful snarky humor to enhance the show.  But beyond that, I see too much waste that overwhelms the feed.  A solution, perhaps, cutting back on the number of people I follow.  But will that be enough.

Is Twitter the Pandora's Box that can never be closed once it is open.  Many seem to enjoy it but many others are like me and spending less time with it.  Can it be saved and what needs to change to assure that it is both functional and profitable?  Certainly that is what Jack Dorsey needs to do to keep his baby afloat.  Unfortunately much of what Wall Street wants to see is more revenue and that means more ads.  And that is where the trouble may have begun in the first place.  Are we getting a bit tired of Twitter; I think I am. 

Communication Consolidation Continues

Its really difficult to look at the wire, wireless, and cellular platforms and limit their platforms to a single business.  No longer are they just a cable franchise or telephone company or cell phone business.  Through triple plays and mergers, the industry has been shrinking steadily.  AT&T wants DirecTv, Charter wants Time Warner Cable, Verizon wants AOL, and today, Dish Network wants T-Mobile.

It is a changing media environment that requires companies to envision the future and lead their companies toward it.  It is no longer an analog world; a new digital cloud that encompasses all types of communication, voice, video, audio, and data.  And the revenue that is derived from it is no longer digital pennies but actual dollars.  Subscription revenue, advertising revenue, storage revenue, e-commerce revenue, and more are the bounty that awaits the companies that successfully transform to match the growing demand. 

Is the Dish - T-Mobile merger a good move?  If it can create more cost efficiencies, drive more users, and deliver a greater share of the market, then it will be a smart decision.  If it fails to capitalize, it will get lost in the shuffle.  But consolidation is not over.  In fact, it is only beginning.

Netflix Pondering Adding Advertising

Despite denials by Netflix CEO that the company is not adding paid advertising, he did say in USA Today "that to dispel concerns saying, 'No advertising coming onto Netflix. Period. Just adding relevant cool trailers for other Netflix content you are likely to love.'"  But truthfully, content that is not the main attraction, promotion, or whatever you may call it, is still a form of advertising.  How consumers react and accept these promotional messages will decide whether Netflix moves toward a paid advertising revenue stream.

Let me be clear, this is not a new strategy.  The same plan has been used before.  Before Bravo and AMC were full commercially supported networks, they were commercial free.  From promotional breaks came sponsorships of uncut content.  And as the desire to grow ad revenue grew, so did the transition to traditional advertising.  Other networks, like Disney Channel, may utilize promotional messaging, but a deeper look may see some sponsored content within these ads too. 

That Netflix is pondering a ad model is not necessarily a bad thing.  But if it moves to cutting content into pods so as to add commercial breaks, a move that Hulu and others offer, that would be disconcerting.  Of course, Netflix could create a free model with advertising to piggyback its subscriber model that remains ad free. 

Advertising is pushing deeper ahead in our digital footprint.  Instagram announced today that they too will add more ads into its feed.  How will its users react?  It seems to have worked for parent brand Facebook, so it simply was inevitable.  But should consumers revolt and leave the app for others, then a lesson may be forged for future brands. 

Cable TV And Internet Last In Customer Satisfaction

Today's New York Times shares a study that confirms what most of us know, that we don't care much for our Cable TV and Internet providers.  According to the study, "Of the 43 industries on which the survey solicits opinions, TV and Internet companies tied for last place in customer satisfaction."  Of course among these providers, some may rank higher than others, the overall consensus is that the industry has done a poor job of listening to customer complaints or improving service. 

Perhaps most apparent, beside You Tube videos of sleeping cable technicians, is that the price-value model is not working.  The combination of subscription pricing combined with an ever increasing load of advertising has caused consumers to seek other solutions.  They are fleeing to over the top (OTT) content providers and cutting the cord to their cable service.  As service remains stagnant and prices continue to rise, satisfaction will keep falling as more consumers cut the cord. 

Google And Apple Competition Growing With Digital Pay

In the smartphone race, functionality and useability continue to drive innovation and value.  The main two competitors, Apple and Google are leading the charge, each trying to out duel the other.  And while Android devices outnumber iPhones, Apple remains a closed architecture while Android is open, used by multiple mobile phone manufacturers.

The latest announcement is that Google has finally created a mobile pay application to rival Apple Pay.  According to Wired, "The service—which will be available on future Android phones as well as from the Google Play app store—operates much like Apple Pay. It stores your credit card details on your phone, and both in shops and online, you can pay for goods and services by touching the phone’s built-in fingerprint reader."  And it is the next iteration of Google Wallet.

Whether the introduction of Apple Pay caused consumers to switch devices or whether Android Pay will have a similar effect remains to be seen.  Still the challenge for Google is that, unlike Apple, it has to be integrated across multiple competing devices that all run under the Android operating system.  Within the Android world, Samsung also has its own version of a digital wallet called Samsung Pay.  What confusion that brings to the marketplace remains to be seen.

Clearly, the use of a digital wallet simplifies the purchase process.  For those that use it or perhaps apps like Starbucks to pay for goods and services, it becomes an easier convenience than pulling at a wallet.  And as consumer use grows, so to will the number of retailers that will enable it at their locations. 

Apple and Google are clearly pushing each other to become the predominant smartphone brand.  With each innovation comes new model phones, new revenue opportunities, and new partnerships.  And this competition seems ready to intensify. 

A Cable Oligopoly Is Forming

Time Warner Cable (TWC) wasn't an orphan for long.  Despite a too long engagement that was broken up between Comcast and TWC, a new suitor named Charter Communication, ultimately won their hearts.  And along with the acquisition of Bright House Networks, Charter will become the second largest cable operator in the nation.  Add a combined AT&T-DirecTv as the third major cable operator in the nation and you have your clear oligopoly.  Once swallowed up and absorbed, the only question will be how long before the rest of the cable operators get bought up. 

Can Cablevision really continue to operate as a stand alone operator?  Will they be plucked up next by Comcast or Charter in the next year or so?  Can Cox Communication remain private and will smaller cable operators seek out buy outs?  It seems that once Time Warner Cable was spun off from Time Warner, Inc., it's heart was no longer in the business of running a cable operation.  It is just not as sexy as owning content companies like Turner and HBO.  But did they ever consider what they could do if they were the one acquiring cable systems like Charter or even Cablevision?  I'm not sure.

It seems that the FCC will be okay with a Charter acquisition of Time Warner Cable as well as AT&T buying DirecTv.  It creates two mega entities large enough to compete with Comcast.  And while AT&T lacks the broadband size, their cellular business more than makes up for it.  Approvals seem a near certainty.

So what is next?  Beside Cablevision or Cox or another cable operator getting bought, I expect it is time for some mergers of content companies too.  Could it be Scripps or AMC or Disney or Discovery in the mix?  With less cable operators, networks need more leverage as well to get their higher prices.  Stay tuned. 

Everyone Wants To Have A Video Platform

There is a proliferation of video channels.  In fact the word channel probably doesn't apply though the word platform seems to general as well.  We no longer get video from broadcast or cable.  Short or long term video content is no longer only available on You Tube  or Hulu or Netflix or Crackle.  And video content is no longer limited to video only websites or apps.  Facebook and Twitter love to share an connect us with video as well.  Even social media companies like Snapchat, with disappearing messages, wants to offer video content from Discovery and other content providers.  Video content is so hot these days that platforms that were so focused on data or non video offerings have found compelled to bring video into their mix. 

And that brings us to Spotify, a music company offering streaming songs for free or in a subscription service, to decide that they too need to also be a video content company.  You might think that the video content would be rooted in music, like music videos or concerts, but that does not seem to be the case.  According to reports, video will come from such sources as ESPN and Comedy Central.  News, comedy and video sports content will all be added to Spotify's playlist of content.

As I watch this proliferation of content across so many sites, and as I watch niche sites become more generalized and mainstream, I recognize that once again history repeats itself.  Cable networks, once niche content providers, would limit their content to a particular format.  But to compete for the largest number of eyeballs and subscribers, to gain the larger share of the ad dollar pile, niche services all realize that eventually they must shift from niche to broad, from limited to general, in order to reach the widest and hopefully largest size audience.  For Spotify, as it is for others, that means moving away from your niche as a music service to be everything for everyone in order to keep growing.  This type of strategic shift is always inevitable.