The Future Success Of Netflix

Nothing lasts forever.  Even Netflix knows that; they watched their DVD business erode while working to navigate the streaming world.  It was a bumpy ride along the way but the result so far has been quite impressive.  But growth appears to be declining, according to the Wall Street Journal, and international challenges and content costs aren't helping. 

In August, the remainder of the U.S. subscriber base will see its monthly fee rise to $9.99; for my household that is $2 more a month or a 25% increase.  Yet that is not enough to satisfy investors in the business seeking more future growth from the streaming giant against greater competition from Amazon and Hulu.  So what is Netflix to do as its Act 3?

Of the options to consider, Netflix might want to build out a streaming tier of live content, at an incremental cost, as a skinny bundle to drive more cord cutting. They could add more advertising to the mix, either with an ad supported option or with more sponsored content to the stream.  Netflix might consider growing through expansion; perhaps the purchase of a studio like Paramount or some cable networks.  For Netflix, standing still is not an option.  They learned that lesson from their DVD rental business.  Existing growth of its subscriber base will dry up and future revenue growth must come from other business platforms. 

The Sharks Are Circling Viacom

Given the health issues surrounding Sumner Redstone and the management conflicts hitting Viacom, I am surprised that it has taken this long for the sharks to circle Viacom. But such seems to be the case with news that folks are looking at pieces of the company.  That piece is Paramount Studios, a once proud film making company that has had a hard time finding financial hits.  Spongebob is not as popular as Dory it seems.

According to Bloomberg, "Chinese billionaire Wang Jianlin’s Dalian Wanda Group Co. is in talks to buy 49 percent of Paramount Pictures from the company."  Whether such a deal gets approved remains to be seen but it shows that the company is having problems.  Still, if Redstone has any control left, why wouldn't he try to see his other company, CBS, take back Viacom and help recharge its engines.  With Comedy Central and Nickelodeon still valuable cable networks and a storied history from Paramount, the hope is that there is still value left to unlock.  New management for Viacom may be the answer and CBS could use the assets to stay strong and competitive against NBC and ABC. 

Comcast Outage Outrage

Are you a Comcast customer?  Then you were likely affected by the outage of service.  It seemed to have started earlier in the day when Comcast business phone customers lost telephone service.  And this wasn't a localized problem; rather multiple markets coast to coast were impacted.  Yet, it was barely reported by media and the possible outrage contained.  One must wonder the economic loss of business that resulted from this outage.  Not for Comcast but for those businesses that rely on the technology to deliver. 

Those outages became personal last night when our cable, internet and phone all went down in the early evening, preventing us from enjoying the MLB All Star Game, and our connectivity to the world.  Our initial call to Comcast required multiple dials to get from automated attendant to a real service rep.  They knew little of the problem in the area and spoke like no one else was having any problems at all.  No matter how pissed off I might have been, it would not quicken the repair to our service.   We were at the mercy of Comcast. 

Our dependency to the internet is especially disconcerting. We are linked to it with every key stroke and despondent when we are cut off.  Luckily, our cell phones are linked to a different provider, enabling us to ultimately get connected and feed our fix.  But, the loss of service was a reminder just how dependent we are. 

Video Snacking To Drive Revenue Growth

We are about to get overwhelmed with tons of short form video content as the long tail of video consumption is about to get longer.  In today's NY Times, Tronc, once known as Tribune Publishing, has revealed their plans to increase video content 1000% daily.  And other online publishers are following this trend.  With video content attached to every online article, the hope is that more viewers will stay on the page longer, click the video, watch the ads, and continue to snack on other articles and other video content.  A very sound strategy.

Whether the content is created specifically for the page or linked via syndication or other means, the direction is clear.  More video snacking with content that connects with the viewer should create a better user experience.  And hopefully drive online revenue higher.


Two online companies, Wochit and Wibbitz, seem to have the means to quickly and efficiently link content to articles.  "The two services’ automation features work in similar ways. They analyze, and may summarize, text, be it a script or a traditional news article, and then automatically find photographs and video clips to go with it." Whether users find the additional content useful to them or simply clutter may determine the long term viability of these services.  But done right, the use of video on the page should be good news for these content companies. 

Cameras Are Everywhere

In the wake of recent news events, the accessibility and use of cameras has provided a video record of what has often been a he said, she said exchange.  That 1 picture is worth a 1000 words may be true, but it may not be the whole truth either.  Still, that video cameras are everywhere is becoming a more important part of our daily lives.

It seems that every sidewalk has a video camera focused on it, every store has a video camera recording each corner, and in everybody's pocket there is a video camera, our smartphone, ready to record events as they happen.  And we are being record in our good times and in our bad.  Cameras are everywhere.

That it catches criminals and criminal intent is a very good thing, that it provides a potentially independent view of a situation is also good, and that it hopes to enhance security and provide protection is important.  But the reverse is a loss of privacy, individual freedom, and a likely permanent record of our actions, good ones as well as our indiscretions.  Personal privacy is lost for the greater good. 

I've always enjoyed catching video moments of my family's lives.  They are a permanent reminder of the events of our lives.  I'm happy too when citizens with their phones capture everything from silly moments to criminal activity.  The hope is that truth of the moment shines through.

But when it comes to media and the availability of these "videos", I worry that sensationalism outweighs truth, ratings over discretion.  Is it necessary to show everything, no matter how insensitive or gory it might be?  Does it make our society more compassionate or does it start to desensitize us?  There was once a time where media withheld material that wasn't relevant to the situation; today, the need to beat out other news organizations means that faces are no longer blurred, blood is no longer ignored, and pain and violence are showed in all its glory.  In the drive to show everything, we may be becoming more hardened to it.  Our scale of restraint has vanished.  And I worry that we, as a society, are heading down a very dark path. 

Netflix And Comcast Are Now Frenemies

In a not so surprising move, Comcast and Netflix have found a way to cohabitate.  Comcast customers that have the latest set top box, the X1, in their homes will be able to watch Netflix on their TV by simply switching to the Netflix channel.  Previously, users would have to switch inputs from the set top to another box, their Chromecast, Apple TV or Xbox, before accessing their Netflix subscription.  One less step, but for those looking for simplicity, an important one.

So why did Comcast agree to let Netflix in the front door?  Perhaps they recognized that Netflix was not the reason folks dropped cable.  Perhaps by being customer friendly, Comcast sees customers take full value of their cable subscription.  Perhaps it provides a bit of revenue or maybe even some additional research into the minds of their subscribers.  And perhaps they realize that set top boxes may one day be history and best to get some incremental value before it is too late.

Regardless, the press has reacted quite positively the news.  I suspect that customers will as well. And a happy customer may just stay a Comcast customer. 

Apple Should Not Buy Tidal

Subscription content services are a nice business to own.  They provide a nice monthly stream of revenue that can be accounted for with limited risks in subscriber loss.  Heck even cable has seen a very small percentage still from cord cutting.  In music, the big player is Spotify and Apple Music would surely like to beat them.  But recent news that they might purchase Tidal is not the answer.  Sure it has Jay Z but that does not a business make.  And it certainly won't make Apple Music any better or bigger.  Whether it secures any exclusivity is questionable, especially when you consider what Apple may have learned from the book side of the business and dealing with both book publishers and eventially the Judicial Department.

Still, the strategy of building better content businesses is a good one for Apple.  Could that mean buying someone as big as Netflix or perhaps even a Time Warner Inc, home of Turner, HBO, and Warner Bros?  I would love that move.  But maybe something smaller is a better first step.  Given the Viacom issues and Sumner Redstone lunacy, Showtime and sister networks might be a better idea.  Lionsgate is picking up Starz; once owned, they could be in play too.  And let's not forget Scripps or AMC.  Overall, I believe that video subscription should be Apple's next big content move.

And as for SIRI and the Amazon Alexa competition.  That is a blog for another time. 

Starz Deal Demonstrates The Value Of Content

Lionsgate believes that content and distribution are intertwined and so have announced their deal to buy cable pay provider Starz for $4.4 billion.  According to Multichannel, " Although anticipated for months, the combination will give Starz the production heft it has craved as well as a vast content library – the merged entity will have 16,000 movie and TV titles – while Lionsgate gets a distribution arm in the Starz and Encore premium channels. It also paves the way for a broad range of new content partnerships and accelerates the growth of Lionsgate and Starz’s own OTT services."  A win-win for both companies and one that leverages the strengths of each other.   The deal should be approved by end of year.  

This deal comes as a result of the work done by John Malone, CEO of Liberty Media , who invested in Starz, spun it off into a separate company and ultimately put Lionsgate together with Starz to finalize a deal.  Not surprising, Malone's Discovery Channel also has a piece of Lionsgate making this deal more of a family affair for Liberty Media.  Given John Malone's MIdas Touch with content and distribution, the newly combined entity will do quite well. 

Globalization Verse Isolationism

We live in interesting times.  While domestically, our political system grapples with issues ranging from immigration to unemployment, from freedom to security, from guns to the right to choose.  And as a democracy, we have a full range of thoughts and actions on how to accomplish our goals.  There are those that believe that we should be armed, that we must build walls to restrict entry, and we must tell others what they can do with their own bodies.  Others seek more regulation and restriction, interdependency, and choice.  But the one truth is that each of us have our own point on the line on where we stand, similar with some and different with others.

But what we face in the US seems no different than what is faced abroad and Brexit certainly demonstrates that a majority were fed up with status quo.  But unlike a revolution, a vote to exit the EU may answer one issue while creating so much more uncertainty.  In this case, no one seemed to plan out what the next steps should be should the vote pass.  Change and uncertainty consistently go together.

The riding question is if such a move to withdraw and separate is truly the right strategy.  Technology, media, communication, environmental issues, and so much more have made this planet Earth a much more smaller place to inhabit.  We all live on this one planet and for now we have no other planet to move to.  Rather than isolating ourselves, restricting movement, pushing others away, we need to learn how to listen, how to get along and ultimately to start growing up and behave like adults, not children.  Violent physical conflict should never be the answer; communication, conflict resolution, and compromise should be the global mantra.  Ultimately, "Can't We All Just Get Along."

As for our upcoming election, perhaps some will see a lesson learned from what the UK is now experiencing;  others will not.  Let's hope that a majority finds that we can find an orderly process.  But the world around us must also grow up too.  Violence should never be the answer.  But that esson might take a lot longer to learn.