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Tuesday, March 31, 2015

Cable Consolidation Confirmed For Charter

Three weeks ago, I mentioned in my blog that Charter Cable was kicking the tires on Bright House Networks.  Today it has been confirmed that Charter will acquire Bright House with a combined subscriber base exceeding 7 million homes.  Bright House parent, Advance-Newhouse will own about 25%, and Liberty about 25% of the new MPVD.

Most interestingly, this acquisition is contingent on the Comcast acquisition of Time Warner Cable.  Should that not happen, this deal could likely be kaput.  Bright House has benefited from their current relationship with Time Warner through a programming partnership that enables them to get the same license fee rates as TWC.  That programming deal would likely expire when or if the Comcast deal is approved.  Combining with Charter post approval would create a larger entity that could likely retain those better licensing terms.

So just to count all the cable acquisition deals in front of the FCC to date, we have Comcast and Time Warner Cable, AT&T and DirecTV, and now Charter and Bright House.  Three and counting...one can only wonder who the next likely target will be. 

Friday, March 27, 2015

Can TV Everywhere Help The Cable Industry

Today's Variety poses an interesting question, Is Cable's 'TV Everywhere' Strategy Finally Poised to Take Off?  According to an Adobe Systems' study, viewership doubled from the previous year to reach 20% of all pay households.  That is to say that 20% of all cable subscribers were authenticated to watch TV programming away from their cable box across other streaming devices.  Reasons for authentication included streaming Olympics coverage as well as World Cup Soccer.  And come this next football season, the NFL has agreed to stream a regular season football game.  Whether that also involves authentication remains to be seen.

I've had the pleasure of downloading network apps that require my cable email and password for authentication.  I've read reviews from others that have downloaded and used apps from Xfinity to NBC to CBSN.  As for ad supported networks, a number of the reviews are unkind.  Examples include gems like this, "I do not usually write reviews but the duplicate, redundant, and excessive amount of ads thrown at me while watching a single episode ..." Or this one, "This app is hopeless streaming to Apple TV."  Or "The commercials are loud and so repetitive".  Some are more positive, "Easy to operate. Wish for less commercials."  Clearly there is need for improvement.

That consumers are using these apps and are so passionate indicates to me how valuable they can be.  Technically, more can always be done to improve the viewing experience, assuring no glitches or freezing, and an easy interface to choose and watch content.  The other issue is commercial load and how much the consumer will watch before they turn away to commercial networks, continue to cut the cord to cable, and focus exclusively on subscription services like Amazon, Netflix, and Hulu Plus.  If part of the goal of TV Everywhere is to drive value for cable TV, both on and off the cable box, then don't kill the golden goose before it even has time to fully hatch.

Clearly consumers are increasingly using these authenticated apps to enjoy their TV programming on their other devices, from iPads to iPhones to Roku.  And enabling access to live network linear feeds as well as on demand viewing benefits the authenticated viewer with a better, more personalized viewing experience.  But like any good business, it is so important to listen to the customer.  Rule One, the customer is always right.  Rule Two, when the customer is wrong, see rule number one. 

Thursday, March 26, 2015

Will Apple And Beats Gain Edge In Streaming Music

Apple sure has a lot on its plate with the release of the Apple Watch, a planned Apple TV subscription service, and a refreshed Beats streaming music service.  The NY Times article talks about what Apple is able and not able to do to compete against Spotify and Pandora.  According to the report, "Apple recently tried but failed to persuade record labels to agree to lower licensing costs that would have let Apple sell subscriptions to its streaming service for $8 a month — a discount from the $10 that has become standard for services like Spotify, Rhapsody and Rdio."  But does Apple really want to play the low cost angle to compete?

It may be telling that Apple has not tried to undercut its iPhone or iPad price to gain an edge over Android or will use a low price strategy for its Apple Watch release.  So why start now.  If history is a guide, what Apple does exceedingly well is create demand by focusing on unmet needs and delivering uniquely a product or service that works simply and efficiently.  So in the case of the competitive music streaming market, Apple and Beat's success must deliver unique benefits that consumers will desire. 

Apple may just have the products and services to achieve early gains.  The Beats music service could be pre-loaded into the next iteration of iOS.  A Beat's subscription could be included with every Apple TV video subscription.  And synergy with iTunes could help Beats push music purchases.  Content is king and building a library of exclusivity will be important to demand.  Perhaps, a unique deal with Taylor Swift, U2, and others may be a driving force.  Lastly, customization and personalization remain key to build a music subscription service that delivers unique value and enjoyment.   Can Apple Beats gain market share verse the current batch of competition.  I suspect that Apple has a plan.

Wednesday, March 25, 2015

ESPN Reminds Planners That Cross-Media Advertising Matters

Hopefully most media planners know that the best way to reach a broader audience is to advertise across media platforms.  It also raises awareness, interest, engagement, and hopefully intent to purchase.  Advertising on one platform, especially when consumers interact with so many different types, from print to TV, pc and mobile, billboard to coupons, limits the reach and frequency one hopes to achieve. 

But I guess ESPN wants to remind us of that.  In the Wall Street Journal article in the CMO Today Advertising section, the headline screams, ESPN Urges Advertisers to Hit All Devices.  In it, their research reaffirms "that the key to effective ads is getting in front of viewers across all their devices."  Did this group finally realize that?  That new research was needed to quantify what has been known for years seems silly.  If we get to the gist of what I can only consider as pure PR, ESPN wants its advertisers to spend advertising dollars across all its platforms to assure that it best reaches a male skewed demo.  Yes, integrated marketing clearly works to reinforce brand messaging and well known for decades. That given the rise in new media platforms, like mobile, hasn't seemed to change this fact.  Still, given the start of upfronts, something ESPN found important to reaffirm. 

Monday, March 23, 2015

Could Streaming Network TV Boost Advertising

With the planned release of Apple's TV subscription streaming service, networks might just be greeted with an advertising opportunity, the ability to dynamically insert commercials to specific households.  Thus one commercial spot could be sold to reach a certain household based on relevant data while the same spot could be sold again to a different set of households.  Advertisers would pay a premium but would have more certainty that their ad was reaching a relevant audience.  And networks could sell the same ad spot multiple times.  In addition, different ads could be served based on the device being used to watch the program, one for the Apple TV box, another to the iPad or iPhone.  Ads could be dynamically inserted on linear as well as on-demand and DVR programming.  The likely results, higher engagement, higher viewership, and more revenue. 

Friday, March 20, 2015

Do Cord Cutters Care About Linear TV

The desire to capture a digital friendly audience begs the question, do they even care about linear TV, either broadcast or cable channels.  Many that are cutting the cord to cable tend to be Millennials that have found that they can watch most of their shows free, without paying a subscription fee.  From clips to full length episodes, consumers can watch on You Tube, Crackle, and many more as well as on a slew of pirated sites.  And those willing to pay a small monthly fee per month have access to tons of shows and movies on Netflix, Hulu, and even Amazon Prime.  Borrow a friend or parent's passcode and you get HBO GO.  For those that don't need to watch shows on a linear network can eventually get these same shows on other sites.  It begs the question, do these cord cutters, these Millennials, even need linear TV?

Sling TV, PlaystationVue, and now Apple TV seems to think that this audience will pay for content offered via their platforms.  That the content can be streamed to any device, saved for future airing, and watched when, where, and how the user wishes may drive a value that isn't currently being offered.  And access to some live programming, like sports and events, that needs to be watched as it airs may be a driver to purchase these OTT platforms.  It is the cost/value proposition that will ultimately determine if the Millennial audience sees value to purchase. 

Thursday, March 19, 2015

Comcast Leadership Threatened By Disruption

As the leader in the industry, Comcast is facing the same kind of threats that have faced other leaders for years.  Whether a technological change, environmental, external, internal, or even a change in consumer demand, businesses are challenged to retain its core business or risk losing core revenue to drive new revenue growth.  It is why some well known leader brands are no longer around.  They fought so hard to retain their business model while consumer fled to new competitors.  Examples include Sears, Radio Shack, Prodigy, just to name a few.  Feel free to add to the list.  It is an epic reminder of the classic business novel, Who Moved My Cheese?.

Some companies have successfully adapted to change.  Netflix was a DVD mailing company who was able to change to be the streaming content leader.  Apple was willing to let the iPod decline to introduce the iPhone.  And they did it again with the larger iPhone, a possible killer of the iPad mini.  But change is constant and to stay relevant these and other brands must continually look to adapt and change.

Cable operators face those same challenges as a result of the growth of streaming and the launches of new competitors, including PlaystationVue, Sling TV, and Apple, as well as HBO Now, CBSN, Netflix, Amazon Prime, and Hulu.  Consumers can now leave cable, cut the cord, and get a smaller package of relevant content, at a hopefully lower price, and on any device they choose.  It is the cord cutting nightmare driven by a TV Everywhere approach.  So what to do?

For Comcast and other cable operators to compete in this ever changing entertainment landscape, they will have to reassess how they are delivering their content to the home, what business they want to be, a pipeline or a content aggregator/distributor, and how they want to differentiate to maintain a healthy and profitable subscriber base.  The loss of cable subs means a loss of a monthly subscriber revenue stream as well as a loss of ad revenue from a declining base of users.  As more and more streaming services appear, each building packages of broadcast and cable networks and other programming, more and more consumers will be siphoned off.  The percentage of cord cutters continuing to grow.

To compete successfully, it is time to throw out the old cable boxes.  For Comcast, to push out the IP enabled X1 box, or to offer a TiVo box solution, and enable all programming to be authenticated and offered across all mobile devices, on and off the TV set.  Update your packaging model to encourage consumer choice.  Some homes will always want to buy all programming at one price, but others want to pick and choose their package of service.  Market the availability and accessibility of choice, with online access to quickly pick and choose the networks you want for your personalized package at variable price points.  Let consumers change within their package at a moment's notice or upgrade or downgrade at will.  Make Choice, Accessibility, Variety, Availability, and Simplicity your mantra.  Could CAVAS become the next buzzword?

If consumers are choosing Apple TV over cable TV it will be because Apple enabled consumers to buy a smaller package of content and the choice of where, when, and how to watch.  Comcast can do the same if it wants to save its cable business model and be the ultimate aggregator and distributor of all content.  Or it can become a dumb broadband pipe provider.  More competitors are coming to take your cable business away.

Wednesday, March 18, 2015

Apple's Subscription Platform A Disruptive Force

Given the Apple infrastructure of retail, a full line of products from Apple TV to Apple Watch, plus its iTune interface and AirDrop capability, it is no wonder that the news of it's entry into an online cable subscription service has created quite a stir.  From traditional cable operators, like Comcast, to other technological rivals, like Google, Amazon, and Microsoft, Apple has challenged their current business models.  How?  Let us see.

Comcast may be concerned on a number of fronts.  While NBC is currently not in the mix for services on the new Apple subscription platform, they may be forced to launch based on their agreements with the FCC.  According to the NY Post, "As part of Comcast’s deal to acquire NBCUniversal in 2011, the cable giant agreed it would make its content available to online video distributors on a “comparable” basis to its rivals."  For Comcast, the debut of Apple TV could cause a rash of cord cutting as consumers decide they prefer the TV Everywhere advantage of Apple, the simplicity of use across all their devices, and the mobility.  They also undercut Comcast with lower subscription fees for a scaled down but desirable list of networks.  Add HBO Now and Netflix and consumers mayjust prefer the Apple TV box or iPad or iPhone over a cable TV box tethered to a single television set.  How does Comcast compete?  With an Apple launch scheduled for the Fall, they have about 6 months to build a new business and marketing plan.

As to the other streaming networks, Apple will compete with Sling TV and Playstation Network.  Amazon may feel they have lost a step.  They have the smart phone and tablet devices, but don't have the broadcast nets and most of their streaming is tied to their Prime subscription model.  Microsoft has XBox, but they have already disbanded the content side of that business to concentrate on cloud computing.  Building an infrastructure of content partners and a streaming subscription service may not be part of their current focus.  And Google has concentrated on building out fiber in limited markets.  They have Google Play and can reach outside the Apple closed infrastructure through the open Android platform.  But by being open, it may lose some control.

Still, the speed of change has increased greatly and mass adoption continues to occur at a quicker and quicker rate.  All of these technology companies have the ability to commit to change and focus on driving digital consumption.  And moving off of cable boxes and onto personalized devices delivers richer data about who is watching, when, where, and how, coupled with the same users using these same devices to make purchasing decisions.  Apple's infrastructure and usage base could potentially give them a huge edge in capturing a sizable subscription audience and rich data to drive advertising revenue. 

Tuesday, March 17, 2015

Apple To Become Online Cable Operator

For years it has been speculated that Apple wanted to get into the television viewing business.  But in the last few years, the word television has changed its definition.  Watching content, whether on cable TV or through Netflix, whether on a big screen set or on a mobile device, all seems to fall under the umbrella of television viewing.  Rumors that Apple wanted to build big screen sets or a cable friendly set top box have all been bandied about.  The latest news might just be the direction Apple has decided to take.

The Wall Street Journal says that "The technology giant is in talks with programmers to offer a slimmed-down bundle of TV networks this fall, according to people familiar with the matter. The service would have about 25 channels, anchored by broadcasters such as ABC, CBS and Fox and would be available on Apple devices such as the Apple TV, they said."  Like Sling TV and Playstation Network, announced at the CES, and other aggregators, Apple hopes that its Apple TV device, recently reduced in price from $99 to $69 is the means to drive adoption.  Under the Apple ecosystem, subscribers of the service would be able to view content on any of its devices, from iPod to iPhone, from iPad to Apple TV.  Truly a TV Everywhere approach!

Interestingly, the one content provider not included at the moment is NBCUniversal, home of the NBC broadcast channel, Bravo, Syfy, USA, CNBC, and others.  Also NBCU is owned by Comcast, the largest cable operator, soon to be larger with the acquisition of Time Warner Cable.  While the new service is not planned to launch till later in the year, so too is the approval of the cable operator merger with the FCC.  Could this issue add an extra wrinkle to the approval process?  We must wait and see.

For consumers seeking a cheaper alternative with a smaller set of channels but access to content anywhere and everywhere, and additive premium content from Netflix and HBO Now, this new subscription service could be highly welcomed by the millennial audience.  Ideally this online audience would prefer to pick and choose the nets it wants within the package.  The concern over time will be as more nets do deals to be on the subscription service causing Apple to need to raise its monthly fees.  That is one of the issues that led to cable cord cutting.  That, and the inability to watch content away from home.  With this new online subscription service, TV Everywhere becomes a true reality.