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Thursday, July 31, 2014

AMC Nets - Eat Or Be Eaten

With all the media moves being made on the distribution front, Comcast and Time Warner Cable, AT&T and DirecTv, and on the content front with Fox trying to buy Time Warner, consolidation has become the key buzzword.  To remain competitive and to build leverage, strength comes with size and content needs that size to demand higher license fees for its programming. 

Speculation on how will do the acquiring and who will be acquired have included nets like Discovery, Scripps, and AMC Networks. Well it seems that AMC would rather eat than be eaten.  It has mad a bid to own a major piece of BBC America.  Once sold by Discovery Networks, although never owned by them, BBC America has been a small but steady network.  And like AMC, BBC has distributed some original programming, like Orphan Black, that has received critical attention.  These two nets have partnered in the past so such a move could be a good programming fit.

But the question is whether it is enough to maintain independence or simply delay it.  AMC owners, the Dolan family, have demonstrated that they can both buy networks, like Sundance Channel, and also sell networks, including Bravo Network to NBC and fuse to Nuvo.  They spun off both AMC Nets and MSG into separate companies from each other as well as from its cable distribution arm, Cablevision Systems.  So if the timing and dollars are right, AMC Networks could take either approach.  If staying strong is the approach, a BBC America acquisition may not be enough to stay independent. 

Wednesday, July 30, 2014

Twitter Finds Growth While Losing Money

Sports, especially the World Cup, was kind to Twitter last quarter.  The social media site grew users and usage and exceeded its revenue projections.  It also led, as CEO Dick Costolo suggests, new user engagement "from people checking out special feeds set up by Twitter. This gives Costolo confidence that Twitter can build more 'experiences' around big events and big topics in the future."  Still, the service continues to lose money although at a smaller pace than the previous quarter.

So is the quarter a one shot wonder brought in by a rabid international World Cup interest or can Twitter figure out other ways for users to stay connected to the app ans use it for longer and longer periods?  It certainly is an easy way to connect with fans over sports and live events.  The Emmys are next month and the World Series in October but can they equal the impact that World Cup offered.  Also, they are US centric events while World Cup was a global phenomenon that comes every 4 years.  And while the Olympics are a couple years away, they hardly seem to deliver that same passion. 

Twitter has a lot to be proud of while it continues to focus on monetizing its social engagements.  Too much apparent advertising might spoil the process, too little won't pay the bills. Its a big job for Costolo to keep dollars flowing into the site. 

Tuesday, July 29, 2014

Windstream Gains Could Help All Telecom

Per the WSJ, thanks to IRS approval, Windstream, a rural telecommunications company, will be able to "spin off some of its telecommunications network assets into an independent, publicly traded real estate investment trust, a move that comes as a wave of U.S. companies look for ways to lower their tax burdens."  That news has lifted the telecom sector resulting in telephone and cable companies, those with a wireline infrastructure, with a potential tax benefit as well.  And whether they also decide to spin off assets into a REIT or not, the stock market expects they will, leading to higher stock prices today. 

How it translates into better service, more investment in the infrastructure, more employment, and other capital investment programs remains to be seen.  Should that be the case, it demonstrates that a heavy tax burden actually reduces the opportunity for new dollars to grow and other benefits to be taken.



Monday, July 28, 2014

Will Apple's iWatch Embrace Mobile Payments

Given the strong ties between Apple and Disney as a result of Steve Jobs and Pixar, we continue to hear that Apple's forthcoming iWatch could include a commerce feature.  Similar to the Magic Bands that are being used in Disney Resorts, the iWatch could potentially offer similar features.  "Within the past few weeks we've been hearing a lot about Near Field Communication (NFC) technology coming to the iPhone and iWatch."  The start perhaps of being able to leave your wallet at home and to pay for goods and services with a flick of the iWatch and a security code. 

The success of the Apple iWatch seems to depend on it being more than what is currently on the market in the smartwatch category.  Time and heart rate monitoring aside, easier communication functionality, mobile payment features, and perhaps a self-winding feature that enables ones own movement to continue to power the watch.  The more functionality and ergonomic design, the better the chance for success. 

Friday, July 25, 2014

Comcast Improving Broadband

On Monday, I wrote about FIOS success in broadband and its use of fiber optics to improve speed and bandwidth.  Historically, cable operators have used coaxial cable to the home which can slow down speeds as more users are attached to the node.  Well as broadband becomes more valuable to a consumer than cable TV, Comcast is now upgrading its infrastructure in certain markets, replacing cable with fiber to the home.  Great for consumers but most likely an expensive upgrade that will need to be reimbursed through higher fees.

According to the Wall Street Journal, Comcast and other cable operators are using fiber in any new builds that they are doing.  Unfortunately, the report goes on to say that Comcast does not have plans to replace all existing coaxial with fiber.  It certainly will get more expensive the longer they wait.  With more consumers adding broadband subscriptions, usage will increase, and speeds will decrease at peak periods on coaxial cable systems.  And with more homes streaming, the situation will continue to worsen.  Fiber systems have higher capacity to handle increased usage. 

In addition to fiber, more investment will be needed in technology that improves streaming capabilities and enhances speed.  Given the limited number of players offering broadband, cable and telco, new competitors are needed to enter the space to help keep pricing in line; otherwise, consumers will only continue to see their data usage bills rise and rise some more.  Demand for fast broadband access will only continue to rise. 

Thursday, July 24, 2014

Facebook Conquers Mobile

When Facebook users began to migrate from their pc to smartphone and tablet, shareholders were concerned that the ad model would crumble and Facebook would take a hit.  But given their recent quarterly earnings report, Facebook has embraced the mobile platform and uncovered a growing revenue stream. 

"The social network reported that profit more than doubled and revenue topped estimates for the ninth straight quarter."  It is a world of more than just display advertising; rather, sponsored content with video and a targeted approach.  And as CEO Mark Zuckerberg knows so well, this world changes at an ever quickening pace.  He is making new investments in untried products, all to stay relevant for the long haul.  Products like Oculus VR and services like WhatsApp can potentially bring new sources of revenue back to Facebook. 

For the present, Facebook must contend with user satisfaction and usage.  It is harder to find new users to the service and a challenge to keep them active users too.  Constant reinvention that encourages tune-in rather than pushes current users away.  It is the challenge every time an upgrade is released.  Still, Facebook seems up to the challenge and certainly has the financial resources to invest and grow.  It was a great quarter and as some shareholders have speculated, facebook could now be considered undervalued. 

Wednesday, July 23, 2014

Apple Patents Smartwatch Called iTime

On the heels of its quarterly earnings, Apple also received a patent on its smartwatch design, labeled iTime.  Of course, this patent was first submitted 3 years ago, an eternity ago in the world of internet connectivity.  Much has changed, digitally, creatively, ergonomically that the smartwatch device could be either a breakthrough or an expensive timepiece.  Certainly, the design elements, as described back in 2011 didn't consider as much.  It seems almost as a placeholder.  While iWatch was a media created brand, thought up as an extension to its iPod, iPhone, iMac, iPad branding format, the release of the patent name iTime will not be the official brand name. 

Many expect Apple to schedule a product announcement release in the late Summer/ early Fall with a sale of the device in October, in time for the Holiday Season.  I suspect neither iTime or iWatch will be the official brand name for this smartwatch device when it is finally announced.  Its announcement would also tie in to one for the next generation iPhone.  

Tuesday, July 22, 2014

Netflix Surges As More Consumers Join

I joined Netflix first when it offered DVDs through the mail.  I lasted a year.  I preferred the immediacy and choice that cable offered.  How simple to scroll through on demand and watch shows and movies from a wide sources of content.  My daughter encouraged us, after the latest snow day this winter, to join Netflix again.  This time for its streaming content.  And we are now loyal users.

For each of us in the family, Netflix offers and recommends content that matches our interests.  Easy to discover content, easy to use, and easy to watch.  Like many others, I am currently fixated on Orange Is The New Black.    And it is fair to say that some of my TV time has switched from cable to streaming. 

I take my own experiences and can easily see why Netflix has been doing so well.  Since their misstep a few years back with trying to separate their DVD business from streaming, they have recognized the value of original content and used it to drive subscriber growth.  Whether it is OISTNB or House of Cards, it has led to both Emmy nominations and awards.  With their quarterly earnings announcement, Netflix continues to attract viewers, "signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs."  In the US alone, they have now over 36 mm households.  And while the stock market always wonders how long such growth can last, I expect Netflix will find new revenue models to further improve their value.
signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs. - See more at: http://www.multichannel.com/news/tv-apps/netflix-pushes-past-50-million-subs/382645#sthash.b3NKB1Z8.dpuf
signing on 1.69 million during the period, extending its total to 50.05 million, of which 47.99 million are paid subs. - See more at: http://www.multichannel.com/news/tv-apps/netflix-pushes-past-50-million-subs/382645#sthash.b3NKB1Z8.dpuf

This years Emmy awards are next month and most likely Netflix original shows will win more statues.  That kind of publicity will cause more households to want to watch its programs.  And once they watch one episode, the Netflix feature that automatically loads the next show to start will keep them tuned in.  It encourages binge viewing, but it also encourages loyalty. 

Monday, July 21, 2014

To Better Compete, FIOS Improves Broadband

Verizon FIOS has a competitive advantage over cable; its broadband speed, mainly because of fiber to the home, is greater than cable's coaxial connections.  And as customers seeks more streaming media to view and upload more content to the cloud, the faster the connection, the better the experience.  FIOS can, with minimal investment, support that objective by increasing its upload speed to match its download speed.  "FiOS says the rollout should be done by the fall, and 95% of customers will receive it automatically."  And FIOS says this enhancement is being delivered at no additional charge.

While concern over net neutrality still mounts, most customers really just care that their content is accessible, without delay, when they want it.  When they encounter buffering, no matter what the reason, it creates a bad user experience.  The more speeds are improved, no matter the content, no matter the direction, the better the customer will value the service. 

FIOS growth has been slowing while cable operators have seen gains as well in broadband customers.  But as broadband continues to become more valuable than cable, FIOS may have the advantage when marketing superior broadband speed.  And while upload speed may not yet be as important as download speed, the need is coming.  Cable operators need to push more investment into improving their lines. The total broadband experience matters and slow internet only frustrates consumers who then start looking for a new provider.