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Wednesday, April 23, 2014

Aereo Just A Remote Antenna And Cloud DVR

As the Supreme Court listens to arguments regarding the Aereo service, many also speculate what a ruling either way will do to future cloud based services.  Broadcasters are concerned that this disruptive model will kill is license fee revenue model, although it would also increase its viewership reach.  Aereo argues that it is simply selling a technological service to receive and transmit free programming. 

Today's Business Insider article argues that a ruling against Aereo will also negatively effect the future of cloud based services.  Previous rulings have enabled cloud based DVR service; in fact, Cablevision was the cable operator behind an N-DVR push.  And when you look at the basic model, Aereo is simply leasing remote antennas rather than placing one on your roof and adding enhanced cloud based DVR capabilities in exchange for a monthly fee.  BI's argument, and a compelling one is this: "Make no mistake, large media companies hate technical innovation. TV and movie studios also believed that DVRs and VHS cassettes would kill their businesses. In fact, they enhanced them. Aereo is simply a remote personal video recorder."

Should Aereo lose its court case, it claims no "Plan B" and would cause an end to its business.  But it is argued that such a ruling would be counter to previous rulings enabling cloud based content capture and transmitting services.  And would lead to "Any company whose business model relies on letting viewers store copyrighted material on a remote server for later viewing could find itself suddenly illegal" including services like Dropbox.  The concern is that a ruling would significantly alter further innovation for all cloud based services.

Broadcasters argue that it will kill their business model although they have argued that before with the rise of cable, VHS, and DVR services. Some have threatened to move from over the air to a cable based model.  While they argue the possible loss of license fees, I am skeptical that cable operators will move to an antenna based system as a result so no significant loss of revenue.  I believe that as long as broadcasters use over the air to transmit, consumers should be allowed to lease antennas from Aereo or other to capture and stream programming.  If we can do it with a DVR why not with Aereo. 

Tuesday, April 22, 2014

Comcast Sees No Cord Cutting

While other cable operators have seen subscribers drop video service for OTT, Comcast seems to have bucked the trend.  For the second straight quarter, video subscriptions actually rose for the company.  "Comcast added 24,000 TV customers in the quarter to reach a total of 22.6 million."  In addition, Comcast added "383,000 broadband subscribers in the period to a total of 21.1 million."  They continue to defy analysts who expected cord cutting to take a bigger bite. 

Comcast has followed a differential strategy that continues to work.  Where cable operators have been separating their content companies from their platform companies (Time Warner Cable as an example), Comcast has embraced both content and distribution.  Its acquisition of NBCUniversal from General Electric has led to enormous gains as well.  They have proved that a content and distribution company can find synergies to work together.

Their planned acquisition of Time Warner Cable also demonstrates that size matters.  To offer best services, economies of scale and efficiencies come from size.  And a cable and broadband and content company, they seem to recognize that businesses change and adapt over time.  Like Apple's willingness to forgo iPod sales for iPhones, Comcast seems to understand that the cable world may change significantly and they must continue to readjust to meet the changing customer needs.  So far, it seems to be working well for them. 

Monday, April 21, 2014

Should Advertisers Pay More for C7 Ratings?

As more and more viewers get comfortable with their DVR, networks would love to extend the period of delayed viewing counting toward ratings from 3 days to 7.  The good news is that shows would show higher ratings based on how consumers are really watching these days; the bad news, advertisers would pay more for those added quantifiable eyeballs.  According to the TiVo research, some show ratings could increase more than 10%.

At the same time, advertisers might need to challenge how often viewers are using trick features like fast forward on their DVR boxes to pass through the commercials to get to the show.  In my household, DVR and on demand viewing, especially during prime time, happens more and more often.  And the remote is close by in trying to judge when to start and stop the fast forward button.  Sometimes, the first commercial and last commercial in the break are viewed in getting close to the show content.

C7 Ratings, used to judge popularity of a show is certainly important.  But in regard to raising advertising fees, some formula might be needed to ascertain the true value of delayed DVR viewing.  Still it is nice to see that the rise of DVR viewing is seen as more than just 3 days from initial linear airing of a show. 
Looking at 10 top primetime shows on the broadcast networks, TiVo Research found $88 million in additional revenue that could be captured by switching to C7 from C3. The ratings lift ranged from a low of 6.2% for CBS’ The Good Wife to 10.9% for ABC’s Modern Family. - See more at: http://www.multichannel.com/news/technology/change-c7-would-boost-ratings-revenue/373981#sthash.1IwCTEoc.dpuf
Looking at 10 top primetime shows on the broadcast networks, TiVo Research found $88 million in additional revenue that could be captured by switching to C7 from C3. The ratings lift ranged from a low of 6.2% for CBS’ The Good Wife to 10.9% for ABC’s Modern Family. - See more at: http://www.multichannel.com/news/technology/change-c7-would-boost-ratings-revenue/373981#sthash.1IwCTEoc.dpuf
Looking at 10 top primetime shows on the broadcast networks, TiVo Research found $88 million in additional revenue that could be captured by switching to C7 from C3. The ratings lift ranged from a low of 6.2% for CBS’ The Good Wife to 10.9% for ABC’s Modern Family. - See more at: http://www.multichannel.com/news/technology/change-c7-would-boost-ratings-revenue/373981#sthash.1IwCTEoc.dpuf
Looking at 10 top primetime shows on the broadcast networks, TiVo Research found $88 million in additional revenue that could be captured by switching to C7 from C3. The ratings lift ranged from a low of 6.2% for CBS’ The Good Wife to 10.9% for ABC’s Modern Family. - See more at: http://www.multichannel.com/news/technology/change-c7-would-boost-ratings-revenue/373981#sthash.1IwCTEoc.dpuf

Friday, April 18, 2014

Video Streaming Not Hurting TV Ad Revenue

While Netflix, Amazon Prime, Hulu, and others are capturing subscription revenue and watching usage surge, broadcast and cable networks continue to grow as well.  According to latest figures in the first quarter of this year, ad revenue was up over 21% from last year's first quarter.  That is pretty healthy ad growth considering all the worries of cord cutting and streaming video. 

In addition, syndication grew 11% for the quarter while local cable advertising rose 4%.  Exciting times ahead as big data helps to drive better targeting and hopefully higher ROIs.  It seems the pot is big enough for both digital and linear to continue to do well. 
for the quarter was up 21.2% from a year ago. March spending was up 18%. - See more at: http://www.multichannel.com/news/marketing/tv-ad-revenue-grew-21-q1-smi/373935#sthash.mmCjxbn8.dpuf
for the quarter was up 21.2% from a year ago. March spending was up 18%. - See more at: http://www.multichannel.com/news/marketing/tv-ad-revenue-grew-21-q1-smi/373935#sthash.mmCjxbn8.dpuf
for the quarter was up 21.2% from a year ago. March spending was up 18%. - See more at: http://www.multichannel.com/news/marketing/tv-ad-revenue-grew-21-q1-smi/373935#sthash.mmCjxbn8.dpuf
for the quarter was up 21.2% from a year ago. March spending was up 18%. - See more at: http://www.multichannel.com/news/marketing/tv-ad-revenue-grew-21-q1-smi/373935#sthash.mmCjxbn8.dpuf

Thursday, April 17, 2014

Yahoo Or Else

As CEO Marissa Mayer attempts to reinvent Yahoo, their greatest strength so far may be their investment in China's Alibaba, their challenge continues to be how to grow usage and consequently advertising.  The secret plan, uncovered by re/code, may be to convince Apple to make Yahoo the default search engine on its iPad and iPhone devices.  Certainly this will take some financial inducement.  And is there an ROI that justifies the expense.  Its just a shame that Yahoo hasn't done more to educate consumers on how easy it is to manually switch the search engine on these devices. It also makes me wonder if an Apple/Yahoo partnership could lead to more business ventures as well including original content and distribution. 

Wednesday, April 16, 2014

Dad, What's Dial Up Internet?

My son recently asked me about a book he read that said that the character couldn't use the phone because it was being used by the computer.  This struck him as both odd and funny.  And as I tried to explain what dial up internet was like, it took him some time to get the concept.  For him and so many others of that generation, the internet is an always on phenomenon.  The computer is always connected, the tablet, the smartphone, all instantly have access to the web.  That the phone must be connected to the computer makes no sense; it is connected independently allowing us to talk on the phone while we surf the web. 

The idea of having to tell the computer to dial in to your ISP to access mail still exists in some parts, but for the vast majority of us with a broadband connection, those days are long gone.  One must go and watch the 1998 movie, "You've Got Mail", a film now 16 years old, older than my son, to see the characters dial in to AOL, here the familiar buzz, and learn that they have indeed got mail. 

I remember fondly all those AOL cd-roms being available free of charge to get the software to download and start your trial membership.  Since then, the AOL business model has changed from subscription membership revenue to an ad supported one.  But those days were not so far ago.  How quickly we forget the changes that have happened in our connectivity.  We are now so connected that anytime our broadband access fails, we agitate as our webpages no longer refresh or connect to the video we seek to watch.  An always on internet connection has become as important as shelter, food, and clothing.  What's dial up - that has now become a history lesson. 

Tuesday, April 15, 2014

Broadcasters Are Asking...What If

What if Aereo wins its case in the Supreme Court?  Certainly both Aereo and the broadcasters are wondering what happens once the case is decided.  For Aereo, they have announced in the media that without a Supreme Court victory, their business model will cease to exist.  And broadcasters are considering their options as well should they be on the losing side of this argument.

 While it is hard to imagine that broadcasters would drop their over the air signal, networks could consider converting to a cable model.  Then Aereo would be unable to acquire an over the air feed to retransmit.  Broadcasters could also consider selling direct to consumers its own platform of linear and on demand programming via the web.   Today, all offer shows and clips streamed through their own website or through Hulu or both.  Lastly, its  possible that broadcasters will do nothing to alter their signal. 

Through cable agreements, some broadcasters offer an authenticated streaming linear feed of their line-up to customers.  Cable operators like Comcast might just continue to pay license fees for the simplicity of the delivery of the signal, but would push back hard should broadcasters attempt to sell a streaming model directly.  I find it doubtful that cable operators would put together their own antenna farm unless they could justify economically a real cost savings. 

If I were to predict an outcome it would be that Aereo wins its Supreme Court ruling.  Broadcasters continue to license their signal and a full authenticated TV Everywhere model to cable operators, and so broadcasters continue to use the over the air airwaves.  At the end of the day, if broadcasters can show that more consumers are watching their programming, via cable AND Aereo, then they will continue to increase their ad rates and generate more advertising revenue.

And one day, should cord cutting start to take a meaningful bite out of license fee revenue, broadcasters will revisit the cable model and consider transitioning away from the over the air signal and freeing up airwaves back to the FCC for other new opportunities. 


Monday, April 14, 2014

Everyone Wants To Be A TV Network

If only it were so easy to pick great TV show, all the networks would be winners.  NBC would never had lost its dominance with "Must See TV" on Thursday nights and shows like "Hello Larry" would have never made it on the air.  But the process of selecting scripts to become TV pilots and pilots to be picked up for series is much more a matter of art than science.  And unfortunately, most TV shows that I like and want to watch seem to quickly be cancelled. 

Competition for programming has increased and so has the number of outlets.  When it was just broadcast, only a limited number of shows could actually find time slots; with the rise of cable TV, number of  slots have increased and the audience started to fragment.  But it also allowed some edgier programming to slip through and find a significant audience.  Shows like HBO's "The Sopranos" and AMC's "Breaking Bad"  were discovered and loved.  But with the size of the pot, or number of cable networks ever growing, audience size per network kept fragmenting.  Some networks have grown their ratings, many have not.  And broadcast continues to see eroding share. 

The savior for some programming has been technology.  From DVDs to DVRs to on-demand, viewers could watch shows whenever they wanted.  Two shows competing in the same time slot meant little when both could be seen hours or days later.  And now with the growth of streaming media, viewers can catch up with subscriptions to Hulu or Netflix. 

Not being content with licensing previously created shows, streaming media has now entered the original content game.  Netflix has found success with "House of Cards" and Amazon with shows like "Alpha House".  Today we learn that Yahoo also wants to enter the picture with long form TV content.  But with more platforms to choose from, the audience continues to fragment further. Capturing a meaningful audience size gets more and more difficult. 

The winner in all this is the viewer who now can choose from almost an infinite number of choices.  The challenge is in discovering which of the long form content is worth spending time with and which to ignore.  Where to find it and how to retrieve it become our goals; discoverability and search.  And how can you identify which shows are good and which are dogs?  With a couple of networks airing linear programming, measurement was easier to achieve.  Now it may be harder to compare, broadcast vs cable vs on demand vs streaming.  An ever increasing number of networks and platforms offering an ever increasing amount of original TV shows to an audience trying to find the best stuff.

Which brings me back to picking the best content to create.  As broadcasters have been well aware, it is not easy to pick the winners.  HBO could have picked "Mad Men" but declined it; AMC thought differently.  Making such decisions is a bit of an art and some luck.  And as the article in today's NY Times suggests, its a gamble.  But Yahoo smells advertising dollars from streaming long form content.  And if they pick right, they see financial rewards.  That is, if the audience can discover it, like it, and want to keep watching it.  Ask the broadcast and cable networks, it isn't easy.

Friday, April 11, 2014

How Much Would You Spend On A Smart Watch?

Wearable technology, like the potential of the Apple iWatch, the Samsung Galaxy Gear, the Pebble, Fitbit, Google Glasses, and more, has both the consumer market and the financial market on edge.  It is the next big thing and its development while nascent is expected to explode. 

With Apple, many expect that when they finally release their iWatch, its stock price will explode.  But given that a "stupid watch", can be had for under 10 bucks, what would you spend for a smart watch?  Samsung has priced its Galaxy Gear for around $300 while the Pebble can be found for a little more than $200.  Google Glasses, although not a watch, is expected to cost $1,500.  And according to today's news, an Apple iWatch could go for over $1000.  Other models could cost less, according to the NY Post article, but how much less to justify upgrading to the luxury model.

For early adopters, price will not be an issue for any of these devices.  But to get to scale, these prices will definitely go down. Ultimately, consumers will have to see the value that the device brings to justify buying these wearable technologies.  And if that demand can be generated, these devices will all become winners.