Wednesday, July 1, 2015

Apple Watch Is Part Of A Marathon Not A Sprint

The recent article in Business Insider headlines a weak demand for the first generation Apple Watch.  But like any first generation product, it first attracts an early adopter before the masses descend.  And the masses must see the price-value to take the next step and purchase the product.  With every generation improvement in hardware and software, demand increases and sales grow.  Apple has seen this across their product lines.  The Apple Watch is no exception.

I did not buy an Apple Watch but I expect that it will be a future purchase in a generation or two.  As it delivers more functionality, improves battery life, and demonstrates a need to own, the Apple Watch will gain more customers.  As one analyst states, "Even if the watch is a flop, it doesn't matter. The iPhone is killing it for Apple, and that's how the company makes money. Any sales of the watch are a nice bonus.  It's possible the watch just isn't going to be a major product, at least not right away. It may take years of refinement before it really breaks out."  I believe that the latter is a more likely outcome.

While the meat of Apple is their iPhone product, the connectivity that they create across all their product lines is what turns a consumer into an Apple household.  The iPhone plays best with an iMac, an iPad, and even the iPod.  The connective tissue remains iTunes and the iCloud, syncing and sharing content across devices.  Phone calls, iMessages, photos, music, videos, calendar info, etc.; you name it, they share it.  The Apple Watch is just one more connection to the fiber of the household.

As to what is next for Apple, the release of Apple Music is step one of another revenue stream of music subscription services.  A new Apple TV box would mean the next opportunity for a video streaming service.  And of course new generations and new sizes of the iPhone and iPad.  And when we look back at the Apple Watch product line in 5 years, we may not even recognize what it has become.  There was once a time when a computer was seen as simply a better typewriter in the home.  Not anymore. 

Tuesday, June 30, 2015

Apple Should Expand Its Streaming Business

The big news on Apple the last couple of weeks was the Taylor Swift fiasco that turned quickly into a marketing bonanza.  From chastising Apple on refusing to pay artists during their three month free preview to gaining her content on the Apple Music Service.  Not on Spotify or Pandora, Swift agreed to stream her music with Apple.  And Apple's introduction into the monthly music streaming business will provide them with another ongoing revenue stream, month after month after month. 

Apple will get a taste of what the cable industry has enjoyed for years, a regular, measurable, monthly stream of revenue.  And I believe that once Apple starts to see the trickle of dollars explode into a sustainable business, they will start to expand this corner of the business.  That means that Apple TV will be released with an OTT line-up of video content to compete against other video subscription services.  Of course, if Apple chooses, they have the free cash to just buy an existing business.  Should Apple start pursuing Netflix or Hulu? Perhaps partner with Sony to grow their Playstation Vue service or with Dish and their Sling TV subscription service?  Or as it may appear, simply build a video OTT subscription service from scratch. 

The allure of subscription revenue is surpassing purchase and download.  Consumers seem to like the connect and access model for receiving content.  And as more consumers access mobile to connect, the cellular companies especially enjoy watching data plan usage soar and revenues rise.  And as consumers, we pay twice, once for our monthly subscription and second to pay for more data usage.

Friday, June 26, 2015

Approval Expected For AT&T - DirecTv Merger

According to reports, the FCC will be approving the merger of AT&T and DirecTv sometime next week. While it has been more than a year since its announcement, the need for the FCC to first address the Comcast bid for Time Warner Cable likely was a factor in moving forward with this acquisition.  Still, little seems to be in the way for a new AT&T/DirecTv to begin.

Certainly next on the FCC plate is Charter's bid for Time Warner Cable.  Unlike the issues surrounding Comcast, the FCC is also likely to approve this deal, too.  Many don't expect final approval for Charter and TWC till year end if not early 2016.  Once completed, the big three of Comcast, Charter, and AT&T will dominate the cable distribution industry.  And then we can watch to see what happens to Dish Network, Cablevision, Cox, FIOS, and the other players.

Thursday, June 25, 2015

Video Delivery Verse Viewership

Sometimes it feels like we spend too much time looking at the trees but missing the forest.  I share this trite observation as it applies to cable operators in their desire to stop cord cutting, the act of subscribers dropping their cable subscriptions for OTT content.  With notable shows on platforms like Netflix and Amazon Prime,  Hulu, Crackle, and other digital sites, cable operators watch with disdain as its viewership erodes. 

Truth is, there is nothing unusual with these trends; they follow the desires of the consumer and the companies that innovate and change to get in front of them.  And while TV sets got bigger and sharper, some tried 3D, others 4K, the consumer preference changed to smaller, more personal, handheld screens on tablets and smartphones.  This is the current future of how many are watching video content today.  And this is their choice.  Cable operators have remained more locked behind their set top boxes and tethered to wires that run around the home.  And because of the license deals that they signed, they are limited on what they can push out to subscribers on wireless outside the home.  As we have become more mobile, cable operators remain fixed.

Its not that viewers aren't watching TV shows or movies.  They are watching shows that once appeared on television and others originally created for OTT platforms.  Want to see Seinfeld as it first aired without being cut down for syndication, go to Hulu.  Ready to watch the third season of the original series Orange is the New Black, go to Netflix.  The screen may be smaller or it may not; now the consumer has more choice.  They now decide what device best suits their viewership needs, an iPhone or iPad, Roku, Chromecast or any other device can allow viewers to choose where, how and when they want to watch.  "It's Not Linear, It's Whenever", could now be HBO's new slogan.  With HBO Go and HBO Now, a consumer can access content as an authenticated cable subscriber or simply as an online monthly subscription.  And some cable networks are following along, creating streaming channels of their own to drive viewership and hopefully revenues. 

Content companies are winning because they now have more platforms to sell their programs to.  Can't get a good syndication deal, sell it to OTT.  Cable operators have been slow to get true TV Everywhere for its subscribers.  And it may get harder for them as content companies love having different platforms to negotiate with.  But those costs can only rise to purchase license fee rights to both cable and streaming platforms.  And then those costs will likely be passed through to the consumer. 

Here is what I want.  As a cable customer, I want to access the cable guide on my iPad, see what is available on channels and on demand quickly and easily, and watch on that same iPad the show I picked, regardless of where I am sitting, in the home or on the beach or in another city.  I want to decide if I want to push that content to a larger TV screen in my home instead.  And I want to do it now.  I want control, I want choice, and I want flexibility.  No set top box tree and branch searching for me, no tethering to a location; I want mobility, unlimited access, ergonomic search, with a quality picture and fast and easy functionality.  The content is the content, how you deliver it to us matters more. 

Wednesday, June 24, 2015

TV Land Not Classic TV Anymore

The transformation may be complete, the plastic surgery done.  With a new logo and brand identity, TV Land now looks like every other cable network.  As cable networks keep trying to chase after the key demographic of 18 - 34, they create a glut of sameness that has changed the cable landscape greatly. 

There once was a time where cable networks each tried to find their niche genre and core audience.  From classic TV sitcom channel like the original TV Land where shows like Dick Van Dyke and I Love Lucy and others were staples to Game Show Network (today GSN) that showed old black and white and early color game shows like I've Got A Secret and Match Game.  We had niches too for high culture television (Bravo), classic B&W movies (American Movie Classics), art oriented programming (Arts & Entertainment) and more.  And the message that the cable industry brought to the masses was that it was a sum of the parts that brought something for everyone across its slew of programming choices.  Today, all these networks look more and more alike.  By going for ratings and the same audience, the differentiation has disappeared.  Yes, they may find original series that strike interest in a large fan base but by and large those shows could be identified with any number of cable networks today. 

As for TV Land, the notion that classic TV deserves a channel is over.  Its next likely location is streaming.  Already classic series like Friends can be found on Netflix or Seinfeld on Hulu.  As for linear television, its now focused on finding younger skewing original shows.  The past is the past, all focus on building meaningful audience share.

Tuesday, June 23, 2015

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.

Friday, June 19, 2015

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.

Friday, June 12, 2015

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. 

Thursday, June 4, 2015

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.