Archive for November, 2010

Big scissors

Following up my cord-cutting article from a few weeks ago, I picked up some staggering evidence that we are witnessing a seriously disruptive trend for cable companies.  At the same time, these stats provide sunny evidence for online video sites.  Check out these tidbits:

Losing subscribers

According SNL Kagen’s recent analysis:

The US multichannel market fell by 216,000 subs in Q2 2010 and again was down 119,000 subs in Q3 2010.  This represents the single largest dip for cable subs since 1980!

Customer behaviors are shifting

In a study of 800 customers (ok, it’s not a HUGE group surveyed but I think is decent directional data):

39% watch TV online or on a handheld device at least once a week; 25% watch TV online or on a handheld device at least once a day

And obviously the next generation of viewers is shifting

37% of 18-34 year olds watch TV on an alternative platform; 44% of 15-17 year olds do the same

More time is being spent watching video online

175 million US Internet users watched online video content in October for an average of 15.1 hours while US Internet audience engaged in 5.4 billion video sessions

And advertising is following

There were close to 4.6 billion ads viewed in October…

1.1 billion video ad impressions at viewed at Hulu (that’s 37 million per DAY), 533 million through Tremor Media Video Network, 435 million through ADAP.TV (a video ad network), 374 million through BrightRoll Video Network.

Those are some pretty big numbers…And to put things in perspective, another article talked about TV’s effectiveness at pulling an audience together and cited Super Bowl 2010 with 121 million viewers at its peak.  Indeed, TV still rules for pulling together a one day audience, but Hulu and the others sustain some massive audiences.

This all adds up to some bleak news for cable companies.  But I’m thrilled with the abundance of choice out there that’s damn near free.

So for now, where are those scissors?

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No more Keychest

Fresh news from over my long weekend that relates to my previous post: Disney’s Keychest is “being subsumed by a larger plan.” Thanks, paidContent.org and Andrew Wallenstein, for the coverage!

It seems that Keychest will no longer be competing with Ultraviolet, and my earlier concerns of the formation of competing format islands is less likely to happen. According to Bob Chapek, President of Distribution at Walt Disney Studios, the hard work that was done with Keychest will become “the engine for [Disney] to harness the power of multiple Disney utilities into one ecosystem.” I’m not really sure what that means, but I look forward to hearing more about Disney Studio All Access to reinforce my (and your) desire to buy Disney products.

When this is all said and done, I think this is good news for you and me. It means that while UltraViolet and its United Nations-like workflow of reaching agreement still has a long way to go to making something happen, you and I will benefit from less clutter in the marketplace. While Disney nor Apple have not joined Ultraviolet, at least this story closer to having a happy ending for us.

It’s all supposed to be magic

My relationship is strained

My newly professed love affair with my AppleTV is seriously on the rocks.   And worse, my previously loving customer relationship with Apple has shown some serious signs of getting stale.

It started with my AppleTV.  As I wrote in my cord-cutting blog, the set-up and first few days of enjoying the freedom of streaming unlimited content from Netflix was just awesome.  Having all that content waiting to devour was such a wonderful prospect.  With my iPhone remote control app controlling the experience, I was totally stoked. It was magical.

I overlooked the fact that AppleTV only has the latest ports to connect to the latest stereo and TVs, because I was able to work around my port problem by using my old AppleTV.  No worries, I thought, I’ll buy a new stereo later.

Is it coincidence?

Within a week of watching a few National Geographic programs and lots (and I mean lots) of Spiderman, Thomas the Train and Care Bears and (omfg) Hello Kitty, my old Apple G5 mysteriously crapped out.  I suspected something was going on, but didn’t think anything was related.  It turns out my logic board was fried, and I needed a new machine.

Cool, I rationalized, because I wanted to buy a slick new iMac anyways.  I had ordered my new iMac within two days and now I’m gleefully working on a new 27” iMac that is seriously making me a more complete, better human being.  Never mind that I had to buy a whole set of new Firewire cables to connect my “old” external hard drives.  Never mind I had to buy a Firewire hub because my new iMac only has one Firewire port.

From $99 to $2000+

But then, things started to go horribly wrong. I started becoming suspicious about my love affair with Apple.  Why did my old machine crap out?  Hmmm, it had to be powered on in order to stream music and photos to my new Apple TV.  Did that ultimately create the final strain on my G5 that caused it to flame out?  Is there something darker at work here?  Did a $99 purchase lead to a $2,000 iMac?

And then, my Apple TV started revolting.  I now get an intermittent Error 112 or Error 111.  Guess what.  There’s nada at Netflix on this error.  Zero.  I searched for solutions on chat boards and found some pretty pissed off people.  The best fix I’ve seen so far is either to re-boot or set to a Google DNS.

Wait a minute.  Re-boot?  That’s Windows language.  We don’t do that in Apple-world.  Set to a Google DNS? I’ve got blogs to write.  Worse yet, when I can get my AppleTV working, the stream hangs and I get the dreaded wheelie.  Well, the hang up is caused by “over utilized” broadband network in my neighborhood….

Return of frustration

This all adds up to my kids being annoyed with me, my friends strangely celebrating my frustration, my wife rolling her eyes and my discontentment with this whole consumer experience.

And I’m back to being frustrated at how hard all this stuff is to do and the fact my friends are going to be calling me again for help.  When things are lined up perfectly – such as the right broadband speed, the right equipment, the right DNS, the right content and the list goes on – it’s all magical and mind-blowingly cool.  But getting to this perfectly aligned technology nirvana state takes some serious effort, patience and well, cash that I should probably save for my kids’ orthodontists.

When is the stuff going to be truly easy?  And when will device manufacturers like Apple stop playing games with customers? Is there hope that the industry will respond?  When will it be safe to love again?

Rentership beats ownership

There has been lots of recent buzz in the press about Redbox announcing its digital service in 2011. Today, Wal-Mart announced that it is (finally) doing something with its $100 million acquisition of Vudu. These announcements got me to thinking about the not-so-subtle shift  from Ownership to Rentership and my personal conflict of what this is doing to the entertainment industry.

Redbox and Wal-Mart are up to something

As way of background, Redbox insinuated that it would add a Web-based rental service to its network of DVD kiosks next year.  This means if the Coinstar-owned company is going to deliver on its promise, Netflix may have a competitor sometime in 2011.

Wal-Mart announced with that Toy Story 3, customers will receive a download code that they can use on their nearest Vudu player to stream the movie at any time without the disc involved.  Does this signal that Wal-Mart is finally getting into action in digital? Maybe Wal-Mart will do something else with Vudu, like team up with Redbox.

These movements tell me that big players are laying the groundwork to help me rent more content than ever before.

From Ownership to Rentership

A great article in Wired talks about how we are slowly moving away from an Ownership Society of the American dream of owning stuff like houses, cars and collections of CDs and DVDs.  Instead, we are moving to more practical Rentership Society where we can enjoy unlimited choice that comes without the cost burden of owning stuff.  For those of you who have thrown a ton of cash into a kitchen remodel only to find out that you break even on the sale of a house, you understand.

While I’m holding on to my house and not moving into a rental down the street, my personal shift from Ownership to Rentership is really clear in how I consume media.  I no longer faithfully go to Best Buy every Tuesday to get the latest.  I now wait a bit, sample stuff from iTunes or Grooveshark or Last.fm or Pandora and then, maybe I buy it.  Instead of buying the DVD, I rent it from Netflix.  And NOW, as I recently wrote, I am increasingly viewing stuff through Neflix my AppleTV.

What about entertainment?

But wait a minute.  I am conflicted.  I am a happy consumer, but what does this do to the entertainment business?  With labels (and just forget about artists) making fractions of pennies for each stream, subscription service revenues don’t really amount to a hill of beans. With this trend, artists will have to work a helluva lot harder to perform their music live and make money.  With more than 50% of a studio’s revenue coming from selling movies and TV, well, let’s just say that renting does not make them much money either.  At this rate, studios stop making movies.  Scary stuff.

So what’s the entertainment industry doing about it?  Lots of companies have invested in consortia like UltraViolet and Keychest to answer these questions, but what are they thinking in terms of rental?  I am skeptical of industry groups doing anything in the best interest of the customer.  Afterall, content owners just want to protect their bottom line. The entertainment industry needs to remember:

Everything, everywhere, all the time. That’s the dream of the Rentership Society. And we’re almost there. If you want to be able to possess some things, in some places, some of the time, well, keep on buying. But I vote for infinite abundance, on demand. Doesn’t that sound like the new century’s American dream? – From Wired’s Abandon Ownership!

Are you moving from ownership to rentership?  What does it mean for the industry?

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