Apple TV - 5 Reasons Why It Will Crush the Competition

Interesting article giving 5 reasons why Apple TV will crush the competition.

Three quibbles about the article:

1. I think Apple will actually have two products - an Apple TV set top box to be used as a legacy STB replacement for MSO's and other service providers and also an Apple iTV.

2. This iTV product won't crush the competition because there really won't be any. It will be a product unto itself just as the iPhone was when first released. It will be both a TV and computer monitor with built in apps like Siri and other Cuppertino goodies.

3. Still think that videoconferencing will be a killer app for the iTV. This will give Apple entree into the business VTC marketplace which will also allow it to take share in a multi-billion market.

Apple's TV Plans

Brightcove's CEO Jeremy Allaire predicted that Apple will make both a set top box and a TV. Big whoop - I predicted that months ago.

In addition to making my prediction I also explained why that strategy is genius for Apple. Everyone connected to the industry knows that there are billions of dollars worth of legacy MPEG2 set top boxes that would be ripe for upgrading. An Apple TV STB product could help accomplish that with the added bonus that the subscriber may actually pay for the box on their own.

It is the TV, however, that could be the real game-changer. When's the last time you thought of your PC monitor? An Apple TV could be a combination TV / computer monitor and videoconferencing unit. If the product could just grab 10-20% of the markets in those segments then you're talking a product that would be as revolutionary as the iPhone.

An Apple TV would give people reason and incentive to upgrade their TV's at home and their monitors at work. Pure genius.

Verizon Fios to Stream NFL Network

Interesting development - Verizon Fios has signed an agreement that allows them to stream both the NFL Network and NFL RedZone channels.

My initial thought upon reading the news was that this is just another sign of a growing digital divide in this country. Verizon Fios has pretty much frozen where they will be deployed and the same can be said of most of the major cable operators. So this announcement is just a reminder to most of rural America that there are services out there that they don't have access to because they don't fall into the right "footprint."

Even the people who live in areas with independent FTTH operators probably would not have access to services like the TV Anywhere NFL Network from Verizon Fios because the authentication process today is just so expensive.

I guess people could still use the new Slingbox units that can stream to smart phones and tablets but that's not just the same.

Sports Programming

Very interesting development - DirecTV to start charging customers with multiple regional sports networks (RSN's) a $3 charge.

Nobody argues that sports programming pricing is going through the roof but this news makes me think the following:

1. The logical thing would to be to move the sports programming to an expanded tier. I have Charter cable at home and the NFL Network is in the expanded tier but the MLB Network is in basic. Moving the sports channels to expanded would allow only the people who want sports to be paying for them. People like the RSN's, ESPN and others would fight this tooth and nail. They enjoy being is the most popular tiers because it makes them the most money.
2. The move by DirecTV is a little hypocritical when you think of how much they are paying for the NFL rights and the fact that many people subscribed to DirecTV just for NFL games.
3. This move could be interpreted as another step towards a la carte programming. I think if you gave sports content channel owners the choice between a la carte and having their channels on an inclusive expanded tier (sports, women's programming, etc.) - then the content owners would choose the expanded tier. We could therefor start to see some movement by the content owners regarding "must carry" requirements and tier placement as new agreements are reached with the major cable operators. The price expansion simply just can't go on like this.

Bad Connections

The New York Times recently had an interesting op-ed piece by David Cay Johnson about the dangers of an ATT and Verizon duopoly.

I would make a few comments about the article:

1. Part of the reason a triple-play bill is so high in the US is due to very high content costs. That's a much bigger component that Internet data or voice services. That should be noted.
2. It is true that both Verizon Fios and ATT U-Verse won't be doing much expansion in the coming years and it is also true that copper based POTS (plain old telephone service) could be endangered in rural or less populated areas. It should be noted that this could actually be a blessing in disguise. Municipalities, smaller more nimble telephone companies and electrical cooperative could easily step in and start providing the FTTH services that Verizon and ATT will walk away from. These opportunities could be the real growth areas in the coming years - much more than what Verizon or ATT will accomplish.

Worth saying.

Google Selling Motorola STB Business

The Wall Street Journal has reported that Google is accepting bids for their Motorola STB (set top box) business unit.

This is not surprising to anyone who has been paying attention. When Google Fiber decided to use another product rather than the in-house Motorola STB for their Kansas City deployment - the writing was on the wall.

Netflix Signs Deal to Stream Disney Movies

Netflix has signed a deal to stream Disney movies.

First let me say that I was amused by the headline writer for that article calling it a "blockbuster" deal. I wonder if the pun was intended. The deal allows Netflix to stream older movies immediately, direct to video movies starting next year and their first run movies months after release starting in 2016.

The analysis of the deal in the article was lacking though. The reason Wall Street likes this deal is because Carl Icahn's investment has put Netflix into play and this deal with Disney adds value to any potential suitor. How hard is that to understand?

Why Some Content Packages Will Fall Apart

Today most content providers bundle their channels together and you have to take them all. As this article points out - that has to end because the prices are out of hand.

One important factor that the article does not point out is the fact that today's middleware and OSS/BSS systems can tell operators exactly how many people are watching particular channels, when they are watching and for how long. They don't have to rely on Neilson ratings or any other factors. They can also use those eye-ball reports to compare channels against similarly viewed channels to see if things are over-priced.

If a channel that costs $.20 per sub is getting the same viewership as another channel that costs $.10 - how do you justify paying that $.20 in a new contract?

DVR's In US Homes

A new study says that DVR's are in 52% of the homes that have pay TV in the US. I remember that it was just a few years ago when the number of homes with outhouses in US outnumbered the homes with TiVo (literally - that was an actual stat that stuck in my head).

The real interesting stat to me though was that DVR viewing only made up 8% of TV viewing in the US. That's a number that will explode in the next few years and something that must have TV networks and advertisers worried. Very worried.

Watching MNF on an iPhone

Peter Kafka had an interesting article about not being able to watch Monday Night Football at his home with his iPhone. I had a couple thoughts and comments about his dilemma which I'm sure is shared by many.

First - being able to watch something on your iPad but not on your iPhone while using your home WiFi is probably an encryption / conditional access / DRM issue. The cable company with any sort of TV Everywhere probably treats your PC, laptop or tablet device the same as a set top box. A cell device is probably a little more tricky.

Second - since it was the Watch ESPN app which should have allowed mobile devices like the iPhone - I have to wonder who Peter had his cell service with. If Verizon has an exclusive on NFL mobile rights then that may extend to the handset. I doubt this is the case but it was the first thing that popped into my head. Maybe iPhones are the exception to cross carrier availability?

Anyway - my two cents on the matter.

Apple's Stealth Video Conferencing Strategy

Last week it was announced by an analyst from Piper Jaffrey that Apple plans to release its long awaited Apple iTV product sometime around next November. The new product - not to be confused with the existing Apple TV set top box "hobby" - is expected to come in either 47 or 55-inch screen models. What really interested me was the "news" that the devices would also include both Siri voice controls and FaceTime video conferencing. The units are supposedly going to be priced between $1,200 to $2,000.

If Apple really does this then what they will essentially be releasing is a single codec telepresence unit with unmatched video clarity and some pretty cool features. Can you imagine how cool it would be to use Siri for call set-up and completion? "Siri - call Chris Lynch at the Boston office." Boom - call done. And if no answer there could be a follow-me aspect that would them to ring my cell phone (which Apple probably hopes is an iPhone - maybe exclusive features for that).

There could be some interoperability issues to work out but the VTC market is mature enough so that shouldn't be an issue. The 2011 market for single codec telepresence units was about $1 billion but that was just for new units many going into legacy networks. An Apple product like described above could prompt people to do massive upgrades or put these Apple iTV units into places these units normally don't go. A unit only costing $1,200-2,000 would be peanuts for most businesses - especially when the device can double as a person's PC screen in a small office.

Re-making the videoconferencing market may be the actual goal of the Apple iTV product. Brilliant if it is.

Carl Ichan and Netflix

Looks like Carl Ichan is convinced that Netflix is in play. Ichan converted his options into actual stock - a move that will allow him to better leverage his just under 10% stake in the company in any proxy battles.

The article mentions Amazon, Microsoft and Verizon as potential suitors. I've said it before that of those three Verizon makes the most sense since they are trying to build a Netflix-light with their Redbox Instant venture as it is. Why not spend $4 billion for the real thing?

I would also mention a company like Level 3 as a potential suitor. Reed Hastings the CEO wants to keep Netflix independent. A Level 3 ownership could allow Netflix to be a wholly-owned subsidiary and at the same time give Hastings that independence as long as he uses Level 3 pipes.

It looks to me that Ichan's strategy is to force Hastings to find a suitor of his liking to prevent a takeover being forced upon him. Either way Ichan will win. Either way - Netflix is in play.

Differentiating OTT

I've been meaning to comment on this article about OTT Models for a few days. I've been meaning to comment on it because the basic premise behind the article is wrong - and it seems to be very common mistake people make when describing OTT (over the top) video.

The article seems to assume the models for connected CE and mobile devices are the same. THEY ARE NOT!

A company like Charter may want to have strategic partnerships with Microsoft for their XBox and Apple for Apple TV because those devices could be used to replace existing set top boxes while adding value to the subscriber experience. And if the customer is the one replacing the STB with their own box - even better. In that case Charter saves on both capex and opex costs adding directly to the bottom line. In this case OTT for connected CE makes perfect sense but what about OTT for mobile devices?

If the mobile device is set up as the equivalent of a set top box within the home then yes - it would make sense. In this case Charter would have the added expense of a conditional access / DRM  license for the iPad, tablet or other mobile device but once again they would be eliminating the support of additional set top boxes while at the same time improving the user experience.

But what of a model that calls for a company like Charter to support mobile devices outside the home? How does that model make any sense for Charter? They would not be gaining any advertising revenue from additional eyeballs as that revenue would be going to the content owners. Sure there might be some local ad insertion type opportunity but that depends on whether the content providers would give up enough local avail opportunities to make the costs of authentication worth the while. And if the mobile device is used outside the home then chances are the subscriber would be using someone else's broadband connection to view it. How would that help a company like Charter? It wouldn't!

The models for OTT for a connected CE and mobile devices are two very different things. Very different things.

The NFL and Time Warner's Subscriber Losses

OK - this may be a question that only interests me but I wonder how many of the 140,000 subscribers who dropped Time Warner cable in Q3 did so because of the NFL?

Time Warner was the last major operator to add the NFL Network and didn't add the channel until after the start of the NFL season. The negotiations were contentious and it was never clear that Time Warner was going to give in. The loss of the 140,000 subscribers in Q3 has been blamed mostly on "cord-cutters" but a person who dropped Time Warner for DirecTV (and their NFL Sunday Ticket) or Dish Network would look the same on paper (drop video but keep high speed Internet).

So the question remains - how many subscribers did Time Warner's hardball negotiations with the NFL Network cost them?

Why Netflix Might Be an Attractive Target

Very interesting report that Netflix now accounts for 33% of the residential downstream peak traffic in North America. Nobody else is even close.

I speculated that one of the reasons that Verizon may have started the joint venture with Redbox was to insure that whenever possible the Redbox Instant traffic would be traveling on Verizon pipes. What would 33% of the peak residential traffic in North America be worth to Verizon? Would wrapping up that traffic and the revenue that it entails be worth a little north of $4 billion (what it would probably take to buy Netflix)?

I've seen a lot of articles talking about who would be interested in actually buying Netflix and all of them name the same usual suspects - Amazon, Verizon, Google, AT&T but I think there could be others for whom the purchase might make more sense.

Think of a company like Level 3 Communications. They could buy Neflix and tell Reed Hastings to just keep running the company as he has done with one little stipulation - all traffic on Level 3 pipes whenever possible. In turn Level 3 could increase Netflix's profitability just by making network usage more efficient.

Or think of a company like Akamai. They could also drive profits by making Netflix's network usage more efficient while at the same time using Netflix's traffic to get better deals for existing CDN business. It would be a very bold move by Akamai but it very well could be worth it.

If Netflix does get purchased - I'm guessing it won't be by one of the usual suspects (except maybe Verizon).

Cord-Cutting on Rise at Time Warner

Interesting look at how Time Warner has lost 140,000 residential video customers during the third quarter this year.

What the article doesn't tell you is that even though TW lost those 140,000 subscribers - profits are up in part because they increased the number of residential high speed Internet customers by 8%. People who cut the cord still need a good Internet connection to view Netflix, Hulu and the rest of the over the top content providers.

The real losers from TW losing 140,000 residential video customers are the content providers. That dip in TW subscribers should cost Disney (ABC, ESPN, etc.) well over $1 million a month just in Affiliate Rights fees never mind lost advertising revenue. If this becomes a trend then content companies may start rethinking a la carte pricing as a way to get back some of the cord cutters.

What Next for Netflix?

Very interesting article looking at Carl Icahn's investment in Netflix. Seems like a smart investment for Icahn as just his involvement has generated buzz that Netflix may be in play and as the article points out - since he owns less than 10% of the company - he can get out at any time. The Netflix stock has increased roughly $10 just in the few days since the announcement of Icahn's investment in the company.

There could be a number of companies that would be interested in swallowing Netflix. Some have mentioned either Amazon or Verizon and I would add Google to that list. But it is Verizon that most interests me.

Verizon has a partnership with Redbox (a Coinstar company) to launch Redbox Instant later this year or Q1 2013. If Verizon were to buy Netflix then they could both gain the lion's share of the movie streaming business and maximize the value of their content agreement obligations which represent the biggest liabilities for companies like Netflix and Redbox. If Verizon does not go after Netflix and someone else does - it will be interesting to see if the purchase price for Netflix is more or less than what Verizon invested in the Redbox joint venture. If it ends up less - then that could be a sign that Verizon did not properly gauge the market for their new venture.

What Was Steve Jobs' Vision of the Future of TV?

Interesting look at Apple and what Steve Jobs may have in mind for Apple TV.

I still say that the idea of Apple replacing set top boxes for the major MSO's is an idea that is vastly under-rated. Time Warner Cable alone probably has 40 million STB's. They would be very glad to help subsidize customers switching out their existing gear for Apple TV boxes. Apple would get a tremendous boost in revenue, Time Warner would increase profits by greatly lowering operating costs and the customers would get shiny new Apple TV boxes with features their existing legacy STB's can't come close to offering.

Why wouldn't everyone involved go for a scenario like this?

Aereo Now Supports All Major Browsers.

Aereo has announced that they have expanded their support from just Apple and Roku to pretty much all major browser platforms.

The browser platforms added include Firefox (11.0 or higher), Chrome, Safari (5.0 or higher), Opera (12.0 or higher) and Internet Explorer (9 or higher). So unless you are still using a Radio Shack TRS 80 - you should be all set.

If I lived in New York City I'd try the service. For $12 a month its worth a try.

Do You Have the Game?

When I was a kid - boxing was at perhaps its heyday. Marvin Hagler, Tommy Hearns, Roberto Duran, Sugar Ray Leonard, and Mike Tyson. It seemed there was always a big fight but the problem was where to watch it. This was the end of the closed circuit TV era and beginning of the PPV (pay per view) era. Some bars legitimately paid for the signal and charged an entrance fee to make up for the hefty fee. Other bars had a "hot box" and received the signal illegally.

Guess where I watched many of these fights.

Today bars, restaurants, hotel common areas and other places are supposed to pay commercial rates based upon formulas that make string theory algorithms look like child's play. For that reason and because its not a whole lot of money in this bundled channel package world - having cable in these places at the same rates as a residential customer is not really a big deal.

One of the unintended consequences of a la carte TV may be to completely change this.

If Disney can no longer bundle all the ESPN channels together to get a hefty rights package fee then they may need to find other avenues to recoup the costs of buying rights to things like the NFL's Monday Night Football. One of those avenues may be to go after some of these bars and other places that are paying residential rates when they should be paying commercial rates based upon bulk rate pricing and fire code seating and a bunch of other variables.

We could wind up in a world where bars have to charge $7 for a draft beer to cover their TV costs. Or, conversely, we may end up in a world where the bar avoids these rights fees by simply offering free WiFi and people watch what they want on iPads or other tablet-type devices. We may even have scenarios where one person uses a Slingbox to get their signal from home and the bar shows it on a "group projection device" (don't call it a hot box).

Not  saying this is what is going to happen. Just saying it is possible.

Amazon versus Apple Business Plans

Yesterday there was a BBC article on Kindle Fire HD and Paperwhite making no profits for Amazon.

Basically the Amazon model is to sell the hardware at cost so they can make their profits on the content. This seems to be the exact opposite model from Apple who makes great profits from their device sales and, according to the article, runs the popular iTunes "slightly above" break even.

I immediately wondered what impact these two models would have for IPTV. 

Apple seems to be positioning its Apple TV as a replacement for major MSO legacy set top boxes. That could prove to be a brilliant strategy. There are tens of millions of legacy MPEG2 STB's out there. How great would it be if customers voluntarily upgraded their own STB's by purchasing $99 Apple TV boxes on their own? Apple would get the hardware sales, the MSO's would keep their subscribers while being able to offer new services and the customer would own their STB. 

Amazon's model? In terms of IPTV their offering would seem to appeal mainly to cord-cutters. Whereas if Apple isn't making much off the content they they can position themselves as not being in competition with the big cable companies (if they just support the Apple TV STB). Apple's business plan seems to make more sense.

A Bad Argument Against A La Carte

Joe Flint tries to pass off analyst Todd Juenger's argument that cable prices really aren't that bad and that a la carte won't work. The reasoning on both counts is servery flawed.

The article starts off with a graph showing the price increases of various items from movie tickets to cups of coffee. The idea is to show that in comparison the recent increases in the price for cable TV is more than reasonable. The problem is all of the items listed (with the possible exception of health care) are voluntary purchases. If I think the price of Dunkin Donuts coffee is getting too expensive then I can go to McDonald's for their $1 large coffee. If I buy a cigar - the tobacco industry doesn't tell me I also have to purchase a pack of cigarettes and some nicorette gum as part of the package. Yet that's what cable TV does. You want ESPN - then you have to get at least 3 other channels along with that.

Then the example of if Nickelodeon was an a la carte option then viewers may have to say goodbye to shows like Dora the Explorer or SpongeBob  SquarePants is used. Not sure if two worse examples of the effects of a la carte could have been chosen. Both shows are cartoons with low production costs and both shows probably make more in merchandising and web applications at this point than in affiliate rights. A la carte won't harm those two shows in the least.

I was told that consumers being able to buy individual MP3's of songs would kill CD sales. But it didn't - it just created a new market - for MP3 songs! And it also allowed entry into the market many of many more artists and bands.

So too with TV. If a la carte was available and a provider could simply give me a menu of choices - that provider probably would have incentive to put as many channels on that menu as possible. Instead of just the History Channel maybe a channel is put on the menu that actually shows history. I would subscribe to that and then maybe History would see that success and rethink doing shows like Ancient Aliens.

But I digress.

Could Turnaround Be Fair Play and Smart Play for AT and T and Verizon?

Interesting report that AT and T and Verizon may be looking to add cloud based gaming capabilities.

Most people have been talking about more and more video services being ported to game consoles like X-Box, Wii and PS3 enabling cord cutters and potentially cutting into MSO revenue streams. What if the MSO's turned around and eliminated the need for game consoles by porting the games to the MSO's cloud. Gaming on demand instead of video on demand.

Here's another thought - what if this is the strategy Apple is looking at for their new Apple TV? They could upgrade the box so that it is both a replacement for existing MSO set top boxes and also a replacement for the customer's game console. A STB with Kinect-like functionality? There would be a huge market for Apple game console.

The thing holding most MSO's back from offering new features and functionality is the huge sunk investment in existing MPEG2 based STB's. Imagine if the customer - on their own - replaced those old boxes with new Apple TV boxes! Wouldn't that be most welcome by the major MSO's like AT and T and Verizon?

Dish Network Putting the Internet TV Pieces Together

There has been much discussion about Dish Network speaking to Viacom and other content providers regarding the launch of an Internet TV service. Most people commenting on the news seem to be missing the big picture about the possible Internet TV solution Dish Network may be assembling and how it has the chance to change how we watch TV for all-time.

First question that needs to be asked is "what is Internet TV"? Secondly, "What are the pieces that go into a successful Internet TV solution"?

Simply put Internet TV could be defined as the ability to watch broadcast quality video over the Internet. But by saying that you could argue it already exists today in YouTube, Hulu, Vudu or Netflix form. So more people would say that to be a true game-changing Internet TV solution you would have to offer enough services to challenge the existing cable solutions and make people willing to "cut the cord" for your new Internet TV.

Well what goes into the average cable package? There are the local channels (which are the most watched). There are live sports. There are content choices appealing to most groups like kids, pre-teens, college kids, foodies, history geeks, etc. Then there are the movie channels. Assuming this broad bush painted enough of what makes up a 200 channel cable package - what would a Dish Network Internet TV package have to rival that?

Dish (and DirecTV for that matter) already have many of the major metropolitan local channels up and on their transponders. It would take a simple addendum to most of the retransmission agreements to allow Dish to offer up these local channels a la carte to potential Internet TV customers. The carrot would be that each of these new subscribers would be paying the full rate retransmission agreement rights. The stick is the potential success of companies like Aereo where the local channels would get nothing for their off-air signal. Why not make a deal with Dish if those are the options?

Sports? Everyone seems to think ESPN is the end all and be all but it is not. NBC Sports is struggling to survive and CBS Sports is looking to make inroads (they have been spending big for on-air talent like Jim Rome). They might be very willing to do a deal with Dish. Also consider the RSN's (regional sports networks). I'd be willing to pay an extra dollar or so for the privileged of Dodger baseball if it meant watching Vin Scully announce the games. The RSN carrying Dodger games benefit would be to get access to millions of potential subscribers outside their normal viewing area. Red Sox fan living in California? I'm guessing they would be willing to pay to watch NESN. There are plenty of RSN's out there that could fill any sports fan's requirements. Subscribers within the normal broadcast zones? Just charge them the going rate. Cable companies in New England are not going to drop NESN if they make a deal with Dish. They need the Red Sox (and Bruins) games.

Premium movies? Blockbuster at Home is owned by Dish and they have over 25,000 titles in their library. Stream movies on demand and have a new DVD or game for your X-Box, PS3, Wii or other console. One disk at a time and streaming on demand will fill most people's entertainment needs. Every person I've seen writing about Dish looking into Internet TV has neglected to mention Dish's ownership of Blockbuster at Home. That is a HUGE oversight!

That leaves the niche channel viewing of kids, pre-teens, foodies and others. That's where the deals with Viacom (Nickelodeon, Comedy Central, MTV) and Scripps (HGTV, the Food Network, etc) would come in. That's the part of the story most people are commenting on but by doing so miss the bigger picture.

Dish has an investment in Roku and they have already made a trial run with Internet TV with their launch of DISHWorld. An inexpensive, proven delivery platform - done! Easily replicated for game console platforms? Sure - absolutely!

Probably most important - Dish already has the back-office components in place. They have ways to insure the signals only go to paying customers and a system to pay the content providers for their products. They have 14 million people already in their billing system!

Internet TV - the pieces are almost in place. Soon I will be detailing Dish Networks real "killer app" when it comes to Internet TV. (Do people still say "killer app"?)

NBC Sports (aka the Old Versus)

The Big Lead noted that NBCS (NBC Sports Channel - the old Versus) is not doing so well in the ratings. Channels like Biography, OWN (the Oprah Winfrey Network) and the Travel Channel are beating it in ratings. I can understand losing to the Travel Channel (they have Anthony Bourdain) but losing to OWN?

This got me wondering about the contract NBC Sports has with the NHL. The 10-year contract was signed last April and was reportedly worth $2 billion. Can a broadcaster losing to OWN in the ratings really afford such a deal? Could the NHL owners lockout give NBC a way out of the deal? Wouldn't that be an interesting turn of events?

The First Crack in the Content Dam?

Two things happened over at Time Warner cable last week. One got a lot of attention but the second went pretty much under the radar.

The first thing to mention is Time Warner Cable finally signing to carry the NFL Network. TWC was the last holdout among the major cable companies in the US. Why did they hold out so long? Because the NFL Network is pretty damn expensive. We are talking about adding over a dollar in rights costs. Is TWC going to raise their prices? Probably not because they are already changing a premium to their digital tier customers. So the costs for the NFL Network will be coming right off the bottom line for TWC.

That's a situation that won't last.

Which gets me to the second thing I wanted to mention. Last week Jeff Bewkes, the Chairman and CEO of Time Warner made the following comment (which could easily be properly called a complaint), "About 17% of TV viewing occurs outside these [top] 40 channels, and $7 billion [in rights fees] goes to those channels." The comment was made at a Goldman Sachs investment conference and the inference was clear - companies like TWC are paying way too much for channels nobody is watching!

My guess is that to cover that dollar plus for the NFL Network - TWC will start shedding smaller niche channels. It will probably take five or six channels to make up for the costs added by the NFL Networks. I'd hate to be the sales rep for a smaller channel whose contract is coming up with TWC any time soon. Those will be the first to go.

The cable landscape has been a non-stop history of adding channel after channel for larger and larger line-ups. I think the wave has crested and that we are about to enter a period that for every channel added a couple will be dropped. Last week may be remembered as the week TWC added the NFL Network but long term it may be remembered as the point in time that the channel line-up started to shrink.

Mobile DVT

BroadcastEngineering had a nice update on the status of mobile DTV. I'm sorry but it is still hard for me to think of mobile DTV as anything but a science experiment. I guess I'd think that about any new technology that requires a dongle. Once the smartphones and tablets come mobile DTV enabled - then that's when you know the service has traction.

The big question is whether it is better to pick up live wireless signals like mobile DTV or streamed signals via a company like Aereo. In a perfect world both would be available. You could pick up the mobile DTV signal when in range and then switch over to the streamed version when you are out of range but still with Internet access. Let's hope common sense prevails - and it does so without having to use a dongle.

Redbox-Verizon Streaming By End of Year?

Interesting article updating the Verizon-Redbox co-owned Redbox Instant product.

One flaw that I would say exists about the article is that it never even mentions the Dish Network owned Blockbuster  at Home product. With over 14 million subscribers to Dish Network and with over 25,000 titles in their Blockbuster at Home library (of which over 10,000 are available for streaming) - it seems silly to overlook this potential rival to Netflix, Amazon and Redbox Instant. In fact - if Redbox Instant grew to just the current size of Blockbuster at Home it would be viewed as a wild success.

Edit: Please note that Blogspot does not allow the "at" symbol. That's why Blockbuster at Home is spelled the way it is.

Aereo Adding Content?

Semi-cryptic announcement from Aereo saying they are close to adding new content deals.

Seeing how Aereo is being launched in New York City and seeing how they are saying it is content that doesn't come from local TV stations and which will be sold at an additional fee - my guess is that Aereo could be trying to work out a deal with either YES or MSG or both.

Think of it. If I'm a guy in NYC - I would be perfectly happy getting just the local channels plus the two big regional sports channels. That combination would make a killer product. Aereo could charge an additional $20 per month for this sports tier and everyone would be happy. YES and MSG really have nothing to fear from the networks suing Aereo since local service providers have to carry their channels anyway. Try being a cable company in NYC without carrying Yankees games. Aereo represents another revenue stream to these RSN's - why wouldn't they strike a deal?

This could get very interesting.

Google and Motorola STB's

There are lots of rumors floating around about Google wanting to sell the Motorola Mobility Set Top Box business. Meanwhile Motorola is releasing new STB's geared for Microsoft MediaRoom.

That's all well and good but the real story I want to see explained is why Google Fiber did not choose to use Motorola STB's in its Kansas City deployment. All three stories are connected.

NFL Sunday Ticket without DirecTV?

Peter Kafka has an interesting post about DirecTV's relationship with Sony's PlayStation Network and how the PS3 can be used to watch the NFL Sunday Ticket (whether you get DirecTV or not).

While that is interesting in and of itself. The article got me wondering - what is the future for the NFL Sunday Ticket?

RNC Viewership Down vs. 2008?

It is interesting to note two conflicting reports - Mitt Romney's acceptance speech according to some reports was down by 8.6 million viewers in comparison to the acceptance speech by John McCain four years earlier. Yet there are many reports that enthusiasm among Republicans is much higher than 4-years ago. What gives?

I think the drop in viewership can be explained by 3 simple reasons:

Un-Cutting the Cord

Interesting article by Jeff Bercovici of Forbes on how he's been without cable for 13 years but is about to un-cut the cord. I've been wondering if I could cut the cord but I think watching sports would kill me. The money I'd save on cable - I'd spend at a bar watching the Red Sox, Patriots, Celtics and Bruins.

Time Warner Cable and Fox News TV Everywhere

Time Warner Cable now has TV Everywhere apps for Fox News and Fox Business News. This announcement got me wondering if we will see a new trend where TV Everywhere becomes the first line of defense for content producers against the oncoming tide of a la carte TV.

HBO Go is tremendous but the over the top service is only available to people who are already subscribing to HBO through their cable company. One hand washes the other in this arrangement. If you think about it - HBO is also a defacto package of channels. Nobody gets just one HBO channel. Other content providers who are not premium channels may see this and wonder if a similar arrangement like this can be used to their advantage.

I am not sure about the details of the Time Warner Cable arrangement with Fox News and Fox Business News regarding their apps but I have to wonder if the language of the agreement states that the apps are only available to people who subscribe to both channels? That may not be a big deal now when Time Warner and other cable companies package the channels together but it would be good protection and a very valid selling selling point if a la carte ever came to be. Sure with a la carte TV you would be free to pick either Fox News or Fox Business News or neither but what if you lost access to the apps for both channels if you didn't also get both linear channels?

Just something that occurred to me.

D-Link's MovieNite

Very good review of D-Link's new low cost ($38) MovieNite media streaming device. The once criticism I'd make about the review is that they miss they key market for this device - the spare TV.

I would say the most likely person to buy this device is a cord-cutter who uses an X-Box, PS3 or other device on their main TV but needs something for their extra TV. X-Box in the living room and MovieNite in the bedroom with Netflix access on both.

Google Fiber's Missing Channels

I've seen a number of articles about Google Fiber in Kansas City commenting on the channels their TV package seems to be missing. What I have not seen is a good explanation of why those specific channels seem to be excluded from the line-up.

I think I can explain. The noticeable missing content seems to be from ABC/Disney (including the ESPN channels), Turner (TBS, TNT, CNN, etc) and HBO. What these three companies have in common is they traditionally do not allow their content to be transported via fiber. If Google wanted to add the channels by pulling them down via satellite then those channels would probably already be secured. But the name of the company is Google Fiber not Google Satellite.

In my opinion this has little to do with the cost of the content - consider that HBO is premium content that only the subscribers who want it would be paying for it. This has to do with business models - both Google's and the content providers.  How subscribers access over the top portals like HBO Go or ESPN3 is probably one of the key sticking points. I'm also guessing that none of the three content providers are very excited about re-doing any existing most-favored agreements to satisfy Google.

It will be interesting to see how this is resolved.

Verizon Spectrum Deal Approved by FCC

"Welcome to my lair said the spider to the fly." That was my first thought upon reading that the FCC approved the Verizon purchase of spectrum from Comcast, Time Warner Cable, Cox Communications and Bright House.

Who are the winners and losers of this deal and why did I think of the spider and the fly? Let me explain.

Smart TV's or Dumb Screens?

Very astute article about Smart TV's. The question is asked - "Who needs an Internet set top box like Roku or Apple TV if the functionality is integrated directly into your TV?" This question can basically be answered with another even better one - "Who is going to buy a $2,000 Smart TV that can be obsolete with the next new app or firmware release when they can buy a box for $100 that can be replaced as needed?"

If you understand the two questions then you'll also understand why Apple is not going to be getting into the manufacture of TV's - smart or otherwise.

How to Move from MPEG2 STB to IP Consumer Boxes

Once upon a time if a business wanted phones to make calls they had to buy a proprietary system and handsets. Whether it was a PBX, hybrid or key system from Lucent, Mitel, Ericsson, Nortel or others - it was proprietary. And expensive. Then came VoIP.

Anyone who was around at that time can recall the key word that was always attached to anything IP - "ubiquitous".  As pretentious as the word and description was it did come true. IP has become "ubiquitous". Well for everything except cable set top boxes.

MSO's and smaller cable companies have invested billions in MPEG2 set top boxes. They don't want to go to the expense of switching out those boxes just so the customers can enjoy MPEG4 HD programming and other IP based services. And the customers don't seem to want to foot that bill either. Surprisingly the answer to this conundrum may turn out to be relatively simple.

If a game console or box like Apple TV or Roku can accept the encryption client from the MSO to insure content protection as well as accepting the EPG and data - then the switch-over from proprietary MPEG2 based STB to IP based consumer product could be for the most part painlessly achieved.

I think Apple understands this which is why the next version of Apple TV will probably more closely resemble a traditional STB (but with cloud based DVR functionality). This is not much different than Cisco back in the day getting into the VoIP handset market. It should be noted that the VoIP handset didn't replace the traditional TDM-based phone overnight but the VoIP handset market was much more profitable.

How many people do you know selling PBX's today? In ten years the same thing will be said about people selling QAM based systems and set top boxes.

Apple TV - Out of the Box Thinking

People keep trying to predict what Apple is going to do regarding Apple TV - or iTV as some people want to call it. I don't believe the speculation that Apple is going to get into the manufacture of televisions. And people who speculate that Apple will get into cloud based DVR - what do you think iTunes is if not a giant cloud based library for music and video?

Having said the above - I will jump in and add my speculation to the bunch. What if Apple makes a deal to provide VOD services for CBS - who other than trying to drive people to the CBS website doesn't seem to have much of a strategy in place. You could buy a season pass for a CBS show on iTunes for say $1.99 and Apple and CBS could split the money. Make a show available the day after it first airs and then take it off a month or two after the last show in the series airs. This would be a big incentive for people to purchase Apple TV and it would be a new revenue stream for CBS. And if CBS doesn't like the idea - Apple could just use their huge hoard of cash to buy them.

How's that for thinking outside the box?

Apple TV

I really don't understand the people who think that Apple will actually start manufacturing TV's.

But 70 inch iPads that are massive media centers sure sound sexy. Imagine big screen Apple TVs running the iOS touch interface. Now that's something worth paying for.

I see a big flaw in that idea. Touch screen TV's? So I'm supposed to get off the couch just to touch the TV to change the channel? No - I could use my iPad as a remote but I'm not going to care about a touch screen. I could use Siri to voice my commands but Siri could be built into Apple TV. It doesn't need to be an actual TV.

A la Carte TV

Peter Kafka has a new article where he argues that it is most likely that Apple TV will go along with the current content arrangements to get along. He mentions two scenarios that would create a more a la carte  environment but he misses the most likely - Congressional action.

A la carte TV may come to Canada and will be through legislative action. Of course the content producers would spend millions lobbying against such action in the US but can you imagine how popular it would be? Everyone - Democrats and Republicans - have to pay for channels they don't like.

Verizon and Comcast Deal

There seems to be two pieces of business common sense that are somehow mystifying to some people. First most business people would rather not do a deal than enter into a deal where they know they will lose money. Second - once a home has a high speed connection there is very little incentive for a competitor to pour the money into the infrastructure to put in a competitive connection. Its not brain surgery but some people just can't seem to get their arms around these two simple ideas. And as I explain below - these two simple ideas are the crux of the proposed Verizon Wireless and Comcast deal.

Google to Slash 4,000 Jobs at Motorola

Google to slash 4,000 jobs at Motorola. That's 20% of the company. It is expected that a third of those cuts will be in the US. My mind works differently from most so when I read the article two things came to mind:

1. I'm amazed that just 10-years ago Google was a company whose browser was just catching on with the public while Motorola was one of the best known brand names in communications technology. Now Google not only owns Motorola but is streamlining them as if the new kid is teaching the old professional how business is supposed to be done. Who is the new kid lurking around who in 10-years will be teaching Cisco or some other big name how to do business?

2.  If you are on LinkedIn - watch for many from Motorola to suddenly find a new enthusiasm for networking.

DISH Network Q2 Profits Drop

DISH Networks Q2 profits dropped from $335 million last year to $226 million this year.

I would expect this trend to continue as costs of programming do not seem to be going down any time in the near future. At what point does DISH need to raise its rates? If they do raise their rates will that cause a stampede of customers? What sort of churn can DISH withstand if they do raise rates?

Cord Cutting?

Another article talking about cable companies losing 400,000 subscribers last quarter. Of course I would expect those numbers to be made up in later quarters and the overall comparison to last year to be a wash.

Two thoughts keep popping up every time I see one of these articles:

1. Say an older couple who had cable moves out of an apartment and younger tenants take over who never bother to add cable but who sign up for a better broadband service than the older couple had - do these new tenants count in the statistics as cord cutters? Technically they never had a cord to cut. Also the revenue from the broadband service may be greater than what the older couple was paying for cable (and with a greater gross margin). How is this a bad thing?

2. Articles like this always seem to bring up Netflix and Hulu like these services don't also contribute to the content providers bottom lines. In the example above the new young tenants are probably consuming more content then the older couple who may have just watched local news and sports.

Pay-TV Share Shift

Peter Kafka makes an interesting argument that the pay-TV market isn't shrinking - the market shares are just shifting around.

And it should be pointed out that the numbers Peter writes about don't include any of the small telcos or FTTH companies that have gotten into IPTV and taken subscribers away local MSO's.

Is Aereo a Winner?

Does the Aereo service and pricing model make sense? To be honest - I don't think so.

Here's why.

Apple TV and Hulu Plus (Continued)

Here's some additional thoughts on Hulu Plus being added as a channel to Apple TV:

Hulu Plus Quietly Comes to Apple TV

Interesting report of Hulu Plus being added as an app to Apple TV. As the report points out there has been no official announcement. Interesting.

If you combine Hulu Plus with the video enhancements of Mountain Lion OS and any other enhancements being worked on - then you start to wonder if all of these things could be soon combined and productized into an new Apple iTV?

UTStarcom Divests IPTV Units

Chinese manufacturer UTStarcom is divesting itself from its IPTV division. The division supposedly accounts for a third of the company's revenue but is still not profitable. The IPTV division will become a stand-alone privately held company headed up by current UTStarcom CEO Jack Lu. I'm not sure if having the current CEO take over the new IPTV company shows confidence that the company will be a success or whether Jack Lu is being forced out of UTStarcom to take over the division that was a drag on the overall bottom line.

I have always wondered why UTStarcom didn't try to crack the North American market. When I was exposed to the product a few years ago I found it to be a solid product at half the price of domestic US competition.

Motley Fool Misses Big Picture on Apple iTV

The Motley Fool is normally pretty spot on in their analysis but when it comes to Apple's potential iTV offering they really miss the big picture. Here's why...

Redbox Instant by Verizon

When you think of it the Redbox Instant by Verizon product is genius. The child of a joint venture between Verizon and Coinstar's Redbox - the service plays off the strengths of both companies. Verizon handles most of the bandwidth traffic requirements (like a free CDN for Redbox) while Redbox handles the content rights which will pretty much be same movies you'll find on Amazon, Netflix or iTunes. Want a newer DVD release? You can try one of the Redbox kiosks - a wrinkle you won't find from any of the competing services.

Redbox enhances their existing offering with this service and Verizon adds traffic to their existing network. Win-win. The genius part is neither company is responsible for the last mile or wireless connectivity - the two areas where most of the customer issues will reside. Even if the customer is using Verizon DSL or Verizon Wireless - hey that's a different division!

Peter Kafka has a nice take on the new offering.

A Coming Wireless Urban Divide?

By some accounts there are over 85 million fixed network broadband connections and also 235 million wireless broadband connections.  That means there is almost one broadband connection per citizen of the US - but that doesn't mean everyone is connected. Is there a coming wireless urban divide?

AT and T's 2Q12 Earnings Highlights Notes

Some interesting things to point out regarding AT and T's second quarter 2012 earnings announcement.