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.
Sunday, November 25, 2012
Saturday, November 24, 2012
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.
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.
Thursday, November 22, 2012
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.
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.
Monday, November 12, 2012
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 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.
Thursday, November 8, 2012
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?
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?
Wednesday, November 7, 2012
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).
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).
Tuesday, November 6, 2012
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 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.
Saturday, November 3, 2012
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.
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.
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