Tag Archives: Subscription business model

Blocking The Stream

If you’re typical of most consumers these days, you spent part of the past week watching streaming video. I watch a fair amount of it, and I like to use a Chromecast to stream it on the big screen TV. I’m a subscriber to the big 3 video services – Netflix, Hulu, and Amazon – and use my TV provider to authenticate streaming of other services such as ESPN3. It all works quite well with one exception, and that’s our topic – and business point – today.

Deutsch: Logo von Amazon.com

 (Photo credit: Wikipedia)

Nearly every app or every service supports streaming to the Chromecast with one major exception: Amazon. Because of that, I find that I use my Amazon subscription far less than I do Netflix or Hulu. It’s not that they have inferior content. Far from it: there are many things I’d like to stream. The issue is that I don’t like watching things on my computer or phone since I’m usually using one or both while watching. So why doesn’t the service support Chromecasting? As one article pointed out:

Google allows any app developer to add Chromecast support to their iOS or Android app. There is no technical or policy limitation that prevents Prime Video from “interacting well” with the Chromecast. And Amazon has made no statement indicating why they refuse to support it.

In a word, business. There are no technical reasons why Amazon hasn’t built Chromecast support into their service, but they have chosen to ignore a user base that is almost 20 million opportunities strong (the number of Chromecasts out there). The war between the two – Amazon and Google – has become so heated that as of last Fall Amazon no longer even sells Chromecasts in their store (go ahead and check – I’ll wait). You might think that it’s because Amazon wants to push their own FireTV devices, but the fight is much bigger than that. The business point is that it doesn’t matter who believes they’ll win. We – the consumers – are the losers.

I’m a big Amazon fan (and shopper!) and have been an Amazon Prime user since the first day it was offered. This, however, is terribly misguided thinking on their part.  Yes, I’m aware that I can use a browser extension to mirror my phone or screen and cast Amazon video that way, but it’s a much inferior user experience.  This is a rare, but big, misstep on Amazon’s part. As businesses, we can’t be placing customers in the middle of our business disputes.  We might think that we’re hurting a competitor but what competitors aren’t also in business together somehow these days?  Moreover, this thinking by Amazon flunks the most basic business test we need to apply to any thinking: is this good for my customers and will it enhance the value of my product or service if I proceed?  Not in this case.  Agreed?

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Filed under Huh?, Reality checks

Never Never Land

I paid my cable TV bill the other day.  It’s a lot of money each month but the fact that the amount also covers my high-speed internet access and office phone mitigates the expenditure, I guess.  I know my kids don’t see it the same way, and from a lot of the numbers that researchers are reporting, neither do their peers. 

Consumers are shutting off their cable and satellite TV connections in droves.  Nearly half a million subscribers did so in the second quarter, according to the folks at  Leichtman Research Group Inc.  The cable guys will tell you that it’s really a drop in the bucket and they’re right.  49 million folks still have those cable connections and another 34 million have satellite dishes.  So what’s the big to-do?  Those drops have the potential to run into a flood if you look inside the numbers and at how people are watching as well.

Take a look at some information put forward by the Forrester folks in their recent study of cord-nevers.  As explained by this piece in Digital Trends:

Based on a recent survey of 32,000 adults conducted by data analysis firm Forrester Research, roughly 18 percent of Americans have never actually subscribed to premium TV service through a cable or satellite company. While the majority of those respondents were at least age 32 and over, about seven percent of ‘cord-never’ Americans are between the ages of 18 and 31; a prime marketing demographic for advertisers.

Furthermore, the growth rate of cord-nevers suggests that roughly 50 percent of Americans under the age of 32 will have never subscribed to a premium TV service by the time we reach 2025. That’s a massive segment of the population that will be turning to digital delivery services rather than calling up their local cable company for a stack of set-top boxes and a hefty monthly bill.

I’ve stated before that I believe the TV distributors we have will trade the program pipes they have today for internet pipes tomorrow.  Rather than spending money paying fees to the program distributors, they’d be far better served spending the money to upgrade their pipes and building better connections to move video to their subscribers.  While today’s college kids (and tomorrow’s consumers) don’t know a world without high-speed internet access, as cord-nevers they won’t miss the cable subscription.  They might also just be the customers today’s marketers think have gone missing unless they rethink their use of traditional TV.

Cable and satellite subscriptions aren’t going away any time soon, but the one size fits all bundle of program services is.  It will have to in order to retain the consumers who now program their own viewing.  With a minority of viewing to entertainment programs happening live, the operative word will be choice and control.  Consumers expect that along with their monthly bill, and it will be interesting to see if the cable and satellite guys are listening.

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Filed under Consulting, digital media

It’s Showtime!

Change is hard, and when it’s forced upon you by circumstances beyond your control, it’s even harder. That’s the ongoing situation in the television business, both on the distribution side and on the content provider side (read that as cable/satellite providers and programming services).

English: Logo for Showtime.

Photo credit: Wikipedia)

Showtime recently began offing a streaming-only subscriber service, and, as reported in the piece in Adweek, they’re learning a lot from the experience. More about that in a second, but the fact that the Showtime folks are even doing this at all gets a round of applause from me. Too many of my friends in broadcasting (cable-casting, whatever you might call it) are fixated with the traditional (dying) business model. They seem bound and determined to milk every last cent out of it before changing their ways (reality check = music business).  All this while the 13 largest pay-TV providers in the US, which account for approximately 95% of the market, saw a net loss of 470,855 subscribers in Q2 2015—the worst quarterly drop ever.  Now is the time to be trying new things and finding new ways of doing business, not when the drip of cord cutters becomes a flood.

Here is a quote from the article that got my attention:

Showtime Networks President David Nevins has been receiving detailed, data-fueled reports about its growth and usage each day. Having long been limited to getting monthly reports about subscriber trends for the premium cable network, he now browses detailed updates each morning, learning how many subscriptions were sold and what the service’s usage looks like.

While you might wonder why they weren’t looking at usage reports before, the reality is that there was little incentive to do so.  The network stuck their deals with service providers – the cable distributors were their customers, not “civilians.”  While they are no longer being separated from their users by a middleman, they’re also having to learn a lot about those users, which wasn’t an imperative before.  That transition, by the way, is probably one of the biggest impacts of digital – the disintermediation effect on many businesses.

“You can see on a nightly basis exactly what people are watching, and it’s fascinating.”  Anyone in business needs to know what our customers are consuming, as well as how and why they’re doing so.  Moreover, we need to be open to changing how we do business, better to serve both those customers and our bottom lines.  Showtime has been.  You?

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Filed under digital media