Saturday, April 16, 2011

A possible future of TV

The Story:

TV is becoming more and more fragmented, we have moved from 3 channels of content to having hundreds of channels available in that media, along with hundreds of video sharing websites and millions of content creators.

This is my opinion:

I feel that as video becomes more fragmented and people are more able to avoid marketing attempts advertisers are going to take one of two approaches, either stop sponsoring video creation or work towards getting their content to be unavoidable (this could be anything from product placement to those annoying ads at the beginning of a video that you can't skip past).

Perhaps there is another way. As far as I understand it TV shows are usually made by a process where a person selects one script from hundreds (or thousands) that pass over their desk. After a script is chosen the studio will typically pay for a pilot to be created (or another investor pays for the pilot and you shop that around to studios). Typically at this point a production company will be started if this is their first time making a pilot, if not then the writer is typically part of a production company. If the studio likes the pilot they may decide to pickup or purchase the show (many times with changes to the actors). When they do this, they select how many episodes they want to buy and what they are willing to pay, this is where the budget for a TV show comes in and leads to the quality of the production (shows with high budgets can afford better cameras, explosions, stunts, better actors, etc).

As the fragmentation persists and advertisers pay less to the studios and the studios will start changing their business, or perhaps even go out of business. What if a company started to use the power of crowdsourcing to fund TV shows?

The idea is simple replace the studio with the general public. Instead of funding pilots the production companies would fund their own pilot and if the general public liked the show they could purchase a season. The production company would input all of the information about the show that they had at the time of creating the pilot, including the total budget they were working with, how many episodes they were going to create, episode length, and cost of the season. If they sold enough seasons to hit their budget they would be funded and be able to create their show, if not - it would be a flop.

The company that hosts the videos and makes all of this possible would take a commission from each show sold, probably 10-30%, I am not sure what a television station takes - but I would say that this company would have to take less than standard TV to attract big shows.

Amateurs would also be able to get into the mix, but they would be held to a slightly higher standard to prevent fraud. They would have to fund their entire season by themselves then sell it through this marketplace (still just showing the pilot). A great example of a show that was self funded that rose to being a funded show is "the Guild".


I would say Google is the one sitting in the right position to capitalize on this idea. They own You Tube which is a great backbone for video hosting, Android which could be a great platform for viewing/sponsoring these shows, and their powerful advertising network which could allow for more revenue streams for these videos. Sony, Netflix, and Dish Network are all also sitting in decent positions to take this on as well.

BTW: If I inspired you to make good on this idea I wouldn't mind a royalty of 1%, I am using the honor system here.

Thursday, April 14, 2011

DRM - Huh, What is it good for? Absolutely nothing.

The Story:

Dragon Age 2 was unplayable for 4 days recently, this being the second time in a few months that a server outage has caused this game to be unavailable for those who had purchased it.

This is my opinion:

I feel that no matter how hard companies try to lock down their content, someone will figure out a way around it. I have been playing PC games for over a decade and I can't think of one that has been completely safe from being cracked, hacked, or otherwise circumvented. My theory is that they wouldn't see any more piracy if they made games without any type of prevention, and may even increase sales if they focused the effort and resources in a different direction. People who are going to pirate or benefit from pirated games are going to continue to do that. There is no argument that gaming companies can make to prevent them - it is a choice these gamers have made.

People who want to support a company will do that as well. There are many people who will pirate a game to make sure they like it, and purchase it if they do. This is because the market does not allow for the return of video games (one of the original moves to curb piracy of games). If you can't try it before you buy it, what guarantee do you have that your $20-60 purchase is going to be worth while?

There are other people who are too poor to buy the games in the first place. These people wouldn't be buying games anyway, so they aren't really a drain on the system either - they may actually be a benefit to the system because if they enjoy the game they will tell their friends about it, who may actually purchase the game (unless they are poor as well, and then it won't matter either).

I would say that game manufacturers are pushing people towards piracy. If you had a pirated version of Dragon Age II, it is likely that you wouldn't have been effected by this outage. I have personally downloaded no-CD cracks for games that I have purchased in the past, just so that I didn't have to change the CD every time I wanted to play a different game. That has to be one of the more annoying anti-piracy moves that companies have made over time. Don't get me wrong though, the most annoying is to demand that you have an internet connection to play a single player game so that it can authorize you to play every time. That takes the cake.

I think the people who are punished the most by anti-piracy are the people who actually buy the games. You have to endure whatever crazy thing they want you to prove that you actually own the software. I spend an hour on the phone with Microsoft when I moved a harddrive with windows XP from one set of hardware to another. I didn't clone it, or do anything crazy, I just wanted to use my new motherboard with software that I received when I purchased a Dell computer. I was told that this was a breach of the EULA and that I would have to purchase another copy. Eventually I got them to do it, but it was a pain that took way too long. If I were installing a cracked version of Windows, there is a high likely hood that I wouldn't even have to type in a license code.

Who has the better experience?

Wednesday, April 6, 2011

Blockbuster - Under new management


The Story:

Blockbuster was recently purchased by Dish Network, for $320 Million (though they will likely only have to pay $228, due to Blockbuster's debt).

This is my opinion:

This may be a huge win for Dish Network providing they understand what they are doing with the new brand. My guess is that they could use this partnership to compete heavily with Netflix and Redbox exploiting their relationships with networks and studios to provide content through streaming video and via the mail. I don't know that this is enough to compete, so I would take it a step farther than just building up what Blockbuster had tried before their fall.

The potential for the Retail locations -

Blockbuster has/had 1700 retail locations across the country. I would turn these into Dish Network corporate stores, while retaining the Blockbuster branding outside and adding Dish network branding to the logo. Inside of these stores I would continue to do some movie and game rental, but it would be more about educating customers around how to stream movies using the streaming service (a service which I would build into the Dish Network boxes). I would also use these stores to promote premium services offered by Dish Network and even attempt to partner with a retailer like Best Buy, Wal-mart, or Target to be able to sell TVs from these locations.

I would recommend selling contract TVs (similar to the discounts on Mobile Phones for signing a 2 year contract). TVs that sell for 100-300 would be free, and larger more expensive TVs would have significant discounts, as long as customers sign a 2+ year contract for service. Imagine a free 55" 3D-LED for free for signing a 5 year contract to Dish, how many people would be on board with that.

Crushing Netflix, Redbox, etc.

Netflix and eventually Redbox were the harbingers of doom for Blockbuster. Now that it is under the wing of a larger company it is time to return the favor for these companies (full disclosure I am a Netflix customer and love Netflix instantly streaming). I would start with attempting to offer more content and provide new content as fast as possible to the Blockbuster online side of the business. I would also heavily push for the video game side of the mail business to be an add on to the movie subscription, or perhaps you could have a subscription model where a customer can have X discs out for $XX.XX per month depending on the total number of discs they want and they could choose to divide that between movies and video games. It would provide a Value Prop that isn't offered by Netflix or Redbox (you would also be competing against gamefly, gamestop, and valve/steam).

In addition to adding value props, because Dish is a large company that has revenue streams coming in from many different places, they could also offer the "instant" streaming movies for a price that may not net them any profit, or a slight profit margin to drive their competition out of business (see Wal-mart).

Leverage the Future of TV

With more and more people moving away from traditional TV service this can give Dish the edge they need to be an innovator of the future of TV. This purchase coupled with their purchase of Slingbox could give them the tools they need to make some huge leaps and bounds, I will sit back and wait to see if they can combine their assets to make something greater than a sum of the parts.

Let me know what you think.

Tuesday, March 29, 2011

Tablet - King of the Hill

The Story:

I think we can all agree that Apple is the King of the Hill in market share at somewhere around 75-80% market share (although I am currently finding it difficult to find an official number). Will anyone be able to dethrone them?

This is my Opinion:

Before I even get started on this post, let me say that I love Android due to its ability to support flash, multitude of free apps, handset selection, and for being a 'mostly' open source platform. I was an early adopter in one of the first waves of T-Mobile G1 owners. I also love Google as a company and think that they have a great culture. I think it should also be stated that I am not a fan of Apple, I think that they are bullies.

Okay, now to get to the root of the issue. Apple has positioned itself as the primary brand in tablets the same way it did in MP3 players (which many people still call iPods regardless of the device manufacturer). They did not accomplish this by making sure they had most features, the best specs, or the most affordable price tag. They weren't the first one to do make a tablet, or even the first one to advertise one. They did make a device that is stable with a visually appealing smooth moving operating system and did launch an advertising/marketing blitz that only Apple seems to be willing to do at this point in consumer electronics, I will get to the Apple equation for success a little later though.

Apple has about 75-80% of the tablet market share now (depending on who you listen to). Currently I don't see any single table that will have the much market share coming from any other company, but lets take a look at some of the competition (and why I don't believe they stand a chance).

Motorola Xoom

This tablet is bigger, with a better mega-pixel rating on its front camera (and a rating on its back camera), flash support, a 4g upgrade, and since it is running Android more of the apps are free. The price is close; $799 with no contract (the comparable iPad 2 is $729) but can be subsidized to as low as $599 with a 2 year contract with Verizon. There is also a WiFi only version at $599 (the same price as the equivalent version of the iPad 2). On paper it looks like a much better tablet and it is the one that I would recommend for most people who were trying to decide between the two.

What is Motorola doing wrong - how can they make this more of a contender?

First - Pricing. When you are competing against an Apple product the first thing you want to do is come in at a lower price than anything in their pricing chain. This is a success that I first noticed in the MP3 player era and has repeated itself in the smartphone battle as well. Android is gaining market share vs the iPhone being stagnant and RIM's Blackberry losing. If you want to out sell the iPad with a device that has essentially the same features (with slightly better specs) you have to crush their price. I would assume that if the Xoom were $499 for the 3G version and $299 for the WiFi and subsidized price it would do much better.

Second - Advertising. Everyone and their mom knows what an iPad is and will likely confuse all tablets with the iPad. Motorola isn't doing a good enough job whipping the public into a frenzy about their product and that is sad, because as I mentioned I do recommend this product for most people.


Blackberry Playbook

Another amazing product idea from RIM. Not trying to compete on a larger size with a 7" display it seems like they opted for portability. They also went Dual-Core like the above tablet and the iPad 2 which should make for a fast device. They may have realized that their app world can't compete with that of the iOS or Android and have included the option to run Android apps (this adds an estimated 200,000 apps to their 80,000 app list). This product boosts a really cool feature that allows it to connect to your current Blackberry(BB) - though RIM says that you don't have to have a BB to enjoy this tablet.

Why it doesn't have a shot.

First, RIM lacks relevance. The most amazing thing they did was convince teenagers that they needed a Blackberry, but they didn't adapt or change which has kept their core audience of business users happy, but they lost the rest of the smartphone market. It would be amazing if this device would allow for an iPhone or an Android phone to unlock the same features that a Blackberry phone can. I think that it is an amazing concept and will be even more amazing when someone else does this for those two platforms.

Second, Advertising. Again this is something that is coming soon and they haven't yet whipped their fan base into a frenzy. It will be interesting to see if they do anything big before it comes out, but as it stands I don't believe they are doing enough.

Third, Pricing. Once again the price is too high to compete directly with the iPad 2. I think that this smaller tablet should be coming in closer to the $299 that I stated for the Xoom. I realize that this may be close to the cost to manufacture either device (Xoom or Playbook), but at this point I think that the companies have to make the decision not to profit from the tablet, but to find a way to profit from the media consumption (although this is a dangerous game because Apple is doing both).


Palm Touchpad

Let me start by saying that while I love the idea of this tablet - with features that are similar to everything above (including the Blackberry Playbook, replacing RIM's phones with the Palm phones). I am not going to go into details here. Palm lost the smartphone war - got purchased by HP, and is going to try to reenter. Let me say that the smartphone war reminds me of the processor war from the late nineties where AMD and Intel crushed Cyrix, and I feel that Android and the iOS are the two systems to look at for the future - everyone else will have their good ideas taken by one of these two and will be forgotten about by most people.


The Apple Equation for success

Okay, this is what I have figured out from Apple that other companies should probably mimic (I know that if I were running a company right now I would want to be able to make the profit they make).

Start by building a fan base - They have done this by having decent customer service, passionate people running the company that aren't too different from the customers they want to attract (geeks), and got people to root for them as they were the underdog (facing off against big blue).

Market to this fan base - Every Apple product is announced in a pep rally environment (or so it seems). Every announcement is a secret to be revealed, making this a news story (free press).

Planned shortages - if you think you will sell 1 million of a device make 500,000 units available. Get people to stand in line for a product if you can as well - these are things that also make good news stories (more free press).

Simple advertising everywhere - Make your message very simple. Have a commercial for each feature a product has, don't ever talk about more than one feature within 10 seconds. Run as many commercials as you can afford. Connect these features to how they can benefit someone.

Sacrifice ability for performance - It doesn't matter how many things your new whirly-gig can do, if it doesn't do them fast and without crashing. People HATE it when something doesn't work right and will typically buy the product that does less things as long as it does all of those things well. The iPad doesn't do flash, widgets, or have the same customization as any of the other tablets - but it is stable and moves from one operation to another very smoothly, it wins.



One last off the cuff remark
I don't know if any other company is going to challenge Apple right now, because no one seems to be willing to bring down the price. Maybe a carrier will get smart and start dropping the price of a comparable tablet to $100 or less (free) with a 2 year agreement. That would really move them...

Sunday, March 20, 2011

4G VS 4G VS 3G - What do the G's do?

The Story:

I often hear confusion from people who are looking for a new phone surrounding the differences between 4G and 3G, and between the various versions of 4G. I also hear people who are sure that the iPhone 4 is a 4G phone. I am going to attempt to shed some light on this.

This is my opinion:

To start with 4G is just a marketing term, it really doesn't mean anything because there is no true standard for what 4G means. If you are choosing a new phone it may be important to have fast data and if you are planning on staying with your current carrier and signing a contract - go with the 4G phones as they will be the fastest phones on the carrier (perhaps not immediately, but it is very likely that in your 2 year contract that they will be). If you are changing carriers or thinking about starting service with a carrier the differences in 4G technology can be very important.

So what does the G mean anyway?

G in this case means Generation. The first generation of wireless technology can be called 1G. These were the phones of the 80s and were analog. The reign of 2G phones begin in the 90s and offered improvements like data (text messages) and digital communication (instead of analog). The 2G network is still around and if you have a GSM phone (T-Mobile/AT&T) then you may see an E instead of a 3G from time to time depending on your coverage this is the EDGE network (a 2G network). On a CDMA carrier (Verizon/Sprint) you may notice a 1x on the top in low coverage areas. The EDGE and 1x networks are actually improvements beyond the original 2G network, sometimes being called 2.5G or 2.75G.

3G phones became available in 2001 with greatly improved data rates, but unlike previous generations of the technology there was not truly a standard or bench mark for what speeds a provider had to operate at to call their service 3G. Like the 2G standard before it, there are half-steps before the next generation. One of these half steps is HSPA+, which is a 3G technology that augments the speeds of 3g offering 2-4 times the 3G connection speed currently (with a max connection somewhere around 56Mbps).

So to be clear the "G" really just means generation, and depending on the technology in the phone this is how fast your mobile data will be (how fast webpages load and files download). This has little effect on your voice quality (the 1G phones actually have the best potential for voice quality due to the way analog signals can travel through the air). If you are not looking for data on your phone, this may not matter. Websites are typically able to be loaded quickly regardless of total Mbps down (the speed of your connection) and may be more effected by latency (the time it takes to connect to the server).

4G vs 4G

Okay, so this is where it gets a bit tricky. Sprint has been advertising their 4G network for a long time. Nearly a year ago (the EVO was released in June of 2010). Sprint launched their WIMAX 4G service, which is capable of 128 Mbps (no phone is really achieving this speed currently, and it would be hard press to find one that is averaging more than 15Mbps - which is still faster than most DSL customers). WIMAX is technically an IEEE network standard like the G or N network that is likely in your house. The downside to this is that it makes it difficult to have long range from the towers, and is likely to only have city wide coverage for select cities (even into the future). Sprint heavily marketed their network as "FIRST". As they were the first to 4G coverage.

The reaction from T-Mobile, who had launched their HSPA+ network around the same time as Sprint, was to switch the branding from HSPA+ to 4G. This allowed them to work off of the marketing groundwork that Sprint had already laid. HSPA+ is currently similar in speeds to the Sprint WIMAX, but the upward maximum for the technology is only at about half.

AT&T recently launched their 4G network, which is also HSPA+, and plans to do an LTE network in the future. LTE is the type of 4G network that Verizon has launched. The benefit to this is that it has an upward maximum of 100 Mbps (and with LTE advanced it could be as much as 300Mbps). Verizon's LTE is running on the 700MHz band that analog TV ran on (before the digital conversion). This means that they will be able to put towers across the entire country an blanket us with these amazing speeds (if they follow their past 10 years of coverage expansion). LTE is also an improvement that allows for voice and data at the same time (old iPhone commercials call out AT&T as a better network because of this feature that Verizon lacked).

What do I recommend?

In the end I currently recommend Verizon or Sprint's version of 4G if you are in the market for a phone that will be the fastest in the future. Also, they both currently offer unlimited data which is something that will likely become a must with unlimited terrestrial broadband going to the wayside. With that said, I think that AT&T is a great company and if you live in the right area it can be the perfect provider. Also, with the looming purchase of T-Mobile, AT&T will grow into an even bigger provider and who knows what they will have the potential to offer!

AT&T hunts free tether users.

The Story:

AT&T has started sending text messages and emails to those who are using tethering apps, without paying for the tethering service. (To my knowledge at the time of writing only iPhone users have been affected).

This is my opinion:

I am glad they are doing this.

For far too long have these mobile companies allowed users undermine the services they offer and the sales of their mobile broadband solutions. In the spirit of full disclosure I should make mention that I do work for a company that sells mobile broadband solutions, cell phones, and other devices that use these services. I will not deny that this may cloud my opinion, but so be it.

For those of you who don’t know what mean by mobile broadband solution let me explain, if you already know you can jump to the next paragraph. Many cell phone providers have devices that allow you to connect to the internet nearly anywhere you go by either plugging a device into a USB port on your computer or by simply carrying around a device that creates a wifi network. The service is based off of the same service that allows your mobile phone to connect to the internet nearly everywhere you go. People often ask why not just use the free wifi that you can find more and more places. This is a valid question, but the problem with using open wifi networks is that they expose your computer and your personal data to potential threats.
I know that in my very last blog update I was very negative about AT&T limiting their terrestrial broadband and this seems to be a contradiction to that opinion. I have to argue that this is a different case all together. Mobile broadband is currently a luxury, perhaps in a few years it will be as main stream as broadband is today. Also, I think they have laid out the case pretty well – You are using a service that we charge for, pay for it or stop using it. I don’t see an ulterior motive in this other than the potential that they are trying to remove their grandfathered unlimited plans. If they are trying to remove their unlimited plans, I would assume they could do it the way that Sprint is enforcing their premium data plans (if you change your hardware through upgrade or equipment swap it is applied).
Regarding AT&T removing unlimited data plans on mobile phones, I don’t see this the same way as I do for the removing it from DSL and Uverse. Freedom of choice is the biggest reason - AT&T is offered along side of 2 other post-paid carriers in thousands of locations across the country (Best Buy, Best Buy Mobile stand alone stores, Radio Shack, Target, some Wal-marts, some Staples, and Costco). They also have to compete with pre-paid phones in these locations. I will be worried if the other carriers follow suit, but right now I do see this as a reason that people choose their competitors – if they see enough of this, they may change their policy.

How do I think they are doing it?

I am not 100% sure how they are doing it, but I know how I would go after these users. I would check the ip ranges that data is coming from looking for things that shouldn't be able to be accessed from the phone listed on the account such as: Xbox Live/Playstation network servers, Steam servers, large file transfers (especially those in a format that a phone couldn't open), multiple simultaneous data transfers (from multiple computers access the web at the same time), and for those users that download more than 20GB (not that it is impossible with a phone, but it would merit some account scrutiny).

Am I missing the point?

Don’t feel bad about yelling at me in the comments, or @MichaelASander on Twitter. I will do my best to read and respond to anything that you have to say. Thanks for reading.

Thursday, March 17, 2011

AT&T Limited internet

The Story:
AT&T recently announced that they would be limiting DSL service to 150 GB and Uverse to 250 GB of usage per month with fees of $10 per 50 GB of overage after exceeding the limit 3 times. The company also says that 98 percent of customers do not exceed this usage.

This is my opinion:
Personally I am upset to hear this for many reasons.

First, it seems like they are recycling the argument/press release they made when they made a similar move against their mobile users. For those who are unaware AT&T removed the unlimited data plans in June of 2010 – the official press release framed it as a new lower price for data. In addition to the press release many AT&T representatives made mention that removing the unlimited data would only affect 2% of the users. It is an odd coincidence that this is the same percentage that uses more than 250GB on their U-Verse and 150GB on DSL. Can this be true, or is this just a way to pacify the general masses?

Second, it seems like a move that is more about protecting traditional paid TV than it does about a fixing legitimate problem. The statement seemed kind of crazy then (considering every other major cell phone provider were still offering unlimited data). AT&T’s argument seems even crazier today considering those companies still have unlimited data (even though Verizon’s CTO keeps teasing the tiered data plans are coming) and even some prepaid phones offer unlimited data (Virgin, Boost, and Cricket). I understand that some customers do use more data, but these limits make it much more difficult for an average family to replace traditional TV with streaming media and the other uses for broadband (gaming, Skype, browsing, etc).

Let’s take a closer look at the way this data breaks up. If we assume that a person has the fastest speed AT&T offers and could maintain that speed around the clock – how long would it take to hit the cap?
24mbps = 180MB per minute
250GB = 250,000MB
250,000MB/180MB = 1388.88(repeating) Minutes
1388.88 minutes/60 minutes in an hour = 23.148(repeating) Hours

You could do it in 1 day if you were able to hit their maximum speed all day!

This doesn’t seem reasonable at all, but to break that down another way –
Netflix movies use about 1GB per hour of streaming, which means that you could spend 250 hours watching Netflix in a month. The average American watches 150+ hours a month in TV – so for an individual user who replaces their TV with streaming media this seems like a reasonable number, 250-150=100GB left to do what you want with. The problem comes in if you have a family of 4 with each able to use a computer of some sort (laptop/desktop/tablet), game counsel, cell phone (to not exceed AT&T’s data cap), or other device (MP3 player/internet station/etc). Hopefully everyone wants to watch the same thing most of the time.

This doesn’t even account for people who are purchasing games from the web (steam/Xbox Live/PSN/etc). New PC games are measured in several GB each, though it is unlikely for someone to exceed the cap with only game purchases – it is still a possibility, and it can take a large portion out of your monthly budget of bandwidth.
I also haven’t talked about those who use services like Carbonite to backup their files. If you have a few hundred GB of pictures/videos (memories) backed up, or coming back down, you are likely going to exceed the cap, what a terrible way to hit the cap.

Third, it seems unfair to those contracted customers. Imagine an all you can eat buffet doing something similar, penalizing a section of customers who are eating 20% more food than anyone else. Skinny people are able to eat more because their stomach can distend, those people should pay more. Or a rule where you can get two plates, but if you go back for a third you will have to pay more. Is the rule fair, especially for those under contract? I don’t think so. If every region could have any broadband carrier, or if these companies weren’t government regulated monopolies, then maybe it would be fair, but this just seems like bad business to me.
Before we accept this argument from AT&T, let’s ask the question does it make since? I have heard arguments that support this side claiming that we all pay for the amount of electricity, water, and gas by total amount of usage and it makes sense when we compare it to these things. I guess my problem with their argument is that I understand that there are huge amounts of resources that go into generating energy, pump water, and acquire gas, but I have a hard time understanding how bandwidth is becoming more expensive. With more fiber optics, cheaper storage, free Wifi “everywhere” and a larger infrastructure one would think that the price of bandwidth would be at an all time low.

What can be done?

Well honestly depending on where you live, not much. You can complain to AT&T, send emails and calls. You can switch from their service to another (provided that there is another provider in your area that isn’t capped.) I guess in the end we can mourn the loss of another great piece of internet freedom, crushed beneath the boot of paid TV (a floundering business that is the thing that should not be).