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Monthly Archives: February 2015

When Will TV Shows Get Surge Pricing?

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Surge TVThere’s a lot of mixed feelings about Uber’s “Surge Pricing” concept, which described in a nutshell is: if lots of people are trying to get Ubers in a certain region, the price goes up. Economic-minded folks will call it simple supply and demand, whereas others feel the company is attempting to gouge their customers, manipulate pricing, etc. Assuming for this discussion it’s more the former – a simple case of supply and demand – I’ve been wondering about applying a similar model to TV shows.

When Better Call Saul premiered, it launched as the number one series debut in cable history. I was/am very interested in watching it, but without a pay TV subscription, I had no option to see it in/near-real-time. Within hours the episode was available in a variety of Video on Demand (VOD) formats, either for free or a low fee ($2.99 in iTunes at this moment). Older shows in iTunes tend to run at $1.99 per episode.

I’d argue the TV industry, specifically content owners, are missing opportunities right now by having equanimous pricing. The value, to an interested audience, of a piece of content is much, much higher in a short window. Especially for content that has any kind of zeitgeist/cultural value. Being “in” the crowd who sees the premiere matters to some segment of the population.  Similarly, older content has less inherent value. Do I really find an episode of WKRP in Cincinnati is “worth” the same as others? WKRP in Itunes

And yes, there is a range – Game of Thrones is $3.99 per episode, for example – but I’d argue there’s a lot being missed out in both directions. Older, library catalogs are worth less, and hot/newer shows are worth more. I’d probably also argue that anything more than 2-ish years old should have free S1E1 viewing to all viewers.

This takes a lot of new-style thinking for an older-style industry. And I see the hazards as well – if content gets priced too high, audiences may well seek out illegitimate sources. But I’d assume there’s a lot of opportunity to be had in a real-time priced marketplace. As content owners seek out new methods of monetizing their huge inventories, I hope to see experimentation in this space. Then again, I’d hate to see a snowstorm make a good show cost 2.8x the normal rate!



Viacom, the TV Industry’s Canary in a Coal Mine

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When people ask me about the future of TV, I frequently tell them “just watch Viacom.” Their ratings have plummeted in recent years, and the recent loss of Stewart and Colbert may well be irreparable. Or is it the beginning of a brand new approach to big media? 

yutesViacom’s in a fascinating position to watch. They obviously own a lot of content, but if you look into the brands, it’s very youth-oriented. Which puts the company squarely in the targets for where the bulk of change is occurring. If “those kids today” truly prefer YouTube and Netflix to Saturday Morning Cartoons, that impacts Viacom heavily. And while I have a whole other series of thoughts regarding how younger audiences behaviors shift as they age, it’s also safe to say at this point that today’s 20-year-old will act like today’s 30-year-old in a decade. They won’t.

If “those kids today” are actually cord-nevers, that is about to impact everybody.  And “about” in TV industry terms could be a year, or maybe ten – hard to say.

The two biggest challenges networks face are changing audience behaviors and an advertising industry shift toward more data.  This combination puts Viacom in the position of having to react to the changing times in near-real-time if they want to be relevant in 10 years. And a-changing they are! Viacom is pushing ahead in so many ways, trying new technologies, looking for what’s working (and what’s not). In a way they appear to be trying to avoid the classic Innovator’s Dilemma conundrum.

They may make it, they may not. All depends on how good their ability to be a media giant and a scrappy startup at the same time. But watch them, I shall.



What it Takes to Make a Successful Hardware Startup

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First, let me congratulate YCombinator and the founders they’ll fund, for putting forth an initiative to support the until-very-recently-unsexy segment of hardware startups. This is great news for the anyone and everyone in the “Internet of Things” and “Wearable” and other related segments. I myself am a mentor to Highway One (another such incubator) and know there are others in the space as well.

Building a Slingbox

Building a Slingbox

By way of background, for those who don’t know me, I’ve been involved in hardware startups since 1999, as a cofounder of Mediabolic (acquired by Rovi in 2006), VP of Products for Sling Media (acquired by DISH in 2007), and a former product consultant to great companies like Bug Labs, Boxee, D-Link, DivX, Dropcam, and many others (I’m getting all nostalgic here!). Having spent almost 20 years building mostly successful gadgets of one kind or another, I thought it might be good to chime in on the topics raised by some of the YC HW founders, and add my own “recipes for success” to share with other founders.

Hardware is still very hard.  
Seems amazing to me that, while things have gotten notably easier, anyone could possibly come to the conclusion that hardware startups are easy. You need expertise in so many fields, from distribution to marketing to manufacturing to support, and have so little wiggle room (more in a moment), it’s almost mind-boggling. And when things go wrong (more on that coming too), and things always go wrong, it’s entirely possible that there’s not enough resources/knowledge/etc to ever recover. TL;DR: there’s no pivots or growth hacking in hardware.

HW requires some fundamentally different skill sets than Software.
In software/app/web startups, there are a lot of skills that transfer easily, whether across platforms, segments, borders, etc. This is rarely true for a hardware startup where, for example, a very experienced customer acquisition/marketing specialist may find themselves completely in unfamiliar territory when building a distribution strategy. And from what I’ve seen across my career, not a single HW startup comprised of highly competent founders with no hardware background has shown tremendous success. TL;DR: make sure you have domain experts in your team.

You need to know what can go wrong with HW.
I’ll address the “what can go wrong” topic one more time below, but I guess I can’t emphasize enough: more can and will go wrong than you’ve ever thought possible. Ever have your manufacturer swap out specified memory chips in your device, not tell you, and not QA them prior to shipping to customers? Check. Ever have your CM have their assets seized mid-way through a production run, putting all your pre-paid inventory into a massive governmental lawsuit? Check. Ever have your rep tell you the design is being met to 100%, only you can see with plain eyes that they are cutting circles into the mold by hand? Check. Ever have your packaging fail to meet a retailers’ drop-test, one week after loading up endcaps? Check. Ever have a chipmaker massively exaggerate a platform’s capabilities, and not be able to learn the truth until 60 days before shipping? Check. TL;DR: start with the expectation that some unimaginable thing will go awry; never forget it.

You should raise more money / funding than you plan for.
Here’s a mind-boggler: success can bankrupt your HW startup as easily as failure. How, you might ask? Because with every month/quarter’s sales, you must order and plan for the next month, and do so without necessarily seeing revenue.  Basically if you’re getting orders from retailers, you need to plan for growth. And order the parts for future orders. And what happens when volume increases? So do cost of goods (even if the per-unit cost is dropping due to scale). I’ve seen this multiple times before: companies scramble to project ahead, order either too much or too little inventory, and run out of money along the way. TL;DR: you will incur costs prior to revenue and need oodles of cash on hand to manage!

The first media streamer!

The first media streamer!

HW requires a deeper understanding of customers / markets.
Its fine/great to start a software company and slowly learn the features that drive adoption, or discover hidden market opportunities. The ability to tweak products and meet different opportunities is the beauty of the modern startup. But this doesn’t work in hardware – you can’t add a button, change a component, etc to a product in the market. Sure if it’s a “headless” device (like a Slingbox or Dropcam) you can always improve the end-user software experience. But need more memory, or an extra port of some kind? Welcome to 2.0. TL;DR: there’s no such thing as a lean hardware startup.

You need a better “crystal ball”.
For the most part, since you are starting 6-18 months away from first customer ship, you need to pull a Wayne Gretzky. It’s not about where the puck is, it’s about where is the puck going? What technology/infrastructure will change in the interim? A product I had designed for a huge consumer electronics company won accolades and awards from retailers, industry professionals, etc. And then the world turned HD in an amazingly short window, and the product got killed. Done, game over. TL;DR: your HW startup vision should make bankable assumptions about the world 18-36 months from now.

Solid backup plan for when things go wrong.
So I’ve identified a plethora of things that can go wrong. Now what happens when something delays your device by 4 months (a fairly reasonable timeframe, if not longer)? What do you do with the ad inventory you’ve pre-agreed to? How about your marketing team you’ve been recruiting and hiring? Or the conference you paid to launch at? How do you keep up morale? TL;DR: have a plan in place, from day one, assuming a multi-month delay will occur at some point prior to launch.

It’s a very exciting time for hardware entrepreneurs, and it’s very true that the resources available to them today are far superior than anything before. But in all candor, most of this new support and infrastructure doesn’t actually fix the fundamental struggles that come along with making things. I’m looking forward to the next crop of must-have gadgets, and hope the above tips and thoughts help any readers who come along.



Active or Passive Television?

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1411575895493_wps_54_Couple_waAs I think about the “future” I think a lot about existing audience behavior, and what patterns might be changing. Too much talk is overarching of “All Television” – as in “the future is ALL binge-watching” or “the future is ALL mobile” or etc. To ponder the future, we must get specific about patterns and trends, and determine their implications.

As a starting point to divide the conversation somewhat, I believe there are two fundamental modes of “watching TV” – an active and a passive mode:

Active television watching. This is Game of Thrones. This is the season finale of Idol. This is any episode of Broadchurch. The shows that you watch and do virtually nothing else. You are captive in the action, the drama, the storytelling. And for different folks, this is different shows, genres, networks, etc.

Passive watching. Basically everything else – the shows that are half-captivating your attention, and by definition, half-not-captivating your attention. This is when people Tweet, Text, Facebook, Snap-o-gram, or whatever other thing that may catch their eye.

With those definitions in mind, let’s consider the potential for change. From my perspective, passive watching is a definitive activity, and one that people still enjoy. Its the same as having music on – the show is the background activity. TV is not threatened here, because it’s just not the primary thing going on in the viewers’ mind. And this is also where the “$0.50 of every $1.00 spent on ads is thrown out” – because at best the advertiser gets a little brand awareness. It’s not really measurable, and a near-irreplaceable activity. You can’t really passive watch YouTube, nor passively use Facebook – these are both primary activities. Conclusion 1: passive TV audiences will become increasingly un-monetizable, across any platform. Conclusion 2: passive TV viewing is most vulnerable to anything that creates entertainment-related background noise (hence Pandora being one of the most popular “apps” on smart TVs).

And as for changing active watching? Well good luck with that. There’s just too much great TV, in literally every genre available, to pull away from. If, for the purposes of this discussion, we define “TV” as 22- and 44-minute long shows, then we can also assert that YouTube clips/videos are not directly competitive of active viewing TV behaviors. Regardless of the delivery platforms – be they live, streaming, on-demand, linear, whatever – this is a deliberate, desired activity by whomever is watching. And they’ll keep tuning in long into the future of whatever it is we call television.



When Did the Super Bowl Become PG-13?

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The only thing worse than watching the call to pass up the middle at the end of last night’s Super Bowl was watching the ads with my young kids (okay, watching the fight at the end was worse – how lame).  In 3 hours my kids saw more explosions and graphic violence, more over-sexed-up themes, and more sadness and angst than they have seen in their entire lives. After the Nationwide commercial (more on that in a moment), I got increasingly agitated about what other sights my kids had to see for the sake of advertising. Left me wondering what the heck is going on here?!

Super Bowl ads used to be a chance for brands and agencies to showcase cleverness, creativity, and humor. Here’s the “top” ad from 20 years ago, good old 1995:

Edgy, eh? Did it “raise awareness” of something? Nope. Did it tickle our fancies? Nope. In fact, it wasn’t really that funny at all. But it was original, it was light-hearted, it was memorable – it did everything an ad is supposed to do for its brand. So much so that if you talk to anyone over the age of 30 they can still quickly recall the Budweiser Frogs. And by the way, big thumbs up to Budweiser for maintaining a higher standard than so many others during their 30 second spots. BTW yeah, I’m praising Budweiser – that’s how bad things were this year.

Here’s a list of all of the 2015 Super Bowl ads, “ranked” in some way by USA Today (we can ignore the rankings, since, who cares?). How many were “clever”? A tiny handful – coincidentally I thought Nationwide’s “Invisible Mindy” commercial was one of the best of the batch. How many made you laugh, or even chuckle? How many left you feeling positive thoughts?

Now how many featured a little more “sexiness” than is needed for a Super Bowl ad? Do I *need* to explain to my 7 year old what the little blue pill falling into the Fiat is for? Do young women need to get exposed to Victoria’s Secret’s idea of what a woman’s body is “supposed” to look like (if one is genetically gifted, that is)? Is the fun of playing iPhone games the chance to win a Kate Upton? This isn’t a 9:30pm commercial on FX, this is supposed to be “fun for all ages”.  As my friend Alan Wolk said:

[my son] is 16 now, but when he was younger and we’d watch games on TV, I’d cringe every time a Viagra or Cialis spot came on, thinking “please don’t ask me what an erection lasting more than 4 hours is.. please don’t ask me what an erection lasting more than 4 hours is…”

How about violence? I’m pretty sure that with Blacklist episode previews alone my kids saw more cars explode than they ever have – cumulatively (I like The Blacklist FWIW – but there’s a reason it airs late).  The new Terminator movie preview shows a “skeleton robot walking through fire”.  I love Mophie, but does God have to watch some bizarre apocalyptic thriller to be entertained?

Lastly, straight out morbid and depressing ads seemed to be the Super Bowl Ad Meme. Yes, I’ll cry for pretty much any use of Cat’s in the Cradle – as all dads do – but do I really think Nissan is helping the father-son relationship? And this year’s Budweiser entry, with “sad dog”, while it was certainly not one of the worst offenders, sure brought us all down a notch. But even that wasn’t nearly as bad as the Nationwide commercial. I won’t link to it, as I don’t want to give more views to a thing I found terrible.  And terrible it was. So bad that numerous memes were instantly created on Twitter as a result, which in turned  provoked a response from Nationwide – in which I found this little gem:

The sole purpose of this message was to start a conversation, not sell insurance.

Sorry, but I’m calling BS on that. No offense to the entire insurance industry, but yours is not one of altruism. I have no idea the true motivation behind the ad, other than to shock and awe. It was literally despicable at every level, and I’d rather see a thousand more wardrobe malfunctions than anything like this ever again during daytime sports television. In my opinion, the decision-maker behind that ad should be fired, and shame on NBC for allowing it to air. Per my friend and colleague Jesse Redniss (of BRaVe Ventures):

As a parent, it was very difficult watching a game of sport with a light hearted and fun Half time show and then explaining to my children what the #NationwideDeadKid Commercial really meant? “Daddy, Why did that boy die?  “Dad, he looks so sad… why is the bath tub overflowing”

In some senses, it was like watching a scene out of True Detective. SB49 felt like advertiser ambushes. Taking advantage of these moments and literally sucking the life out of the family friendly entertainment value that many of us were expecting.

As a sports fan and parent, this year’s Super Bowl Ads will have an impact on how we watch it next year. I don’t need to be ambushed by advertisers, especially ones who want my business. The NFL, NBC, and brands need to think much more deeply about their audience – because we aren’t all 25-year-old boys drinking out of red cups anymore. There are plenty of ways to entertain, delight, and intrigue audiences without resorting to such tactics. I may sound stodgy and out of touch, but I also know how to tell when a line’s been crossed.