LIVEdigitally

What it Takes to Make a Successful Hardware Startup

Posted on by

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?

Posted on by

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?

Posted on by

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.



Guest Post: the Broken Golden Age of Television

Posted on by

This is a guest post by TV industry thought leader Erik Schwartz:

broken golden tv

It’s broken. But in 4K!

“Television is dead.” 

“It’s the golden age of television.”  

Here at the NATPE conference in Miami Beach this week, I’m hearing both of these arguments being argued repeatedly.  I think there’s truth in both positions.

This is the golden age of television. Programs like Mad Men, Breaking Bad, HOC, Hannibal, Fargo, The Americans, are as good or better than anything that has ever been produced. The current MVPD model is optimized around every network having a blockbuster show that makes that network a “must carry” for cable and satellite providers, and then filling up the rest of its schedule as cheaply as possible. As the number of networks has grown, the number of these tent-pole programs has swelled.  

Television is dead. Fewer consumers are watching this programming in a linear fashion, as the network airs it. It is DVR’ed, viewed on demand through TV Everywhere or Hulu, or purchased from iTunes or Amazon. It’s a generational shift. This is making it more difficult to monetize via traditional TV advertising channels. (My kids barely know what commercials are.) If this trend continues, will networks continue to invest in the funding of premium programming?

Will the SVODs like Netflix pick up the slack by funding even more new programming? To a certain extent, yes. But SVOD growth was fueled by buying archives of existing high-quality content, for much less than it would cost to produce new quality programming. This content is cheaper because it is already monetized.  It is found money for the rights holder. At market saturation (and Netflix is almost there in the US), if the SVODs have enough programming (original and archive) to prevent subscriber churn, is there incremental ROI in making more premium shows? Their profit is maximized by offering just enough content to keep a viewer subscribed — everything over that threshold eats into profit margins. A viewer consuming more SVOD is an incremental expense that does not increase revenue.

Yes, it is the golden age of programming. But the existing models for monetization are flawed given today’s consumer’s preferred consumption channels. Flat-rate SVOD incentivizes “just enough” great programming. For decades, advertising made revenue directly proportional to consumption. That changed when retransmission fees started accounting for more network revenue, and then it changed more with SVOD. For this golden age to continue, we need a new model in which revenue for all stakeholders is correlated with audience size.

– Erik Schwartz



Why Netflix Offline Mode is Unlikely to Happen

Posted on by

squirrel-no-internetFrom TechRadar:

And despite the pleas of the masses (or maybe it’s just us) it doesn’t sound like it’s going to happen any time soon – or ever. Speaking to TechRadar, Cliff Edwards, Netflix’s director of corporate communications and technology, said “It’s never going to happen”.

Now personally, I’d love this to be false. I’ve flown 75K miles a year for quite a while now, and am on planes and in hotels enough that I could’ve powered through all of Luther, New Girl, Broadchurch, and much more by now (those are my current shows FWIW). Heck, I’d have watched Lost by now – but I don’t think I have 200+ hours of connected time I’m willing to sacrifice for lens flare.

But truth be told, Netflix has no reason to cater to me, nor the legions of business travelers who follow suit. Here’s why, in handy list format:

1. Nobody’s Canceling Netflix for a Lack of Offline Access

If the Internet has connected us all together to do one thing, it seems to be to collectively whine about high-class problems. But getting rid of the unquestionably best-bang-for-your-buck TV service because you were inconvenienced en route to JFK makes no sense. And since churn is actually a key factor for Netflix, the lack of this being a “Problem” is enough to shut down the topic.

2. Nobody’s Subscribing to Netflix if they Added Offline Access

Much like the above, it’s pretty hard to imagine a market of people with disposable income (as business travelers are prone to be) who choose not to subscribe to Netflix because of price/features. So it’s pretty hard to argue that adding this feature would generate a wave of new subscriptions. Further, since customer acquisition is again a huge metric for Netflix, if they believed this is an untapped market, we’d possibly see change. Clearly they don’t.

3. It’s a Hard Problem to Solve Well

We could mince words about it, but the fundamental experience around using Netflix is pretty great. Everything about queuing up downloads, archives, and managing storage is a not-great experience. So adding this burden, which would inevitably create customer support overhead, product experience dilution, etc, would have to be well-justified. Again – not saying it can’t be done, just saying doing it really well isn’t easy, and is it worth it? See above.

4. It’s an Expensive Problem to Solve

In case all the above didn’t somehow add up, remember that Netflix, to the best of our knowledge, does not currently pay content owners for non-streaming access rights. And content ain’t cheap. And having worked in this field for more than a decade would lead me to believe adding in offline access would be an expensive negotiation point.

In conclusion…

Combining any of the aforementioned challenges – why does it make sense for Netflix to spend more money to build more product to solve a problem for a small number of users without gaining new paying customers nor staving off churn of existing customers?

It doesn’t.

When to Use Star Ratings Versus Pass/Fail

Posted on by

If you’re a Uber/Lyft user, you’ve probably noticed a recent trend of drivers asking for 5-star reviews at the end of your ride. While this might seem normal for any service where reviews/ratings matter, what you may not know is this: drivers whose ratings hit 4.5 or lower get fired. In other words, when you see the 1-5 stars and click on 4-stars (a good review), you are actually saying “fire this person” to Uber/Lyft.

This, in my opinion, is a very bad use of a ratings system. First, we’ve been trained through our lives that 3 stars = “acceptable”, 4 stars = “good”, and 5 stars = “perfect/great”. For reference, that’s the equivalent of a D, B-, and A+ grade. And an A+ is supposed to be exceptional/rare. Further, if these companies are basically saying “only great drivers can remain employed” – that’s fine, but they need to train the customer in a way that makes sense.

Another example of poorly used 5 stars is Yelp. Ever see a 2-star restaurant on Yelp? Pretty rare. Took a *lot* of searching to find the following:

worst sushi - yelp

 

Any frequent Yelp user knows 4/4.5/5* = likely to be good, 3.5* = worth trying, and 3* and below should be skipped if at all possible. At least this is *closer* to a real review system, but the problem with Yelp lays in the reviewers. I’ve seen reviews of restaurants wherein people only discuss the cocktails at the bar, or give “4* for food, but 1* for service” reviews. This makes no sense as a method of judging a restaurant – and is the core to why professional reviewers exist.

Comparing, for just a moment, to services such as Metacritic and RottenTomatoes:

rotten tomatoes metacritic

Very clear ratings, lots of transparency, lots of meaningfulness in gradients.  Gives me enough information to make decisions on. Reviewers aren’t liking the above film, but early audiences are. Now I can make a choice and know what I’m getting into. There’s nobody rating a movie because of the popcorn quality in the theater, whether or not the ticketing process went smoothly, or if someone was polite to them or not. So I propose two options:

1. If it’s a pass-fail thing, make it so.

When I get out of a Lyft/Uber ride, it seems that the company wants to know, basically, should this person continue to be a driver? If that’s the question, then just ask it. Pass/Fail – all done. Then if I choose “Fail” they can quickly follow-up, determine the nature of my complaint (bad routing? rude? smelly car?) and take action. Further, drivers can be informed that XX Fails per month = terminated. Also, the same would work in reverse – was the passenger someone who shouldn’t be permitted to continue using the service? If so, determine why, take action, move on.

As an aside, I do think both companies should have a GE-like “bottom 5% of passengers get fired as customers” type of policy. I hear so many complaints from drivers about the rudeness and demands many passengers make it baffles me. Really people? And you wonder how taxi drivers got that way.

2. If it’s a scale, but with nuance – ask different questions.

If Yelp really wants to make scores relevant, the 5-star system should have criteria. For example, users should be asked to rate Food, Service, Ambiance, and an Overall Score. I don’t mind discovering that a place has mediocre food but great drinks and service – but that should be obvious from the get-go.

If Uber and Lyft want to know what I really think about my ride, ask me about the driver’s Safety, Routing, and Politeness (or other factors, as needed). I’ve often found drivers that were super friendly and prompt, but had terrible driving instincts (likely related to the roughly 3% of San Francisco area drivers who actually live here as opposed to Alameda or Sacramento).  Compare either service to Tripadvisor:

tripadvisor

I’d actually complement Tripadvisor at the single most useful ratings criteria sorting system I’ve ever seen. The simple nuance of sorting based on Vacation versus Business travel is *huge*. I can quickly re-sort the above hotel to ignore Families, and watch how the Traveler Ratings change as a result.

What about being able to set a preference for Lyft/Uber drivers who are rated highly based on Driving as opposed to Social? Or can I please view Yelp reviews, ignoring anyone who dines at a different budget than me? It’s not that any of these ratings or opinions are invalid, just not always helpful when combined and out of context.

In the meanwhile, I’ll go back to seeking out 4.8 or above drivers. Because those 4.7 people are terrible.

Advice to Mentors: Stop Giving Non-Advice!

Posted on by

As a mentor to both 500 Startups and Montreal’s FounderFuel, I’ve met a lot of founders, read a lot of business plans, and given a lot of feedback. And I use the same two disclaimers with every founder I meet:

  1. My feedback will be brutal and honest.
  2. Feel free to ignore any of it.

I’ve looked founders in the eyes and questioned the very core of their product, strategy, business model, etc. And to this day, I’ve heard nothing but thank-you’s. In fact, the most consistent statement I hear back from founders is “I wish others had told me this earlier!”  For example, here’s a reply to an email I sent someone, in which I apologized if my feedback was only critical:

Please do not apologize, I need this perspective desperately! Everyone I have sent it to says it reads well and I know it needs to be ripped apart…

Mentors – you are there to help improve businesses, not be buddies. It’s almost like parenting – sure I want to be “friends” with my kids, but not if it gets in the way of being their father, which must always come first. There’s plenty of time and room for nurturing – and also time to call out problems when they arise.

The comment above is not the first time I’ve heard something like it. Founders know they have problems and need help, and when mentors give nothing but praise and head-nodding, it hurts the company’s chances of success. I tell all founders “you have friends and family, right? their role is to pat you on the back, tell you you’ll be a billionaire, and lift you up any time you need it.” And it’s not to say that my role is to tear someone apart – it’s to help them think critically, challenge their own assumptions, and get refreshing input and worldview onto their initiatives.

Additionally, I have a strong tendency to avoid giving specific feedback on areas where I have no expertise. I don’t know much about SEO, so I don’t comment. But when it comes to product, marketing strategy, communications and messaging, and fundraising, I am ready to dive into the weeds with any entrepreneur, and help get to the core “why?” of whatever they are doing.

A mentor of mine has a big thing about asking “why?” – basically he won’t stop asking it until all assumptions are challenged and taken down to their core. It’s almost excruciating to go through, and unquestionably has made any session I’ve ever had one that improved my strategies, plans, visions, etc. Try it sometime – work with a trusted advisor/mentor/friend and push yourselves to the very limit of “WHY?” until you truly can’t go any further. By that I mean, both parties agree that the answer is fully rational AND cannot be dissected into a smaller question.

It’s great to support entrepreneurs, and never want to discourage them. But if you leave a meeting with some founder, and you are thinking to yourself “that distribution strategy makes no sense” and you didn’t say it out loud? That’s the same as me telling my kids they’ll be great swimmers, and never taking them for lessons.

Is Chevy Missing a Golden Marketing Opportunity? And Stuff?

Posted on by

If by now you aren’t aware of the awesomely awkward delivery of a (apparently recalled) Chevy truck to Madison Bumgarner last night, well here:

Instant Internet classic. Just google “Chevy Guy” and you’ll find a gold mine of funny.

And then go over to any Chevy property. Their Web site is … fine. Their twitter feed is full of … clever jokes?

Hysterical.

They should OWN this moment. The Chevy Guy Video should be front and center. Every painful line he stammered should be played UP, not hidden away. His little note card should come inside every new Chevy truck sold this year. And their web site should look like this:

technology and stuff

C’mon Chevy – grab this and RUN with it.   #TechnologyandStuff. Create a @ChevyGuy twitter account. Instachat some stuff.  Get a new commercial on air by Monday with the Chevy dude explaining technology and stuff to someone. Or hire Rob Ford to do a new one for you. Whatever – just do something!

OWN IT.

Blocking Apple Pay Won’t… Pay.

Posted on by

55688263So Rite Aid and CVS have decided to block Apple Pay in their stores. I’d characterize this as short-sighted and a likely damaging mistake. It’s one thing to not rush to adopt the new platform, but to deliberately get in consumers’ way is pretty much never the right option. Once a certain technology is in enough peoples’ hands and is convenient to use and the blockade is transparent enough to regular people, they will deliberately seek out alternate solutions.

As more and more people buy NFC-enabled phones (the technology that powers Apple Pay, as well as numerous Android options as well), they’ll expect/demand the convenience. Further, considering the motives of these retailers is suspect (they have a competing solution to avoid paying as much credit card fees), these are the combinations that create long-term resentment.

The better solution for these retailers is to re-enable Apple Pay, and then present a better, viable alternative. For example through loyalty programs, or discounts, or freebies, or any other positive incentive they can offer.

Considering the relative easy with which a consumer can choose a nationwide pharmacy chain, I’m curious to see how long this blockade holds.

Nine Thoughts On An Unbundled HBO

Posted on by

HBOToday HBO’s CEO Richard Plepler announced that they’d offer some form of HBO service in 2015 that doesn’t require a cable subscription. From Re/Code:

Plepler said the company will go “beyond the wall” and launch a “stand alone, over the top” version of HBO in the US next year, and would work with “current partners”, and may work with others as well. But we wouldn’t provide any other detail.

This is what we’d call “kind of a big deal.”  It’s big enough to make my head spin a little bit, so I’m going to share my thoughts in a non-“prose” fashion. So in no particular ordering, my thoughts (mostly questions really):

“Could this be the death of Pay TV as we know it?” Yes, this could easily be the canary in the coal mine. If HBO “fully” unbundles, then the combination of Netflix+Hulu+HBO as (non-sporting) Pay TV Alternative is pretty compelling. And if it works, then it’d be easy to see ESPN and others follow suit. Which then takes us to unbundled TV – and probably higher overall content costs, but a lot fewer junky channels to watch.

“What exactly are they going to offer?” I highly doubt the Unbundled HBO offering will be the exact equivalent of the current HBOGO product/service. My bet’s on a library similar to what you can find in Amazon Prime.

“Is this for the masses?” About 30-odd-million US households have HBO. That leaves 80mm as the opportunity ahead. So do these folks not have HBO today because of price, interest, accessibility, catalog, other? Curious.

“This could have no impact on Pay TV after all.” Before we run off and say Comcast and Directv are ruined here, let’s go back to that 30 million HBO subscriber number. Does it *really* drop in a meaningful way? I could easily see this as a non-predatory move.

“But then again, what about cable-delayers?” We’re clearly seeing the adoption of Pay TV shift from something 22-year-olds do when they get their first apartment to something done later in life (long term impact of this is still TBD). It’s really, really hard to go FROM a full Pay TV lineup to an all on-demand/a la carte one. But the reverse isn’t true – if you have never had 500 channels, you don’t know what, if anything, you are missing. And with an HBO service available without Pay TV, maybe this impacts that delay even more.

“How will it price-compare to iTunes and Netflix?” If I were to buy the shows I already enjoy on HBO from iTunes, it’d cost me roughly $60 this year (Game of Thrones and Silicon Valley), or $5/mo. But if I were a larger consumer of their content, let’s say 6 original shows per year, that’d be roughly $15/mo. I’m not even using any new math to figure that all out – which means anyone/everyone can do the same. Would I spend more than that for full HBOGO access today? I don’t think so, because any price point above $10-15/mo is going to cause me, and others, to do math. Which turns out to not be that hard to do. Obviously with an unknown product offering, this is hard to speculate, but again – I’m curious.

“What does Comcast think?” While I don’t know the intricacies of the distribution terms between HBO & Comcast, I do know that, for the most part, Comcast tends to have a “most favored nation” type of clause. This is what’s historically prevented new offerings (Intel Media?) from actually competing in the market, since “nobody” can get better pricing than them for a given channel. So *something* exists between HBO & Comcast to enable this new service – wondering what that looks like.

“What if there’s more to the story in terms of distribution/devices?” Maybe this is an all-Amazon deal, and Prime subs get even more HBO, and that’s it? Or if it’s unique to iPad owners? Or is only on Samsung Smart TVs? Or Google Fiber? I don’t really think any one of the above is on the money, but there could definitely be other players involved here. Further, I’d muse that this is a distinctly “not available on a TV set or connected TV device” offering – but I could even be wrong on that too.

“What if it does actually still require cable?” It’s very hard today to subscribe to basic cable + HBO in all markets. What if this is a move that requires *some* kind of cable subscription, but then unlocks the full HBO service? This would still fit in the description Mr Plepler outlined earlier.

Add your thoughts to the comments below. And for no particular reason, the Game of Thrones theme sung using nothing but Peter Dinklage’s name:

Better Hobby: Blogging or Coding?

Posted on by

Between a full-time job, a family, home maintenance, and some backyard chickens, I manage to drum up about 23 minutes a week for hobby-time. I have two areas of interest I continue to explore, and curious to get some feedback “from the cloud”. Would love any opinions on…

1) Blogging

So I’ve been blogging for a decade. I enjoy the process of picking a topic, thinking on it, and writing something up. But I often find it frustrating and unrewarding. It’s frustrating because there’s a feeling of pressure to keep up a certain pace/continuity in writing. It’s also tricky as I always want this to be my personal voice, and be free to write things without tying in my employer in any way.

2) Coding

I started programming as a teenager in the Turbo Pascal era, and stopped advancing in the early days of C++ and object oriented programming. I picked up PHP and JavaScript (and Visual Basic!) over the past decade, and while I’m nowhere near the calibre of a professional developer, can certainly build a thing or two of use. I’m now following the awesome Ray Wenderlich tutorials to learn Swift, which I’m mostly enjoying. But again, lots of frustrations as I get set back by not understanding some basic/fundamentals of either XCode, Objects, or some other “simple” knowledge base that I had never picked up.

In either/both case, I also have a personal bad habit in that when I get too frustrated or hit a roadblock, it’ll tend to set me pretty far back. Something I need to work on, of course.

Reason to code more: have fun building things. Best-case scenario is make working prototypes of ideas I have.

Reason to blog more: have fun writing about things. Best-case scenario is increase visibility as an industry thought leader.

Would love to hear any feedback (if anyone’s still reading?)!

Why Apple Watch Pricing is Brilliant

Posted on by

90s-snap-bracelet-photolist-500Until Monday I was “that guy” fully believing Apple wouldn’t introduce a “watch” – maybe some kind of wearable (I had imagined a slap-wrist bracelet thing with Apple awesomeness) – but not a watch. I felt that (a) some kind of “remote extension” to the iPhone/iPad made a ton of sense but (b) “nobody” wants a watch. And then team Apple strutted their beautiful stuff, and I thought “gee willikers, at $99 that could just be a hugely adopted mainstream device.” But when the $349 price tag appeared, I scoffed and hemmed and hawed (note: no, I didn’t actually haw).

I woke up this morning thinking a little different. At $349 they might just have created another phenom.

At $99, I’ve realized, it may have been ready for mass adoption, but then – the masses may well have not adopted it. It’d be up for comparison with the various crud coming out of generic manufacturers. But not at $349.

What I believe Mr Cook and his cadre have created, at this much higher price point, is another high-falutin product. One owned by those with disposable income, enough that they’d “toss it away” on a “gimmicky” product. One with built-in scarcity.

In other words: they are re-creating want in a product, maybe even almost-need to those who can’t just have it.

Unlike the iPad, whose value I saw upon announcement, the Apple Watch is not so clearly framed in my mind. I can’t yet visualize how I’d use it on a day-to-day basis, which always slows down my likelihood to adopt.

But, I can now see the want that consumers will inevitably feel. The pride with which the early adopters will strut down the streets, wearing obviously too-short sleeves to ensure that everyone around will see they were first.  And one day it’ll drop to $299, then eventually some much more accessible price, perhaps even as low as $99 for a Watch Mini in a few years. Smart.