If Netflix Were a Cable Network, it Would be "the Most Viewed"

If Netflix were a subscription TV network, the amount of streaming conducted by Netflix users would make Netflix the most-watched subscription TV network, according to BTIG Research.

BTIG estimates that the "more than one billion hours" of streaming by Netflix customers in June 2012 would make Netflix the "most watched TV network overall including broadcast and cable.

In January 2012, BTIG noted that "Netflix streaming usage is exploding and is far, far bigger than traditional media executives give it credit for."


The "average" Netflix user now watches about 80 minutes of streamed content every day. 

Only a Supremely Self-Confident Company Would Post its Competitors' Current Prices in Store: Best Buy Might Do So

How many companies do you know that would be willing to post their competitor's prices, on the same merchandise, inside the store?

Best Buy might do so, suggesting that the company believes its prizes are close enough to Amazon that doing so will emphasize the value of shopping at Best Buy.

That points to an interesting perception problem Best Buy wants to overcome, namely that its prices "must be" higher than what is available online, and from online retailers such as Amazon.

That can lead to customer "showrooming," where consumers inspect merchandise at Best Buy and then purchase online.

That Best Buy might be willing to post current online prices indicates its belief that prices are competitive enough to allow it to do so.

Some observers already say Best Buy does offer prices that compare well or even better than the competition. Over the years, Best Buy has even considerably weakened Amazon’s sales tax advantage, the retail price advantage Amazon can offer in some states because it does not collect sales taxes.

Executive vice president Stephen Gillett, Best Buy’s new digital chief, recently told institutional investors the company might install screens throughout its stores that display real time prices on products offered by competitors like Wal-Mart and Amazon.

How many firms do you know of that would dare do such a thing?

Tablets are Changing Content Consumption

“The rapid adoption of media tablets is substantively changing how consumers access, create and share content,” says Carolina Milanesi, Gartner research vice president. But some might argue that “content creation” is fairly limited to email messages, social network replies or other short messages.

A new survey by Gartner of users in the United States, United Kingdom and Australia found that the main activities moving from PCs to media tablets are checking email (81 percent of respondents), reading the news (69 percent), checking the weather forecast (63 percent), social networking (62 percent) and gaming (60 percent).

That probably illustrates as well as any statistic the key role tablets are assuming as primary content consumption devices, with the PC being used for “work” tasks related to creating more-complex content.

Media tablets also play a more dominant role in the home than mobile phones or PCs, with the highest usage taking place in the living room (87 percent), the bedroom (65 percent) and the kitchen (47 percent).

Respondents say they purchase a media tablet, in preference to a PC, for its convenience, small size and light weight.

The survey also found that 45 percent of respondents do not share their tablet at all. In other words, a tablet is almost as personal as a mobile phone in terms of usage and consumer attitude, for nearly half of users.

The respondents, early adopters of media tablets, said they use their multiple devices (PCs, TVs, mobile phones) interchangeably, rather than substituting one device for another. They use whichever device is at hand, or the most convenient to use at a particular time and for a specific task.

However, respondents use their PCs (desk-based or mobile) 20 percent less at weekends.

Overall, you might note that most consumer electronics devices these days are “consumption” devices (MP3 players, game players, tablets, smart phones, TVs) while a few devices (PCs, cameras) are mostly for content creation.

Tablet Sales will Pass Notebooks in 2016

Tablet PCs, such as Apple’s iPad, are expected to be the growth driver for the mobile PC market over the next few years. In fact, tablet shipments will surpass notebook shipments in 2016, according to NPD.


Overall mobile PC shipments will grow from 347 million units in 2012 to over 809 million units by 2017.

While notebook PC shipments are expected to increase from 208 million units in 2012 to 393 million units by 2017, tablet PC shipments are expected to grow from 121 million units to 416 million units in this period, for a compound annual growth rate of 28 percent. 


A key driver for tablet PC growth is adoption in mature markets (including North America, Japan and Western Europe), which will account for 66 percent of shipments in 2012 and remain in the 60 percent range throughout the forecast period. 


Tablet PC shipments into mature markets will grow from 80 million units in 2012 to 254 million units by 2017, NPD predicts. 

Figure 1: Worldwide Mobile PC Shipment Forecast (000s)

Source: NPD DisplaySearch Quarterly Mobile PC Shipment and Forecast Report

Figure 2: Emerging and Mature Market Tablet Shipments (000s)

Source: NPD DisplaySearch Quarterly Mobile PC Shipment and Forecast Report

Google's Relationship with Telco Mobile Payments is Complicated

To say Google has a complicated relationship with mobile service providers in the mobile wallet or mobile payments space is an understatement. Google both competes directly with some efforts and also appears to be looking to partner with others.

Deutsche Telekom is in discussions with Google, credit-card networks and banks about becoming partners to Deutsche Telekom’s new mobile payment system, Business Week reports.

Deutsche Telekom already had said it is working with MasterCard in Europe, allowing the Deutsche Telekom mobile payment system to use point of sale terminals accepting Mastercard payments.

So far, the talks are exploratory. “We’re talking to other players in the market, and even a cooperation with Google is theoretically possible,” said Thomas Kiessling, Deutsche Telekom chief product and innovation officer.

In principle, Google could supply credentials and loyalty features, as Google Wallet already works with Mastercard payment terminals and systems.

Separately, Google’s Save to Wallet APIs allow developers to add features allowing visitors to bank and merchant websites to save payment cards and offers to Google Wallet.

The “Save to Wallet API for Payment Cards” enables banks to integrate any credit or signature debit card into Google Wallet in a relatively simple manner. Google provides card-issuing banks with two options: 1) a “no integration” option that allows banks to provide us card art, and co-market Google Wallet, or 2) a light integration option, which enables banks to push cards directly from their websites into Google Wallet, with user consent.

The “Save to Wallet API for Offers” enables merchants to publish offers that can be saved to Google Wallet as well. Offers can be redeemed by consumers using a mobile device either using SingleTap NFC at the point of sale, or by showing and scanning the offer during checkout.  

The benefit of the API to the merchant is that website visitors easily can save an offer from the retailer’s website so that they have it with them when they visit your store.  Google Wallet will also remind customers to use offers before they expire.

But Google’s current relationship to telco-owned mobile wallet or mobile payment systems is complicated. In the U.S. market, Google Wallet faces Isis, the consortium owned by AT&T, Verizon Wireless and T-Mobile USA, as a competitor.

In the United Kingdom, Google and PayPal both have warned that a proposed joint venture between Britain’s five biggest mobile service providers could stifle growth of the nascent market, the Financial Times reports.

The “Project Oscar” mobile payments initiative involves Vodafone, Telefónica’s O2 and Everything Everywhere, the merged U.K. businesses of Deutsche Telekom and France Télécom.

On the other hand, Google obviously is interested in mobile partners, as it has been working with Sprint as part of its U.S. Google Wallet operations.

Separately, China Telecom also has announced a new mobile banking service more oriented towards mobile bill payment and money transfers, rather than retail payments.

Deutsche Telekom aims to make mobile payments a reality for Deutsche Telekom’s 93 million mobile customers across Europe, beginning in Poland in 2012.

In Germany, Deutsche Telekom will conduct trials using tags and cards rather than NFC-capable (near field communications) devices, a simple solution to the relative lack of NFC devices in the installed base.

Deutsche Telekom will issue the MasterCard products via its subsidiary company ClickandBuy, which has the mandatory “e-money license” required to operate a mobile payment system.

Cable, Satellite, Telco TV Providers Will Have to Do Something About Programming Costs

AT&T and AMC Networks have settled on a new contract, after going to the brink of non-renewal.


Dish Network, which has been engaged in a contract dispute with AMC Networks, appears ready to drop AMC from the Dish line-up, giving AMC’s channel positions away to  HDNet Movies. That unusual move illustrates the growing tensions within the video subscription business between distributors and content owners.

Though cable, satellite and telco TV distributors often risk consumer ire over monthly bills that almost routinely grow every year, faster than the overall rate of inflation, distributors maintain, not without reason, that such price increases are driven by higher carriage fees paid to the programming networks.

By its own estimates, about 41 percent of Time Warner Cable operating expense is content acquisition fees. About 57 percent of on-going cost is all other operating cost, including network operations, marketing, customer service and other overhead.

A la carte programming, with consumers able to buy single programs as they wish, or whole channels, if that is what they wish, is the great fear of executives in the video distribution business (cable, telco, satellite video services).

But some might argue that if consumer prices for such services continue to grow consistently at rates far above the background rate of inflation, latent demand for such services will grow.

3 Sets of Challenges for Mobile Service Providers

Mobile service providers face at least three different sets of challenges related to bandwidth consumption. Skyrocketing consumption is outrunning revenue earned from supplying that demand. That is a capital investment issue.

At the same time, there is growing pressure on lucrative narrowband services, especially text messaging and voice, from over the top alternatives and declining voice usage in many markets. That represents a gross revenue and profit margin squeeze.

Third, the customer perception of value of carrier-provided voice, texting and mobile broadband access needs to be enhanced. At least in the near term, that is arguably the fastest way mobile service providers can boost both revenue and profit margin.