Posts filed under ‘Video’
SkypeCast
The other day, Comcast (NASDAQ: CMCSA) announced a partnership with Skype, to allow–among other things–video chat on your TV while watching shows.
In addition to the usual candy-coated and breathless quotes from company officials, the NY Times had this comment: “Cable companies like Comcast have been trying to figure out how to make it easier to chat while watching shows.” That should have read, “...trying to figure out how to make money from subscribers while they’re chatting during shows.”
May I be among the first to say “Epic Fail”?
People are already chatting while watching shows; some of them on video, surely many on Skype. For free. I get using your TV as a large videoconference screen incorporating Skype. That has value. But how many are going to pay Comcast a hefty monthly charge so their friend’s face appears next to their favorite show on the TV set , instead of their tablet or iPhone? Not many, I bet.
Oh, they will undoubtedly snag some consumers who don’t know about Skype already, and who think the idea of chatting with Grandpa over American Idol (assuming you’re both watching live) is cool. I suspect there aren’t many of those.
Interesting how instead of watching together in one room, the industry vision has become one in which we’re in separate domiciles watching the same thing at the same time, using the Internet to chat about what’s happening on screen. Looks like Isaac Asimov had it right all along.
Perhaps there are other benefits from a Skype/Comcast hookup. I’m not holding my breath on this one.
Disclosure: I hold no position, either long or short, in any stocks mentioned here.
Lawyers and TVs and Tubes, Oh My!
The business models surrounding video delivery to consumers are sure evolving rapidly, aren’t they? And in sometimes surprising ways.
Time Warner Cable (TWC) has been sued by Viacom (VIA) over an iPad app it recently released. The app allows TWC subscribers to watch live TV on their iPads within their own home, effectively turning the iPad into a TV. It streams channels wirelessly to the iPad, typically from a router attached to the subscribers’ internet cable modem.
Cablevision (CVC) has released a similar app, although because it streams directly from the cable box (plus wireless adapter add-on), this one does not require cable subscribers also to be internet customers.
Broadcasters such as Viacom are claiming that TWC and Cablevision have “no iPad video streaming rights.” Time Warner Cable, for its part, insists it can send TV to any device in the home.
Meanwhile, ESPN (DIS) has taken another tack, releasing their own app that lets properly identified subscribers from Time Warner Cable, Verizon (VZ), or Bright House, to stream its live content to an iPad from any location. This is an example of the “TV Anywhere” initiative envisioned by the likes of TWC and Comcast (CMCSA) among many others.
And on another front, startup company Zediva is being sued by all 6 major movie studios over its service that “rents” DVDs to consumers and then streams them over the internet. Each customer has exclusive use of a DVD disc and a DVD player. Again, the studios are claiming copyright infringement, calling Zediva’s business model a “gimmick”. All Zediva is really doing is putting a DVD into a player, pressing play, and then sending the customer the output signal directly. They just happen to be using the internet instead of a wire.
[Next, I imagine, it will be illegal for me to stand outside my neighbor's house and watch a DVD on his TV through the window.]
Logically, Zediva and the cable providers seem to be on reasonably solid ground. Legally, who knows?
Regardless, the notion that this has anything to do with distribution or copyrights is beside the point. What’s really being fought over is the ability to make money in new ways by using the Internet. Or as the late Senator Ted Stevens of Alaska laughingly called it, “a series of Tubes.” Time Warner Cable’s app does in fact use IP to move video around, though it is exclusively on its own cables. And while Zediva uses the open internet, there is precedent in the form of virtual circuits to think of that transmission channel as being private and dedicated.
In a way, these links are functionally no different than wires. Perhaps Senator Stevens was more right than his detractors thought. Companies are using the internet just as if it was a series of private pipes, or tubes. So why wouldn’t these distributors have the right to send video this way?
Because it interferes with the content owners and networks from getting two things they dearly want: (1) unfettered control over using the internet to sell content directly to consumers, and (2) ownership of customer information for marketing (read: monetization) purposes.
Every movie Zediva rents and shows is one that a studio can’t derive its own rental income from. When people watch Mad Men or Survivor from the dining room on an iPad, that’s one more episode that can’t be monetized through iTunes or Netflix (NFLX), or viewed on ad-supported Hulu.
What’s worse, when an iPad, smartphone, or netbook is used to view video streamed through a cable or satellite provider, the content sellers have no information about the end user. If they could sell or rent directly, they’d gain valuable demographic and other information that could be used for marketing purposes or monetized via ad networks.
They know that content is not king; the customer is king. Networks and studios would love to be able to eliminate the middle man if they could. And they don’t want to be beholden to Apple (AAPL), the way music publishers are now and magazine publishers are quickly becoming.
To own the customer is to be prepared for the day when consumers “cut the cord” on cable. And when they use tablets and smartphones instead of a
TV.
In 1993, Nicholas Negroponte (the founder of MIT’s Media Lab) made a prediction that became known as the “Negroponte Flip.” He said, in essence, that what was wired would become wireless, and vice-versa. When you consider that our phones are becoming wireless, and over-the-air TV is increasingly via cable or fiber, Negroponte seems to have nailed it. We have a similar flip occurring with centralized mainframe computing moving to distributed (PCs) and then back to centralized (the “Cloud”).
Could it be that just as we’ve reached the point where most TVs are flat, and no longer have tubes, we are moving to a time when the “tubes” are what’s important, and video is no longer watched on TVs?
Disclosure: I hold no position, either long or short, in any stocks mentioned here.
Tele Visions
What will a TV “app” look like in the future? How will interactivity between viewers, social networks, and advertisers evolve? Is the linear model of TV dead? Will people continue to pay for content? What’s the frequency, Kenneth?
A few weeks back I attended a TalkNYC event on TV Apps, social TV, and Interactivity. More recently, the Connecticut Digital Media group hosted a similar panel covering online video. Quite a diverse set of speakers representing interests that spanned the spectrum of content owners, creators, advertisers, and technologists. Because of the multiplicity of viewpoints it’s not clear anybody really had answers to any of the above questions. Frankly it’s just too early to say with any certainty how everything will turn out. However, that’s not stopping many companies, investors, and other stakeholders from trying.
Nor will it stop me from sticking my neck out.
Interactivity is not new. It just jumped networks.
People have watched TV together, talked about it, and read about it, nearly since the time when television sets replaced the family campfire (radio). Discussing the popular show of the day at school, or over the back fence, is a time-honored tradition. I’m not sure which was invented first, the TV or the office water cooler, but they seem to always have been linked.
The difference now is that this interactivity, this social connection about video, has gone online. That means it’s no longer geographically bound. And technology has allowed viewing habits and preferences to be accessed, measured, monitored, interrupted, shared, and influenced, in ways that nobody dreamed possible.
In effect, social interactivity over video is now at scale.
The interesting question is whether that scale has come at the cost of depth. Are we now more involved with our TV, or less? Are we more deeply connected with those we share it with, or are our relationships numerous but more shallow?
If there’s nothing to watch on TV, maybe we don’t care
I see this as a massive tradeoff, because in the end attention is a finite resource. Teens and tweens are increasingly watching TV while at the same time reaching out over social networks, looking up facts, tweeting about what they’re seeing, and controlling what they watch. (Even digital immigrants like me sometimes embrace this multitasking.)
On the one hand we’re more involved with each other, as we converse over our portable, miniaturized water coolers, make an online purchase of the purse some actress is carrying, and signal an advertiser we like the blue convertible more than the red. On the other hand, how much attention are we really paying to the TV show now?
Are we seeing a move from long-form content to short-form video just because we require time between clips to text each other about it?
And this doesn’t even address the move to content-on-demand. What will there be to talk about when nobody is watching the same thing at the same time? Are we then simply interacting with databases? Or will we instead find ways to queue up our shows in synchronization with our friends?
Does Interactive TV even require a TV?
Watching “lean back” media like television still tends to be a shared experience. Conversely, using a screen on a computing device has typically been a solitary activity. You might be communicating with others over a social net but you’re likely to be physically alone.
This disconnect might explain past failures at “interactive TV”, and seems likely to limit the amount that televisions themselves can become interactive, despite the claims of some that want to build apps and widgets right into the device. Or—heaven forbid—turn your TV into a large screen PC.
I certainly wouldn’t want someone in the room updating their Facebook profile on screen and interfering with my enjoyment of whatever I’m watching. Or expanding an app that eats up screen real estate.
This means the TV isn’t going to get very smart, despite manufacturers ramping up production of internet-connected sets. Oh, there will be some small, useful, unobtrusive apps or “bugs” that will get built in, but for the most part widgets will be D.O.A., and the TV itself will remain passive.
Interactivity will be a multi-device experience. And the smarts will be—as they already are—in the other gadgets.
Whether via a laptop, an iPad, a smartphone, or some combination resembling a remote control, such connected devices will allow viewers to interact with shows, products, celebrities, ads, and each other. We will “check in” to the shows we’re watching, vote on outcomes, rate shows, comment on what we’re seeing, buy items, and share everything.
We will control the horizontal. We will control the vertical.
More importantly, our external devices will allow us to efficiently find content we want to watch, and then control how it gets to our TVs or other viewing devices. And even move it between devices.
These last two interactions—filtering and directing video—represent the stickiest problems. It’s clear that consumers are increasingly demanding a migration from strict linear programming (TV shows on a set network and schedule each week) toward a video-on-demand world. And the ability to move their content to any device they want, often in the midst of watching it.
But how do we find anything? What replaces the filtering function the old style networks performed for us? To what extent is passive profiling by content providers and marketers, and active participation in social networks, going to keep us from sinking in a sea of video dreck?
Even if we find the things we really want to watch, will we be allowed to access and consume them the way we want?
T
here is a lot of experimentation going on in the marketplace around these questions. Set top boxes, iPad apps, content aggregation sites, changes in theatrical windows, new DVR functionality, smartphone integration, and more. Precious little standardization and no agreement on business models, though.
Because of conflicting corporate interests, differing technical approaches, content licensing agreements, regulatory quagmires, and general resistance to change, it will take years for common approaches and standardized technology to make them a reality for a majority of us.
But many are trying, and a few will succeed. It will happen. Because after all, we humans are interactive creatures. And we still want our MTV.
Disclosure: I hold no position, either long or short, in any stocks mentioned here.
Close to the Edge
With the New Year upon us, and a possible rally (well, sometime this year we hope), it may be time to think about dipping your toes back into the market. But how to put your money to work?
For technology stocks, I think it’s important to have an “edge”.
Over the past few years, I’ve been following a trend that–while not new–still has plenty of legs. Particularly coming out of this bear market. It’s not a stock screen, but it helps me see which technologies could be viable investment candidates, and which might instead require swimming against the current.
Things like control, intelligence, and value creation have long been shifting away from the center. Moving from large, centralized bodies towards the edge. The edge of markets, networks, locales. There are exceptions, of course, but this movement is still happening.
So I always check first to see whether any new technology–or its market–supports this trend towards decentralization and democratization.
“Uh, gee Scott, that’s great. I have no idea what the hell you’re getting at.” Fair enough. Let’s look at a few examples.
Healthcare
Lots of innovation here. Doctors interacting with patients and each other at a distance. Sending X-Rays to specialists abroad for review. Doctor-patient consultations over videophone instead of in the office. Glucose testers and home dialysis kits let measurements occur at home, not the hospital. Portable ultrasound machines and defibrillators allow diagnosis and treatment in remote areas.
Consumers are rating doctors, sharing treatment experiences, and finding health information via social networks and the Internet. Doctors themselves are forming “expert” networks to vet new research and treatments according to the wisdom of crowds thesis.
All of this is related to distributing power or value creation away from traditional central facilities and control.
Companies such as Sonosite (NASDAQ: SONO), HealthGrades (NASDAQ: HGRD), WebMD (NASDAQ: WBMD), Vital Images (NASDAQ: VTAL), and American Well (private) are among many in this space.
Manufacturing
Here’s a favorite.
Computer Aided Design (CAD) made it easier for companies to decentralize or even outsource much of their product design. But now they’re actually outsourcing the fabrication, and in some cases the end product manufacture can be done outside of a factory.
3D Printing (often more formally termed Rapid Prototyping or Rapid Manufacturing) has come of age, with machines that can take computer files and fabricate plastic or metal objects from nothing more than raw material and software. Before, even simple prototypes had to be fabricated over the course of weeks. Now, companies can turn a design into a marketing concept model within hours, and make needed changes much quicker, shortening design cycles. They also can avoid expensive tooling, since short-run items can be “printed” instead of made with traditional manufacturing processes.
Companies like Stratasys (NASDAQ: SSYS) and 3D Systems (NASDAQ: TDSC) make large industrial grade fabricators, as well as less expensive versions suitable for office use. Soon, they (and others like Desktop Factory–private) will make consumer versions cost effective.
Why have a replacement part for that lawn mower or kitchen mixer shipped from the factory, when you could simply download the file and print it at home?
Municipal Networks
While many think this is an idea that went bust, there’s still a huge demand for municipal networks. FCC statistics on broadband penetration are quite misleading, and plenty of Americans have either pokey DSL-like speeds, or no broadband at all. Towns and public utilities, often in partnership with private enterprise, are filling the gap.
True, many of these projects have not fared well–but that was usually due to faulty business models, not the underlying tech. Many ideas have been tried, and people are getting much smarter. There are many thriving wireless and Fiber-to-the-Home projects.
Instead of one giant centralized “mother of all” (Ma) Bell owning your phone or Internet connection, the end piece is owned locally. And its often faster, with more capacity, than many parts of the Internet. This is recapitulating what happened years ago to television in underserved areas, as Community Antenna Television (CATV) gave birth to today’s cable networks.
And it’s happening with energy generation too.
Others
Here’s a partial list of other innovations that are benefiting from “the edge”:
So how do we wrap our minds around this explosion of innovation? I think of this trend as occurring in 3 distinct ways:
Decentralization–moving utility to the edge
The basis for this first one is hardware, and typically some kind of disintermediation. It’s driven by things like the availability of leading-edge technology, shrinking hardware sizes, falling costs, and the Internet.
Examples–3D printing, TiVo, municipal networks, distributed energy generation
Authoring–tapping users to create
Here the basis is centered more around software, the demand for mass customization, and hobbyists. You know, that class of people with time, passion, interest, and the willingness to work for nothing but recognition and/or personal satisfaction. The availability of software tools, Broadband, and the Long Tail (everyone’s a hobbyist in something) are drivers.
Examples–Blogs, mashups, personalized ad streams, podcasts, YouTube
Emergent Systems–enabling collective/cooperative effort
This last is typically facilitated by an enabling service. Often with the existence of an intermediary to provide a control or filtering function. But while the result mimics a more centralized function, the value is created on the edges–a true “whole is greater than sum of parts”. Here the driver is simply networks of people in easy, rapid communication. I think they call that the Internet. 
Examples–Wikipedia, open-source software, eBay, prediction markets, grid computing
Then according to the man who showed his outstretched arm to space,
He turned around and pointed, revealing all the human race.
I shook my head and smiled a whisper, knowing all about the place.
Yes, “Close to the Edge”
Of course, like all classification systems, the answer you get will depend on which consultant you talk to. The concept is pretty general, and sometimes unwieldy. Regardless, I find the edge idea to have a lot of merit, and hope you do too.
The key is to find companies that create, use, and benefit from the technologies that are fostering these trends. Or the markets that they enable. It might be tool, a marketplace, an ad platform, a device, a network, whatever. Then do your research.
Once you get down to individual companies, it’s caveat emptor. Picking stocks based on trends alone is what cost people so much money investing in the likes of Webvan (another “edge” play) or Pets.com.
I have done research on some companies that are emblematic of this trend–including a few mentioned here–to a greater or lesser extent, some more recent than others. In fact many I covered as an analyst fell into this mold–and not by coincidence. But do your own due diligence before investing, or hire someone to do it for you.
Let me know if you think of other ways this idea might be manifesting in technology markets.
Disclosure: I currently hold no positions, either long or short, in any stocks mentioned here. However, I do consult with companies in some of the markets discussed.
We Interrupt This Transition…
…to bring you an important announcement.
In today’s NY Times, former FCC commissioners William Kennard and Michael Powell both urged Congress to delay implementation of the digital TV transition. There’s been neither enough money set aside to subsidize converter boxes, nor are there enough in stock to satisfy demand anyway.
Oh, and not enough people have taken advantage of the government offer. Nor is the FCC call center prepared to handle the estimated 1.5 million calls from confused consumers once the switchover occurs.
“Moreover, many people will need help hooking up their converter boxes and setting up their antennas. (Picking up the digital signal may require reorienting or moving an antenna, or buying a more powerful digital antenna.)”
That last part has not generally been communicated to anyone. At least those likely to be affected.
[Switching to my best Jon Stewart falsetto]: “Nailed it….”
I agree with the commissioners. The FCC and other powers-that-be need to do a better job of making this transition happen. It’s not a simple one, and there are technical elements beyond the skills of many people to understand without help. Otherwise, as the article states, “If the transition to digital TV goes badly, it will inconvenience millions.”
Disclosure: I hold no position, either long or short, in any stocks mentioned here.
‘tennas, Anyone?
Ever wake up in the morning, fire up the PC, and then find your Internet connection doesn’t work? Annoying, isn’t it? Particularly if you have no idea why. Imagine if that happened to your television set.
It could, if the day you wake up is February 17th, 2009.
That’s the day that over-the-air TV stations in the U.S. are required to cease analog transmission and go to all-digital. People who have analog televisions will no longer be able to receive broadcasts.
These unfortunate souls have three options: buy a new digital TV, purchase a special converter box (subsidized by government vouchers), or subscribe to satellite or cable.
All of this has been getting fairly wide publicity. It’s also confused a lot of people. Naturally, cable and satellite providers have joined the party, by trying to con their customers into believing they need to upgrade to digital service to watch (any) TV after the cutover. DISH Network is just one example.
(In reality, no one is “forcing” the telecablecos to upgrade to digital. But since they want to go digital for their own reasons, they’d dearly love for you to opt into higher monthly fees.)
The government ran a DTV “beta test” in Wilmington, NC in September. However, the hoopla surrounding the test, the low percentage of analog households, the presence of special help lines, and FCC commissioners lurking in the area are conditions unlikely to be duplicated when the nationwide conversion occurs.
That will affect an estimated 13 to 23 Million households–most of which are, understandably, not tech savvy. And 35% of which are completely unprepared for the transition.
Wait, it gets worse.
The dirty little secret, not widely publicized (or understood), is that even if you have a new converter box, you may lose your signal anyway.
Analog signals degrade in a familiar way–the poorer the reception, the more snow you see, and the fainter the picture gets. Digital doesn’t work like that. It tends to fall off the cliff entirely. Except for a bit of pixelation, the picture is either there or it isn’t. So people with indoor rabbit ears, or bad rooftop antennas, may lose some or all of their stations, depending on how good their reception was in the first place.
But there’s more.
Some stations are broadcasting at intentionally reduced power levels during the transition, but will ramp up subsequently. People could lose their signal only to have it restored later–perhaps after they fall off their roof trying to install a new antenna. On top of that, so-called “low-power” stations aren’t required to go digital at all. So to receive those, you’ll need to be sure and get a converter box with analog pass-thru.
What a mess.
People who want to learn more about the transition to DTV can do so at the FCC’s official site. Detailed help on antennas can be found here.
One thing’s for sure. Congressmen and FCC commissioners (current or budding) will be getting their ears bent big time after the switchover, once hundreds of thousands of loyal constituents are without their bread and circuses. The response will undoubtedly be swift, accompanied by pompous rhetoric, rolling heads, and ill-advised new laws.
Still, it could be worse. Imagine the response if 2009 were an election year, and politicians faced the prospect of people not seeing their re-election ads.
Disclosure: I hold no position in any of the stocks mentioned here.
I Want MyTube, Not YouTube
Maybe I should have called this “A One-Channel TV, Redux”.
There are two recent bits from NewTeeVee about the last 10-foot problem, and especially getting YouTube to the TV. Whether via a special-purpose set-top box, or integrated into your TV, both still fall short.
How difficult can it be to get all the video services (current and future) into my TV? The answer may not be as simple as a browser, which is probably not the right user interface for the living room. But perhaps something close to that. Couple that capability together with a simple way to stream all the content you already have on your PC, and it’ll sell like hotcakes.
But yet another box with only a couple of services? No thanks.
Disclosure: I hold no position in any of the stocks mentioned here.
Ass Backwards, Again
Blockbuster (BBI) has outdone itself now. It just announced a trial of in-store kiosks that will allow consumers to download movies directly into a portable media player (PMP) to take with them. For now, only the Archos player will be supported.
Let me get this straight.
Blockbuster wants you to hop in your car and drive to one of their outlets. Using soon-to-be-five-dollar gasoline. Just so you have the privilege of downloading a movie onto a portable player.
They do seem to have this whole thing ass backwards, don’t they?
Hello! Ever hear of the Internet? Why in the world isn’t this a download to your PC and then a transfer to the PMP? (Yeah, I know, the answer is the studios and their oh-so-customer-friendly Digital Rights Management fixation.) Blockbuster’s insistence on driving consumers to their increasingly useless stores has clearly reached new heights.
Meanwhile, Netflix (NFLX)–while noting its ultimate future is in downloads–predicts that its DVD mailing business won’t PEAK for 5 to 10 years. That tells me the smart money is on DVDs (either standard or Blu-ray) to last some time. I agree.
It’s not that downloads aren’t the preferred solution–personally, I can’t wait–but that universal adoption is a long way off. Why?
- The studios’ love affair with DRM, artificially reducing the availability of video fare and making it difficult to transfer media to other devices
- Still no inexpensive, simple solution in sight for getting video from the PC or Internet to your TV.
Here’s an idea: If you insist on making people drive somewhere, at least let them leave with a disc. Use Qflix technology from Sonic Solutions (SNIC) to print a fully licensed DVD out of the kiosk instead. That’s portability and ease-of-use in a single package. As I’ve noted before, this would allow Blockbuster to reduce/eliminate inventory, and get more Hollywood back catalog titles into customers’ hands.
[Sonic holds the key technology patents on download-to-burn, which has been approved by the DVD Copy Control Association (DVD-CCA). This allows discs to be burned with CSS encryption, pleasing the studios and making such copies legal commercial DVDs.]
Sonic was working with MovieLink, prior to its purchase by Blockbuster, to push this tech into the end user market. While disc burners for consumers probably won’t go mainstream anytime soon, Sonic is in trials with kiosk makers. It’s a nice transitional solution until discs are truly dead. Why Blockbuster has made no use of this technology is a puzzle.
But then so is everything else it does these days.
Disclosure: I hold no position in any of the stocks mentioned here.
Red State/Blu-ray State
As I expected, NPD reports sales of Blu-ray Disc (BD) players dropped precipitously over the last few months. This is contrary to the desires and expectations of Sony and others in the Blu-ray Disc Association, who seemed to think the BD/HD-DVD format war was the big impediment to HD adoption. Why should this drop have been obvious?
- The economy sucks right now. Last thing people will do is buy another box, especially since–
- Many consumers don’t see much advantage to Blu-ray over upconverted DVD players. (Of course, many people also bought HDTVs without any access to actual Hi-Def programming. )
- There’s virtually no player available (except Sony’s Playstation 3) that incorporates the full functionality of BD Live interactivity. Why would anyone buy BD now if the final feature set isn’t available?
- Oh, and did I mention that due to the lack of competition from HD-DVD, player prices have not only failed to drop, they’ve actually gone up. Doh!
By waiting as long as it did to settle the format war, the industry came perilously close to making discs irrelevant at the same time downloading is finally starting to gain traction. Its failure to prove a compelling Blu-ray value proposition for consumers is only making things worse. If this goes on any further, it’s game over.
Sony and its partners gave it everything they had just to win the battle, but forgot there’s still a war going on with the ultimate enemy–downloads.
Guess that makes High-Definition discs the Democratic Party of video.
Disclosure: I hold no position in any of the stocks mentioned here.
Open Sezmi
Startup Sezmi is beginning to get some notice–in a short piece on NewTeeVee, and a longer one on Forbes. Sezmi is aiming to become a new video distribution platform, combining over-the-air broadcast and internet delivery. While their strategy is ambitious, I have some doubts.
What it gets right:
- Video on Demand. These guys seem to get the transition from channels (called “nothing more than playlists for shows” by Sezmi co-founder Phillip Wiser) to VoD.
- Storage vs. Delivery. Storage is still cheaper, and Sezmi will “pre-load” it’s Terabyte box with some content, based on the results of a predictive software algorithm.
- Navigation. Sezmi is developing a viewing guide that will combine traditional TV fare with internet content, in customized “channels” that automagically group content by category.
What it doesn’t:
- Content. None announced yet, and Sezmi is attempting to extract per-sub pricing from the networks that’s identical to what the telecablecos pay. Good luck with that.
- Pareto’s Rule. The model relies on the fact that only a few shows account for most of the viewing at a given time. True enough. But take away the option for (or even impede) viewing that occasional odd show, and you’re D.O.A.
- Inertia. Such a new paradigm will create difficulty with viewers who are more interested in plopping down in front of the tube than in learning a new technology, box, and way of viewing TV. Certainly not impossible, but not easy either. At least with TiVo (TIVO), consumers could always default back to their old habits if they wanted–Sezmi will require jumping in with both feet.
- Cost Structure. This is where the wheels fall off, I think. Sezmi claims it can deliver TV for half the cost of cable, not having to pay for physical pipes. But it must pay to lease extra local broadcast spectrum. And it piggybacks on telecableco internet pipes that are largely cross-subsidized by the very content distribution it aims to disrupt. Let’s see how long that lasts. Not to mention beaucoup marketing and subscriber acquisition costs just to get off the ground–investments that incumbents like Comcast (CMCSA) and Time Warner Cable (TWC) have largely made.
My bet is that this will get lots of press, a few rollouts, and ultimately fail. If Sezmi is able to get some of its predictive algorithms right and create a useful way to combine internet and TV programming into a single guide structure, someone will buy it eventually–at a price disappointing to its VCs–for that technology alone.
Otherwise, Sezmi simply becomes Sezyu.
Disclosure: I hold no position in any of the stocks mentioned here.
by Michael Mauboussin
