ESPN’s John Skipper doesn’t see any benefits in new TV models – yet.
ESPN chief John Skipper is happy to talk to any of the so-called new over-the-top Web video players surfing around the fringes of the cable TV business. But he doesn’t see any major deals happening soon — if ever.
In a conversation with Reuters at this year’s cable show, Skipper was blunt about his skepticism over the idea his network – the best paid in the business according to SNL Kagan data — could work with a new Web partner, a tie-up that may in some way threaten the cozy $100 billion a year cable programmer-distributor relationship which feeds the entire industry.
“We have a significant stake in maintaining the current model. There’s no advantage to us in new models that undercut what we have today,” said Skipper, speaking from the NCTA Cable Show in Boston.
ESPN pays tens of billions of dollars every year in sports rights fees to major sports and college leagues — much of which is live programming that doesn’t lend itself naturally to the subscription video-on-demand model popularized by the likes of Netflix and Amazon, he points out.
The Disney-owned sports network is the envy of the cable television business, and several major rivals, like News Corp and Comcast Corp’s NBC Universal, would love to replicate its model.
Skipper was careful to play down recent bullish comments about ESPN’s strengths versus potential rivals. But he pointed out that, while he respects his rivals, it would be difficult for them to build a new sports network to the size, scale and fees that ESPN enjoys today.
He also disputed the idea that the rising cost of sports could one day see ESPN forced onto a sports tier.
Facebook’s passive-aggressive friendship
We are witnessing a fascinating changing-of-the-guard moment in tech. The old Internet, represented this week by once-mighty Yahoo, is fumbling with another leadership crisis it must solve before it can even think about restoring some semblance of relevance. The new Internet, Facebook, is ruled by a young man in a hoodie who is on the verge of creating a massive public company that, as was the nascent Yahoo back in the early ’90s, will be an Internet darling longer on potential than track record, but running hard on an open field.
The common thread might seem to be the “If it’s big, it’s gotta be BIG” illusion that got us all in trouble at the turn of the millennium, when Internet investment hysteria equated today’s eyeballs with tomorrow’s profits. But it’s always about the profits, and the people who promise them. This time that person is Mark Zuckerberg, who as the books on the Facebook IPO closed Tuesday, well in advance of Friday’s first trade, seems to have convinced Wall Street that his seven-year-old company could be worth more than $100 billion — the richest-ever launch in Silicon Valley.
When you value your company at 100 times revenues, investors are banking on the belief that Zuckerberg has perfected the unstable compound that is social abandon and advertiser hunger.
Search remains pretty much the top use of the Web (as opposed to the Internet) – the gateway to everything else. The other big use is now social, which was invented on the Web but whose chops will be tested in the app schoolyard that is the mobile Internet.
But thus far, advertising works better on search than social. Google makes about $40 billion a year, almost 100 percent on ads. Facebook is reporting last year’s revenues at just north of $1 billion $3.7 billion. Google has a market cap of roughly $200 billion – so it’s twice as big as Facebook’s IPO valution and makes 40 times the money more than 10 times the money.
While Facebook is very successful, the question is: at what? It’s great at creating a community of time-wasting freeloaders, but it needs to be good as an advertising medium to be worth anything to the institutions falling all over themselves to get in on the ground floor of its stock.
To compare the new and the old way of tech, let’s just say, for the sake of argument, that there are two kinds of Internet companies – Googles and Facebooks.
Instagram’s Facebook filter
The startup had millions of users, but, from the beginning, just one customer.
The predominant way of interpreting Facebook’s billion-dollar purchase of Instagram, in light of the social-networking giant’s forthcoming IPO, is that Mark Zuckerberg had to pick up the photo-sharing app to boost his company’s mobile engagement. That would allow him to guard the mobile flank against incursions from Google, Twitter, and whatever other social-media tools might next arise.
That may be true – and it may even be the way Zuck thought about the deal when he swallowed hard and ponied up the purchase price. But that way of analyzing Facebook’s pickup, and the pickup of dozens of other startups, not just by Facebook but by Google, Twitter, LinkedIn and others, is probably not telling the whole story. Here’s a different theory, one that better describes the tech world that we, the users of the Internet, now inhabit: Instagram may have had millions of us as its users, but it was really built for just one customer: Facebook.
Silicon Valley, for too long, has confused the issue of what it means to be a user of a website, service or app, and what it means to be a customer of the app. Intuitively, you’d think they would be one and the same: The person using the app is the person consuming the app. But increasingly, apps are being made to grab the attention of the hegemonic companies in tech. Whatever it takes to get bought.
Sure, startup CEOs are careful to refer to their user bases as just that – users – but even when money changes hands, those users are cattle to be herded toward a cell on a venture capitalist’s spreadsheet, to help the VC decide whether to fund another pivot, engineering acquisition, rack of servers, whatever. Users are just another dart, basically, that startups have to hurl at the bull’s-eye and ensure success.
A colleague of mine tells a story: You can tell when a tractor was made to be purchased by a farmer, and you can tell when a tractor was made to be purchased by a corporation to be used by its employees. Tractors whose users are also the customers come equipped with every convenience, from a satellite radio to Wi-Fi to all the cupholders a farmer could dream of. They drive well, and their controls are intuitive, because that’s what the average tractor driver wants, and what the tractor competition provides. Tractors bought by companies, for earthmoving, rock breaking and the like, come equipped with nothing but a hard seat and a prayer. Employees – mere users – don’t get any say on the amenities, or lack thereof.
Wireless industry at annual convention bemoans lack of consumer trust
The wireless industry is one of the least trusted businesses among U.S. consumers ,and network operators need to improve their reputations as they look to provide sensitive services like mobile payments or health monitoring, according to the chief executive of the No. 3 U.S. mobile provider Sprint Nextel.
Sprint CEO Dan Hesse cited statistics regarding the wireless industry from the Reputation Institute Pulse Index annual survey during his keynote at the CTIA — The Wireless Association annual U.S. wireless convention in New Orleans.
“Even cable and oil industries rate higher with consumers than we do,” Hesse said. “Its very troubling.”
Hesse, who himself is facing a push by some shareholders to vote him off the board at Sprint’s shareholder meeting next week, said he did not know why mobile has such a bad reputation. But, he said, it urgently needs to improve as it offerings tap further into people’s lives in areas such as financial services, health and home security.
“Trust is important. There has never been a device as personal as a smartphone,” said Hesse who participated in a panel of the top executives from the top four U.S. mobile providers.
In his presentation, Philipp Humm, chief executive of No. 4 U.S. operator T-Mobile USA, showed a video advertisement that portrayed his company’s network as being substantially faster than the Apple Inc iPhone on the network of bigger rival AT&T Inc . AT&T’s mobile chief Ralph de la Vega pointed to the advertisement for a suggestion as to why customers might feel they cannot believe U.S. operators.
Yahoo CEO Scott Thompson’s forgivable sin
We’ve all had a little time to breathe after the disclosure last week that Yahoo CEO Scott Thompson embellished his resume. Despite saying he received an undergraduate computer science degree, he in fact did not. And while rising through several positions of increasing responsibility for years, he allowed those vetting his suitability to believe otherwise.
So far Yahoo has said Thompson was guilty of an “inadvertent error” and that it was reviewing the matter. Third Point, the activist shareholder who revealed what had apparently been hiding in plain sight and is trying to grab spots on Yahoo’s board, is now demanding that Yahoo fire Thompson.
Is this what’s best for Yahoo? I doubt it. Is Scott Thompson what’s best for Yahoo? I don’t know. It’s too early to say. And that’s the point.
The company is on its third CEO in as many years, and he’s been on the job one day short of four months. You don’t get from here to there overnight, no matter who’s in charge, and you don’t get from here to there at all if you are constantly taking detours.
Yahoo can afford to have a guy at the helm who didn’t get a CS degree but said he did, but it can’t afford to aimlessly cast about, as it has now for nearly a decade. Unlike some CEOs, Thompson isn’t accused of sexual harassment or running a secret hedge fund within the company. There is something to be said for a bit of calm and a period of continuity.
Thompson was hired for whatever talents and abilities he’s displayed since college, not for ostensibly logging computer lab time in his teens. Sure, lying on your resume is not a good thing, and it shouldn’t be rewarded. But in the grand scheme of things it doesn’t rate.
Netflix: The New Arch-Frenemy
The Albanian Army is coming everyone, watch out!
We’re only into week 1 of big media companies reporting their quarterly earnings and the most prominent name hasn’t been CBS Corp, Time Warner Inc, Comcast Corp, and Viacom — instead it’s all been about Netflix.
Pretty much on each of these companies’ conference calls, the $4 billion company from Los Gatos, California was a key reason for a boon to the bottom line by supplying ’found money’ by digital licensing of shows that would have been gathering dust on a shelf somewhere in Hollywood. But also on the calls for several of the same companies, Netflix was seen by analysts as a threat to their future. Let’s not forget the four who reported this week have combined market value of over $160 billion.
At CBS on Tuesday, which most people see as a broadcast and billboards advertising company, the first quarter was given a nice bump from its licensing of old CBS shows like”‘Cheers” but also by newer cable shows like Showtime’s “‘Dexter” and “Sleeper Cell”. Here’s the ever ebullient CBS CEO Les Moonves telling analysts on Tuesday how great Netflix and other copycats are:
“Content is forever and quality content never goes out of style. Nowhere is this more evident than the way we monetize our content digitally. In addition to the deals we struck with Netflix and Amazon, other online video distributors are looking to license our library content. These deals are having a big impact on our financial results, adding meaningful, very high margin dollars to our bottom line”
Amazon’s daily deal biz in personalization push
AmazonLocal, Amazon.com’s daily deal business that competes with Groupon Inc, is trying to make its offers more relevant to subscribers by asking them for more information on what they’re interested in.
AmazonLocal sent an email out on Wednesday asking subscribers to answer questions on what they like and dislike.
“You’re one click away from personalized deals,” AmazonLocal wrote in the email.
After clicking through to AmazonLocal’s web site, subscribers were asked to rate more than 30 different types of deals, ranging from Adventure & Recreation to Massage, Sports & Outdoors and Cafes & Casual Dining. Subscribers could click on one of three buttons for each category, Like, Neutral or Dislike.
The more subscribers fill this information out, the more information AmazonLocal will have to help it decide what deals to send to which people. The more relevant the deals, the more likely people are to buy them.
AmazonLocal may have an advantage over other daily deal businesses, because Amazon already has massive amounts of data on the purchases of millions of customers who shop at Amazon.com.
Indeed, AmazonLocal’s Privacy Notice says: “If you have an account on www.amazon.com and a cookie from that site, information gathered by AmazonLocal may be correlated with any personally identifiable information that Amazon.com has and used by AmazonLocal and Amazon.com to improve the services we offer.”
Amazon selling refurbished Kindle Fire for $139
Amazon.com looks like it is trying to move a bunch of used Kindle Fire tablets. The company offered “Certified Refurbished” Fires for $139, versus a regular $169 for refurbished models, on the Gold Box daily deals page of its web site on Wednesday. New Fires go for $199.
Shoppers can buy up to five of the gadgets each, according to the web site.
“Each Certified Refurbished Kindle Fire is a pre-owned Kindle Fire that has been refurbished, tested, and is certified to look and work like new,” Amazon said. “They come with the same one-year limited warranty as a brand-new Kindle Fire.”
The offer runs through May 2 only, or until the refurbished devices run out, it added.
The irrational imitation of the online news industry
All across Europe, journalistic online startups are launching, aiming to produce and disseminate news in new ways. In our brave new world, the nimble startups of tomorrow were supposed to be overtaking the lumbering dinosaurs of yesterday online. But nearly all of these startups, even the most impressive and innovative sites, are struggling to survive because they face structural and strategic challenges that are not always recognized upfront. To succeed, European journalistic startups need to recognize these challenges, move beyond simply imitating others and find their own paths ahead.
The structural challenges for European journalistic startups have to do with the competition they face in content and advertising.
Startups are trying to establish themselves in a market for online news that is dominated by legacy media like newspapers and broadcasters. New journalistic ventures, such as Netzeitung, Rue89 and Il Post, are competing not only with other startups but also with the popular online offerings of news organizations like Spiegel, Le Monde and La Reppublica. These incumbents, and others like them, have built their digital strategy around their well-known brands and content from their existing newsrooms. They fund them with profits from their (generally declining) offline operations. Together with a handful of aggregators and portals, such legacy players dominate online news provision in most European countries.
As European news startups compete with established news media on the content side, they are also trying to carve out a position in a market for online advertising. That market is already dominated by U.S.-based giants like Google (and increasingly Facebook). A few large players attract most of the advertising, while innumerable smaller websites with display advertising keep down rates (so-called CPMs, cost per thousand impressions), eroding the value of the audience that each journalistic venture manages to attract.
Those are the structural challenges. The strategic challenges, meanwhile, concern the tendency toward irrational imitation. Startups across Europe need to break with two kinds of imitation in particular to develop sustainable funding models for the future.
On the one hand, many startups imitate what has been the dominant model for online news for the last 20 years. They produce content, make it available to users for free and try to cover costs by placing advertisements on their site. This doesn’t work. News that is free at the point of consumption has worked for broadcast television, radio and for-free newspapers for decades. But because of the structural challenges of online advertising outlined above, the model is not working on the Internet. Most sites operating on this basis are operating at a loss, and have done so for years. It is not clear that the dynamics of online news and online advertising are likely to change anytime soon, so to launch a site based on this model expecting to break even is a clear case of irrational imitation – doing the same thing, hoping for a different outcome.
‘Man’ leads domestic movies, ‘Avengers’ big abroad
Romantic comedy “Think Like a Man” easily beat four new films to win the U.S. and Canadian box office race for a second time while superhero movie “The Avengers” stormed into overseas theaters with record-breaking sales.
“Think Like a Man” led domestic charts with an $18.0 million total from Friday through Sunday, according to studio estimates compiled by Reuters on Sunday. New movies including adult comedy “The Five-Year Engagement” didn’t come close, each grabbing about $11 million or less.
Big-budget, effects-filled “Avengers” hauled in a massive $178.4 million since Wednesday from theaters in 39 international markets, Walt Disney Co said. The 3D film from Disney’s Marvel studio set opening-weekend records in 12 territories including Mexico and Brazil and opening-day records in four countries.
“Avengers” reaches North American (U.S. and Canadian) theaters on Friday to kick off the summer movie season. Box office forecasters predict super-sized sales that will rival this year’s record set by teen death match drama “The Hunger Games,” a blockbuster that debuted in March with $152.5 million domestically.
Anticipation for “Avengers” likely kept many filmgoers home from multiplexes this weekend, said Paul Dergarabedian, president of the box office division of Hollywood.com. Overall ticket sales slumped 30 percent from the same weekend last year.
“It just seemed like audiences are saving their time and money for next weekend” and the “Avengers” debut, he said.
“Think Like a Man” brought its 10-day sales to $60.9 million. The movie features an ensemble cast and is based on a best-selling relationship guide by comedian Steve Harvey.
