We often forget that the thing we don’t like about something is also thing that makes it possible. The annoying part of something good, is usually what keeps it alive and provides us the gifts that surround it. One case in point is Youtube advertising. It’s so annoying isn’t it, to spare that 5 seconds before clicking out, or that entire 30 second advertisement you can’t even click out of – how dare they. What we ought do is imagine for a minute that Youtube never found its monetization model. Then what? Then it probably fails, doesn’t exist and instead of having pretty much all forms of education and entertainment on demand on any topic, any time, we’d be stuck with a few free to air TV channels, home shopping, and marginal pay TV subscriptions.
The cost of the benefits is rarely a heavy price to pay, especially with new technology and disruptive innovations which need to have lower barriers to inspire adoption. And speaking of disruptions – the advertising we have to endure is not nearly as bad as it was in the TV era. Sometimes it’s worth remembering that misdirected hate is both a waste of energy and a short sighted perspective.
It seems every other day I read another story about mainstream media just not getting the shift we are seeing in the landscape. The most recent example is the idea of international TV programs being fast tracked to Australia. That is, them not waiting to show it in a perceived ‘peak ratings’ period in our country, but just showing it as soon as it is available.
One such program that is touted as being on the ‘fast track’ to Australia is Homeland. A really terrific edgy show which was a ratings boon in Australia for series 1. Channel 10 in Australia screened the first series in January this year to more than 1.2 million viewers. This was 3 months after the USA premier. Yet the ‘so called’ fast tracked 2nd series averaged a disappointing 630,000 viewers. Some commentators including this one postulated that ‘fast tracking’ doesn’t work. Claiming that ‘downloads are minimal’ ( WTF?) and that it is better to promote heavily and program in a strong period.
It’s clear to me that he doesn’t get it. A few points to note:
- Fast tracking should be ‘the next day’. Not 3 weeks after the US shows as channel 10 is doing – way too slow.
- The second season rated poorly because people loved the first one and didn’t want to wait.
- Fact – second seasons of successful shows have significantly higher download rates than first seasons. #obvious?
I could go on… But the simplest fact of all is this – mainstream media are still serving their model, not the model the customer want. This is why successful businesses of yesteryear rarely survive a technology disruption as a front runner.
So I was true to my word and turned off Foxtel in my home. Instead I now have a Sony web enabled TV, and an Apple TV. Both of which do not have any on going monthly charges, but movies and TV shows can be purchased on demand – pay for what you use, not to keep a ‘network’ afloat – just the way I like it.
But the truth is that this TV set up is very labour intensive. It’s not as seamless as cable TV is. Firstly, the usability is not great. We all agree IPTV has a way to go to solve the usability problem (just like smart phones did). Maybe it will be the domain of smart entrepreneurs who develop apps that cut across all web enabled TV’s to give a more seamless, yet personalised viewing experience? If someone out there plans to do it – here’s what it needs:
So here’s the things it really needs:
- Smart phone enabled control pads / remotes.
- Aggregation sites which curate content from places like Youtube and other video sites to give a ‘network style experience’.
- Curation of longer videos on the web – videos that run for less than 20 minutes are annoying.
- History pattern suggested shows to view – genius style.
- Geo located news & viewing experiences.
- Full access to all studios output, not just manufacturer based deals.
Just like web search has become. The TV needs to be agnostic about where the content comes from and just deliver what people want. Once this happens, TV will never be the same again.
* On a side note. Our house now has about 90% of it’s viewing time allocated to Youtube. Full episodes of TV shows, documentaries, music video and kids shows are all available and free here. We use the Apple TV and the iPhone as the remote. it works very well.
I came across this terrific piece of film where the founder of Advertising Agency Wieden+Kennedy – Dan Wieden spoke on the future of TV. He has a smart point of view on “The New TV Landscape” and the opportunities it presents in business.
Besides the fact that it is a great micro lesson, for me it’s another reminder at how terrific the world is today where we can have almost instantaneous access to the worlds great thinkers, for free. As entrepreneurs, we just need to seek it out.
I’ve been a vocal opponent (and customer) of Foxtel. A service that, as the web evolves is loosing its reason for being in my life. So I decided to disconnect my service and here is the interesting story of what happened.
I called the number and the options to choose from (1,2,3,4) for the appropriate issue. This surprisingly included ‘Press 4 to disconnect’. This was the first clue things aren’t right down at Foxtel. Any business that has this issue come up often enough to include it in the first 4 options of customer interaction has some issues.
So I click it and get put through to the ‘Customer Retention Center’ and they ask me why I want to disconnect. A few of the reasons I tell them include:
- I’m sick of seeing better offers advertised to new customers. (Screw the existing ones hey!)
- They have reduced the services and kept the price the same for my account.
- I can’t get movies on demand (which I’m prepared to pay for) without signing up to a more expensive packaging (WTF, the tubes are already in my house?)
They apologise, tell me I’ve been a good customer for a few years, so they offer me a $30 discount per month. Which is 30% off what I’ve been paying. I retort with, ‘if I’m such a good customer why do you only try and keep me once I’ve already decided to leave you?’ Seems to me they have things back to front at Foxtel.
So I took the discount for now – I’m moving house in 2 months and it is all over for me and Foxtel then.
My advice to any Foxtel subscriber out there is to call up to disconnect and get the discount anyway and hack their already flawed proposition, before it gets hacked entirely by market forces.
I am a Foxtel subscriber and every day I get that little bit closer to turning off my $100 per month payment. Not because it is too expensive, but because the value equation is getting worse, at a time when alternatives are becoming more attractive. Sure, their penetration in Australia might be growing, but we are on the precipice of disruptive change to Television, in a way that Foxtel must respond to if they want to survive. And their response needs to be before the impending disruption, or just like the music industry, they’ll be wondering what happened.
I’ll give a summary of the why, and then revert to the what they should do.
Why Foxtel is doomed
The primary reason is that their system is antiquated. The model they employ, is the same as the cable television model which emerged from the US in the late 1970′s. Yes it still exists, but it’s days are numbered. it has already happened to newspapers, it has happened to music, and TV is next. The belief that they can demand that consumers subscribe to content in a world of infinite content is foolish. The world is moving quickly from a pay to play – subscription model, to a ‘free and on demand’ model. The fact that Foxtel has access 35% of homes is irrelevant. The real competition of Foxtel isn’t Free to Air TV, it’s the alternative web enabled screens in the home; laptops, desk tops, ipads, kindles and connected TV’s. Web enabled TV has already penetrated 17% of homes in Australia. With the dropping cost of screen & web technology, the future for Foxtel is bleak.
Foxtel is reducing what we get for the same price:
Only two years ago our $100 per month gave us the gold package. Every channel, 2 free new release movies per month, the IQ recording device and approx 30 on demand shows / movies. Without notice the same amount of money gave us ‘less’ incrementally. First they removed the 2 free movies – without notice. Then they slowly started reducing the number of on demand shows. As I write this it is down to a paltry 7 shows as of today. While everyone else is giving us more, Foxtel are giving less. Anyone would think Moore’s law works in the opposite direction the way they operate.
They don’t get on demand:
The great innovation on the web and entertainment deliver is on demand. Foxtel, still choose to schedule nearly everything that is available, save for a few movies and TV shows they are promoting (the 7 mentioned above). They expect us to work to their schedule. The world doesn’t world like that anymore. They need to wake up to this before most of their customers wake up to the fact that their are far cheaper and better alternatives available than Foxtel. (Including watching all USA TV on demand on Hulu via a proxy spinner.)
They don’t provide access content for purchase without subscription:
In their wisdom Foxtel has added a ‘movie library’ which is ‘on demand’. I thought – ‘Finally they are starting to get it.’ So when I attempted to watch an ‘old movie’ I was informed I had to; subscribe to get access. I thought I went into a time warp back to 1983 or something. It is not as though the movie was going to be free. I was happy to pay for it. But they also wanted me to pay for the right to have access. How stupid are these people, given that the tubes are already connected to me TV? Surely giving everyone access could and would increase revenue via people like me sitting down to watch an old movie. They have the system upside down. They have turned off their revenue tap. This is where they should be taking a lesson from iTunes. You can download whatever you like on demand for a rental fee. I’m really flummoxed by this. I think it is currently the worst media strategy in Australia by any company.
The NBN will hurt their business:
The imminent National Broad Band Network in Australia (NBN) is very bad news for Foxtel. It is basically putting the power of HD web live stream in every home. All that needs to happen is an on demand web enabled competitor to arrive and any one with half a clue will turn off their Foxtel. Not to mention the fact that Youtube HD will become a seriously viable TV option. (If you haven’t lately, you should check out the Youtube Movies, Youtube live Concerts and Documentary’s section – it’s growing daily as are brand content channels – no prizes for guessing their strategy is to win the screen in every lounge room).
Apple Television in coming:
It was reported that Steve Jobs last great disruption was coming to Television with the Apple TV. Not the Current Apple TV box, but fully fledged in home Television screen connected to the web with levels of wizardry we can only imagine. One thing we don’t have to imagine is the depth of content that will be available from it’s existing iTunes store. All on demand, up to date and without subscription fees. When this comes – and it will, I am certain TV will never be the same again…. and Foxtel will be very model T Ford.
Connected TV is rapidly encroaching on Foxtel:
Foxtel is all about being connected to narrow cast content. Now that all TV’s sold are web enabled, we have access to everything we could imagine – Free. It’s a pretty compelling price point. The really important thing we must remember is that the price of technology is dropping. A connected Plasma 42″ TV is now as little as $500 to buy. With the user interface improving rapidly and many US streaming players arriving shortly (Hulu, Netflix, Startup XYZ) there is no space for the ‘monopoly like’ behaviour or pricing. For Newscorp it is newspapers all over again.
Users must pay for unwanted (unwatched) content:
The idea of having to buy packages is archaic. The idea of ‘Packages’ is a supply centric mantra from a time when the factory called the shots – much like travel agents did in the 1980′. But we now live in a user decides, mashup, self design commercial society. The idea that we can’t pay for the exact channels we choose (with volume discounts of course) is not design for users, just the owners. people don’t watch sport. They watch football, or boxing or surfing. people have specific needs, not generic ones. BBC viewers are different to Fox news viewers, so why treat them them same and ‘bundle them up? ‘ It’s an old method which is quite simply broken.
They’ve thrown their opportunity to be ‘platform oriented’:
Foxtel had their chance to own the distribution point of content on demand in Australian homes, and they let it go. They have tubes going into 35% of homes and every Foxtel discussion I have with anyone these days is around how poor the value equation is, and how they are poised to seek alternatives which they know are emerging. Their old world mentality is much like th music industry who were in love with their system, and not their customers. And this will be their downfall.
What Foxtel must do to survive:
Everything above and more.
But I honestly think it is too late. They may still exist, only via exclusive content like global sports properties. They’ve missed their chance and I have no doubt that disruptive internet technology will do to them the same thing it has done to many industry stalwarts. The most interesting fact is that, although I’m calling their game as over, the opportunity for startups in the space is still alive and kicking, which is ironic. It comes down to one basic fact, that companies who feed off legacy infrastructure almost always lose.
TV was the first entertainment screen in our lives and belonged in the living room. And it stayed there for the best part of 30 years before it multiplied. Slowly, it made it’s way into the other rooms of the house. It was linear and unidirectional, but it was also the start of a new culture. A culture that would shape more than entertainment.
In less than 20 years since the birth of the graphical web, screens in all shapes and sizes have started to pop up all around us. They’ve made things simpler, easy to understand, and just made life better. So much so, that screens now permeate virtually every aspect of our lives.
I call it screen culture.
And it’s much more than TV, web browsers and smart phones. It’s every screen we see. All web enabled, all around us and consumers expect the screens to serve them without a hitch.
They’re in our pockets, they’re on our desk, the car dashboard is now a screen, on the back of airline seats, the airline check in counters, supermarket checkouts, shopping centre directories, in all retail spaces, in the back seat of taxi’s, bus shelters, community spaces. They exist where ever communication and commerce does. Every machine now has a screen. Every time we interact with technology, the interface is increasingly screen enabled. And we often attend to multiple screens concurrently.
The more we learn about the screen, the more it learns about us. The best screens can be manipulated, touched, caressed, controlled and even spoken to. It’s our job to humanize the screens so that they are culturally sensitive. They need to intuitively know what we want… and lead us to that solution. The interface has to be the instruction manual. Screen culture demands that we teach people “how”, while they interface. That the learning, and the solving, happen simultaneously. The screens need to serve us. We must be able to navigate the tight spaces of the small screen, if we can do this, then conversion to the big is easy.
This can only happen when we design as humans, not technologists.
I’ve been thinking alot about the differences of various businesses I’ve been involved with. I invested the formative years of my business life working in consumers goods companies. Classic fast moving consumer goods companies that thrived through industrial revolution and then boomed during the TV industrial complex.
I’ve since invested most of my time in service based internet businesses, startups and advertising. They both have relative advantages and disadvantages that I only ever realised once I had time to digest the dynamics in each of them. The most interesting observation I’ve made is the difference when the office and the factory are the same thing. This occurs in service / web based business. In consumer goods the office and factory tend to be separated.
The key advantage that the consumer goods scenario has is that the office is not linked to output. It creates time for thinking. The immediate concerns of what needs to ship today are somewhat removed. The urgent, doesn’t get in the way of the important. Yet, the challenge here is that we can become out of touch with how things work.
The key disadvantage of the service scenario (office is the factory), is we don’t have as much time to think and consider. There is always something that needs to be created, done or fixed. Over time our mental flexibility declines as we get absorbed in shipping what we make and meeting deadlines. Yes, we know what is happening, but we get too close to it. We lose vision and creativity via also ‘being’ the production process.
The important thing for startups and marketers alike is to know which environment we are operating in, and to work real hard on the area of disadvantage.