How The Internet Is Killing Salmon

It's 4:00 on Christmas day. Quiet time. The fire is just right, the house is cleaned up, and there is an ensuing battle between A Christmas Story  and Christmas Vacation on TV. I know, it wouldn't be the holidays without Dad's leg lamp and Ralphie's relentless pursuit of the Red Rider rifle. However, it is really hard to beat the Grizzwalds.

I know the quote is a bit close to the line.  But when you read this post, I think you will appreciate its meaning being pretty dead-on.

He’s cute ain’t he? Only problem is, he’s got a little bit a Mississippi leg hound in 'im. If the mood catches him right, he’ll grab your leg and just go to town. Word of warning though, if he does lay into ya, it’s best to just let ‘im finish - Cousin Eddie from Christmas Vacation (Watch it here)

Ok, so no blog would be good without a soundtrack, right? This time around it is Styx - The Grand Illusion. Hadn't listened to this one in a little while and it's a play through.  This is the album that really put them into orbit. It was their seventh album and was released on 7/7/1977. What's more interesting is that such a good rock and roll album came out at a time when the airwaves were dominated by disco. You'll know many of the songs on this album. So put the needle on the record, sit back, and do some reading.  

Castle Walls

It’s the end of the year and like so many of you, I take the time to look at money spent on all different things. Again this year I've come back around to looking at my home phone and media services. In my case, this would be a combination of DirecTV and Comcast. My landline will survive at least another year. Comcast makes this so cheap at $5.00/month. But the real reason is because I still have young children. Besides the obvious emergency need, I love getting those random calls from them just to see what I am doing at work. It never gets old. But media service is different. I am starting to look more closely at "cutting the cord" and moving away from the conventional means of getting television programming. Look, I could do it right now. Between Hulu, NetFlix, and a high-def antenna, I really could be sans cord. I should note though that doing so would likely result in being sans wife as well. See, in every husband/dad's life, there are those moments where good judgment is just plain obvious. Like the moment you look at your wife and then glance over at your stack of electronics. In that moment, you are supposed to recognize there is simply no way to narrow the gap that exists between the technology YOU can use and that which can be used by your wife and children. Don't worry, that gap gets smaller by the day. While you are waiting (and it won't be long), let me tee up this little story for you. A word of caution: it will make you so want to cut the cord right now, yet at the same time will convince you waiting is the right thing to do.     

For TV and movies, I am a very happy DirecTV customer, and have been for a long, long time.  And while I consider them the gold standard for television programming,  Comcast is the clear leader in Internet and phone access…at least in my part of the country. On the Internet side, Comcast continues to follow the "more for less" model; television programming is the exact opposite. Earlier this year, I called DirecTV to review my service levels and reduce my bill. I didn't resort to using words like "I'm thinking about switching." Instead, I just politely asked for better rates on the service I was consuming. They were very accommodating, with a drop of some $30.00/month, thanks to a package change and the sacrifice of one channel I happened to like. Ok, so I am saving money. But even with these changes, the  bill is still over $100.00/month. It's at that point the annoying mental tap dance begins in my head as I am reminded about the 30+ year old cable model that nearly all of us are forced to subscribe (no pun intended). Everyone paying into the system for all of this programming, much of which you don't want or need. Equally spreading the financial misery burden amongst the whole subscription population. Sounds vaguely like some other systems we all know about…most of which no longer work either. Anyway, back in the day, this was the only way to make this type of service work. But this model no longer works in the Internet age. I have DirecTV for things like HBO, the Discovery network channels, children's channels, and on-demand movies. Local channels are also included in there although they have become far less important given news and weather are all on the Net. I am not a sports guy, nor a home shopping guy. Eliminating those two categories alone would lop off a good hundred or so channels. Really, it would. I counted. Isn't it time for these old-school cable/satellite people to make their products available more a la carte? Yes, yes it is. And believe me when I say that the decision makers hear the bell tolling so much so it is as if the Doors song "The End" is the only song on their mental iPod, playing over and over and over again. At this point it is safe to say that media services such as NetFlix and Hulu Plus are mainstream enough for nearly anyone to use. Yet, there remains one last bastion to be breached; one big shoe to drop; the TV world equivalent to the destruction of the Death Star. An event so pivotal, TV as you know it will be forever changed. It's not a new remote, a smarter TV, or even some big technology shift. The revolution will start with three letters: H-B-O. Let me explain.

Come Sail Away

Let's hop in the DeLorean time machine and take a ride back to the mid 1990's. As a fun aside, if you click this link you will be taken to the real countdown clock. Anyway, it was the time of grunge and hip-hop and the dot-com bubble was...well...bubbling.  Email was all the rage and Windows 95 began what many claim was Microsoft's march across the globe. And, we were only up to the third Die Hard movie (Die Hard With A Vengeance). It was then that HBO realized that it's long-term viability was in serious trouble. Movies and boxing alone were not enough to carry it. In fact, they started to resemble their distant cousins in the music industry; an industry known to be nothing more than a distribution system that profited from, and in some cases exploited, the creative efforts of others. In HBO's case, it was a bit more complicated. They actually served two masters: the movie studios and the cable/satellite companies; one controlled content and the other controlled delivery. HBO was relegated to being a middleman of sorts, with no real control and no royalties since the movies remained the property of the studios. Anyway, a bunch of really smart people at HBO started to line up writers and directors, funding them to produce original series. Shows like Curb Your Enthusiasm, The Larry Sanders Show, and Arli$$ were a few of the early ones. All met with critical acclaim. As time went by, HBO raised the bar with award winning series like The Sopranos, Entourage, Game Of Thrones, and Boardwalk Empire. As word got out, an interesting transition began to take place: people wanted HBO for their original series programming more than the movies. I've been an HBO subscriber for well over 25 years and fondly remember "new movie Saturday nights" as a staple in their programming. Beyond a doubt though, I too am counted amongst those who are much more enamored with their original series programming than their movies. Ok, why does this even matter? Who cares what I watch anyway, right? Keep reading.

Even with the advent of original programming, much of which rivaled network television, people still resisted the urge to get HBO. There are a number of different reasons. Doesn't really matter. The fact is, everyone didn't have it.  So what was HBO to do? How about make all of their series' available for rental? Ah ha! Now you could mosey on down to your local Blockbuster and grab them on DVD or VHS. How many of you said, "screw the cable company and their monthly fees. They are too expensive. I want this stuff on my terms and I can do it for less." I know. And you thought you would win that little skirmish didn't you? Well, for a short time some of you did. Think it was a turning point? Nope. It was just a stepping stone in a much bigger, master plan. See, while renting DVDs brought a whole new legion of fans to HBO, it was the rise of on-demand services that will forever be seen as the bellwether for what was to come.  Not even the lifelike resolution of Blu-ray could ebb the storm surge that was on-demand service. On-demand eliminated the number one complaint from subscribers: not being able to watch a show when they wished. After all, renting DVDs was expensive and time consuming. Forgotten have you? See if this sounds familiar. You hopped in your car for a trip to Blockbuster. If you planned it right, you would get that new release. Sometimes that didn't happen. So you engaged in that time honored tradition of shelf browsing. You know, that droning up and down, left and right, aisle by aisle scanning of movie box covers. As you looked around, you noticed others just like you; some of whom look like they have been lost here for days, endlessly wandering the aisles or lurking by the counter on the off-chance that any minute someone would drive up and return the movie they wanted to watch. Not you. You will be in and out in 10 minutes, right? So, with Terminator-like precision, you began the scanning process. And before you knew it, 30 minutes had passed and nothing had grab a hold of your interest; at least nothing on the A-list of movies. It is then, in a moment of frustration, you exclaim "there are no movies here to watch." Idiot moment.

Let's assume you found something worth watching. By now you were hungry. So, you stop and grab some Chinese, wings, or pizza on the way home. Now that $5.00 rental just ratcheted up to an even $20.00 and you are running late thanks to all that wasted time in Blockbuster. Ok, so you finally get home and enjoy your movie and food. It goes back in the case and you place it on the front seat of your car so as to not forget to return it. All seems good in the world until a week or so later. Perhaps you are getting your car washed or returning from an out of town business trip. You open the passenger door of your car and out falls the movie case from last weekend. Ugh! You make your way to Blockbuster and drop the movie into the drop box. After all you aren't going to do the "walk of shame" into the store, giving that high school kid with the name tag around his neck, you know the one that is meant to mimic a backstage pass, the chance to laugh at you…the adult…for incurring late fees that are enough to buy the damn movie…twice. So much for saving money by renting.

I know, a bunch of you just said, "we just recorded our shows or movies and watch them when we wanted." With what? Your VCR? You all know this never worked as promised. These days, DVRs and TiVo have made this whole process much better. Yet they too have limits. One show at a time, perhaps one episode a week. Above all else, you had to remember to schedule the show to record. When you look back now, it seems so…primitive…doesn't it? We were real knuckle-draggers back then. No longer the case with on-demand. Watch any show you want, whenever you want to watch. And you thought binge-watching an entire series of DVDs was a big deal. Ha! Now you can watch an entire season of Boardwalk Empire without leaving your couch…literally. Try and be mindful as family members toss you food, diapers, and sponges to wash yourself down. And trust me when I tell you that rather strong scent is not the dog.  On demand really brought binge watching to the masses. And people haven't slept the same since.

  

Man In The Wilderness

On-demand services are made possible by Internet bandwidth. See, when you choose to watch Entourage, that program has to be "pushed" to you bit by bit. Technology has made this possible, using a process called streaming. That's right, regardless of what others have told you, every single television program and movie ever made doesn't live inside that small little cable box in your house. It's an urban myth. Just like there is no such thing as the deadly Arachnius gluteus from South America, rumored to have migrated to the United States under airliner toilet seats. Or known by its normal name, the butt spider. And, the big scare in 2001 over Dihydrogen Monoxide (DHMO), that colorless, odorless, tasteless liquid that is consumed by nearly every person on Earth? Yea, it's just another name for water. Anyway, where was I ? Oh right, on-demand. So, you pick what you want, press a button, and it magically arrives at your TV in seconds. With on-demand now really viable, other companies began to take notice. Enter NetFlix. Their flat-rate all-you-can-watch movie rental via mail was highly successful. Yet they saw on-demand as the next big thing…for them. Hmmmm. Mix a successful model of movie rental with on-demand? And do so directly to TVs, DVD players, and just about any other device. As you no doubt know, they were right on the money. You can stream NetFlix content to just about any device so long as it has Internet connectivity. Next they took a page right from the HBO playbook and released their first original series this year called House of Cards. It has met with rave reviews and is quite good. All of a sudden, NetFlix was the reigning king of streaming media. NetFlix? Here is where it gets a little interesting.

Not to be outdone, Amazon began to offer on-demand content right around the same time. It was a natural extension for Amazon as they already offered shopping, music, smartphone apps, and books to a captive audience of devoted members and device owners. Amazon's twist was making this new instant programming service part of its Amazon Prime membership. If you are not a Prime member, you are really missing out. It costs about $80.00/year and entitled you to free second day shipping on just about everything you buy from the big A. That alone makes it worthwhile. But wait, there's more. You can also borrow books from the Amazon ebook library, which happens to be one of the largest  on the planet. And if that wasn't enough…wait for it…you get unlimited streaming of select movies and TV shows. Prime also allows you to pay a small fee for first-run movies or other content in the Amazon universe. Wholly cow! Not an Amazon fan? That's ok. You can hitch yourself to the Microsoft wagon with Xbox LIVE Gold. Same premise here: captive audience thanks to the Xbox gaming console in millions of homes and dorm rooms. And guess what? The first Microsoft original series is due to come out later in 2014. Are you all about Android or Google? Then head right over to Google Play for their similar experience. And of course, we can't forget about Apple iTunes.  In the blink of an eye, you have a half-dozen formidable players in this space. None of which are the usual suspects. No studios, no networks, no record companies. None. How did this possibly happen? I just got your attention didn't I? Keep going.

As most of you know, the big networks have their own websites devoted to their shows. Miss an episode of The Blacklist? No worries. Open your browser and head over to ABC.com. What if you miss an episode of…say…Archer or Deadliest Catch? Head to the website right? Sure you can. And you will get great backstory info, schedule information, and even a nifty T-shirt. But no show replays. What? Why? Because these shows, like so many others, are only available on cable or satellite. So if you miss an episode, you have to grab it on-demand. Ok, at least you can watch it when you want. Then, one day in early 2010, with the flip of a digital switch, we were all introduced to HBO Go. As an HBO subscriber via cable or satellite, you could now watch HBO movies and original series on-demand straight off the HBO website. Take a moment and think about what I've just said.  Every day since November 8, 1972 when it first launched, the ONLY way you could view HBO content was through either cable or satellite. Not any longer. Not too long afterwards,  Verizon launches 4G mobile service with speeds now on par with home and business Internet. And just like that, you could now watch The Sopranos on your smartphone while spinning at the gym. Now then, fast forward a year or so. HBO quietly releases an HBO Go app for iOS, Android, and Xbox. Then, within days, DirecTV releases its own mobile app, enabling subscribers to stream nearly all of their channels and content, mixing on-demand and live streaming…all to your smart phone or tablet. No more going to twenty different channel sites to catch up on shows. Like Hulu, DirecTV aggregated all these channels into one app. Want to catch the news while your wife watches the Biggest Loser without going into the other room (and making her angry)? No problem. Grab some ear buds and your tablets, sit down on the couch next to her, and watch CNN with a smile. Look at what we've done. Pick your show and then pick where to watch it; phone, tablet, PC, TV. Ok, so this is pretty cool and offers a lot of convenience. However, it is only available to DirecTV customers. Right, here is where it all comes together.

The Grand Illusion

With all the pieces now in place, soon you will be able to get HBO as an on-demand Internet service…
without cable or satellite. You can bet your cable bill on it. Don't believe me? Just read the news from a few weeks ago. Comcast has introduced a new bundle that includes Internet, HBO Go, local channels, and their own streaming movie service. The service is something like $40.00/month year one and $70.00/month thereafter. A bargain when you consider someone like me pays nearly that much for Internet alone.  I know you like a good deal when you see it and you may decide to jump all over this. And it is good. But the real deal here isn't…well…the deal here. What you are seeing is the unwinding of cable and satellite service as you've know it. See, someone big needed to break away. That is what HBO has done. What appeared as a series of decisions to broaden their appeal were in fact the creation of a new, direct delivery system.  And, since these services are now delivered via Internet, the cost of infrastructure goes down…way down. Think about DirecTV and how much it costs them to continually develop and support hardware like receivers, dishes and cable boxes. What about the call centers and distribution fees? That is all changing right there in front of your eyes thanks to high speed Internet. Amazing when you think about it. And now that the wall has been torn down, rest assured other channels will soon follow suit. And I suspect it will happen at a ridiculous speed. Don't get me wrong, you will still have packages of service available from the likes of Comcast and DirecTV. However, they will look and be priced very different. 

Now the game becomes very interesting. Most TVs are now Internet-ready. Many newer ones are capable of running apps in order to receive content…just like your phone or tablet. You also have devices such as Apple TV, Chromecast, and Roku which bring these apps to non-smart TVs and give you the ability to wirelessly attach your tablet or smartphone to your TV. So, you will turn on your television and will choose from the likes of Pandora, Spotify, HBO Go, NetFlix, DirecTV, Amazon Prime, iTunes and more. Your "channels" will be accessed  from apps. And they will all be available to you on a subscription basis, all on demand, no satellite dish required.  DirecTV, Comcast, and TimeWarner will gradually transition to content companies and join the ranks of NetFlix , HBO, Microsoft, Apple, Amazon and Hulu. Collectively, this group will be the new media companies with some delivering content while others create and deliver it.   In the short term, most of the old media companies will desperately try to keep people from cutting the cord. They need to buy time to get themselves through the changes I have spoken about. And in true caveman fashion, they will do so by being counterintuitive: they will raise rates for everyone. Yes, I am sure. Both DirecTV and Comcast both have announced rate increases come February 2014. This will no doubt cause more people to leave. Short-term profits that tee up long-term losses. The music industry tried this with album CDs. They woke up one morning to find that people, especially kids, gave them the middle finger and started downloading music one song at a time. And the music CD industry…completely decimated.

Fooling Yourself

By this time next year, the competition amongst all these players (which is a really good thing by the way) will be palpable and compelling. Could you dump Comcast TV for say Amazon? TimeWarner for a combination of Hulu and HBO Go. Both are not only possible but very much probable.  Folks, this isn't fiction or a parallel universe. It is here right now. In the near term, I am betting that the old media companies like DirecTV, Comcast, TimeWarner and Charter will find themselves in a bit of a flat spin as they both try and figure out the balance of new and old; to reinvent themselves and remain viable. So, check this out. Each one of them has to continue funding the operation of their older delivery systems (ie dish and cable) while quickly learning how the Internet model really works. If that wasn't enough, one of their premier partner (ie HBO) has decided to go direct. Now check out the other side of the street. There you will find those smart TVs and connection devices (ie Chromecast, AppleTV etc) that give consumers that direct access to movies, shows, and the Internet. They don't need old media; they only need Internet. Oh man, if you are an old media company, you've got that feeling; not the James Brown get up and dance feeling; that feeling of loneliness as your customers begin to leave you. But don't count them out just yet. There is room in the market for them. However, they will no longer enjoy healthy competition amongst a handful of like players with similar problems. Now they will find themselves competing against each other as well as the likes of Amazon, Microsoft, and Apple. And these are companies who have built their businesses on Internet ecommerce and efficiency, in highly competitive environments, serving millions more customers than Comcast and DirecTV combined. Let's face it folks, they are pretty much wrote the e-book on delivering stuff to people via the Internet.

So, what do you do? I'd suggest you pull up a chair, grab a cold one and just watch it all go down for now. It will feel like a mixture of freedom and a breath of fresh air. Remember, most of you have been in a dysfunctional relationship with your old media company for many, many years. Choice is about to come back to you in a big way. Until then, let me offer up this little story as to how the old media companies are like salmon. Yes, I am talking about the fish. When I was a kid, the only fish my mother cooked was salmon. I remembered it kind of stunk. An ocean full of fish but you could only eat one? I didn't really count tuna as a fish since it was always served as tuna fish salad (the salad on the end made it a salad and not a fish). Plus, to add to my confusion, it was called Chicken of the Sea. Brilliant. Anyway, so, I grew to hate salmon. Really, I did. I knew it was supposed to satisfy me in a good way, but I was often left disappointed and a bit hungry. I also couldn't help but turn my nose up just hearing about it. Ugh. But I really had no say at the time so I was forced to accept it. As I grew older, I let it be known that the liking of fish was prohibited in my digestive kingdom. It wasn't until I met my wife that I experienced the return of the fin. Halibut, Sea Bass, Cod, Snapper and more. Hmmm. You could cook and combine them all different ways. And you could eat them too! Best of all, they each tasted good and you didn't have to just pick one. Will there be an end to salmon? Certainly not. There are some people out there who are very content living in a one-fish pond. For the rest of us, the sea is full of other fish…and about to get fuller.

See you all next year. May 2014 find your tips up and your lines tight.