Google's Feeling Lucky

Question:

What are some current events in your industry? What is the impact of these events on the industry?

Articles in this blog post:

“Google Ponders Pay-TV business”

Article Summary:

As television distributors face competition from internet streaming and other major corporations in the industry, they now have to face a new threat: Google. Amidst the development of dozens of online YouTube channels and Google TV, software for televisions which lets both the internet and television channels be searched easily, Google has begun considering making its own cable services.

While not officially announced or commented on by Google, the evidence is piling up. There have been exploratory discussions with Disney and other content providers about distributing content from their channels, along with the recent hiring of Jeremy Stern, an executive from cable television, which indicate a desire to move into the television market. While more details have yet to be seen, many analysts think that a large company like Google or Apple will eventually make the jump into providing online service.

Analysis:

Google definitely has the potential to become an immediate threat to the media industry. While Netflix, Amazon, and Hulu have all trailblazed the streaming industry, Google has significantly more assets and has grown vertically and horizontally at a tremendous rate. Given the introduction of Google TV and the concept of making channels for viewing YouTube, it seems like Google has already made the first steps into the media distributor industry. As the article states, there’s also an incredibly large market at stake – subscriptions and advertisements for television produce $150 billion in revenue, and with the growing strength of both Google and the Internet a transition into media distribution would be welcomed by consumers.

Google has to be careful of moving too quickly. Netflix has lost respect for changing the prices of their service, along with attempting to grow too quickly – it would be incredibly easy for Google to become overly-ambitious and lose potential. Still, as of present Google’s presence strikes a fear in the current distributors due to the immense size of their possible competitor.

Entrepreneurs bring entrepreMORE

Articles in this Blog Post:

“Pay TV industry loses record number of subscribers”

“A Bleak Picture for TV Makers”

Question: How has the competitive landscape changed as a result of leading entrepreneurs in the industry?

Article Summary: Recently, distributors of cable and satellite have been facing a new problem – more and more people are canceling their television subscriptions. While this decrease in customers was small last year, the numbers now are growing, causing a change in competitive landscape. The Associated Press reported that in the course of three months, April to June, distributors lost almost 200,000 subscribers, a 0.2% loss from the total.

Where are all the subscribers going? Due to the poor economy, evidence shows that many consumers have shifted to leading entrepreneurs that offer Internet distribution services at a cheaper price. Netflix and Hulu have many of the same popular shows that the rest of the distributors have, but with no installation, fewer advertisements, and more portability with the growing use of laptops. In an effort to make more of a profit, the content providers like Newscorp demanding higher fees to the online subscribers and instating a week delay on shows for those who use Hulu but do not pay for the expanded Hulu Plus features.

In addition, the markers of physical television systems have suffered a great hit, and companies are manufacturing TVs with Internet connectivity to combat the losses. Sharp Corp. will introduce a new model with “4K” technology, which is four times more detailed than standard HD, which will presumably bring more change to the industry as providers take advantage of the new technology. Bottom-line: entrepreneurs in the form of online streaming are bringing a hit to the rest of the media industry, which makes other distributors struggle, leads content providers to demand higher fees, and physical television producers to introduce new changes of their own.

My Analysis: There’s no doubt that online streaming has influenced changes in the media industry. While the first article mentions how some big companies are not yet acknowledging the threat of online streaming, a product that costs only about $8 instead of the more expensive cable and satellite is incredibly attractive, especially with the recent recession taking most people’s wages.

The entrepreneurs have changed the stage to bring changes in physical televisions, which have much potential to bring even more innovation. Obviously, with internet-connected televisions, more user interactivity and control is brought to the action of watching TV. The 4K televisions, which are four times more powerful than standard HD ones, will also probably spark more competition in the industry – cable and satellite companies are still competing over which has the most and best HD channels.

But the powers of these new entrepreneurs should not be over-exaggerated. In the United States there are about 83 million subscribers to television producers, so a loss of 200 thousand is hardly crippling. Additionally, with Netflix currently in a period of decline and the runner-up Hulu being significantly smaller, the entrepreneurs are still going to need much more innovation to stand amongst the giants without getting squashed.

Netflix: The Most Global Industry (In The Americas)

Articles in this blog post:

“Netflix Expands to Latin America Countries”

“Netflix to Stream Films and TV Abroad”

“Netflix Launches in Canada”

Question: Which company in your industry is most global? What has been the key to their success in other countries?

Article Summary:

Starting on September 5 this year, Netflix began selling subscriptions to their online video streaming service in various nations in Latin America, starting with Brazil and expanding to 43 nations in Latin America, including Mexico, Argentina, and islands in the Caribbean. This service, which costs about $9 a month, only includes unlimited streaming and offers popular shows and movies in English, Spanish, and Portuguese.

This venture into the global market is not the first time Netflix left the United States in order to attract more customers. Last year in September Netflix made their first foreign venture by setting up their unlimited streaming service for use in Canada, though they did not invest in letting Canadians order unlimited DVDs by mail, which was included in all US Netflix subscriptions. For the most part this venture has paid off, as Netflix announced recently that it had gotten one million Canadian subscribers in less than a year since the company expanded there. However, there have been no further announcements of whether Netflix wants to make streaming available in any further countries.

My Analysis:

The interesting trend in the field of media distribution is that, while several companies are faring well in the United States even with the recession, little progress has been made towards creating a multinational corporation. In England, which is very similar to the US in regards to language, wealth, and hobbies, popular companies like Comcast and DirecTV are unheard of, despite being giants in the industry here. As such, Netflix’s transition into countries outside the United States is welcome – while it still is limited to the Americas, it shows a significant effort to increase their viewer base, make more money, and give people in those countries a greater consumer surplus.

Netflix has been hailed several times for being innovative in the industry and growing at a substantial rate. With the transition of going from being in one country to two to almost 50 in the course of a couple years, and the good report of one million customers when being in Canada for only a year, Netflix is once again showing its potential as a major contender in the form of media distribution. The key to this success is that they have a product relatively easy to produce – after all, most movies and shows already exist on Netflix, not many changes are needed to show them in another country – and incredibly easy method of distribution compared to tangible goods since everything is online. While the change from being in the Americas to overseas would require a big investment, I feel that Netflix has the potential to become a truly global corporation on par with the likes of McDonalds for being able to efficiently produce a relatively cheap but valued good.

Recent Consumer Behavior Trends

Articles in this blog post:

“In the Living Room, Hooked on Pay TV”

http://www.nytimes.com/2010/08/23/business/media/23couch.html?ref=consumerbehavior

Question: What are some recent consumer behavior trends that are influencing the industry?

ARTICLE SUMMARY: With the growing power of Netflix and other online video streamers, a new concept has emerged: dropping paying for television all together and just using online streaming. However, while this may seem cheaper and overall better, the number of Americans who have “cut the cord” has not been significant, with the number of subscribers to television being fairly consistent despite Netflix also rising. While many other industries suffered heavy losses due to the Internet replacing them, cable and satellite companies have two distinct advantages. First, several services, like sports games and channels like HBO, have avoided making contracts with online streaming companies, meaning that customers have to still pay for television; second, the companies have adapted to the internet age by letting consumers watch television on their computers and other electronic devices. Still, several people under the age of 45 have begun living without television and many more admit that they could possibly take that course of action also. While cable and satellite numbers remain strong, there is a possibility of big losses, and companies have still already a minor hit in the number of pay-per-view shows ordered.

My Opinion: For the most part, I agree with what the article states. While the likes of Comcast and DirecTV are still taking in revenue, they have to continue working hard to satisfy the consumer. As a college student, I lack a television and I typically watch shows that air through my Hulu Plus subscription and turn to Netflix for movies, as the television in my hall’s lounge is small and inconvenient to use. While streaming is convenient, there are still many restrictions: I cannot watch shows like The Big Bang Theory unless I watch an actual television, while some shows like The Simpsons, while available on Hulu Plus, wait more than a week before being uploaded to the website. Television is also convenient in its ability to have shows already recorded, while with streaming if I want to watch a show I typically have to wait for it to buffer or else the episode will lag – and if I want to rewind or fast forward, it takes a minute to buffer again. As such, there are many perks to television that I miss now that I am in college, though I do not fully know if, after college, those perks are worth the price of spending more for television.