Saturday, June 18, 2011

Getting Back to Basics in Business

Over the last few months much has been made of relatively new tech companies, less then, 2-5 years old coming out and announcing that they want to do a IPO, which is a Initial Public Offering. There are several questions that have been risen, such as do they have a solid business plan, and are they actually making money. While I don’t pretend to completely understand all the ins and outs, of big time money management and all of the ramifications of events to both the economy or the business itself.

There are several basic ideas that I do understand, The primary object of any business is to both make money, and give the consumer the most value for their money as possible. If you give the customer value above and beyond what they expect , and follow it it up with support and service, whatever, that might entail everything from basic hand holding, to either going and fixing or replacing the product with no hassle, and a BIG smile on your face. You’ll do far more more good for your business then any amount of advertisement can ever do. Happy customers come back, and Happy customers talk,, a lot. Word of mouth can go a long way to either building your business, or destroying it slowly. Just remember that the next time a customer is driving you crazy over something YOU think is stupid, to them its important, how you handle what they think is important, is important to them. So much for business 101.

Netflix has become the 800 pound guerrilla in the room when content and tv companies get together. No matter what else they talk about, what deals they may want to do, Netflix is in their shadow waiting to take their market share way form them. Content providers need to go back and reevaluate their core objectives.
As I mentioned in the opening segment, the object of any business, be it a small family business that sells fruit out on the side of the road, to a multi-million dollar conglomerate is to give the customer value above and beyond what they expect.
Quite simply the TV/media industry at least on the broadcast and consumer provider side, not the theatre side so much, has dropped the ball a LONG time ago.
Way back in the 1950’s at the beginning of TV, advertisers knew they had a captive audience and played it up to the max. Having corporate sponsors,and having host of talk and game shows actually plugging the product as part of the routine show, is was annoying, but far less annoying then today's commercial breaks which can last from 3-10 minutes long, and often repeat the same ad several times in a roll.

That just covers what broadcast show “live” on a daily basis to the masses.
That includes those who don’t have the technology to bend their TV to their will.
Those of us with DVRs can record,pause and rewind and generally bring the TV to its knees. And advertisers hate this. they can’t count on you seeing their ads every time you want to see your favorite show. and Appointment Viewing is long dead. That is to say if you wanted to watch a certain show you had to be in front of your TV at that exact time, or you missed it until next week. Worse yet, if there were two shows on at the same time, on different channels you had to choose which one you liked better. Advertisers loved that, it helped with getting numbers, they could tell much better what was being watched, and who commercials were being seen. Today, consumers demand to watch what they want when and where they want. The devices and platforms that media is available is constantly expanding. Content owners and providers need to embrace the new directions and come up with models that allow them to get access to the content they want, when they want.
They need allow consumers to watch their content on a variety of platforms.
The basic concept is to spread your content around as much as possible; instead of trying to do a deal to limit ones content to one venue and asking a exuberant sum for a very short year deal, try spreading it out out over several venues with less for money each deal, and make more money in the long run.
Better yet they make their content readily available to whole new audiences which might not have discovered content they didn't know about. Making content easier to access or rent, either via Netflix Amazon, any number of other places to rent or view content, doing such deals to let ` the consumers find the content and play it where they want, or need to, with out having to resort to to other means to get the content they want.
A YouTube search will yield many movies and TV shows put up in short 10-14 minute segments watching a series of 8-10 segments in a row will allow you to essentially watch the whole program. Whether this is legal is another question for another time. However, the bigger point, is the is people want to see the content, and will put it out one way or another. So content providers do yourself a favor and make you stuff easy to rent, buy or otherwise enjoy the content, and moving content from one platform to another should be seamless with a DRM issue and no issues with software formats not being capable. Everything should just work.
The notion of cord cutting that the industry pundits are taking about is probably right to a degree, However, As people get the new TVs that can connect to the web, either directly or through a computer, easiest being hooking a laptop and piping everything from the laptop to the TV, the uses for a fast connection are increased, suddenly you can fire up Netflix, on the laptop and send it to the TV and enjoy the same content from the laptop on the big TV, same for YouTube, any other web content, be it podcast, or videos etc. Suddenly the pipe from the cable provider is’nt as important as it was, However, there’s still a lot of content that only available on broadcast TV. While a large percentage will cut down on the size of the package that keep, both for budget reason, and because content is available on line and they can get it there and pipe it to the platform of choice to watch it. I don’t think its cord cutting, so much as its cord switching, and sharing, one supplementing the other.
Some content providers are making strides to make their content available on mobile platforms with limitations, while its a good start. But there’s a long way to go.
Netflix has pretty much set the standard for streaming video, and a business model that works. They have been able to get themselves placed in a wide variety pf platforms from DVD players, TVs themselves, I even read at one point, there was talk of them actually having a physical button on a remote, on some TVs, weather anything has come of it, is not important. What is important is their dominance and saturation in the video industry . They do have some big hurtles to jump, the biggest is the deals they have to make with content owners. Every time they try to do a deal the price goes up or the owners want to renegotiate a deal halfway though a contract. The point is if content owners would quit being so worried about their content and how its being used, and work to get it into as many venues as possible and not make is prohibitively expensive that small providers to get into. They would in the long run probably make more then they trying to do with the high price deals they’re doing now, only it’s be spread out over more companies, and longer terms, so if there was a loss somewhere it won't be as much as it it was in one big deal the lost.

The long and short of it content owners, and providers need to go back and reevaluate their core business model, and why they are in business. Are they in business to serve the stockholders, or the customer, aka, public? If its the customer, they need to rethink how and what kind of deals they do, to get their content out, with a minimum of constraints both on the provider and especially the end user. If the customer is is happy and willing to pay the reasonable rental fee or subscription fee, and can get what they want when and where and on what platform they want, with no issues, the profit for the stockholders will come.

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