Web Excursions 2022-05-19

Cable’s Last Laugh

• everything that makes the cable business so compelling:

  • is in high demand because it provides the means to get what customers most highly value.

  • works best both technologically and financially when it has a geographic monopoly.

  • creates demand for new supply; technological advances enable more supply, which creates more demand.

• It’s that last bit about satellites being better on lower ground that stands out to me, though:

  • as long as you control the wires into people’s houses

  • you can and should be pragmatic about everything else.

• Turner realized he could buy programming at local rates,

  • but sell advertising at national rates

    • via cable operators eager to feed their customers’ hunger for more stations.

  • Turner soon launched a cable only channel devoted to nothing but news; he called it the Cable News Network — CNN for short

• Consolidation in the provision of cable service proceeded in conjunction with consolidation in the production of content,

  • an inevitable outcome of the virtuous cycle I noted above:

  • Cable companies acquired customers who wanted access to content

  • Studios created content that customers demanded

  • The more customers that a cable company served, the stronger their negotiating position with content providers;

  • the more studios and types of content that a content provider controlled the stronger their negotiating position with cable providers.

• The end result were a few dominant cable providers (Comcast, Charter, Cox, Altice, Mediacom)

  • and a few dominant content companies (Disney, Viacom, NBC Universal, Time Warner, Fox),

  • tussling back-and-forth over a very profitable pie.

• Netflix and other streaming services were obviously bad for television

  • Here, though, cable’s ownership of the wires was an effective hedge:

  • the same wires that delivered linear TV delivered packet-based Internet content.

• the fortunes of cable companies has boomed over the last decade, even as cord-cutting has cut the cable TV business by about a third.

  • strategic positioning of cable companies, and ignores the industry’s demonstrated ability to adapt to new strategic environments.

• When Comcast and Time Warner Cable sold their AWS-1 spectrum to Verizon back in 2011,

  • they believed at the time that they were walking away from ever becoming facilities-based wireless players.

  • They therefore viewed it as imperative that the sale come with an MVNO agreement with Verizon to compensate for that forfeiture.

• Comcast finally launched Xfinity Mobile in mid-2017.

  • Charter [which merged with Time Warner Cable, acquiring the latter’s MVNO rights] followed suit a year later…in four short years

• if Verizon is going to lose customers to an MVNO, it would surely prefer said MVNO be on their network;

  • this means that the cable companies have negotiating leverage.

• What makes the cable companies such effective MVNOs

  • cable MVNO customers are far more likely to consume data over WiFi, perhaps because of cable company out-of-home WiFi hot spots.

  • This could become even more favorable in the future as cable companies build out Citizens Broadband Radio Service (CBRS) service,

  • particularly in dense areas where cable companies have wires from which to hang CBRS transmitters

• one of my arguments was that the traditional cable TV bundle would become primarily anchored on live sports and news,

  • while most scripted content went to streaming.

  • That is very much the case today

• What was a mistake was insinuating that this was the “end”;

  • after all, as Jim Barksdale famously observed, the next step after unbundling is bundling.

• Six years on and Netflix is in a much different place, not only struggling for new customers but also dealing with elevated churn.

  • Owning the customer may be less important than simply having more customers,

    • particularly if those customers are much less likely to churn.

  • After all, that’s one of the advantages of a bundle:

    • instead of your streaming service needing to produce compelling content every single month,

    • you can work as a team to keep customers on board with the bundle.

• effective bundles have more disparate content that you are vaguely interested in,

  • instead of a relatively small amount of focused content that you care about intensely.

• The breadth of the cable company bundle, though, is unmatched:

  • not only might it include streaming services,

  • but also linear TV; more than that, this is the company selling you Internet access,

  • and increasingly wireless phone service.

• That gives even more latitude for discounts, and perks like no data caps on streamed content, not just at Fhome but also on your phone.

"Disregard the Words"

• In 2012, my younger sister (in middle school at the time) tried to describe Snapchat to me.

  • She told stories about real life workflows instead of marketing one-liners,

  • just like Apple did in those early iPhone ads

• [My sister’s] exemplary use case [for Snapchat] was a moment

  • that she captured in the airport of a funny looking man who was snoozing in an awkward position.

  • It’s the type of thing that you want to share with somebody, but its insignificance would make it awkward in a text or status update.

• “It’s a way to connect with friends when you don’t really have anything to say.”

  • Or in my words, if traditional messaging is functional—communicating for a purpose;

  • “What time do you want to meet for the movie?”—Snapchat is the opposite, whatever that is.

• After many years of building and tens of millions of users, Notion now describes itself this way: “Every department’s work. In one tool.”

• Stop using these popular labels for the things that you are describing.

  • The truth of what is happening—what actually exists in the real world underneath—is much more nuanced and complex than these pithy statements.

  • The nouns and phrases you are relying on are imperfect projections on reality.

  • Don’t ever forget to disregard the words if you want to truly understand the world around you.

• if the words already exist to describe something new then maybe it is not truly that novel after all.

• looking back on the last decade or two, the most transformative consumer products—and generational changes in behavior—

  • have often been the most difficult to describe.

  • The ones where words escaped us initially.