Apple's Plan To Destroy The Large Cable Bundle

The cable bundle is misunderstood. While analysts and pundits focus on when the cable bundle will finally succumb to Netflix (NASDAQ:NFLX), HBO, and Hulu, the reality is the future of television will be built on the video bundle's back. Due to attractive economics, video bundles are one of the best values in the media space and will remain the dominant way we receive premium video content. We are quickly approaching the point where Apple (NASDAQ:AAPL) can capitalize on market dislocation to destroy the modern-day big cable bundle with a leaner bundle that is built to thrive in a mobile world.

Video Bundle Economics

The cable bundle has been one of the best consumer deals in the modern era. By subsidizing content's true cost, the bundle makes it possible for consumers to receive a vast amount of video content for an artificially low monthly price. The bundle works marvelously well as long as everyone pays into the system, and this has been the case for the last 20 years. Nielsen estimated there were 116 million homes with televisions in the U.S., of which approximately 100 million had some form of pay TV for the 2014-2015 TV season. ESPN is one of the most widely distributed cable networks, reaching 95 million homes. ESPN has a farther reach than Facebook (NASDAQ:FB), a testament to how much power the cable bundle holds.

While the video bundle will remain relevant for many years, the content associated with the bundle will change. New companies have relied on the old bundle parameter, namely, selling a wide range of content to as many people as possible to carve out a piece of the subscription video streaming market. Companies like Netflix, HBO, and Hulu sell video bundles. Instead of charging viewers by individual shows and series, these companies charge for access to a wide selection of content appealing to a range of consumers.

Most cable networks are in existence today because of the large cable bundle. Without the bundle, these networks would not be able to fund their current slate of programming. The mistake many people make when analyzing the bundle is to ignore the value of access. Having a window to nearly 100 million households is in many ways more lucrative than the pennies or nickels that the average channel receives from each household each month. This is a cable distributor's key selling point, and we often see fighting between content owners and distributors over access.

The Trickiness in Going Direct to Consumer

When contemplating the future of television, many have thought the strongest cable networks can one day bypass the large cable bundle and sell their programming direct to consumer. For simplicity's sake, I position ESPN and AMC as the poster children of this theory. In the current system, ESPN receives approximately $6 per month from every household subscribing to cable. AMC receives quite a bit less, approximately $0.50, although it is still well above the average $0.15 received. If ESPN and AMC were to leave the bundle and embrace the direct to consumer model, they would need not only to make up lost subscriber fee revenue, but also contemplate losing access to 100 million households. AMC relies on that access to sell new series, like "Fear the Walking Dead," to viewers. "Fear the Walking Dead" just became the highest-rated series premiere in cable TV history thanks to AMC's reach. ESPN also benefits from grouping sports programming into one channel, appealing to a much wider fan base, including those who may only watch a game or two each month.

There is no question that the best networks will have loyal fans ready to pay top dollar for a direct to consumer option. However, that won't be enough since these networks are simply not built to support such a model. It will be very difficult for ESPN and AMC to stop subscribers from signing up for their content only to watch their favorite series or sports season and then cancel their membership afterwards. With the cable bundle, such month-to-month volatility does not exist.

I am very skeptical that a cable network will be able to go 100 percent direct to consumer. The economics are just not in their favor. Instead, a hybrid approach may work although in many instances, the best case scenario would be to just get to a point that matches the current large cable bundle. There is much incentive on the part of cable networks to make the bundle work.

Time for Action

The mobile revolution has weakened the large cable bundle's fundamental underpinning. Mobile hasn't changed just the way we communicate, but also the way we create and consume content. Having new types of video content in our pocket has led us to no longer sit in a particular room at a particular time to watch a particular show. As smartphones continue to grow in screen size, all other pieces of smart glass in our lives, including our television sets, will lose value and importance.

The old definition of TV doesn't do justice to the much wider array of available content that we now have at our fingertips. As smartphone adoption grew, the idea that anyone could be a content creator became reality. While YouTube may still lead in terms of mindshare when thinking of user-generated content, we also have plenty of interesting content found on video-sharing networks like Vine, Snapchat, and Periscope, not to mention premium content from the likes of Netflix, HBO Now, Hulu, and Amazon.

One example of an entirely new form of content that people are increasingly turning to is vlogs, which is short for video blogs. The following Google Trends chart highlights vlogging's expanding popularity. The vlogging industry, notorious with young people chronicling their daily activities, is still in its infancy. Vlogging combines elements of reality TV with scripted television as many vloggers record real-life situations although the heavy use of editing and some pre-planning suggest there are also elements of a regular sitcom.

Via: Seeking Alpha

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[BUSINESS] Don't knock Amazon's corporate culture

On a recent trip, a fellow traveler asked if I always felt afraid living in Atlanta. Since this gentleman had never visited a U.S. city, his belief was that encountering gun-toting criminals might be a daily occurrence. As a longtime resident, I assured him this was not the case.

I was reminded of this exchange when I read the scathing New York Times article about Amazon's corporate culture because the authors seem to be unfamiliar with common practices in the business world.

After many years in management and human resources, I have a slightly different take on their observations about Amazon. So here are my reactions to their article.

1. Amazon's "bruising" management practices are really quite routine.

The Times article devotes paragraph after paragraph to "Amazon's singular way of working," yet most of the examples they cite are widespread in the business world. Terms like "ownership," "mission," "dive deep," "bias for action," "think big," and "customer obsession" are highlighted by the authors as though they are somehow unusual, even though they've been around for decades. 

Business practices like performance ranking, confidentiality agreements, business reviews, competitive internal projects and data-based decision-making are hardly exclusive to Amazon. Perhaps most amusing is the description of the Performance Improvement Plan as "Amazon code for 'you're in danger of being fired.'" I hate to tell the reporters, but that "code" is used by almost every large company in the country.

This is not to say that all these practices are without fault — but there is nothing unique about them. And Amazon's Leadership Principles are actually sound operational guidelines.

Read More Inside Amazon: Wrestling Big Ideas in a Bruising Workplace

2. People do not bloom wherever they are planted.

All managers and recruiters know that "cultural fit" is a key to successful hiring. The applicant who happily settles in at Microsoft may quickly become disgruntled at a 50-person start-up — and vice versa. Someone who enjoys the non-profit world may be miserable in business. Organizational size, structure, expectations, and mission can all affect job satisfaction.

Having worked with many technology companies, I know first-hand that the culture is not for everyone. As a human-resources director, I often told applicants that if they could not handle frequent change or a rapid pace, they would not be happy in our company. I encouraged them to talk with employees and learn about our environment. After assessing the landscape, some made an informed decision to self-select out. 

Amazon apparently takes a similar approach, as evidenced by a recruiting video quoted in the Times article: "You either fit here or you don't. You love it or you don't. There is no middle ground." 

Read More Cramer: Investors will love Amazon more now

3. Unhappy employees usually blame someone else.

About a year ago, a new Amazon hire contacted me for some personal career coaching. "I was excited about the opportunity at first," she said. "But these people work ridiculous hours. And they are really rude." Another way of stating this, of course, would be "I prefer to work a 40-hour week and have people care about my feelings." 

In psychology, there is a field of study called "attribution theory," which looks at how we assign causality. Simply put, when something good happens to us – an award, a promotion – we tend to attribute that result to our own amazing qualities. But when the reverse occurs – a project fails, we lose a job – we quickly blame factors outside ourselves. 

Unsuccessful or unhappy employees almost always attribute the problem to their company, boss, or colleagues, and they eagerly share these perceptions with anyone who will listen. So it is hardly surprising that two reporters found ex-Amazonians who were ready to complain. But like my coaching client, many of them had probably just landed in the wrong place.

Read MoreAmazon's data-driven approach becoming more common

4. Bad managers are everywhere.

The examples of Amazon managers disciplining employees with cancer or sending women on business trips after a miscarriage are appalling and inexcusable. However, as someone who writes a workplace advice column, I can assure you that such egregious actions are not unique to Amazon. Every week, I find emails in my inbox describing similar events. 

In a company with over 100,000 employees, it is statistically unlikely that every manager will be competent, caring, and compassionate and statistically probable that anyone looking for horror stories can find them. But I feel fairly certain that many heartwarming examples could also be found of Amazon managers who made every effort to assist employees with difficult personal or family situations.

5. Even the guy at the top can feel powerless.

I once worked for a CEO who complained about feeling out of control. This was rather amusing to the rest of us, since from our perspective, he controlled pretty much everything. 

What he meant, though, was that he could not guarantee that his intentions for the business would be accurately interpreted and carried out. His passion for customer service had to flow through a lot of layers before reaching those who actually served the customers. Stories about customer mistreatment drove him absolutely nuts. 

Given his rapid response to the Times article, Jeff Bezos apparently shares this frustration. He made it quite clear that this is not the Amazon he knows or envisions, and he invited employees to email him directly about any inappropriate management behavior. So kudos to you, Jeff.

Commentary by Marie McIntyre, a career coach(www.yourofficecoach.com) and the author of "Secrets to Winning at Office Politics." Follow her on Twitter @officecoach.

Via: CNBC

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Cities, States Keep Piling on the Internet Taxes

The City of Chicago has the dubious distinction of becoming the first jurisdiction to apply a sweeping tax to “cloud-based” services, ranging from streaming video to tax preparation.

Beginning Sept. 1, residents of the Windy City will be dunned a 9 percent levy on entertainment, online applications, and data processing services that depend on the computing, transmission, and storage  capabilities of the Internet and World Wide Web.

It’s the result of a Chicago Department of Finance decision to extend the city’s Amusement Tax and Personal Property Lease Transaction Tax to Internet downloads. The application of the Amusement Tax means that Chicagoans will be paying 9 percent more for streamed video and music services, such as those from Netflix, Hulu, Amazon, and Spotify, whether the purchase is in the form of a monthly subscription or a one-off order. In doing so, Chicago joins the Alabama Department of Revenue, which wants to apply the state’s 1980s-era tax on videocassette rentals to streaming video.

But Chicago went one better with its new reading of the Lease Transaction Tax. This will now cover any paid cloud-based application that provides information or processing services, such as TurboTax’s web-based tax preparation application, as well as database search services such as Lexis-Nexis, Ancestry.com, and Realtor.com, just to name three.

The “cloud tax” represents yet another government money grab from Internet users. Sales taxes already are applied to nontangible digital purchases such as software, movies, music, and games that consumers then permanently store on their own media. Then there are the numerous taxes, surcharges, and fees states and cities heap on the broadband wireless phone and cable services that serve as Internet connections. On wireless service alone, these charges averaged 17 percent, according to a 2014 report from the Tax Foundation.

And it’s not stopping. Prince George’s County, Maryland, recently raised taxes on landline and wireless phone services as part of an overall local tax increase. Meanwhile, Congress is debating once again whether to create a legal framework that would let states collect sales tax from online retailers outside their borders.

It’s no surprise to see jurisdictions targeting cloud-based services. Enough consumers have turned to streaming for entertainment that it’s been dubbed the latest “game-changer” in tech circles. Even the Federal Communications Commission is trying to figure out a way to regulate it. In the past three years, the percentage of viewers watching live television has fallen from 89 percent to 80 percent, while Internet streaming has increased from 4 to 11 percent, according to research by Nielsen Co. and broadcasters. The same research found that over that same three-year period, per-week streaming grew from four hours and 13 minutes to four hours and 17 minutes in a growing market. No doubt governments covet these dollars.

Sadly, it seems that streaming services see taxation as inevitable, “Jurisdictions around the world, including the U.S., are trying to figure out ways to tax online services,” a Netflix representative told The Verge, an online site covering technology, entertainment and science.

Chicago consumers should not despair yet. The law firm Reed Smith LLP, quoted by CBS Chicago, believes the tax may violate the Federal Telecommunications Act and the Internet Tax Freedom Act, which, as one of the few consumer-friendly tax laws pertaining to the web, prohibits taxation of Internet access.

Legal questions aside, taxing the Internet is just bad policy. Tax a commodity and people will use less of it. Adding a tax to web-based applications means decreasing utility for users and increasing barriers to success for entrepreneurs who seek to build innovative cloud-based services. Lawmakers in states and communities all say they want to foster digital inclusion and stimulate a robust information-based economy. Rampant taxation is no way to do it.

Via: American Spectator

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[VIDEO] AMAZON TAKES DOWN CONFEDERATE FLAG, CONTINUES TO SELL COMMUNIST MERCHANDISE

In a marketing move that will shock no one, Amazon removed the Confederate flag after a howling mob of both liberals and brown-nosing conservatives demanded the “symbol of hate” be stricken from its shelves.

But these comrades can rest easy, knowing that they’ll have plenty of opportunities to stock up on Communist merchandise after their latest purge.

Amazon sells a huge variety of shirts, posters, you-name-it featuring the hammer and sickle, Joseph Stalin’s mustache, all things Che Guevara, Vladimir Lenin and other colorful revolutionaries who fought to make the world a better place, man. Guevara’s book Guerilla Warfare is on sale in four different formats. In one of the worst genocides in modern times, Stalin forcibly starved Ukrainian peasants in what’s known as the Holodomor, a “terror-famine” that left anywhere from 2.4 million to 7.5 million Ukrainian peasants dead in 1933.

Communism is chic: Amazon’s senior vice president Jay Carney proudly features Soviet Union war propaganda in his lavish home, after all. “Have you enlisted in the army?” a poster featured by The Washingtonian Magazine photo splash asks.

Helpful reminder — Communism led to the deaths of 94 million people world-wide within a hundred years. That’s approximately 93,999,991 more murders than a drug-addled, fatherless loser committed in Charleston.

Via: Breitbart

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Amazon says it sold 426 items a second on Cyber Monday

AND OBAMACARE SOLD ONE POLICY EVERY 426 SECONDS

Amazon.com sold almost 37 million items on Cyber Monday, a pace of 426 a second to be exact.

The sales tally for Dec. 2 was one of a number of statistics the Seattle online retailer announced on Thursday. 

It did not reveal how sales compared to last year's Cyber Monday, but said that overall holiday season sales were its best ever.

PHOTOS: Got a Christmas gadget? Here are the apps to download

The company also said that it shipped items to customers in 185 countries during the holidays. Additionally, Amazon said 50% of its customers used mobile devices to do their holiday shopping.

As for Christmas sales, it did not say how many of its packages may have missed the Dec. 24 delivery. UPS and FedEx on Thursday said they were still scrambling to deliver packages that did not arrive in time for Christmas.

The shipping giants blamed the missed deadline on heavy holiday shipping volume and bad weather in some parts of the country.

Here are some other oddball statistics that Amazon released in its press release:

• Enough Crayola Marker Makers were sold to draw a line around the world four times.
• Enough Hot Wheels cars were purchased to stretch around the Daytona International Speedway.
• Enough miniature flashlights were bought to light up four football fields to NCAA standards.
• Enough Himalyan Crystal Lamps were purchased that if they were each stacked on one another their collective height

Via: LA Times
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Late Surge in Web Buying Blindsides UPS, Retailers

A surge in online shopping this holiday season left stores breaking promises to deliver packages by Christmas, suggesting that retailers and shipping companies still haven't fully figured out consumers' buying patterns in the Internet era.

A surge in online shopping this holiday season left stores breaking promises to deliver packages by Christmas, suggesting that retailers and shipping companies still haven't fully figured out consumers' buying patterns in the Internet era. Shelly Banjo reports.

Companies from Amazon.com Inc.AMZN +0.55% to Kohl's Corp.KSS +0.27% and Wal-Mart Stores Inc.,WMT +0.18% having promised to deliver items before Dec. 25, missed some delivery target dates.

United Parcel Service Inc. UPS -0.10%determined late Tuesday that it wouldn't deliver some goods in time for Christmas, as a spike in last-minute shopping overwhelmed its system. "The volume of air packages in the UPS system did exceed capacity as demand was much greater than our forecast," a UPS spokeswoman said.

Consumers were reporting missing deliveries from FedEx as well, although a FedEx spokesman said the company wasn't experiencing significant delays.

Americans tend to go online for a bigger proportion of their Christmas shopping than for their buying during the rest of the year. This year, the trend's acceleration apparently took some stores and carriers off-guard.

Via: WSJ

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Obama: Using Obamacare Website as Easy as Buying 'a TV on Amazon'

Pres. Obama said today that buying Obamacare health insurance through the administration's www.healthcare.gov website is the same as buying something on Kayak.com or Amazon.com.

In a speech defending Obamacare, the issue driving the government shutdown/budget battle, Obama declared:

"[S]tarting today, you and your friends and your family and your coworkers can get covered, too.  Just visit healthcare.gov, and there you can compare insurance plans, side by side, the same way you'd shop for a plane ticket on Kayak or a TV on Amazon.

"You enter some basic information, you'll be presented with a list of quality, affordable plans that are available in your area, with clear descriptions of what each plan covers, and what it will cost.  You'll find more choices, more competition, and in many cases, lower prices -- most uninsured Americans will find that they can get covered for $100 or less."

And, instead of taking his word, Americans should try the website out for themselves, Obama said:

"And you don't have to take my word for it.  Go on the website, healthcare.gov, check it out for yourself.  And then show it to your family and your friends and help them get covered, just like mayors and churches and community groups and companies are already fanning out to do across the country."

But, both an MSNBC host and a congressman tried to use the site and failed due to error messages.

National Review reports on MSNBC's unsuccessful bid to show how easy the site is to use:

Via: CNS News
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