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NETWORK BRANDS ERODED BY STREAMING VIDEO 

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As volatile as the TV industry has been lately, the one segment that has been relatively stable– and consistently profitable– is network broadcasting. This may be about to change.

With the release of new video interfaces such as the most recent upgrade of Comcast X1, and with the launch of multichannel live TV streaming platforms such as Sling TV, DirecTV Now, and Hulu Live TV, the most prominent broadcast networks finally have reason to fear possible extinction. They’re losing their ability to keep their brands in the public eye.

Investment Bankers Weigh In

Kannan Ventakeshwar, an investment analyst for Barclay’s, a multinational British bank, wrote a letter about the TV industry’s future to investors. In it he stated: “Every OTT product is organizing its default user interface by the type of content and not by network. So sports does not show up as ESPN or YES Network. Instead, the default interface is organized by sport and/or teams. This is also becoming true with legacy user interfaces like X1. As a result, it is tough to see the brands of individual networks retaining value in the coming years.”

Until recently, the program guides for cable and satellite TV listed channels under assigned numbers. It was only by looking up particular channels that the viewer could see what shows were airing on those channels at what times.

Viewers Want Convenience

Ventakeshwar said, though, that viewers are losing patience with this system. “…In every evolution of OTT”, he said, “the number of clicks needed to get to a program guide or a network viewing option is actually increasing. Given the importance of consumer inertia in usage patterns, this is not a trivial shift.”

In other words, the harder it is for the viewer to find the shows he wants, the
more likely he is to tune out altogether.

Listing by genre or title saves time, but reduces visibility of network brands. This threatens the network business model. Under the old model, new shows are far more likely to succeed if they immediately precede or follow established hits. A highly popular show might even carry an entire evening’s lineup. A ‘halo’ effect– the network’s reputation for airing shows the viewer likes- can induce him to try out its newer shows.

No More ‘Halo’ Effect

If video interfaces are no longer listing shows by channel, though, the lead-in.
lead-out, and halo effects nearly disappear. Each show is an orphan, standing or falling on its own, and offering little market support to other network programming.

Some streaming platforms, such as Amazon Prime Video, Netflix, and Hulu, further undermine network brands by offering their own original content. And you can find their content only on their own platforms. If you want a Netflix original, you’ll find it only through Netflix.

 

How can the networks adapt to these developments? We don’t know, but they haven’t yet. Perhaps they never will.

If they can’t figure out how to protect their brands, the giant broadcast networks may be headed for extinction. Productions studios could live or die by their latest hits.

Notes:

Comcast owns NBC Universal, the largest and oldest broadcast TV network.
With its updated X1 interface, then, the cable system is partially cannibalizing its own business.

OTT is ‘over-the-top’ video. It is content streamed via the internet as a standalone service. With OTT, no cable or satellite system controls or distributes the content.

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I DEMAND MORE! MORE! MORE!

WHY WE’LL ALWAYS WANT MORE BANDWIDTH

PART ONE:  EDUCATION

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No matter how much you get, you want more. You’ve always wanted more, and you always will.

No, this isn’t about your love life. It’s about your insatiable demand for internet bandwidth. No matter how much you get, it will never be enough. This is mainly because as the pipeline expands, you will think of ever more material to fill it with.

What Makes the Web Different from Older Technologies

In this respect, the internet differs from previous means of communications. In over a hundred years of home telephone service, bandwidth usage for it changed hardly at all. Innovation brought modest improvements in convenience and sound quality, without fundamentally altering the nature of voice transmissions. The internet, though, is constantly evolving. Increasing bandwidth promotes innovation, and innovation promotes demand for increased bandwidth.

Increased bandwidth doesn’t just improve the speed of e-mail. It makes entirely new functions possible. At the dawn of the internet age, few of us would have guessed that it would become a major medium for commerce, telephony, streaming video, or social media such as Facebook or Twitter. Now these uses are so commonplace, we could scarcely imagine living without them.

Education

Technology is forcing massive changes in education. A few decades ago, knowledge was quarantined, and difficult to find. Seeking information in libraries was tedious and cumbersome, and the most important and timely information was in the hands of corporate and government elites.

Now, though, we carry nearly all of the world’s knowledge in our pockets. Whatever we want to know, we can usually find it in a few seconds. Education is now mostly guidance in what to look for.

It was inevitable that greater access to information would affect demand for formal schooling.

MOOCs and Home Schooling

As college tuition rates skyrocket climb into the stratosphere, and millions of students take on crippling debt, and with many of the most prominent universities mired in stifling intellectual conformity, demand for alternatives multiplies. Multiple open online courses (MOOC) are one answer. They cost far less than standard university courses, and are often at least as effective, perhaps more effective, in communicating course content. Unlike textbooks, material on the web can be updated constantly. Students can log in for real-time class discussions on video, download their assignments, and upload their homework.

The web is also becoming vital to home schooling (elementary and secondary levels). Parents can tailor course content to the needs and aptitudes of their children, and students can learn at their own paces, without being either rushed or slowed by the learning abilities of classmates.

Virtual Reality and Augmented Reality

We have learning tools that previous generations could scarcely have imagined. No longer bound by school schedules, we can learn as we need to. Without waiting for others to teach us, we can constantly upgrade our professional skills online.

Virtual reality (VR)  and augmented reality (AR) can hugely enhance effectiveness of online training.

VR is digital simulation of 3D environments.  With VR, you’re not held to one fixed perspective, as when you’re watching a movie.  You can look around and ‘move’ in the digital environmental.

At a trade show in Barcelona, Spain, a reporter climbed into a control booth owned by a heavy machinery firm. Wearing a VR helmet and manipulating levers in the booth, he operated an earth mover in real time in Sweden, 1500 miles away. Think, then, of VR’s potential alter construction, inspection, and manufacturing. It has already changed training for skilled trades. We could learn surgery, piloting of aircraft, and other skills without all of the risks that come with learning them in real environments.

Augmented reality is the overlay of a digital environment over a real one. With AR, an apprentice mechanic or plumber can see a repair diagram laid over real pipe or a real engine. The AR app provides constant feedback on his work, so he can see and feel how the task should be done.

AR and VR can revolutionize education, because they help develop habit or ‘muscle memory’. When he tries his new skills in real environments, the student already understands them from memory. VR and AR are much more effective for skill training than written manuals could ever be.

Of course, such forms of education require huge amounts of bandwidth. For this reason, among others, we’ll always demand more.

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HACKERS DEFEATED BY MICROSOFT

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Hackers defeated… This is always good news, right?

We’ve often been critical of Microsoft. Its operating systems have usually been buggy and slow, and they seem to require multiple patches to work properly. Occasionally, though, the brainchild of Bill Gates functions exceptionally well. When it does, we want to give it proper credit.

With this in mind, we call your attention to last night’s announcement by Microsoft regarding a potential security threat. Earlier in the day, a group of hackers called The Shadow Brokers released a suite of Windows ‘exploits’ which could have enabled hackers to compromise computers operating on multiple versions of Windows. But Microsoft had already moved to forestall the attacks.

In a blog entry posted last night, Microsoft described the attacks and its responses. Microsoft had repelled one, ERRATICGOPHER, before the release of Windows Vista. Another, ETERNALCHAMPION, it had patched along with two unrelated vulnerabilities.

Yesterday’s Microsoft Security Bulletin spelled out the company’s responses to The Shadow Brokers. On March 14, it patched ETERNALBLUE, ETERNALROMANCE, and ETERNAL SYNERGY. The company didn’t bother patching three others. These were: EXPLODINGCAN, ENGLISHMANDENTIST, and ESTEEMAUDIT. Microsoft left these alone because it couldn’t simulate the attacks on any systems it supports. This evidently means any systems it provides updates for- Windows 7 or newer.

The hackers apparently made the mistake of testing their exploits on a ‘clean install’ of Windows. A ‘clean install’ is a version without recent security updates. The hackers then, had no idea how their attacks would fare on properly updated systems.

We’ve mentioned this before, but it bears repeating. Update your computer’s operating system often. Be especially vigilant when you hear about critical threats.

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FACEBOOK: A THREAT TO YOUR PRIVACY?

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Can you trust social media? Is your privacy always safe in the hands of Twitter, Facebook, or Instagram?

Most of us don’t give much thought to how social media are handling our personal data. Perhaps we should.

The network effects of digital communication enable extremely rapid growth for firms that get in early, and over time they can dominate their market segments. Within a few years, they can acquire monopolies or near-monopolies. Once such near-monopoly is Facebook. Because of its massive user base- numbering in the billions- it gets close attention from advertisers. It crowds out other media- especially print.

This, in itself, could create serious problems for you. But what if Facebook becomes the dominant means of authenticating personal identity? You may soon be unable to handle the ordinary business of life without an account.

“The Zuckerberg Mafia finally hit me where it hurts.”

Consider the case of Jason Ditzian, who operates the website The Bold Italic. He was recently kicked out of a San Francisco ride-sharing service, City CarShare, after Getaround bought it. Getround had founded its platform on Facebook, and authenticated membership through it. Lacking an account, Ditzian could no longer use City CarShare. As he put it, “The Zuckerberg Mafia finally hit me where it  hurts.”

Getaround’s user agreement states: “We may permit third-party advertising networks to collect information about your use of our service over time…” It goes on to state that this could include location information. Getaround, then, would know where you’ve been- and when you’ve been there. Could this be a threat to your well-being?

What are you telling the world about yourself?

Most people post huge amounts of personal data on social media. Your Facebook posts may reveal:

  • Where you live
  • Who your friends or lovers are
  • Where you travel
  • What pets you have
  • Where you work
  • What you read
  • Your musical tastes
  • Your political or religious commitments and opinions

This can provide a nearly complete profile of your personality, background, and interests. What happens if this information falls into the wrong hands?

Could governments get your data?

 So far, your social media posts are used mainly to benefit advertisers. This may not be a serious problem for you. But what if governments or hostile political activists get their hands on the data? Consider China, for example. It has begun assigning “citizen scores” for applicants for housing or jobs. Its scores are derived largely from information on social media.

Could something similar happen here? Could the state use your data to ruin your life? Could it guess your location at any given moment, based on your Facebook posts?

The personal information Facebook can collect now is already a severe threat to privacy. At least you can opt out of participating, though.

What if that option is taken from you? If enough businesses and social groups require social media proof of I D, you may have to give in. Your survival may require it. You would have to leave yourself vulnerable to those who would use your personal data against you.

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The enclosed images are from Black Mirror, a Netflix series. It is said to be a contemporary version of The Twilight Zone.  

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WORLD’S FIRST UNMANNED CONVENIENCE STORES

Are you fed up with surly or slow convenience store clerks? Do you want to buy something you’re slightly ashamed of, and would prefer not to face a human clerk? Wheelys offers a solution.

A Swedish firm best known for selling bicycle-mounted coffee bars, creperies, ice cream dispensers, and juice bars, Wheelys has opened an unmanned convenience store in Shanghai, China. The prototype store will be open around the clock, seven days a week. Because it requires no staff, the Wheelys concept will make it easier for entrepreneurs with limited capital to enter the grocery business.

Wheelys tested the concept successfully in a small town in rural Sweden. The Shanghai store marks its first test in a dense urban setting.

For access to the Wheelys store, the customer installs an app on his iOS or Android tablet or phone. The door opens automatically for anyone carrying a device with a registered app. The customer scans the bar codes for any goods he wants to buy, and Wheelys charges them to his credit card.

To prevent theft, a camera monitors the store. And since customers log themselves in through their apps upon entry, they can be identified easily if they take any goods without scanning them.

Wheelys says that if the Shanghai test is successful, it will license the unmanned store technology so retailers can incorporate it into their existing stores. A company spokesman said, “What Uber did for taxis, we do for retail.”

The Wheelys system is not as advanced as the unmanned store concept currently under development by Amazon– though Amazon has yet to test its system in an actual market setting. Amazon said that its stores will not require scanning of individual products. After logging in, the customer with simply load his cart with the goods he wants, and a scanner will total his purchases as he leaves.

Amazon has not said it plans to license its unmanned store technology.

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ROBOTS:  WILL THEY TAKE OUR JOBS?

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Apocalypse by Robots is a recurring theme in technical publications and science fiction. As our tools become more sophisticated and able to learn, the more alarmist writers tell us, they might attack us. A machine programmed to make paper clips might try to turn the entire world into a paper clip factory. Robots programmed to find their own power sources could deny us the power we need for survival. Robots could be deadly.

Some of the less excitable tech writers dismiss such alarms,. They still say, though, that say automation will foster mass unemployment. In fact, we’ll need a guaranteed minimum income to save the hordes of technologically unemployed from rioting in the streets because they can’t support themselves. MIT’s Technology Review, Wired, Gizmodo, The Verge, Singularity Hub, Mashable, Ars Technica- almost every technical rag echoes the same theme.

There are a few dissenting voices, but almost every article addressing the subject warns that automation will destroy far more jobs than it will create. In the past, technical development has only disrupted job markets for the short term, and in the long run has created far more jobs– and far more remunerative jobs-  than it has destroyed.

But this time it’s different, the alarmists say. We can’t use the Industrial Revolution or the dawn of the Information Age as our model. The big difference now is artificial intelligence or machine learning. As our tools learn from ’experience’, instead of just responding to specific inputs, the need for direct human control nearly vanishes. A small technical and financial elite will control almost everything, and will become fantastically wealthy. The rest of us will be mired in poverty, permanently shut out from the labor force.

How Have Robots Affected Job Markets Before?

This certainly is a grim prospect. But is it likely?

We doubt it. Suppose we concede that the distant past has nothing to teach us about out own futures. We’ll look into just the rise of robotics in the last sixty years. In all that time, robots have finally and irrevocably destroyed only one job category, elevator operators. But automation has created more jobs for elevator engineers and repairmen.

We’ve seen the same trend in other industries. Replacement of land lines with mobile phones has radically altered the work of telecom technicians, but has not made them obsolete. Replacing cathode ray tubes with LCD, LED, and OLED TV sets radically shrank the market for TV repairmen, but created new jobs for electronics designers and coders. The waning influence of broadcast TV networks has opened new markets in cable TV, satellite TV, and streaming video,. It has created more demand for content– and for content creators.

Automation has brought us an enormous blessing: assignment of the most dangerous, dirty, exhausting, and boring tasks to machines. This leaves us with far less onerous work, often in air-conditioned comfort. Machine learning will accelerate this trend. The tasks we handle in the future might not be what we call ‘work’ today. They might even seem like play. But suppose you could enter a time machine, and could talk with a farmer or a merchant living two centuries ago. If you describe your current job to him, will he understand it? Will he consider it work? Not likely. He’ll probably think you’re just playing.

What Can You Do?

This doesn’t mean you should be complacent. If you’re unprepared, a rapidly changing job market can hurt you badly. Your best job insurance is continually upgrading your skills.

Above all else, learn how to learn. We can’t always predict what occupations will be in demand. Students who spend years preparing for specific jobs in trendy fields often find, not long after they graduate, that their hard-won skills are obsolete. If you have solid communication, math, and reasoning skills, and if you know a fair amount about literature and history, you have a huge advantage over others. What you don’t know, you can learn quickly.

With a nimble mind and a solid work ethic, you probably don’t need to fear competition by robots.

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TWILIGHT OF “KNOW-HOW”

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Part Two of a Three-Part Series

The twilight cometh…

By the mid-sixties, ‘know-how’ was outmoded. To mention it was to mark oneself as hopelessly unhip and unaware. The assassination of President Kennedy had soured the nation’s mood, riots tore many of our biggest cities apart, the Vietnam war appeared endless and unwinnable, and street crime was skyrocketing. America’s most cherished institutions were under assault by leading public intellectuals. Talk of ‘know-how’ was out of sync with the national mood.

Events of the seventies generally reinforced this timid, embittered, and cynical spirit. For millions of us, the Watergate Scandal destroyed faith in our government’s essential decency. We questioned its regard for the well-being of the people. Double-digit inflation, repeated recessions, and repeated energy shortages undermined confidence in our material futures. The catastrophic loss in Vietnam, the Iranian Hostage Crisis, and the Soviet Empire’s seemingly unstoppable advances cast a shadow over the future of America itself. The country seemed to be in its twilight.

Many of us took refuge in unrestrained hedonism. We dosed ourselves with psychoactive drugs, entertained multiple lovers, spent inordinate amounts of time in recreational activities, and avoided work when we could. The period was called the “Me Decade” for a reason.

We’ve gone through numerous twists and turns since then, our cultural competence and self-confidence waxing and waning by turns.

In early 2016, we seem to be in another trough. Our largest political parties are discredited. Republicans exhibit pathetic and inexplicable weakness. Democrats appall us with their excessive ambition, the social disruption inherent in their embrace of identity politics, and the moral bankruptcy of their governing model. Our military forces, despite overwhelmingly superior training and weaponry, face defeat after defeat at the hands of barely organized bands of savages. Our national government is mired in seemingly unpayable debt, and few of our leaders even bother to ask how we’re going to deal with it.

How did this happen?  How could ‘know-how’ have slipped through our fingers? Can we recover it?

We believe there is a way back. But it will not be easy.

The Twilight of “Know-How” to be continued…

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KNOW-HOW AND CULTURAL SELF-CONFIDENCE

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I’m looking at some old magazine ads touting “American know-how”. Do you remember “know-how”? If you do, you’re old enough to collect Social Security benefits.

“Know-how” was one of the enduring buzzwords of the fifties. It meant technical competence, of course, but much more. It was an attitude and a philosophy. Technical competence was the decisive factor in almost all aspects of life. There were hardly any problems that couldn’t be solved with the right tools, the right training, and enough elbow grease. Seemingly intractable social ailments such as war, crime, and poverty would be eradicated if the right people applied the right methods. Almost no challenge was beyond the reach of “know-how”.

Was Our Confidence Justified?

It was easy to believe in “know-how” then. America was the dominant power in the world. We were the only major industrialized nation not to have fought World War II on its own soil. Our unmatched industrial capacity had helped us defeat Tojo and Hitler. The crime rate had plunged dramatically since the thirties. Our economy was growing by leaps and bounds. We were by far the world’s largest exporter of manufactured goods. By 1955, Americans had developed vaccines to prevent polio and other crippling diseases, and we had effective antibiotics to treat other diseases. Nuclear power-“Atoms for Peace”– promised limitless cheap energy.  A middle-class American family enjoyed levels of comfort, leisure, entertainment and mobility unimaginable a few decades earlier. No other people had ever had it so good. No other nation had come close.

We also seemed supremely competent in international matters. Our advances in agriculture would end famines forever. Advances in travel and communications would tie the world together, reduce misunderstanding, and promote peace. We’d win the good will of foreigners with electricity and well projects.

Even the United Nations- an American project at first- seemed to be working. It seemed a useful tool for promoting peace and freedom. Its most important project in the fifties was defending South Korea from Communist invasion. It was much later that we came to revile the UN as a hive of scum and villainy***.

The National Mood Sours

“Know-how” fizzled in the early sixties. Afterward, to mention it was to mark oneself as hopelessly unhip and unaware. The JFK assassination had soured the country’s mood. Riots tore many of our cities apart. Failed social experiments had fostered skyrocketing crime rates. Our most cherished institutions were under assault in the universities and the press.

By 1965, talk of “know-how” was out of touch with the national mood. To many of us, it seemed a cruel joke.

Coming Soon: What Went Wrong? What Can We Do?

(***…a hive of scum and villainy… This is how Alec Guinness as Obi-Wan Kenobi described Mos Eisley in the first Star Wars movie.)

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TRUMP TO DUMP CPB & NEA?

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Subsidized arts, TV, and radio are feeling the Grim Reaper’s cold breath on the backs of their corporate necks. They’ve heard powerful hints that their taxpayer-funded lifelines are about to be severed.

The Hill, a D.C. publication specializing in ‘insider’ coverage of the Federal Government, said on Sunday that President Trump plans to eliminate funding for the Corporation for Public Broadcasting and the National Endowment for the Arts. Trump plans to leave them with no federal funding for fiscal year 2018.

The CPB is the Federal entity that partially funds National Public Radio and the Public Broadcasting System. The NEA, by its own account, “funds, promotes, and strengthens the creative capacity of our communities”.  It does so by subsidizing favored artists, writers, dancers, musicians, and theater productions.

The NEA receives about $150 million per year from the Federal Government, making it the biggest arts funding source in the country. No other source is even close.

The CPB receives more than $445 million in federal funding each year. About half of it goes to the 350+ public TV stations in the U.S.  The stations return some of the money, in the form of licensing fees, to PBS, which produces commercial-free content such as Frontline, PBS NewsHour, and Sesame Street. (Since August 2015, HBO has held exclusive rights to first-run episodes of Sesame Street. After a nine-month window, though, they’re available at no charge to PBS member stations.

The NEA and the CPB have long been political targets for conservatives. They argue that CPB news coverage– NPR especially– is not at all objective or impartial, and that the NEA often funds obscene and aesthetically questionable work. In 1987, critics flayed the NEA fiercely for its subsidies of Andres Serrano, whose work featured his bodily fluids and religious imagery, and Robert Mapplethorpe, whose photographs were explicitly homoerotic. These are only two examples. There are many more.

Can the CPB and the NEA thrive without their taxpayer-funded lifeline? Maybe they can survive on ad sales and voluntary contributions. From their reaction and the reaction of their media allies to the news of the looming budget cuts, though, they don’t seem confident that they will.

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NIELSEN RATINGS REVAMPED

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Nielsen has been a TV god. From the dawn of the TV industry, the Nielsen Ratings were its gold standard of performance measures. They served electronic media whose programming and personnel decisions had previously been combinations of guesswork and voodoo. For an industry rife with superstition, the Nielsen system was the closest thing to science.

Like the Word of God from Mt. Sinai, the system’s judgements were absolute- and beyond appeal. Actors, talk show hosts, programming directors, and ad buyers lived or died by them. The ratings conferred wealth and fame for some; career death, financial ruin, and highly dreaded obscurity on others. Nobody in TV or advertising could afford to ignore the ratings.

The system is a dramatic improvement on all that came before. It’s far from perfect, though. Survey samples are skewed. In part, this is because participation is voluntary, and participants know they’re being surveyed. And the samples have always been small. In the beginning, the sample was only a few thousand households. Though Nielsen enlarges it once in a while, as late as November 2015 it was only 25, 000. It is now about 100,000.

The system worked well enough when only four networks (including PBS) competed for viewers. It became less reliable with cable channels multiplying, and the need for precision was greater than ever.

Other developments undermined the rating system. Viewers often ‘time-shifted’ their viewing with DVRs. With ever more viewers watching on tablets and smart phones, many were beyond the reach of the Nielsen system. TV also has to compete with internet browsers. The browsers track user interests and buying habits- and adapt targeted ads for them. Legacy TV systems couldn’t keep up.

The Nielsen Rating System was in danger of becoming obsolete. To survive, it needed to be revamped– dramatically and quickly.

Last month, AT&T stepped into the matter. The telecom forged a multi-year agreement with Nielsen to provide anonymous viewer data from DirecTV and U-Verse receivers and streaming apps. The new system will provide instantaneous data from more than 25 million subscribers, so it will be many times more accurate than the previous one.

A few months ago, Dish Network signed a similar contract with Nielsen.

For the first time, all concerned will truly understand what viewers want to watch. The difference will be especially dramatic for data from rural and less populous suburban areas, for which data from the original Nielsen system was especially erratic. It will be easier to track the performance of regional or specialty channels that currently attract limited audiences. And the new system will more easily detect when a specialty channel has potential to break into the mainstream.

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