by Adam Hartung | Jul 8, 2014 | Current Affairs, Food and Drink, In the Whirlpool, Leadership
Crumbs Bake Shop – a small chain of cupcake shops, almost totally unknown outside of New York City and Washington, DC – announced it was going out of business today. Normally, this would not be newsworthy. Even though NASDAQ traded, Crumbs small revenues, losses and rapidly shrinking equity made it economically meaningless. But, it is receiving a lot of attention because this minor event signals to many people the end of the “cupcake trend” which apparently was started by cable TV show “Sex and the City.”
However, there are actually 2 very important lessons all of us can learn from the rise, and fall, of Crumbs Bake Shop:
1 – Don’t believe in the myth of passion when it comes to business
Many management gurus, and entrepreneurs, will tell you to go into business following something about which you are passionate. The theory goes that if you have passion you will be very committed to success, and you will find your way to success with diligence, perseverance, hard work and insight driven by your passion. Passion will lead to excellence, which will lead to success.
And this is hogwash.
Customers don’t care about your passion. Customers care about their needs. Rather than being a benefit, passion is a negative because it will cause you to over-invest in your passion. You will “never say die” as you keep trying to make success out of an idea that has no chance. Rather than investing your resources into something that fulfills people’s needs, you are likely to invest in your passion until you burn through all your resources. Like Crumbs.
The founders of Crumbs had a passion for cupcakes. But, they had no way to control an onslaught of competitors who could make different variations of the product. All those competitors, whether isolated cupcake shops or cupcakes offered via kiosks or in other shops, meant Crumbs was in a very tough fight to maintain sales and make money. It’s not you (and your passion) that controls your business destiny. Nor is your customers. Rather, it is your competition.
When there are lots of competitors, all capable of matching your product, and of offering countless variations of your product, then it is unlikely you can sustain revenues – or profits. There are many industries where cutthroat competition means profits are fleeting, or downright elusive. Airlines come to mind. Magazines. And many retail segments. It doesn’t matter how much passion you have, when there are too many competitors it’s a lousy business.
2 – Trends really do matter
Cupcakes were a hot product for a while. And that’s great. But it wasn’t hard to imagine that the trend would shift, and cupcakes would be displaced by something else. Whatever profits you might have when you sit on a trend, those profits evaporate fast when the trend shifts and all competitors are fighting for sales in a declining market.
Remember Mrs. Field’s cookies? In the 1980s an attractive cook and her investment banker husband built a business on soft, chewy, warm cookies sold in malls and retail streets across America. It seemed nobody could get enough of those chocolate chip cookies.
But then, one day, we did. We’d collectively had enough cookies, and we simply quit buying them. Mrs. Fields (and other cookie brand) stores were rapidly replaced with pretzels and other foodstuffs.
Or look at Krispy Kreme donuts. In the 1990s people went crazy for them, often lining up at stores waiting for the neon sign to come on saying “hot donuts”. The company exploded into 400 stores as the stock flew like a kite. But then, in a very short time, people had enough donuts. There were a lot more donut shops than necessary, and Krispy Kreme went bankrupt.
So it wasn’t hard to predict that shifting food tastes would eventually put an end to cupcake sales growth. Yet, Crumbs really didn’t prepare for trends to change. Despite revenue and profit problems, the leadership did not admit that cupcake sales had peaked, the market was going to decline, competition would become even more intense and Crumbs would need to find another business if it was to survive.
Few trends move as fast as tastes in sweets. But, trends do affect all businesses. Once we bought cameras (and film,) but now we use phones – too bad for Kodak. Once we used copiers, now we use email – too bad for Xerox. Once we watched TV, now we download from Netflix or Amazon – too bad for NBC, ABC, CBS and Comcast. Once we went to stores, now we order on-line – too bad for Sears. Once we used PCs, now we use mobile devices – too bad for Microsoft. These trends did not affect these companies as fast as shifting tastes affected Crumbs, but the importance of understanding trends and preparing for change is a constant part of leadership.
So Crumbs Bake Shop failure was one which could have been avoided. Leadership needed to overcome its passion for cupcakes and taken a much larger look at customer needs to find alternative products. It wasn’t hard to identify that some diversification was going to be necessary. And that would have been much easier if they had put in place a system to track trends, observing (and admitting) that their “core” market was stalled and they needed to move into a new trend category.
by Adam Hartung | Nov 22, 2013 | Current Affairs, Defend & Extend, In the Whirlpool, Leadership, Television
Do you really think in 2020 you’ll watch television the way people did in the 1960s? I would doubt it.
In today’s world if you want entertainment you have a plethora of ways to download or live stream exactly what you want, when you want, from companies like Netflix, Hulu, Pandora, Spotify, Streamhunter, Viewster and TVWeb. Why would you even want someone else to program you entertainment if you can get it yourself?
Additionally, we increasingly live in a world unaccepting of one-way communication. We want to not only receive what entertains us, but share it with others, comment on it and give real-time feedback. The days when we willingly accepted having information thrust at us are quickly dissipating as we demand interactivity with what comes across our screen – regardless of size.
These 2 big trends (what I want, when I want; and 2-way over 1-way) have already changed the way we accept entertaining. We use USB drives and smartphones to provide static information. DVDs are nearly obsolete. And we demand 24×7 mobile for everything dynamic.
Yet, the CEO of Charter Cable company wass surprised to learn that the growth in cable-only customers is greater than the growth of video customers. Really?
It was about 3 years ago when my college son said he needed broadband access to his apartment, but he didn’t want any TV. He commented that he and his 3 roommates didn’t have any televisions any more. They watched entertainment and gamed on screens around his apartment connected to various devices. He never watched live TV. Instead they downloaded their favorite programs to watch between (or along with) gaming sessions, picked up the news from live web sites (more current and accurate he said) and for sports they either bought live streams or went to a local bar.
To save money he contacted Comcast and said he wanted the premier internet broadband service. Even business-level service. But he didn’t want TV. Comcast told him it was impossible. If he wanted internet he had to buy TV. “That’s really, really stupid” was the way he explained it to me. “Why do I have to buy something I don’t want at all to get what I really, really want?”
Then, last year, I helped a friend move. As a favor I volunteered to return her cable box to Comcast, since there was a facility near my home. I dreaded my volunteerism when I arrived at Comcast, because there were about 30 people in line. But, I was committed, so I waited.
The next half-hour was amazingly instructive. One after another people walked up to the window and said they were having problems paying their bills, or that they had trouble with their devices, or wanted a change in service. And one after the other they said “I don’t really want TV, just internet, so how cheaply can I get it?”
These were not busy college students, or sophisticated managers. These were every day people, most of whom were having some sort of trouble coming up with the monthly money for their Comcast bill. They didn’t mind handing back the cable box with TV service, but they were loath to give up broadband internet access.
Again and again I listened as the patient Comcast people explained that internet-only service was not available in Chicagoland. People had to buy a TV package to obtain broad-band internet. It was force-feeding a product people really didn’t want. Sort of like making them buy an entree in order to buy desert.
As I retold this story my friends told me several stories about people who banned together in apartments to buy one Comcast service. They would buy a high-powered router, maybe with sub-routers, and spread that signal across several apartments. Sometimes this was done in dense housing divisions and condos. These folks cut the cost for internet to a fraction of what Comcast charged, and were happy to live without “TV.”
But that is just the beginning of the market shift which will likely gut cable companies. These customers will eventually hunt down internet service from an alternative supplier, like the old phone company or AT&T. Some will give up on old screens, and just use their mobile device, abandoning large monitors. Some will power entertainment to their larger screens (or speakers) by mobile bluetooth, or by turning their mobile device into a “hotspot.”
And, eventually, we will all have wireless for free – or nearly so. Google has started running fiber cable in cities including Austin, TX, Kansas City, MO and Provo, Utah. Anyone who doesn’t see this becoming city-wide wireless has their eyes very tightly closed. From Albuquerque, NM to Ponca City, OK to Mountain View, CA (courtesy of Google) cities already have free city-wide wireless broadband. And bigger cities like Los Angeles and Chicago are trying to set up free wireless infrastructure.
And if the USA ever invests in another big “public works infrastructure” program will it be to rebuild the old bridges and roads? Or is it inevitable that someone will push through a national bill to connect everyone wirelessly – like we did to build highways and the first broadcast TV.
So, what will Charter and Comcast sell customers then?
It is very, very easy today to end up with a $300/month bill from a major cable provider. Install 3 HD (high definition) sets in your home, buy into the premium movie packages, perhaps one sports network and high speed internet and before you know it you’ve agreed to spend more on cable service than you do on home insurance. Or your car payment. Once customers have the ability to bypass that “cable cost” the incentive is already intensive to “cut the cord” and set that supplier free.
Yet, the cable companies really don’t seem to see it. They remain unimpressed at how much customers dislike their service. And respond very slowly despite how much customers complain about slow internet speeds. And even worse, customer incredulous outcries when the cable company slows down access (or cuts it) to streaming entertainment or video downloads are left unheeded.
Cable companies say the problem is “content.” So they want better “programming.” And Comcast has gone so far as to buy NBC/Universal so they can spend a LOT more money on programming. Even as advertising dollars are dropping faster than the market share of old-fashioned broadcast channels.
Blaming content flies in the face of the major trends. There is no shortage of content today. We can find all the content we want globally, from millions of web sites. For entertainment we have thousands of options, from shows and movies we can buy to what is for free (don’t forget the hours of fun on YouTube!)
It’s not “quality programming” which cable needs. That just reflects industry deafness to the roar of a market shift. In short order, cable companies will lack a reason to exist. Like land-line phones, Philco radios and those old TV antennas outside, there simply won’t be a need for cable boxes in your home.
Too often business leaders become deaf to big trends. They are so busy executing on an old success formula, looking for reasons to defend & extend it, that they fail to evaluate its relevancy. Rather than listen to market shifts, and embrace the need for change, they turn a deaf ear and keep doing what they’ve always done – a little better, with a little more of the same product (do you really want 650 cable channels?,) perhaps a little faster and always seeking a way to do it cheaper – even if the monthly bill somehow keeps going up.
But execution makes no difference when you’re basic value proposition becomes obsolete. And that’s how companies end up like Kodak, Smith-Corona, Blackberry, Hostess, Continental Bus Lines and pretty soon Charter and Comcast.
by Adam Hartung | Jul 10, 2013 | Current Affairs, Defend & Extend, In the Whirlpool, Leadership, Television
Tribune Corporation finally emerged from a 4 year bankruptcy on the last day of 2012. Before the ink hardly dried on the documents, leadership has decided to triple company debt to double up the number of TV stations. Oh my, some people just never learn.
The media industry is now over a decade into a significant shift. Since the 1990s internet access has changed expectations for how fast, easily and flexibly we acquire entertainment and news. The result has been a dramatic decline in printed magazine and newspaper reading, while on-line reading has skyrocketed. Simultaneously, we're now seeing that on-line streaming is making a change in how people acquire what they listen to (formerly radio based) and watch (formerly television-based.)
Unfortunately, Tribune – like most media industry companies – consistently missed these shifts and underestimated both the speed of the shift and its impact. And leadership still seems unable to understand future scenarios that will be far different from today.
In 2000 newspaper people thought they had "moats" around their markets. The big newspaper in most towns controlled the market for classified ads for things like job postings and used car sales. Classified ads represented about a third of newspaper revenues, and 40% of profits. Simultaneously display advertising for newspapers was considered a cash cow. Every theatre would advertise their movies, every car dealer their cars and every realtor their home listings. Tribune leadership felt like this was "untouchable" profitability for the LA Times and Chicago Tribune that had no competition and unending revenue growth.
So in 2000 Tribune spent $8B to buy Times-Mirror, owner of the Los
Angeles Times. Unfortunately, this huge investment (75% over market
price at the time, by the way) was made just as people were preparing to
shift away from newspapers. Craigslist, eBay and other user sites killed the market for classified ads. Simultaneously movie companies, auto companies and realtors all realized they could reach more people, with more information, cheaper on-line than by paying for newspaper ads.
These web sites all existed before the acquisition, but Tribune leadership ignored the trend. As one company executive said to me "CraigsList!! You think that's competition for a newspaper? Craigslist is for hookers! Nobody would ever put a job listing on Craigslist." Like his compadres running newspapers nationwide, the new competitors and trends toward on-line were dismissed with simplistic statements and broad generalizations that things would never change.
The floor fell out from under advertising revenues in newspapers in the 2000s. There was no way Times-Mirror would ever be worth a fraction of what Tribune paid. Debt used to help pay for the acquisition limited the options for Tribune as cost cutting gutted the organization.
Then, in 2007 Sam Zell bailed out management by putting together a leveraged buyout to acquire Tribune company. Saying that he read 3 newspapers every day, he believed people would never stop reading newspapers. Like a lot of leaders, Mr. Zell had more money than understanding of trends and shifting markets. He added a few billion dollars more debt to Tribune. By the end of 2008 Tribune was unable to meet its debt obligations, and filed for bankruptcy.
Now, new leadership has control of Tribune. They are splitting the company in two, seperating the print and broadcast businesses. The hope is to sell the newspapers, for which they believe there are 40 potential buyers. Even though profits continued falling, from $156M to $89M, in just the last year. Why anyone would buy newspaper companies, which are clearly buggy whip manufacturers, is wholly unclear. But hope springs eternal!
The new stand-alone Tribune Broadcasting company has decided to go all-in on a deal to borrow $2.7B and buy 19 additional local television stations raising total under their control to 42.
Let's see, what's the market trend in entertainment and news? Where once we were limited to local radio and television stations for most content, now we can acquire almost anything we want – from music to TV, movies, documentaries or news – via the internet. Rather than being subjected to what some programming executive decides to give us, we can select what we want, when we want it, and simply stream it to our laptop, tablet, smartphone, or even our large-screen TV.
A long time ago content was controlled by distribution. There was no reason to create news stories or radio programs or video unless you had access to distribution. Obviously, that made distribution – owning newspapers, radio and TV stations – valuable.
But today distribution is free, and everywhere. Almost every American has access to all the news and entertainment they want from the internet. Either free, or for bite-size prices that aren't too high. Today the value is in the content, not distribution.
In the last 2 years the number of homes without a classical TV connection (the cable) has doubled. Sure, it's only 5% of homes now. But the trend is pretty clear. Even homes that have cable are increasingly not watching it as they turn to more and more streaming video. Instead of watching a 30 minute program once per week, people are starting to watch 8 or 10 half hour episodes back to back. And when they want to watch those episodes, where they want to watch them.
While it might be easy for Tribune to ignore Hulu, Netflix and Amazon, the trend is very clear. The need for broadcast stations like NBC or WGN or Food Network to create content is declining as we access content more directly, from more sources. And the need to have content delivered to our home by a local affiliate station is becoming, well, an anachronism.
Yet, Tribune's new TV-oriented leadership is doubling down on its bet for local TV's future. Ignoring all the trends, they are borrowing more money to buy more assets that show all signs of becoming about as valuable whaling ships. It's a big, dumb bet. Similar to overpaying for Times-Mirror. Some leaders just seem destined to never learn.
by Adam Hartung | Dec 10, 2012 | Current Affairs, Defend & Extend, In the Whirlpool, Leadership, Lifecycle, Television
Remember when almost everyone read a daily newspaper?
Newspaper readership peaked around 2000. Since then printed media has declined, as readers shifted on-line. Magazines have folded, and newspapers have disappeared, quit printing, dramatically cut page numbers and even more dramatically cut staff.
Amazingly, almost no major print publisher prepared for this, even though the trend was becoming clear in the late 1990s.
Newspapers are no longer a viable business. While industry revenue grew for
almost 2 centuries, it collapsed in a mere decade.
Chart Source: BusinessInsider.com
This market shift created clear winners, and losers. On-line news sites like Marketwatch and HuffingtonPost were clear winners. Losers were traditional newspaper companies such as Tribune Corporation, Gannett, McClatchey, Dow Jones and even the New York Times Company. And investors in these companies either saw their values soar, or practically disintegrate.
In 2012 it is equally clear that television is on the brink of a major transition. Fewer people are content to have their entertainment programmed for them when they can program it themselves on-line. Even though the number of television channels has exploded with pervasive cable access, the time spent watching television is not growing. While simultaneously the amount of time people spend looking at mobile internet displays (tablets, smartphones and laptops) is growing at double digit rates.
Chart Source: Silicone Alley Insider Chart of the Day 12/5/12
It would be easy to act like newspaper defenders and pretend that television as we've known it will not change. But that would be, at best, naive. Just look around at broadband access, the use of mobile devices, the convenience of mobile and the number of people that don't even watch traditional TV any more (especially younger people) and the trend is clear. One-way preprogrammed advertising laden television is not a sustainable business.
So, now is the time to prepare. And change your business to align with impending new realities.
Losers, and winners, will be varied – and not entirely obvious. Firstly, a look at those trying to maintain the status quo, and likely to lose the most.
Giant consumer goods and retail companies benefitted from the domination of television. Only huge companies like P&G, Kraft, GM and Target could afford to lay out billions of dollars for television ads to build, and defend, a brand. But what advantage will they have when TV budgets no longer control brand building? They will become extremely vulnerable to more innovative companies that have better products and move on fast lifecycles. Their size, hierarchy and arcane business practices will lead to huge problems. Imagine a raft of new Hostess Brands experiences.
Even as the trends have started changing these companies have continued pumping billions into the traditional TV networks as they spend to defend their brand position. This has driven up the value of companies like CBS, Comcast (owns NBC) and Disney (owns ABC) over the last 3 years substantially. But don't expect that to last forever. Or even a few more years.
Just like newspaper ad spending fell off a cliff when it was clear the eyeballs were no longer there, expect the same for television ad spending. As giant advertisers find the cost of television harder and harder to justify their outlays will eventually take the kind of cliff dive observed in the chart (above) for newspaper advertising. Already some consumer goods and ad agency executives are alluding to the fact that the rate of return on traditional TV is becoming sketchy.
So far, we've seen little at the companies which own TV networks to demonstrate they are prepared for the floor to fall out of their revenue stream. While some have positions in a few internet production and delivery companies, most are clearly still doing their best to defend & extend the old business – just like newspaper owners did. Just as newspapers never found a way to replace the print ad dollars, these television companies look very much like businesses that have no apparent solution for future growth. I would not want my 401K invested in any major network company.
And there will be winners.
For smaller businesses, there has never been a better time to compete. A company as small as Tesla or Fisker can now create a brand on-line at a fraction of the old cost. And that brand can be as powerful as Ford, and potentially a lot more trendy. There are very low entry barriers for on-line brand building using not only ad words and web page display ads, but also using social media to build loyal followers who use and promote a brand. What was once considered a niche can become well known almost overnight simply by applying the new dynamics of reaching customers on-line, and increasingly via mobile. Look at the success of Toms Shoes.
Zappos and Amazon have shown that with almost no television ads they can create powerhouse retail brands. The new retailers do not compete just on price, but are able to offer selection, availability and customer service at levels unachievable by traditional brick-and-mortar retailers. They can suggest products and prices of things you're likely to need, even before you realize you need them. They can educate better, and faster, than most retail store employees. And they can offer great prices due to less overhead, along with the convenience of shipping the product right into your home.
And as people quit watching preprogrammed TV, where will they go for content? Anybody streaming will have an advantage – so think Netflix (which recently contracted for all the Disney content,) Amazon, Pandora, Spotify and even AOL. But, this will also benefit those companies providing content access such as Apple TV, Google TV, YouTube (owned by Google) to offer content channels and the increasingly omnipresent Facebook will deliver up not only friends, but content — and ads.
As for content creation, the deep pockets of traditional TV production companies will likely disappear along with their ability to control distribution. That means fewer big-budget productions as risk goes up without revenue assurances.
But that means even more ability for newer, smaller companies to create competitive content seeking audiences. Where once a very clever, hard working Seth McFarlane (creator of Family Guy) had to hardscrabble with networks to achieve distribution, and live in fear of a single person controlling his destiny, in the future these creative people will be able to own their content and capture the value directly as they build a direct audience. A phenomenon like George Lucas will be more achievable than ever before as what might look like chaos during transition will migrate to a much more competitive world where audiences, rather than network executives, will decide what content wins – and loses.
So, with due respects to Don McLean, will today be the day TV Died? We will only know in historical context. Nobody predicted newspapers had peaked in 2000, but it was clear the internet was changing news consumption behavior. And we don't know if TV viewership will begin its rapid decline in 2013, or in a couple more years. But the inevitable change is clear – we just don't know exactly when.
So it would be foolish to not think that the industry is going to change dramatically. And the impact on advertising will be even more profound, much more profound, than it was in print. And that will have an even more profound impact on American society – and how business is done.
What are you doing to prepare?
by Adam Hartung | Feb 1, 2011 | Current Affairs, In the Rapids, Innovation, Leadership, Television, Web/Tech
Summary:
- There is dramatic change in the television/media industry
- NBC Universal/Comcast is changing ownership, and leaders
- The company’s future success will have more to do with which battles the new President invests in than the history, or style of the past and future company President’s
- Trying to “fix” the old business will waste resources and harm future prospects
- Success will require developing a management approach that gives permission and resources to find a path to the future – a future that will be nothing like the past
NBC Universal is changing owners, from General Electric to Comcast. The former NBC President, Jeff Zucker, is being replaced by Steve Burke. Stylistically, it’s hard to imagine two fellas less alike. Mr. Burke, portraited in the New York Times “A Little Less Drama at NBC,” is a mild-mannered, quiet, self-effacing executive who almost attended divinity school. He avoids the limelight as much as he avoids being abrasive with colleagues. The outgoing Mr. Zucker is by all accounts brash,abrasive and quick to make decisions, as he was portraited in PaidContent.org “Was Jeff Zucker Really So Bad For NBC Universal?“
But it isn’t executive style that will determine whether Mr. Burke succeeds. Although NBCU just returned its highest profits since 2004, the television and media industries are in dramatic transition. Things aren’t like they used to be, and they will never be that way again. Growing revenues, and profits, at the combined NBCU/Comcast will require Mr. Burke quickly move both companies into a different kind of competitor focused on the changed market of 2015 – when media customers and suppliers will both be very different, with quite different demands.
Although Mr. Zucker is blasted for allowing NBC’s ratings to fall to last among the Big 3 networks (including CBS and ABC), it’s not at all clear why that wasn’t a smart move. What has grown NBC’s profits has been far removed from network programming. It was the acquisition of cable channels USA and Sci Fi (now Syfy) via Universal, and later Bravo, Oxygen and The Weather Channel that contributed greatly to NBC’s revenue and profit growth. These were also enhanced by building, from scratch, the #1 business-content television channel at CNBC, and the profitable, somewhat populist counter-channel to powerhouse conservative Fox News with MSNBC. Despite what the critics (who are largely interested in programs rather than profits) have said, it may have been an act of brilliance to avoid investing in the declining business that is prime time network programming.
What anyone thinks about the brouhaha over Jay Leno’s attempt at prime time, and Conan O’Brien’s stint leading The Today Show, is immaterial to revenue growth and profits. I’m a late boomer, so I remember when there were only 3 stations, and Johny Carson dominated the post-news late evening. But now I have college age sons that don’t even own televisions, have almost no idea who Jay Leno is (other than know of him as a car and motorcycle collector) and find all interview programs boring. “Network” TV is something they don’t quite understand – since their tolerance for watching entertainment on someone else’s pre-determined schedule is non-existent, and their patience for sitting through commercials of real-time programming is even lower. In other words, what happens in the “prime time” race, or with network celebrities, really doesn’t matter any more. And if NBCU can’t grow viewers it can’t grow ad revenues – so why should it invest in the prime time business? Just because it used to? Or started that way?
While lots of media “experts” are screaming for Mr. Burke to “fix” NBC, that business is already well into the hospice. Network share of entertainment interest is falling rapidly as boomers die, dozens of new offerings are micro-targeting across the channel spectrum, and we all turn to the internet for downloads, ignoring the TV for news or entertainment several additional hours each year. Meanwhile, people under the age of 30 aren’t even watching much television any more. They just pretend to watch while sitting with their parents as they text, check Facebook or watch a downloaded program on their iPhone.
“Network” programming is a business which is not going to grow again. Given how costs are increasing for traditional shows, and the over-explosion of inexpensive “reality” or “news” shows, and fragmentation and decline of advertising why would anyone ever expect this to be a profitable business? Being last in that 3 horse race is about as interesting as tracking share of market for printed phone directories. Probably the first to quit ist he big winner. So why should Mr. Burke spend much time, or money, fighting the last war? “Fixing” that outdated business model is fraught with high risk, and low return. Now that tthe artificial limits on news and entertainment programming have been removed (thanks to the internet) isn’t it time to let go of that historial artifact and focus on the future?
We know the future will be a mix of traditional TV (at least for a while, but don’t make any bets on it being too long), as well as targeted channels we now refer to as “cable” (even though that moniker is clearly losing meaning in a WiFi world.) Some of these will be free access, and some will be paid content. But all of that now must compete with downloads from Netfilx, Hulu (in which NBCU is a part owner) and YouTube (partially owned by Google.) People can create and post their own programs, and even do their own marketing. Instant availability, reviews and promotion will be couresy of Twitter and Facebook. This is a lot more complex than just ordering a new crime drama series, or situation comedy, and foisting it on a market with only a handful of channel options.
Viewership will range from 50″ panels, to 2″ hand-held screens – with a plethora of optional sizes in between. Program length will be infinitely variable from hours of non-stop viewing to constantly interrupted sound bites, no longer proscribed by 30 minute increments. Traditional programming, like local or national “news” will have little meaning, or value, in 2020 (or maybe 2015) when we will be receiving instant updates several times each day on our mobile device.
Mr. Zucker did a yeoman’s job of steering NBCU toward the future. He was smart enough to understand that only historians, locked-in media critics and old farts in Lay-Z-Boys care about what’s happening on The Tonight Show or the NBC News. His primary investments were oriented toward understanding the future, and getting NBCU’s toes into that rapidly churning water where future growth lies. But he’s leaving just as the stream is turning into a torrent. Even what he did could well be out of date within a few years – or months!
Now it is Mr. Burke’s turn. The very pleasant fellow has a daunting challenge. If he isn’t supposed to “double down” his bets in network TV, and traditional “cable,” what is he supposed to do? In a dramatically changing advertising world, where Google, Facebook and mobile device ads are now becoming the hot markets, what is the role for NBCU/Comcast? If we no longer need the physucal cable (say in 2020), won’t Comcast lose subscribers for cable access just like we’re seeing declines in subscribers for newspapers, DVD subscriptions, land-line telephones and land-line long distance? What is the role of a “programmer” like NBCU if viewers all have unlimited access to everything, anytime, anywhere, in any format? And what is the value of a content provider if self-published content streams onto the web by the terabyte daily? And is sorted by engines like Google and YouTube?
What Mr. Burke must do, regardless of style, is develop some scenarios about the future, and understand the much more complex playing field that is today’s media business. He has to find the holes in competition, and learn how to leverage what the “fringe” competitors are doing that drives all that usage, and viewership. And, most importantly, he has to keep experimenting – just as Mr. Zucker did. He has to create opportunities to test the newly developing markets, figure out who will buy, and what they will buy. He has to set up white space teams who have permission to be experimental, even if they attack the old businesses like “network” TV – even cannibalizing the historical viewr base as they transition toward future media markets. If he can create these teams, give them the right permission and resources, NBCU/Comcast could be the next great media company.
We’ll have to wait and see. Will the sirens of the past, looking backward, pull the company into gladiator battles with old foes trying to hold share in narrowing, declining markets? That path looks like a sure disaster. Despite being an early leader with satellite TV and MySpace that approach has not helped NewsCorp. But betting on the future is more a bet on the journey, and finding the right path, than betting on any particular destination. The future-based approach takes a lot of faith in company leadership, and the company management team. It will be interesting to see which way Mr. Burke goes.
