Amazon Rides Tablet Wars Side-Saddle

Amazon's new Kindle Fire tablet v. Apple's iPad, Samsung Galaxy and virtually all others. We know Apple is winning. But, Amazon will be a big winner too, but for very different reasons.

You see, for Apple, selling the iPad is the big prize. Apple uses services (including music and movies) to sell more hardware. So do Samsung and all CE companies. That's why the price-tag for those tablets is so high. (And, of course, Apple can charge an even bigger premium because ... well ... it is Apple).

But, for Amazon it's completely reversed. Amazon is all about selling goods and services (books, music, movies and just about everything else). So, for Amazon, it's all about the store. Its new hardware -- the Kindle Fire tablet -- is simply a means to an end. The tablet is its Trojan Horse to its real prize -- mobile e-commerce. That's why Amazon can price the Kindle Fire at $199 -- hundreds less than Apple and others. Amazon is simply subsidizing its tablet side business and making up the difference (and much more) by getting us all to shop more.

So, both Amazon and Apple have their Trojan Horses. But, Amazon rides its Trojan Horse side-saddle ....

Super HD Premium Video -- Front & Center at Today's Amazon Kindle Fire Press Conference

All eyes in the tech world later this morning will be focused on Amazon and its big Kindle Fire tablet announcement. With the Kindle Fire, Amazon takes on Apple's iPad directly -- and this challenger will be formidable and WILL eat into iPad sales. I recently wrote about this (click here).

What is Amazon's headline story -- and key message of attack against the iPad -- at today's press event? Super HD premium motion picture and television video content, streaming services, and playback via a super HD resolution screen, that's what. The clues are everywhere.

First, Amazon's opportunity. Amazon will exploit the iPad's largest chink in its armor -- i.e., the fact that Apple, still surprisingly, provides no premium video content streaming service of its own whatsoever despite the fact that a tablet's killer experience IS video. Apple simply has not yet secured sufficient critical mass of motion picture and television rights from the media companies that it believes is necessary to provide a compelling service.

But, Amazon has. Amazon just closed another massive premium content deal with Fox, thereby further underscoring its absolute commitment to its Amazon Prime service. Amazon's recent announcement of that deal -- just last week -- was no accident. This was a textbook move to lay the groundwork for today's announcement. And, trust me, the media giants want non-Apple tablet and streaming services to become formidable competitors to the Cupertino gang. The more significant competition, the higher go the prices for licensing premium content. Amazon will not disappoint.

Second, Amazon was just caught testing a super HD video that most likely will be featured to showcase its video headline. This super HD video was shot with a Red One camera that supports resolutions of 4,096 by 2,304 pixels -- significantly greater than standard HD video.

Great premium motion picture and television content. Great seamless super HD playback on a tablet whose raison d'etre is video. Great brand with a great and massive existing customer base hungry for more than books.

Amazon will have a success here ... a big one ....

Amazon to Apple -- "GAME ON!" And There Will Be Blood!

The tech world's current worst kept secret is that Amazon tomorrow will announce its first tablet computer, the Kindle Fire. Jeff Bezos will take the stage, counter-program Steve Jobs' Silicon Valley cool-tech with his full-on Pacific Northwestern geek-tech, and announce to all those within earshot of Cupertino, "GAME ON!" Welcome to Amazon's iPad-targeted shot across the bow -- the first shot lobbed so far in the tablet wars that actually has the potential to inflict real damage to the boyz in the black mock turtlenecks.

Amazon's secret weapons? A massive built-in audience of loyal Kindle faithful Amazonian techno-geeks who are looking for Seattle's next big non-caffeinated thing. Amazon is smart, very smart here, because the Kindle Fire is designed NOT to cannibalize the good old-fashioned Kindle. You see, the Kindle Fire is for multi-media consumption -- while, the Kindle classic is for e-reading. Two great flavors that taste great together! Buy one, and get a discount on the other. You get the drill. Great marketing opps here.

But, wait, what's this? Ahh yes, secret weapon #2 is straight out of the Apple playbook -- create a seamless content/services experience with the hardware! Apple pioneered and perfected this approach -- essentially reinventing technology to delight consumers with great experiences. It's ultimately the content that matters after all! Amazon is smart, very smart once again (techno-geeks usually are). So why mess with success? There is no pride in authorship here.

So, Amazon's announcement tomorrow will feature premium video services -- i.e., motion picture and television streaming -- front and center. Amazon just closed a major Fox deal, among others, so expect a Murdoch-ian minion to join Bezos on stage (okay, maybe not now while James is still being grilled in the UK, but some king of content will join him). Video streaming on the Kindle Fire will be THE headline story. And, why not? Apple don't got it! Apple's recent iCloud announcement left motion picture and television streaming conspicuously M.I.A. Amazon is smartly exploiting Apple's Achilles Heal with its Amazon Prime streaming service as being the prime reason to buy the Kindle Fire. And, it won't hurt tht the Kindle Fire will likely be a few hundred dollars less than the iPad. QED -- the student learns from the master!

Don't get me wrong, I fully understand that the Kindle Fire will not even remotely challenge iPad numbers in the near or even mid-term. But, hear this people. Amazon's Kindle Fire will cause heart-burn in the Apple orchard down South and cannibalize their sales. There will be blood!

(Forgive my sense of drama here, but it runs in the family .... know the name Luise Rainer anyone? Bonus points if you do. There is a connection here ....)

Facebook Aims to Acquire Spotify? Vice Versa?

Earlier today, a very intriguing online music announcement broke -- i.e., that every pundit's darling online music service, Spotify, now requires new users to either already have a Facebook account or register on-the-spot and verify (spot-ify) to become Facebook users. No Facebook account? No Spotify for you!

First, everyone knows that Spotify is Mark Zuckerberg's favorite online music service. Then, remember last week? Spotify was the only online music service front and center and on the stage at the big Facebook music launch event. And, now this! Hmmm .... One may be an accident, two may be a coincidence, but three??

If I didn't know better (which I admit I don't), I would speculate that someone is setting itself up to be swallowed whole by a big fish. Acquisition anyone?

Am just sayin' ....

Finally, Hollywood Begins to "Get" It -- The "Ex" Factor -- Experimentation & Experiences

Much like their music label brethren before them who resisted online distribution to their peril, most Hollywood execs have acted like deer in headlights with respect to the reality that consumers now primarily want to access movies and television on demand and online rather than via discs. Put simply, now that network conditions and viewing devices (smart TVs, tablets, smart phones) are "right," consumers expect to get what they want, when they want it (which is an instant gratification "now"), where they want it, and how they want it. They can't get that with physical media. And, here's the thing -- consumers ultimately get what they want.

Well, finally, it appears that Hollywood execs are beginning to "get" the message due for two simple reasons. First, on the negative side, DVD sales continue to plummet and physical DVD rental stores continue to vanish. But, on the positive and more interesting side, studio execs are beginning to see gold in them thar hills. In a recent example, Netflix -- desperate for a win after a series of recent losses -- just outbid HBO for first rights to distribute Dreamworks movies during the traditional pay TV window. That's right, Netflix KOs HBO and will stream Dreamworks movies before they hit pay TV. How did they do it? Pure hard cash, that's how. Netflix will pay Dreamworks a whopping $30 million for each Dreamworks movie -- $10 million more than HBO currently pays. For you math majors out there, that's a whopping 50% windfall.

Streaming ahead of pay TV distribution? That's a watershed moment for Hollywood. And, that's price and distribution experimentation (the first of two "Ex's) that will lead Hollywood to the monetization mother-lode. More flexibility, more devices, more consumer choice -- those will ultimately lead to more profits for king-makers of content.

The second "Ex" that will help lead Hollywood to the promised land is "Experience." Although DVDs increasingly featured rudimentary consumer interaction, online distribution opens the door to a whole new level of consumer experiences. Online movie and television viewing will be increasingly social -- as an example, consumers will be able to view with a friend on Facebook and elsewhere (much like music lovers on Facebook can now listen with a friend). Consumers will shell out more bucks for unique experiences.

"Ex" marks the spot (well, two "ex's" that is) -- pricing/business model experimentation, and content consumptive experiences. If Hollywood embraces this reality and builds it -- which they are finally beginning to do -- then consumers (and hefty profits) will ultimately come.

Have faith young Skywalker ....

More Proof That Cable's Dumb Pipes Are Smart, Very Smart

Seemingly forever, pundits have written that the brave new world of over-the-top premium motion picture and television video distribution eventually will scorch the business models of cable companies -- i.e., essentially consumers will by-pass paying expensive cable TV bills in favor of direct Internet viewing options. The ultimate end game here -- downright frightening to many -- is that the major cable companies will be rendered nothing more than "dumb pipes" (broadband) that carry that Internet-delivered video content.

But, so what? Apart from the pejorative name ("dumb pipes"), more and more evidence is supporting the notion that cable companies are expanding and monetizing their business more effectively than ever precisely because they provide the infrastructure necessary for the delivery of that premium video content. Case in point -- cable companies are winning the broadband war over their telco brethren, while the telcos are winning the IPTV war -- and ARPUs (average revenue per users) for broadband users is "more than double that of IPTV" according to a new report identified in Gigaom. That's right 2X!

I recently wrote more about this "dumb pipes not being so dumb" reality -- click here for my earlier post on this subject. In that post, I also discuss the reality that margins in the broadband game are significantly better than those in the IPTV game (and identify the reasons why -- a significant one of which is that IPTV faces extremely burdensome content licensing costs from major media companies).

So, on the one hand, the broadband biz has significantly higher ARPUs. And, on the other hand, the broadband biz has significantly higher margins. And, oh yes, one more critical thing -- the cable broadband biz is also expanding significantly, as more and more consumers need faster and faster connections to view their growing online video viewing habits and demands.

Win, win, win for cable -- even though many continue to believe the hype that cable companies are nothing but losers in this brave new world ....

VIDEO -- A "Fly By" of Earth -- Remarkable

Taken from the International Space Station ... watch in 720p of course ....

Prediction Fulfilled -- Netlix's Stock Nose-Dives

Yesterday, I wrote about Reed Hastings decision to split Netflix into two businesses -- Netflix (the online streaming business) and Qwikster (the legacy DVD business). Intellectually, I didn't "get it" (and I wasn't alone), although I understood the emotional rationale. And, I questioned whether the company moved too quickly (and felt I was very clever by saying "Qwiksterly", although I now cringe a bit when reading that one). I also predicted that Netflix's stock would get hammered after the announcement.

Prediction fulfilled. As of 7:15 am PT, the stock is now trading at its 52 week lows ($135/share) -- and about $20 lower than when Hastings announced the news.

Yikes ...

Another Kudo for Sorenson Media, CTO Mike Flathers

In recognition of our company's storied place in the video production eco-system, Sorenson Media - and our CTO Mike Flathers -- have been selected to participate in the Joint Task Force on a Framework for Interoperability of Media Services ("FIMS") in TV production. FIMS is spearheaded by the Advanced Media Workflow Association ("AMWA") and the European Broadcasting Union ("EBU"), which brings together top-tier global broadcasters and media service providers to to develop standard interfaces between components and systems that will create highly interoperable video workflows. Click here to read the full press release that just hit the wires.

Sorenson is joined on the FIMS consortium by other stalwarts in video production, including Avid, BBC, Canadian Broadcast Corp., Harris Corp., IBM, NBC Universal, Oracle and Sony, among others. 70%+ of US Fortune 100 companies and 60%+ of US Top 30 broadcast station groups are customers of Sorenson Media.

Did Netflix React Too Qwikster-ly?

Wow! Didn't see this one coming. On the heels of his company getting hammered by Wall Street (which I recently wrote about at length), Netflix's CEO Reed Hastings just officially split its DVD/online streaming company into two separate companies. And, here's the kind-of-wacky part -- the original DVD business is the one that is getting the new name ("Qwikster") while the online streaming business will retain the "Netflix" name. "Qwikster"? Really? Reed Hastings, in a blog post full of contrition, explains that they chose that name because of how quickly DVDs are delivered to your mailbox. Hmmm ... will have to chew on that one.

In any event, Hastings gives his full explanation of "why" in his blog post -- click here to read. And, he begins by apologizing profusely for not being a better communicator with his customers about recent price hikes, etc. (Interestingly, I just recently wrote that Netflix needs to turn things around primarily by communicating more effectively to its customers.) He calls himself and his company "arrogant" and "thoughtless" to its customers.

He also -- dangerously in my view -- promises no more pricing changes with respect to either company's services (in his words, "we're done with that!"). But, what does that mean? And, for how long? He simply cannot fully predict what his online streaming service's cost structure will be in the future -- because it is primarily dependent upon the costs of acquiring compelling motion picture and TV content (and we know that those costs will only skyrocket in the years ahead). I have praised Netflix in the past for bravely leading the way with respect to price experimentation -- something necessary to "dial in" Netflix's streaming business model. Looks like Netflix is giving that up given the recent customer backlash. But, as Hastings himself admits, perhaps it was more communication (or lack thereof) that hammered them more than the fairly minimal price changes themselves?

Bottom line. Yes, Netflix and Hastings (and Netflix stock) have been hammered in the past several months -- I mean, hammered. But, has Hastings moved too Qwikster-ly? Is this really proactive bravery or reactivity? I know that my most recent Netflix-focused post last week was titled "Netflix Needs a Net Fix Fast!". But, wow -- is this a "fix" or an over-fixation with Wall Street?

My prediction -- Netflix's stock will be hammered again today when trading opens ....

But

TechCrunch 90210

Eye-popping melodrama is playing out publicly on TechCrunch right now. Writer Paul Carr just resigned in one of the most remarkable resignation letters you will ever read (click here) -- and, that's the point, it is all for the world to see. New Editor Erick Schonfeld responds -- likewise in full public view (click here).

As my wife reminds me, Paul's resignation manifesto reminds me of that classic stunt pulled by the JetBlue flight attendant who announced his resignation, grabbed a beer, opened the cabin door and slid down the chute onto the tarmac for all the world to see. The limelight followed.

Same will happen here. Paul reminds us in his resignation post that he is primarily a writer of novels. And, he himself concedes that the last couple weeks have given him plenty of fodder.

You can bet that this public resignation -- which is opening mouths around the tech world (including mine) -- ain't gonna hurt his future book sales ...

Nice play, Shakespeare!

Netflix Needs a Net Fix Fast!

Have you seen Netflix's stock price lately? As the market opens today, it sits at just about $170. Ahh, it seems like just yesterday that its stock traded above $300 per share. And, that's because it was just about yesterday! July in fact!

What has happened?

First, price experimentation. The company was recently embroiled in Netflix-gate -- i.e., doing something very understandable, but rejected by many -- a price hike. Here is my blog post about the company's controversial moves (which I praised at the time as part of natural digital media evolution).

Second, one of the company's primary suppliers of premium video content -- Starz -- publicly humiliated the company by telling the world that it had broken off contract extension negotiations. As I wrote at the time, I wouldn't be surprised if the two parties ultimately come together -- i.e., that Starz is simply playing Netflix with the oldest trick in the book -- but for now, investors are justifiably spooked. Even if Netflix is able to get Starz to accept its ring, it will be at a high price ... very high. And, that is just one content supplier. What happens next?

Third, the company just announced its subsequent quarterly results -- and they ain't particularly pretty. For the first time ever, Netflix is losing customers -- and at a faster pace than even Netflix ever expected. Sure, the company apparently knew that its price experimentation would cause some angst -- but, certainly not to the level it has seen.

So, what's Netflix to do in the face of these challenges? My advice -- generally stay the course (with your new pricing), but do a much better job reaching out to its customers (like me) explaining what it has done and why it has done it. Also, give us a better idea of where you are taking the service. Are you committed to giving us all more and more A grade premium movie and television content? And, make us feel really good again -- give us special offers.

Bottom line -- don't be afraid to continue to turn the knobs and pull the levers on pricing to dial it all in. Your customers can't expect you to never change your pricing -- the new world order is simply too new. But, help them fully understand any changes before you hit them with them.

However, in the long run, what is Netflix's ultimate prognosis? I wrote about this a long time ago -- and I predicted a significant "coming down to earth" in its stock (much like the fireball I saw and wrote about earlier in the week). In the short term, I continue to be skeptical of the company's overall inability to justify its recent lofty stock price.

But, remember, we are early early early in this brave new multi-screen video world -- video on demand, anytime, anywhere ....

The Great Fireball of 2011 -- Happy Anniversary!

What's going on here? Yet another more personal post?

Well, there is a digital media/technology angle here, so bear with me.

Yesterday, as my wife, Luisa, and I sat in our backyard in San Diego celebrating our 15th wedding anniversary, we saw a massive fireball streaking diagonally across the night sky and seemingly all the way down to Earth. She saw it first, told me to look up and -- yup -- there it was. And it was massive -- unlike anything we had seen before. Happened around 7:45 pm. I know that lighting candles is romantic, but this was a bit over-the-top!

Well, turn's out that we weren't imagining things and we certainly weren't alone (which is not surprising given what we saw). Spottings from all around blazed across the Internet -- yes, that is the digital media part of this post -- and I was one of them, tweeting the news for no one in particular to read. And, NASA has confirmed -- yes, that is the technology part of this post -- that this spectacular object was most likely a "fireball" or very bright meteor (which is apparently different from a shooting star and is much more rare than a shooting star).

Listen people -- give me some credit -- I arranged this whole thing to impress my wife!

Vikings Lost, But We Won

Yesterday I took my little man, Luca (nearly nine years old), to his first NFL football game -- my Minnesota Vikings v the San Diego Chargers down here at Qualcomm Stadium. We live here in San Diego of course, but I will always be a die-hard Vikes fan (I will leave it up to Luca to decide what he wants to be!).

Inevitably -- my Vikes blew a 17-7 half-time lead and lost 24-17.

But, my son and I won -- was an amazing way to spend 9/11 -- and was a great experience neither of us will forget. We tail-gated with Chad Hummel, my best friend (and co-Vikes commiserator) since 2nd grade who is now a hot shot white collar criminal attorney in LA. We got great seats. We were moved by the 9/11 ceremony -- full football field-sized flag and stadium flyover. Was a spectacle. And, was spectacular.

I know this ain't a post about digital media at all. But it is a post about a special moment in our life. One for the ages ...

Live in San Diego, But Feeling Minnesota -- Vikes/Chargers Today on 9/11

Today is a very big day for all kinds of reasons. For me on the more personal side, it's a very big day for nostalgia, as my Minnesota Vikings take on the San Diego Chargers down here in San Diego (where I live with my family). Why Minnesota? Because I grew up there and the Purple People Eaters have broken my football heart from the very beginning. Perhaps the most frustrating team in the history of football year after year -- but I still gotta love 'em (even though I have lived here in Southern California since 1989)! Your football heart always belongs to your childhood team.

What's especially cool about today's game is that I will be taking my little man, Luca (now almost 9), to his first professional football game ever. And, both of us will be proudly wearing Vikings jerseys (he has grown up watching me throw pillows at the TV screen). And, as an added bonus, my best friend since 2nd grade -- Chad Hummel (who has experience the pain with me year after year since our childhood) -- will join us.

We leave soon for Qualcomm. Will be one for the ages!

Sorenson Media LIVE at IBC

Sorenson Media is now live at the IBC mega-conference in Amsterdam. Here is living proof -- VP Biz Dev Kirk Punches looking refreshed and ready to go. It wasn't easy -- UPS refused to deliver our booth to the team's hotel for some reason or another. But our crack team persevered and we are up and running. Stop by -- introduce yourself -- and let's make a deal! We are demo-ing new enterprise-focused Squeeze Server 1.5 -- just announced yesterday (here is the link to our press release).

A Day (& Night) Without Power & Tech Here in San Diego

My family and I, who live in San Diego, experienced the Great Blackout of 2011 yesterday and night which impacted a wide swath of the U.S. Southwest and began at about 3:45 pm. Up to 5 million were cut off completely from the power grid -- and, that means technology - until some time early morning today.

All of us in the San Diego office of Sorenson Media were deeply in the midst of collective flo -- we had just launched our new significant Squeeze Server 1.5 enterprise product, after all -- when the blackout hit. No power, no A/C (was a hot day), no real ability to productively work (although many tried and stayed as I left the office about 30 minutes later). None of our office phones worked, and the mobile phone networks were congested -- I could text, but I couldn't make or receive calls. I headed straight to the ocean beaches of Del Mar where I had intended to go in any event to watch my kids' surf lessons (they were awesome). It was a strange scene as I headed over there -- no stoplights, nothing -- but drivers were all incredibly polite. And, at the beach, it was an incredibly magical scene -- one of the most beautiful sunsets you can imagine -- as the day turned into night. No lights twinkled on around us -- just serenity and beauty engulfed us. The image above is the picture of last night's Del Mar sunset I took with my iPhone. Wow!

Some friends met us at sunset. What to do from here with no power? Enjoy the experience of course! They came over to our home -- we lit candles -- my little girl played DJ and spun tunes from her iTune library. We BBQ'd. And, we talked and enjoyed! My usual routine of working after kids' bedtime was nixed, as was today's school day for the kids. We slept completely in the dark (a bit unsettling for the kids initially, but they handled). In the middle of the night -- about 2 am I guess -- I noticed that the clock was back (wrong, of course, but back). The Great Blackout of 2011 was over. And here we are.

For my family and I, this blackout was fun. An experience. A day (and night) largely without power and technology. Of course, this was not the case for thousands of others -- the sick, the elderly. And, this experience was a potent reminder of how dependent we are on things we take for granted each day -- and of the need to be prepared (which we were only to a limited extent). Had this blackout lasted much longer than the 15 hours it took to restore full power, then things would have gotten dicey fast.

And, at the risk of waxing doom and gloom, I have little doubt that this type of event will not be isolated as demands on our aging power grid only escalate ... unless it gets smart ....

NEW Squeeze Server 1.5 Differentiated Enterprise Transcoding ... Just In Time for IBC!

In conjunction with the kick-off of the major IBC tech conference in Amsterdam, I am pleased to announce a major new Sorenson Media product release -- i.e., enterprise-focused Squeeze Server 1.5.

Squeeze Server 1.5 offers best-in-class enterprise video transcoding with full adaptive bitrate support -- that means presets for Apple HLS, Microsoft Smooth Streaming, and Adobe Dynamic Streaming. We believe this is the first enterprise-grade software transcoding solution to offer adaptive support across all three major "flavors." In other words, Sorenson innovation. Sorenson award-winning quality. And, significantly, Sorenson disruption of the legacy enterprise video transcoding market.

Squeeze Server 1.5 is the enhanced on-premise, behind-the-firewall version of Squeeze Server that uniquely leverages the differentiated power of the Sorenson Squeeze encoding engine to streamline workflows for broadcasters and other enterprise users. Only Squeeze Server 1.5 offers hundreds of intelligent video encoding presets that automate the process of transcoding video files to optimize playback in our increasingly multi-screen world. And, uniquely in the marketplace (revolutionary, in fact), Squeeze Server 1.5 also can work seamlessly with Sorenson's industry-first enterprise-grade Cloud-based video transcoding solutions to offer customers excess capacity and ultimate flexibility --in other words, the market's first real hybrid video transcoding solutions.

There's a lot here. Too much to write in this post. Here is the link to our official press release. Now, get going and Squeeze to your hearts content!

Online TV/Movie Distribution -- Current State of Affairs

Industry guru Ryan Lawler of Gigaom just posted a great "must read" analysis of the current state of affairs in online TV and movie distribution. Rather than pull out a few sound-bites, here is the link to the full post itself. Ryan -- I hope that you don't mind that I have officially christened you a guest blogger today.

A few of us here at Sorenson Media affectionately call Lawler the Woodward & Bernstein in our online/mobile video market. I read his posts regularly (and sometimes comment on his Twitter-sent musical tastes); and he frequently unearths relevant industry-related nuggets that others do not. I agree with this specific web TV analysis for the most part -- it is very insightful. My only point of slight disagreement is that I believe that the era of experimentation for online video business models is still early, early, early. I recently wrote about such experimentation myself -- click here to read that earlier post.

AOL v TechCrunch -- Parent v Child, From the Child's Perspective ... and It Ain't Pretty

Strange times in TechCrunch land. A few days back, it was announced that Founder/Editor Michael Arrington has left his baby to start his own AOL-backed VC fund called CrunchFund. Seemed quite simple really ... and not entirely surprising. I had assumed that things certainly weren't nearly as "fun" for him under the watchful eye of behemoth AOL no matter how hands off AOL always vowed to be.

But, then things got a bit weird. Everyone involved in the news -- AOL, TechCrunch, Arrington -- were hit with a barrage of criticism, much of it understandable. How could TechCrunch ever stay neutral to its coverage of CrunchFund portfolio companies? These concerns were similar to those voiced by many when AOL acquired TechCrunch -- i.e., how could the child ever be truly editorially neutral in the coverage of its own parent (as well as those interacting with its parent)?

Well, apparently there is much trouble in TechCrunch-land -- and much much behind the scenes. MG Siegler of TechCrunch just posted a remarkable piece about the current state of affairs ... and it ain't pretty (click here to read this post). First, apparently no one really knows what is going on inside the machine -- including what is happening with Arrington. Second, the child is angry ... very angry ... at its parent. No, I really mean it -- very very angry.

Here's the deal. TechCrunch DID revolutionize tech journalism. That means that Arrington revolutionized tech journalism. Everyone -- I mean everyone -- in the tech and digital media worlds follows TechCrunch ... and follows them closely. That includes me (as you readers of my blog well know). For me -- as my PR team knows -- one of the biggest "gets" is TechCrunch. And, it ain't easy to get, because everyone else wants the same thing ... i.e., love from TechCrunch. Happily, my company, Sorenson Media, recently penetrated the beast with a major feature piece (click here to read and see that one, since I was also interviewed via TechCrunch TV). That was a significant victory. Brought smiles all around. Still does ....

I met the TechCrunch team up in the Bay Area when I was interviewed. And, let me tell you this -- the entire team couldn't have been more gracious (especially Jon Orlin, who hosted me throughout my couple hours there). They fed me lunch. I spoke with many. And, I met Arrington for the first time. Many have preconceived notions of Arrington -- as did I -- but after a few seconds we connected. As I left, he unexpectedly gave me a generous "friends of TechCrunch" gift that I still display proudly on my office bookshelf today. Yes, he is brash. Yes, he is controversial. Yes, he is polarizing. But, one thing you can't say about him is that he lacks passion. He poured his heart and soul into TechCrunch -- and his persona permeated everything -- every post.

TechCrunch will not be the same without him -- as simple as that. And, one more thing is a near certainty. After today, MG Siegler likely will not have a job .... But, you know what? He probably doesn't care.

Starz Walks from Netflix Contract Talks -- Oldest Trick in the Book!

By now, all of you in the digital media world are well aware of the fact that Starz Entertainment just terminated contract renewal negotiations with Netflix. Starz supplied much of Netflix's premium motion picture content that was available online and on demand. Starz's move (or is it just z'?) represents a major shot across the bow by content owners to distributors in the brave new world of digital media. Bottom line -- "pay up big time or feel our wrath!" And, Netflix certainly is feeling that wrath. In after-hours trading today, the stock nearly dropped 10% (but now is at about 8.5% in the wrong direction).

What does this mean? Well, if you believe what Starz is proclaiming, as of February 28, 2012 -- i.e., about 6 months from now -- "Starz will cease to distribute its content on the Netflix streaming platform." And, that would be a body blow to Netflix ... and to Netflix customers like me who already find slim pickens.

To add insult to injury, Starz's announcement came on the same day -- yes, SAME DAY -- as Netflix's recently announced price hikes went into effect. Coincidence? I think not!

And, that's the point. Starz is playing Netflix big time. First, they shoot to thrill by issuing this press release concurrently with Netflix's hugely unpopular pricing move (which I actually applauded a few weeks back in this blog post). Next, they drop the "T" bomb -- as in contract termination. Doesn't get much scarier than that!

But, people, this is all just a big game -- the oldest negotiation game of them all. Throw up your hands. Storm out of the room. Walk away! But, are you really walking? Of course not! You simply want more more more! Starz's intentions here are incredibly obvious and transparent -- IT ISSUED A PANIC-INDUCING PRESS RELEASE AFTER ALL! Think about it. If Starz really were walking and not looking back, would it really feel the need to announce that to the world? Of course not! But, if you simply want more and more stacks of cash and want to induce panic in the boardroom of one of the most closely-watched publicly-traded companies, that's precisely what you do!

But, here's the trick to pull off this type of Starz negotiation move successfully ... listen very closely ... YOU MUST HOLD THE CARDS! You can only walk (or feign walking) from a negotiation if (a) you really are done (which is not the case here), or (b) you know that the other side absolutely needs to make a deal (which is absolutely the case here).

Bottom line -- Netflix needs premium content to bring value to its service. Without it, Netflix is nothing. Netflix knows it. Starz knows it. All of us know it. After all, content is still king ... and always will be.

So, what's a Netflix to do? It's really quite simple. Open up its wallet and say "ahhhhhhhh!" That "ahh" will represent a gag reflex for Netflix, and a deep sigh of satisfaction for Starz. Remember, it's not as if Netflix has other alternatives, because every single purveyor of premium motion picture and television content in this brave new world of digital distribution will demand the same. And, Netflix can't be all about old Scooby Doo cartoons (as much as I like Shaggy). Subscribers like you and I want some good old-fashioned movies from this century too.

Q.E.D.

BREAKING "BIG DEAL" NEWS! Starz Will End Netflix Content Deal in 2012

Yes, it's true -- TechCrunch reports that Starz is terminating its content renewal discussions with Netflix. That means many of Netflix's most important (most watched) video titles will be gone, gone, gone in 2012. Bad day for Netflix. Stock plummets near 10% in after-hour trading (as of 3 pm PT). Smart move by Starz? We will see.

But, of course, it likely is more like the oldest trick in the book -- i.e., call off the deal discussions, and watch time pass until the other guy comes back. In this case, Starz really does hold the cards.

After all, content is still king ... and always will be ....

MobiTV's IPO Dreams -- A Tough Sell

The tech IPO parade continues -- another video platform pioneer, MobiTV, just filed to go public (here's the link to its S-1). MobiTV follows OVP grand-daddy Brightcove's recent IPO filing (about which I wrote at that time). As with Brightcove's S-1 filing, MobiTV reveals -- for the first time -- a fascinating look under the covers of its overall financial numbers and key metrics. And, that look ain't necessarily pretty. Bottom line -- buyer beware ... very ....

Here are some key things to consider -- and which certainly give me pause:

(1) Roughly Only 10% Year-Over-Year Revenue Growth -- that certainly doesn't scream success, set the world on fire, or cause investors to jump and down, especially during a transformative period when mobile video usage via smart phones has exploded; specifically, MobiTV generated $55 million in 2008, $62 million in 2009, $66.8 million in 2010, and is on pace to generate $74 million in 2011;

(2) Losses Growing, Not Shrinking! -- caution Will Robinson, it's red flag time! MobiTV's losses are going in the wrong direction; the company is on a pace to lose $16 million in 2011, after losing $14.7 in 2010 and $14.6 million in 2009;

(3) Still Not Profitable -- see (2) above; to borrow a Latin term from my law school days, res ipsa loquitur;

(4) Extremely Vulnerable -- read my lips here, over 50% of the company's revenues are generated via one customer, Sprint! When you think about it, that is quite astonishing. That's a lot of eggs in one basket (especially when its contract with Sprint reverts to a month-to-month contract in one year); but wait, there's more -- MobiTV's next two largest customers, AT&T and T-Mobile, together account for an additional near 25% of its revenues; in other words, 1+1+1 = 75%+ of the company's annual revenues! Yikes, be afraid ... very afraid!

So, with these daunting numbers, why did MobiTV file to go public now? Listen, here's the deal. Much like Brightcove, MobiTV likely had no other choice in order to raise more capital to cover its continued bleeding. The company is reported to have raised $115 million to date, and it would be challenging -- to say the least -- to find a buyer willing to pay the premium likely necessary to satisfy investor expectations.

In other words, "if not now, when?" was the likely mantra being chanted within MobiTV's board room. Something had to be done.

But, that doesn't mean you need to be part of it.