There is a joke going around: How do you make a small fortune in Bitcoin? Answer—Start off with a big one! There is parallel line of thought that applies to companies: How do you make a small, unprofitable company? Answer—Start off with a big one and don’t invest in it.
As is always the case it is not that simple. Not investing is the result of one or both of the following:
- Lack of imagination; or
- Lack of understanding about the business.
It is often hard to tell which of these is at play, but it seems to me it is almost always a combination of the two. Let me give you an example. This comes from the cable industry as I believe that they are an exemplar for both issues.
I recently contacted my cable provider, Spectrum (Charter Communications), for the 4th time this year. There are multiple issues:
- Quality of service, e.g. they only provide a 1080p service. This is well behind what can be had from other sources;
- Management of their customer service organization. Their technicians are not given the provisions, tools or training to properly do their job;
- UI/UX. It is embarrassing. It doesn’t deliver a clean complete or consistent user interface or experience.
- And the reason I called—their software is buggy.
Further they do not seem to be making investments to solve these issues:
- The hardware they are using is at least 6 years old. This was based on being told that I had the most up to date hardware and a quick check of the FCC registration database on the unit in my possession. That is ancient by technology standards;
- They are letting bugs go unresolved for a year or more. That is how long I have been experiencing a situation where I schedule recordings which are then unviewable. After replacing the hardware (twice), I was told it was a “known issue”;
- I have not seen a significant software update in the year I have been subscribing to their service;
- Their service offering has not accounted for changes (like streaming) to how their customers are now consuming content; and
- They have not developed a vision that would keep them relevant, i.e. figure out how to provide a seamless set of services (a content delivery platform) that would delight their customers and provide a long term competitive advantage. My apologies if they have, but there is no evidence of it.
The description provided above is not unique to Spectrum. It applies to all the big players: AT&T, Cox, Comcast, Dish, etc. I would note that AT&T took an expensive detour into content (a business they had no experience or expertise in) with the purchase and subsequent divestiture of Time Warner. And they wonder why they are losing subscribers.
The streaming providers have similar problems. Users like the idea of streaming, but the big streaming players (Netflix, Amazon, Disney+ etc.) have not recognized the shortcomings in their products and customers are tiring of the deficiencies and have been losing interest in that model too, as far as it has matured, and are showing signs of abandoning these services too.
Content may be king, but as both Google and Amazon have proven if you do a better job of helping your customers discover, manage and access the prodigious volumes of content (i.e, what they are looking for), the profits will follow. Further, Roon has proven that people are willing to pay for products that help the user discover, organize and enjoy content (in their case music) that comes from a variety of sources, not Roon. The folks at Roon provide a comprehensive (in terms of functionality) platform that encourages and enhances the enjoyment of music thereby delighting its customers.
Given the revenue the players in video delivery industry, both the linear (traditional cable) and streaming varieties generate, there is no excuse for the state of their offerings. With just a small allocation (relative to revenue) these players would have state of the art offerings that would redefine how media is consumed and would not only be delighting their customers, but also growing their businesses and margins.
The large retailers (Sears. JC Penny, Macy’s, etc.) have already been through this process and the same lack of imagination and understanding of their business (as it is and will be rather than what it was) provides a cautionary tale for both the cable companies and any other business that forgets how to innovate and keep their business fresh and vital. They had large prosperous businesses, now…
Copyright 2022 Howard Niden
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