3D or Not 3D: That Is the Question!

For at least the past fifty years, people have been debating the usefulness of three-dimensional effects in the movies – and whether this represents the future of the medium or an occasionally annoying novelty. The recent versions have been much more impressive than the old-fashioned red and green 3D glasses, with images that really do appear to be extending off of the screen and into your personal space, but even the best of them still have issues, such as making the picture noticeably darker and murkier. The new “glasses-free” technology is promising, but they still don’t have the bugs out of it, and even if they did, there are very few movies (and even fewer television programs) which were shot in the right format to make any use of it – which makes the fact that several companies have been trying to market television sets with the glasses-free 3D feature all that much harder to explain…

A story which ran this week on the New York Post website explained how the relative failure of these 3D television products is contributing to the failure of the ESPN 3D service, and may ultimately lead to the disbanding of the channel. It turns out that most of the companies who have been paying for ad time on the new network have been ones that manufacture the 3D television sets – which makes very little sense, since anyone watching ESPN 3D would already have a 3D television set, and anyone who doesn’t have such a television set wouldn’t be watching the new ESPN in the first place. Moreover, since the 3D televisions aren’t selling all that well, the companies that make them can’t afford to keep buying up prime time advertising on ESPN 3D, and may pull their funding – which would leave the network with no revenue to keep it going…

Exactly why anybody thought that either the television sets or the channel that catered to them were worth spending money on in the first place remains unclear. The new 3D movie technology has brought in a lot of money (since theaters charge more to see the 3D versions of movies), but unless a lot of broadcasters and cable companies started investing in 3D cameras, the cable and pay-per-view versions of those same 3D movies would be the only things you could watch on such a device – and those few movies would still be “edited” by most channels, making them an inferior copy anyway. But even if we can somehow account for why the management teams of these companies felt that home-use 3D systems were a good idea, that still doesn’t explain why they didn’t realize that the consumer market wasn’t ready for such products. Even the most basic focus-group research should have revealed that most people have no use for a very expensive piece of home entertainment electronics that they can’t –as of yet – use for more than a single cable channel and a few specific movies…

The ironic part of all of this is that eventually 3D cameras probably will become standard – or, at least, no more expensive than any other video systems – and increasing numbers of television productions will start using them. If the price of the 3D-capable television sets drops in the meanwhile (or if similar products are introduced at a lower price later on) this technology might be a real winner. The question right now is when that will happen – and if it was worth getting in on the new technology wave right from the beginning. Personally, I can wait…

Another New Record?

I sometimes regret that people don’t keep the same kinds of statistical records for business ventures that they do for sporting events and teams. It’s not that we don’t, really; but unless you have access to several proprietary databases and advanced statistical analysis software, the only way you can see any of them is to read about the Fortune 500, the Forbes 400, and so on. Even then, what we’re talking about is usually limited to things like gross income, net income, stock price, and a bunch of financial ratios that even the Economics students don’t really think of that highly. It would be much more entertaining if people actually kept statistics on the most hated company in America, for example, or the one with the worst customer service, the most worthless products, or the most heartless consumer policies. Although given some of the recent news items, it seems possible that Bank of America might be contending in more than one category…

According to a story in the Daily Mail online, a widow started receiving calls from Bank of America (B of A) collections people as often as 48 times each day, immediately following the death of her husband. She explained the situation to the Bank, and sent them copies of all of the documents as requested, but the collections calls kept coming, and when called on it, B of A had mysteriously “lost” all of the documentation, exactly the way they do in every news story where any legal action or billing situation has the possibility of charging more interest during a delay. Now, you and I have no way of knowing how much of this story is true – the Daily Mail is a tabloid, and not everything you read on line is going to be 100% correct anyway. What strikes me about this story is how easily you and I (and, to judge from the comments, thousands of other net citizens) accepted that it was true…

The fact is, there have been a lot of stories regarding this sort of atrocity staring Bank of America, and if only those cases where the Bank later confessed to the actions cited and promised to make things better are true, then B of A has some laughably bad public relations – and management in general. What seems to get overlooked in all of the consumer-advocate outrage and Internet reader glee is that even if all of these stories are absolutely true, they still represent only a tiny fraction of the company’s total customer interactions in any give year. Bank of America lays claim to literally tens of millions of customers, which means that for even one-tenth of one percent of its customers to have a horror story, there would have to be hundreds of thousands of such news items every year. Yet the actual number being reported appears to be more on the order of dozens, or perhaps hundreds…

The problem is, in the Internet age, anything you do wrong can be noted down and repeated by news organs and bloggers all over the globe, whereas anything you do right is likely to attract no attention at all. Bank of America could have perfect customer service 99.99999% of the time, and still be a complete failure dozens or hundreds of times each year –and thus wind up being humiliated in the press and excoriated online. The days in which a company could just cover all of its public relations disasters with several layers of customer service drones (none of whom can take responsibility for anything or accomplish anything, no matter how many times you ask) are gone; to survive in this strange new interconnected world, we are all going to have to try a little harder than that…

Although, at this rate, it seems as though B of A might also set a new record for how long it is taking them to figure all of this out…

Still Not Sure

A while back I wrote in this space about a $100,000 safety razor, and how I was having trouble determining if the whole thing was a hoax or not. We’ve seen cell phones inlaid with gold and precious stones that cost even more, mattress sets that cost nearly as much, and cashmere bathroom tissue that would certainly add up after a few years, but $100,000 for something you can obtain for less than a dollar per use seems excessive. If you use a disposable razor once and then throw it out, you’d still have to live for more than 273 years before the iridium razor would pay for itself. Even if you use one of the more absurdly overpriced cartridges (I’m looking at you, Gillette Fusion) once and then throw it out, you’d still need to shave for another 70 years or so before you’d break even. But as outrageous as that might seem, I still think that the $200,000 bottle of scotch is harder to believe…

According to a note on the Only Excess website, the master blenders over at Chivas Brothers are putting together a blend of the best and most expensive Scotch whiskey “…as a liquid tribute to the oldest crown jewels in the British Isles.” Part of it, of course, is the bottle itself, which is described as being “…made from black porcelain, adorned with 413 flawless black and white diamonds, as well as 22 carats of other gemstones, set in gold and silver.” Rarity is probably also a factor, since the run of this stuff will be limited to just 21 bottles; if you’re the sort of person who would want to drink $200,000 booze in the first place (that’s somewhere around $10,000 a shot, depending on how big the bottle actually is), you’d probably like the fact that no one else is going to be able to enjoy such a thing. But what really caught my attention was the fact that the liquid inside is said to be a blend of the best whiskeys made in Scotland. Years of hanging around with scotch drinkers has already taught me that the best scotches are all single-malt types – and that most real connoisseurs will not use blended scotch for insecticide…

Obviously, if such a product actually exists, the point of having it won’t be the quality of the liquor; it will be the status conferred by having one of the rarest beverages ever marketed, in one of the most opulent packages ever developed. You can see some billionaire or celebrity buying a bottle and then displaying it in a locked cabinet in their study – or opening the thing at a party and inviting all of the guests to sample a glass. What makes this story so fantastical is that unlike the iridium razor – which is guaranteed to function perfectly for ten years or be replaced by the manufacturer – this stuff could be accidentally guzzled by a drunken houseguest on a weekend bender (who might then give the bottle to a passing driver with a demand to get him a refill)…

For the same monetary outlay, you could obtain 250 bottles of an ordinary super-premium scotch whiskey (Johnny Walker Blue runs about that), or at least 21 cases (possibly more if you order all of it at once; most distributors will offer a volume discount on an order that large) – enough to get the average person seriously drunk for something on the order of four or five years. If you were willing to accept merely exceptional scotch, you’d have enough to get falling-down drunk every day for anywhere from fifty to one hundred years, or until you died of liver failure (whichever came first)…

Until I actually hear from someone who actually paid $200,000 for a single bottle of alcohol, I’m going to remain skeptical. Would anyone really charge that kind of money for such a small amount of product? More to the point, would anyone pay that much? Is this story for real, or is someone trolling me? Only time will tell…

Can You Cook?

I was wandering around the Internet news sites today, when I came across an Associated Press article about a group of culinary school graduate who were suing the company that owned their school, claiming that they had been ripped off by recruiters promising readily available work and high wages after completing various (very expensive) training and certificate programs. The plaintiffs were being mocked in a variety of places on line for being gullible enough to spend $30,000 or more for a certificate qualifying them to work in an industry where the entry-level job is generally an $8/hour line cook’s position – and if that’s what actually happened, the people in question might actually deserve it. However, I believe the question here isn’t so much whether these former students made a bad choice (they did) as it is whether they were actually defrauded by the school’s recruiters…

As noted previously, if it ever becomes illegal to make money off the credulous, the greedy or the stupid, our economy will probably collapse – and anyone who could honestly believe that a seven-month training program could replace a dozen or more years of education and apprenticeships probably falls into one or more of those categories. But people who were promised those results – or, at least, more than an $8 per hour job after graduation – by an apparently legitimate company aren’t exhibiting that behavior, any more than anyone else who is promised a specific outcome from an investment. Which is kind of the point here: telling someone that their investment WILL be worth 300% of its current value in three years is a crime; telling someone that their investment COULD be worth that much isn’t. This is why those commercials you see for investment companies always have disclaimers at the end about how they aren’t guaranteeing you anything. The company says they gave their prospective students such a disclaimer; the students say they didn’t. The court case will try to determine who’s right…

Part of the problem in these cases is that most people aren’t used to thinking of educational institutions the way they do about regular for-profit companies. There is a persistent belief in America (and much of the Western world, for that matter) that education is a noble pursuit, and the people who go into it are by definition driven by higher motivations than simply making money. Unfortunately, for-profit education companies (in this case, it’s Career Education out of Schaumberg, Il.) are only in it for the money, and make a lot of it off of students who don’t understand the difference. The worst of these scandals have been the Federal Financial Aid fraud cases that have popped up in recent years, where for-profit schools have advised students on how to get Federal aid packages and student loans, taken the money, and then flunked the students out of their programs three months later. No one is saying that the culinary schools in our story are doing the same thing – at least, not yet. The implication, however, is that this is just the same scam with a different sauce over the top…

The other problem in this case is that the company appears to have made good on its agreements to educate the students. It’s possible that they misrepresented the value of those degree and certificate programs, but there doesn’t seem to be any question that they actually provided the training they were contracted to provide. It also seems reasonable that the plaintiffs could have made use of any of a dozen different online tools to check both the availability of entry-level cooking jobs, and the salary levels associated with those positions. Unless the plaintiffs can prove that they were actually given incorrect information with fraudulent intent, it will be very difficult for them to make their case…

Of course, it’s also possible that they’ve received incorrect information from their attorneys regarding how easy such a case is to win, or how much they will receive in compensation if they do prevail. But that’s a discussion for another day…

What We Sneer At…

I had often heard the expression “We become what we ridicule” over the years, but I don’t think I’ve ever seen it demonstrated as well as it is by the pile of bottle caps sitting on the corner of my desk right now. They’re taken from a number of Coke products (mostly Diet Coke) that I’ve consumed over the last few weeks, and are all worth a certain number of points (usually 3) if you enter the code printed on the inside of the cap on the My Coke Rewards site. You can find similar codes on a number of different kinds of Coke packaging, especially 12-pack boxes (10 points) and 24-pack cases (20 points), although interestingly not on any of their bottled water products. None of this is exactly news, let alone revolutionary news; loyalty-point programs of this type date back at least as far as the 1930’s, and some of them have been in operations for longer than most of their current customers have been alive. What makes the Coke rewards so interesting is that not long ago they were mocking their key competitor for trying exactly the same type of promotion…

Most students of marketing theory (assuming there are any who visit this blog) will already remember the Pepsi rewards program of the mid-1990’s, but for those who don’t, it ran on very similar lines to the Coke Rewards program currently operating, except that you had to mail your reward codes in to the company. There were websites that could have handled such an exchange in 1996, but not everyone had Internet access the way we do today, and even those who did most commonly had dial-up connections and had to pay for their online time by the minute. However, once you mailed in your points you could choose a reward item from a full-color catalog that included t-shirts, hats, barware, electronics, sporting goods, leather jackets, and a fully-functional BAC/McDonnell-Douglas A/V-8 Harrier jump jet…

Okay, that last item was just a joke – but not MY joke; Pepsi put the plane into their rewards catalog even though there was no way that the U.S. or British governments would ever have let them sell a state-of-the-art V/STOL strike fighter to a civilian owner. The one guy who actually tried to buy the thing (sending in two box-tops and a check for $750,000 – the real-money equivalent of 75 million Pepsi points) eventually lost the lawsuit he filed for false advertising, because the court ruled that anyone offering to sell a $75 million airplane for only 1% of its value was obviously joking, and he should have known better. That aside, the program was obviously working, both in the sense of selling a lot of Pepsi products, and also in the sense of raising public awareness of the company and its branded soft drinks. Coke had been caught flat-footed, and had no equivalent promotion with which to counter-attack. So instead, they developed a series of television and radio ads that ridiculed the Pepsi program…

These ads, promoting a fictional soft drink called “Jooky” featured people exchanging packaging from an absurd number of drink cans for “prizes” that no one could possibly want – such as a single horrible sock for the equivalent of 10,000 cans of soda. The spots would end with people choosing to drink Coke products because they taste good, not because of some crackpot prize you might be able to get. The ads helped to counter the Pepsi promotion long enough for Coke to develop new forms of promotional material – including, just a few years later, the Coke Rewards program and its catalog, which features (among other things) such amazing prizes as a Coke oven mitt, a set of Sprite potholders, and a little neoprene bag (about six inches long) in which to keep your Coke bottle caps until you redeem their rewards code…

I kid, of course; there are a lot of quite nice prizes on the Coke Rewards site, assuming that you’re willing to drink the thousand or so bottles of Coke products you need to get one (or get a bunch of your friends to safe their bottle caps and box tops for you). Still, the irony of setting up such a program after running the “Jooky Junk” ads seems to be lost on the company – and does seem to be helping them sell a lot of Coke products. It makes you wonder whose promotional stunts they’re going to copy next…

The Ethics of Loan Modification

I was reading an interesting piece about loan modification on one of the AOL discussion sites the other day, and it struck me that while the authors were framing it as a question of economics, there is also a significant question of ethics involved. One of the problems with recommending fantastical fixes for a national problem – like a stalled economy – is that most of the suggestions are going to involve other people’s money, and however rational those ideas might seem to the person suggesting them, they’re going to look very different from the point of view of the people being asked to give up millions of dollars to achieve this social aim. Or, in the case of loan modification proposals regarding the current real estate slump, $71 million USD or thereabouts…

In case you haven’t run across this idea before, the basic concept is that if the various banks were to lower the amount of all of the “underwater” mortgages (ones where the amount owed exceeds the amount the property is actually worth) down to the amount those properties are currently worth, people would be able to start obtaining loans, buying and selling houses, and constructing new one. This would create somewhere between 500,000 and 2,000,000 jobs (it depends on who you ask) and could potentially result in hundreds of billions of dollars in profits for the banks alone, and considerably more than that for the country as a whole. And the best guess as to what it would cost is around $71 billion as of this week – or roughly half of what the American banking industry paid out in annual bonuses to its employees in fiscal 2010…

It sounds simple, doesn’t it? All the banks have to do is pay their super-wealthy executives half of last year’s bonuses this time around, and they can jumpstart the economy, rescue millions of people from bankruptcy, create millions of jobs, and benefit their own self-interest down the line by raking in billions of dollars in future mortgages. In fact, considering that many of our major banks are still in business only because of government bailouts made using our tax money, you could argue that they owe it to the country that saved their bacon to return the favor. Unfortunately, as usual, the actual situation is not nearly that simple…

Consider for a moment that most of these financial institutions are publicly-traded companies, which means that they are owned by individual investors – people just like you. If you had invested your money in a bank, how would you feel if people started calling for that company to drop half of its available funds down a rat hole in order to save the economy? Would you be okay with that, or would you start thinking that maybe other industries (like oil, or insurance, for example) that are recording record profits and have also benefited from government support over the years should chip in their share, too?

Then there’s the question of how many of the people holding underwater mortgages actually deserve to be rescued. Certainly, no one is disputing that there are a lot of innocent people who have been hurt by the situation, but we know that there are a certain number of real estate speculators in that number who were just trying to get rich quickly using other people’s money – effectively yours, if you’re a U.S. taxpayer. Should all of the people who were just trying to make a lot of money by buying and reselling houses without knowing what they were doing (a practice I have compared unfavorably to juggling lit chainsaws) have their fortunes repaired at the expense of bank personnel and investors who haven’t actually done anything wrong?

One could argue (as several commentators have) that the Federal government could impose such a program, or if that’s too onerous, just pay off the difference in the mortgages using governmental funds, but here again, that’s your money they’d be giving away (assuming you pay taxes), and a lot of people who don’t deserve it would benefit from their doing so. Given all of these problems, are loan modification programs actually a viable way of restarting the U.S. economy, or are they just a pie-in-the-sky scheme with no more connection to reality than mice belling a cat?

It’s worth thinking about…

Bad for Whose Business?

There’s a case that has come up recently in Las Vegas where two large companies have come to an impasse, with each claiming that the other is doing it wrong and that their business will be harmed if they accept anything the other company is suggesting. Such things are hardly unusual, especially in a bad economy, but what makes this case so interesting is that the companies are arguing about whether a building should be imploded and then bulldozed because it’s not safe. Such cases are common enough between landlords and tenants, cities and residents, or even contractors and their clients; over time, even very well-constructed buildings with gradually become weak and unsafe. What makes this case unusual is that the building is brand new, and has never been occupied by anyone – and the company that owns it has already spent more than $279 million on the project…

According to the story on the Time Magazine online news feed, the MGM Resorts company had contracted with Perini Building Company to make them a new hotel and condo complex as part of the CityCenter property in Las Vegas. The resulting product was a very nice looking steel-and-glass tower – which MGM is claiming is completely unsafe because of improperly installed steel links on 15 of the 28 floors. As a result, MGM want to implode the tower and bulldoze the property so they can work on a different project for that location; they would probably also demand their money back. Perini says the building is perfectly safe, and the few actual problems it has are all easily solvable. They further claim that MGM is just unhappy that they spent nearly $280 million during a real estate bust, and is therefore trying to get out of having to pay for the work. I can’t help thinking that both companies are missing the point, at least to some degree…

First off, MGM can’t really avoid looking foolish under these circumstances. Even if they are eventually vindicated in the legal action – if it turns out that Perini really did defraud them – there’s still the matter of having invested $280 million in a large real estate project during a completely dismal time in that industry, and that they borrowed money during a time when real estate loans are not particularly favorable. If they lose the case – even on a technicality – they come off as buffoons who tried to get out of a debt they legitimately owe by attempting to defraud another company and failed. And win or lose, MGM is going to pick up a reputation for being willing to screw over a business partner if it is in their best interest to do so – which won’t keep other companies from doing business with MGM, but will make it harder for them to get what they want in their next contract…

Perini isn’t risking as much – if they are justified by the court decision, they were just the innocent builders who got taken advantage of by MGM. On the other hand, if they lose the case – even on a technicality – they’re going to have real trouble finding work in Las Vegas ever again, and it will not help them to get the kind of contract they would want in any case. It’s possible that they could have avoided the current unpleasantness by wording their contract with MGM to make such a lawsuit impossible, or that they could have worked harder on their public relations efforts to make it clear to the public that their work on the MGM project was solid, or perhaps that they could have brought in allies (government agencies, academic institutions, industry experts) to help make their case (in the media, if not actually in the courts). All I know is that win or lose, some people are going to assume that they were up to something shady, if not actually trying to pass off unsafe buildings as state of the art – and that’s going to be bad for business…

I’m not saying that I have some easy answer for this situation. It’s entirely possible that one of these parties is completely in the right, and the other is trying to scam them. But from where I’m sitting, it looks like this whole court action is bad for business: in this case, everyone’s business. I have to wonder if there wasn’t a better way to have handled the matter…