Exploring New Markets - YouTube takes to the skies

One of the benefits of the emerging digital economy is that it's opened up a lot of potentially new markets for content distribution.

YouTube's signed a deal with Virgin America airline to put a selection of its premium streaming content on flights throughout the U.S., starting Dec. 15.

“We’re inspired by the quality of content our creator community is developing for YouTube, and we’re excited to get it in front of people in new ways. Partnering with Virgin America is one way we’re doing this. We feel the innovation and energy of both the YouTube and Virgin America brands align well,’ says Danielle Tiedt, YouTube’s chief marketing officer.

For now, at least, the move is more of a promotional test than a fully commercial service. A limited number of shows from premium YouTube channels will be made available, without commercials. As one reporter quipped, "the impression that little YouTube programs are on an equal footing with networks or theatrical big releases—and that’s exactly the message (YouTube) wants to deliver."


   It's also a good starting strategy if YouTube wants to commercialize their services later.  As Chris Anderson suggests in Free, it can be useful when introducing a new product or exploring a new market to offer free sampling, so that people can test the waters and start forming their own thoughts about the content/service's value.

Whether short-term promo or long-term market development, it's good to see media outlets exploring potential new markets, and exploiting multiple revenue potentials for their content.  At least it's indicating that they're no longer trying to hold onto the old market structures and behaviors.

Source  -  YouTube Goes on a Trip,  Vidblog

Online Video Ad Exchanges - How Viable?

Recently, Ted Sacerdoti applied the methodology of venture capital firm Benchmark Capital to the online video advertising exchange sector, to get a hint of the sector's long term viability.  (Benchmark's used this approach to consider which markets can give birth to successful online marketplaces).  The Benchmark approach looks at ten factors or attributes, and Sacerdoti gives the online video ad exchange A's in all but one (which earns a B+).
Here's a summary -

1. New Experience v. Status Quo - the online exchanges offer advantages in inventory and flexibility.
2. Economic Advantages - For now, the exchanges offer lower CPM, and better targeting reduces wasted spending.  Exchanges offer publishers opportunity to monetize, making exchanges advantageous from their perspective.
3. Opportunity for Technology to Add Value - online offers better metrics, "which enables technology to provide inventory forecasting, pricing recommendations, performance optimization and workflow efficiencies for buyers."
4. Fragmentation of Suppliers - digital video publishing is highly fragmented and is likely to remain so.
5. Friction of Supplier Sigh Up - a new third-party standard (VAST) has made it easier to sign up a supplier - often in less than an hour.
6. Size of market Opportunity - Online video ad is already a billion-dollar market, with forecasts of $5-10 billion in a few years.
7. Opportunity to expand the market - digital video publishing is growing (expanding inventory), and better online audience metrics opens potential to smaller, highly targeted ad/reach opportunities.
8. Frequency - exchanges minimize "dead air"
9. Payment Flow - the exchanges serve as part of payment flow
10. Network Effects - Incremental added value at the margins, while exchanges minimize transaction costs

Its pretty clear that there are several distinctive advantages for online video ad exchanges within the larger video-ad and advertising markets.  The potential efficiency advantages (speed, inventory, targeting) should make this sector somewhat competitive within the TV and general ad markets.  Still, its the ability to complement and expand those markets that is likely to really drive market growth in the future.  Online ad exchanges bring in a wealth of smaller, highly targeted content "publishers",  better metrics allow improved targeting opportunities for larger advertisers.  Moreover, when you combine those two factors with the small scale opportunities, this opens the market to small and local firms who otherwise wouldn't be able to consider video advertising.

  The opportunity is clearly there - unless or until the exchanges manage to screw it up.

Source  -  Video Ad Exchanges Make The Grade,  Online Video Insider

The (Free) E-Textbook Movement

Prices for textbooks in the U.S. are, for the most part, outrageous.  Particularly within higher education. The annual costs for books and supplies for college students averages $1200.  The old reasons for high cost given to the public - low press runs and higher print-setting costs (due to use of wider range of symbols and languages) - don't apply in today's publishing world.  Yet even as costs decline, textbook prices have skyrocketed.  Which leaves one primary explanation for continued price increases well above inflation rates - a captive market.  Instructors assign required texts, and students have to buy them - whatever the cost.  So textbook publishers feel they can easily raise prices.  And when the market for used texts boomed, their response was to push up the frequency of revisions to restrict that market challenge.
  The rapid increase in prices for textbooks has had some consequences - a number of universities and colleges (mine included) have adopted policies asking instructors to consider textbook prices when assigning them.  Others (again, mine included) have encouraged development of reading packs and texts for classes, and subsidized their production to keep costs low, and/or have established online book imprints for low-cost or free distribution - a California law will require the development of free online textsbooks for the 50 most popular courses in state colleges and universities.  And I'll note that two major academic publishers, Oxford University Press and MIT Press, have undertaken to make many of their texts available in more affordable trade versions. While all of these approaches have been helpful, textbook prices continue to rise.
  (I recently looked around for a text for a new course I'll be teaching - and the most appropriate text was $160, and the other viable alternative was also over $100.  I'm ancient enough to recall that in college, $100 was usually enough to get the books needed for 4-5 courses per semester.  In grad school it rose to $150; maybe $200 if I also bought the recommended texts.  And I typically spent more at used book stores, building up my library.  But today, I can't justify (at least to myself) asking my students to fork over $160 for a text.)
  The rise of eBooks, including the rapid diffusion of eReaders (and now tablets), has opened the door for digital textbooks.  eBooks have several advantages that textbooks could exploit - they're cheaper to produce and market, the publication process is significantly faster (and allows for near-realtime updating), and can easily include multimedia and links to online resources. Mainstream textbook publishers have slowly tested the market, but tend to keep prices absurdly high (to minimize impact on print markets).  Prices for e-Texts, however, don't need to be high - they are relatively cheap to create (mostly authors' time and effort) and very cheap to distribute.  Apple's pushing to keep textbook costs under $10).  And some of the major eBook retailers (Apple, Amazon), along with the FCC and U.S Dept. of Education, are encouraging the development of affordable online texts.  (We've just started the Tennessee Journalism Series here at UT - four short texts now, with many more in development).

  And now there's the booming OpenSource textbook movement.  Some of the boom is in the form of open-source publishers like Boundless Learning, which uses open-source materials to assemble their own versions of popular textbooks.  Boundless is currently being sued by a group of large academic publishers for allegedly engaging in a "business model of theft."  Some are the results of state and foundation supported efforts, like the California Open Source Textbook Project, CK-12, Merlot, and OpenStax.  Others build from University-sponsored efforts to promote free online access to their courses, like MIT's OpenCourseWare project and the University of Illinois' Open Source Textbook Initiative. At the heart of these efforts is the notion of pulling together and building on existing educational materials, and facilitating their online publication and distribution.
  And then there's people like me and my colleagues at the Tennessee Journalism Series - senior professors who have textbooks in our heads but have dreaded the time and effort involved in getting a book contract from an academic publisher, and then going through the full publication process (and more important, the relatively low rewards for that effort in terms of getting tenure or annual reviews at research universities).  Apple, Amazon, and open-source textbook initiatives have vastly simplified the process - so it's time to open the floodgates.  Besides, for most of it, the reward is in getting our work recognized and used - and high prices in academic publishing (both books and journals) get in the way.  Going open-source can facilitate wider access and use, and thus increased recognition.
  As more and more of us go to open-source, the greater the competition for mainstream texts.  That should at least slow down price inflation, if not create a force for price moderation.  I'll looking forward to the transition.  Now only if I could get those dang books out of my head.

Source  -  Free Textbooks Spell Disruption for College Publishers,  MIT Technology Review

Just how bleak is TV's future?

I ran across an interesting analysis of the TV industry on the Business Insider blog, where Henry Blodget argues that the TV industry faces collapse.

  His argument is based on growing evidence that TV viewing behaviors are changing, even while revenues and profits remain high.  The same position that the newspaper was in during the 1990s.  And just like newspapers in the 1990s, TV's leaders today proclaim their importance and relevance, even as they seek to expand what counts as "viewing" (see the following post).

For understandable reasons, many TV executives continue to dismiss the digital threat out of hand, pointing out that people still spend 5 hours a day in front of their boob tubes and arguing that the TV habit is so entrenched that satellite-cable-telco-network juggernauts will be able to maintain their chokehold and profits forever.

 And like newspapers, today's TV leaders forget that its audiences and advertisers that determine TV's value, and its revenues.  Falling ratings and changing viewing patterns suggest that the relative value of traditional broadcast TV is in decline.
  In a prior post, Blodget illustrated some of the changes by looking at viewing behavior in his own home -

• We almost never watch television shows when they are broadcast anymore  (with the very notable exception of live sports)
• We rarely watch shows with ads, even on a DVR
• We watch a lot of TV and movie content, but always on demand and almost never with ads (We're now so used to watching shows via Netflix or iTunes or HBO that ads now seem like bizarre intrusions)
• We get our news from the Internet, article by article, clip by clip. The only time we watch TV news live is when there's a crisis or huge event happening somewhere. (You still can't beat TV for that, but soon, news networks will also be streamed).
• We watch TV and movie content on 4 different screens, depending on which is convenient (TV, laptops, phones, iPad)

In other words, in our household, and in many other households like ours, the same thing has happened to the TV business that has happened to the newspaper business: the user behavior that supported the traditional all-in-one TV "packages"--networks and cable/satellite distributors--has changed.

Blodget suggests that these changes will eventually have some big impacts - networks becoming largely irrelevant as it will be programs that drive viewing; viewers will realize that the vast bulk of what they pay for TV (from cable and other multichannel providers) is wasted; and advertisers will realize that the vast bulk of what they pay for TV advertising is wasted. And when audiences and advertisers see that, a lot of TV's revenues and profits will be gone.

  Before you start arguing that that's just anecdotal, there's a lot of good research that's starting to show the same thing. I've already discussed some of that (check the posts on media use). Blodget's "Tolls" post also makes use of several recent studies of TV viewing behaviors over time to support his argument that TV viewing behaviors are starting to change.
   Pay TV subscriptions are falling. And they're a huge profit sector for cable, DBS, and telco-TV operators.


Ownership of alternative display and video delivery devices is booming, and starting to impact media use habits. Particularly for younger viewers.

TV audiences continue to be heavy multitaskers (three quarters are doing something else at the same time they're watching early prime-time TV), but they report increasing use of other media while "watching" TV.


Alternate media use is also growing for those who aren't watching TV during early prime-time


   What this all suggests is that TV-viewing behaviors are starting to change, and not in ways that help traditional TV. How quickly these changes increase, and become apparent to everyone, is not clear. But one thing is clear - as audience preferences and attention shifts, the money will follow.  And that won't be good for traditional TV (or cable).

Sources  -  For Whom The Bell Tolls? It Tolls for TV...,  Business Insider
Don't Mean To Be Alarmist, But The TV Business May Be Starting To Collapse, Business Insider

Pay TV - Flat in Expanding Market

Research from Bernstein shows that total pay TV subscriptions has remained essentially steady over the last few years.  While there is some variability quarter-to-quarter, looking at total subscriptions for all multichannel video delivery systems the year-to-year numbers remain pretty constant.  While you might think that's good, in the sense that roughly 90% of US homes subscribe to a multichannel pay TV service, and thus there's not much room left to grow - it really isn't.

"For two years now, the pay TV industry has grown subscribers at a rate essentially indistinguishable from zero," said ISI Media analyst Vijay Jayant.

  Here's the problem - it's not the percentage that's flat, but the subscriptions that aren't growing.  That's despite the fact that the size of the US audience is growing (slowly), and TV subscriptions aren't keeping pace.  There's also the problem that the TV marketplace is itself expanding.  Basic cable subscriptions (aggregate) have been falling for years; now Dish TV is reporting a drop in subscriptions.  Additionally, some analysts think superstorm Sandy might wipe out the anticipated gains in TV ad revenues from the Olympics and election advertising.  When you're competing in a market with no meaningful growth (in demand and revenues) with a growing number of competitors, you're not in an optimal situation.
  The flat forecasts have reignited concerns about cord-cutting (cancelling pay subscriptions for some combination of broadcast and Internet viewing), and/or the weak economy.

"Declining industry penetration rates suggest that cord cutting is a reality, but perhaps not in the way that most pundits think," Bernstein analyst Craig Moffett wrote in the report. "Certainly, there is no evidence that customers are dropping subscriptions in droves in favor of Internet-based content. Rising costs of cable service, however, are undoubtedly becoming more burdensome for lower income households, increasing the likelihood that some households are reverting to rabbit ears - cable losses, at least, continue to be concentrated among low-end "broadcast basic" subscribers."

The combination of flat total growth and Dish's drop in subscriptions has also raised talk about the two DBS operators (DirecTV and Dish Network) reviving interest in a possible merger sometime down the line.
  In the meantime, telco-based efforts continue its faster growth pace, and Google's entered the market with its GigaNet broadband/TV service mix.  
 

Sources - TV's Fiscal Cliff? Maybe Just a Bump In The Road,  TVWatch
Third-Quarter Pay TV Sub Trends Could Revive Cord Cutting, Merger Talk, The Hollywood Reporter

TV, Media Execs Embrace Multi-Platform Distribution

A recent survey of broadcasters and media executives found that three out of four believe that online, social, and mobile platforms are driving audiences to watch more television content.
  The Avid broadcast survey interviewed more than 200 "executives and decision-makers from leading broadcast and post and professional organizations in Europe and North America," who were asked questions about where they thought their businesses were headed, and the role and impact of a variety of digital delivery platforms.
   Two thirds of the media organizations indicated that they were optimistic about their future, despite declining audiences and revenues in many traditional media operations.  The optimism was more than wishful thinking - it was linked to the belief that new digital distribution platforms would offer "unprecedented" opportunity for business growth. The researchers identified three drivers for continued growth - increased audiences, multiplatform distribution (MPD), and revenues growth potential from both advertising and audience payments.
  As noted above, 74% of respondents agreed with the statement that the Internet (digital video delivery) will also drive viewers to more traditional linear media (Broadcast, Cable, Satellite).  As for fears of digital options further fragmenting their markets, more than half (55%) of the executives felt that current economic uncertainty was a bigger threat.  They also felt that current and emerging digital video delivery options gave them entry into new and expanded markets - an entry that could be exploited in a variety of ways.  85% of respondents said that multiplatform distribution was critical to capturing new markets and their growth potential.
  One largely undeveloped opportunity is the ability to access and exploit existing content archives.  Respondents felt that, on average, 40% of existing archives could be monetized (potentially profitable) - but at this point they felt that only a fourth of their archives were accessible.  Expanding access could make more valuable content readily available.  The survey found that 83% of respondents felt that all premium video services would be available online, as a means of increasing accessibility and market size. Almost tw0-thirds (63%) also felt that MPD opened a new market for professional content. But most critically, the media executives seemed to be recognizing the full range of opportunities that multiple digital platforms offer - not only access new and expanded markets, but potential to add value to their content streams by customizing them to specific platforms and individual customers.  Adding value increases demand generally, and if high enough, it can justify direct payments from consumers.

Gary Greenfield, CEO and chairman of Avid, says "... media organizations worldwide are moving from addressing homogenous audiences to delivering personalized experiences... this change in the relationship between broadcasters and their audiences... forces a change in business models... “

More than three-quarters of those surveyed (78%) thought that within the next ten years, most of the content delivered would be customized for individual viewer preferences.  70% felt that most content would also be optimized for the particular device viewers are watching the content on.
  Survey participants also thought that moving towards an emphasis on exploiting content assets, by expanding accessibility or adding value through customization, could also be beneficial on the operations/cost side.  When asked about the potential effects of an increased emphasis on asset-based workflows, 75% felt it would increase business efficiency and the bottom line, and two-thirds (67%) felt it would enable new business models.  More specifically, 79% felt that implementing asset-based workflows would enhance operational agility, 69% indicated it would enable better automation, and 62% thought it would largely solve the problem of increasing content volume.
  Exploring new business models and markets opens the way for new growth opportunities at a time when the traditional broadcast model appears static or in decline.  The media executives recognize this, and are looking for their future growth to occur in other areas: 85% see growth potential in multi-platform services; 78% look to new markets and increased audiences for growth; 71% feel those increased channels and audiences will lead to increased advertising revenues; and 70% see growth from audience direct revenues (fees/sales).  There's also a general recognition of the potential of the Cloud; almost all respondents indicated they were already using the Cloud (24%) or exploring how to use the Cloud in their future operations (75%)

  For me, the survey results confirm that today's broadcasting and media executives now recognize the fundamental market transformation that digital has brought - they no longer see themselves as monolithic "broadcasters" relying on long-established revenue streams.  They have recognized that they're primarily purveyors of content in an increasingly competitive market; that the source of their value is content and not merely a signal; and they should seek and embrace multiple mechanisms for exploiting their content and the multiple revenue streams available.  While the various MPD options have yet to show they can fully replace losses in traditional revenue streams, early efforts suggest that when fully developed, the added revenues from multiple streams and operational savings could provide the basis for broadcaster survival into the future. 

Sources -  Multiple Digital Platforms Boost TV Viewing,  Research Brief blog
To request research results, go to Avid/Ovum The Future of Digital Media Survey

Report: Apple's iOS and Google's Android to split mobile market

Research from Global Equities Research suggest that the Apple and Android operating systems are likely to increase their dominance of the mobile marketplace, eventually coming to share 98% of the market.  After talking with app developers, they concluded that

"98 percent of [the mobile market] will be shared by Google Android and Apple iOS. There will not be any third spot left. Nokia, Microsoft and RIM will struggle in the remaining 2 percent of the market."

  There's numbers backing that conclusion.  Apple's sold more than 400 million iOS devices, and the number of people who have set up one-click-billing accounts has doubled in the last year (reaching 435 million accounts - last year there were 180 million).  Google's Android is also doing well, with more than 1.2 million device activations a day.  And there is cross-over as well - the recent Google YouTube iOS app was downloaded a million times in the first 24 hours.
  In contrast, analysts were cautiously mixed in their predictions about the heavily hyped Nokia Lumia 920/Windows Phone 8 product launch.  Some even called the product pair "poor industrial design" and "dead on arrival."  (In large part because the screen is too large for easy one-handed operation).  While the Nokia just launched, the new RIM - Blackberry product launch has been pushed back to January.
  In the meantime, Apple recently launched the iPhone 5, and analysts expect an iPad Mini to be available next month.  On the Android side, Kindle just launched a new family of Kindle Fire tablets, and October should see the new Android OS (Jelly Bean), some 30 new Google apps, and at least 15 new Android-running smartphones.

"The innovation rivalry between Apple and Google will not leave any third slot in the mobile space," concluded report author Trip Chowdhry. He added, "Innovation velocity of both Apple and Google far exceeds that of its peers."

  The analysts see one potential ray of hope for a challenger OS - the fact that Apple and Android dominance (and their competition) have forced wireless operators to heavily subsidize many of the newest products.  Some financial analysts have warned that the iPhone 5 launch would likely result in a significant hit on wireless operator profits.  The various wireless operators could help a third OS challenger by pushing a third platform; but this is only likely to help if that third platform could offer highly capable, competitive, smartphones at low price points.  Microsoft has the funds to subsidize product lines if it wants to, and has been very innovative in the past.  Its had a problem, though, getting many of those innovations adopted by consumers.

Source -  Android, Apple Dominance Leaves No Room for Third Platform: Report,  CIO Insight Mobile & Wireless.

PwC - IPTV Key for Australian Media

Global analyst firm PricewaterhouseCooper (PwC) released its Australian Entertainment & Media Outlook report for 2012-2016.  The report predicted that IPTV and other online television subscription services would lead the way in growing the Australian media & entertainment market 18% over the next five years.  The report suggests that by 2017, more than a quarter of Australians will have switched to IPTV subscription services, concluding that the shift "makes IPTV a strong market contender among the boxes vying to control content shown in Australian living rooms."

  The study forecast an overall annual growth rate of 4.1 percent for Australia's media $ entertainment industries, despite continuing declines in the print sectors.  The report predicts that newspapers will see circulation declines average 7.6 percent annually, and drops in advertising revenues of 5.1 percent per year.
  The report recommended patience as emerging new online business models will take some time to fully develop.  It also had some recommendations for policy, warning that

"some types of Australian content--drama, documentary and children's programming-- would all but disappear if it were not regulated, due to the high costs of production."

Content, in fact, was a critical concern in terms of the future success of media and entertainment industries, firms, and markets. PwC analyst David Wiadrowski warned that content "cannot be taken for granted. Popular professional content that crosses platforms, aggregates viewers, prompts recommendation and lights up social media, becomes increasingly valuable."

Source - IPTV seen as important piece of Australian media and entertainment industry future FierceIPTV

Time for TV Everywhere Critical Mass?

Jeff Heynen, directing analyst for broadband access and video at Infonetics Research thinks 2012 will be a watershed year for 'TV Everywhere', predicting that cable giants Comcast and Time-Warner will push implementation and diffusion of the service.  The question will then be what impact will 'TV Everywhere' services have on subscriber churn and revenue.

  The prediction is based on two Infonetics Research reports on sales and orders for MVPD equipment and set-top boxes.  Taken together, the two reports suggest that the global video infrastructure market will grow by 8% this year, with sales of more than $875 million.  Much of the growth is expected to be in Asia, with China outspending both the North American and European markets in investment in Video on Demand and video streaming hardware.  The reports also suggested that IPTV growth pushes streaming equipment demand - predicting that IPTV subscriber base doubling in the next four years.

  Infonetics projects set-top box growth to be somewhat slower, generating about $14.7 billion in 2012.  They also see a shift from basic cable and satellite STBs to hybrid models that include IP video capabilities.

"TV Everywhere and other multi-screen video initiatives are fundamentally changing the TV business model, which apps streaming live TV to iPads and telcos and cable companies offering home automation security and video conferencing to subscribers in an effort to make the TV the hub of the digital home," Heynen said. "Demand for digital, HD and premium video content and services will continue to drive revenue growth in the VoD and encoder market."

Source -  Infonetics: 2012 a 'watershed year' for TV Everywhere services,  FierceOnlineVideo

Latest FCC Report on Video Competition available

The FCC recently released its 14th report on the status of competition in the video marketplace.  While the FCC is supposed to do this annually, it tends to be somewhat late - this just-released report is officially the 2010 report (covers 2007-2010).
  The expressed conclusion is that the level of competition in the video marketplace is "insufficient to hold down cable prices".  This despite finding that cable's market share is declining (to 60%), satellite services growing to 33% of the market, and the rise of competition to 7% market share (in 2010).  More recently, there's also been the growth of online video and mobile video systems.  And broadcast TV is becoming more of a direct competitor as stations take advantage of the ability to multiplex separate channels within their digital signals. So while video markets across the US are all more competitive from the situation examined in previous reports that concluded that there was sufficient competition, the FCC now finds there is insufficient competition.
  Part of the rationale for the change in conclusions may be a shift in what kind of competition is being considered, or a change in the threshold for "sufficient."  One change evident in the report is that the FCC now divides the video marketplace into 3 separate pieces - the Broadcast market, the Multichannel Video Programming Distributor (MVPD) market, and the Online Video Distributor (OVD) market.  The OVD market was also very narrowly defined as services offering professionally produced content previously shown in theaters or on TV.  While there may be value in differentiating the three, basing consideration of competitiveness solely on the number of outlets in each market (separately) is a narrow and problematic perspective.  From a consumer perspective, these aren't independent markets - at the very least they are very close substitutes for one another, and should be considered (at least) as interlinked markets.  There's a similar issue with the way the report considers the Broadcast market, as their analysis seems based on counting licenses rather than separate programming channels, or the programming itself.  Similarly, ignoring the huge gains in volume and use of online video (outside the retransmission of previously aired programming) sets a very narrow and unrealistically defined market.
  It would seem that the report is attempting to minimize any measurement of competition by failing to consider all competing alternatives in the video marketplace (and not merely a narrowly defined set of distribution services).  It also appears that they approach competition from a political economy perspective (how many owners) rather than a consumer perspective (available choices and options for video consumption).  And for a study purporting to look at the forces impacting cable pricing, it completely ignores the single largest contribution to costs (and thus prices) for cable services (as well as other MVPD and OVD services) - the cost of programming.  The report does not seem to consider the content side at all (other than, once again, from a political economy perspective of what channels are owned by which distributors). 
  Finally, while I have yet to closely read the whole report, there doesn't seem to be a clear standard set for what would constitute "sufficient" competition.  This allows FCC Commissioner Roger McDowell, to claim that the information presented in the report could as easily "affirmatively conclude that the video programming marketplace is competitive."  A second Commissioner, Ajit Pai, also commented that the data in the report shows that the video marketplace is "more competitive than it has ever been."
  The conclusion that the market (or markets) are not sufficiently competitive in terms of cable pricing seem to be drawn from a variety of claims made by a few commenters - based on anecdotal claims, or unrealistic comparisons to "ideal" market structures that do not exist (and can not exist in the U.S. due to FCC standards and regulations).
  While the basis for the report's conclusions are questionable (and in my view, suspect), there's still a large amount of good descriptive information in the report that is useful, if sadly outdated in age of rapidly evolving media and information markets.  It's worth a look, and I'll try to give it a more thorough look and commenting later.

Sources  - FCC Releases Video Competition Report,  Multichannel News
FCC,  14th Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming
 

PC Market Shrinks

The market for PCs (personal computers) has been in a decline recently, and analysts fear that the slump will continue.

"Consumers are less interested in spending on PCs as there are other technology product and services, such as the latest smartphones and media tablets that they are purchasing. This is more of a trend in the mature market as PCs are highly saturated in these markets," Mikako Kitagawa, principal analyst at Gartner, said in a statement.

David Daoud, research director for personal computing at IDC, said the troubles besetting the PC industry are numerous, particularly in the United States.

"The U.S. market suffered a double-digit contraction in the second quarter as market saturation and economic factors combine with anticipation of Windows 8 and other changes later in the year," Daoud said in a statement. "In this context, consumers are delaying purchases, and vendors and retailers are slowing down their PC activities to clear existing inventories. The situation is exacerbated by consumer notebook saturation, a slowing replacement cycle in the commercial sector, and the big macro-economic and political events affecting confidence and spending."

I'm not sure that Windows 8 will be the answer for the U.S. market - or an economic recovery.  In the U.S., the market is saturated, and processing power has been high enough for years to do the kinds of things that the vast bulk of users are interested in.  For most, improving you computing set-up is focused more on portability (accessibility and connectivity), network connection speeds, and storage capacity.  With terrabyte-capacity portable hard drives falling well under $100, and a plethora of connected devices, I think those looking to upgrade are looking in other directions.  I also haven't heard anything about Windows 8 that's likely to drive replacement demand, although knowledge that it's coming soon may well encourage some purchasers to delay their purchases so that they don't have to pay for updating their OS.

The boom has shifted to mobile computing - PCs still serve a major role, particularly in business sectors, and that should keep overall demand steady, or at least slow down the decline.  At least in the absence of some major improvement in technology to drive wholesale replacement of existing devices.

Source  -  Slumping PC Sales Ripple Through Tech Industry,  CIO Insight

"Online Video's Manifest Destiny"

  In a post to the Online Video Insider blog, Rob Manoff uses the phrase "manifest destiny" to talk about some recent projections about the size and growth of the online video market.  It's no secret that online video, as a market, is booming.
  Part of that is the continued diffusion of the Internet. Analysts from the Royal Pingdom firm in the UK found that there are around 2.1 billion Internet users globally (roughly one-third of all the people in the world), browsing some 555 million websites.  They also indicated that there were more than 1 trillion YouTube video plays in 2011, an average of 140 for every person on the planet (and more than 400 for every Internet user).  And YouTube accounts for about 45% of the online video viewing, so double that figure again for total plays of online video.
  In the U.S., numbers suggest more than 158 million Internet users watch at least one online video a month.  But the average is much greater - numbers from last October suggested U.S. online video users watched an average of almost 290 videos that month. Predictions are that the number of regular online video users will swell to around 200 million by 2015.  And the advertising industry's taking note - spending on online video advertising reached $2.16 billion in 2011, and is expected to more than triple by 2015, reaching $7.11 billion.
  Manoff suggests that the driving force behind this growth is the wider use and adoption of online video by websites.  He suggests that online video will soon become an integral part of every website, large, small, commercial, noncommercial, and that online publishers need to develop a strategy for handling online video.  He provides a short checklist of questions for publishers and site owners to consider in developing their individual strategy for online video:

Q. How can I optimize the use of video on my site?
Q. Do I build or license my own video player?
Q. How can I ensure my video will also work on the mobile Web?
Q. Should I sell my own advertising or utilize advertising networks?
Q. If I do utilize third parties, do I work with just one, or all of them?
Q. Do I create my own content or license content from others?

  Whatever strategy emerges, it suggests a growing market for providers of online video content, or for video content owners to consider putting their content online.  For a lot of sites, the strategy will be licensing videos, or contracting for video creation and video distribution services, expanding those markets and opportunities.

Sources:  Online Video's Manifest Destiny,  Online Video Insider
What Happened on the Internet in 2011?,  PC Magazine

Paid Media Pyramid - Old and New

Seth Godin's got an interesting blog post on "The erosion in the paid media pyramid."  He starts with the suggestion that since the development of media, there's been a model of value and pricing options for paid media.

   Basically, he differentiates paid media into 4 groups, with value and pricing related to supply, or the breadth of demand.  At the bottom of the pyramid is Free content.  He describes this kind of content as including content that is delivered to anyone who is interested in consuming it - primarily as a draw for sales of something else.  Chris Anderson's Free covers the same ideas.
  Mass content includes media products where the cost of replication and delivery are relatively low, allowing lower prices with the development of mass markets.  With mass markets, value can be aggregated over larger numbers.
Limited content, Godin suggests, is rare and thus expensive.  This can be the result of higher costs of replication and delivery, requireing higher pricing and limited markets, or can be a decision that inherent value is high enough that income can be mazimized by restricting the size of the market.
At the tip of the pyramid is Bespoke content - which for any media product is the most expensive, as it needs to recoup the whole cost (and value) with a single exchange rather than averaging costs over a larger market.
  Godin suggests that with the rise of competition, convergence, and the digital network economy, three things have occured that have eroded, or upset, the pyramid.

1. Digital media have significantly reduced replication and distribution costs, and have also expanded the availability of content.  He suggests that this has led to an explosion of choice, or from the point of traditional media content producers, an explosion of competition and clutter.
2. As a result, attention is worth more than ever before.  In the old model, attention was the important value in Free, or even some Mass content, but was low compared to most other costs, and therefore didn't have a big impact.
3. Again, as a result of #1, the marginal cost of one more copy in the digital world is zero (or close enough that nobody cares).  This is important because general economic theory recommends setting price at marginal cost.

Godin argues that as a result, there's a "huge sucking sound" of value leaving the media model (or at least prices and revenues from sales falling dramatically).  The new media pyramid, he suggests, will be a whole lot flatter, with a whole lot of free, and a little bit of high end limited content trying to subsidize everything.
  I'm working on my own pyramid for this new environment, which I'll post as the first in what I hope will be a series of targeted reports/analyses.  Look for a new header in the sidebar in a day or two.

Source -  The erosion in the paid media pyramid,  Seth Godin's Blog

Amazon's Kindle Revamp & the Future of Digital Media

As predicted, Amazon announced it's first entry into the tablet market on Wednesday, the Kindle Fire. On the technology front, it's not going to directly challenge Apple's iPad.  The Fire has a color touchscreen, but it's only 7 inches (slightly larger than the Kindle reader at 6") compared to the iPad's stunning 10 inch display.  The Fire has no camera or microphone, does not have the capacity to hook up to a 3G network (it does have WiFi), and is limited to 8 GB of internal storage (the iPad comes with up to 64 Gb).  It's stated battery life of 8 hours is several hours less that the iPad 2's expected  time on a charge.  Running on an Android OS, the Fire pulls from the Android app base that still has a way to go to match the range of apps available for the Apple iOS system (approaching half a million).

On the other hand, the Fire isn't being marketed as an iPad-killer high end tablet.  It seems to be envisioned more as an extension of the Kindle branding approach - a device for accessing and using digital media content - only this time accommodating audio and video content (especially content acquired through Amazon).  As the lead feature on the Amazon Kindle Fire product page states, "Movies, apps, games, music, reading and more," with "18 million movies, TV shows, songs, magazines, and books" available through Amazon.  Screen size and battery life is sufficient for regular personal use, and the Fire offers stereo speakers (for stereo on iPads you need to use headphones), and the limited onboard storage is offset by the included free Cloud-based storage for all content acquired through Amazon.  Further, the Fire comes with a one-month trial of its Prime membership, and Prime members get free streaming access to more than 10,000 movies and TV shows.  Amazon's MP3 store regularly offers free songs and samplers, and Kindle bookstore continually offers free promotional titles, access to hundreds of thousands of older public domain titles, and connection with a growing network of public libraries offering eBook loan services.  The Fire is aimed at heavy media consumers rather than Internet and computer users.  But it's not limited to just media.  The Fire includes a customized web browser, and the Android OS means it can run games and other Android apps.  And its priced at $199, while the iPad 2 starts at $499.

John Gruber, blogging at Daring Fireball, gives a good summary of the contrast between Apple and Amazon in the tablet market -

"The iPad takes it on from the high end. It's the best possible device in that price range from the world's best maker of devices. The Kindle Fire takes it on from the low end. The iPad is a credible laptop replacement for many people—and with iCloud and another year or two of hardware improvements that's going to be true for more and more people. The Kindle Fire is a laptop replacement for almost no one. It's a peripheral, not a second computer—and it's priced accordingly."

Analysts expect Amazon to sell 2.5 million Kindle Fires in the first two months (expected to start shipping Nov. 15), and 13-15 million in 2012 (in the U.S. only, for now).  On the other hand, projections are for Apple to sell more than 50 million iPads worldwide in 2012.

While most of the hype has been centered on the Fire as Amazon's first tablet, Wednesday's product launch went well beyond that - introducing a range of new models and price cuts.  Analysts were anticipating a $249 tablet offering, and perhaps the first sub-$100 basic Kindle.  Amazon's biggest surprise was not only pricing the tablet at $199, but three different models breaking the hundred dollar price point, if you're willing to go with the "Special Offers" service, which lets Amazon put ads or offers as the device's screen saver (without is $30-$40 higher).  There's a basic reader at $79, a touchscreen e-Ink version at $99, and a version with Amazon's traditional keypad feature also at $99.  Both the Touch ($149) and Keyboard ($139) models also have 3G models that allow free downloads outside of WiFi areas.  The larger screen DX model remains available as well.

The new price points could well prompt another huge extension of the eBook market this Holiday season - rapidly expanding the ownership base.  A Pew Internet report in June indicated that eBook ownership doubled between November 2010 and May 2011, rising from 6% to 12% of U.S. adults.  A Harris Interactive report released last month suggests ownership and usage will double again in the next six months, and that was prior to Amazon's new models and price points.  With the new prices and models, I anticipate greater adoption and use among younger readers and media consumers, expanding the eBook market.  If Amazon can also follow up with a subscription model for ebooks, this could well push up interest in reading and demand for books. 
In a similar vein, the Fire price point is also likely to significantly expand adoption of tablets and their use for media content.  This should further hasten the shift to digital media and on-demand usage.  It will be interesting to watch the coming transformation.

Sources - Amazon Kindle Fire No True iPad Rival: Munster,  eWeek.com
E-reader ownership doubles in six months, Pew Internet  (full report available at this site)
One in Ten Americans Use an eReader; One in Ten Likely to Get One in Next Six Months, harrisinteractive

IPTV - Expect High Growth Rates

IPTV providers around the world should continue to see rapid market expansion over the next few years, according to a recent report released by SNL Kagan.  They project that subscriptions to IPTV services will double in the next three years, reaching 70 million.
The rosy forecast results from an IPTV adoption rate that has averaged a 92.4% compound average growth rate over the last 6 years.  The also think that the current push for "TV Everywhere" and IP-based Video on Demand (VOD), and continued diffusion of broadband networks will drive demand, leading to a doubling of IPTV video service revenues in the next three years.  Currently, IPTV accounts for 6% of all global subscription-TV revenues; SNL Kagan predicts that by 2014, it will account for 11%, between IPTVs rapid growth and the slowing down of cable and satellite providers.

Expect further market expansions and realignments, as consumers embrace the choice and flexibility of IPTV video services (and the lower distribution costs, compared to older video media models).

Source: "Major IPTV Adoption Means $27B Revs by 2014," Media Daily News

Nielsen shows Tablet penetration at 5%

For a class of consumer electronics that's only been around for a year or so, reaching 5% penetration is impressive (given e-readers at 9% and netbooks at 8%- and both are cheaper and have been around much longer).  The research by Nielsen and others about the rise of tablets suggests a strong impact, and their rise as a superior media consumption device:

• Tablet users show strong engagement rates (30-40 minutes per app) and a willingness to buy content
• The rush by big brands to adapt content to the format, and giving publishers the opportunity to provide an immersive (and controlled) experience.
• 70% of tablet owners use it while watching TV, with potential to create synergies between screens.

These suggest the potential to recreate relationships between a wide range of content producers and distributors ("publishers") and their audiences, and along the way creating new markets and revenue streams.
Of course, they could still manage to blow it, but it looks like the tablets come along at a time when the media have finally recognized and embraced the need to expand their vision and markets beyond the old traditional media silos.  This suggests that they might have learned something after all.

Source:  "Tablets: The 5% Solution," Mobile Insider

iPad Dominance slipping

From Sean Siegel:

This article was interesting talking about apple's dominance with the iPad. They don't believe its going to last as long as people think. I know for someone who has a sister who works at the apple store, she would be happy if the lines for the iPad and new products calmed down just a little bit. I definitely think the iPad will continue to be a hot selling product and dominate the market until a competitor comes up with something better.

 

Source: "Nielsen numbers show iPad dominance slipping," RCRWireless Unplugged

Tablets grab share of PC market

Tablets, smartphones, and other mobile devices are making serious inroads into the business computing marketplace. Tablets in particular are seen as giving employees choice and flexibility in doing most of the simpler types of business computing. A recent bulletin from research firm Gartner, suggests that business leaders are open to the potential competitive advantage that mobile applications can bring.  One result is their prediction that tablets are headed for the business enterprise "in a big way." 
This potential is also behind the recent reduction in analysts' predictions of worldwide PC market growth from 9% to 4%.  With Microsoft at least a year away from a tablet OS, and the larger PC manufacturer's having difficulty producing tablets competitive with the iPad, this gives Apple a head start on the future "business mobile" market..

Source: "Microsoft Could Lose More Than Consumer Market to Tablets," Information Week

Amazon adds value via streaming (Updated)

Today's Amazon entry page touts a new, and potentially significant source of value.
They are offering to Amazon Prime customers, the ability to stream more than 5000 movies and television shows free.  If you're currently a member, you get commercial-free video streams for free (and Prime's $79/yr cost beats Netflix's rates), certainly providing added value for Prime members.  By increasing the value of Amazon Prime membership, it should encourage a boost in memberships and revenues.  But in providing free access broadly, Amazon also gets a jump on Netflix and other outlets in establishing a brand that will promote its online video rentals and sales, and ties into its DVD/BluRay store for those who want to get a hard-copy.  Call it market-building and branding for now - but it's another reflection of the shift to online video, and perhaps adding another push in that direction.
I'm watching Contact at the moment (gotta test this thing out), and the quality on the U's network isn't bad.
Update:  Found this table (from Clicker) that compares Amazon Prime streaming options with Netflix and Hulu+.

IPTV Global Forecast Report

The new IPTV Global Forecast released in December shows growth slightly ahead of expectations.   It predicts greatest growth in Europe, where the high level of broadband and limited local outlets, combined with a highly mobile population, creates higher demand for imported signals and targeted content.
The report's executive summary is here.