Michael Powell, president of the National Cable and Telecommunications Association and former FCC chairman, suggests that content creators are still in control in the emerging multiplatform age.
“Technologists are excited about software or hardware and we forget that people are really buying and holding on to stories,” notes Powell.
“The challenge in the living room — when you talk about new devices and platforms what often gets left out is access to the highly-produced, licensed content that viewers most crave. You’re asking to substitute a fresh experience.”
“The holy grail for the living room to me isn’t technology,” he says. “It’s figuring out how to integrate the phenomenal power and interactivity and information of the Internet into the highly produced premium content that we crave.”
When asked whether manufacturers should be able to tap into cable streams and offer alternative experiences, Powell suggests that “cable companies are at the mercy of content companies on the issue of content rights and use.” Mirroring the cable experience on other devices is not a technological issue, but an issue of licensing rights.
“At the end of the day Apple and Boxee and Vudu and Roku are going to find out that the content market is tough and expensive, and it’s hard to do the most creative things,” he says.
Powell suggests that all companies are heading toward IP-distributed content and a shift from a hardware-centric environment to a software-centric environment. “When the guide and content are in the cloud, you can change look and feel overnight,” he adds. “You won’t have to come in and get a whole new box — that’s a horrible model.”
Patent trolls conducted by non-practicing entities, who buy up patents to make money from licensing and lawsuits, have become increasingly common.
“The proportion of patent lawsuits filed by NPEs has grown to 40 percent in 2011 from 22 percent in 2007, according to Lex Machina, an intellectual-property litigation, data and analytics company,” reports the Wall Street Journal.
Now, networking-equipment maker Cisco is fighting back with its own litigation.
“Cisco’s suit against Chicago-based Innovatio IP Ventures LLC targets a tactic that some NPEs have employed in recent years,” explains the article. “Rather than allege that a big technology company has infringed one or more of their patents, Innovatio and other NPEs have gone after the tech company’s customers,” like coffee chains or hotels which don’t have the resources to fight costly lawsuits.
“Innovatio’s tactics, Cisco argues in its lawsuit, are ‘misleading, fraudulent and unlawful.’ It says they effectively amount to an extortion scheme, and therefore violate federal antiracketeering laws,” WSJ reports.
“A win by Cisco isn’t necessarily going to stop the NPE industry in its tracks,” says defense lawyer Ann Fort. “But it could halt some of the tactics used by NPEs, like going after companies’ customers.”
In a related case, Cisco is claiming Mosaid Technologies paid witnesses for testimony in infringement claims it filed against Cisco last year.
“Sometimes, lawsuits are about how much damage you can threaten in order to change behavior,” says Robin Feldman, a law professor. “At the very least, Cisco might get that. Or it could get a sympathetic judge or jury that takes Cisco’s case and runs with it.”
A San Francisco-based startup aims to add an element of gambling to both traditional and non-traditional games of chance, taking anything from poker to “Farmville” and raising the stakes.
Betable manages gambling transactions, allowing developers to focus on their game and simply configure rules on Betable’s API. Doing so enables these companies to bypass gambling licenses because all the gambling aspects are controlled by Betable.
Developers anywhere can build off the platform, but because online gambling is illegal in the U.S., the consumer opportunity is limited to other countries. Betable’s CEO Chris Griffin says there’s still an enormous opportunity for the technology in Europe, Asia, Canada, Australia and elsewhere.
“In terms of number of players, I think it’s an order of magnitude bigger than the existing online gambling market,” he says. “We’re going after an audience that’s already playing social games and mobile games,” which is much larger than the existing gambling market.
Betable is funded by Silicon Valley venture capitalists and currently has 18 employees.
“The company has survived a grueling licensing process for the UK and other markets, and has begun to sign up online video game companies interested in adding a gambling component to their games,” Forbes writes.
Spotify founder Daniel Ek compares the music streaming service, now valued at $3 billion, to Amazon, saying he’s willing to bet on low-margins to build the business in the long term.
The music industry has been resistant to such services, but Ek suggests the business model makes more sense as consumers’ habits have changed.
“Songs in the [Spotify’s] catalog are played again and again, with no diminution in popularity,” in contrast to the quick decline of sales after CD releases, Quartz writes. “The reason is simple: people are building playlists. It’s as if an artist were paid every time one of their fans dropped a needle on their record.”
“They’re saying, oh, they’re just paying a fraction of a cent every time someone plays a song,” says Ek. “And then you compare it versus the download revenue. Well, I can tell you it will take you 200 song listens before you make the same amount of money [as a download]. But because the consumption behavior is entirely different, and the revenue then increases in perpetuity, it’s not even a question of if this model is better, it’s just when in the life cycle it’s better.”
Ek wants to rebuild the industry that has been torn down by piracy and consumers’ shifts in behavior.
“As the world moves from owning content to getting access to it on demand, Ek’s experience is likely to generalize across all kinds of content,” including movies, notes the article. “It’s a fundamental transformation of how artists and their industries will make money.”
As a point of differentiation from other services, Spotify is focused on music discovery. But it relies on third-parties to build such apps on top of Spotify’s library.
“We distinctly don’t think we’ll figure out every single use case around music,” says Ek. “But we do want to be the platform for music… If there’s music somewhere, we should power that.”
After spending the last year redesigning the once thought to be dead Myspace, Interactive Media Holdings plans to relaunch the site in 2013 as a direct competitor to Spotify and Pandora, according to documents obtained by Business Insider.
Specific Media bought Myspace during the summer of 2011 for $35 million, and then changed the company name to Interactive Media Holdings. The company then rebranded Myspace as a destination for unsigned artists to showcase their music.
Myspace traffic has risen 36 percent since the acquisition, but still stands to lose $40 million this year and a projected $25 million next year.
Interactive Media Holdings is looking for another $50 million in funding, of which “$10 million will go to marketing, $15–$25 million will go to licensing deals with the music labels, and another $15 to $25 million will be reserved for ‘general working capital,'” writes Business Insider.
“Interactive says the big competitive advantages for MySpace versus Spotify and Pandora is that it pays labels a lower rate for song plays than Spotify and Pandora. MySpace relies on 27 million songs from unsigned artists, who account for 50 percent of the music played on its site.”
The post includes Interactive Media Holdings’ pitch deck, an interesting inside look at how tech companies sell themselves for a significant funding push.
Before the iPhone, the app economy did not exist. Since then, it has grown to produce 400,000 jobs and billions of dollars in business.
But just like every other market, the app economy is controlled mostly by a few large players. To illustrate this point, The Atlantic notes that while Apple has paid $6.5 billion to app developers, only 25 percent have made more than $30,000 and only 4 percent more than $1 million.
The article compares apps to the music industry in that there are many people trying to do the same thing, and when one gains traction, it translates to tremendous growth internationally. This means that minuscule differences can suddenly spark one app or musical artist to international glory, while a similar application or artist struggles to gain any notoriety.
“It’s the Economics of Superstars law, applied to apps: In a crowded international field, small differences in talent can translate to huge differences in outcomes,” suggests the article. “The most popular photo app, Instagram, was bought by Facebook for $1 billion. The 10th best photo program probably isn’t worth 1 percent of that figure.”
But there are differences between apps and music, such as the tendency of “venture capital firms who buy equity in promising apps with the expectation that ad money, or something else, will follow audience,” explains The Atlantic.
“But since many of these bets are made with the expectations that somebody somewhere will figure out the model for monetizing mobile attention, it’s not alarmist to suggest that the longer big companies like Google and Facebook struggle with mobile ads, the smaller VC’s appetite for some apps will become.”
As smartphone and tablet adoption grows, so do online payments, but they still remain a small portion of all transactions — mostly because of fear.
A 2012 survey from online authentication firm Entersekt found that only 32 percent of men are inclined to carry out online transactions on their mobile devices. For women, that number was even less, just 25 percent.
“In today’s world, consumers are not only aware that fraud exists, but many have either experienced it personally, or know someone that has,” writes Entersekt’s CEO Schalk Nolte. “This criminality impacts all of us through increased insurance, increased prices, and increased hassle. However, what I think is interesting and actually quite comforting, is that people are happy to be inconvenienced if it means they’re better protected.”
The development of new encryption technologies such as SSL (Secure Socket Layer) will help to increase security without delaying transactions.
According to a report from Ecommerce Europe, the expansion of smartphones will make 12.5 of all e-commerce transactions mobile by the end of 2013.
“It needs to be stressed, however, that such prospects will not materialize unless online payment services providers keep constant track of market trends, consumer demands and competition in this challenging market environment,” Ulric Jerome, with Ecommerce Europe, said in the report.
While both increased security and mobile devices will play a big part in making online payments mainstream, social influence will also have a big role. “Consumers are more likely to adopt new methods of currency exchange when they feel that everyone else is doing it too,” reports ReadWrite.
“Bottom line: The more people hear and see online payment systems in action, the more they will want to try them for themselves. In the meantime, only the bold are willing to go first.”
“Mobile commerce is big and getting bigger,” suggests a new report from BI Intelligence that analyzes trends in mobile commerce.
The report indicates that 29 percent of American smartphone users have used their devices to purchase something, and adds that Cyber Monday e-commerce sales rose 6.6 percent over last year.
This increase falls in line with Bank of America’s predicted $67.1 billion in mobile e-commerce revenue by 2015 for American and European customers.
Successful mobile payment systems not only give customers a way to pay for their items, but also add “extra value that can [be] created as a direct link between brands and customers,” according to the report. This means adding coupons, loyalty rewards, or other innovative ways to connect customers and products to mobile payment systems.
The report also highlights tablets as important targets, as the devices drive more traffic to e-commerce sites, and tablet customers also complete more transactions than smartphone users.
Location targeting allows companies to specifically match customers to stores they are interested in, writes Business Insider. “With in-store mobile marketing, an indecisive consumer can be nudged toward a specific brand or product,” adds the report.
After three years, Disney has decided to shut down Disney Movies Online, a streaming and digital locker service similar to UltraViolet.
The service allowed users to buy and rent movies from the Disney library, as well as stream movies they own on DVD or Blu-ray, but the service did not allow for offline viewing or for viewing on mobile or videogame systems.
“The digital environment is rapidly evolving and Disney Movies Online does not have the flexibility that many users today demand,” said a Disney spokesperson. “We made a business decision to close the service until we are able to provide the greatest value and experience to our customers.”
Disney is not abandoning the streaming movie business, and is expected to relaunch a Disney Movies Anywhere service with more features and more access to films, writes Variety.
While Disney Movies Online plans to officially shut down on December 31, the company will continue to embrace digital platforms.
“The opportunity to monetize owned IP is only growing because of new technology,” according to Disney CEO Bob Iger. “We will see growth in revenue and bottom line. It’s an exciting time for intellectual property owners.”
WatchESPN is now available for Xbox Live Gold Members. Previously Xbox Live only offered ESPN3, but now users can watch ESPN, ESPN2, ESPNU, ESPN Goal Line, ESPN Buzzer Beater and ESPN3 live on their Xbox.
Users must have service from a cable provider that offers WatchESPN. If they do not, they can continue to watch ESPN3 as long as they have an Xbox Live Gold membership “and an Internet connection from an ‘affiliated provider,'” reports Engadget.
The Xbox Live app offers split screen viewing so users can watch multiple channels at once — and with Kinect, users can navigate the experience with gestures or voice control.
The app also features game reminders and allows for personalization through its “My Sports” feature. The Mini Guide “gives fans a preview and quick access to all live events and highlights right at the bottom of the screen,” according to the press release.
ESPN and Microsoft plan to release an XboxSmartGlass feature for ESPN, NBA, and SportsPicks by December, notes the post.
With a new Nielsen report indicating that smartphones have saturated 50 percent of the American market and tablets have made their way into 20 percent of American television viewing homes, executives have begun to take second screen viewing more seriously as a legitimate trend, reports Ad Age.
Forty percent of Americans use smartphones while watching television at least once a day, according to Nielsen, and 84 percent use a smartphone or tablet while viewing television at least once a month.
These trends have executives, like Lou Paskalis of American Express, convinced that this “is a bigger cultural shift.” Paskalis has helped his company toward a vision where consumers use “mobile devices not only to chat and communicate, but also to look for product details and make purchases,” writes Ad Age.
While people do not like advertisements on their primary screen, second screen advertisements with relevant content could help drive commerce. This approach supplements the content on the main screen without interrupting the viewing experience.
“No one wants to see a pop-up in the middle of their program they love saying ‘Buy this!'” says Paskalis. “The primary screen is not the way to drive the commerce.” Second screen marketing represents “a way to augment the experience without impacting the experience.”
American Express is testing the waters through second screen partnerships with Fox and NBCUniversal. Verizon has been testing in-app voting for “The X Factor,” while Target has been steering viewers of ABC’s “Revenge” to additional content on second screens.
“How brands will create content that isn’t annoying and isn’t disruptive and really is something worth watching and not skipping — we are in the early days of figuring out that value for the consumer,” says Jeff Jones, Target’s chief marketing officer.
In what started as a class assignment, Austrian law student Max Schrems from the University of Vienna is fighting Facebook for “right of access,” a European privacy principle that allows users to request all the data an EU entity has about them.
Schrems formed an advocacy group called “Europe vs. Facebook,” encouraging Facebook users worldwide to request copies of their data. He has sent complaints to the Irish Office of the Data Protection Commissioner (ODPC) to force Facebook to comply with EU law.
“Just this month,” Ars Technica writes, “Facebook changed the way it presents privacy information to new users, largely at the suggestion of the ODPC. Back in September, Facebook said it would disable facial recognition for European users, also under pressure from Irish authorities.”
“[Schrems] is now going to have to sue not only Facebook, but also the ODPC to say that it has imposed too low a threshold. That’s a very, very hard standard to meet,” says Eoin O’Dell, an Irish law professor. “…it’s a very important social strategy [in terms of public awareness], but on the legal side I think it’s going to be very hard to win now that there has been significant engagement [from Facebook] with the ODPC and vice versa.”
Schrems is trying to raise $384,000 to fund the multi-year legal battle “that might significantly redefine how Facebook controls the personal data on over one billion people worldwide,” suggests the article.
“We do have privacy laws which, by the letter of the law, are rather strict. In the end we’re not really enforcing it right now — that’s the politically interesting thing about the Facebook case,” notes Schrems. “To me it’s an experiment; you have a win-win outcome. On the one hand, Facebook gets off the hook and that would be great, because then we have to change the law. Or [on the other hand] it’s a landmark case, saying actually there is enforcement.”
Rewards-based social TV service Viggle announced it will acquire GetGlue for $25 million in cash and 48.3 million shares of stock. Under the terms of the deal, Viggle will operate both brands.
GetGlue is “a social network based on check-ins for entertainment,” reports CNET. Its founder and CEO Alex Iskold will join Viggle as a senior exec and member of its board of directors. All 35 GetGlue employees will be part of the new company.
Launched in January 2012, Viggle rewards users for checking into TV shows by offering them points that can be used for gift cards and products from the likes of Amazon, Best Buy, Fandango, Hulu Plus and iTunes.
“GetGlue, an app that operates like Foursquare for entertainment, gives users virtual stickers for checking in while watching shows or movies,” explains CNET. “Those virtual stickers are then turned into real-life ones and mailed to users for their collection.”
The company was launched in 2007 and currently claims over 3.2 million registered users and more than 500 million entertainment ratings and check-ins.
“Viggle is raising the funds to buy GetGlue with investments from other companies that would like to see the two unite,” explains the article. Greg Consiglio, Viggle president and COO, says the investors “could be a media company, or could be somebody in the media strategic space, someone with hardware you might use to check in with.”
Current GetGlue media partners include ABC, Comedy Central, Fox, HBO, NBC, Showtime, USA Network and Warner Bros. Television. Viggle has a number of ad partners and relationships with Verizon and DirecTV.
At the Monaco Media Forum last week, one digital media banker said social TV companies will find it hard to prove their worth. “When social TV companies say, ‘We can enhance engagement by 700 percent, the advertisers say, ‘So? We’re happy with the engagement we have.’ As far as the TV infrastructure goes, it ain’t broke,” suggests Terence Kawaja.
Kawaja is a former GCA Savian media M&A advisor who founded Luma Capital. He acknowledges the second-screen trend, but doesn’t see it as a strong business opportunity when considering the control TV networks have on advertising.
“That’s all well and good — but it’s on the margin,” he says of second-screen businesses. “The thing they teach you in startup school is, solve an existing problem. There’s no problem in TV — at least, not for the people who are funding it.”
Naturally, online companies think differently. “I love television but I don’t think the current state of television advertising leverages all the potential TV has,” says Benjamin Faes, Google’s media and platform director for northern and central Europe.
Google and other companies are working to make TV ads personalized like many Web ads are. These efforts could prove fruitless if they directly conflict with the current Hollywood dominance.
“A lot of digital guys say ‘TV is dead, video’s going to take over,'” Kawaja says. “Not so fast — the producers have a cabal that’s not going to be disrupted any time soon. This is really a lop-sided playing field.”
“Television ad spend is $70 billion in the U.S. Compare that to online video monetization that’s roughly $2.5 billion,” he continues. “The $70 billion is growing. This cabal is going to make it very difficult to disintermediate.”
But according to digital companies, the TV industry could soon lose it all. “Even if, today, ad spend is growing on TV, if the TV industry does not act soon, the total amount of value will decrease,” counters Stephanie L’Hospital of France Telecom’s Orange.
Recent Nielsen reports saw sharp declines in “live” viewing of the top broadcast networks, and television executives were quick to point the finger at digital video recorders. However, a new study shows that DVR viewing has fallen in sync with live viewing.
According to Nielsen, Fox had 25 percent fewer viewers for both live viewing and delayed DVR viewing. Similarly, ABC lost 11 percent of its live viewers and 7 percent of its audience watching programming a week later. CBS had a 12 percent decline in live viewership and 10 percent in viewership measured up to a week after the show aired. NBC, however, saw a rise in both categories — 10 percent for live and 14 percent for delayed viewing.
“The data are likely to underscore concerns about traditional television viewing, suggesting that people are either watching broadcast television shows through on-demand services, or are turning to alternatives such as online video,” the Wall Street Journal suggests.
The article notes that the audience watching up to a week after the broadcast tends to be 30 percent larger on average than the audience of the initial airing.
Networks are calling for advertisers to take into account viewing that occurs up to a week after when considering ad buys. Currently, only viewing delayed three days is considered, but even if the window is expanded, the networks are unlikely to see any increased ad revenue as DVR viewers typically skip ads.
Some executives suggest a lack of buzzworthy shows or the presidential election could have effected declines. But analyst Todd Juenger is unsure.
“One possibility is that fewer individuals in any given home are watching TV. ‘You could theorize that now the high school kid isn’t watching the TV anymore,’ Mr. Juenger said, adding that another culprit could be video on demand, which isn’t captured in time-delayed ratings.”
