Jan

19

There is nothing on TV…

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“Well” she said “there is nothing on the television. I don’t know why we have one, since its certainly not for what we watch. Well, my husband watches the cricket, of course. He’s cricket crazy, up half the night watching the Ashes from Australia, he was. And I like Crime. Of course, it only takes me 10 minutes to find out who the killer is, and you’ve got to watch all those ads before you can see you were right, so I mostly record them and take out the ads as I watch them…”

This extract from a 2013 survey (this family watched 45 hours of television a week) demonstrates once again that television remains the dominant source of entertainment in many developed societies, even if we do not switch on at 6pm and close with the National Anthem when broadcasting stopped, as British social critics of the 1970s feared we would. Barry Parr, now Outsell’s lead analyst in the sector has started to examine what is happening with a series of very well-argued articles (“TV’s complexity crisis is an opportunity for content owners” 13 January 2014 www.outsellinc.com). He set me thinking about what content owners in the print industry did a decade ago when they went through the parallel process – the traditional delivery format is broken and the traditional delivery mechanisms, with all of their complex supply chain relationships, are beginning to fail. Do the reactions of the print world and the record industry give a clue to the likely reactions of their television peers?

A first reaction in print was disbelief, followed swiftly by denial that the speed or range of change could be anywhere near as severe as commentators reported. So as book publishers were saying that “they will always want narrative and always in book form” so cable operators and channel owners in television are talking about brand loyalty, the high value attached to scheduling, and the importance of holding the line on pricing and packaging. And just as brand does not attach to publishers in entertainment markets but to authors, so brand does not attach to channels but to programming/shows. So as a result both types of middleman – publishers and channel operators – misjudged their users, as almost all intermediaries did in the analogue world, because it was impossible for them to see how content was consumed, and their knowledge of their audiences , despite all the surveys, the focus groups and the market research, was stale by the time it reached them. Only in a digitally networked world do you begin to overcome the problems of knowing audiences, and even then, asking them questions is less informative than watching their behaviour and mapping their reactions (recommendations etc).

Shortly we shall see television distribution, which five years ago in Europe was diminishing its creative efforts and outsourcing everything, beginning to buy back the outsourcers and talk about the value of “content”, as in “content will always be king” (book publishing c.1995). This will be followed by a great wailing and gnashing of teeth around further falls in channel advertising revenues, while every effort is made to seek alternative revenue sources. I quoted Jim Dolan, chairman of Cablevision, last year, when he pointed out that his many children of all ages, now used Netflix on Cablevision. He saw this as a signal to work on Cloud libraries and the ability in the network to download and store up to 10 programmes simultaneously. And surely this is a very proper reaction, but only if the cable players really see their future as utilities, with very well-regulated margins, competitive pressure from telcos in a similar bind and subject to fickle consumers who can change broadband suppliers on a click. So here is the second thing which television will find hard to buy: digitally networked markets increase consumer power immensely, and the contractual tie-in so beloved of cable and satellite is now a very shaky foundation indeed. Alongside Netflix, who can fail to see Google and Amazon as major market players here – and they really do understand about Cloud libraries and downloads.

If Jim Dolan really thinks that the US cable industry is “living in a bubble with its focus on TV packages that people must pay for as offered” (www.hollywoodreporter.com/print/599574) then there is at least a hope that a note of realism may be afoot which was absent in print and music. Yet TV has always been about mass audience and numbers of eyeballs sold to the advertiser. Can it work on a niche interest, subscription model? Spending time last year with Fred Perkins, a survivor of print (ex FT.com, ex McGraw-Hill) at Information Television (http://www.information.tv/?cid=3) in London I saw convincing demonstrations (caravanning and mobile holiday homes formed a classic model for this) which made me wonder why more niches, alongside other B2B or B2C digital content vehicles, do not use niche TV effectively. OK, I know that many magazine publishers invested in studios in the hope of getting into an aligned television market, and this never worked. But that was before the digital broadband network had further blurred and softened the edges between content formats and packages. My conversations with Fred, and stories like the BBC News item (www.bbc.co.uk/news/business-25457001) last week which profiled, in describing the prospects for internet television broadcasting, NTVE (Nautical TV Europe) based in Magaluf, Mallorca, and financed not by advertising but by sponsorship and product placement. But its distribution model is, well, fairly cheap… or free, if you don’t find that four letter word offensive.

So this may not be an option for Mr Murdoch, who was rather hoping that the satellite/pay TV model would continue to fund him through the next three decades. The signs at the moment are that, under the same digital network stress as print and music, TV programme distribution will change radically to a My network model, still paid by subscription but no longer powerful as an advertising medium. And beyond that? Maybe the subscription will be to a programme guide that enables you to decide what you watch, when and where and in what sort of device, with monthly billing depending on the choices made, the storage used in the Cloud and the deals that you make with programme makers? It is Your Choice!

Dec

30

From BRICS to MINTs

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This is the season of the year for predictions. You will find little of that here. I feel like a fortunate seer in that none of my predictions have actually failed. I feel like a disappointed seer in that very few ever happened within the timeline of prediction, and indeed a few are still out there, ready to come screaming into focus on the “I told you so” arc of probability, in order to demonstrate once again that if you just forget the timing, everything you can envisage does eventually happen. And I don’t like predictions that follow the “whatever was beginning to happen last year will go on happening next year”, since I regard this as the province of newspapers with holiday space to fill. In its turn technology prediction is a mug’s game, and ever since I heard Alan Kay say that “everything that will be launched in the next 15 years has already been invented” I have resolved to steer clear.

Which only leaves us markets to talk about, and since they are ever-present prediction becomes a matter of when they come into focus rather than anything else. When we invented BRICS (and that last capital S is important if we are recognizing South Africa, as we should be) we were really saying, five years ago, that the long age of US global economic imperium was drawing to a close. A host of new nations was about to challenge that supremacy, and while the US was not minded to give it up easily, as demonstrated last year by its role in leading the global market once more out of cyclical downturn, economists now have a clear handle on when, in the next few years, China will resume its historic role of global market leadership, which it last held in the fourteenth century (think paper, gunpowder, printing and language).

This poses vital questions for information marketplaces. The Information Revolution has been led from the US both in terms of technology and in terms of services and languages. China seems well-equipped in the latter area, with players like Alibaba and Baidu, and the ability to use English very effectively – or buy its use. However, both India and Korea show more promise as the next hub of Silicon Valley proportions. And of course the US will not go away, though it may find it easier to go protectionist and isolationist in some aspects, living off its huge and wealthy internal marketplace, and no longer allowing itself to be the place where all information market prospects have to be proved. In many ways we are already seeing this, since success in the US no longer means automatic global market success. But if this is the outcome then it leaves the rest of the world with an issue – where do I go for growth if not to the USA?

Well, there is a very specific information markets answer to that. There is still huge and dynamic growth in BRICS. And beyond that, look at every country where half the population is under 25, and coming up to half of those are smartphone users. Markets where the smartphone is already the most important network connector and bridge to cloud-based computing, because there is no infrastructure around small populations of laptops or tablets that performs the role that we have identified in Europe, Russia, and the US for embedded network connectivity. These new fast-growth markets will teach us a great deal about cloud-working which we will bring back to the old world. For reasons best known to the economists, the first of these markets to show have been christened MINTs – Malaysia (or should that be Mexico? Or are Mexico and Canada too much part of a Greater US economy?), Indonesia, Nigeria, Turkey. If it were not for sanctions, Iran would head this list. And note that we do not have Korea, the best networked country I have ever visited (10 Mbit broadband on a railway platform in Busan!) on either of these lists.

The ITU statistics tell the story (http://www.itu.int/en/ITU-D/Statistics/Documents/facts/ICTFactsFigures2013-e.pdf),although they are now a year old. But if half of the world’s population is under 25, and if only 25% globally have smartphones at the moment, then we are looking at one of the most exciting growth prospects that any industry has ever seen in global history. It may astound some that 40% of the world’s population is now online, but it seems to me vital to concentrate both on the services we supply them with now, and the way those services draw more of the remaining 60% online as well. And as we look at that 2.7 billion online total, it is as well to remember that in a global population of 7 Billion, the planet supports 6.7 billion mobile/cellular subscriptions. As we go along, each of the cultures that come into play will add something distinctive and exciting to our knowledge of the way in which information services and solutions work to change society.

Finally, what about the Old World? Well, as I have indicated, much of the market that we are discussing was created in the US, and will continue to flourish there. And do not write off Europe. Just imagine what it would be like, in ten years time, if politicians had cast aside the petty nationalisms and regionalisms that bedevil progress today, and a really integrated marketplace was emerging. A trading entity from Ireland to the Ukraine that thrived from being the world’s largest free trade zone, which was utilizing new memberships amongst poorer Eastern Europe to drive growth and using the technology – Europe is the most online region of the world – to regenerate itself. Stranger things have happened – though not much stranger. I admit! Meanwhile, pour another libation, accept my very best wishes for every success in 2014 and venture out into those newly MINTed global marketplaces!

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