This is getting interesting. While Netflix is scaring the living daylights out of operators and rights holders in the US, on this side of the pond the battle to control the living room took a new twist with the announcement that Tesco is acquiring 80% of video-on-demand aggregator Blinkbox. Thus the UK’s most successful physical retailer - £1 in every £8 of UK consumer spend is with Tesco - is set to compete head-to-head with the most successful online retailer, Amazon, which earlier this year took full ownership of Europe’s largest online DVD rental provider, LOVEFiLM.
Blinkbox is a canny company that has spent the last few years solidly acquiring pay-per-view video rights. Its execs are people the studios and broadcasters can do business with, and it has gone about its business quietly and efficiently. It looks like a good fit for Tesco, although the retail giant may yet keep its own white-label online DVD rental business, powered by LOVEFiLM.
There’s a compelling logic to this development: While media companies have been agonizing about the best way to make money from paid digital content, perhaps the best way is to ask those whose whole business is about selling stuff. And while at Forrester we regularly implore our clients to focus on understanding their consumers, that imperative is at the heart of the success of both Tesco and Amazon.
For the consumer, this could be good news, if it helps bring choice to the UK VoD market, especially on the proposed YouView platform, on which both LOVEFiLM and Blinkbox will be offered. For content owners, this opportunity to reach more consumers will be tempered by the knowledge that Tesco’s buyers are famously hard-nosed. For operators and broadcasters, this is an opportunity missed, and gives momentum to an unwelcome new competitor in the UK VoD market.
Tim Armstrong is not the first CEO of a media company to try and bring some rigour and process to the creative process, and he won’t be the last. Whether The AOL Way, the training document that maps out a vision of 21st-century editorial production, will succeed — first, in getting AOL’s editorial team on board, and second, in creating a content experience that will engage fickle users and generate revenues — remains to be seen. But the exercise reminds us of the eternal challenge for the media industry — how to channel creativity to produce valuable and differentiated content.
From my experience working as an editor on magazines, on websites, and in TV, I wish Armstrong luck in implementing his vision. Much of what he is looking for makes sense: creating more content, more quickly; thinking about search optimization, traffic, and revenue; using more video. But such thinking is at the heart of Demand Media’s model, too. What is it about AOL content that will enable it to stand out in a crowded marketplace? Where is that X factor? How can AOL be distinctive as well as more efficient?
AOL, like its contemporary Yahoo, does not have the established brand values of an “old” media company like ABC, for example; arguably, it has had to acquire newer companies — such as TechCrunch and Huffington Post — to become a genuinely nimble and relevant content provider. The fear now is that if it’s a choice between “The AOL Way” and the highway, those within AOL who already know how to create compelling content will choose the highway: The signs from Engadget don’t look great.
Amid the recent kerfuffle over Apple’s plans to relieve publishers of 30% of their subscription revenues, and Google’s swift counter offer, did we forget about that other great disruptor, Facebook? The social net is still growing: we were told last week that it has 30m active users in the UK. And despite denying that it is interested in becoming a content provider, it is becoming an increasingly important platform for consuming content. The announcement that Warner Bros is offering Facebook users the chance to rent The Dark Knight (for 30 Facebook credits, or $3) reminds us that the futures of traditional and social media are intertwined.
Facebook was never going to sustain its growth based on status updates alone. It needs a steady supply of content, like a fire that needs vast quantities of fuel. Social gaming has done a great job of bringing users in and keeping them on the site, ensuring a healthy mix of content and communications. But Facebook’s sheer scale means that it has become a significant platform for consuming and sharing other content such as music and now video (according to comScore it’s now one of the top 5 video sites by views in the US). With a massive user base and its own virtual currency, Facebook could yet become a significant platform for paid content (beyond the virtual goods of social gaming), especially via connected TVs.
I recall my first visit to News International’s London HQ a few years ago. It takes several minutes to get through security at the vast complex, surrounded by barbed wire. Once in, I was struck by the sheer scale of the operation, and how only a tiny percentage of the floorspace was given to those creating the content (the bit, in my naivity, I thought of as important). Most of the site was devoted to printing, with articulated lorries jockeying for position as they lined up to take the newspapers off around the country.
Yesterday’s launch of The Daily gave us a glimpse of the future for news organisations, where the focus is on an editorial product, not manufacturing logistics. The distribution is electronic and through one platform only – the iPad. Newspapers have looked at salami slicing their old structures and realised that the numbers don’t stack up. In the long term this kind of radical product innovation is needed.
So will it work? The mantra in media circles is don’t bet against Murdoch, noting the success he has achieved with Pay-TV and to a lesser extent, with reinventing the newspaper business (in the UK certainly) in the 1980s. The Daily, he says, will need 1m paying subscribers to work, at the current (and attractive) price point. Given Forrester’s forecast for Tablet sales in the US, that may not be an unreasonable ask.
And although it will take time for the new product to bed in, the signs are promising. The first edition reflects a lot of thought about how content can be packaged and consumed to maximize the qualities of the iPad (and perhaps the real story here is the potential power of a relationship between Apple and a major publisher). The photography works well, for example, and there are some neat navigational tricks.
I was delighted to see that Alan Partridge, one of my favourite comedy creations, is back. Steve Coogan’s cringeworthy Norfolk-based DJ hasn’t been on TV for eight years but will be starring in a series of Web-only shows sponsored by Fosters. They look like being the flagship content for a comedy-themed branded online channel, www.fostersfunny.co.uk. Aficionados will be interested to know that Alan is now plying his trade as a mid-morning DJ on “North Norfolk Digital.”
Webisodes were all the rage a couple of years back when the social network Bebo, among others, commissioned series such as Kate Modern, with funding from sponsors like Ford and P&G. But even though budgets were a fraction of TV budgets, the sums didn’t add up, and the nascent trend was all but killed off by the economic downturn. So, it’s intriguing to see that major talents such as Coogan (who recently co-starred opposite Will Ferrell in The Other Guys) and co-creator Armando Iannucci (a BAFTA winner for the fabulous The Thick Of It) have turned to the Web to revive perhaps their best-loved creation for 12 11-minute episodes. Presumably, there was a decent — if entirely justified — financial incentive to do so. Set against the cost of TV airtime, though, Fosters may have nabbed itself a bargain.
Can marketers create great content? Can they bridge the gap between an appealing 30-second viral video and TV comedy? Because that’s the competition in the emerging Web landscape — where media companies and marketers are competing for the same eyeballs.
Company creation of original video content to promote its products and services isn’t new, but this week, I was intrigued to see Philips trying something different. It launched a new “online sitcom” — Nigel and Victoria — that follows a love-struck marketing manager (a bumbling twit and therefore, naturally, English) and an actress (playing an actress) who hosts a Web series about Philips products. It’s amiable, knowing, and reasonably amusing, and a presence across YouTube, Facebook, and Twitter ticks those social media boxes. It’ll be interesting to see if it finds a larger audience than the other video content — some of which is actually decent — lurking unloved in the recesses of Philips' own Web site.
The notion of Web-specific video content, or Webisodes, as a new format for content — somewhere between lo-fi UGC and broadcast-quality TV — took a hit in the economic downturn. The budgetary gap between TV and the Web was a difficult one to straddle. The sums didn’t add up, and the likes of Kate Modern, though effective at generating buzz, hinted at a future that never quite happened.
Publishers across the world will be keenly scrutinizing the response to The Times’ freshly erected paywall. Tired of giving its expensively acquired content away for free online, News Corp. has decided that users must now pay for it. Are paywalls the answer? They may be an answer — but to the wrong question.
Instead of asking how much more money they can get for the content, companies should be focusing on how that content can help create new revenue streams. It’s a small but crucial difference. The value in a media business lies in its dialogue with consumers. And if a paywall removes 90% of your audience (as Sunday Times editor John Witherow has suggested — and even that may be an underestimate), the challenge becomes even harder. Focusing on the sale of content is missing a trick: Media companies are not actually in the content business; they are in the audience business.
We may speculate as to whether 2%, or 5%, or 10% of Times readers will pay for the paper’s content online in the face of competition from free rivals. We will have to see. But we have plenty of evidence that consumers do spend money online on products and services. Indeed, online news fans are even more likely than the average online user to buy books, tickets, travel, or clothing online. The key is not to monetize the content but to monetize the audience.
The challenge is to really understand that audience and identify the way that compelling content can build a strong relationship, creating new opportunities for monetization elsewhere. In this respect, passion-based products such as Times Plus (or Guardian Extra) that reward keen readers with additional content and offers represent a smarter long-term solution than a simple paywall that drives users into the welcoming arms of your (free) rivals.
This is the fourth episode in the Find Your Popcorn podcast series, in which Consumer Product Strategy Analyst Nick Thomas describes new ways that media companies can monetize their content in the digital age.
Here is the second video podcast in the "Find Your Popcorn" series, part of a new approach to our research processes. So to hear me talk about how gaming sites' promotion of virtual goods (paid for with real currency) could help other companies build new revenue streams, please click on the video link below. And as ever, please share your thoughts and feedback on both what we are saying and how we are saying it.
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I enjoyed listening to Carol Bartz, the CEO of Yahoo!, who was in London last week to address the European press and analysts. She’s smart, focused and entertaining – a rarer combination than it should be. But one thing in particular struck me. When she was asked about the future of online advertising, she commented that in the future, “ads should be as interesting as the content.”
A truism? Perhaps, but one that still eludes many advertisers off- or online. And while my usual focus is on the content side of media, let me extend my brief a little to comment on some current ad campaigns, bearing in mind Bartz’s words. Excuse the non-scientific survey, but three campaigns I’ve watched in the past week have stuck in my mind.
John Lewis’ lengthy TV ad has been extensively written about - with several commenters noting its uncanny ability to make them cry. It’s all about brand positioning, but it’s a beautifully crafted bit of content that bears repeated viewing. In my household (like many others in the blogosphere) this is a rare example of a TV ad that viewers actually hope will be shown. In essence it’s not revolutionary, but it’s hugely effective (and affecting). Check it out here.
I saw it on TV last week when in a cruel twist it was shown before the corresponding new campaign from Marks and Spencer, its erstwhile competitor as the UK shopper’s best-loved retailer. But what a terrible ad (no link - unsurprisingly it has not been uploaded to YouTube). Uninspiring, unaspirational, humdrum and failing to convey anything great about the M&S brand. Its message? Something about shopping at M&S if you can’t be bothered to cook. That’s what I recall, anyway. Not the finest call to action I’ve ever come across.