Let's make TV local again

Posted by Barry Parr Technorati Profile

It's no surprise that local television stations are under pressure, with increased competition for local audiences from cable and the current economic...um...opportunity.

Without actually citing a source, WSJ reporter Martin Peers declares that the problem is overcapacity and the solution is to let top stations in the local market merge to "reduce overcapacity":

That means shuttering weaker stations and consolidating ownership of others in individual markets to allow for greater cost-cutting. One of the biggest costs is local news operations, which can account for between 25% and 33% of net revenues. Allowing one top station to buy another top station would spread such costs across a bigger revenue base. Regulators might consider relaxing ownership limits given the industry's parlous state.

I can understand why this serves the purposes of the licensees, but it does not serve the interests of the communities they've been licensed to serve.

Consider this radical alternative: insist that to hold a local broadcast license you have to produce local programming. Can't make money doing that? Sell the license to someone who can. Enforce the conditions of the license and let the market do its magic. Keep or even reduce the limits on the number of stations a single owner can hold to lower the price even further and to keep ownership in the community.

Reducing the price of a local broadcast license would encourage innovation in programming and particularly in journalism at a time when the entire value chain of video production is under attack from smart suppliers.

Keeping the price of licenses high -- particularly at the cost of reducing the amount of journalism created in the local community -- only serves the current licensees, who've already had their payday. Maybe we can encourage them to cut their losses and put local stations back in the hand of local entrepreneurs.

Orange France loses iPhone exclusivity

The French Competition Council - the Conseil de la concurrence - ordered yesterday that Orange's iPhone exclusivity be immediately suspended, with the result that any French carrier (SFR and Orange) is now able to offer Apple's iPhone.

Orange will appeal the decision before the Court of Appeal in Paris, but in the meantime (it may take as long as 12/18 months to have a final decision) Orange's competitors will be able to sign distribution deals with Apple. SFR annnounced it had anyway already 45,000 unlocked iPhones active on its network. However, the time those agreements are in place, Bouygues and SFR cannot benefit from the Xmas sales period. After one year of its exclusive partnership, Orange announced that they will have sold over 150,000 first generation iPhones and over 450,000 3G iPhones. But beyond the idea of attracting high-end users, such an exclusive agreement was a key way for Orange to differentiate from competition, drive traffic to shops to cross-sell other Orange/France Telecom products and to nurture the brand (iPhone being all about "convergence").

Orange complained that this decision places France in a radically different situation compared to countries such as the United States, Germany, the United Kingdom and Spain. It is difficult to say the impact such a decision could have on other courts but Vodafone already tried in vain to stop T-Mobile distributing the iPhone in Germany.

The interesting piece here is that the French decision is motivated as follows: "by nature introduces a new factor of rigidity in a sector that already lacks competition." Bear in mind, the Competition Council already fined the 3 operators for the lack of competition. See an old post from December 2005 on this topic.

From an Apple perspective, it could however boost sales, now that they have radically altered the business model when launching the 3G iPhone. There are already several countries where non-exclusive agreements are in place: TIM and Vodafone distribute the iPhone in Italy; T-Mobile and Orange in Austria, Singtel and Vodafone in India.

That being said and beyond the iPhone decision, the ruling (still a temporary one) states that 'all exclusive agreements will have to be limited to three months". No doubt such a decision will raise lots of discussion among operators and handset manufacturers.

Vodafone & Wayfinder

Vodafone announced thisweek a recommended cash offer to acquire Wayfinder Systems AB. This is not a done deal yet but my first take is:

- Wayfinder like other software vendors really pioneered the market for navigation on mobile phones. Initially, the Swedish company (at that time named Itinerary systems) started in as a R&D project in the mobile phone division of Ericsson in the 90s! It is thus no surprise that Wayfinder recently announced an intensification of its global collaboration on GPS handsets with Sony Ericsson, one of its main clients. Back in July 2007, the company acquired Finnish application provider Navicore.

- According to its interim report (ending September 30th 2008), Wayfinder wanted to focus on a small number of global partners and to planned to reduce costs by 30% in 2009. The company reported close to 2,5M activated user accounts but only 294,000 paying users, who had activated a paid for application in the past 18 months. Vodafone's offering value Wayfinder at around €23M. I am not a financial analyst so I won't comment the cash offer in detail but from an industry perspective, it seems to me:

* this is a small amount of money for a global operator like Vodafone

* most competitors are also small players (Telenav, Route 66, TCS, Apello, Webraska, Jentro and NIM). Some of them have already been acquired (remember Gate 5?), some others seem to perform well (NIM in the States) but most of them will struggle remaining independent and going directly to consumers since it implies significant marketing budgets and that they need operators' support due to large bills of mobile data consumption when accessing navigation services from your mobile phone.

* I would not be surprised to hear other players get acquired or at least signed deep strategic partnerships. Between Nokia/Navteq and Google Maps, operators will struggle differentiating and maintaining competitive advantages.

- Vodafone will benefit from Wayfinder's expertise, technology capabilities and team and provide resources and scale to distribute Wayfinder products.

Wayfinder had launch Locate Mate, a service integrating into social networks such as Facebook.

I am currently undertaking some research on LBS, so do not hesitate to contact me to discuss this topic.

Mobile gaming $

Following the publication of this article in Moconews, I had a call with Greg Ballard, CEO of mobile gaming company GLU.

Glu is adamant that despite a smaller size than EA Mobile or Gameloft, the company is very well placed in porting games on the balkanized mobile handset market. He righlty pointed out that if smaller in revenues, Glu has a scalable business and claimed to be ahead of its competitors in some regions of the world (n2 after EA in the US and after Gameloft in Latam, n1 in China and Australia). He also made the point that Tetris still represents a significant chunk of EA revenues. Looking back at the Jamdat acquisition in December 2005, I have no other choice than to agree.

So, let me precise that my comment "the larger companies have economies of scales that their smaller rival doesn’t" mainly addresses the smaller players in the mobile gaming industry. Despite consolidation that took place over the last few years, this market is still very fragmented. Also, it is fair to point out that Gameloft's developer/production/porting teams represent close to 90% of the workforce (and thousands of employees). But I am not a financial analyst so I can't really make a call here.

However, I still believe that:

- EA and increasingly Gameloft (due to the fact that the company is part of the Ubisoft galaxy and that it started developing games for consoles) can develop synergies by licensing content on multiple platforms and not only for mobile. They also have their own IP rights, reducing the needs to pay royalties to the likes of Fox or Celador.

- GLU did not join the iPhone train yet, contrary to Gameloft. Building for new platforms and alternative distribution channels (iPhone, N-Gage, Android,...) is key. See in previous post the reasons why.

- Some companies may be hurt in the decline, doesn’t mean all companies won’t do well, or that some parts of the mobile gaming sector won’t thrive. Indeed, there will be a slowdown due to the economic downturn (mainly because of longer handset renewal cycles and potentially because of the need to cut non-core telecom spending) particularly for traditional java games. It thus all the more important to develop for new platforms and to innovate (new merchandizing, biz models...)

Apple AppStore - Top Apps

eApple recently released its top downloaded applications on the AppStore since launch in July 08. No mention of the split here between apps downloaded on the iPhone and on the iPod touch.

Top 10 Free Downloads (Overall). My comments in italic

1-Pandora Radio (music, 2 million iPhone subs who spend 90 minutes listening on average)
2-Facebook (social networking)
3-Tap Tap Revenge (game)
4-Shazam (music)
5-Labyrinth Lite Edition (game)
6-Remote (entertaining app)
7-Google Earth (only launched 2 months ago!)
8-Lightsaber Unleashed (cool and fun app, close to a game for Dark Vador fans...)
9-AIM (highlights the strength of AOL Instant Messaging in the US vs Europe)
10-Urbanspoon

My first take:

- 2 music apps in the Top 5, highlighting the role of free in music today. I wonder what are the stats on iTunes. How does buying tracks on iTunes from the iPhone / iPod touch perform?
- lots of gaming / entertaining apps
- 2 social networking / IM apps in the top 10
- Where's video???

Top Paid Apps (Overall):

1-Koi Pond
2-Texas Hold’em (game)
3-Moto Chaser (game)
4-Crash Bandicoot: Nitro Kart 3d (game)
5-Super Monkey Ball (game)
6-Cro-Mag Rally (game)
7-Enigmo (game)
8-Pocket Guitar
9-Recorder
10-iBeer

Well, doesn't it speak for itself? The iPhone (and to a lesser extent the iPod) are gaming platforms. Beyond the great user experience, the good marketing catalyst and the need for game developers / publishers to look for new source of revenues, there is another explanation: it is easier to merchandize content on the iPhone than on operator decks. More on this on my personal blog.

UPDATED: According to Macworld's iPhone Central, Apple has purchased full-page ads in both the New York Times and the Wall Street Journal that include the news - in small print at the bottom of the ads - that the iTunes App Store has now distributed "over 300 million" iPhone apps from a total of "over 10,000" titles available. I was initially skeptical that Apple could sustain such a high growth-rate since the beginning of the AppStore launch, back in July 2008. That's really a significant number.

The Joost App for iPhone - product strategy ahead of its time

Joost has produced a free iPhone app that brings the glory that is Joost -- videos of an oily Britney Spears, classic Star Trek reruns, and interviews with barely-clad Victoria's Secret models -- to the iPhone.

I've posted about this on my blog, you can read the whole post here. My overall take is that this not really about mobile video. It's about the future of video product strategy. I wrote:

“Many devices, many services” is the future of video. It requires the use of an open platform and open protocols. Joost, which got its start as a P2P video delivery mechanism, has since opened itself to wider consumption by going straight IP. Once it speaks IP, Joost can easily be ported to any IP device, including the iPhone. Including the T-Mobile G1. And so on. It has been so successful on the iPhone so far that it’s regularly in the top 10 free applications on the iPhone App Store.

I go on to explain what happens next. This kind of open-development platform has to be put on the TV set-top box. This is in stark contrast to what happens now. But in the end, this will change the way devices are made, services are provided, and consumers experience media, all thanks to what is a real revolution in product strategy. Can't wait.

How Sling.com fits into long-term product strategy

I've been asked by a lot of reporters in the past few weeks whether Sling.com -- Sling Media's online video Website in the US featuring content from Hulu, CBS and many others -- is something they should cover. I don't envy reporters who aren't specialists in media technology, they really have a hard time knowing whether a specific site, application, or device, matters. In the case of Sling.com, it was particularly confusing to the lay reporter because it almost appears like a shift in business model. As in, "Oh, no, the Slingbox isn't selling well, let's get into the online video business!" I had to reassure reporters that in fact Sling.com makes good sense for Sling. In fact, it's part of a secret plan.

I wrote about it on my video-focused blog OmniVideo (http://omnivideo.wordpress.com) yesterday, read the post here for more detail from a video perspective. At the end of the post, I explain that this Web video strategy is really about future product strategy for Sling. This is a case where a very patient company sees that it must position itself for the future. I wrote:

Because the Slingcatcher lets you share PC and online content to your TV, aggregating the best content on Sling.com just makes it that much easier for Slingcatchers to access the best of the Web on the TV. It’s a small step, but it represents big thinking.
Big thinking because once Sling can show that it has the technology in its Slingcatcher and the content on Sling.com, it will then start calling Samsung and other TV and Blu-ray makers to say, “Hey, want an Internet-connected TV strategy that puts the best of the Web on your device quickly? Partner with us!”

I expect these kinds of announcements all through 2009. We see the first wave of them in the recent deals Netflix has done with LG and Samsung. That's just the tip of the proverbial iceberg. I'll be writing an entire report updating the many ways video is coming to the TV in early 2009, so stay tuned.

NokiaWorld: Distracted by the N97 Flagship

by Ian Fogg

Everyone appears to have spent the last week discussing Nokia's new flagship N97 phone. But it's far from the most significant announcement.

Why? The N97 will be premium priced and won't be the only handset to feature a touch screen from Nokia, or the new 5th Edition Series 60 Symbian OS.  The N97 isn't due to ship until mid-2009 by which time it will face improved competition. The current models that commentators have compared it with in the last week are a red herring. Against mid-2009 rival handsets the N97 will look less strong.

The N97 is important as a part of a bolder overall strategy by Nokia and is not the entire story in itself.

The mid-range will be the new mobile Internet battleground in 2009:

Samsung (especially), LG, SonyEricsson and Motorola are already pressing into Nokia's traditional mid range strength. At some point, Apple will extend the iPhone range with lower priced models as it did in the past with the iPod Mini, Shuffle and Nano. This will open a new front onto Nokia's heartlands. RIM is already targeting consumers with cheap'ish Curve's and consumer-focused marketing.

Nokia clearly understands its mid-range mobile Internet strategy will be critical. It's making numerous moves in this area already. Announcements Nokia has made over the last few months focused on mid-range mobile data:-

• Email strategy targets mainstream Series 40 handsets. By specifically enabling all Series 40 phones -- ie non smartphone -- handsets, Nokia places email in the hands of virtually its entire customer base. And, with Nokia Messaging, intended to be offered with an operator partner, that Series 40 email is a push email offering. Mail on Ovi by contrast is available to all for free. Nokia is also adding a full webmail interface to make Ovi mail a viable alternative to consumers' existing email.
• The first 5th edition touchscreen Nokia phone is mid-market. The 5800 handset was announced in early October. The 5800 features a four contact social media widget on the home screen but it's less feature rich than the N97. The 5800 is already shipping. The N97 will raise the profile of the software platform and encourage developer adoption, which supports Nokia's mid-market mobile Internet phones as well as the high end.
• Nokia has launched mobile data services on low cost emerging market handsets. See Nokia Life Tools and the main announcement of low cost mobile data handsets and emerging market email.
• Nokia is pushing smartphones into mid-range price points already on the quiet. Announced earlier in the year, the 5320 XpressMusic is a full S60 smartphone offered for just Euro220 unsubsidised. The 6210 Navigator is a similarly S60 smartphone in plain clothes without N or E Series branding at a keen price.
• Nokia has blurred smartphone distinctions with the S40 6260 slide . The November-announced 6260 packs a 5Mp camera, HSPA 3.5g data, music playback, Ovi Maps and other former smartphone characteristics. Note also the new S40 developer kit offers a webkit-based browser, which is the same component used in S60 phones' web browser and by the iPhone's web browser.

The smartphone is dead. All phones are smart now. Long live the smartphone!

And, that makes the mid range the mobile Internet battleground for 2009. Nokia is already marshalling its forces for the onslaught from its new rivals.

Why the Music Industry Needs Zavvi Back Online

UK high street retailer Zavvi has suspended trading on its online store, see my post on Music Industry Blog

Amazon Launches MP3 Store in the UK. First Take.

Amazon today launched, with no fanfare, their UK MP3 store. See my post on Music Industry Blog for my first take.