Views on the new media market

Adobe's innovation dilemma

With Apple's launch of the iPad the number of web devices Flash doesn't reach is set to increase. Will this impact the use of Flash by the creatives who are Adobe's core supporters - it's instructive to look at what Flash uniquely provides, and also how did Flash get to the position it is in today.

While many people associate Flash with animated banner adverts (while in fact plenty of animated banners are in fact animated GIF images), Flash didn't start out there - Flash's roots go back to 1996 with the first release "FutureSplash Animator"

There has always been demand from creatives for high quality, interactive experiences - back in 1995 Macromedia Director and the Shockwave format ruled the roost here, with CD ROMs being the key vehicle for delivering interactive digital content. With the rise of the internet the opportunity for Flash opened, and Macromedia (who acquired FutureSplash and re-released it as Flash) allowed an internal competition between Director and Flash, to drive innovation, and ultimately prioritised Flash over Director.

Flash wasn't always as ubiquitous as it is now however - a key point in driving the ubiquity of Flash was the 11 June 1998 deal between Macromedia and Netscape to bundle the Flash Player as part of the Netscape download package. At the height of the "browser wars" between Microsoft and Netscape this was a key deal in delivering a better experience to computer users - and put Macromedia on the path to be a defacto standard.

Merely being there wasn't enough however - Macromedia were able to continually innovate on the Flash Platform enabling people to get more out of their rich web experiences. If we look at the timeline of Flash with key features we see

• 1997 - Flash 3 release transparency and the object library allowing for richer functionality within Flash
• 1999 - Flash 5 improved ActionScript and provided streaming MP3 bringing sound to the web
• 2002 - Flash Player 6 added support for video on the web for the first time - enabling YouTube
• 2004 - Flash Player 7 added Object Oriented programming and rich vector effects
• 2006 - Flash Player 9 new virtual machine for ActionScript with much faster performance, and full screen video

Each release has also brought incremental improvements - such as the move to h.264 video support in 2007, however with any platform the introduction of major new features has slowed down - as the user base has expanded, and the growing number of existing customers ask for new incremental features, rather than spending time and effort on radical, risky innovations.

While there is an ever growing number of new features in Flash Player the adoption of the new features has slowed down - and from the October 2008 release of Flash Player 10, we are still waiting for the 10.1 release.

This comes at a time when creatives are encountering new platforms on mobile - whether iPhone native applications, Android or Blackberry Java applications, or beginning to think about what they could do with the iPad.

Adobe's dilemma is - do they continue to incrementally improve the core Flash Player and Creative Tools used by the large army of creatives that they deliver to - and defend their platform - or make a major bet on a new area - and strike some new "Netscape" type deals to deliver a new wave of creativity to developers?

What should Adobe be thinking about? We can take our lead from the features that are easily accessible in Mobile devices, yet still very hard to do on the web:

• Accelerated 3D - is ubiquitous in desktop PC's now, and is growing fast in mobile phones due to the popularity amongst consumers of iPhone style smartphone experiences
• Location - many smartphones are location aware - applications and services are being built to take advantage of this - many laptops would also benefit from being location aware for the same applications and services
• 3D Video - consumer electronics and the TV industry is betting on a future that includes 3D video, support for 3D video on the web could accelerate the uptake and demand

I await with interest to see if Adobe have an aggressive as well as defensive strategy to address the growing army of web browsers that do not include Flash.

Predictions for 2010

As it's December I get to blog some predictions, that I'll either ignore (as I've been proven completely wrong) - or use to tell everyone "I told you so" later on in the year.

So what do I think is going to be interesting in the new media market in 2010?

New application stores, and re-launches of application stores will continue to happen during 2010. As new application stores launch they will increasingly have problems getting quality application inventory as the cost of maintaining multiple application store listings deters developers. Some innovative companies will start to offer solutions to this problem with "meta aggregators" that manage applications listings in multiple application stores (Symbian Horizon is an example of this), however they will struggle to add long term value to developers, and so will have a limited lifetime. So my predictions are:

Big application stores will get bigger

Watch for a relaunch of Nokia's Ovi Store together with more operator partnerships to start to drive significant volume

Apple's App Store will continue to set the standard, and drive volumes.

Blackberry applications will see a resurgence as Blackberry devices grow fast in the consumer market, and RIM's increased developer focus.

Successful iPhone Application developers port to other platforms

Successful application developers from Apple's Application store will start to port to other platforms as they search for cheap routes to grow new revenues. The platforms that will benefit most from this will be Android and Blackberry, as these both have great mindshare in the USA. In Europe I expect Blackberry to grow strongly, and start challenging Nokia, Samsung and Sony Ericsson.

Audiences integrate mobile as part of their media consumption for major events (Election, World Cup)

In the UK we have two pending major national events that will have mobile integrated as part of the audience experience - in May we expect a General Election, and in June there is the FIFA World Cup. In both cases audiences will be integrating mobile as part of the overall media experience - there will be a small number of very smart media companies and advertisers who will have successful campaigns that have mobile elements as a part of this. (If you are a smart media company or advertiser and would like to find out how - contact us at Live Talkback to find out what we are doing)

Android loses it's shine with developers, Blackberry is a surprise hit

As new Android devices come out from multiple manufacturers and the platform fragments with different screen sizes, experiences and features on different devices it will lose it's appeal with developers. Those developers who switch their Java platform development to Blackberry will be surprised by the success, as Blackberry grows fast in the consumer market outside it's traditional enterprise strength. RIM will delight developers with new offerings, and consumers a new OS platform that integrates a great WebKit offering from the team at Torch Mobile. Manufacturer controlled mobile platforms that use open source components will be the new theme in mobile platforms.

BBC Canvas project will launch devices and a new generation of internet + broadcast experiences will appear

The BBC Canvas project will receive final approval, and will launch the first generation of devices that consumers will rapidly adopt as they enable BBC's iPlayer free, on demand IPTV service to reach TV screens. There will be some bold experiments with interactivity around TV and broadcast - but the majority of usage will be on demand TV services. Free, interactive TV services will challenge the growth of premium rate phone call TV shows like X-Factor and I'm A Celebrity, but will not have any significant revenue impact for ITV in 2010.

That's it for my predictions for this year - let's see how things turn out as 2010 progresses.

UK online video market gets a boost

The UK online video market has just received a boost - though from a surprising source. Microsoft. The service offers UK viewers a way to stream online video after the "7 day window" that UK broadcasters make their content available online via their on demand sites (the 7 day window is a length of time that was determined by consultation with the broadcasting regulators for UK public service broadcasters)

The surprise here is that this comes from a new aggregator - Microsoft - the service is MSN Video. Though industry watchers may have a sense of deja-vu - the value proposition from Microsoft is identical to that of "Project Kangaroo" a JV between the leading broadcasters to create an online, video streaming service for the UK. This isn't that big a surprise as the ex-CEO of Project Kangaroo (before the JV's opportunity was torpedoed by the competition commission) is Ashley Highfield - the ex-BBC Future Media & Technology director, and now the MD at MSN UK, responsible for... MSN Video.

The biggest surprise here is that the branded TV companies have not chosen to offer these services directly, but preferred to partner with a branded aggregator who will drive traffic.

Building an online video portal today is not that hard - the challenge of video streaming online is reasonably understood, and there are technology packages from Adobe (Flash Media Server) and Microsoft (Silverlight + WMV) that solve many of the tough problems.

So why have the branded broadcasters decided to allow their audiences to experience their content under the banner of a different brand?

This depends on your perspective on the value in new media - does the value lie in the content, or in the audience?

"Old media" traditionally focussed on the content as being where the value lies - create great content and there is opportunity to monetize it in multiple ways - syndicating the content, selling the back catalogue, and selling the format to new countries. This is the model that invests in journalists, production companies, and produces great, quality content.

"New media" focusses on the audience as being where the the value lies - the ultimate expression of this is Google - who's content is as simple as possible (text links) and comes from any source (Google don't commission web pages from anyone) but by providing a service that the audience (web surfers) value are able to monetize the content.

In the video market "old media" is still the strongest player - and consumers still place much value in the aggregator and commissioner of that content - under the old "channel" umbrella that is a legacy of the broadcast distribution of video.

As video explores new distribution mechanisms (iTunes, MSN Video, "On demand" catch up TV services) the value will shift from being associated with the content to being associated with the audience. Enabling consumers to consume video where and when they want will lead to growth, but also highlights an opportunity for the traditional broadcast market - a focus on monetizing your audience in new ways can generate new revenues - learn from the web and new media companies, and apply those techniques to the traditional TV market.

(Disclosure: my company Live Talkback is working on providing broadcasters with solutions to engage and monetize TV audiences using web technologies - if you are a UK TV producer or broadcaster get in touch with me)

Editorial is valuable, raw content is not

In the world of traditional media everyone is running scared, as old advertising revenues are declining as advertisers follow the trend of users going elsewhere.

One recent example is Telegraph Media Group - publishers of The Telegraph and The Sunday Telegraph, in 2008 their revenues fell by 3.2% to £343.4m this is one example amongst many.

Yet this shift creates an opportunity for media companies. Historically media companies were able to make money because they owned the means of distribution. It was capital intensive to create distribution - whether paper (printing presses, networks of newsagents) or broadcast (radio licenses, broadcast towers). Thus media companies consisted of two key parts

• Distribution businesses
• Content & editorial businesses that took advantage of the distribution advantage

With the rise of digital media, the advantage that these businesses have over distribution is going away. Anyone can create a distribution channel - even this humble blogger has readers in 41 different countries.

So where does the value remain?

With Google it's easy for anyone to find content - and that raw content doesn't have much value, but if we look at the role that Google is playing in this market for content we get an insight.

Google acts as the "editor" of the content here - each time you write a search query you get a personalised, focussed set of content that may interest you. This editorial process is valuable to consumers - look at the usage that search engines get.

There are other "editors" in new media - Twitter acts as a form of crowd sourced "editing" - driving traffic to content. This blog gets more traffic from Twitter than from Google.

Understanding that the editorial process creates value, and that consumers connect the brand (Google, Twitter) with that value is a powerful insight for old media brands.

They have a valuable asset - in their brand, and their editorial process, and they have the opportunity to leverage that brand in the shift to digital distribution. As more content is created, the challenge for consumers of finding interesting, high quality content increases, and consumers will turn to their trusted brands to provide filtering for them - whether it's Google's accurate search engine, Twitter's crowd sourced comments, or the Financial Times' industry reporting and analysis - the value comes from the connecting the consumer with valuable content. As PwC have outlined in their report on Global Entertainment and Media Outlook "Stop talking about the demise of newspapers, start talking about the rise of news brands."

Media companies need to focus on enabling consumers to easily access their content, wherever, whenever in a high quality way, and take advantage of their strong brands from the old media space to build strong, trusted brands in the digital economy.

Internet video is still under control

In the midst of all the excitement around new business models and the internet revolution it's easy to forget that the old order continues to exist.

The latest demonstration of this comes from Hulu and Boxee. If you are in London you'd be forgiven for saying "who on earth are these folks?" as both of them have almost no impact over here - as you can't get the content you want (which would be BBC iPlayer and the ITV, Channel 4 and five services on Boxee please)

What's happened? At the content owner's request Hulu has asked Boxee to remove Hulu's content. Boxee has agreed. This was at the request of the content owners it seems. The consumer seems to be the only loser here as this makes rational sense for all the 3 parties. So what is going on - let's look at the perspective from each of the three parties.

Content owners

The main current source of revenue is from cable subscriptions and TV advertising on cable. While they are interested in exploring new models for this (hence the investment in Hulu) at the moment the overall majority of revenue comes from traditional routes. Boxee threatens those - people can replace their cable subscription and set top box with a device running Boxee and get the same content. Thus reducing the revenue stream from the traditional route, with no clear replacement yet. So as a content owner if I want to continue to fund exploration in new business models I need to maintain my revenue stream - accordingly shut down Boxee

Hulu

Hulu's is utterly dependent on it's content - without the content Hulu has no value proposition - so it needs to make sure that it keeps it's content providers (and owners!) happy. While Hulu provides the potential to monetize the internet traffic the problem isn't solved well enough yet. So Hulu needs to comply (though it must be frustrating as this means that they can't explore the possibility of monetizing the content on TV sets).

Boxee

They need to comply - otherwise they risk both lawsuits, and an escalating technical arms race as Hulu engineers come up with an inventive way to "turn off" Boxee, and Boxee's engineers come up with workaround solutions. This would ultimately be destructive for both Hulu and Boxee - as it diverts resource from their respective core value propositions - Hulu's is monetizing video content on the web, and Boxee's is bringing high quality TV experience with internet video.

So - what next? I'd expect that we'll see similar solutions come back in the future - it's in all parties interest to get this to work - I'm sure Boxee would happily license to Hulu and their content providers a solution for a "next generation" set top box.

Flash on iPhone

At the World Economic Forum in Davos Bloomberg conducted an interview with Shantanu Narayen of Adobe. The inevitable question came up "When will Flash be on the iPhone?" - truly Shantanu must be bored with that question. The blogosphere seems to have widely interpreted the answer as "any day now" - but the actual wording isn't any different to earlier questions to Adobe staffers on the same issue "when we get it working"

Not withstanding the fact that it's hard to get Flash working on mobile devices (it's hard to move any "PC centric" codebase to a mobile device) it's reasonable to assume that it will happen. When it does happen it's bound to be like London busses - wait ages, and then 3 come along at once. (Nokia S60, Android, iPhone and Windows Mobile?)

So what will change in a new "Full fat flash" world on mobile?

Mobile video will become far easier to use

Flash has had a dramatic impact on video on the web. Flash is on every PC and in every browser. As a video distributor you can trust that consumers will be able to watch your video without needing to go through a painful install process.

Mobile video consists of many different formats - there is one consistent format, that used by 3G (h.324) - and even though any phone can access video in a consistent way by just dialling a number this hasn't taken off. Flash video will change this - firstly it will become increasingly hard for network operators to charge a premium for "video" - as Flash video can be delivered over normal HTTP streams. It is also likely to drive flat rate tariffs - after all few consumers are likely to be happy that they get charged extra for the on page video advert that uses up lots of bandwidth.

Rich Mobile Applications will be a real opportunity

Rich Internet Applications, whether delivered with Flash, AJAX, or another framework that builds on these building blocks will become a real opportunity. If you want to deliver a great, free application experience to smartphones today you need to build at least (if you are sat in London)

• iPhone application and register with the AppStore for free download
• Android application and register with the AppCatalog for free download
• S60 application, get it Symbian Signed - you can then distribute from your own website
• Blackberry application

Contrast this with building just one flash application and passing the URL out to people - simple to build and maintain. What will suffer here is native application development - as people will be able to achieve much using Flash & web technologies native application development will become more focussed on niche applications where native is essential - performance applications such as 3D games are a good example.

iPlayer and downloaded content

Quietly, just before Christmas the BBC released a new version of iPlayer. You'd have to have been hunting to find this - it was announced on the BBC blog by Anthony Rose, but to actually get hold of it you need to be part of the BBC Labs trial - this isn't hard, you just click the button on the BBC Labs site, and you'll see a button that looks like this: What this enables people to do is to download programs and watch them later. What's the real impact? It means, that if you think ahead you can guarantee to watch a show without any breaks in streaming. It's not much ahead either - my experience so far is that the download of a 60 minute show takes between 15 minutes (off peak) and 60 minutes.

What is the impact of this going to be? I predict more impact on ISP's - increased bandwidth usage by consumers, as those who previously didn't get a great iPlayer experience during peak viewing times can now plan ahead and download shows to watch later - so total traffic in the UK used by iPlayer will increase, and ISP's costs associated with the traffic will also increase. I'd also expect to see some real impact on mobile networks - the ubiquitous USB dongles that are being sold now are an ideal solution for downloading a show - simply plug the USB dongle into a netbook, and you've got the ability to download and watch shows at your leisure, without worrying about ensuring you get maximum signal strength at any given time.

With the impact of the credit crunch restricting the free cash that consumers are willing to spend in the UK I'd expect to see even greater usage of TV entertainment during 2009. It looks like another painful year for providers of internet data services.

What happened to mobile TV?

In mid 2007 the mobile industry was full of hype around the opportunity presented by Mobile TV. Multiple companies were investing in the space, handset manufacturers were announcing handsets that had TV tuners built in and there was a standardisation process ongoing to ensure there was cross border compatibility of mobile TV in Europe. So where are we today?

DVB-H is the EU standard for mobile TV

Italy is the "showcase" market for DVB-H with 900k subscribers

MobileTV offerings are available from operators in every european market

That's the good news - but all the marketing effort today from mobile operators is going on mobile broadband - so what happened?

It seems that in spite of the broad, simple appeal of mobile TV, consumers don't actually watch it. The BBC ran a 12 month, cross network trial in the UK of TV services - offering their broadcast TV content over 3G on mobile. The "highlight" of the results was simultaneous viewing by 580 people. That's across 5 networks and around 60m people. Not a thrilling statistic.

Yet at the same time the usage of internet video, including TV video in the same places has increased dramatically. BBC's iPlayer service (on Demand TV) and similar services are available from all the major UK broadcasters

These services are moving people away from an assumption that TV is all about "broadcast" and to an expectation of "on demand" and "interactive" content.

The MobileTV value proposition - which was based on an assumption that people would be watching broadcast TV en-masse has been enabled just as consumers are making the shift to new forms of content consumption.

The real success for entertainment on mobile will come from enabling new, innovative interaction models with audiences - what happens when the phones of everyone in the digital living room let you to interact with the show that's you are watching together on the TV?