StrategyEye Views

EXPERT COMMENT: Future of independent UK TV production

2009-05-21T13:51:49+01:00

StrategyEye is now publishing a variety of expert perspectives on hot topics in digital media. If you wish to feedback regarding the topics or propose an expert commentator, please email me at nickg@strategeye.com

We've today published a view from Mark Beilby, formerly #1 City Media Analyst on the challenges and future of UK TV Production in advance of the publication of the Digital Britain report ...

As the publication of the government’s Digital Britain report nears, there is a great deal of discussion over the future of the UK independent TV production industry. The 2003 Terms of Trade stimulated the growth of the TV production industry by securing both ownership rights and the ability to resell content for independent producers. The underpinning provided by domestic broadcasters’ demand has enabled the ingenuity of UK producers to flourish and build a buoyant export market. Ofcom states that 53% of all global format sales are made by UK producers. This represents a startling success.

This growth industry, however, faces new challenges as the evolution of digital technology changes the broadcast landscape. Schedule-based, linear TV is under threat. Time-shift viewing is becoming the norm rather than the exception. The profitability and programme budgets of UK broadcasters are under duress from the prevailing economic malaise as well as the erosion of live audiences and attendant haemorrhage of advertising revenues.

How can the UK independent production sector be protected and nurtured? There are two essential pre-conditions – a new set of terms of trade that reflect commercial digital realities and the provision of external investment capital from institutions to compensate for the deteriorating financial position of UK broadcasters.

...

Read full article

EXPERT VIEW: Local newspapers and a sustainable digital business model

2009-05-13T12:10:04+01:00

Great post for us by the first of our "Experts Panel" ...

EXPERT VIEW: Local newspapers and a sustainable digital business model

Mark Beilby is a former #1 City Media analyst who now lectures at the Cass Business School as well as being a director of a number of entrepreneurial companies in mobile and publishing.

If you are, or know of anyone who is, an expert on key areas of the digital media market and would be keen to write their views on the trends, challenges or opportunities in their market areas please drop me a note ... info@strategyeye.com !

We'd love to hear from consultants, analysts, venture capitalists or anyone with a good opinion!

"Facebook to KILL Google" - or will it just add search and be done with it??

2009-03-20T12:34:16+00:00

A number of comments on the web referencing Ross Sandler at RBC's view that Facebook could outpace Google and make the search engine 'reliant' on it:

Henry Blodget - Facebook could kill Google -according to RBC analyst

The analysis that Silicon Alley Insider makes in interpreting Sandler's commentary is flawed as it is not comparing apples with apples - particularly given that it suggests that Google 'gets' 19% of its traffic directed from Facebook - which is simply not the case.

My take is ... the referrals from Facebook to Google are not the correct comparison - it is likely that many people simply:

(a) log on to Facebook as first move on the web to check friends

(b) then switch to Google to search for something to do with work or otherwise and get on with day

The only interesting thing from this of strategic consequence is:

People go to Facebook then want to search for something.

IF Facebook did a deal with some search company that was anything like as comprehensive as Google for general search and put that as a "Search Web" bar on the next version of Facebook (probably next week based on recent iteration speed) THEN that would be something interesting ...

Definitely that would take traffic away from Google which may be what you are suggesting ... and would be interesting ... and Facebook would get a cut of ad revenue on genuine referrals.

Who could they do that "search" deal with? Microsoft??

StrategyEye commentary and related links

Mobile TV - still 5 years from being a reality ...

2008-10-08T18:10:40+01:00

Despite the hype, mobile TV will remain a digital media pipedream for at least five years - StrategyEye has just produced a report on the challenges of getting Mobile TV from its current state to mass adoption and a revenue generator.

Currently, a combination of lack of standardisation of both broadcast and handset technology plus no credible financial rewards have hamstrung the sector.

Since its inception in Korea in 2005, watching broadcast TV, interactive TV and video on our mobile phones has been an alluring concept and the mobile TV sector has seen some steady growth in Asia and moderate or lesser growth in Europe and the US.

Widespread and large scale investment has taken place across all three continents but the sector has yet to yield profits and users experience a high level of technical frustration.

“There are about six different standards of broadcasting around the world and, without standardisation, mobile TV is hard to roll out. If you add to this the fact that few handsets are able to receive broadcast TV, then you start to see the scale of the problems facing the Digital Media sector,” says Thomas Warren, StrategyEye analyst.

The EU created non-binding legislation but this has clearly not worked - as people intended maybe when they do make it binding, as is planned, we will start to see real progress???

Napster gets passed around again ... to BestBuy this time for $121m .. and MySpace Music fund raising

2008-09-15T16:50:55+01:00

Napster has been acquired by BestBuy for $121m after a tumultuous history.

Napster began in 1999 as an illegal file-sharing site, before folding under the pressure of numerous record company lawsuits in 2002. The site re-emerged as a legal subscription service and earlier this year launched a DRM-free music download store.

Napster has been the subject of multiple rumours for some time now ... in July it was attracting the interest of hedge funds (see StrategyEye article) although of recent perhaps these funds have had more to occupy themselves ... and left the acquisition to a more mainstream offline / online retailer BestBuy.

Napster was trading at near $10 at start 2005 and fell to $1.4 at end of August, with the agreed acquisition price being $2.5 today, a decent 80% premium.

It will be interesting to see how BestBuy fares with this pioneer in the music space in light of the ongoing dominance of iTunes and seemingly inpenetrable iPod consumer mindset, not to mention a lot of deep pocketed players attempting different ways to tap into the music market.

This deal also comes interestingly on same day as the other online music announcement about MySpace planning to raise $100m for its music arm at a valuation of around $2bn ... (StrategyEye - MySpace Music set to raise $100m).

Follow-on: CBS brings TV shows to social networks

2008-09-09T18:32:57+01:00

Actually a quick follow-on to the CBS story about putting video into social networks as I've just been looking at a company called Livestation ...

Livestation is backed with some Microsoft tech injection and essentially positions itself as being at the forefront of streaming 'live' broadcast TV over the web ... ie. that if 30 million people simultaneously want to watch a live Madonna concert they cannot do this over conventional approaches as the infrastructure cannot stand up to the load and need their type of P2P approach. I'll let their web site explain the tech (and why this is really different given the success of the Olympic streaming from what I know) but if social networks started to become more of a channel interface and pushing live streaming content becomes a common theme (music is obviously big on Myspace et al) then P2P tech such as this might be more interesting to also watch ...

CBS brings TV shows to social networks

2008-09-09T17:59:16+01:00

Not sure it's entirely revolutionary but I've always thought that the whole social networks audience should start to be a massive channel for friends promoting / watching shows in the next generation of the web - namely when it is really viewable through their TV so is a 'normal' sociable watching experience. And ideally from the social network industry's perspective you watch within the confines of a nice social network player.

This would start to extend the advertising model for social networks into something slightly more interesting than the current one which is not seemingly appealing for a host of reasons (read interview with Publicis Modem MD for some interesting views on problems with social network ads) - being that of driving up eyeballs for shows and therefore indirect ad revenue. ie. perhaps Rupert Murdoch is going to be right after all with the combination of content + delivery + social network traffic.

The various tipping points have started to come in place or be crossed:

Scale of audiences
- definitely exceeded tipping point (whether Facebook, MySpace etc)
Technology to extend web video into living room
- not at tipping point - YET - but Apple et al will get it right on the cool hardware front with simpler plug-and-play devices
Bandwidth
- there for some players (eg cable) but others have far to go
Content partnerships into Social Networks
- growing ..... but most involve redirects back to the main content broadcasters site

The news today about CBS promoting shows through a relationship with start up iWidgets social syndication platform is another step on the latter ...

US TV network CBS will broadcast a number of its shows on Facebook, MySpace and Google's personalised homepage, iGoogle, after signing a deal with San Francisco startup iWidgets.

The iWidget app will allow social networkers to watch TV series such as CSI, The Amazing Race, NCIS and Numb3rs. CBS says it hopes to add more shows, including Star Trek, in the coming months.

Users will also be able to share and rate episodes as well as participate in polls and competitions.

Several other TV networks have deals with social networks: MySpaceTV features shows from Fox and NBC, Facebook has an ABC.com widget and Bebo also has a deal with CBS. However, the latest CBS deal is the first that allows users to watch shows directly from social networking pages, without being redirected to the TV networks' sites, according to Silicon Valley Insider.

iWidgets taps into an flavor-of-the-month and describes itself on its web site:

People are spending increasing amounts of their online time on social networks like Facebook and MySpace and portals like iGoogle. The iWidgets Social Syndication Platform drives traffic and interest for your website by syndicating your content and user activity to social networks and portals. iWidgets is the only turnkey solution offering deep integration into the social graphs and viral channels of social networks, in addition to an online PowerPoint-style editor offering full creative control.

2008-09-09T13:10:26+01:00

StrategyEye has just released it's new Weekly Dealflow report ... now includes all deals and monthly trends on M&A, VC (and partnership deals).

To see some of the commentary and to download a free sample copy of the full PDF go to the link here ...

Digital Media Weekly Dealflow - to Sept 5 2008

Report now contains:

DEAL TREND GRAPHS

This now contains monthly trend tables on VC and M&A deals we monitor on globally across digital media – and statistics on the number of transactions in the past week:

COMMENTARY BY CATEGORY

The commentary is also now split by our key digital media investment themes, from Search to Video to Devices.

FULL DEAL TABLE

Easily read tables summarising all the weekly deals across the entire sector:

o Venture Capital deals

o M&A deals

o Partnership deals

Each deal has a full commentary and related links within the full portal.

The StrategyEye services now delivers a number of key features giving the overall global market view as well as enabling you to personalise what’s delivered in the form of alerts:

o Global View – Daily analyst newsletter (30+ stories daily from our own writers and analysts)

o Global View – Weekly dealflow report (attached)

o Personal View – Highly personalised watchlist alerts by individual Company or Category (20,000+ companies, 400+ digital media categories – and thousands of business sources / blogs monitored)

o Portal Access – Ability to search full 2 year archive, run reports, view any Company or Category news, Map drill down

Challenges of US Mobile Search ... ChaCha in trouble?

2008-09-08T15:05:41+01:00

US human-powered search engine ChaCha Search is reportedly having financial difficulties according to comments on TechCrunch et al, as rumours arise that employees (ie. their 'guides') are at minimum being offered significantly reduced search rates or even not getting paid:

With a USD10m funding round in November of last year, the company announced its plans to mount an early 2008 launch of its beta-stage search software for use by web and mobile customers where its staff would hand pick sites of interest. The company has since focused its efforts on an all-mobile service, abandoning a web-based interface prone to misuse by pranksters, and a total of USD16m has been raised by investors.

There were reports last month that ChaCha was cutting its pay rates in half, following the introduction of a new pay-for-performance remuneration scheme designed to improve search quality. It now seems the company is in deep financial waters, with anonymous employees reporting that they are not getting paid.

Critics have been saying that the company's business model was ill-conceived and unscalable from the start, something that is often thought to be an issue with search engines directly answered each time by humans.

StrategyEye comments

I've never entirely understood ChaCha's financial model and I'm sure they have developed technology that allows a proportion of their questions to be answered automatically (ie. their database of prior questions should allow this to a degree) and hence theoretically continually lowering the per-Q cost. However, if the figure of 30,000 human 'guides' is right then it suggests that the number of questions that are automated is still probably a very tiny fraction.

Then there is the simple fact of who actually gives them money (ie. revenue ....) - given it's now a largely mobile driven business it seems odd that they are not charging premium SMS rates for the service yet - surely something that has been possible for a long time with the likes of mBlox and MX Telecom being active in that market for a long time - although perhaps ChaCha can't offer a premium rate across all the network operators it claims. Or it used it's $16m VC pile to offer the service gratis to build up regular users in lieu of marketing - slightly dangerous game when it comes to switching them to charging models.

In the UK there are a couple of services - Texperts and AQA - both of whom offer text services for a £1 or so premium SMS rate charge and can answer in theory any question. You also have 118 118 starting into the game with heavy TV advertising - and probably the need to work with a player like Texperts or AQA who has the automation down to a tee already rather than trying to reinvent the wheel.

It seems from my understanding of the opportunity there are a few models that MIGHT work (as people do definitely appreciate the service right now ...):

Premium SMS billing
- $1++ for a question
- less operator cut (say, 30%)
- less 20c to the human 'guide' (10c in the case of 'non-expert' guides)
Advertising
- Sponsored responses - "Brought to you by Guinness"
Licencing Technology
- Licencing into 3rd parties to use:
- - licence question analysis / routing technology and database into telcos / directory services wanting to offer the service
- - licence into companies wanting to offer their customers a dedicated query service (eg to airports allowing customers to query whether a flight has landed etc)

Errr, that's probably about it but am sure there are more lateral ideas.

Defensibility might come from being able to tap into premium content databases (eg. sports results or live train times or hotel availability) that are simply impossible to find easily online but the key issue is whether these companies can move fast enough to counter what is happening on the next generation of smart phones ... even with my BlackBerry (let alone the ease of an iPhone) I can now answer most of my average 'life support' questions when on the road through Google for less than a few cents worth of Vodafone bandwidth ......................................

Virtual Worlds for kids - where the money really is??

2008-09-05T18:13:49+01:00

The focus of most reporting and analysis on virtual worlds is on the big names, such as Second Life, and how these 'may' change the way we undertake everything from our social lives through to going shopping or seeking entertainment services.

However, the reality in terms of financial performance is that many have simply fallen far short of where they'd hoped to be - and major companies are just not prioritising them as investment areas. See a recent survey of global executives on their expenditure plans in light of the economic climate:

"75% of respondents either already have or intend to build community features into their web offering. However, despite a widespread belief that virtual worlds such as Second Life could expand, 68% said that they did NOT intend to include them with their digital media strategy over the next two years."
- STRATEGYEYE SURVEY OF 200 MEDIA EXECUTIVES ON IMPACT OF CREDIT CRUNCH ON SPENDING

The big news, if anyone in the mainstream media looked to their childrens' behaviour, is much more about the kids. Children’s versions of virtual worlds are proving much more popular and is where the revenue is and where the money is going. Indeed, Neopets already has 45 million registered users, compared to a mere 12 million for Second Life.

This fast-growing market has attracted the attention of VC investors – USD22m+ has been invested in several startups over the past six months, while media and toy conglomerates are increasingly using kids’ virtual worlds to leverage their offline distribution and build customer loyalty among their youngest fans. In April 2008, Virtual Worlds Management reported that 114 worlds for the kids and ‘tweens’ demographics were either live or being developed.

The most popular virtual worlds to date are: Club Penguin by Disney (17 million registered users), Neopets by Nickelodeon (45 million), BarbieGirls by Mattel (13 million), Stardoll by Stardoll (20 million), Whyville by Numedeon (3 million) and Webkinz by Ganz (7 million monthly US users).

Business models are evolving quickly but the sheer scale of audiences presents multiple opportunities to be exploited:

Subscription fees from USD5 to USD15 per month (Club Penguin, Barbie Girls, Disney’s ToonTown)

Merchandising

Virtual good sales. Neopets and Stardoll are selling pre-paid retail cards that are then used by children to buy in-game goods

Advertising

Indirect promotional impact - some are creating tailored, ad-free virtual worlds simply as part of marketing strategies

Read StrategyEye full analyst views here (normally subscription only - request a trial):

FOCUS: Virtual worlds for kids – a growing playground for children and brands