Bricks, Mortar and Mobile: A New Paradigm This Holiday Season

It seems that online shopping and the in-store experience are coming together this holiday season, courtesy of the growth of the smartphone market.

Online holiday purchases have steadily increased each year for the past several Christmas seasons.  This year, it is a little different because many consumers now carry the internet with them in the form of a smartphone.  This means that they don't need to check prices online and then run to the store, or vice versa.  They can stand in front of a product in the mall and immediately check the pricing against online options.  A recent survey by IDC indicates that over 1/3 of smartphone owners intend to use that strategy this year.

Recognizing the trends, retailers aren't sitting on their hands.  Many retailers have developed custom smartphone apps to stay in front of connected consumers.  This not only gives them a seat at the comparative shopping table, but it also allows them to keep selling after they lock the doors at night.  Many consumers are shopping at all hours of the day or night, increasingly using their smartphone.  If they are looking at an app from Target or another retailer, there is still a possibility that they will go make the purchase at that store, or buy from the store's website.  And target is also making its website available through shopping kiosks placed throughout the store.

Amazon is working hard to lead the pack in the integration of in-store and mobile online shopping.  Consumers can scan an item's bar code in the store, take a picture of it or even say the name of the product into their phones, and Amazon's app will scan the Amazon inventory for pricing and availability.  If it looks good, consumers can buy it from Amazon on the spot.  (Of course, read further down in that article, and it points out that RedLaser already offers smartphone technology which will scan bar codes and compare prices on many different websites, not just Amazon.)

For a good discussion of the whole phenomenon, check out this article in the San Jose Mercury News.

So what does all of this have to do with the entertainment business?  As tablets will be one of the hot sellers this holiday season, and smartphone sales continue to grow, this trend towards mobile media and commerce will expand greatly.  There will be a huge demand for mobile content, as well as genuine opportunities for mobile brand integration strategies.  And the growth of mobile commerce means that many more advertisers willing to sponsor mobile content.

2011 will be the year that mobile devices break out as a separate category of entertainment, and a medium where creators will soon be able to make some serious money.  If you're developing content, think online and mobile first.  You can get it "on the air" quickly and build an audience while you chase a television deal.  Or just keep it in the digital realm and take advantage of the large move towards mobile commerce.

Personal Media Devices Are The Future of Entertainment

An article I saw last night discusses how major computer manufacturers are all chasing the iPad with similar tablet devices of their own.  You can read the article for the interesting details.  However, I wanted to quickly comment on the importance of this trend.

The iPad is truly a new class of hardware that has changed the media landscape.  It's a highly portable device optimized for obtaining and displaying robust media.  The screen is big enough and sharp enough to deliver a satisfying video experience, serve as an eBook and display the news, weather and sports.  It is connected, so you can have a constant stream of new content.  It is literally a window through which you can look at the entire world, 24-7.

Once there are a number of viable competitors, prices will come down.  India already says it can make a competitive device for as little as $10.00.  This means that the majority of consumers will eventually have the capability to grab whatever they feel like seeing on a real-time basis.  And each device will know who is using it  and where they are, and thus be able to deliver customized advertising content.  Just take one minute to think about the commercial implications of that. It is absolutely huge.

The iPad and its eventual competitors don't replace theaters or flat-screen TV's, but mobile media will quickly become an equally powerful (and eventually, the most powerful) segment of the media landscape.  If you are a content producer and you want to be ahead of the curve, start thinking about mobile media today.  That's the direction the money will flow for several years to come, and the trend has already started.

The Most Important Trend for Entertainment 2010

At this time of year, it's interesting and fun to think about where our industry is headed.  More specifically, what are the important trends in entertainment?  Which changes are most likely to impact those of us who don't work at NBC Universal?

We can talk about the various developments and what they might mean for the various sectors, but I think this coming year there is one single development that will be a game changer in almost every area of the business.  It is the convergence of the Internet with the home theater. 

Internet content has been moving closer to the living room for several years.  One major hurdle in that process has been the lack of enough bandwidth and speed to deliver large format HD content on a real time basis.  The combination of effective compression and faster networks has pretty much solved that problem.

Also, a truly effective and dominant solution for getting the digital content on to the TV screen had not yet emerged.  The TV manufacturers have taken matters into their own hands by integrating Internet inputs into the hardware architecture, and establishing alliances with content providers.  Problem solved.

So, for 2010 we will see the emergence of huge, sharp TV screens equipped with hardware and software that provides seamless access to everything on and off the 'Net.  We will be able to get endless amounts of full-sized HD content with surround sound at the push of a button.  Vevo, Netflix, Hulu and dozens of lesser known companies are poised to fill this newly minted content pipeline. 

And all of those TV sets boast at least a 120 Hz refresh rate, so they are 3D ready.  (In-Three and Reliance, Katzenberg, Cameron, and dozens of others are poised to feed dimensional content to consumers, both in theaters and at home.)

What's the business impact of this new technical capability?  It's quickly eliminating the DVD business.  It will be the final and fatal blow to the CD business.  It is putting pressure on theater owners to develop and deliver a superior experience.  It is already eliminating the "windows" strategy in the film distribution business.  It will give small film makers the ability to find their own audience (just like iTunes allowed independent music artists to find an audience).  It will create upheaval in the broadcast and cable businesses, forcing these companies to find better business models and deliver better programming. 

Virtually everything about our business will change when this final link is placed in the chain.  It is something that cannot be ignored; it must be embraced.  There is tremendous opportunity afoot for those who are poised to take advantage, and tremendous struggles for those who delay or resist.  My friends, the cheese is about to move in a big way.  If you have any doubt about whether I'm right, come to CES in Las Vegas next month and tell me what you see. 

The new horizon is now going to be solving the marketing problem.  It's hard enough to figure out what to watch with a couple hundred available channels.  How about when that number is infinity?  How do you decide what to watch when your choices are endless?  Whoever solves that problem stands to make a lot of money.  (Personally, I'm betting on Google.  They are really good at solving that type of problem.)

As always, I welcome your thoughts.

Mobile Media Marches On

Another good article this morning (this time from the BBC) which is indicative of the speed with which mobile media is advancing. The gist of the article is that the sales of smartphones will surpass the sale of laptops within the next 12 to 18 months.

Think about that -- 12 to 18 months. That is right around the corner. This means that everyone is quickly heading towards having robust media capability in their pocket, with a 24-7 connection. This supports what we've been saying about mobile media being the place where content providers need to be focussing -- not for sometime in the future, but right now.

This also means that the vision for mobile peer-to-peer distribution which gets charged to consumers through their carriers is a paradigm that should be set up now. If everyone has a media player in his or her pocket, and they can easily beam their favorite media to their friends, and the content providers can get paid on that transaction, that equals a win for everyone. That's where we need to be headed, and today's BBC coverage shows that the necessary shift in technology usage is fully underway.

The Real Hurdle to Mobile Media

At the Mobile World Congress in Barcelona on Thursday, one of the panels was apparently very revealing on the topic of advancing mobile media business models. The Hollywood Reporter has excellent coverage on that story.

If you ask most people, they would probably characterize the content providers as reluctant to make their content widely available on mobile devices. Personally, if I had to guess, I would have identified that as the primary factor impeding progress in that area.

However, the real problem appears to be the carriers. They are apparently stuck in a business model where consumers must pay extra for everything they get through their phone. The content guys favor making content more readily (and cheaply) available to mobile customers, but the carriers insist on pricing it as a premium feature. This, of course, discourages most consumers from signing on.

The content guys recognize that if you want people to change their media habits, you can't make price an issue. You have to make it cheap and easy at first so consumers get used to doing things the new way. Once they grow attached to the availability of robust media on their phones, then they will be much more likely to pay for additional and expanded services.

That makes sense to me. I think the content guys are right and the carriers are being short-sighted.

By the way, the article makes one other interesting point. MTV is apparently discovering that consumers like watching full-length media on their phones. I think the presumption was (and continues to be for most people in the business) that mobile media would work best in smaller units -- something in the 5 minute range as is the norm for online media. However, MTV says this does not appear to necessarily be true.

Mobile Is The Next Frontier, and It's Right Now

The most interesting news on the digital entertainment front comes out of Barcelona, Spain today. That's the site of the Mobile World Congress where there have been two very interesting and related developments.

First, Microsoft announced its acquisition of Danger, a mobile phone operating system. The Danger software is especially adept at facilitating social networking through mobile devices. This is clearly a part of the MS strategy to dominate the entire digital media environment. I view the acquisition of Danger as being equally important to that strategy as the proposed acquisition of Yahoo. Certainly not as high profile, but an equally important piece of the puzzle.

At the same conference, the new Google-enabled cellular device was unveiled. The phone runs on Google's Android operating system.

So the fight between MS and Google has officially extended onto the mobile front, and it will be a battle royale. The mobile advertising business should be worth double-digit billions of dollars by the end of the decade, or not long thereafter. Mobile media is the portion of the business that truly frees consumers from their desks and facilitates the "whatever I want, whenever and wherever I want it" paradigm that is the current goal of media technology development.

And the big winner at this point appears to be Andy Rubin. Andy is the co-founder of Danger who is now running Android for Google. That's right, the entire mobile operating system battle can be traced back to one guy (who I'm sure had a lot of help from dozens of other talented people). I guess when they make the list of most important people in the world of mobile technology, Andy's name will be near the top.