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    This is the personal blog of Simon Kendrick and covers my interests in media, technology and popular culture. All opinions expressed are my own and may not be representative of past or present employers
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Replacement cycles

There have been several news articles recently that incorporate quotes from people lamenting lower than anticipated sales for new technological innovations. These articles on Smart/Connected TVs and the Nintendo 3DS are but two examples.

As everyone knows (or at least should know), technological superiority is not enough to guarantee success. Hence the Beta-Max not succeeding over VHS or the Atari Jaguar or Neo-Geo losing out to their 16-bit incumbent predecessors.

Nevertheless, too much attention is paid to the specific product when predicting future success. A combination of technological innovation, strong branding, suitable distribution and attractive price point may prove a compelling package. Yet this may not correspond to sufficient demand.

Even if an organisation pays sufficient attention to the market and adequately segments and targets a particular group of consumers, there is still no guarantee of success.

Randomness aside, a major – and what appears to be to be overlooked – factor is replacement cycles.

Once early adopters have been sated, a product will only move into mainstream penetration if the general public find a compelling reason to upgrade their existing kit. Since most, if not all, new devices are evolutionary rather than revolutionary, this can be a tough ask.

(NOTE: Looking at it from a purely technical perspective, one could argue that the different 3D technologies are revolutionary. However, from a consumer perspective it is fundamentally evolutionary. At heart, it is the same service but with a graphical innovation).

Smart TVs do face a particularly tough challenge, as they are entering the market just after the majority of the mainstream have recently gone through a replacement cycle. This cycle was unusually synchronised due to the twin forces of legislation – digital switchover – and technology/manufacture. Flat screen HD TVs may show the same channels, but larger and lighter screens offer twin benefits of better picture (when compared to analogue equivalent) and easier placement (e.g. wall hanging) and transportation (transporting a 50 inch CRT up a flight of stairs was possibly one of the most painful experiences of my life).

Smart TVs may have additional services that appeal to the mainstream, but since the core proposition – watching live TV – remains unaltered, I don’t perceive many mainstream viewers as being eager to adopt their recently acquired HD TVs.

On a similar note, now that the market is already saturated with set-top boxes, second screens and such like, it may prove difficult for both Youview and Google TV to offer a compelling upgrade proposition (Nigel Walley has written an interesting piece on Google TV here)

The 3DS was always going to be a tough sell – the DS was massively successful among casual gamers who were unlikely to upgrade because of a novelty gimmick. But it also points to the wider trend in gaming of extending the life cycles of consoles and platforms. Interestingly, this is supply side rather than demand side – the costs of investment are so great that developers want a longer life cycle to maximise their profitability.

Looking at other forms of technology, I’m particularly intrigued to see the effect of replacement cycles for tablet computers. I was quite sceptical about the chances of mainstream success for the iPad to begin with. While it has undoubtedly been successful (and profitable) among the early adopters, I’m still not convinced iPads/tablets (market share means they are effectively synonymous) will permeate the mainstream before all laptops become touchscreen.

As such, what will happen when everyone who is likely to want a tablet computer already has one? Will tablets need to work on the same principle as mobile phones, which are effectively rented for the duration of a contract and then swapped for a new one? Given the additional cost of manufacture and purchase, I’m not sure how feasible this is.

In fact, perhaps the mobile industry points to way to shortening upgrade cycles. With the trends toward digital consumption, we are slowly being accustomed to not tangibly owning things. Perhaps this could be extended to hardware. Do we still need to own our TVs and games consoles, or could we rent subsidized devices over a period of time, before swapping them for the latest models?

Rental shops have had a bit of a bad reputation for ripping off the old and poor, but perhaps a rejuvenated version could be due a comeback.

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Image credit: http://www.flickr.com/photos/mgat/3282519651/

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Broadcast in a multi-platform world

Last week I attended the Mediatel Media Playground 2011 – the first session of which was Broadcast in a multi-platform world. Below are my notes.

Notes for the other sessions will follow later in the week. However, I found this seminar the most enjoyable and thought-provoking due to the sector being highly competitive with players who would traditionally be in separate markets, and the willingness of the speakers to engage in debate on this.

Details

According to the website, the themes of the debate were:

Platforms, content owners, broadcasters, manufacturers and the confused consumer too – the new broadcast world.

  • How are consumer viewing and listening habits changing?
  • What is Connected TV? How will it best be sold to the consumer?
  • How will broadcasters and programme makers stand out in a world of TV clutter?
  • How should VOD be sold to agencies and advertisers?
  • The role of the EPG
  • Who needs who most? Are these uneasy alliances going to come crashing down?
  • Is YouView just too late now or the catalyst to Connected TV taking off?

The session was chaired by Torin Douglas, Media Correspondent for the BBC and the panel consisted of:

  • Dara Nasr, Head – YouTube & Display at Google
  • Oli Newton, Head of Emerging Platforms at Starcom Mediavest
  • Dan Saunders, Head of Content Services at Samsung
  • Jeff Siegel, Head of Advertising at Rovi
  • Nigel Walley, CEO of Decipher
Notes

My notes are chronological, so will broadly follow the themes above. All “quotes” were hastily scribbled down, and so are subject to error and misinterpretation.

Introduction

Nigel Walley opened by saying that in many ways new media isn’t that different to old. “Broadcast is the original recommendation engine” albeit editorially driven rather than through algorithms.

He also said that we are now in a “post VOD world” where new media is a support to broadcast and not an alternative. This is actually a boon to live TV as those time-shifting need to actively avoid mobile and laptop to keep away from spoilers.

Oli Newton said that consumers don’t realise what technology they already have and what it can do – he used games consoles as an example of this. He sees the children being the main educators in spreading these forms of behaviour.

Dan Saunders talked about the rise of connected TVs (Smart TVs, in Samsung parlance). Samsung sell 1 in 4 TVs in the UK, and 75% of these will be connected. He says that smart TV isn’t a separate category but a price point in the overall line-up between HD and 3D.

Jeff Siegel notes that worldwide 50% of connectable sets are now connected (though Mat Watson of ITV disputed this for the UK, saying it is much lower)

Dara Nasr believes that digital and broadcast empower one another and the online/offline divide has disappeared

Consumer understanding

Nigel Walley believes it is a confusing time for consumers as there are different technologies, different players and different acronyms (DTRs/PVRs/DVRs).

For instance, an average household could have an IPTV for the Olympics, Virgin for their TV and broadband, a PS3 for the kids and a DVD player for Mum. All of these can play iPlayer but the BBC has done no strategic development to say which one is better. Nigel thinks Virgin should be the priority as it the best platform to correlate VOD viewing to the broadcast audience.

Unsurprisingly, Dan Saunders disagreed. He thinks a TV tuner with an internet connection allows viewers to augment broadcast to something meaningful – thus Samsung comes to the fore in Freeview homes.

Dara Nasr said that Youtube follow the user. To be a TV company they need to be on TV, though at the moment it is mobile that is growing their audience.

Nigel Walley questioned his strategy as on the same device there can be multiple versions of Youtube. Dara countered by saying this was because their API is open to external developers. They “want to be accessible everywhere, and see what wins”.

Oli Newton said it was not about names but what gives the best viewing experience. “It is being of the web, not on the web”.

Jeff Siegel agreed in that we should focus on features and not on definitions. On TV, the quality of the video is the main thing – scores and additional information can be mobile if necessary.

Nigel Walley feels the quality of the interface has been the main problem in the past but this is improving. In future, he sees Sky and Virgin could be the dominant app on a TV rather than a separate device, “but there is a technology race to go through first”. This might change how they are used – for instance Youtube is used differently on a TV to how it is on a PC

Nigel noted that another problem to date has been a lack of promotion of connected TVs. For instance, stores don’t have internet connections to enable them to demo it.

Oli Newton said that consumer understanding is the most important thing – they need to be able to ask the right questions in store. Apple’s “ad-ucation” has been good at this – even non-users know how to work an iPhone.

Impact

Nigel Walley sees the film industry as being most under threat as connected TVs can deliver a better experience. It will be hard to break through the system of broadcast promotions, trailers and TV guide features that build up a linear broadcast schedule.

Dan Saunders argued that connected TVs can only have a positive impact for companies like ITV – people are buying TVs to watch TV after all.

Nigel Walley then accused TV companies of not understanding the difference between customers and consumers. Sky and Virgin have customers with transactional records while BBC and ITV are trusted brands to consumers – thus they should treat BSkyB as a business partner rather than a competitor.

Role of EPG

Nigel Walley argued that platforms aren’t doing enough to promote channels. The EPG is dull and boring and wastes all the promotion that goes into a channel launch

Dan Saunders questioned the role of the EPG. It isn’t being used effectively for advertising and there is currently too much on the front page

Jeff Siegel feels it has to be consumer friendly before you can even consider advertising

Oli Newton feels that if you have a smart TV, you don’t care about the channels but the content – that’s where the power of the EPG is. The EPG is the best place to advertise “but has been woefully let down”

Nigel Walley concluded that “the EPG is still software, it is not yet a media”

Competing platforms

Oli Newton noted that there “content sinkholes” e.g. the Channel 4 programmes available on Youtube are different to those on 4oD and again different to those on TV VOD services.

Oli also feels that Youview “is a bit pointless” – other serices, that already had a head start on the interface and simplicity, are now occupying this space.

Nigel Walley said that the original Youview scope was great, but that was in 2007. Stores are already discounting things that are better than Youview.

Nigel finished by saying that with devices and manufacturers battling it out, broadcasters are now further down the value chain. However, they have the valuable content that lets them punch through.