Another nail in the coffin of mobile video
From TelecomTV today:
Motorola has abandoned the race to be first to market with advanced phones, according to mobile handset division head Ron Garriques. “Do I really want to launch a WCDMA phone with a Qualcomm chip that drives up my bill of materials by $40, but which I can’t sell for a higher price, and give up my profit margin?” he asked Reuters. Garriques says consumers simply aren’t interested in paying more for 3G handsets because most subscribers don’t find next-generation services worth the price.
Exactly as I’ve been saying. Americans don’t view the phone as an entertainment device. In fact, as Motorola has happily learned, the mobile phone is more of a fashion accessory. Every time someone whips out a RAZR I am embarassed by my lumpy gray Samsung A890. Sure it’s V Cast capable. Big deal. I dumped V Cast after the free trial period ended. Now I’m stuck with this clunky thing.
Now the likes of MobiTV are totally screwed. If Motorola has decided to forego $40 on the COGS of every phone sold, others will have to seriously consider the same. Just imagine being at the Cingular store. If a RAZR actually costs less than some blobby LG, what do you think Mr. Executive, Mrs. Soccer Mom, and little teeny boppers will choose?
Of course MobiTV still has its fans like Fast Company, the magazine that never met a potential advertiser it didn’t hype. MobiTV’s founder clocks in at number 8 on the Fast 50. Wow. I’d hate to have money tied up in the ventures of the 42 taking up the rear. This might be my favorite bit of tech journalism in a while.
The founder and CEO of MobiTV admits that “it was more difficult than anticipated” to roll out a service to put TV on cell phones. “They could smell the Silicon Valley on us.” But two years later, Phillip Alvelda, a NASA and MIT vet, has more than 500,000 subscribers paying $9.95 a month for real-time TV from NBC, ABC News, ESPN, Discovery Channel, and TLC, among others. He has his naysayers, but we figure that with 200 million U.S. cell phones and 2 billion worldwide, how far wrong can he go?
Cue the laugh track. Let’s not forget that at this time last year MoribundTV was boasting of 400,000 subscribers. So at the rate of 100,000 subscribers per year, we’re looking at 195 years before MobiTV gets 10% share of the US market. Since MobiTV doesn’t share its churn rate, I’m thinking the real number’s closer to never.
It’s not Avid vs. Apple
Talk of Avid’s demise are premature. Much hand wringing has come from longtime Avid customers and user over the emergence of Final Cut Pro in smaller shops. Some larger shops have been embracing Final Cut Pro as well, most notably the BBC. FCP is a fine editor. There are times I choose FCP over Avid, but for most of my time sensitive, mission critical work I turn to the familiar purple interface. For those interested in an unbiased head to head comparison, Patrick Inhofer of Fini.TV’s done a great job.
What’s really going on
It’s an understatement to call Steve Jobs competitive, but this is a case where evolution, not revolution is the cause for Apple’s success. The desktop nonlinear editing system has become a virtual commodity – so much so that it can be argued that the best software-only NLE available today is Adobe Premiere Pro 2.0. In the late 1990s Apple had the vision to see this and purchased the seed of a great NLE from Macromedia. In 1999, Final Cut Pro 1.0 was released. In a review for DV Magazine I called it the finest piece of 1.0 software I had ever used. The only issue was that at the time I had little use for a DV-only editor.
Apple’s plan wasn’t to compete with Avid directly. It’s plan was to create a Mac-based ecosystem that allowed third parties to create solutions that might or might not compete with existing Avid offerings. Apple probably didn’t care much about its effect on Avid. It just wanted to sell lots of Macs with Final Cut Pro as a $1,000 add-on. Jobs oft-discussed beef with Avid executives before NAB 1999 was with a different executive team. All indications are that today Avid and Apple a decent working relationship. Avid still helps sell a lot of Macs.
The rise of Final Cut Pro is nothing more than a market shifting from premium priced solutions to commodity solutions. Avid’s a premium priced, complex solution provider with some entry level products to feed its premium line. Apple’s a pure commodity player. Sell Macs and boxes of FCP. Avid sells multiple versions of its editing software – Xpress DV, Xpress Pro (with and without Studio options), Xpress Pro HD, Media Composer, Symphony, and the NewsCutter line for newsrooms. Avid also sells hardware for each of those except Xpress DV. Complex. Needlessly so, maybe, but that’s another discussion.
In contrast Final Cut Pro is sold in only two versions: a studio solution, and a stripped down version called Final Cut Express. OK, maybe Apple likes to tweak Avid a little.
This happens all the time in tech markets. A company defines a new market, serves it with complex solutions, and then a commodity player finds a way to serve that market with off the shelf components. It happened to Sun in the early 1990s when financial services firms dumped their expensive Sun workstations and replaced them with standard PC running Windows NT. Sun had two options. It could race to the bottom against the likes of Dell, or it could take its core capabilities and apply them to a new market. Fortunately for Sun shareholders, Sun decided to stick to what it was good at and didn’t engage against a low cost producer. Dell had expertise in low cost manufacturing. Sun didn’t. Sun would lose that battle.
The same thing is happening in video post production, but there’s an additional rub. As the barriers to entry to video production have dropped, more people are producing video. Video production is no longer the exclusive purview of high end studios. Anyone can do it, and everyone does. While this is good for Jeffersonian democracy, it wreaks havoc on production values. (Again, another discussion.)
In order for existing media to compete with the new entrants, their cost structures must be radically reduced. The most noteworthy point in the Final Cut Pro puff piece is not that the BBC opted for FCP over Avid, but this:
What drives a broadcaster to implement a radical new concept in programme production? One of the most obvious answers is cost, but in this case, there was far more to it than that. All organisations, whether public or private, need to function efficiently to meet the demands of media-hungry audiences; procedures must be streamlined without hampering productivity, resources and skills must be flexible and transferable without compromising creativity.
This vision of the future of broadcasting, along with the aforementioned cost savings and tight deadlines, is what motivated the BBC to make use of “‘predators”’ -— part producer, part editor – for the second series of Full on Food.
So for the post production professional, not only has his gear been commoditized, but his output has been as well. With hundreds of channels and myriad video playback devices creating a more fragmented media marketplace, demand for high cost mass entertainment is diminishing. Cheap content is the order of the day. The Hollywood blockbuster will remain with us for some time, but the growth is at the low end. More Breaking Bonaduce, less Lost. Media producers are using the “infinite number of monkeys” approach to content production, because the economics have made it viable.
Of course, sooner or later the monkeys will come up with a gem, but in the meantime the smell will be atrocious.
