Tag Archives: Apple

Everything you know about media is changing dramatically

I mean it. Everything. The media and entertainment industry as we have come to know it is being disrupted, and so is this blog, more on that later. Where to start? Because I did say everything is changing.

Broadcast is dead

Until I spent time this week wandering the exhibit hall and attending talks at INTX 2016 this week, broadcast’s obituary was going to be buried a little deeper in the post. I frontload so heavily because I know how long the average reader spends here. Although I am tempted to name my posts something like “20 things are changing in the media and you won’t flippin’ believe number 19” and then present it as a slide show, I respect your time enough to make but the important stuff first.

We’ve been declaring broadcasting has been braindead for years, but now it’s time to start harvesting the organs. Sports and regional news won’t cover the bill to keep the ventilator pumping indefinitely.

The spectrum currently used by digital television would be put to better use quenching consumers’ insatiable thirst for wireless bandwidth. To that end, the FCC has allowed broadcasters to opt into the Broadcast Incentive Auction. The idea here is simple. Give up spectrum so it can be licensed to wireless providers for 5G service and make some money. As a disincentive to hoarding and holding for a higher price, the first part of the auction is a reverse auction, so it pays to get in early.

As infuriating as it might be for a taxpayer to watch broadcasters profitably sell back to the public airwaves they lobbied so hard for and swore they could not live out, you have to feel a little bit sorry for the dinosaurs now that the asteroid is in sight. I’m partial to the EU’s approach of reallocating the spectrum over 700 MHz for wireless and simply assigning new VHF channels to broadcasters, but here in the US corporations are people too, so we just can’t act in the public’s interest for the sake of the public interest. We have to think of the lobbyists.

Variety had a great explainer on the auction in March. My favorite numbers gleaned are below.

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The final act of this play will be streamed

Once the video over IP’s latency problem with live events is solved broadcast will have completely outlived its usefulness. We will have reached a point where even the Super Bowl can’t save it. Currently IP network latency delays live events up to thirty seconds. As an MLB.TV fanatic, I have to put the mobile down to enjoy a game otherwise I’ll witness the Twittersphere lighting up before I even see the batter step into the box to crush the game winning home run. For sports to remain a communal activity in the age of social media, latency has get down to about two seconds.

That date is very near. Using a combination 4G LTE bonding and some really nifty video file wrapping tricks, the Israeli startup Zixi has reached that bar with image quality that rivals today’s Xfinity and FiOS pictures. It’s just a matter of adoption. I put it at 24 months for Zixi or a rival technology to make broadcasting over the air obsolete.

The passing of traditional broadcast is interesting enough. In fact, I could stop here and call it a post except that I said everything was changing. And, dammit, everything really is.

Move over Viacom, Fox, and Disney

Amazon, Netflix, Google, Apple, Netflix, Facebook, and Microsoft all want to steal your lunch money. Wall Street believes they will, and these things become self-fulfilling prophecies in short order. They all already own or aspire to own a significant portions of the entertainment value chain. Microsoft and Facebook are longer shots but somewhat more interesting because they are not just looking at the traditional media value chain, but are approaching M&E through significant investment in gaming and VR. For them it comes down to whether VR technology will be ready for primetime soon enough. If one of them wins, just read Ready Player One to see how the story ends. Google’s gotten into VR as well, but it gets lumped it with the others due to its ownership of the world’s most successful online video platform. And how many OVPs does the world really need? Hint: The answer is not greater than two. One rare bit of investment advice from this publication… short OVPs and go long on CDNs.

It going to come down to who can afford to front the large sums of money to create tent pole content, who can store and protect it throughout its lifecycle without losing it to theft or in a theme park fire, who can monetize it effectively, and who can deliver it efficiently. That’s what will determine the winners. Amazon with Elemental and Apple with all its video expertise are positioned for an epic battle. Apple has the edge in video smarts while Amazon has the edge in distribution, pricing, and packaging smarts. How will Apple compete against free two-day shipping for underwear and great programming for $99 a year? Whatever the tech giants come up with will certainly beat a $300 a month cable bill.

Where’s Google in all this? I can’t help but feel that Google will mess it up. Media and entertainment is all about user experience. Google simply doesn’t value design and user experience enough. YouTube and Gmail are still ugly after all these years. While an email client can be ugly and a little clunky as long as it’s free and the user never loses anything, the presentation layer for the night’s entertainment should be inviting.

IaaS the big play

The real money in media then is infrastructure as a service. What Avid, Grass Valley, and the like have done in the past must now become exponentially bigger, more robust, and more open. Avid is right. The industry is crying for a platform. Unfortunately for Avid, it’s crying for a platform a mid-sized tech company doesn’t have the resources to provide. Amazon with Elemental is already closer to realizing Avid’s dream than Avid is. A lot of small players have the necessary pieces built to connect to a network, a larger company, not viewed as  a direct competitor by potential partners is better positioned to roll them up into a unified platform offering.

Simplifying it a bit, whoever can provide the storage, rights management, and monetization tools will win. Dell-EMC is extremely well positioned to contend in that space with its hardware, virtualization expertise, and storage smarts. It makes the servers and intelligent storage. It owns VMware and Virtustream, so it will be able to provision data centers like no one else. Dell-EMC should be able to take a commanding early lead repurposing hardware in real time as audience usage patterns change. Add an acquisition like Telestream or Harmonic, and we have a new media and entertainment powerhouse.

IBM is the cicada in all this. Once every few years IBM shows interest in M&E only to shift focus shortly thereafter. With the right timing, IBM could get lucky.

Over the next few years, the remaining media-specific tech companies will have to become more focused on their core competencies. Their customer bases are buying less, forcing them to compete in a race to the bottom in a shrinking pool. While all are moving as nimbly as they can to make the transition from signal-based to IP video, they are faced with R&D resource limits and the drag of legacy customers such as large state broadcasters moving more slowly to the future.  These legacy customers account for significant portions of media tech’s revenue stream and cannot be ignored until the business transformation is complete.

Acquisition and Post are about to be disrupted too

Camera evolution is the total wildcard that can change the whole production and post process dramatically. When light field cameras get high enough resolution and come down in cost, the cost of shooting will drop dramatically due to shorter set up time and the need for fewer cameras. Composition, focus, lighting, tracking and green screen will all be handled in post, much of it algorithmically. Editing becomes a smaller part of the post process with DPs, directors, and VFX taking on larger roles once shooting stops. As post production for the 2D display requires more 3D capabilities, look for the post solutions market to bifurcate with Adobe taking the lion’s share with a combination of Avid and Autodesk tools owning the extreme high end. Don’t be surprised to see Media Composer land at Autodesk, or Autodesk’s media and entertainment business go to Avid. A number of former (and extremely talented) Avid engineers are now in Autodesk’s media and entertainment development organization.

Adobe has a leg up in the light field world. These cameras have been in development for some time. Light field still image capture is already available to the market, and Adobe has tools under development to enable Photoshop, Lightroom, Premiere, and After Effects to thrive in this new world.

How media is created, distributed, and consumed is all changing. No career in media will be untouched. No company will be sheltered from the disruption. Be agile. Embrace the disruption.

Everything includes this little nook in the internet

I will follow my own advice by embracing disruption and becoming more agile. It will no longer be focused exclusively on media and entertainment technology. Instead I will draw upon my experience of the past fifteen years in technology design, development, and product management. I will adjust my gaze away from LA and put more focus closer to home in the technology hotbed of Boston.

Rebirth of the newspaper?

Rupert “I bought MySpace just in time for it to tank” Murdoch didn’t seem to get the new media thing… until today. The Daily, the first iPad-only newspaper launched to great fanfare. At first blush Steve Jobs and Rupert Murdoch make Felix and Oscar look like identical twins, but they certainly have at least one thing in common. They know how to passionately engage millions of people at a time and make a lot of money doing so.

If the Web has been listed as the cause of death for numerous dailies and magazines, the App might be named godfather of the reborn e-pubs. While people remain largely unwilling to pay for content on viewed on the PC, the iPad and Kindle prove they are willing to pay for content on the tablet. I call it the corn flakes effect. I always paid a few bucks a week to read the morning paper at the breakfast table. I’d pay a few more bucks a month for magazines to read in bed. And I’d overpay at the airport for virtually anything to read on an airplane so I wouldn’t be stuck watching some neutered cut down version of a movie that tanked at the box office.

CNN covered the announcement nicely, acknowledging that as the iPad’s share of eyeball expanded into television’s territory.

Another report last month from ReadItLater, a web service that follows web trends, found that the time spent reading on the iPad is even crossing into primetime TV hours.

It reported that maximum iPad text consumption occurs from 7pm to 11pm, a slot traditionally allocated to reclining on the couch and watching TV.

Likely CNN is assuming it’s at the expense of Two and a Half Men, not Anderson Cooper. Even the Times gushed about the Daily’s user experience… in its own catty way.

The Daily, according to people who have seen it, is aesthetically — if not intellectually — compelling, incorporating sound, sight and motion in new ways.

“It’s got an amazing look and feel,” said Mike Vorhaus, the president of the media consulting firm Magid Advisors, who had been shown The Daily in advance and who compared it to a glossy magazine.

Of course CNN was able to dig up the requisite Luddite for its coverage.

“While anything that Rupert Murdoch and Steve Jobs do in collaboration is bound to be unique, we have to be mindful of the fact that the tablet is just in its infancy stage — it’s like the early days of the printed press,” said Barry McIlheney, chief executive of the UK based Professional Publishers Association.

He believes that newspapers are easy to replace because their format is adaptable to the screen but reading longer passages of texts with images are not.

Apparently Mr. McIlheney hasn’t yet caught the Economist on the iPad. The experience of reading it on the iPad is more pleasant than on paper, and all the additional online content is only a click or two away.

Before we start encouraging kids to enroll in journalism school again, we should temper our optimism for the future of the old fish wrapper. Just this week Apple announced it’s clamping down on content sellers who evade the App Store and Apple’s 30% vig. This whole thing could lose steam quickly If Apple and the content creators can’t arrive at a win-win. The iPod always worked with non-iTunes content, in a competing format no less. If Apple blocks Amazon, Sony, Conde Nast, and others from getting their content onto the iPad, the whole platform will suffer.

What does number one really mean?

Earlier this week, Apple’s market capitalization topped Microsoft’s. From a bragging rights point of view it just doesn’t get any better than this for Steve Jobs and Apple. Even the staid gray lady, the New York Times laid it on thick.

This changing of the guard caps one of the most stunning turnarounds in business history for Apple, which had been given up for dead only a decade earlier, and its co-founder and visionary chief executive, Steven P. Jobs.

Of course, market capitalization represents Wall Street’s take on which company is more valuable. And it can be argued that neither company is worth nearly $220 billion. Remember the free market is only accurate over the long haul. The less accurate it is over time, the longer the long haul gets as defined by the experts. It’s the closest we have come as a society to perfecting the perpetual motion machine. The less accurate analysts and forecasters are, the more they are able to convince us of their importance. But I digress and would be remiss if I failed to note that the contrarians have come out in droves. A sampling from MarketWatch:

But how many times in a row can Apple pull yet another rabbit out of its hat? When a company is riding a wave of investor euphoria, its stock price already reflects the expectation of many more rabbits. Almost by definition, any unexpected developments from such companies will be bad news.

Stock talk is of virtually no interest to me. I could claim the high road as an adherent of the Random Walk hypothesis, but I’m not. Call me a proponent of the Random Mugging theory – walk down Wall Street enough times, and some punk out of Wharton will find a way into your wallet.

The last time Apple was number one

At the dawn of the personal computer era, Apple was the undisputed leader. IBM wasn’t much of a player but wanted in. IBM embraced MS-DOS and its more open ecosystem. Apple kept its platform mostly closed, and the rest is history.

Pretty much the same thing is happening now in the mobile space. Apple’s keeping its iPhone platform closed. Google’s entered the space with its open Android platform. I’m not deaf to the argument that times have changed. In an age of virus and malware attacks, privacy threats, and rampant generalized paranoia, the market may very well reward a closed and apparently safer platform. Steve Job’s bizarre promise of “freedom from porn” might play well in Peoria, assuming one can get an AT&T signal in Peoria. But we can take it a step further and put forth the proposition that the iPhone also gives us freedom from Verizon, Sprint, and T-mobile.

It really does look like 30 years ago all over again, but looks are deceiving. Only a fool underestimates Steve Job’s adaptability. Do not forget that the man who made it job #1 to kill the Newton upon his return to Apple is the man who brought us the iPad.

Excuse me if I opt not to place a wager on this race.

Apple TV’s next moves?

Before the Christmas holiday, rumors of Apple’s overtures to the networks abounded like so many visions of sugar plums. Journalists and bloggers posited about the effect of Apple’s entrance into the subscription television market. Most of the analysis was solid. The Seeking Alpha blog featured this succinct write up. Most expect a successful Apple offering would threaten cable and satellite subscription models. Others note that an invigorated Apple TV could put the pinch on the Netflix Roku service. Light Reading’s Cable Digital News noted the following.

While cable operators likely won’t face an immediate threat from the subscription service Apple Inc. (Nasdaq: AAPL) is purportedly pitching to major content suppliers, the offering may instead put the hurt on over-the-top video service providers like Boxee and Roku Inc.

It should be noted that Apple TV employs a hard disk. Content is downloaded before it’s played. Roku receives streams, so it’s a lower cost, lower footprint device. Most importantly streaming allows more delivery flexibility. Netflix doesn’t care whether I watch my content on a PC or a TV. Apple TV is anchored to a television. While an iTunes account can be managed from multiple devices, content needs to be downloaded to each to play it. Even with improved progressive download performance, this model has its limitations. One blog noted that a full season of an HD network television series can take up to 50 GB of hard disk space. So there’s a limit to how much content can be delivered to an Apple TV.

For Apple to leverage the strong iTunes brand it has to unhitch content from the device – a fundamental change in business model for a device manufacturer. But if any company has shown the ability to adapt to the digital media marketplace of the early 21st century, it’s Apple. If Apple succeeds at getting content deals in place, I expect a next-generation Apple TV to emerge shortly thereafter.

Apple, iTunes, and the cloud

A small, but interesting tidbit. Word has leaked that Apple has agreed to acquire the hybrid streaming-download music service Lala. Unlike other streaming services, Lala is not subscription-based so it fits nicely into Steve Job’s view of the online music world. Lala is more of a cloud-based iTunes. If you keep your music on the cloud and stream it, you pay 10 cents to add it to your collection. Downloading a song costs 89 cents. Lala also has a nifty technology that allows the user to upload his MP3 library to Lala. Any song in Lala’s catalog is linked to the Lala version, others the user can upload for free.

Assuming a proliferation of music playing devices with inexpensive Internet connectivity, the deal’s a no-brainer. It accelerates iTunes’ much needed migration to the cloud. You gotta love this business model from the consumer’s point of view. “Let me get this straight, you’ll store, backup, and manage my music collection on your storage with your infrastructure for 10 cents per song, or I can take on the hassle for 89 cents per song.” Apparently the model works according to a Wired article.

This Lala acquisition could also help iTunes increase its revenue-per-user. Steve Jobs admitted  in 2007 that the average iTunes user had only bought an average of 22 songs. By contrast, Lala CEO Bill Nguyen told us in October that its paying customers spend an average of $67 on Lala music…

And don’t forget all of those wi-fi capable iPods to be sold.

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