Feb 23, 2011
This blog was originally posted by Jeremy Allaire on http://www.imediaconnection.com/. Enjoy!
Nearly every day I sit down with a media publisher or digital marketer, and am struck by the consistency of their questions and struggles.
Uniformly, the explosive growth in connected device platforms is the most daunting, exciting and material area of focus for these digital professionals. There are several themes that I often speak to, so I thought I’d write them down to share more broadly.
Runtime wars
The biggest sea change we’re experiencing is the explosive adoption and use of smartphone platforms for accessing content and applications on the internet. Mary Meeker predicts that by 2014, more than half of worldwide internet usage will come from these devices. I think it might be sooner. The biggest issue for content publishers and developers is the rising fragmentation and complexity that has emerged in the runtime wars on these platforms. As I’ve written about before, these runtime wars are less about technology issues and more about the political economy of app development, and the downstream implications for who controls access to users and the monetization opportunities. These are long-running issues, and this will be a decade long battle. For content and app developers, there are no easy or binary choices today or the foreseeable future. The result is a dramatic and unsettling level of runtime fragmentation and complexity for digital media content applications.
Every digital organisation must have a strategy for:
The PC web. While HTML5 vs. Flash looms large over the future of the PC web, today, you must embrace both HTML5 and Flash, which remains the most relevant rich media runtime in terms of distribution and capabilities on PCs.
Mobile web. This used to mean WAP or crappy light-weight HTML sites that you could view in a BlackBerry. This now means a touch website, with optimised experiences for smartphone and tablet resolutions and UE gestures – all of the usage growth in mobile web is coming from the touch web. HTML5 appears to be emerging as the only unified platform to address content apps to these platforms.
iOS apps. If you want to partake in the marketing, distribution and revenue-stream momentum of Apple, you need to participate in the Apple iTunes ecosystem. So you need native apps that provide value, and tap into in-app advertising and payments for apps and content.
Android apps. Ditto. The future will make this more not less complicated, both with additional Native App runtime platforms, and more device form-factor proliferation (e.g. iPhone vs. iPad, Connected TV vs. Tablet vs. PC Web).
Device-centric monetisation. Device proliferation also seems to be turning many notions of media and content monetization on its head. From 2000 to 2009, the mantra was always “Information wants to be free”. However, the personal and intimate experience with content apps on mobile and handheld devices seems to be drawing money from people’s pockets at a scale no one really anticipated. Paying for content apps on hand held devices is instant, intimate, and convenient. And it’s surging. The long-cherished “dual revenue stream” for professional media may be coming back into fashion indeed.
Connected TVs are not about watching TV today, mobile and handheld platforms are the center of these disruptions, but the newest emerging front in the device platform explosion is the Connected TV, which is shaping up to be as much about connected applications as it is about over-the-top TV distribution. Connected TVs are really just a new surface for contextual access to information, communications and interactivity. With hundreds of millions of consumers equipped with smart handheld computers (with navigation and data entry capabilities), it is inevitable that we’ll want to bridge those experiences onto larger screens and into more comfortable settings (e.g. a large flat-screen monitor in a room with large comfortable seating.) Yes, these will be about consuming long-form linear video programming, but I predict they will also be as much about interacting with Facebook, holding a video call, playing an online game, or shopping. And hence, with Google TV, the runtime wars for building connected device applications have reached into the living room, where the stakes are about not the future of TV, but the future of Internet applications, communications and commerce. For Connected TV, it’s the mobile Runtime Wars redux — HTML5 vs Flash, Native Apps vs. TV Web, Apple vs. Google vs. Console or TV platform makers.
The future
The past year saw the emergence of the Platform Wars in the handheld computing space. In 2011, we’ll notice the distinct trend for these to expand into newer territories with the maturation of the connected TV platform market.
I expect the resulting battles to look incredibly similar to those that took place in the Smartphone market, but with several familiar players, notably Google and Apple, now squaring up to new competition from the dominant TV brands. Before the year is out the market will witness heightened interest by publishers and developers in creating TV apps for connected TV platforms, with volumes of products shipping by the end of 2011 in the tens of millions. The largest of the TV CE manufacturers, such as Samsung and LG, will be looking to leverage their volume position in the living room through TV app development and the like, whilst fending off Apple and Google from claiming the consumer experience and app distribution relationships. While video ubiquity is nothing new, another characteristic shaping online video in 2011 will be the continuation of this trend, but at an unprecedented pace. If you are a professional institution, organisation, or business of any size, you will need to have an online video strategy in place within the next 12 months. A new era of Web video production business will emerge, similar to the Web development industry growth in the mid-’90s, and organisations will be defining how to best accomplish their online objectives with video.
Another growing trend — highlighted in our recent joint-research report with TubeMogul — is that Facebook and Twitter are the fastest growing sources of traffic to video on publisher websites. This growth is accelerating, and the role of these sites as primary content discovery and viewing environments will reach a point by the end of 2011 where Facebook and Twitter will be as important as Google search.
While over-the-top TV will also continue to develop during 2011, the expectation of mass ‘cord-cutting’ by cable consumers will fail to materialise. While library VOD subscriptions via services, such as Netflix, Lovefilm, Xbox Live Marketplace, and Amazon VOD in the U.S., profess extensive content libraries, they don’t yet offer a compelling substitute to a cable subscription.
But 2011 will see the first wave of attempts to create richer TV subscription bundles available over the internet. Most major broadcasters and studios, however, won’t participate in a meaningful way, leaving consumers with the persistent feeling that OTT products aren’t offering enough. The absence of a broad offering of live sports, in particular, will be a major factor keeping cords intact with cable providers. At the same time, existing cable subscriptions will start to offer a greater range of content over the Web. But consumers will have to hold out until 2012, when the scale of connected TV adoption is much larger and more enticing for online TV subscription providers.
A final trend of note is that the battle over video delivery standards will continue to heat up. Google’s acquisition of DRM vendor Widevine will fuel the key platform war over how video is consumed, secured and delivered, both on PCs and increasingly on non-PC devices.
Google will get in the mix with Widevine’s technology and my expectation is that they will make it open source and freely distribute the technology, as well as bundle in the Chrome, Chrome OS and Android browsers and operating systems.
Good luck, and try not to become collateral damage.
Jeremy Allaire is CEO for Brightcove
