Mediaholic

As expected nobody is buying Movies released on Sony's UMD, because nobody wishes to pay several times for the same content. An article titled Sony‘s Universal Media Disc facing last rites, published by the Hollywood Reporter, concludes that the days of the PSP as a movie watching device are numbered. Here is a quote:

"No one‘s watching movies on PSP," said the president of one of the six major studios‘ home entertainment divisions. "It‘s a game player, period."

Obviously the UMD as a format for publishing movies is dying or even maybe is dead already, but does it actually mean that the PSP is a failure as a movie watching device? As the article itself suggests:

"I think a lot of people are ripping content and sticking it onto the device rather than purchasing," he said. (this is Benjamin Feingold, president of Sony Pictures Home Entertainment).

So for all those Sony executives that are blinded by the propsects of controlling this new market and therefore are not willing to listen to consumers here is the real deal behind this failure, spelled out so that even they can understand it. The PSP as a movie watching device can succeed, and the success is indeed related to content, without which the device is useless for movies. However, you will NOT get away with selling the same content over and over again in different formats. People are fed up with it, they will NOT re-purchase their collection over and over again. Of-course they will rip their DVDs, what do you expect? They bought it already, and if you can't get that then Sony's products will continue to flop in the marketplace.

The solution is simple, instead of trying to control the world, let the PSP take its own course, open up the platform (maybe run Opera Mini on it?) and allow any Internet content to be easily accessible on it and you will be amazed by the results. Take advantage of the fact that the PSP has WiFi and the iPod Video is still lacking it (for how long though? you must act quickly!) to make it an always connected device so that one will need not synch their device in order to access content on the go. Make it possible to play live Internet streams such as radio and TV stations (which the iPod video cannot do). Make it UPnP AV compatible so that people can access the content from their home network throughout the house and with media servers like TVersity even access live and on demand Internet content and I guarantee the sales of this device will double overnight.

If Sony is serious in beating Apple in the mobile video market then the above may just do it for the near term. If Sony would like to beat Apple in the mobile gadget market in the longer term and go beyond video, then more is needed. There are clear indications in the market that there is a room for a mobile, always-connected device with a larger screen than a cellphone and with Internet capabilities (including the ability to handle audio, video and images), the PSP can and should be it. Some say it is a niche market, in contrast I think it will become mainstream in a few years and will be disruptive for cellphones because of its ability to do VOIP on the go. What are the market indications I am talking? The Nokia 770 with its "unexpected" success is one, and the Origami initiative from Microsoft is another (the first generation of those devices is a huge disappointment of-course and taking into account Microsoft track record so will the second and third generations be, but the point here is that Microsoft did a lot of research indicating that people want it, and this represents a huge opportunity).

So what does Sony need to do to make it happen? Learn from Nokia! Open up the platform and let anyone develop applications for it. Combining the open approach taken by Nokia, with the coolness factor of the PSP, will position Sony as the most likely winner of this new market and eventually as mobile VOIP goes mainstream, the number one company for mobile devices with cellphone companies included.

So what is going to happen now? Nothing, Sony will probably not listen to any of this and will continue to self destruct...

According to research from Points North Group and Horowitz Associates, while 25% of Internet users are interested in watching downloaded TV shows and movies on their PCs, 38% (50% more) are interested in watching that video on their TVs. Interest in watching on TV is even stronger among 18-34 year olds at 68%, compared with 45% interested in watching on PCs.

"In this PC and iPod generation, consumers still want to watch TV shows and movies on a TV, whether the programs are broadcast or downloaded," said Stewart Wolpin, senior consulting analyst for Points North Group, "Getting Web-based content to the TV should be the industry’s primary goal and will unlock by far the biggest revenue opportunities," added Wolpin.
(taken from ITWorld.com)

This is what TVersity is all about and I can't tell you how nice it is to see market research supportive of our vision, a vision that we have been dreaming for many years now and have just began to realize in mid 2005. It looks like 2006 is going to be very interesting as this market is entering the awareness of many people, leaving the boring IPTV / Telco TV far behind.

An announcement that UK Film go'ers are going to be able to get permanent downloads of films they purchase, has been made today.

BBC News

It seems that Universal are wrapping it in DRM, is this just another way to push more DRM quietly into the public arena. Should we be worried about it and is this a good or bad announcement in the grand scheme of things?

It's really great to see that countries such as France appear to be making a stance in parliament against DRM technologies like that utilised in iTunes. Apparently Apple stated that if the planned law were passed in France it would be effectively "state-sponsored piracy" Here are a few recent articles on the subject, with interesting views and comments.

• BBC News
• BBC News Video Clip
• Wired News
• Engadget
  

If you watch the BBC News video clip it is heartening to realise that the French government are firmly behind software models and methods which operate like TVersity; enabling a user to stream or download and listen to any type of media in whatever format the device they have purchased, supports.

I have been discussing DRM a lot in this blog and I suspect many of the readers may feel saturated at this point. Yet, one can't make a meaningful argument without providing the supporting facts to back it up, this is the difference between a valuable opinion and a load of crap and so with this in mind I would like to point out an interesting article from the BBC, carrying the same title as this blog post.

The reason this article is important is that it is an opinion written by someone who is making a living by creating copyrighted content (see picture), these are the "poor and helpless" artists and creative people the labels and the studios claim they protect with DRM, and so it is enlightening to see what they think about DRM and about legitimate ways to protect copyrights. Here is a relevant quote:

My opposition to DRM is not an opposition to copyright, or a claim that copyright is dead. But current attempts to use technology to enforce restrictions on use, restrictions that often go beyond those copyright law would demand, are unacceptable.

Another interesting quote which is related to the implications of DRM on the business of new media, shows the irony behind DRM and how it decreases the chances of traditional media companies to re-invent themselves, which could essentially lead to them being displaced by others:

Just this week, Rupert Murdoch, speaking to the Worshipful Company of Stationers and Newspaper Makers, said: "A new generation of media consumers has risen demanding content delivered when they want it, how they want it and very much as they want it".
...
This is not about enhancing the customer experience but locking down content. It is about ensuring that the "new generation of media consumers" Murdoch is referring to do not get the content they want, how they want it or when they want it.
...
The music, movie and publishing industries do not deserve to survive if their only way to remain viable is to undermine copyright law and replace it with restrictive contracts backed by harsh penalties for breaking the inevitably flawed DRM they wrap around their products. Others will take their place, and I cannot see that this is a bad thing.

Ironically this has already started to happen, and new media moguls are bound to surface. Perhaps the best example is Mark Cuban, who said in more than occasion that he loves DRM since by not employing it he gains a competitive advantage against the traditional media companies. He even went to an extreme and suggested in his blog that consumers to do the following:

My advice ? Any and all digital content that you purchase and OWN, with any sort of copy protection, crack it, and make a backup copy for your own personal storage.

I have come across a CNET article about Intel's VIIV and could not ignore two very concise sentences by Don MacDonald, Vice President and General Manager of Intel's Digital Home Group. Here are two quotes from the article:

• it's wrong to assume that "all consumers are criminals".
  
  
• Ultimately, though, MacDonald is confident that piracy won't be a significant issue for Viiv, as Intel promises to "make content easier to buy than it is to pirate".

So the first quote clearly explains the inherent evil of DRM systems, while the second provides a real solution for piracy, one that is already proven in the market. Make it easier to buy than to pirate and people will buy - this is what the iTunes music store has proven! For those that claim that this is thanks to the fact the iTunes sells DRM prtected music, I say, all iTunes music is available on P2P networks so DRM is obviously irrelevant. It is indisputable by now that most people wish to pay for music and will pay as long as a reasonable solution is available to them.

MacDonald further says in that article that Intel's stance surrounding Digital Rights Management (DRM) is that consumers should be able to do whatever they like with legally purchased content. That means backing it up to external drives and streaming it to other devices such as handhelds and networked machines. The only thing I would add is that it will be a long time before people can do all that with DRM around (if ever) so it is time to say goodbye to this ineffective solution and focus in the things that can actually decrease piracy such as establishing easy to use innovative solutions for content consumption and educating our kids to avoid piracy.

In 2003 when the dot com bust was still in the air, it was hard for most people to imagine the next wave of Internet innovation but the signs were all over for those who wished to believe. While the much sought after killer application for broadband never made an appearance, broadband penetration kept growing and in the same time web advertisement was starting to make its comeback. During 2004 the trend was silently accelerating and gaining critical mass and in 2005 it was clear that these two trends are already powering the next Internet revolution - the Internet TV revolution.

While I am sure skeptics are still abundant, there are several indisputable phenomena in the market that make it clear that Internet TV is the next big thing, not web 2.0, not social networking, but Internet TV. You see most of the stuff deemed by people as the next great thing are in fact nothing but the means for the creation of the next big thing. This is true for many of the things people attribute to web 2.0 and it is true to social networking as well. These tools together with the adoption of broadband and the now proven ad-based revenue model for Internet content providers and Internet service providers are the enabler of the revolution. Yet I have to insist again that the revolution itself is not any of those elements, the revolution is as always a better way to do something or a way to do something that was not possible before. In this case we are talking about the delivery and consumption of audio and video content and we are about to list several trends that should convince you that this is where the real action is. All the things we mention are circumstancial since we want to avoid making this article another kind of a visionary analysis of the market but rather stick to the facts and let you be the judge.

• The .tv domain name; It is well known that domain names are a big business. In fact both Yahoo and Google are working with domainers, yes there is even a name for this profession and if you ask me since most of these people are mainly trading in domains, it is time to introduce the term domaineering. While this can be a subject for a separate post the important thing for now is that the .tv domain name is the hottest and most expensive one as indicated by the fact that Verisign has established the www.tv corporation to sell premium domain names for rediculously high amount of money and it looks like they are selling very well! Even non premium .tv domains names cannot be had for less than $30 while .com domains can be purchased for less than $10.
• Internet startups in this area are popping up every days and many VCs are adding partners to help them make investments in new media and Internet TV. There are so many new companies operating in this area that it is really a moot point to try and mention some, so we will just mention TVersity :)
• There us so much content and it is growing very fast. In the begining before the dot com bust everybody was doing Internet TV, but it was too early and no one wanted to watch those small talking thumbnails. During the downturn of the market most of this content disappeared since it was one of the first candidates for cutbacks. Then audio podcasts and later video podcasts, such as Rocketboom, have made their appearance and triggered a big change in the markt. In the same time some new content providers have emerged, realizing that there is a real ooprtunity here, comapnies like ManiaTV were trying to gain marketshare over the big names by being the first to market. Two things happened since then, some of the Indie guys have become mainstream and the traditional players have realized what they stand to loose and started to offer their own Internet content. MTV has launched Overdrive and Uber to undoubtedly maintain market share in light of the many new music Internet TV stations (like ManiaTv) that recently emerged. ABC is making its news available for free as podcasts, and many more names like HGTV, FoodTV, CBS, Reuters, AP have revamped their web TV offerings.
  
• Prmium Web TV content is becoming free and is supported by ads. CNN used to offer their content on the web only to Real superpass subscribers, but this is no longer the case and it has been free for several months now. The AOL Live 8 concert has attracted so many viewers and allowed AOL to generate so much revenue that the big guys got the message. The latest example is CBS, they used to offer NCAA games for subscribers only but have just recently decided to make it available for free. According to them:
  "Already the advertising booked for the online product has exceeded the amount of subscriber revenue amassed last year, said Joe Ferreira, the executive producer of CBS Sportsline. "We felt the free model would increase the number of eyeballs seeing the sponsors' messages," he said. Commercials different from those on CBS will be inserted into the streamed games."
• Media coverage of Internet TV related stuff is at all times high; The NYTimes has probably been issuesing about four to five new articles related to Internet TV every week. Sometimes they had more than one per day. The latest one at the time of this writing is N.C.A.A. Fans Courted With Free Webcasts. And here is a quote:
  
  "CBS switched to the free policy because Internet broadband capabilities have improved, demand among users for video products is growing and advertisers are more willing than ever to support the medium."
• The big names in tech are very active in this area. Apple with Front Row and with the Mac Mini becoming a wireless media player, Microsoft reacting to Front Row by making media center an integral part of Vista and not a separate SKU, Intel with viiv, and of-course Cisco with the acquisitions of Liniksys, Kiss and Scientific Atlanta. Finally Amazon is about to enter the downloads market and offer a free or semi-free player.
  
• The traditional media companies feel threatened and show initial signs of panic. Their good old business models are about to rendered irrelvant and as we all know if the rich old companies can't beat the the fresh young ones in the market then they simply move the battle to the courtroom. The recent incident where NBC requested YouTube to remove the funny and successful SNL clip is just one example. In the same time they try to buy anything they can just to make sure they are not left behind. NBC acquired iVillage and News Corp acquired Myspace.
• The traditional media delivery companies feel threatened and look for remedies. Of-course Telco TV (AKA IPTV) is one obvious threat but the real smart ones know that cable, satelite and telco TV are all threatened by Internet TV and therefore start to re-invent themselves for this new age. Perhaps, the best example here is DirectTV's decision to offer their content on Media Center without a set top box.
• Portals and Web services are courting the living room. From Yahoo, through MSN and google, it seems like everyone is working hard on creating an offering that goes beyond the PC. This of-course includes on the go services, and as one could see in CES of this year, a 10 ft version of Yahoo is now available for MCE users, and the number of channels on MCE online spotlight have tripled in a few months.
  

By now you should look at the title of this article and feel that it is quite obvious that Internet TV is big, but how big? Is it really the next big thing? There is never a way to tell these things for sure before they already happen, but ten years from now when your content is much more diverse, much cheaper and filled with new interactive social experiences, you will look back and know that this was indeed the case.