Market convergence

Market convergence happens all of the time. For example, Ericsson™ recently purchased Microsoft MediaRoom®, and they will use the service to support their products, and maybe others. Market convergence is a long term scenario in which technology, business growth, and market forces shape which players end up in the big three or four lasting providers and the two or three niche providers. This may take 15 to 30 years, but could happen more quickly. Technical capabilities (cable) for streaming broadcast on a large scale is not expected to be in place for around 10 years because of the need for new equipment. At this moment it is anybody's guess who will win the big three spots.

The winners will likely stream video to all devices. They may have created or purchased their own CDNs. It's just as likely, and even more probable, that CDNs will provide distribution infrastructure just like the electrical power company transmission lines, natural gas pipelines, and cable companies have. The CDNs may buy the cable companies and provide infrastructure from source through the last mile.

Mergers will likely depend on who has gotten contracts with major content providers, such as Universal Studios®, Disney, ABC, cable channels... and gotten big. The niche players will probably host independents that don't mix with the Goliaths, and these niche players will have a difficult time maintaining market visibility and channels.

A hedge-fund manager (May 2013) reportedly is recommending that Sony® spin off its entertainment divisions (TV and movie studios) to focus on core technology products, for higher profitability. It never ceases to amaze me that making a good profit isn't enough - boards and investors are only willing to settle for high, short-term profit, with little regard for the future. Preceded by years of diversification, the focus then became stripping down and refocusing companies - merger mania in the decade through 2007 - to increase profits. For example, AOL® began as a small technology company, got large and in 2000 merged with (Purchased) media conglomerate Time Warner, then spun back off again in 2009 as business units focus and profitability changed, and now AOL buys other media companies. Market evolution ever changes.

Apparently the hedge-fund manager fails to see the synchronicity of hardware and digital entertainment products, and that size matters. I guess I shouldn't mention the 17% decline in TV viewing in 2012, which probably went to IP, where there is little viewer discrimination between TV and movies, and they do a tremendous amount of it over game consoles in proprietary content networks.

The holy grail in this industry will continue to be quality content. Winners will have three things:

1. Quality content that is new, original, unique, meets audience wants
2. Enable the audience to find the content through advertising and relevance algorithms
3. Access to the audience preferred exhibition devices, in distribution windows

Sony®, MGM, XBox®, WII®, and Viacom®, in my opinion, look unprepared to compete in the new markets with NBC™/Universal, ABC/Disney, and CBS/CW, although Viacom did make its library available to IP distributor Joost, which failed, and Viacom owns a percentage of Disney. (CBS split from the global entertainment company Viacom, but owns the CW network, which was the first to make its content available to Apple.) This is just my speculation - what do I know? (I only predicted the success of IP distribution in early 2001 - probably late.)

Investors and content aggregators will likely become gate keepers who supply the big market distributors with any independent content. Many existing online services already use content aggregators to screen content, put it into the form they need, and provide it to them. As aggregators get larger, they typically become less available to smaller independents (read they become exclusive to those with a lot of high quality content in their library of offerings).

Today there is great opportunity for innovative creators and entrepreneurs. It's the best opportunity to get into this lucrative market and grow. But the future is much less certain for Independents. We've already seen Independents locked out of most smart devices unless they are on Roku®.

Hopefully Youtube® and Vimeo® type services will continue in the market where innovators and creators can bring their new content and find an audience. This can serve as an incubator for Independent producers and for experimental content. The Internet has provided an entrepreneurial space, and unless equipment manufacturers find ways to lock out Independents, this should continue. For example, if a smart TV manufacturer buys Roku and locks out Independents from having channels on the device, the Independent market will revert to PC viewing only. The battle for viewers has a lot of money and power connected to it, and Independents have never had much of either.

Independents are likely to have the same fights they have had in the past: The battle for production, the battle for distribution, and the battle for exhibition. Large companies will try to keep them out of the market through market manipulation, such as by locking out from content aggregators, not allowing access to distribution platforms, not allowing access to distribution pipes (CDNs) and not allowing access to display devices. The book industry is fraught with these same problems, and electronic distribution has alleviated some of those problems. These battles are likely to be fought in the courts.

The FCC needs to make sure that independents have an available and sustainable path to consumer devices, and let consumers decide whether or not they want to watch independent productions. This path might be similar to cable channels that allow community access, or similar to Roku channels. Roku sees virtual MSOs coming: Roku CEO Wood: Virtual cable MSOs 'inevitable'

Update: Several consumer devices connect Internet programming directly to TV, but the Web browser is limited to Google TV. Streaming Media Blog list: Streaming Media Devices.

Open Access Content Example

Advertising

Advertising is essential to the financial success of a VOD (online/cable/satellite) movie. But advertising online can be done in many forms that don't have to be expensive:

• Build a following on social media venues, so you have a built-in audience (page likes, followers).
• Ask viewers if you can notify them by email or social media when you do your next release.
• Both of the above mean that you need a Web and social media presence for your business. There are businesses that can help you develop an initial following for very little expense.
• Encourage viewers to rate your movie. People want to see movies that others think are good.
• Give free passes on social media to get the viewing and audience ratings started.
• Make it easy for social media word of mouth integration, by putting social media links on your site. (Add This makes this easy.)
• If you are getting good ratings for the movie in its genre, consider putting the revenue back into paid advertising.
• Notify movie bloggers that you are available for an interview, to promote your movie.
• Notify critics and reviewers of your movie launch, and give them a free pass.
• Use Facebook ads, and other social media ads - they haven't gotten expensive yet.
• Self-rate your movie by the W3C worldwide ratings, W3C Powder document movie rating example, so people know what to expect and whether or not to let their children watch.
• Make your listing available to filmthreat.com, indiewire.com, etc. These are sites for people who like independent movies.
• Enlist your Web site in a banner ad exchange, such as whambanners.com (free) or banneradexchange.net (free or small charge [.05/thousand] if you can't display ads).
• If the results are looking really good, advertise on cable channels. They cost around 1/10th. as much as broadcast networks.
• Make sure the host you put your movie on, features the movie for a while.

- Dorian

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