U.S. Movie Rentals Grow, Purchases Decline

Revenue from U.S. movie rentals increased 11 percent from 2010 to 2011, reaching $2.06 billion, according to the Digital Entertainment Group. Sales of discs and digital purchases dropped some 15 percent to $1.93 billion from June 2010 to June 2011.

Purchases of movies, TV shows and video on Blu-ray discs are projected to total $9.9 billion in 2011, as opposed to $8.1 billion for movie rentals, according to IHS Screen Digest. Movie rental revenue will surpass movie sales revenue annually during 2014 by $9.3 billion to $8.5 billion, IHS Screen Digest estimates. Read more here.

The last time rental revenues beat purchases was in 2000, before people slowed their rentals of VHS tapes from shops like Blockbuster and began buying more DVDs, which at around $20 seemed like a bargain. The DVD first came out in 1995 and led to a revolution where people replaced their home libraries of video cassettes for the thinner, lighter discs that lasted longer. That gave a huge boost to movie studios' profits.

Alternatives such as the Netflix streaming service or $1-a-night rental kiosks such as Redbox have "taken a pretty big (bite) out of purchasing," said Tom Adams, principal analyst and director of U.S. media for IHS Screen Digest.

Blu-ray Disc spending is up more than 10 percent and overall consumer spending on home entertainment is
down five percent, despite a 16 percent drop in box-office for titles that entered the home entertainment window in the first half of 2011, according to the Digital Entertainment Group.

While first quarter 2011 home entertainment spending was down 6.4 percent, second quarter spending was down only 3.6 percent.

Read more here.

Microsoft Smart Phone Exec Quits

Microsoft is losing a mobile executive, as Charlie Kindel is leaving the company after 21 years. As general manager for Windows Phone’s developer ecosystem, he played a key role in the development of Windows Phone, which represents Microsoft’s best hope for re-establishing a presence in the ultra-competitive smartphone market.

Kindel is reportedly heading for a start-up working in "sports, advertising, mobile, social-networking and the cloud.” Perhaps that, as much as anything, tells you where many believe new opportunities now exist.

Microsoft Blow As Smartphone Exec Quits

Netflix is Bigger Than Comcast, in Terms of Subscribers

Subscriber counts aren't everything in the video business. Netflix has more subscribers than Comcast, but makes vastly less revenue from each customer. Comcast has average revenue per user an order of magnitude higher than Netflix.

On the other hand, subscriber density or mass does create a marketing platform for any future video subscription business. And Comcast executives essentially have taken themselves out of the "over the top" business outside their own current geographies.

But customer relationships also are the reasons why firms such as Amazon can never be discounted as new video subscription opportunities arise.

Shipments of Internet-Enabled Consumer Devices to Exceed PCs in 2013

Shipments of Internet-enabled consumer electronics devices will exceed PCs for the first time in 2013, according to IHS iSuppli (the survey does not include smart phones).

Shipments of Internet-enabled consumer electronics devices will surge to 503.6 million units in 2013, up from 161 million in 2010. In comparison, PC shipments during the same period will amount to 253.3 million, up from 222.3 million.

In 2015, shipments of Internet-enabled consumer devices will reach 780.8 million units, exceeding PC shipments of 479.1 million.

Shipments of Internet-Enabled Consumer Devices to Exceed PCs in 2013

Video Subscription Challenges

There was a bit more dribble of customers out of the market for multi-channel video entertainment services. Most observers tend to agree that most of the lost customers are not turning to streaming video delivered over the Internet. Mostly, those lost customers are simply not buying subscription TV, from any source. As you would expect, the assumption is that departing customers are overwhelmingly those who no longer can justify buying service.

But the business has other problems. Some households headed by Millennials simply do not see a reason to buy subscription TV, even when money is not an issue. That arguably is a bigger problem. Beyond that, some would say the strategy of trying to wring ever-higher revenue out of existing customers is going to cause more desertions over time.

"It’s not enough to blame the weak economy when things get rough and folks stop paying for cable; there’s also a structural problem with the way the industry views its subscribers," argues Ryan Lawler at GigaOm. "In the quest for higher margins and customer retention, those companies are generally willing to sacrifice subscribers at the low end if it means they can get more out of their so-called higher-value customers."

The question is how long the industry can keep pushing ARPU up before it starts to shed some of its better customers — those that aren’t necessarily poor, but don’t have $150 or more a month to spend on entertainment, asks Lawler.

That's a reasonable question.

But one gets a sense that the question of "value compared to price" is getting asked even in households that do not have a problem paying $150. The issue is that even households that can afford the subscriptions are aware that online delivery is technologically possible.

Most households are well aware they don't use most of the channels they buy, but haven't had an alternative. How much longer the value-price relationship remains tolerable is a growing question.

Company	2Q Video Net Adds/Losses
Comcast	-238,000
Time Warner Cable	-130,000
Charter	-79,000
Cablevision	-23,000
Dish Network	-135,000
DirecTV	26,000
AT&T	202,000
Verizon	184,000
Total	-193,000

Why 193,000 people stopped paying for TV last quarter

BT to Close Ribbit

British Telecom paid $105 million to buy Ribbit in 2008, which liked to call itself “Silicon Valley’s first phone company.” Now it appears to be "nobody's phone company," as Ribbit is shut down and its functions are subsumed elsewhere inside BT.

The platform allowed Web developers to add phone services into their sites and applications. Remember the phrase "communication-enabled business processes?" That essentially was what Ribbit promised. That is not to say CEBP is equally "dead." But it does indicate Ribbit never was able to jumpstart a significant business for BT, however valid the concept.

Some might say the failure simply points out how hard it is for large telcos to innovate. Others might simply say this particular effort was flawed in some way. Yet others might say the benefits of voice enabling applications has not proven as easy or valuable as proponents have insisted was possible.

Ribbit to close

Generations Divide over Mobile Devices?

Older consumers (Baby Boomers and Generation X) are slightly more likely to favor tablets and e-readers, while younger users (Millennials) are slightly more likely to prefer smart phones, according to a study by Affinity Research.

One suspects the differences are going to narrow over time as Millennials move further along their career paths and have more disposable income, though.

Although the Affinity study estimates that Generation X consumers (generally, people born in the latter half of the 1960s through the late 1970s, usually no later than 1981 or 1982) are 16 percent more likely than the average consumer to own a tablet, a study by GfK MRI indicates that when adding e-readers into the mix, the rate might be even higher. GfK MRI indicates that a Gen X-er is 25 percent more likely than the average U.S. adult to own a tablet or e-reader.

Income may play a large part in this age group’s strong adoption of tablet computers. Wealthier Gen-X consumers are more likely to own the “latest and greatest” gadgets, according to Affinity.

Gen Xers with household incomes of more than $100,000 are 63 percent more likely to own a tablet PC than other Gen Xers. Tablet adoption also skews toward Gen X males, at least for the moment.

Generations Divide over Mobile Devices

Content Creators Have a Primary Duty Is To Audiences, Always

Content Creators Have a Primary Duty Is To Audiences, Always

"Henry Luce, a co-founder of Time, disdained the notion of giveaway publications that relied solely on ad revenue," notes Ilya Vedrashko of Hill Holliday ad agency in Boston. He called that formula "morally abhorrent" and also "economically self-defeating."

That was because he believed that good journalism required that a publication's primary duty be to its readers, not to its advertisers, says Vedrashko. "In an advertising-only revenue model, the incentive is perverse," Luce said. "It is also self-defeating, because eventually you will weaken your bond with your readers if you do not feel directly dependent on them for your revenue."

Since virtually all mass media publications rely on a combination of subscriber revenue and advertising, it is not entirely clear that Luce's views are completely consistent. Nor would some agree with the observation that the role of a journalist changes, whatever the revenue model that makes the writing possible. In principle, a publication could be supported entirely by sales of some other product, with no advertising or subscription revenue.

That, in fact, is precisely the norm for brand-sponsored content. One might argue that the writer's task, in all cases, is to serve the readers, as a videographer's task is to produce engaging video, a composer or musician compelling music. The reason is entirely prosaic. Content doesn't attract people and get their attention unless it meets some end-user need or interest, and is creatively compelling to some degree.

Whatever the revenue model or reason for creating content, "bad content" simply doesn't work. It that fundamental sense, Luce is correct. A journalist, writer, film maker, musician or other content creator has to produce primarily for the intended audience. To be honest, creators often have other motives as well. Some part of content creation in the present age has to be aimed at search engines. Sometimes a subsidiary issue is content creation that, in addition to serving an audience, also impresses peers. That is true whenever prizes or awards are available, for example.

And there can be some element of peer conformity as well. Content creators might develop for audiences, but they tend to socialize and care about the opinions of fellow content creators. Does a film maker want commercial success? Yes, typically. But does a film maker also want accolades from other members of the creative community? Yes, typically.

That doesn't mean the primary task can be anything other than the needs of the intended audience. No success is possible without meeting those requirements at some consistent and basic level.

Content creators must always create primarily for audiences. All other considerations, and those considerations exist, are secondary.

Journalism's Primary Duty Is To Its Readers, Not Advertisers

Could Facebook Credits Lead to Offline Currency?

Facebook Credits could be a springboard for a broader and equally significant offline payments says Thomas Power, CEO of online business network ecademy.

"It starts with a Facebook piggy bank, payment system and credit card," he says. "Then it's a savings account and a loan perhaps for university." Later, it might be about mortgages, life insurance, health insurance, car insurance, house insurance or pension payments as well.

Payments systems intended to support buying of digital goods conceptually can be extended into the peer-to-peer lending model as well, he argues.

Could Facebook wipe out the banking industry?

There Will Be No Files In The Cloud

When cloud computing gets much more traction, one of the implications is that users will "download" and "share" files and download apps a whole lot less than they do now. Venture capitalist Fred Wilson doesn't think so. The file metaphor is necessary and fundamental when digital objects have to be pushed around like physical objects.

There is no need when objects become the equivalent of Web pages. In a cloud implementation, people do things, use things, view things and listen to things that essentially are Web addresses, not digital objects in the current sense.

There Will Be No Files In The Cloud

IBM PC Turns 30

IBM released the "Personal Computer Model 5150" in August 1981. Costing $1,265 in 1981, it didn't have a monitor, parallel ports or even a hard disk. The machine used a 4.77 MHz Intel 8088 processor and featured 256 Kbytes of random access memory. In today's terms, that set of hardware would represent an investment of $2995.

IBM PC Turns 30 Today

Growth is the Only Fix

Have you had enough of this,yet?

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