Metaio Crafts Augmented Reality App for Lego

Right now, we seem to be at the "gee whiz" point with augmented reality: you are likely to see a demonstration and say "wow," but not grasp precisely how augmented reality contributes to a business model or incremental revenue stream.

We will have gotten there when we aren't saying "wow" or wondering what the killer app is.

The New Business Paradigm: Popcorn

Nick Thomas, Forrester Research analyst, suggests content business models might emerge in ways
that are similar to what happened in the "exhibition" part of the movie business.

The "popcorn" analogy speaks to the way theater owners make money. Films don’t generally make
much profit for cinema owners. In fact, the revenue model for movie theaters actually is concessions.

Taking a look at media business models that are starting to be challenged in fundamental ways,
Thomas suggests the "popcorn" analogy is fruitful. In other words, content-based companies might
need to look at new revenue streams created around content, if little money or profit can be made from the content itself.

The observation is correct, but complicated. Theater owners make money from popcorn because
they actually cannot make money from selling content, though other entities within the value chain actually can make money directly from creation and selling of content.

You might suggest that in the future, theatrical exhibition might become a vertically-integrated part of a more-unified content distribution business. In fact, that is precisely the situation that once held, but regulators decided that arrangement put too much power into the hands of the studios, so structural separation was mandated.

The point is that under the current regulatory environment, movie studios largely cannot sell popcorn as they are legally barred from being in the theatrical distribution business. Movie theaters are allowed to be in the "sell overseas" business, the pay-per-view, the DVD or on-demand viewing businesses.

Not all options are available for participants in the value chain to make money from the content ecosystem. Licensing, for example, has been a key wrap-around for some content companies who can license the creation of toys, clothing and other products based on cartoon,movie or TV characters, for example.

Performance (live concerts) have become a key driver of revenue in the music business, where at one point it was the selling of records that was the key revenue source.

There is no question but that, under all circumstances, ancillary revenue streams are good for content or copyright owners. The issue is how much potential revenue such ancillary revenue sources might be, and how big they will be.

For U.S. content companies, syndication for TV broadcast, cable TV exhibition, pay per view, international exposition, precorded media and now on-demand have extended the original theatrical exhibition model.

The point is that such ancillary revenue streams have grown over time, but it now appears some of those venues face shrinkage. The whole idea now is what new ancillary revenue streams can be created if demand or profit margins in several of the channels seems to be weakening. "Popcorn" is the right strategic way of thinking about the problem. It will be much tougher to envision, tactically.

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Big Marketers Shifting Online Budgets to Video Sites

About 57 percent of advertisers surveyed by Advertiser Perceptions say they are shifting spending from television to online vide sites, said Randy Cohen, Advertiser Perceptions president.

The study suggets that 70 percent of big ad spenders, those budgeting $10 million or more,  were likely to move money from TV to online video.

Whether any political fallout was a factor, 70% of marketers more commonly preferred to target based on demographics, vs. 59% who more commonly used behavioral metrics.

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Small Cable Operators Think Dumb Pipe Might be a Better Business Model

Not every cable operator thinks over-the-top video is a worse business model than providing cable TV. In fact, some believe providing what might be wholesale services to third parties might actually provide better profit margins than cable TV now does.

"Our video margins are going down year after year," said Colleen Abdullah, the CEO of WideOpenWest Holdings.

Wave Broadband COO Steve Friedman also agreed that the profits from an over-the-top model might be better than the current cable TV business, especially if the new model simply substituted a bandwidth usage model for the current monthly subscription model.

While the dumb pipe model may in fact be better for small operators, that probably is not the case for larger providers.

Probably the worst of all possible outcomes is over-the-top competition from firms such as Comcast, where Comcast sells the video content directly to broadband users, and the local cable modem provider is not able to charge for the additional bandwidth consumed. That is one reason why the dumb pipe model would not work unless some form of consumption-based charging were adopted.

"Over-the-top video will eventually emerge as a challenge to the current model of large, expensive bundles of programming," said Blair Levin, the executive director of the FCC's Omnibus Broadband Initiative. Levin thinks such a move is "inevitable."

The basic tradeoff is that cable operators would essentially trade current linear video subscription revenue for higher broadband access revenues. That essentially was the business decision Qwest Communications made years ago, when it concluded it was better off outsourcing linear entertainment to DirecTV, and building its optical access infrastructure in a way that ultimately is conducive for over-the-top or on-demand video.

"The final inevitability is mobile broadband," said Levin. "We know it's coming. We know it's going to be very, very big."

"In 1994, you could envision as inevitable the Internet replacing existing platforms for communications and entertainment," Levin said. "And based on numerous metrics, that transformation is well underway."

Levin also warned that consumer anger over the cost of cable TV now reminds him of similar sentiment leading up to the 1992 cable act, and that there will likely be "some kind of response, either from the market or from the government," to address those concerns.

Any such move would further limit the upside from linear video and likely propel more movement towards an over-the-top approach.

http://www.lightreading.com/document.asp?doc_id=190749&site=lr_cable&f_src=lightreading_gnews

HD Voice Increases Call Duration, Says Skype

Jonathan Rosenberg, Skype chief technology strategist, says high-definition call quality can increase the length of a voice call 45 percent. That, in turn, could theoretically lead to higher revenues for application or service providers whose services are sold "by the minute." Call duration might have no revenue implications at all if the endpoints are talking on a "no incremental cost" basis, though.

Skype's studies suggest, as you would expect, that audio quality is higher on a high-definition call. The Skype survey suggests there is a correlation between call audio quality and call duration.

With the lowest quality, approximating mobile call quality, the average call lasted about 21.5 minutes. At the highest quality it went about 31 minutes.

It's difficult to say whether the relationship is correlational or causal, though. One variable might be that users on the highest-quality codecs are predisposed to use Skype for conferencing sessions, which would have call duration parameters quite different from a casual voice conversation between two people, for example.

All Online Advertising Does Not "Suck"

No, all mobile or Web advertising does not "suck," as Apple CEO Steve Jobs says. But Jobs probably is right about rich media being an easier way to make ads engaging. Good creative helps, too, as shown by this Google spot for Chrome.

Why Most Advertising Will Continue to "Suck," Despite iPad

It's easy to lament the relative "ineffectiveness" of banner advertising, or for Steve Jobs, Apple CEO, to argue that mobile and online advertising "sucks."

Online banner ads have click through rates of perhaps 0.03 percent, even when lots of people are exposed, some would argue.

Though improving, it remains difficult to match an actual user's present interests, location and spending intentions with a relevant and compelling message, most of the time. So targeting will help.

But even targeting won't entirely fix the problem. Some say rich media is part of the answer, and that makes intuitive sense, as it is easier to create an emotional bond or reaction using rich media, compared to most other forms of messaging.

Rich media banners, on the other hand, might get a three-percent to 10-percent "roll over" rate. If the creative is good enough, users actually will spend time playing around with the content. That can be a game-like experience, video or even compelling content that doesn't use video.

But really-interesting rich media takes time and money to create. And that is going to be the biggest problem. Most campaigns will not support the creation of truly-compelling creative. Think of the ads developed for the Super Bowl and you'll get the problem. If it were financially possible to create that sort of content routinely, marketers clearly would.

There is another angle as well. Much advertising works, even when largely falling on "deaf ears" and "inattentive eyes." Sure, there's lots of waste. But enough eyes and ears are reached, even with simple messages, to justify the marketing expense. Targeted is better, but even minimal targeting, with everyday, run of mill creative, will produce results sufficient to justify the investment.

Not every movie ever produced is a "hit." In fact, most are either flops or modest successes. That will hold for most advertising as well.

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To the Extent that Housing Instability Slows Cable and Telco Sales, Look at This

You can draw whatever conclusions you want about this chart showing a wave of option adjustable rate mortgages coming up for resets already and peaking next year, not to mention another wave of sub-prime mortgages that is building and will peak at just about the same time as the option ARMs have to be reset.

I'm not suggesting anything, one way or the other, about the potential for a double-dip recession or anything of that sort.

It does suggest that any company making a business out of services and products sold to consumers probably should assume the post-recession economy we now are in will be difficult.

Is Multitasking the iPad's Opportunity?

About 55 percent of users interviewed by the Yankee Group say they frequently surf the Web while watching TV. Slightly fewer say they use email while watching TV.

And if a new product category develops for devices such as Apple's iPad, that is the use case: people who want a convenient way to use the Web and email while watching TV, using the Wi-Fi connection in their homes.

That isn't to say some people might be able to use a tablet to replace a PC when out of the home, but that might be a subset of the tablet user audience.

Mobile Ad Spending Isn't Hype, But is Dwarfed by Online Spending

Everyone would agree that 2009 was not the best of years for advertising spending. But spending might not reach 2008 levels until 2012 or 2013.

Advertising might not reach pre-recession levels until mid-decade. There is at least some thinking advertising might not even reach pre-recession levels during the current decade.

Mobile advertising, Apple and Google expect, will grow fastest, from a low base. But online Web advertising still will be two orders of magnitude bigger than mobile advertising by 2014, Yankee Group predicts.

U.S. Media Usage Shrinks in 2009

Despite the general trend that Americans consume a bit more media every year, that was not the case in 2009, when U.S. media consumption actually fell about 17 percent in 2009, or about two hours a day, a huge drop.

The conventional wisdom is that media use should increase during a recession, as consumers shift more entertainment to the home, and substitute some amount of entertainment spending for travel, for example. But that doesn't seem to be the case, according to a new study by the Yankee Group.

The big exception was mobile media, which grew 39 percent in 2009.

"We believe the underlying reason is the economy," says Carl Howe,Yankee Group analyst. "It’s hard to spend all evening on the Internet or watching TV when you’re worried about making mortgage payments or trying to find a job."

Online activities decreased by 40 minutes, but TV and video viewing lost a full hour. Web browsing, email and social networking decreased 17 percent from their 2008 figure of 4.9 hours, but TV viewing declined by nearly a third, from 4.3 to 3.3 hours per day.

Music and reading declined the most. "The music, newspaper and magazine industries are all struggling for a reason," says Howe. "Consumers are spending less time with their media."

Listening to the radio and music fell half an hour to just 1.4 hours a day. Reading magazines and newspapers fared even worse; those activities combined total only 25 minutes a day, down from 40 minutes in 2008, says Howe.

Mobile is the only category that experienced growth. Consumers spent 40 minutes per day talking on mobile phones, up 12 percent from 2008. Mobile Internet use grew 36 percent to 11 minutes a day, and texting grew 55 percent to 27 minutes a day.

The Yankee Group findings contradict some other studies which indicate that TV watching was up in 2009. One of the differences is that Yankee Group includes both "at work" and "at home" consumption, while Nielsen only measures "at home" consumption.

But anyway one looks at the matter, consumers spend nearly half of every 24-hour day with media.

Respondents report they spend an average of 712 minutes, or 11.9 hours each day, with various types of media, with the greatest amount of time spent online, using Web browsing, email, instant messaging and social networking for an average of 4 hours and 13 minutes each day.

TV and video represents three hours and 17 minutes watching TV, pre-recorded programs on their DVRs, and DVDs and videos. TV watching takes up just over 2 hours and 19 minutes per day, on average.

Consumers report they spend an average of one hour and 26 minutes each day listening to the radio, CDs or MP3s, while all mobile phone activities consume one hour and 18 minutes on average.

Gaming time now exceeds reading. Consumers report spending an average of 36 minutes each day playing video games, but only 24 minutes reading newspapers or magazines.

Consumers routinely multitask while watching TV. "Two thirds of our respondents say they talk on the phone regularly while watching TV," says Howe. "More than half surf the Web or write email as well."

That is one reason why Apple and some observers believe the iPad will create a new niche in the market. People already have the habit of using the Internet while watching TV, so a more convenient device for doing so should be able to get traction, tablet supporters believe.

Interactive activities engage consumers in ways TV doesn’t. The top four activities on this list are all what the media industry calls “lean forward” tasks; that is, they engage the consumer interactively. Consumers naturally give cognitive priority to these “lean forward” activities over “lean back” ones like watching TV. What does that mean? It means that when consumers multitask, TV advertising takes a back seat to more interactive forms of engagement.

Former FCC Chairmen Talk Broadband

This video provides an excellent example of the old adage that having shared objectives does not mean policy proponents agree about the methods which will lead to achievement of the goals. Still, it is nice to see former Federal Communications Commission chairmen who pursued quite-different policies re-emphasize the importance of the end point.

YouTube Consumes 10% of Business Bandwidth, Study Finds

YouTube now consumes about 10 percent of business network bandwidth, while Facebook represents 4.5 percent of all consumed bandwidth, a new study by Network Box finds.

Windows updates represent about 3.3 per cent of all bandwidth used, Yimg (Yahoo!'s image server) 2.7 per cent of all bandwidth used and Google – 2.5 per cent of all bandwidth used.

When looking at traffic, rather than bandwidth consumption, Facebook is the top site visited on business networks. Network Box's analysis of 13 billion universal resource locators used by businesses in the first quarter of 2010 shows that 6.8 per cent of all business internet traffic goes to Facebook, an increase of one per cent since the last quarter of 2009.

Google vists represent 3.4 per cent of all traffic, Yimg (Yahoo!'s image server) 2.8 per cent of all traffic, Yahoo 2.4 per cent of all traffic and Doubleclick about1.7 per cent of all traffic.

The company also found that, of 250 IT managers surveyed about their biggest security concerns over the coming year,  the top concern was "employees using applications on social networks" while at work, with 43 per cent of respondents saying this is a major concern.

"The figures show that IT managers are right to be concerned about the amount of social network use at work," says Simon Heron, Network Box internet security analyst says.

Such measurements always are a bit imprecise, not in terms of URLs visited or bandwidth consumed, but in terms of business or personal use. Business users increasingly are using YouTube business videos for work, while some Facebook use undoubtedly also reflects business purposes.

HTC Incredible for Verizon Reviewed by Boy Genius Report

There's a nice detailed review by Boy Genius Report on the Verizon HTC "Incredible" here. link

You have to give credit to HTC for pushing the envelope on Android devices and design in general. The "Sense" user interface is interesting.

Revenue Sharing is the Heart of the Net Neutrality Matter

“The problem with mobile broadband so far has been most of the revenue it has generated has gone to over-the-top Internet content services, not to the operators,” says Pat McCarthy, Telcordia VP. “That’s what they are trying to change.”

And that is the heart of the matter as far as wrangling over network neutrality. Over time, consumers will have many options for buying customized wireless broadband plans, McCarthy says. And nearly everyone believes that will mean very-heavy users will have to pay more, in some way.

The key notion is that retail price will be related, in some way, to the cost of the services consumed. That doesn't necessarily mean billing by the byte, but probably a range of options for basic access that are similar to wireless voice plans, where users buy buckets of minutes or text messages a various prices, or unlimited use for higher prices.

Some have suggested pricing based on the value of services and applications and most providers tend to believe there should be the ability to buy optional services that maintain quality of service when the network is congested.

Standard users might get messages during peak congestion periods--perhaps rush hour or at a major sports or concert venue--that the network is congested, with their services shaped in some way. Premium users might get priority access and all users might be offered a temporary "power boost," for an additional fee, during the period of congestion.

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Video Seen as Key for iPad

About 77 percent of 200 senior marketing executives believe that developing a video strategy for the iPad is important to their businesses' success, says KIT Digital, which took the non-scientific study during a webinar on the iPad.

The survey also asked attendees if their businesses currently have a mobile solution for other devices. About 38 percent of respondents say they do,  while 43 percent say they are currently working on developing a mobile solution.

Overall, however, 62 percent of respondents do not currently have a mobile video solution.

When asked if they were prepared to take advantage of the iPad's video capabilities, 21 percent of businesses responded that they are, while 48 percent) responded that it is an area "currently being worked on."

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What Works Better for Marketing Campaigns: Twitter or Facebook?

After studying Twitter and Facebook as business marketing vehicles, Irbtrax says "Twitter performed better in the general business to business marketing category due to its viral marketing benefits."

But Facebook performed better in the business to business marketing category for select companies that are 'personalities'. In other words, "hot" products or services with high user inmvolvement can use Facebook in ways that other firms cannot. That also means Facebook likely is better for consumer products.

The study concluded that it is not even necessary to have a large group of Twitter followers to benefit from Twitter's viral marketing advantages. Twitter also might be better for real-time promotions, events, special offers or location-based offers, the study suggests.

The study concludes that both work, and that it is best to create a presence on both. But extrapolating from the findings, one might argue that a business-to-business campaign is better suited to Twitter, while consumer products might fare better on Facebook. That especialy would be true for products without a high degree of personal and emotional involvement.

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Technology and Life in 2020: Good News and Bad News

Forbes continues to have a higher-than-average interest in technology and its impact on work and life, compared to some other major business news media, and in a series of related essays Forbes takes a look at where we will be in 2020, in terms of jobs, health, working and so forth.

One of the points made in one of the essays is that because of Moore's Law, we will by 2020 have 32 times more compute power available to apply to all of those tasks, and that not all the effects will be positive. Those of you who believe manufacturing (I admit I do) remains an important part of any advanced economy will be discouraged by the likely implications. read the essays here

Those of you who are parents might likewise be chastened by some findings of a recent Kaiser Family Foundation report on "Generation M2," which takes a look at the role of media in the lives of youth and children.

The study shows, as I suspect most parents suspect, that reading and good grades tend to go together. About 72 percent of "heavy" readers report getting good grades, while 60 percent of the light readers say so. Read the study

There also is a direct--and inverse--relationship between "time spent with media" and "good grades," as many of you likely also suspect is the case. Children who are heavy media users get lower grades; children who are light media users get higher grades. About 47 percent of "heavy media users" say they get "fair to poor" grades, compared to 23 percent of "light users." And that remains the case when controlling for age, gender, race, parent education, or whether a child is in a one-parent or two-parent household, Kaiser says.

Conversely, 66 percent of "light users" report getting good grades. It isn't clear whether the relationship between grades and heavy media consumption is causal or only a correlation, though. Still, the findings likely correspond to what many parents would conclude.

Title II A Potentially "Dangerous" Turn, Says Dvorak

"There is a proposal afoot developed by Sen. John Kerry that could undermine free speech on the Internet," says technology analyst and commentator John Dvorak. The proposal is to regulate broadband access as a regulated common carrier service, like telephone service.

You can ask yourself whether you think such a change would lead to more, or less, innovation; more or less investment; more or less choice. You can ask whether a 1934 method of regulating a stodgy monopoly service is appropriate in the 21st century for Internet services.

You can ask yourself whether having more choices, rather than less, is the likely outcome of such a move. You may ask yourself whether application priorities routinely available on private networks used by businesses, or application acceleration, as practiced by hundreds to thousands of content providers already, is a good thing or a bad thing to be forbidden.

So here comes the great idea from John Kerry: reclassifying broadband services as "telecommunications services" rather than "information services."

"This is the worst possible outcome as the FCC will eventually regulate the Internet like it does all the entities under its jurisdiction," says Dvorak.

"Why would we want the FCC to regulate the Internet?" Dvorak asks. "It's a terrible idea."

By redefining information services to telecommunications services, the Internet as we know it will be neutered as the FCC begins to crack down on foul language, porn, and whatever else it sees fit to proscribe, he argues.

"No matter the net neutrality outcome, it has nothing to do with increasing broadband penetration and speeds," he says. "It's a total scam invented to censor the Internet once and for all.

"I'm surprised people, no matter how idealistic, cannot see through it," he says.

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Internet Oversight Needed, Just Not Title II

"Should the FCC have sway over the Internet?" a Washington Post Co. editorial asks.

For the past eight years, the FCC has rightly taken a light regulatory approach to the Internet, though it believed it had authority to do more. Now that the agency has lost in court, some advocates in the technology industries are urging the agency to invoke a different section of law and subject ISPs to more aggressive regulation, until now reserved for telephone companies and other "common carriers."

Such a move could allow the FCC to dictate, among other things, rates that ISPs charge consumers. This level of interference would require the FCC to engage in a legal sleight of hand that would amount to a naked power grab. It is also unnecessary: There have been very few instances where ISPs have been accused of wrongdoing -- namely, unfair manipulation of online traffic -- and those rare instances have been cleared up voluntarily once consumers pressed the companies. FCC interference could damage innovation in what has been a vibrant and rapidly evolving marketplace.

Some oversight of ISPs would serve the public interest as long as it recognizes the interests of companies to run businesses in which they have invested billions of dollars. Transparency and predictability are essential to encourage established companies and start-ups to continue to invest in technologies dependent on the Internet. ISPs, for example, should be required to disclose information about how they manage their networks to ensure that these decisions are legitimate and not meant to interfere with applications that compete with the ISPs' offerings.

Congress should step in to strike the appropriate balance. Enacting laws would take some time, but the process would allow for robust debate. In the meantime, any questionable steps by ISPs will be flagged by unhappy consumers or Internet watchdog groups. If ISPs change course and begin to threaten the openness of the online world, Congress could and probably would redouble its efforts.

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