Another Take on Augmented Reality

I don't know about you, but my first thought was "how do they do that?"

Will Apple Disrupt Payments?

One can make an argument that any Apple mobile payment system, even if it remains largely aimed at iTunes users and products, will disrupt the existing payments business. Apple does have a base of 160 million iTunes users, said Avivah Litan an analyst at Gartner.

That base gives Apple the ability to operate largely as a "closed payment system" with minimal need to interface with credit card companies and banks, she said. "They can largely shut out credit card companies if they choose to,"and operate in much the same way that PayPal has done in the virtual world, she said.

Some will argue that this approach actually is rather credit card issuer "friendly." Users of iTunes will probably need to continue using their credit cards and bank accounts to replenish the funds in their iTunes accounts, which would make any Apple mobile payments system a distributor for card companies in much the same way that PayPal is. The main issue is the loss of analytics for the card issuers.

Apple could disrupt mobile payment industry, analysts say

Hulu to Become an Over-the-Top Cable Operator?

Hulu management has discussed recasting Hulu as an online cable operator that would use the Web to send live TV channels and video-on-demand content to subscribers, the Wall Street Journal reports.

The new service, which is still under discussion, would mimic the bundles of channels now sold by cable and satellite operators. In other words, Hulu might wind up being an online way of getting linear TV content. Some people might see that as some sort of failure. Others might see it as something else. Much will depend on how the partners structure the end user deal.

If Hulu is tied to existing linear subscriptions, one set of revenue models and value will be offered. It will be useful to watch one's paid-for linear content on devices other than the at-home TV, but beyond that Hulu will simply represent another "TV Everywhere" sort of initiative.

If Hulu acts like an over-the-top cable subscription, there are other possibilities, depending on whether users have more, or less, control over which "channels" they want access to. Hulu might then offer a bit more discrete control over packages, compared to standard multichannel video packaging into a few broad tiers.

It might be asking too much for the new approach to deviate too much from the typical cable approach. But an over-the-top approach, largely disconnected from a "geographic" requirement (where you have to buy a fixed network service to get the mobile content), would still be interesting.

Hulu Reworks Its Script as Digital Change Hits TV - WSJ.com (subscription required)

Cord-Cutting is Too Difficult For Average Families

Here’s evidence that regular people have zero time for things like Google TV, Boxee, and Roku, if only because they’re too complicated.

Hill Holiday, an ad agency,” asked five Boston-area families to participate in a cord-cutting experiment. For one week each family was asked to forgo traditional cable TV in favor of one of the following devices: Apple TV, Google TV, Boxee Box, Xbox 360, and Roku.

As it turns out, TV watching still is a "lean back" activity, and the new Internet delivery systems changed that into an undesirable "lean forward" experience, to some extent. That isn't to say that some company, sometime, will "Apple-ize" the experience and make it elegant. But we aren't there yet.

Video: Experiment Shows Cord-Cutting Simply Too Difficult For Average Families To Grasp

Card Issuers Face Huge Revenue Challenge

"From a bank perspective, here is why we care about mobile payments: debit, prepaid and credit products are predominantly dependent on interchange revenues that could become less profitable, with a huge negative impact on earnings,” says Philip Philliou, partner at the firm of Philliou Selwanes.

In part because of new regulatory changes and pressures card issuers may find card economics getting worse. “It is inevitable that the revenue side of the business will change downward, so profitability will be affected massively,” he says.

How massive? He expects “more than half the profit for debit and credit businesses” will be affected. Right now, a card issuer can typically expect revenue of perhaps $85 and about $40 of expense, per customer, per month. But the industry expects the economics might fall to something like average revenue of $38 and $40 in expense, so the typical card issuer is “under water,” says Philliou.

Mobile Marketing and Technology

Will Isis Attempt to Replace, or Work With, Existing Payment Processors?

You could get a good debate, almost any day, over the potential impact new players in mobile payments might have. Isis, the joint venture between AT&T Verizon Wireless, T-Mobile USA, Barclays and Discover Networks might be seen as a case of a venture that aims to displace some of the current players.

Others argue that will be very difficult (it will) and that the more-logical route is some sort of grand partnership, that focuses less on shifting market share in the “payments” business and focuses more on creating new forms of value that have more to do with eliminating overhead, improving customer service and creating more convenient ways to advertise, deliver coupons and promotions, or create loyalty.

David Schropfer, a partner at the Luciano Group, says it is not clear what will happen. But there is some logic to the notion that the current “four-party system involving a merchant, a consumer, and the banks that the user and retailer use, was created long ago, and could be redesigned for an Internet-connected, mobile world, operating more efficiently at the same time it creates more value-added platforms.

Mobile Marketing and Technology

Apple Mobile Payments: What Should Banks Do?

Apple's rumored plans to get into mobile payments can be seen in several ways. If Apple decides to disrupt the "four-party" existing retail payments model, the company might be a threat. If it decides it wants to do something else, it could be a banking partner.

The natural instinct for some is to put Apple in the same camp that many have put PayPal Inc. and Wal-Mart Stores Inc., that of the enemy. But banks that look for ways to work with Apple might find themselves getting a new distribution channel.

"If we as a banking industry don't get our head around payments, we risk the chance of an Apple or Google or anybody else being a disrupter in the space and taking some of the volume, very similar to the way PayPal has become a disrupter in the industry," said Jeff Dennes, the director of online and mobile services at Huntington Bancshares Inc.

The big issue is how, and where, Apple decides to play within the ecosystem. Right now, the retail payments business is anchored around a four-party model that includes merchants, consumers, acquiring and the banks used by the consumers and retailers. Everything else basically revolves around those four key actors.

But Apple might try to invent something new, possibly linking existing customer accounts to iTunes, a setup similar to what eBay Inc.'s PayPal does. This could cause banks to lose some of the revenue they would normally gain through card transactions, as Apple would insert itself into the ecosystem.

Apple's iTunes Store, which could serve as the mobile wallet used to store payment information on a consumer's payment-enabled device, generated net sales of $1.16 billion in its 2011 fiscal first quarter ending Dec. 25, according to Apple.

In Apple Mobile Pay Plans, a Possible Opening for Banks - American Banker