What's Danger of Shorter Movie Windows?

BTIG Research media analyst Rich Greenfield does not think Hollywood revenues would be harmed if studios released new movies simultaneously in theaters and on demand, if the on-demand product cost $20 to $25. Survey bolsters his views.


In other words, Greenfield believes the 90-day window between theatrical release and on-demand can be compressed to "zero," with no threat of increased piracy. Few in the content business are likely to be persuaded. And theater owners will hate the idea. 


His argument is that consumers do not object to paying for content, but do not want to wait to view it. Aside from satisfying that demand, Greenfield argues content owners will make lots more money charging $20 to $25 for an on-demand viewing, than from a single patron's theater ticket. 


Offering movies in-home, day-and-date with their theatrical release would be neutral to positive for annual spending on movies, with 93 percent of respondents to a recent survey indicating that their spending would be the same, if not higher (28 percent said higher, 65 percent no change).  


But there are lots of "moving parts" here. Theatrical exhibition builds "buzz" for the after market. Whether at-home viewing with the same "day and date" release window will provide as much promotional value is not certain. 


Some viewers, such as families with young children, might increase viewing at home. Or they might not. 


Also,  the “decrease in movie spending group" includes reduced spending less on concessions and parking, not the actual movie tickets. Piracy might increase, or not. 


Collapsing windows also will depress the market for pirated movies, Greenfield argues. But the survey results aren't conclusive. 





In terms of the impact on piracy, 60 percent of respondents indicated it would have no impact on piracy or decrease it (40 percent no impact, 20 percent decrease).  Content owners might be worried about the other 40 percent, though. 

"We believe the data in aggregate does not show a major industry risk to collapsing the theatrical-to-home entertainment window," says Greenfield. "There would be some uplift in consumer spending on movies with a greater share of that spending captured by movie studios versus movie exhibitors, offset in part (at worst) by a rise in piracy."

Though clearly negative for theater owners, the big question for content owners is whether the move boosts "first run" revenue, and by how much, as well as the impact on pricing power and sales volume in the later release windows. 

Survey via SurveyMonkey Audience

Dish Network Says LTE-Advanced Standards Will Limit its Construction Timetable

AT&T has argued that a new proposed Long Term Evolution network Dish Network wants to build should adhere to the same construction timetable that LightSquared has to meet. 

But Dish says it needs more time, for technical reasons related to its choice of LTE-Advanced as the air interface. LTE-Advanced still is working its way through standards bodies.

So Dish argues it needs to allow for all of the standards to settle and for its supplier to ramp up production of network elements Dish will need to build its network.

There is no reason why a leading contestant in a market should make it easy for its competition, when it lawfully can do so. That appears to be why AT&T takes the position it does.

Smart Phone Shipments Exceed PCs for First Time

Annual global shipments of smart phones exceeded those of PCs (including tablets) for the first time in the fourth quarter of 2011, says Canalys. 

Vendors shipped 158.5 million smart phones in the fourth quarter of 2011, up 57 percent on the 101.2 million units shipped in the fourth quarter of  2010. 

For the whole of 2011, smart phone shipments hit 488 million units, up 63 percent on the 299.7 million smart phones shipped in 2010. 

“In 2011 we saw a fall in demand for netbooks, and slowing demand for notebooks and desktops as a direct result of rising interest in pads,” said Chris Jones, Canalys VP.

You can make your own decision about whether that indicates tablets are cannibalizing desktop PCs, notebooks or netbooks.

However, Canalys expects to see smart phone market growth slow in 2012 as vendors put more focus on profitability, especially on the part of Huawei, ZTE and LG, which will shift more effort towards higher-end models. 

Apple became the leading smart phone and client PC vendor, with shipments of 37 million iPhones, 15.4 million iPads and 5.2 million Macs. 

Apple also set a new record for the most smart phones shipped globally by any single vendor in one quarter, beating Nokia’s previous record of 28.3 million shipped in the fourth quarter of 2010. 

Moreover, Apple’s performance meant that it displaced Nokia, for the first time, as the leading smart phone vendor by annual shipments. 

Apple shipped 93.1 million iPhones in 2011, representing growth of 96 percent over 2010. 

Samsung shipped 35.3 million Samsung-branded smart phones in the fourth quarter of 2011,  for a total of 91.9 million for the year, compared to just 24.9 million in 2010. 

Nokia shipped 19.6 million smart phones, down 31 percent from the record high of a year earlier.

Android accounted for 52 percent of global smart phones shipments in the fourth quarter of 2011, with iOS representing 23 percent and Symbian 12 percent. 

Android was also the leading smart phone platform by volume for the whole year, accounting for 49 percent of all devices shipped in 2011.

Mobile Data Pricing, Packaging is Key to Profitability

Vodafone's recent experience with mobile data traffic has lessons for other global operators.


Among other key trends is the growing role played by smart phone users and the ways traffic shaping can improve experience.


Also, smart phones are proving to be a key revenue driver, so plans tailored for the different behaviors various consumers have, can lift mobile Internet access demand. 


The focus for Vodafone’s price innovation is squarely on smart phones because this is the category of device that is driving data revenue growth. 


In fact, it now is possible to clearly delineate usage of PC dongles, long the main driver of mobile broadband use, and mobile Internet revenue growth driven mainly by smart phones.


Comparing the financial year 2010 to 2011 with the prior year, Vodafone’s mobile Internet revenues increased by 56 percent. This compares with growth of only 14 percent in mobile broadband. 


That's a significant change, as 10 years ago most "data revenue" was contributed by use of text messaging. 


Tiered pricing is also a prominent feature of Vodafone’s current mobile data pricing strategy. The company is introducing price plans tailored specifically to the needs of low and medium data users. 

Careful traffic management will continue to be an essential piece of the data profit puzzle. 

Vodafone has implemented Web and video optimization in nine of its European markets. 

That is one reason why many argue that network neutrality rules are harmful in the wireless domain. Wireless networks are much more susceptible to congestion than fixed networks, in part because demand varies much more than on fixed networks.

It is far easier to engineer a fixed network in part because usage patterns tend to be stable over time. Mobile users can, from time to time, dramatically change demand at specific cell sites.

The company claims optimization has helped it achieve data volume reductions ranging from 15 percent to 30 percent. Vodafone has also seen a reduction of 20 percent to 30 percent in peer-to-peer traffic in some of its European markets.

Offload of traffic to Wi-Fi networks also will play a part in  managing consumption. 

Windows Phone 8 to Support microSD?

Microsoft appears to be readying microSD support for its Windows Phone 8 operating system, a fact of some importance for mobile payments systems that would prefer to use microSD as a way of loading credentials onto mobile devices.

According to Windows Phone manager Joe Belfiore, “Apollo” will add support for removable microSD card storage.

NFC radios will also be supported, with Belfiore placing specific emphasis on 8's push into contactless payments. The "wallet experience" ] will have the capability to be carrier-branded and controlled, either by a secure element on the SIM card or using hardware in the phone itself.

As you might guess, mobile service providers are going to opt for credentials loading using the SIM, an element they control.

The microSD might therefore  be seen as a “content sharing” innovation, allowing desktops, laptops, tablets, and phones to all share content.

But microSD will offer one more option for over the top wallet or payment systems to use.

France Telecom to Step Up Fiber to Home Investment

France Telecom will double its investment in fiber to home networks in 2012 to 300 million to 350 million euros, Reuters reports. There’s both good and bad news in that announcement.

The good news is that the heavy spending is likely crucial for the survival of France Telecom’s fixed network business. The bad news is the huge risk.

France Telecom CEO Stephane Richard said fiber to home investments were key to the firm’s future competitiveness as a fixed line provider.

France Telecom has pledged to spend two billion euros by 2015 on rolling out a national fiber network.

Keep in mind that France Telecom expects a payback time of 30 years to 40 years, far exceeding the three-year to five-year payback expected of application investments. 


Analysts at the Yankee Group have argued that penetration rather than average revenue per user has the strongest effect on the FTTH business case. 


A business plan with a payback of five years or less has to assume retail penetration of at least 30 percent, and ih many cases also with triple-play service offerings. 


Any payback analysis is of course highly dependent on the assumptions, ranging from capital cost per location passed, as well as service revenue per location, among other things. 

That indicates the risk France Telecom and other providers are facing. Those time frames are so long they typically only can be considered by very capital intensive utility firms that operate in monopoly style markets, as fixed network providers used to assume was the case.

These days, the fixed network business faces competition from other facilities-based suppliers, mobile and satellite networks.

Globally, there already are more mobile broadband subscribers than fixed network subscribers. Mobile broadband subscribers surpassed wireline broadband subscribers in 2010 (558 million compared to 500 million).

Infonetics forecasts the number of mobile phone subscribers to grow to 6.4 billion in 2015 (the current global population is 6.9 billion).

While that is a big help for large service providers owning both mobile and fixed assets, the strategic context is different for fixed network operators who do not own mobile assets, and cannot acquire the scale to compete in what clearly has become a national scale business.

In such cases, though the classic investment case might not suggest spending on fiber to the home will generate as great a financial return as some alternative investments, that isn’t the issue.

Unless many smaller networks can upgrade to the fastest-possible fixed network, the entire business arguably is at risk. The investment, in other words, is strategic, rather than based on classic return on investment considerations.

But the decision to invest might also require a very long payback period that is beyond the working life of any single CEO.

Facebook is Mobile First, Revenue Isn't, Yet

From the Facebook S1 document: "Although the substantial majority of our mobile users also access and engage with Facebook on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices."

"We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven." 


The problem is that Facebook, though now a leader in display advertising, cannot show those ads on mobile devices. 

Facebook wants to be "mobile first." Right now, though, mobile right now is "revenue last."