How Often are you "Amazon First"?

About 55 percent of consumers turn to Amazon first when searching for products online, according to research conducted on behalf of BloomReach. But higher percentages will go straight to Amazon if they already know what they are looking for.

When holiday shoppers know what gift they want, 59 percent will start on Amazon, 24 percent will start on a search engine, and 16 percent will start at a retailer that has that product.

When holiday shoppers don't know what gift to buy, 49 percent will start on Amazon, 28 percent will start on a search engine, and 26 percent will start on a retailer the gift recipient likes.

Those findings make sense. If a person has a problem, but is not sure about the solution, using a search engine--”Google it”--makes sense. But if a person already has chosen a particular solution, then it makes sense to go straight to Amazon.

The "State of Amazon" study, which surveyed 2,000 U.S. consumers, found that search engines and retailers lost almost equal ground, coming in at 28 percent and 16 percent respectively.

Amazon increased its share by 11 percent in one year.

The study also found that mobile devices are driving more than half of all traffic to top sites and has grown to 30 percent of all U.S. e-commerce.

While Amazon (mobile site or app) still commanded 50 percent of consumers' first stop for products on mobile, search engines fared better with 34 percent, with retailers lagging at 16 percent.

Free Basics and Other Sampling Programs Help Solve Both Demand and Supply Issues for Internet Access

Ultimately, demand might be the bigger barrier to ubiquitous Internet usage than supply, even if both supply cost and demand value are key issues in most markets, according to the Phoenix Center for Advanced Legal and Economic Public Policy Studies.

On the supply side, the high cost of infrastructure is the main barrier, suggesting that mobile networks will be the way most people eventually get access to the internet.

Despite differences in the economic fundamentals of nations, the barriers to deployment and adoption are categorically of the same underlying nature.

On the supply side, the lack of access to broadband is mostly a financial issue driven by the high infrastructure costs of network deployment relative to the revenue potential.

On the demand side, awareness and digital literacy as well as affordability are the key issues. “Awareness” means use of Internet apps and services is an experience good.

An experience good is a product for which the value is difficult to ascertain prior to its consumption. One proven way to solve that problem is to allow “sampling” of the product. That is the idea behind Free Basics, the Internet.org initiative that provides access to a suite of apps without requiring that users buy a data plan.

The issue is sustainability: how to balance the use of promotions and sampling with the longer-term goal of generating enough revenue to build and maintain the access networks.

And that is where economics suggests the value of a mix of retail offers, including the sampling programs at low or no cost and other packages that add incremental value for incremental cost.

In other words, “free but limited,” combined with “for fee” packages, contributes to the overall goal of enabling Internet access and use of apps for everyone.

source: Phoenix Center

If Netflix, HBO Go and Hulu are Treated Like Linear Video, Then Zero Rating Should Not be an Issue

The city of Pasadena, Calif. Plans to tax Netflix, HBO Go and Hulu accounts 9.4 percent starting Jan. 1, 2017.

At least 45 other California cities have been advised they too could tax their residents’ online viewing using their city’s existing tax rate for cable providers, at rates ranging from 4.5 percent to 11 percent.

Whatever your views on taxation of over the top Internet services, the move provides one more bit of evidence that traditional regulatory thinking now applies to OTT streaming. Colloquially, that attitude can be termed “if it walks like a duck, and squawks like a duck, it is a duck.”

At least for purposes of taxation, OTT is viewed the same as linear video service. That raises an interesting question, however. If OTT streaming video is the equivalent of linear video, as a type of service, and if linear video rules apply, then zero rating should not be an issue at all.

All linear video services zero rate use of bandwidth. That is why many Internet service providers have argued that managed services are not covered by network neutrality rules.

Managed services are not "Internet services."

AT&T to Speed up Video Life Cycle S Curves

The product life cycle is one fundamental principle multi-product firms must follow. As one product moves towards maturity and eventual decline, another product--earlier in its life cycle--has to be cultivated to replace the maturing product.

The challenge for leading providers of video entertainment services is how to manage the transition.

source: Learn Marketing

source: Innovation Factory

Nobody knows precisely when the slow decline of the linear video business might become non-linear and rapidly decelerate, but AT&T now is acting as though it wants to move faster, even if some might argue linear TV providers can rely on  a relatively long transition period.

To be sure, some 82 percent of U.S. TV households (there are more homes than “TV homes”) subscribe to some form of linear TV service, according to Leichtman Research Group.

The percentage of TV households subscribing to such services is down from 87 percent in 2011, but is declining slowly.

The big unknown is whether the rate of decline remains linear, or becomes non-linear at some point in the future, and when that could happen. AT&T now is acting as though it has to move a little faster.

In the fourth quarter of 2016, AT&T will launch DirecTV Now, an over the top video entertainment product with a heavy mobile or untethered focus, featuring “100-plus premium channels.”

There are a couple angles here. Consider the way AT&T plans to manage bandwidth consumption and pricing, something that, in the mobile realm, has been a challenging barrier, given the cost of mobile bandwidth, compared to fixed networks, and the amount of bandwidth video consumes.

AT&T--significantly--is moving to a traditional media model, not an "Internet" data business model.

“When you buy this content, the data required to stream it on your mobile device is incorporated into the price of the content,” said AT&T CEO Randall Stephenson at an investor conference.

“If you choose to use that in a mobile environment on AT&T your data cost associated with this is incorporated into your content cost,” he said.

There is a precedent for this: broadcast TV, broadcast radio, Sirius XM and cable TV and other linear video services. Or, if you like additional examples, newspapers and magazines that consumers can subscribe to, with delivery cost simply bundled into the price of the subscription.

Media products, in other words, always have featured incorporation of delivery cost into the purchased product price.

To What Extent Does Consumer Video Drive Strategy at AT&T?

Randall Stephenson, AT&T chairman and CEO recently has said  “the consumer is about one thing, it's about video.” Coming from a firm such as AT&T, the comment shows--in large part--what is driving telco consumer services strategy.

Though many questioned AT&T’s acquisition of DirecTV, AT&T argued it had a plan both for wringing immediate and long-term value from the deal. So far, AT&T arguably is showing it is right.

Seen both as a way of creating a nationwide video footprint to match its mobile footprint and a way to create more value from bundling, the deal also was touted as boosting free cash flow needed to support AT&T’s hefty dividend payouts.

Less clear at the time was the way DirecTV would be leveraged to support the next generation of streaming services. AT&T might now be showing it has a plan for transition at scale.

AT&T’s new online streaming video service, DirecTV Now, will become the company’s primary video platform in three to five years, some inside AT&T apparently now predict. The speed of that change--and its implications--show just how much change might be expected in the entertainment video business and the service provider business model.

By switching to over-the-top delivery, AT&T in principle could avoid truck rolls, marketing, in-home capital and other fulfillment cost. DirecTV Now, though primarily aimed mostly at attracting new subscribers among the ranks of consumers disenchanted with linear services, might also eventually appeal even to consumers of facilities-based services that require a physical connection (satellite dish installation or installation of cables and set-tops.

Eliminating a truck roll and customer premises equipment could eliminate several hundreds of dollars of cost whenever a new customer is signed up and activated.

DirecTV Now, set to be introduced by the end of 2016, appears aimed at about 20 million households that have no cable or satellite service, competing with services such as Sling by Dish.

One might argue that DirecTV Now is worth doing if the “unconnected” were the only target. But the benefits might also extend to other consumers who already buy either a fixed network or satellite-delivered linear service.

For AT&T there are trade-offs in other areas, particularly the need to ensure that its access bandwidth assets are plentiful enough to support the big upsurge in bandwidth consumption on mobile and fixed networks.

Nobody knows precisely when the slow decline of the linear video business might become non-linear and rapidly decelerate. AT&T now is acting as though it wants to move faster, even if some might argue linear TV providers can rely on  a relatively long transition period.

IoT Simply is the Future

There is a very good reason why firms such as AT&T, Verizon and others are investing in what might be called the next generation of revenue models for mobile and fixed networks: carrots and sticks.

The carrot is the huge range of applications and services related to Internet of Things, ranging from connected car to smart cities, that will underpin future revenue models.

The stick is the need to replace half of all current revenue over a decade, and perhaps over each of the next decades to come after that.

So mobile operators are investing to support future IoT apps for the same reason people pick certain spots to fish: that is where the fish are. That is reflected not only by high level strategy--the need to discover or create huge new revenue sources--but also by the prosaic changes in market demand for communications-related services.

To a greater extent than at present, more of the communications demand generated by IoT will come from urban areas, less from rural and suburban areas.

At a high level, more people will choose to live in urban areas, as opposed to rural and suburban areas. Higher density will mean better economics for autonomous vehicles and transportation overall.

So smart cities will be built on huge networks of sensors, big data and rich communications.

To be sure, it is possible everybody is wrong. But enterprise executives believe they will need IoT, and that IoT could be transformative for their industries.

source: IoT Analytics

T-Mobile US Customers Lead Daily Mobile Data Usage

Lower the price of some desired product and consumers will buy more of it, basic economics suggests.

And that might be precisely what is happening with U.S. customer mobile data consumption, as T-Mobile US, generally considered the “price leader,” has the highest average daily mobile data consumption, while Verizon Wireless, generally considered the most-expensive of the four leading U.S. mobile service providers, has the least average daily data consumption.

source: Business Insider