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Scarcity Breeds Aggregation Opportunities
Following is a guest post from Sam Vasisht, president of 21TechMedia which specializes in advisory services, business and marketing consulting for digital media companies. Sam was previously VP of Marketing at On2 Technologies, now part of Google's WebM initiative. He blogs at www.techmediatalk.com and can be followed on Twitter @21TechMedia.
Scarcity Breeds Aggregation Opportunities
by Sam Vasisht
Based on news from the world of online video over the past few weeks, the dust is starting to settle on a number of topics that had been contentious, if not controversial for some time. Among them is the affirmation of online services as a bona fide monetization model for major media. This was stated by Viacom on its earnings call two weeks ago. Similar signals from other corners of the industry range across Netflix's price increases in its continuing quest for premium content licensing; Amazon stepping up its game in video streaming with a licensing deal with NBC and a few weeks earlier with CBS; and Hulu attaching attractive 5 year content licenses with its rumored sale offer while signing up additional content deals as well.
The race for content aggregation is on.
Content is just one form of aggregation that is the hallmark of the industry. The flip side of content aggregation is audience aggregation. The idea of long tail and ‘market segmentation of one’ is great in theory, but businesses are built on aggregation.
I have long maintained that aggregation is a fact of life and will dictate much of how the industry evolves. Even TV Everywhere is in fact a virtual aggregation model of different services such as HBO GO, linear channels such as CNN, and now Fox’s pay-wall for broadcast programming. Google TV’s Achilles heel, in addition to all its other flaws, was its inability to aggregate meaningful content for video audiences. Among the breaking news over the past few weeks was also the continuing saga of Google TV’s dismal performance with the release of data that returns exceeded shipments. More on Google TV later.
Where the rubber meets the road is when aggregation models intersect with business models and technical underpinnings. That’s when the economics of scarcity take over and the interesting business dynamics emerge. (All economics are economics of scarcity, so that is a redundant term btw, but I thought I would use it for emphasis).
In traditional Pay-TV, the scarcity was in spectrum, whether for cable, broadcast or satellite. This made it a medium for premium, high value content broadcasts that could reach millions of users simultaneously. Today emerging scarcity is bandwidth, user interface real estate, time - and assuredly more scarce resources will emerge over time that will shape the industry and our businesses.
At the same time, such scarcity creates opportunities.
While premium content services and mega million content deals have been getting the spotlight, there are a lot of things going on in our industry that address the impending scarcity that could become bottlenecks in the growth of our industry. A few examples illustrate the point:- Recently, mobile bandwidth caps have become a reality. New bandwidth optimization and traffic management technologies are abounding in the shadows of the big news of multi-million dollar content deals. The Net Neutrality debate is another face of bandwidth scarcity.
- Best Buy’s Insignia Connected TVs are using TiVo’s UI – another piece of recent news. That’s a first for TiVo, and may well be a good business for them. Rovi has filed law suits against Hulu, and earlier sued Amazon for its search and program guide IP. Whoever can figure out the UI challenges to all this content getting aggregated, presented, discovered and displayed will have much to gain.
- Lastly, consumers’ lack of time and attention is creating the opportunity to aggregate different types of services in new and interesting ways that can be classified as social TV, second-screen or multi-screen experiences or whatever else, but it is creating new aggregation challenges to be solved. And there is no dearth of takers in addressing these challenges.
What are you aggregating that this industry needs?Categories: Aggregators, Devices
Topics: Apple, Best Buy, Hulu, NBC, Netflix, Viacom
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