Thursday, 7 October 2010

Keep taking the Tablets

Last week I spoke at the C21Media IPAD Summit at Bafta in London.

Thanks to the C21 team in particular Helen Pennington and David Jenkinson for putting on an informative and well attended event that delivered some good insights on how to profit from the tablet revolution. (and congratulations for securing ‘national treasure’ Stephen Fry as keynote speaker)

In my panel session I shared my prediction is that tablets will, by 2013, be the principal mobile distribution channel for rich media content, and will significantly grow the value of mobile entertainment market.

Based on current run rates & new launches, it is likely that up to 10 million tablets will be sold in the UK alone in the next 3 years.  Propensity to pay for content is relatively high (only 26% of IPAD apps are free, and average spend is $5 per app – much higher than for content bought on mobile phones).  In addition screen & player quality, intuitive UI, robust DRM and simple billing & settlement address a number of barriers to adoption of mobile content – and will open up new pay markets for mobile video, magazines, newspapers, children’s edutainment and E-Books.  Finally, OEM’s and others who are betting on this market are reliant on the support of big media brands, as content lies at the heart of the consumer proposition.

The early signs on market development are very encouraging, but there is reason to be cautious. Media companies, OEM’s and others who want to play in this space need to be cognisant of the immaturity of the space and the teething troubles that will be encountered.  My advice, carefully manage expectations.

Network quality and connection speeds remain a particular issue for rich media content.  Playing with the IPad on wi-fi last week I had a bad case of the ‘worldwide wait’.  Downloading a video enabled app took too long for comfort.

Store, player and billing integration on tablets coming to market in 2011 will not be as seamless as on the IPad.  On some devices there will be no Operator billing on OEM storefronts, and on other devices there will be several storefronts (both OEM, and MNO) competing for attention.  This will contribute to a sub-optimal customer experience.

Commercial models still remain uncertain.  Apple has carved out certain content categories from its App Store, including Music, TV programming and films.  Other categories may follow.  So opportunities for content owners to go direct to consumer may be more limited than hoped.  However the position on competitor devices may be different, as storefront owners finalise policy.

Nevertheless I would encourage experimentation now, particularly for those companies that have R&D budgets and are prepared to take the long view of the market opportunity.

My advice would be to develop products that take advantage of unique capabilities of the device and connectivity, rather than repackaging old content.  Penguin’s ‘Spot the Dog’ IPad App is a nice example.  As Stephen Fry mentioned last week, if the end user can feel the love that has gone into the product, you have at least some of the ingredients for success.

Skill up in digital retailing and learn from players who are really exploiting the dynamic & freemium pricing opportunities offered.

Think carefully about how many platforms to distribute to. With most developers only willing to develop two versions of their Apps,  storefronts outside of the top two (which are likely to remain ITunes and Android MarketPlace) may find it more difficult to scale.  In the long term I think survival for smaller retailers will be down to targeting niches (both specific customer groups and content genres).   However as the market plays out, content owners can take advantage of the willingness of storefronts to pay for market share.  Nokia’s substantial investment in an exclusive X-Factor App for their Ovi Store is a case in point.

And finally be clear about what you want to learn.  Lots of players are treating their experience in the tablet market like teenage sex.  Lots of fumbling about in the dark and no real knowledge of what they should be doing.  Fortunately it doesn’t have to be like that.  There are lessons that can be learned from the evolution of the Apps & mobile entertainment space, and by testing out a variety of product, distribution and commercial strategies.

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