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Tuesday, 31 December 2013

Multi-homing on social networks

As last post of the year I'd like to cite this FT article, which talks about a recent Pew survey confirming that about 40% of adults divide their time between Facebook and another social networking platform. Professionals tend to spend a significant amount of time on LinkedIn besides Facebook (not a surprise) and a large proportion of women tend to use Pinterest besides Facebook. This is totally consistent with economic theory applied to platform competition in the presence of local (as opposed to global) network effects. Our paper with Kaifu Zhang, currently at CKGSB, describes exactly this phenomenon and analyzes how it may manifest itself in the presence of a 'dominant site' such as Facebook. If time spent on a platform relative to that spent on others is the relevant measure of market power, then worrying about Facebook's dominance has always been misplaced. Can Facebook really be anything to anyone over the Internet? Not really... Similarly, I find silly the recent arguments that Facebook is becoming increasingly irrelevant because young people spend more time on chatting sites and less time liking each others' posts. People seem to look for another big thing to which everyone is likely to migrate. But the dynamics of the Web are strongly influenced by local network effects meaning that it is an ecosystem of strong platforms rather than one big site that is likely to dominate social networking. Facebook, with its billion plus active members is certainly a strong candidate to be part of this ecosystem. However, worries about adequate revenue models for the firms in the ecosystem are well justified: it is still not clear how such a fragmented attention base can be efficiently monetized.

Monday, 16 December 2013

Will the cable bundle survive?

A recent article in The Economist about Comcast, nicely describes the challenges faced by the cable giant at a time when a hoard of start-ups challenge the traditional cable subscription model. People talk of "cord-cutters" (and increasingly of "cord-nevers") and there is a general sense that the traditional model needs to change somehow even if there is little consensus on what model(s) will emerge eventually. In all discussions however, the idea that the cable bundle has to break apart seems to come up and people quickly point to the experience of the music industry. Unbundled services over the Internet exist already (e.g. AppleTV) but it is too early to say if they will take over the cable bundle. Cord-cutting is still slow and the prices of cable subscriptions have kept increasing at 4-5% over the last years despite the slow recovery from the recession, which indicates that coach potatoes still see value in it. With the purchase of NBCUniversal, Comcast clearly bet on the future of the cable bundle. In fact, it tries to increase the value of the bundle by packing in even more services in it and making them more convenient in terms of search and access. It is a big bet but one should never under-estimate how lazy coach potatoes are.

Just today a great article in the FT complements the picture. It analyzes the cable operator market and how it is likely to consolidate.

Tuesday, 3 December 2013

Recent Evidence on 'Forecasting'

Forecasting is important in every aspect of life and in business in particular. Grossly simplifying, the last two decades' academic research came to the general conclusion that crowds do better than individuals, the so-called "wisdom of crowds (WOC)" hypothesis. One of the resulting 'innovations' is the idea of prediction markets where people trade securities whose payoffs are tied to specific outcomes/events. Market prices provide 'superior' forecasts for the likelihood of the events in question. With social media broadly available to large and distributed populations, prediction markets are thriving...
    Recent research conducted by IARPA seems to indicate that the WOC insight might be challenged - at least to some degree. Clearly, prediction markets do much better than the average expert participating in them. But it also seems to be the case that the top 2% of forecasters can beat the market by a relatively large margin. First, it seems that the elite forecasters do seem to do better systematically over time, so their performance is not just luck. Moreover, if you team them up, then together, they can beat prediction markets by 20-35%.
    Prediction markets are cool forecasting tools but their weakness is that they give away the forecast, so in business where one wants to generate superior insights it is hard to discover proprietary information this way. But what if firms ran forecasting tournaments to discover the few experts that can provide sustainable advantage for them? Of course, the question then becomes: at what price will these experts share their views with the firm!

Monday, 25 November 2013

Making Mobile Ads That Work

Here is a link to the HBR article we have just published on mobile ads. Examining a large number of mobile campaigns across many categories, our main discovery is that - somewhat surprisingly - mobile ads seem to work for products that are "utilitarian" (e.g. they fulfill a practical need) and "high involvement" (they represent an important choice, e.g. they are expensive). The real learning from our study however, is that mobile ads seem to work by reminding consumers of the product and/or campaigns about the product, thereby making higher bandwidth communication (e.g. TV ads) more efficient. We believe that now is the time for really talking about integrated marketing communication.

Thursday, 7 November 2013

Google under attack - again

And on multiple fronts...... First, the so-called Rockstar Consortium and Netstar Technolgoies have filed a major patent infringement lawsuit against Google and some of its mobile partners at the end of last week. More details can be read about the case here. The group is, essentially, a patent troll with some of the major tech companies behind it, including Microsoft, Apple, Blackberry, Sony and Ericsson. It has over 6 thousand patents related to mobile telecommunications technology, which were acquired with failed Nortel in 2009 for $4.5 billion. Google lost that bid against the consortium but later bought Motorola Mobility for $12.5 billion amassing some 17 thousand patents. Will this war chest be strong enough to defend itself in the lawsuit that attacks its hugely successful Android operating system in its very fundamental functions, such as "the ability to send advertising to people related to a search query"? Google has also been attacked on the content-side, held responsible for "not doing enough against piracy" by Senator Chris Dodd who has emerged as the main lobbyist of the Motion Picture Association of America. While nasty (as attacks are meant to be), this initiative is also pretty dumb as it completely misses its target, namely the companies who actually pirate the content and allow free streaming for everyone. These are just two of the recent major attacks against Google in the US. Hundreds of other claims are pending abroad, namely in Europe (see for an example here) where media companies are losing the plot of the Internet age. Not easy to be successful....

Thursday, 31 October 2013

The evolution of tablet operating systems

This video by The Economist is a great summary of the evolution of tablet operating systems, showing how successful Android has been in this domain as well. Given the competitive dynamics, Android's share growth is likely to continue as it benefits from the cutthroat competition among tablet manufacturers. Moreover, it is built on the previous success of Android as a mobile operating system. The i-phone was launched in 2007 but even that year may not represent the beginning of the story. Rather, it is 2005, when Google purchased Android, a small mobile start-up at the time, with the goal to make search available on mobile devices. From the beginning, the idea was to make it an open system (even making the source code available), giving it away for free (with Google search embedded in it of course) and making it open for app developers. Even before the first Android phone appeared, there were already many apps available for Android. This strategy required quite some foresight from the Google founders on the evolution of the mobile Web.

Wednesday, 30 October 2013

Ad Agencies threatened?

With advertising dollars quickly migrating from traditional media to the digital world it is reasonable to expect that ad agencies will change as well. Digital marketing is all about measurement - goes the newly discovered 'big data wisdom' - so ad agencies need to adapt and acquire serious analytic and data-mining skills. To be fair, they all have been doing this in the last years, acquiring small boutiques or developing in-house digital analytic capabilities. For the industry it is more worrisome that, increasingly, large data-driven consulting firms seem to make a strong move in the digital advertising business. Deloitte, Accenture and Booz-Allen, the largest operations consultants have all developed capabilities in this area or picked up ad agencies specialized in digital marketing. The most recent such acquisitions are by Deloitte, which purchased a Seattle-based social media agency as well as another firm from Brisbane, specialized in Web development. Do consultants represent a threat to traditional ad agencies, given that they naturally have strength in data analysis? To some extent they always did. Professional services firms have invaded each others' territories before: accountants got into consulting, as did ad agencies themselves. Most consulting firms had marketing practices before and wouldn't shy away from 'strategic branding' projects. However, the current focus on data is missing the key issues in digital marketing: (i) creativity and (ii) integration. In a context when a large number of new tools are available for marketers, these aspects of value creation are far more important than analytics, much of which can be subcontracted to small data-mining boutiques. The point is not to say that "analytic capabilities do not matter" - they do - but that creativity and integration matter more than before with the proliferation of new media platforms and non-standard marketing vehicles. Do consulting firms have an advantage in these critical domains? Probably not.

Tuesday, 22 October 2013

Supply of movies - is there a threat to innovation?

Release data plotted over time (MPAA represents majors)
File sharing and piracy reduces studio revenues and prevents firms from recouping the ever larger investments needed for the production of new releases. As such, piracy is claimed to 'kill' innovation and creative production, which will ultimately hurt consumers. The industry has been heavily lobbying for stronger protection from piracy. In a new paper, Joel Waldfogel of the Carlson School of Management argues that technological development has massively declined the cost of producing new movies. Moreover, the same developments that allow massive file sharing also made the discovery of new movies much more effective, thereby substantially reducing the total cost of a new release. This effect counteracts the detrimental impact of piracy and may actually result in an increase of releases and innovation in general (similarly to what happened in other creative businesses, namely music and books). Using IMDb data, the paper shows that this indeed seems to be the case. Since 1990 the annual number of US features and documentaries produced has increased by more than five and ten times, respectively. Moreover, while the number of new releases from the major Hollywood studios hasn't really changed, independent movies make up a large and growing share of what succeeds in the market. The new vintages of movies are far from being of low quality and there is evidence that they are appealing to audiences and critics alike. The movie industry seems to be in better health than ever!

Thursday, 3 October 2013

Demand for Movies

This graph was the starting point of the presentation by Luis Cabral at the first meeting of the NYC Media seminar series (which I highly recommend to media-minded academics). The full paper can be seen here. The X axis measures the box office performance of each movie shown at its opening week compared to the second best performing movie that week. The graph clearly shows that being # 1 on the opening week has a disproportionate effect for the intake of the movie over its full life-cycle. Concretely, while the average box office revenue is about $22 million, the #1 movie takes in on average $93 million. This boost comes from two effects. One is the effect of 'surprise', i.e. the revealed information that the movie is good. More importantly, the much larger second effect (accounting for about $45 million on average) is an awareness effect, i.e. free advertising for the movie in the press and elsewhere. The data contains about 10 thousand feature films released in U.S. theaters between Jan 1, 1982 and Dec 31, 2009. It is important to realize that this advantage only counts the box office revenues. If we were to count all derivative revenues for the movie, the advantage of being # 1 is probably much higher.

Sunday, 8 September 2013

Competing for Attention on Social Networks

Recently, there has been some talk about how major social networks are not as cool or useful anymore. Most of these arguments focus on the angle that the dominant networks are too large and broad, making it hard to create a more intimate environment for their users.

In a recent paper with Ganesh Iyer, we study this question from a different angle. We focus on the incentive of users to contribute to the conversation. Importantly, people want to be heard, thus they only make an effort to send out messages if they can expect to be listened to. The main result of the paper demonstrates that as the network becomes denser and as each user competes with more of their peers for the attention of listeners, it takes more effort to remain relevant. This, in turn may deter users from contributing as reflected in what's called participation inequality. That is, that only a few percentage of users actively contribute.

Having links in a social network is nonetheless very important as provides reach to users who decide to contribute, but after a threshold too many links deter contributors. Perhaps this is the reason for some new players limiting the number of connections that a user can have.

The figure shows the number of users who would decide to contribute as a function of network density in a small network (for different levels of contribution cost/difficulty). As density increases, initially more people contribute, but after a threshold the number of contributing users declines:

Saturday, 31 August 2013

Google's dominance in digital advertising

I am simply re-blogging a recent newsletter by E-marketer that reports the digital ad revenue-shares of major players in the US. The key data can be seen in this table below. What is remarkable is how much Google is forecast to dominate the industry with even Facebook only a distant second. The report also forecasts Google to dominate in mobile as digital ad revenues are shifting there. 

Friday, 9 August 2013

Browser wars

I have written before about Browser wars on this blog: you can read it here. About a year ago, it became clear that Chrome is taking over the world as the most preferred browser. A recent post by The Economist confirms the trend with new data and a superb interactive chart showing the dominance of different browsers in the countries of the world at different points in time. The overall verdict is clear from the attached chart: Chrome is winning.

Wednesday, 7 August 2013

Global advertising spend 2

In an earlier post, I have reported global ad spend by type. The same data is available by region. No real surprises: About $340 billion of the global spend (roughly $500 billion) comes from the developed world (US, Europe and Japan). These markets are flat however, and most of the growth is coming from the developing world, especially China and Latin America, which grow at around 12%.

Media and the productivity debate

A few days ago, along with many other countries, the US has changed the way GDP is calculated. Details of the news as reported by The Economist can be seen here. The change is significant: about $560 billion or about 3% of the actual US GDP, which corresponds to roughly the size of the Swedish economy. What is really cool however, is that most of this increase in GDP comes from spending on innovations (patents) and copyrighted material, essentially from media.

This change should put in a totally different perspective the current debate over the loss of US productivity. Clearly, correctly accounting for these new, value-creating activities should boost the productivity of the US economy, especially if we compare it to the previous (so-called 'golden') period between WWII and 1970. The share of these activities has become much higher compared to the '50-60s period and thus, the productivity slowdown should be mitigated. The new measures should also provide better account for the contribution of IT to the economy, which was largely missed when working with the old measures implemented in 1945. I am curious to see to what extent will the media sector 'save' the productivity of the US economy?

Thursday, 20 June 2013

Global advertising spend in 2013

Roughly half way through the year, estimates seem to draw a coherent picture about the size and the various components of the total 2013 advertising spending in the world. Total spend is some half a trillion dollars. About a third of this comes from the US and most of the growth is from the emerging economies.
More interesting is the evolution of the composition of advertising spend. TV still dominates and the classical media are relatively stable. Only print declines, albeit slowly at -4%. What is notable - although not that surprising - is  the explosive growth of digital advertising spend and, in particular, mobile and social-media ad spend. Search, video and classical digital (banner) advertising also grows at a fast pace (10-20%). At this rate of change, it is reasonable to assume that digital media will represent 25% of total spend by the end of next year.

Sunday, 26 May 2013

Video game history

Here is a great infographics from The Economist on the history of video game consoles. It shows the growth of the industry but also its interesting dynamics as its cadence is clearly defined by 'console generations'. Moreover, it is clear from the chart that each generation is strongly dominated by one company, generally a different one for each generation of consoles. The regular change of the 'leader' is an interesting phenomenon and it is not always the case for high-tech, R&D driven industries. A great counter-example is the microprocessor industry, which shows a similar growth pattern and also exhibits clear generations: remember the XT, AT, 286, 386, 486, Pentium sequence? However, the leader has always been the same, at least until recently: Intel. What is the difference between these markets? This is the puzzle that we tried to solve in a paper with Elie Ofek of Harvard Business School a few years ago. We argue that the answer lies in the nature of the advantage that 'being a leader' buys for the firm. When advantage means 'higher return on R&D spending' then a dominant firm tends to invest more and, as a result, likely remain the leader. However, if the advantage simply means a 'loyal set of locked-in customers', then the leader has an incentive to lay back, which generally makes it lose its dominant position. The Economist article correctly points out that the nice pattern on the infographics might be changing. The reason is that gaming increasingly moves to the Internet and is increasingly dominated by social gaming. Does this mean that hardcore action games, based on consoles will disappear? Probably not. But growth may slow down and this might also change the industry dynamics.

Thursday, 9 May 2013


This article by The Economist is a super summary of the musical business with a great video in it. It is surprising that in this world where people seem to favor `easy access, anywhere, anytime', live performances do so well. Given the data presented in the article, musicals are more valuable pieces of intellectual properties than any movie or TV show.

Thursday, 2 May 2013

Contradictions about Facebook

Lots of data and commentary came out about Facebook these past few days. One set concerns the membership base. Here, the worry is about peaking membership numbers and an aging user base. Not only seem older users be more interested in Facebook than before but younger ones appear to disengage with it. Other sources confirm the "youth problem" (see infographics on the right) but argue that members have simply shifted to mobile not well captured by current statistics (note also that younger users often do not have smartphones in equal numbers to adults).

Another set of news concerns advertising revenues. Here, the positive news is that revenues have increased 30+% compared to the first quarter last year. There have been a lot of new advertising products introduced and mobile advertising is substantially up. The more pessimistic view is that despite these changes, profits remained flat.

To me the real worry is that there has not been any game-changing move from Facebook in the past two years. Sure, there is a lot of incremental innovation: the move to mobile, some new products, etc. But the user experience is essentially the same for years now (mobile or not, in fact with more ads, somewhat less attractive). The revenue model is also identical even if somewhat better executed. But the $5-6 billion revenue simply does not justify the valuation.

Thursday, 18 April 2013

Making sense of media M&A-s

Today's FT pays tribute to The Curse of the Mogul by summarizing global M&A activity in Media since 2009, a particularly disastrous year for the industry. The general point of the article is that - maybe - media firms have learnt a lesson as they seem to be more worried about the efficiency of their core businesses rather than pursuing diversification to build media empires. Is it just the crisis that forced down mogul instincts or will the learning last?

Monday, 15 April 2013

Aereo and Regulation

Usually, I am for the least possible regulation. It is indeed very hard to have good judgment on all trade-offs and, as a result, regulation may do more harm than good. Aereo's new business of streaming free broadcast TV channels to (mobile) Internet devices for a fee is definitely a good illustration of how complex a problem regulation needs to address. Re-transmitting free broadcast TV for a fee is illegal. Cable companies pay a fee to the TV channels. However, Aereo argues that, legally, it does not re-transmit free broadcast TV because it rents an individual antenna to each individual customer. This argument doesn't really make sense and circumvents the regulation with a small technical argument. Will regulators consider the law to the letter or its spirit? They need to come up with a strong decision, which will likely influence in a major way the evolution of the industry. As Aereo expands to over 20 counties (it already covers NYC) there is some urgency.

Tuesday, 9 April 2013

Music streaming

A few weeks ago The Economist has reported the most recent data about the music industry. The news is good: the bleeding has stopped and digital revenues are finally making up for lost CD sales. What is interesting though is what makes up the mix of digital revenues. The FT reports that while "iTunes-style" downloading still constitutes most of the $5.8 billion digital revenues, the share of streamed services revenues has grown to 20% from about 13% last year. The number of subscribers to these services grew to 20 million, a three-fold increase from two years ago. This is a substantial shift in consumer behavior and great news for Spotify and YouTube who were the fastest growing music streaming services last year. Interestingly they have wildly different business models: subscription-based vs. advertising supported, free service, respectively. If those YouTube videos manage to make it to the Google glasses, the world will definitely change. Quite exciting!

Friday, 29 March 2013

Generation C

"Generation C" is the new online marketing buzzword introduced by Google. It refers to people adopting a specific online behavior rather than a proper generation in terms of a demographic group. In fact, Generation C is quite dispersed in terms of age: 18-35. Their behavior is characterized by the 4C-s: connection, creation, community and curation. They are heavy users of YouTube, generally on multiple devices. They are not just consumers of the site but also contributors and "sharers/editors". No wonder Google wants to understand who they are and how to identify them online. Not only do they represent a sizable chunk of the -by now - more than a billion daily views on YouTube but they contribute a disproportionate chunk of the activity in and around content creation.

Friday, 22 March 2013

Browser wars

This chart that appeared last week in The Economist is very telling. Similar data and implied trends about browser shares worldwide have been published elsewhere. Chrome's dominance is dramatic.

The trend certainly has to do with the decline of PC use, which is somewhat responsible for Explorer's decreasing share. However, if this were the only thing at play then Safari's share should grow since tablets (and Apple's iPad in particular) have rapidly gained share in recent years. It seems that Chrome's success is based on a more fundamental thing. My guess is that it is 'quality'. Chrome is much more stable than other browsers that often crash on certain pages.

It is ironic that Microsoft has just been fined over a neglected promise in Europe concerning the (un)bundling of its browser. In the future it is likely that Google will have to worry about these things.

Monday, 18 March 2013

Video on demand: some news

Video on demand is the hottest topic in media nowadays. Many see it as the next technology ready to disrupt further an otherwise already disrupted traditional media landscape.

One question is: how should traditional channels react to the appearance of this new offer? Traditional channels still have the quality content. Sure, Netflix financed "The house of cards" but this is a drop in the sea of quality content offered by CBS, Time Warner, Disney and others. It is going to take a long time before video streaming sites will be able to provide the quality and the variety that traditional channels offer. Unless the channels sell the content to them, of course, which is what seems to be going on. According to the WSJ (March 15-17), CBS, for example, earns 10% of its operating income from subscription video on demand. Other channels are closer to 5%. Is this a good idea? I am not sure. It reminds me of the 1980's FMCG industry when national brands helped major retailers introducing their private label brands. In the short run, this meant extra revenues and the good use of capacity. In the long-run however, retail brands became much stronger than national brands reducing the latter's profitability. Providing good content to streaming sites definitely cannibalizes traditional TV viewing. The better the online content offering the faster will consumers learn that online is just as good but cheaper than cable (and there are no ads...).

Another pressing question is who will be the winners of online video streaming? The online channels who provide traditional content (Netflix, Hulu, etc.) or the likes of YouTube, Vimeo, or even Facebook, who rely heavily on user-generated content (although some started investing heavily in original content too). The latter group bets on a fundamental change in consumer behavior and taste. They seem to have a point: even traditional content is viewed differently in today's environment with second screens and a preference for seeing anything in the consumer's preferred time slot (think of binge viewing of series for instance).

It is also interesting to ask: how will this play out in other parts of the world, especially in Asia where growth is faster. Recent data shows that Asia is far from being a homogeneous market. A Bloomberg Businessweek article (March 4-10) reports data showing that Japan is much larger - with about a 120 million unique viewers per months - than any other country, although there is no data on China (India is at about 70 million unique viewers. Japan also has some local large sites besides YouTube (Dwango and FC2) and has few unique viewers for Facebook, that generally appears to be the second largest site in other Asian countries. Google sites in general are far ahead in every country surveyed with about 30-35% of the unique viewers. The global battle is raging on every front.

Friday, 1 March 2013


The Economist has a really nice article on the future of bookstores. Nothing new (they will mostly disappear or become coffee shops or theaters) but the picture below is quite cute!

Monday, 25 February 2013

US and the Internet

Today's FT article provides a striking tale on the reasons behind the US' dismal rank in Internet broadband service quality within the OECD. In less than twenty years, the US has moved from #1 to #16, advanced by most European countries, including Hungary and Estonia. The article argues that regulation is the root cause of this slide: the Obama administration systematically protects the Cable industry from competing technologies. Cable is now dominated by a duopoly, Comcast and Time Warner, who between them, basically share the entire US market, keeping prices high for mediocre quality. They have little incentive to invest as have competitors with insufficient scale to justify large capital expenditures needed for laying fibreoptic cable. The choice of the new FCC chief can be decisive in changing the status quo. But don't hold your breadth. Given the huge lobbying efforts of Comcast and its support for the current administration, it is unlikely that things will change.

Monday, 18 February 2013

Measurement challenges

With new media consumption patterns emerging, measuring media audiences has become a challenge. Yet, solving the problem is critical because without sound understanding of media consumption it is hard to justify advertising budgets, which in the U.S. today, stand at around half a trillion dollars (all media confounded). Just TV advertising, which is traditionally driven by media ratings, represents some $75 billion. The industry faces three broad problems related to measurement. First. little is known about consumers' behavior on new media. Take online video that seems to take off fast, yet there are huge differences in the estimates on how much time consumers spend watching it (for 2012, comScore estimated 4.2 billion hours while Nielsen's guess was a little more than 1 billion hours). The second problem concerns traditional media (mostly Television) and relates to time-shifted viewing. Consumers save shows for later viewing and devices often screen out the advertising. It is difficult to estimate the proportion of consumers affected but if time-shifted viewing becomes general, the implications are dramatic for the advertising industry. The final problem relates to the trend that, increasingly, consumers are connected to multiple devices (e.g., while they watch TV, they do other things on their tablets or smartphones). The industry talks about the "second screens" phenomenon. Here, it is not even clear how to measure the impact. Consumers watch the show, but are they turning to their i-Pads during the ads?

Tuesday, 12 February 2013

S&P sued by the government

Last week, news emerged that Standard & Poor, one of the three major credit rating agencies (CRAs) has been sued by the US government for misleading investors. A summary of the case by The Economist can be found here. The multi-billion dollar suit caused S&P's shares to drop some 25% while other ratings agencies' shares suffered similar losses. I have criticized CRAs many times in this blog and elsewhere, and the loosely surfaced evidence from the filing does support the broad criticism concerning CRAs in general. Yet, this heavy handed approach is quite unsettling. First, it seems that the government really went out of its way to punish S&P. The Economist's article highlights that the charges filed in California concern civil fraud, which is important because it is outside the protection of the First amendment that has effectively protected CRAs in the past. More worrying is that among the three main CRAs only S&P has been sued, the only one that has downgraded the US government. When I asked a friend about the case, his reaction was immediate: "the message is: 'Down't dare downgrading the US!'".

Tuesday, 5 February 2013


On February 1st, Netflix launched a new series, "House of Cards" featuring Kevin Spacey. The serie's production costs are estimated at over $100 million. Similar series are launched every month and in every possible genre (Downton Abbey is the latest craze in NYC, which - for those who have seen it - questions anything one has ever learnt about segmentation and targeting). Anyway, why is Netflix' launch news? It is so because this is the first major series launched online. Yet, Netflix is not alone. Hulu, Amazon and YouTube have also commissioned original content with the goal to provide high quality programming. Is this the beginning of a new era, similar to the rise of Cable? Every sign seems to indicate so. Today, Americans watch seven hours of online video per week, up 37% compared to last year. The advantage is, of course that the content can be watched whenever the customer desires!

Monday, 28 January 2013

Big Data vs. Quality Information

"Big Data" is a fashionable term nowadays and of course it boosts the demand for (among others) B2B media companies who often sell the data or setup ways to collect it. Yet, one should remember that the ultimate goal is to get good information to generate more value than competitors. My short article in The European Business Review describes some of the opportunities.

Thursday, 24 January 2013

Google rocks

Yesterday Google's stock went up some 8% after the earnings call for the fourth quarter of last year. The media talk about Google's progress in mobile advertising (see, for example, a Reuters report here). This explanation is a bit ambitious as it is not clear how much of the spectacular growth in revenues compared to last year came from mobile. What is true is that it vastly compensated for the (slowing) decline in advertising rates. This could be a sign that mobile rates are stabilizing but not a sure thing. Clearly though, Google rocks.

Monday, 14 January 2013

Evolution of Video Game Industry

This is a really cool chart that appeared in Bloomberg Businessweek (Dec. 10-16, 2012). It shows the share of new game releases for the different game platforms (PC, XBox, Playstation, iPad and their various sequels) for every year between 1975-2012. The chart is complex but closer examination reveals a few fascinating facts.

It is important to realize that the number of new releases per year has massively grown over the years. In 1975 there were only 24 video games on a single available platform, Arcade. By 1987, just 12 years later, this number grew to 1,225 new games/year. Not surprising given the explosion of new platforms (see the blue, yellow and purple 'hills' on the left side of the figure). What is surprising though is that the number of new releases doesn't really change till 2007, that is, for 20 years! In this period, the industry is dominated by two developments. First, platform consolidation. By 1998, 60-65% of games are developed for Microsoft's Windows and DOS platforms and for the newly emerging Playstation. Even in the mid-2000's Microsoft and Sony platforms own  70% of the new releases. Second, in this 20-year period, games become much more sophisticated, with the average development budget increasing from less than $0.1 million to $18 million.

Today, we are experiencing another revolution. It is largely due to the Internet and the associated explosion of a whole new generation of mobile hardware platforms (iPhone, iPad, etc.). In 2011, more than 730 games were released on the iPhone alone, which is only responsible for 15-18% of new releases. This means that the total number of releases in 2012 is around 4,000 games, four times more than the historical peak in the last 20 years! In other words, the Internet almost quadrupled the number of new games and we are just at the beginning of the life cycle of mobile devices.

Finally, it is interesting to see who the winners and losers are among the platforms. Playstation, the inventor of high-end games in the 90's has lost most of its share. Wii, who emerged as a revolution in the mid-2,000s is not doing well. Apple, who dominates the new mobile platforms is a big winner of course. But as is Microsoft, whose Windows platform is still strong (not surprising, given the huge installed base) and who still owns the successful XBox platform.

The interesting questions are (i) how far will the growth go? (ii) who will capture it? (iii) in particular, will the (by now) dominant Android mobile platform be able to get a large share of the gaming apps in the near future? Stay tuned!

Tuesday, 8 January 2013

Evolution of newspaper business

A really cool video on the evolution of the newspaper business in the US can be seen here. A snapshot is posted below. It basically shows that only the newspapers who convinced viewers to pay for digital content have done well, The Wall Street Journal and The New York Times. In fact, they have increased their viewership and the NYT has now more online users than traditional ones. It is not clear that profits increased though as online advertising rates are typically lower. In any case, the video is very revealing.

Friday, 4 January 2013

Happy New Year for Google

Today's Financial Times reports (on its first page) that Google's core search engine is cleared by US regulators from antitrust charges. This is good news for the search engine, which is still not entirely out of trouble on antitrust issues as it faces similar probes this month in the European court. Nevertheless, this is an important step forward and even more so in light of the reason provided for the decision: "Google's search practices don't harm consumers". Google does have a formidable technology that represents strong barriers to entry for competitors. However, as long as this technological advantage is exploited to improve the customer experience there is no reason to stop the industry leader. Let's hope Europe will also lean on the argument of meritocracy...