The Economist writes about Joost:
[Joost] s based on P2P software that runs on people’s computers, just like Skype and KaZaA. And it does indeed promise to transform the experience of watching television by combining what people like about old-fashioned TV with the exciting possibilities of the internet. But unlike KaZaA and Skype, says Fredrik de Wahl, a Swede whom Messrs Zennstrm and Friis have hired as Joost’s boss, Joost does not disrupt the industry that it is entering. Instead, rather than undercutting television networks and producers, he says, Joost might, as it were, give them new juice.
Joost is also ignoring the two business models seen as the most respectable alternatives to advertising. One is to make users pay for each television show or film they download, but then to let them keep it. This is the tack chosen by Apple, an electronics firm that sells videos on iTunes, its popular online store; by Amazon, the largest online retailer; and by Wal-Mart, the largest traditional retailer, which launched a video-download service this week. The other approach is to let users subscribe to what is, in effect, an all-you-can-eat buffet of videos, and then to stream video to their computers without leaving a permanent copy. This is the approach taken by, for instance, Netflix, a Californian firm that mostly delivers DVDs to its subscribers by post, but now also streams films.
New models of software pricing and distribution are becoming increasingly popular. “Open source” software relies on voluntary programmers to build applications that can be distributed freely. Ad supported software includes web-based applications that are free as well, but they generate revenue through advertisements. Also on the increase: “on-demand” software where customers rent software applications when they need them and pay only for what they use.
All of these models pose unique threats to Microsoft, although that is hardly news to CEO Steve Ballmer, who clearly sees the challenges ahead. At a Wharton Leadership Lecture this past December, Ballmer noted that the two biggest competitive threats to Microsoft are open source software and advertising supported applications. “Right now, the emblem of the first one is Linux and the emblem of the second one is Google. But it’s not the companies, it’s the phenomena” that present the greatest challenge to Microsoft, said Ballmer.
Marek Pawlowski writes: “Humans are naturally social creatures. Mobile devices are becoming the main tool we use to interact with our peers and our environment. Combining these elements in a network which allows experience, intelligence and context to be shared freely will lead to an explosion in network usage. The challenge for the mobile industry is to understand the wide range of behaviours which drive this kind of activity and find a way to price services effectively.”
AlwaysOn has a commentary by online marketing guru David Carlick. Among his predictions:
Populations will replace demographics.
It isnt about the long tail; its about the small population: Everyone lies within the center of a bell curve, and the trick is placing them in small populations where theyre at the center. (Targeting!) Online marketers are able to do this in a way that broadcasters and big print cant. (Think of the checkout process at Amazon.) Thanks to computers and software and increasingly intelligent algorithms, we can bucket these small populations with behavioral information so that we can refi ne our relevance and targeting. Demographics, by contrast, are far too clumsy for an openmedia world. Case in point: Something like 30% of the traffi c at the womans site iVillage is made up of men. And demographicsnot psychographics or behavioral targetingwere what led Honda to make the delightfully successful mistake of introducing the Element as a youth car only to have it snapped up by geezers who loved its practicality.
At 10%, VAS is an important element of the mobile operators revenue mix. VAS can be split into three primary streams: P2P (person-to-person) SMS which is about 7% of total revenue, ringtones (including ringback tones) at about 1%, P2A and A2P (person-to-application and application-to-person) SMS services at about 1%, and various other services like WAP and gaming making up the balance. Music has undoubtedly been the biggest success story in the form of ringtones and caller ringback tones, and FM. Most of this music comes from Bollywood.
The most important challenge that VAS providers in India face is the revenue sharing ratio in India. Unlike China, Indian mobile operators tend to keep a lions share of the revenues accruing from the user. There are also some issues with lack of transparency. From the operators perspective, they are making the investments in the network and customer acquisition, and therefore they believe they are entitled to a significant portion of the user payments. This is a debate that is likely to go on for some time.
Another issue which is hampering growth of the VAS industry in India is the slow adoption of GPRS, which is critical for getting users to download multimedia content, polyphonic ringtones, true tones, games, and access the Internet. Even though more than a fifth of the phones in India are GPRS-capable, only a very small percentage have actually enabled GPRS. This has to change if the industry has to grow its revenues rapidly.
Contentsutra wrote: Stars Viren Popli feels that the content business has to be a seamless experience on the mobile device and theres a huge opportunity in India to provide every Indian a chance to view what he wants to, when he wants to view it. GPRS needs to be driven to 40-50 percent, and not 10%… When asked about how open operators are to improving the VAS situation Popli said that for operators, VAS is still not a strategic decision – at a national level, the focus is on getting more subscribers, while in the metro circles, the circle heads are more open.
There was plenty of discussion around mobile gaming, mobile TV, mobile communities, search and advertising. But at the end of the day, one could not help feeling that the VAS industry is waiting for a magic wand to come and take it up into the skies of higher revenues.