Consumer electronics manufacturers oppose Canvas

Why would a consumer electronics manufacture, like Sony, oppose the joint BBC, ITV and BT venture?

Heard of Blu-ray? It’s the DVD standard for high definition videos. It was developed by Sony. There were a few other standards that contended but, eventually they fell by the wayside as consumer caution and confusion held sales of new DVD players back. The manufactures agreed to adopt a single standard. Simpler for everyone.

So you may think everyone is a winner! But as they might have said in “Animal Farm”, some are bigger winners than others

Sony own the technology so every time a Hollywood film studio or anyone else produces a Blu-ray DVD they pay Sony a licence fee. Small it may be but with increasing volumes it ends up being significant. Sony also get a licence fee everytime a manufacturer makes a new DVD player with the Blu-ray technology in it. Again another revenue stream. Sony clearly don’t pay themselves when they make a DVD player so they have a commercial advantage over their competition.

You might say it makes sense and they developed the technology so why should they not reap the rewards. I’d have to agree.

Now think of the Internet or World Wide Web. Who owns that? No one it is an amalgamation of networks (each owned by a seprate company) and computers (each made by a wide variety of manufactures) and a vast aray of information and service provider. It is seen (by some) as the next evolution of humanity, globalising the world and empowering the people.

Who invented it? Well it was a cooperation of non-profit making organisations, The US army and universities principally. It was also help by IBM that didn’t think coordinated the development of the Personal Computer but didn’t think it was a big market so didn’t protect their investment.

ITV is a profit making (or would like to be) company, as is BT, but the BBC is not. What they want to develop in Project Canvas is an open architecture way to deliver high quality video over the internet. Their motives? ITV needs to replace (or at least bolster) its broken ad funded broadcast business model. BT know that video over the internet is coming and a) wants to reduce the cost (or get some more money) of delivering it and the BBC (God bless their cotton socks) have as part of their reson detra , “access”.

The internet improves access from a number of view points. Not only does it extend beyond the traditional limitations of broadcasting, it caters for individual choice, on demand and catch-up services.

If the device in the home can be a PC, Mac or generic set top box then consumers will not have to go out and buy a new box (the end of the world is nigh). Undoubtedly Sony and other manufactures have their own proprietary solution and that is why they are calling foul.

With the exception of the big boys that have done the R&D and have the global presence to impose a standard I think that any other manufacturer should be looking at this as an opportunity. If suddenly I can download stuff (and lots of it) I have two problems; where do a store it (these are not small files) and how do I manage it (what is it, where is it, can I watch it now, how do I get it from my PC to my TV etc etc etc).

The other thing is, no one predicted SMS messaging as a major revenue source for mobile, it was cheap and easy, and look how the consumers took to it. The Internet is the same, no one predicted its commercial and global impact at the start (except me – I wish) and look how people were able to make it (despite its faults) into something so powerful that governments (of all shades) are afraid of it. I’m not suggesting that Project Canvas has the same potential, but who knows if it is cheap and accesable

If Sony come up with something better, even if it is more expensive people will still buy it, if it delivers “value”. I drive a car and it is more expensive than public transport, but it has other values beyond taking me form a-to-b, that makes it worth it to me.

ITV results are bad news, but what are they going to do about it?

ITV results are bad news, but what are they going to do about it?

Well it seems blame the regulator, the economic conditions, the growth in digital TV and the internet.

Have blamed everything it seems tat they are going to cut cost and look at revenue generation.

Cutting costs is what Charles Allan did for several years. Outside observers could say that this drove out creativity, drove away viewers and eventually led to where they are today.

Carolyn Fairbairn (ITV’s group strategy director) says that the TV advertising model is broken. That advertising rates in the UK are the lowest in Europe. She was speaking at the London Business School (3rd March 09) in a debate titled “Future of UK PSB Television”

Is the advertising model broken? There are lots of commercially funded TV channels in the UK that seem to be doing OK. Sure its harder but ITV has failed to adapt so from their perspective it is broken.

Who cares? No one really ITV is not delivering the audiances that the advertisers want or the programming the viewers want. Michael Grade, in an interview today (BBC Radio 4) when questioned about his strategy of using content creativity, to grow the business, said, that ITV were creating content for which they could generate a return on investment for their shareholders. The interviewer queried, “So what about the viewers?” To which Micheal Grade had a long pause (almost “I hadn’t thought about that” moment) before claiming that the content was attracting audience. NOT ENOUGH OF THE RIGHT ONES MICHAEL.

The denial of what is going on is what happens in many industries where the dynamics change and the incumbent/dominant players are unable/willing to make the changes necessary. Example the British Motorcycle industry when the Japanese arrived. The mechanical digger industry when hydraulics came along and the computer industry as generic PC’s took over from mainframes and narrow word processing systems.

ITV strategy must be to get cheaper home grown talent and innovative content. Don’t pay through the nose for Ant and Dec for Simon Cowell.

Use ITV 3 and 4 - try an Opendoor slot for independent producers, armature groups and University media departments (maybe even consumers) to showcase programmes. A talent slot rather than a talent show. Themed so that it isn’t random what consumers will see – Comedy, Drama, Music etc This may not be right but try something other than blaming everything else.

Put your viewers first and if they come back so will the advertisers.