This past Sunday, my wife and I attended a fund-raising dinner in Manhattan for Hillary Clinton's 2008 presidential campaign. It was organized by Indian-Americans for Hillary - a group that supports her 2008 campaign. No, we did not pay $1,000 for an hamburger dinner. Neither are we very active followers of the U.S. presidential politics. We attended for the experience (our first), and our invitation was free (from a very close friend, whose employer was the main host).
The event, apparently the biggest of its kind, raised ~$2m for the former first lady. Given a rather early start for the 2008 campaign, it'd be hardly surprising if all the previous fund raising records get broken this time. Mrs. Clinton’s ties with the increasingly wealthy 2.3M-strong Indian-American community in the U.S. could therefore prove very helpful.
According to the US Census Bureau, Indian-Americans are the richest ethnic group in the country - their median annual income is $61k compared to the national median of $41k. More than 300,000 Indians work in the Silicon Valley, where their average annual income is $200k. This, combined with the increasing importance of India on the global economic scene, indicates that alienating Indian-Americans could be an expensive prospect in the US politics, as Barack Obama, Mrs. Clinton's main Democratic presidential rival, realized recently.
June 26, 2007
June 21, 2007
The Media Revolution - 2050
This is an interesting video on the future of the media industry. Too radical in my opinion, as most such predictions usually are. End of radio, TV, advertisement, books, abolition of copyright in 2020 after Lawrence Lessig, the author of Free Culture, takes over as the U.S. Secretary of Justice, etc.
Some are however on the mark. E.g., the concept of prosumer (producer + consumer) has already become mainstream, and is only going to gain further momentum.
Some are however on the mark. E.g., the concept of prosumer (producer + consumer) has already become mainstream, and is only going to gain further momentum.
June 15, 2007
Activity on my blog
It has been the longest break in my brief blogging history. My readers (though a tiny base) are pretty vocal in complaining that I need to be more active. Most are folks from my professional/personal network. Trust me, it's not lack of commitment, but rather lack of time due to a crazy travel and work schedule lately.
Going forward, I'll be writing shorter posts when I'm pressed for time in order to keep the blog active.
Going forward, I'll be writing shorter posts when I'm pressed for time in order to keep the blog active.
May 24, 2007
TiECon 2007 Conference
Last weekend I spoke at a panel at the TiECon conference in Santa Clara, CA. The topic was Web 2.0 - Redefining How We Live and Socialize Online and Offline. The Indus Entrepreneurs (TiE) is one of the most successful networks of entrepreneurs globally. Started in 1992 in Silicon Valley by a group of successful entrepreneurs, corporate executives, and senior professionals with roots in the Indus region (South Asia), the organization has grown to over 12,000 members in 45 chapters across 10 countries. Its mission is to foster entrepreneurship globally through mentoring, networking, and education. I've been involved with TiE for over 10 years now.
TiECon, the annual event of TiE's founding chapter in Silicon Valley, has evolved to become TiE's most important networking event for technologists, investors and entrepreneurs from around the world. About 4,000 people attended this year's event. Keynote speakers included Nobuyuki Idei, Chief Corp. Advisor & Ex-CEO, Sony Corp; Meg Whitman, President & CEO, eBay; Marc Benioff, Chairman & CEO, Salesforce.com; Vinod Khosla, venture capitalist (Khosla Ventures) and founding ex-CEO of Sun Microsystems; Tim O’Reilly, Web 2.0 thinker; among several others.
Talking to Nobuyuki Idei during the conference, he feels that Japan's aging and closed society critically needs an organization like TiE to spur openness and entrepreneurship in the country.
The theme for TiECon 2007 was "The New Face of Entrepreneurship." Fittingly, one of the attractions on the floor was Anshul Sharma, the 13-year old founder and CEO of Elementeo, a Silicon Valley gaming startup that aims to introduce fun and excitement into kids' education through games (instead of boring textbooks). Here is the video of Anshul confidently touting his new fantasy role playing board game to learn chemistry:
TiECon, the annual event of TiE's founding chapter in Silicon Valley, has evolved to become TiE's most important networking event for technologists, investors and entrepreneurs from around the world. About 4,000 people attended this year's event. Keynote speakers included Nobuyuki Idei, Chief Corp. Advisor & Ex-CEO, Sony Corp; Meg Whitman, President & CEO, eBay; Marc Benioff, Chairman & CEO, Salesforce.com; Vinod Khosla, venture capitalist (Khosla Ventures) and founding ex-CEO of Sun Microsystems; Tim O’Reilly, Web 2.0 thinker; among several others.
Talking to Nobuyuki Idei during the conference, he feels that Japan's aging and closed society critically needs an organization like TiE to spur openness and entrepreneurship in the country.
The theme for TiECon 2007 was "The New Face of Entrepreneurship." Fittingly, one of the attractions on the floor was Anshul Sharma, the 13-year old founder and CEO of Elementeo, a Silicon Valley gaming startup that aims to introduce fun and excitement into kids' education through games (instead of boring textbooks). Here is the video of Anshul confidently touting his new fantasy role playing board game to learn chemistry:
April 22, 2007
Barriers to entry for successful online video creation
While technology innovations and the Internet has clearly democratized the process for creating and distributing video content, one major barrier to entry at the most fundamental level still exists for individuals who want to succeed. That is the skill-set required for compelling story-telling and engaging your audience. This becomes even more important for the long-form content.
With the explosion in the popularity of online video and emergence of firms (Brightcove, Metacafe, Revver, etc) that provide an opportunity to make money to any user who can create content, we're clearly in a new era where one does not need big media firms to launch his/her career. I'm sure most of us welcome this democratization process. Even the price barrier has gone down significantly - these days you can produce professional looking videos using sub-$1k digital cameras. However, just because you can easily create and distribute content, it does not necessarily translate into the ability to make a living out of it. Metacafe pays producers a CPM of $5. Your video therefore needs millions of views for you to make sufficient money to earn a living. Last I checked, the most viewed video on MetaCafe (Matrix - For Real) had earned $26,680 for its producer over two years and five months. All other videos in that list had earned under $8,000. Most other online firms won't disclose the average income for content owners who're utilizing their distribution platforms.
The main reason, in my opinion, is that these short video clips can provide a "snack value" to the audience, but not the "entree" that is required to engage them long enough to command higher CPMs from advertisers. The types of Lonely Girl 15 are few and far between, which by the way was a series of short clips as opposed to long episodic content. The other reason is that the online business models, though constantly evolving, are still not attractive enough for content creators.
Compelling story-telling to engage your audience over a long duration is an art - a very difficult one. Traditional media firms know it well enough to pay big bucks to producers who have mastered this art. And these producers, some of whom even after openly criticizing the concentrated power of big media, will not abandon them to exclusively produce for and distribute on the Internet until the online economics improve significantly to provide comparable earnings, which is unlikely in the near future.
Until then, we may find more and more talented independent online producers switching to traditional firms, especially if they can get an opportunity to bridge the gap between old and new media. Amanda Congdon's move from Rocketboom, a popular online video blog, to ABC News last Fall may be the most famous example of such a switch, but it might become a norm rather than staying as an exception, with the Internet providing the platform for getting discovered.
With the explosion in the popularity of online video and emergence of firms (Brightcove, Metacafe, Revver, etc) that provide an opportunity to make money to any user who can create content, we're clearly in a new era where one does not need big media firms to launch his/her career. I'm sure most of us welcome this democratization process. Even the price barrier has gone down significantly - these days you can produce professional looking videos using sub-$1k digital cameras. However, just because you can easily create and distribute content, it does not necessarily translate into the ability to make a living out of it. Metacafe pays producers a CPM of $5. Your video therefore needs millions of views for you to make sufficient money to earn a living. Last I checked, the most viewed video on MetaCafe (Matrix - For Real) had earned $26,680 for its producer over two years and five months. All other videos in that list had earned under $8,000. Most other online firms won't disclose the average income for content owners who're utilizing their distribution platforms.
The main reason, in my opinion, is that these short video clips can provide a "snack value" to the audience, but not the "entree" that is required to engage them long enough to command higher CPMs from advertisers. The types of Lonely Girl 15 are few and far between, which by the way was a series of short clips as opposed to long episodic content. The other reason is that the online business models, though constantly evolving, are still not attractive enough for content creators.
Compelling story-telling to engage your audience over a long duration is an art - a very difficult one. Traditional media firms know it well enough to pay big bucks to producers who have mastered this art. And these producers, some of whom even after openly criticizing the concentrated power of big media, will not abandon them to exclusively produce for and distribute on the Internet until the online economics improve significantly to provide comparable earnings, which is unlikely in the near future.
Until then, we may find more and more talented independent online producers switching to traditional firms, especially if they can get an opportunity to bridge the gap between old and new media. Amanda Congdon's move from Rocketboom, a popular online video blog, to ABC News last Fall may be the most famous example of such a switch, but it might become a norm rather than staying as an exception, with the Internet providing the platform for getting discovered.
March 18, 2007
Emerging India
Coverage of India in the U.S. press today has become a commonplace. Almost every major U.S. periodical has run a cover story on India - many have done so multiple times. Twelve years back when I first arrived in this country, the Internet was the main source for Indian news, and at times the only source. In fact, I'd pick up the newspaper and pray for no story on India because it invariably involved road/train accidents with avoidable fatalities, embarrassing Parliament skirmishes amongst its multiple political parties, natural calamities claiming casualties so high that it'd make Katrina a side news, etc. In other words, news on India was mostly negative with rare focus on its economy, which at the time was just coming out of its decades-old, socialism-style government controls.
Today, it's all about India's red hot economy. At 9% annual growth rate, it is one of the fastest expanding in the world. With over 1.1 billion people, including a 300M strong middle class, India is the unavoidable growth engine for major multi-national firms which are witnessing mature markets for their goods and services in most developed countries. More importantly, unlike aging demographics in the developed world, India has an incredibly young population. Over 95% of it is below the age of 65, and almost 40% are younger than 15 years of age. India's unusually favorable demography, apart from making it the largest consumer market in the world after China, also results in a very positive "dependency ratio," with proportionately more workers in their peak productive years providing for children and retirees.
China and India, the two future global economic giants, are often compared for their economic progress and its chosen paths. While China took the manufacturing route to became the world's manufacturing hub, India focussed on the services sector and utilized its English speaking army of engineers and college graduates to become the outsourcing capital of the world. It's really astounding to witness both these societies go through such a major socio-economic transformation in a single generation, with millions of people migrating from the hinterland to urban areas in an effort to move out of subsistence farming that limits any significant improvement in one's standard of living. Equivalent transformation in the western societies spanned over several generations, thus providing them ample time to absorb its pace and adopt with far more ease. For example, rapid transformation in China and India is causing serious strains in the family institution as parents and children adjust to each other's starkly different growth environments.
For India, the service sector, which is far less labor-intensive compared to manufacturing, will not be sufficient to push its vast rural population into more productive economic activities. By some measures, India's outsourcing and IT industry employs less than 2MM workers. The majority of the population has been untouched by India's high-tech industry driven growth. Economists are hanging their hats on the filter-down approach. The theory assumes that the government will first fill its tax coffers from economic surge and then invest the collected capital into education and health care for the poor in order to widen the base of beneficiaries. This approach is typically too slow, especially as the impatient lower strata in India watches the rich in the country getting richer at an alarming rate (India crossed Japan as Asia's biggest home for billionaires on the Forbes's latest list of global billionaires), and the government is known to be notoriously corrupt.
Atanu Dev & Vinod Khosla have an interesting Marshall Plan to expedite the desired inclusive-growth in India. Their plan proposes focusing investment on 6,000 Rural Infrastructure and Services Commons (RISC) to expedite development of India's 700MM farmers living in 600,000 villages. The argument goes that 6,000 concentrated zones will provide economies of scale and scope instead of focusing on 600,000 villages.
Coming back to India's urban centers, where many are migrating to from villages in search of better livelihood, there is an urgent need for better roads, bridges, sanitation, mass transport system, power generation & distribution, water supply, and almost every other infrastructure support a modern society requires. India's archaic and aging infrastructure was not built with much planning to begin with, and it's now bursting at its seams trying to cope with the country's sudden, explosive growth. My two visits to India over the past three years convinced me that infrastructure improvement should be India's single biggest immediate focus area. Trouble with India, BusinessWeek's recent cover story, provides a good analysis on India's infrastructure pains.
I can't end a post on India's economic future without discussing the status of its digital media landscape. A recent global study by comScore ranks India home to the world's fastest growing Internet audience (age 15+). Last year, India's Internet audience over 15 yrs of age grew by 33% to 21MM uniques, compared to 2% for the U.S (153MM) and 20% for China (87MM). Online media market in India is expected to grow at 29% annual compounded rate over the next five years. In terms of online usage (avg. monthly online hours per unique visitor), India does not rank in the Top 10, mainly because of its low broadband penetration rate. Indian government declared 2007 as the "Year of Broadband" and plans to increase its BB base from 2MM subs at the end of 2006 to 9MM subs by the end of 2007. In general, the size of the market in absolute terms (dollars and number of users) is relatively small, but all the future trends makes this market unavoidable.
While the above numbers project a bright future for India's online media sector, its wireless market is exploding. In June 2006, India joined China, Russia, Japan and the U.S. as the only countries with over 100MM wireless subscribers. India is adding ~5MM new wireless subs every month, faster than any other country, and is expected to have ~280MM subs by 2010.
Indian market is highly price sensitive because discretionary income is much lower compared to that in the developed world. The starting point for the wireless market in India is also very different - main growth lies in India's rural areas that has no existing telecommunication service. Global firms entering India's fast growing online and wireless markets will therefore need to innovate as proven success formulas from their previous experience may not work in India.
Another important difference to note is that the Indian digital media market is not growing at the expense of its traditional media market - the shift we're seeing in the west. Instead, the overall pie is becoming bigger. According to a recent New York Times story (In India, the Golden Age of Television is Now), the TV advertising in India grew by 21% per year on average from 1995 to 2005, when it reached $1.6B. While it's much smaller than the ~$67B U.S. market, Indian TV advertising is expected to continue its double digit annual growth for the foreseeable future, whereas it's flat to declining in the U.S.
To conclude, India presents a very bright and exciting prospect for the future of the global economy. To realize its full potential, the Indian government still needs to do a lot of hard work and make some tough decisions. Among which, it needs to continue its economic liberalization program, double-up its focus on infrastructure, bring down corruption, and prioritize investment to improve living standards in the rural sector. It's high time that the world's largest democracy also plays a proportionate role on the global economic front.
Today, it's all about India's red hot economy. At 9% annual growth rate, it is one of the fastest expanding in the world. With over 1.1 billion people, including a 300M strong middle class, India is the unavoidable growth engine for major multi-national firms which are witnessing mature markets for their goods and services in most developed countries. More importantly, unlike aging demographics in the developed world, India has an incredibly young population. Over 95% of it is below the age of 65, and almost 40% are younger than 15 years of age. India's unusually favorable demography, apart from making it the largest consumer market in the world after China, also results in a very positive "dependency ratio," with proportionately more workers in their peak productive years providing for children and retirees.
China and India, the two future global economic giants, are often compared for their economic progress and its chosen paths. While China took the manufacturing route to became the world's manufacturing hub, India focussed on the services sector and utilized its English speaking army of engineers and college graduates to become the outsourcing capital of the world. It's really astounding to witness both these societies go through such a major socio-economic transformation in a single generation, with millions of people migrating from the hinterland to urban areas in an effort to move out of subsistence farming that limits any significant improvement in one's standard of living. Equivalent transformation in the western societies spanned over several generations, thus providing them ample time to absorb its pace and adopt with far more ease. For example, rapid transformation in China and India is causing serious strains in the family institution as parents and children adjust to each other's starkly different growth environments.
For India, the service sector, which is far less labor-intensive compared to manufacturing, will not be sufficient to push its vast rural population into more productive economic activities. By some measures, India's outsourcing and IT industry employs less than 2MM workers. The majority of the population has been untouched by India's high-tech industry driven growth. Economists are hanging their hats on the filter-down approach. The theory assumes that the government will first fill its tax coffers from economic surge and then invest the collected capital into education and health care for the poor in order to widen the base of beneficiaries. This approach is typically too slow, especially as the impatient lower strata in India watches the rich in the country getting richer at an alarming rate (India crossed Japan as Asia's biggest home for billionaires on the Forbes's latest list of global billionaires), and the government is known to be notoriously corrupt.
Atanu Dev & Vinod Khosla have an interesting Marshall Plan to expedite the desired inclusive-growth in India. Their plan proposes focusing investment on 6,000 Rural Infrastructure and Services Commons (RISC) to expedite development of India's 700MM farmers living in 600,000 villages. The argument goes that 6,000 concentrated zones will provide economies of scale and scope instead of focusing on 600,000 villages.
Coming back to India's urban centers, where many are migrating to from villages in search of better livelihood, there is an urgent need for better roads, bridges, sanitation, mass transport system, power generation & distribution, water supply, and almost every other infrastructure support a modern society requires. India's archaic and aging infrastructure was not built with much planning to begin with, and it's now bursting at its seams trying to cope with the country's sudden, explosive growth. My two visits to India over the past three years convinced me that infrastructure improvement should be India's single biggest immediate focus area. Trouble with India, BusinessWeek's recent cover story, provides a good analysis on India's infrastructure pains.
I can't end a post on India's economic future without discussing the status of its digital media landscape. A recent global study by comScore ranks India home to the world's fastest growing Internet audience (age 15+). Last year, India's Internet audience over 15 yrs of age grew by 33% to 21MM uniques, compared to 2% for the U.S (153MM) and 20% for China (87MM). Online media market in India is expected to grow at 29% annual compounded rate over the next five years. In terms of online usage (avg. monthly online hours per unique visitor), India does not rank in the Top 10, mainly because of its low broadband penetration rate. Indian government declared 2007 as the "Year of Broadband" and plans to increase its BB base from 2MM subs at the end of 2006 to 9MM subs by the end of 2007. In general, the size of the market in absolute terms (dollars and number of users) is relatively small, but all the future trends makes this market unavoidable.
While the above numbers project a bright future for India's online media sector, its wireless market is exploding. In June 2006, India joined China, Russia, Japan and the U.S. as the only countries with over 100MM wireless subscribers. India is adding ~5MM new wireless subs every month, faster than any other country, and is expected to have ~280MM subs by 2010.
Indian market is highly price sensitive because discretionary income is much lower compared to that in the developed world. The starting point for the wireless market in India is also very different - main growth lies in India's rural areas that has no existing telecommunication service. Global firms entering India's fast growing online and wireless markets will therefore need to innovate as proven success formulas from their previous experience may not work in India.
Another important difference to note is that the Indian digital media market is not growing at the expense of its traditional media market - the shift we're seeing in the west. Instead, the overall pie is becoming bigger. According to a recent New York Times story (In India, the Golden Age of Television is Now), the TV advertising in India grew by 21% per year on average from 1995 to 2005, when it reached $1.6B. While it's much smaller than the ~$67B U.S. market, Indian TV advertising is expected to continue its double digit annual growth for the foreseeable future, whereas it's flat to declining in the U.S.
To conclude, India presents a very bright and exciting prospect for the future of the global economy. To realize its full potential, the Indian government still needs to do a lot of hard work and make some tough decisions. Among which, it needs to continue its economic liberalization program, double-up its focus on infrastructure, bring down corruption, and prioritize investment to improve living standards in the rural sector. It's high time that the world's largest democracy also plays a proportionate role on the global economic front.
January 28, 2007
Fame, fortune or passion?
What motivates users to volunteer their time and effort to create content for companies which profit handsomely from it?
I'd put the reasons in three buckets: fame, fortune or passion (or any combination of the three). Fortune primarily motivates full-timers and small/big firms creating content for promotion/marketing. Fame and passion, I think, motivates most other users, e.g., those making home videos, suggesting stories on Digg.com, contributing articles on Wikipedia, etc. As the novelty of the practice ebbs, users' contribution may also slow down, especially from those driven by fame .
CNET is now experimenting with a system that will reward its bloggers based on the number of clicks their posts get. I welcome the move. I strongly believe that everyone in the ecosystem should be compensated. I'd be eagerly watching how many bloggers, especially seasoned traditional journalists like Mary Jo Foley, a veteran tech journalist who covered Microsoft, join such ecosystems. PodTech recently interviewed Mary Jo on her switch from a full-time job at Microsoft Watch to a freelancer participating in CNET's new initiative.
Sites like Digg.com, which rely solely on its users' participation, should be rewarding its "diggers," at least the most active ones who spend hours every day to surface up popular and interesting stories, for free, while Digg's valuation has soared to $200m by some measures.
I don't agree with the argument that a reward system would be counter-productive, and will adversely affect the quality of user participation by creating wrong incentives for them. I believe checks and balances can be put in place to maintain quality (e.g., thru the algorithm).
Jason Calacanis, while re-launching AOL's Netscape.com along the Digg model, created a stir last summer when he suggested paying $1k/mo to its most active users. Calacanis withdrew the offer - maybe the idea was still too alien at the time - but CNET's experiment above suggests that change is on its way.
And now, YouTube, the biggest success story for a firm that derived almost its entire $1.65B value from its users' efforts, has announced that it'll start sharing revenue with its users. Chad Hurley made the announcement at the World Economic Forum in Davos on Friday.
I'd put the reasons in three buckets: fame, fortune or passion (or any combination of the three). Fortune primarily motivates full-timers and small/big firms creating content for promotion/marketing. Fame and passion, I think, motivates most other users, e.g., those making home videos, suggesting stories on Digg.com, contributing articles on Wikipedia, etc. As the novelty of the practice ebbs, users' contribution may also slow down, especially from those driven by fame .
CNET is now experimenting with a system that will reward its bloggers based on the number of clicks their posts get. I welcome the move. I strongly believe that everyone in the ecosystem should be compensated. I'd be eagerly watching how many bloggers, especially seasoned traditional journalists like Mary Jo Foley, a veteran tech journalist who covered Microsoft, join such ecosystems. PodTech recently interviewed Mary Jo on her switch from a full-time job at Microsoft Watch to a freelancer participating in CNET's new initiative.
Sites like Digg.com, which rely solely on its users' participation, should be rewarding its "diggers," at least the most active ones who spend hours every day to surface up popular and interesting stories, for free, while Digg's valuation has soared to $200m by some measures.
I don't agree with the argument that a reward system would be counter-productive, and will adversely affect the quality of user participation by creating wrong incentives for them. I believe checks and balances can be put in place to maintain quality (e.g., thru the algorithm).
Jason Calacanis, while re-launching AOL's Netscape.com along the Digg model, created a stir last summer when he suggested paying $1k/mo to its most active users. Calacanis withdrew the offer - maybe the idea was still too alien at the time - but CNET's experiment above suggests that change is on its way.
And now, YouTube, the biggest success story for a firm that derived almost its entire $1.65B value from its users' efforts, has announced that it'll start sharing revenue with its users. Chad Hurley made the announcement at the World Economic Forum in Davos on Friday.
January 21, 2007
Jeremy Piven & Smokin' Aces
I'm a big fan of Jeremy Piven. Saw my first live SNL at the NBC studios yesterday. Jeremy, as the host, was brilliant. Musical guest AFI also performed couple of my favorite numbers.
Smokin' Aces, Piven's latest movie and probably his biggest till date, is releasing in a week. Seems to be a clever new twist to an old story, done Tarantino-style with some big name cast. Writer/Director Joe Carnahan is my new hero. He's posted the original movie script he submitted to Universal on his blog.
..."The script I submitted to Universal, which really represents the version they greenlit. Lot of changes in the final film, including the ending (although we did shoot the scripted ending, it goes to that wonderful orphanage known as the DVD deleted scenes section, to be claimed by its loving parent later) and other misc twists and turns."
Movie trailer below:
Smokin' Aces, Piven's latest movie and probably his biggest till date, is releasing in a week. Seems to be a clever new twist to an old story, done Tarantino-style with some big name cast. Writer/Director Joe Carnahan is my new hero. He's posted the original movie script he submitted to Universal on his blog.
..."The script I submitted to Universal, which really represents the version they greenlit. Lot of changes in the final film, including the ending (although we did shoot the scripted ending, it goes to that wonderful orphanage known as the DVD deleted scenes section, to be claimed by its loving parent later) and other misc twists and turns."
Movie trailer below:
December 3, 2006
Differentiate thru content in the IPTV promise
This past summer, when I was leaving AOL, one of the offers I seriously entertained was to run the consumer IPTV business of one of the biggest Indian conglomerates. India is an exciting market - large, young and growing very fast. I however turned down the offer because we were not ready to move back (offer came as a surprise, thru an old IIT batchmate), and I felt the IPTV market in India is still a few years away before attaining a critical threshold.
Phone companies, globally, are pouring billions of dollars into IPTV services mainly as a counter-strike against cable TV companies that have broken into the phone business using another IP technology, VoIP, stealing customers and driving down prices. Phone companies however face a greater challenge, as IPTV and video over DSL are relatively unproven technologies as compared to VoIP.
But nobody is arguing against the disruptive potential of IPTV service. It could transform today's video experience thru richly interactive, personalized and converged TV services for live broadcast, video-on-demand, PVR, peer-to-peer messaging, etc.
Understandably, most of the focus so far has been on the technology side of the equation (delivery mechanism, set-top-box, software, last-mile issue, etc). I however believe that uniqueness of the content and related services will be the critical differentiator for IPTV's long run success. This provides a great opportunity for content firms.
General content categories would be interactive TV content, Internet content and games. Few examples: interactive TV content that includes one-screen voting on shows like American Idol to decide winners, audience participation in game shows, viewers solving crimes on the CSI show, video games on the TV for casual gamers (~45MM in the U.S - largest online gaming segment with very heavy usage), interactive informational shows/educational courses (e.g., Discovery projects its Cosmeo online homework help service could be a $500M annual business when expanded globally), Internet TV (exponentially increasing Internet video on TV), etc.
In markets like N. America, S. Korea, and parts of Europe where cable and satellite already cover over 90% of the market, instead of re-purposing existing cable/satellite programming, IPTV service providers need to come up with original content that leverages interactivity and bandwidth advantages of the IPTV platform to differentiate and give users a reason to switch.
In other markets where the free, over-the-air, broadcast channels predominate with limited cable and satellite penetration (most of the large European countries such as France, Italy, and Spain; Hong Kong, Japan, China, India, etc), competition may be low for IPTV providers. But they still need to invest in unique, interactive programming to promote adoption as user resistance to spending on TV services is high in these markets.
Though the current global IPTV installed base pales compared to that for cable & satellite, encouraging signs are finally emerging. PCCW, world's largest IPTV provider out of Hong Kong, the most penetrated global market, last month reached the 500,000 subs milestone ahead of its projection.
Jon Miller's legacy at AOL
It came as a surprise to lot of folks when Jon Miller, AOL's CEO, was shown the door couple of weeks back. Time Warner had renewed his contract for three years last summer. And Miller is credited for effecting arguably the biggest and most fundamental transformation at AOL (one of many in the Internet pioneer's 20 years of rocky history). This involved changing the basic DNA of the company from an ISP based subscription model to the content based advertising model. So what went wrong? Here is my firsthand observation having been at AOL during this transformation.
Miller opened up AOL's walled garden of content and made most of it available free to web users in a major restructuring in Dec '04 that created three business units: Access (ISP), Audience (advertising) and Digital Services (point subscription products like Safety & Security, music, etc).
Audience became the most glamorous and fastest growing business internally and provided AOL a focused approach to capitalize on the booming online ad market. In some ways it was a last ditch effort to make AOL relevant again with its fast declining dial-up ISP business, which however still generated over 80% of its ~$8b total annual revenue. Opening up the walled garden therefore was a bold move that witnessed severe internal resistance - fear being pre-mature cannibalization of the ISP business. To Miller's credit, he chartered these rough waters admirably by providing the vision of complementarity and synergy between subscription and ad models.
AOL's early success so far (45% growth in Q3 '06 ad revenue) has primarily come from a combination of 1) sudden availability of its vast content for free, 2) the largest ISP consumer base within an immersive AOL client environment that comparatively generates much higher page views, and 3) overall online ad market growth. (1) is difficult to sustain, and (2) is dropping dramatically (AOL lost 2.5M subs in Q3 '06 over the previous quarter and lost 4.9M over Q3 '05). Monthly uniques have largely stagnated over the past few quarters (~110M, incl Time Interactive). People blame Miller's lack of operational experience as part of the reason. Though he did a great job in setting the right strategy and demonstrated persuasive skills in getting it off the ground, taking AOL to the next level requires a seasoned campaigner. His lack of charisma could have also gone against him. Others blame his not-so-cozy relationship with the Time Warner management, which thought Miller acted too independently.
AOL missed the Web 2.0 boat on several fronts (AIM was the original online community, and should have been its "MySpace"), and it has struggled to attract and retain the best talent over the past several years. Location in obscure Dulles does not help either (though the power center may be moving to NYC now).
How Randy Falco, a traditional media veteran with limited online experience, now turns AOL into a nimble, web services and product company could make for another interesting HBS case study (muffed Time Warner/AOL merger being the other famous one).
Miller opened up AOL's walled garden of content and made most of it available free to web users in a major restructuring in Dec '04 that created three business units: Access (ISP), Audience (advertising) and Digital Services (point subscription products like Safety & Security, music, etc).
Audience became the most glamorous and fastest growing business internally and provided AOL a focused approach to capitalize on the booming online ad market. In some ways it was a last ditch effort to make AOL relevant again with its fast declining dial-up ISP business, which however still generated over 80% of its ~$8b total annual revenue. Opening up the walled garden therefore was a bold move that witnessed severe internal resistance - fear being pre-mature cannibalization of the ISP business. To Miller's credit, he chartered these rough waters admirably by providing the vision of complementarity and synergy between subscription and ad models.
AOL's early success so far (45% growth in Q3 '06 ad revenue) has primarily come from a combination of 1) sudden availability of its vast content for free, 2) the largest ISP consumer base within an immersive AOL client environment that comparatively generates much higher page views, and 3) overall online ad market growth. (1) is difficult to sustain, and (2) is dropping dramatically (AOL lost 2.5M subs in Q3 '06 over the previous quarter and lost 4.9M over Q3 '05). Monthly uniques have largely stagnated over the past few quarters (~110M, incl Time Interactive). People blame Miller's lack of operational experience as part of the reason. Though he did a great job in setting the right strategy and demonstrated persuasive skills in getting it off the ground, taking AOL to the next level requires a seasoned campaigner. His lack of charisma could have also gone against him. Others blame his not-so-cozy relationship with the Time Warner management, which thought Miller acted too independently.
AOL missed the Web 2.0 boat on several fronts (AIM was the original online community, and should have been its "MySpace"), and it has struggled to attract and retain the best talent over the past several years. Location in obscure Dulles does not help either (though the power center may be moving to NYC now).
How Randy Falco, a traditional media veteran with limited online experience, now turns AOL into a nimble, web services and product company could make for another interesting HBS case study (muffed Time Warner/AOL merger being the other famous one).
November 18, 2006
Traditional media execs jumping to lead online media firms
This past week has seen surprising leadership changes at AOL (more on that later) and Fox Interactive Media. Discovery completed its CEO search. New heads for online arms of Viacom & CBS were also named recently.
While it's understandable for traditional media execs to move to online media, the undoubted future growth driver for the entire sector, it remains to be seen how well these folks will fare at their new jobs. Online and wireless are fundamentally different distribution platforms. If I have to pick one single criterion for success, it will be how quickly these guys adopt new technologies and keep pace with fast-evolving user behavior as they maneuver these giant ships in unchartered waters that includes new competition.
Traditionally, big media firms, thru their compelling content, filled the role of aggregating audiences for advertisers. This value chain has been broken on digital platforms, and nimble technology firms like Google have entered the fold. Secondly, the emergence of social media, that has democratized content creation and consumption process, is threatening the sustainability of big media's competitive advantage they have historically enjoyed on marketing and distribution. This poses enormous challenge for traditional media firms and execs coming out of them on how to creatively plan and garner their fare share of the value being created in this new paradigm.
While it's understandable for traditional media execs to move to online media, the undoubted future growth driver for the entire sector, it remains to be seen how well these folks will fare at their new jobs. Online and wireless are fundamentally different distribution platforms. If I have to pick one single criterion for success, it will be how quickly these guys adopt new technologies and keep pace with fast-evolving user behavior as they maneuver these giant ships in unchartered waters that includes new competition.
Traditionally, big media firms, thru their compelling content, filled the role of aggregating audiences for advertisers. This value chain has been broken on digital platforms, and nimble technology firms like Google have entered the fold. Secondly, the emergence of social media, that has democratized content creation and consumption process, is threatening the sustainability of big media's competitive advantage they have historically enjoyed on marketing and distribution. This poses enormous challenge for traditional media firms and execs coming out of them on how to creatively plan and garner their fare share of the value being created in this new paradigm.
I'm back
Past six weeks have been terribly busy at work. New job, especially in this huge media empire, can take a while to understand the organization and get the ducts in row. I'm also in the process of building my product development team. Once right folks are on the ground, I hope to have more time to blog.
Talking about jobs in my team, I have an immediate opening for Director, Prod Dev role. Interested candidates can apply online at gecareers.com (job #: 554816).
Talking about jobs in my team, I have an immediate opening for Director, Prod Dev role. Interested candidates can apply online at gecareers.com (job #: 554816).
October 8, 2006
Internet's true potential as an entertainment distribution platform
While I welcome the emergence of social media, I believe in the long run it'll co-exist with traditional media, as opposed to sidelining/obliterating it. The challenge of monetizing today's user-generated content, the essence of this new breed, would not be the only reason for the survival of traditional media.
Traditional media firms were slow in adopting Internet as a distribution platform, but they're catching up and increasing their share of the online ad market.
To reach Internet's true potential as a mass distribution platform for entertainment, we'll need to make the process of watching Internet-delivered long-form content in user's living room at least as easy as it is for them to consume this content today thru satellite/terrestrial platforms.
While big hitters like Microsoft and HP have had limited success in removing pain points for an average consumer to download long-form content on their PC and seamlessly watch it on their big screen TV, Apple's recent public announcement of their living room strategy should be a big boost. We hope Apple can do an "iPOD" with its iTV set top box scheduled for early 2007.
More new entrants like WYPLAY to fulfill this promise of a simple-form, all-in-one device that can replace today's living room stack of cable/satellite box, DVD player and music system, the better. I can't wait to come home in the evening to dozens of automatically downloaded "24" style dramas (predicted based on my past downloads) that I can choose from to enjoy on my 50 inch plasma.
Traditional media firms were slow in adopting Internet as a distribution platform, but they're catching up and increasing their share of the online ad market.
To reach Internet's true potential as a mass distribution platform for entertainment, we'll need to make the process of watching Internet-delivered long-form content in user's living room at least as easy as it is for them to consume this content today thru satellite/terrestrial platforms.
While big hitters like Microsoft and HP have had limited success in removing pain points for an average consumer to download long-form content on their PC and seamlessly watch it on their big screen TV, Apple's recent public announcement of their living room strategy should be a big boost. We hope Apple can do an "iPOD" with its iTV set top box scheduled for early 2007.
More new entrants like WYPLAY to fulfill this promise of a simple-form, all-in-one device that can replace today's living room stack of cable/satellite box, DVD player and music system, the better. I can't wait to come home in the evening to dozens of automatically downloaded "24" style dramas (predicted based on my past downloads) that I can choose from to enjoy on my 50 inch plasma.
Google to buy YouTube?
We've heard this story before. Almost every possible acquisition candidate, from tradional media firms to large online media players, has been rumored to acquire YouTube. Though there are strong arguments behind such stories, execution challenges, most importantly the copyright issues with YouTube's content, are real challenges that remain to be resolved. Mark Cuban has a good argument on why Google should not buy YouTube.
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