Internet wins the distribution battle with 5-16 year olds - they spend 50% more time online than watching TV

Arguably the means of distribution makes no difference to a consumer of content but even so the broadband internet seems to be confirming its place as the winner against conventional TV distribution.

It may be the ability to seamlessly access from any device (YouTube), the social interaction / network aspects or the nature of the material available. Zoella - the most popular Vlogger with 5-16 year olds has 10 million followers on YouTube - a dream audience for many small regional cable or satellite channels.

An example is here;

Children between the ages of 5-16 are spending 3 hours a day online against 2.1 hours in front of the TV. YouTube and NetFlix are the stand out winners with a blend of "normal" TV content and new formats.

Amusingly a number of terrified TV people have popped up in the media suggesting that traditional TV content is simply being viewed on the internet without acknowledging that internet content is now also being viewed on the TV.

If the consumer doesn't really care how the pictures get to them it is a very different matter for the media companies who create and deliver the content.

In the case of Zoella she needs decent video and audio equipment, some $100 editing software on a PC / laptop and a broadband connection. If really enthusiastic she can do the editing herself.

Creating this type of content in an old school TV environment you would need to get past the creative gatekeepers first, hire a studio, cameraman, editor etc etc etc - basically a non starter.

In the case of NetFlix going global was about adjusting some IP address ranges and extending the bandwidth / streaming agreements. The old school model would involve painful discussions on satellite time and securing decent slots on the EPG's controlled by others  - many in the pocket of the existing dominant distributors.

Fundamentally to distribute content on the internet is far less capital intensive but also it is impossible to control distribution to the same degree which lessens the reality of exclusivity. There is also far less scope for intermediaries to take a cut along the way. These factors fundamentally change a number of old school business models and will drive the cord cutting and cord never figures.

The return of the turntable shows that old technologies do not die but change and find a very different place in the market.

These new figures from Childwise shows convergence has arrived and will follow 5-16 year old's into adulthood.

Back to the future

With the comeback of the turntable might the typewriter be hot on its heels ?

As security concerns regarding the Internet start to penetrate more deeply into people's thinking might very confidential documents be kept "off the grid" all together ?

Encryption algorithms are not 100% secure - but effective enough for most applications - leaving a space when total technical security is required and a device which cannot be networked cannot be hacked in the technical sense. This does not eliminate the human factor in security (the typist for example) but narrows the attack surface.

The type of language used in the security industry is also pretty hard to fathom sometimes  for the non expert which would make a return to a simple solution such as a type writer even more understandable when absolute confidentiality is required. If Snowden had tried to wander out with 50 box loads of paper files he might well have been spotted.

An example of this hard to penetrate language is below from the OWASP top 10 pro active controls for 2016 (all of which are very sensible if you can understand them);

1. Verify for Security Early and Often
2. Parameterize Queries
3. Encode Data
4. Validate All Inputs
5. Implement Identity and Authentication Controls
6. Implement Appropriate Access Controls
7. Protect Data
8. Implement Logging and Intrusion Detection
9. Leverage Security Frameworks and Libraries
10. Error and Exception Handling

Panto in the cord cutting debate

Everybody loves a bit of panto but the recent suggestion that Time Warners additional 32,000 cable customers in 2015 mean that cord cutting is dead have possibly over indulged during Xmas.

Kodi (the re-branded XMBC) provide a very well made and technically respected media interface which aggregates 1000's of channels which are available on the internet. Most of which are unlicensed.

This interface (or software) can be sideloaded onto Apple TV and other things running IOS as well as android systems and the Amazon Fire TV stick. For the plug and play brigade boxes can be purchased with pre-loaded software for about $55 with no ongoing subscription costs and connected directly to the TV.

It is quite amazing that Amazon both promote content via Amazon Prime and undermine that activity by not blocking Kodi from the Fire TV stick. Didn't get the memo ?

At the CES 2016 show lots of snappy new devices which aggregate feeds from across the web in ever greater quality on a subscription free basis were on show.

The argument deployed by these device vendors can be termed the "google defence" which states that merely linking to content which is unlicensed does not break the law. If it did Google might be writing a very big cheque indeed (sorry transferring loads of BitCoin using a BlockChain.)

For the demographic totally unconcerned with costs of pay tv etc these innovations will make little difference but as a younger demographic feeds through will they "step up" or become the cord nevers much feared within the industry ?

The outcome of this debate probably boils down to how copyright law is updated to reflect the realities of the digital age.

At a very top line level it seems likely that loss of control over distribution will reduce the ability to monetize content using the lever of exclusivity. On a rational basis this would reduce the amount distributors could pay to rights holders and still make a return. Looked at another way companies will take extraordinary steps to defend business models under pressure and may be tempted to bid up the value of the very premium content that could draw in subscribers......maybe.

Hateful Eight shows the lack of analysis in the piracy debate

A quick search on Google for a free download of the Hateful Eight provides lots of options - probably an equal balance between legitimate licensed viewing and pirate activity.

Richard Gladstein writes in the Hollywood Reporter that the movie has been illegally downloaded 1.3 million times since Xmas and that Google is basically to blame for not taking more action.

The piracy group behind the leak which occurred pre-release, Hive-CM8, claim a physical copy with no encryption was bought off the street. They also claim that the PR around the leak has helped movie sales.

A few conclusions can be drawn

1. Despite the deployment of technical solutions by the movie business to fight piracy they are not working 100% which unfortunately given the nature of digital replication and distribution presents an issue. The video games industry has had more success in this area but they have the advantage of a console to tie into.

2. As no accepted metric for the losses caused by piracy has been established yet bizarre claims that piracy helps the movie business cannot be dismissed. Until this is addressed the debate will remain circular.

3. The legal framework is not fit for purpose and the simple principles behind the Berne Convention and copyright generally have been diluted. If the situation really is that all rights are non-exclusive in the digital age then relevant governments should simply say that and we can all adjust accordingly.

Privacy enters the search arena with DuckDuckGo, Oscobo and Hulbee

Size matters and the image of David with the head of Goliath is much more the exception than the rule.

The search market which is estimated to be worth over $80 billion dollars is dominated by Google at over 65% with Bing, Baidu and Yahoo all under 20%.

New privacy centric search engines DuckDuckGo (USA), Oscobo (UK) and Hulbee (Europe) have decided that consumers want to search anonymously and are not OK with the level of data harvesting that is going on.

A very interesting proposition that requires a high degree of trust from consumers but in the case of DuckDuckGo has seen 600% traffic growth over the last year.

With the rapid growth of ad blockers and the possibility that consumers will start to protect & value personal data more carefully there will be some adjustments needed to ad funded online models.

European VPN market to grow at 13% per year to $15 billion by 2020

Recent research and analysis  from Frost & Sullivan suggests that the current European MPLS / IP VPN market is worth just over $7 billion. This is forecast to grow to just under $15 billion by 2020 at a compound annual growth rate of 13%.

If true this shows that the genie is well and truly out of the bottle regarding internet security post Snowden.

In the corporate market increased use of cloud based storage requires greater focus on secure connections to that storage and use of the open internet for confidential data / communications starts to look negligent. If proposed Data Protection legislation is enacted fines of up to 4% of turnover will be in place which will focus attention (especially around the time when bonuses are trousered).

In the consumer market innovative products like the Shellfire VPN box developed in Germany allow the non tech savvy to notch up security levels on the home network across multiple devices. Whether all the new flavours of OTT subscription based video streaming services (which may require an IP address) will integrate OK with a system of this type remains to be seen. If not can you imagine the calls to the helpdesk ?

That said it may prove to be the case that there is a significant correlation between users of VPN's and those who wish to watch unlicensed content and avoid ISP blocks on pirate or unlawful websites.

When it comes to the really "bad guys (and girls)" the VPN / encryption debate could prove a red herring as they will probably hide in plain site on the open internet using steganography based techniques which are as old as the hills and will not be picked up by the automated systems and machines that go "ping".





  

Amazon Prime vs NetFlix

Amazon, the giant of online retailing, has over 35% market share of cloud platforms. With a market cap of over $300bn it dwarfs a company such as News Corp at $10bn.

Amazon's share price was about $5 in 1998 and now stands at over $600.

The perception of dominance therefore of media companies in local markets must be taken with a pinch of salt given the expansion of the Amazon Prime entertainment offering. Stories of success and failure in the entertainment industry have often been driven by the ability of distributors to pay very high prices for exclusive content for long enough to destroy the competition and grow a customer base. This is even more extreme if Amazon decide to use its content offering as a marketing tool for the retail offering.

What price to understand the level of ambition for Amazon Prime and the investment that they are prepared to make in it. Free hosting / distribution and customer care are a pretty good start combined with hassle free online payment.

NetFlix, success story that they are, have clearly recognised the threat and started to produce content in house (such as the excellent Beasts of No Nation).

These developments look to be good news for both the producers of compelling content and the massive remaining global content distribution platforms once they have fought it out and either consolidated or been forced out.

Amazon look to be able to lose money on content for longer than NetFlix if Amazon have decided that this is a priority area.