2011 has been called “the year of the tablet.” What we’re seeing with mobile today is really no different than any of the other technological innovations that have continually transformed TV since its very inception. Thanks to Information Age pioneers like Steve Jobs, tablets are just the latest challenge requiring us to adapt our business models in order to retain customers and grow revenue. Tablets are not only influencing where we experience television, they are helping to re-shape the way we experience it. And they are providing TV stations with new opportunities for reaching mobile viewers.
Tablets Spell Out Stations’ Mobile Future
Steve Jobs’ recent passing has us all reflecting at how much our lives — and business models — have been affected by innovations incubated by the company we once called Apple Computers.
Most recently, the technological innovation that has commanded our admiration and attention is the iPad, which helped to usher in the tablet era. In fact, Bruce Benson, FTI Consulting’s senior managing director of entertainment and media, described 2011 as “the year of the tablet” when he spoke at our annual conference in May. Janet Stilson, editor for our member magazine The Financial Manager (TFM) and frequent TVNewsCheck contributor, reported on his session in an article appearing in the September/October issue of TFM.
According to Benson we can expect roughly 25 million tablets sold around the globe this year, a number he predicts will jump to about 45 million in 2012. This should not be a surprise when you consider that 9.25 million iPads were sold in the last quarter alone. While Apple’s iPad has been the market leader, Benson believes that tablets powered by Google’s Android operating system will begin to take share from the iPad late this year and will have a 40% share of the market by 2012. As Stilson reports, “He expects the situation will get even more competitive in 2014, when Android tablets become significantly cheaper than iPads due to Android’s open-source operating system and the rivalry between the manufacturers that use it.”
Android’s growing presence should be beneficial for media companies because of its influence on the fees paid for their applications, such as magazine subscriptions. If a company wants to get its app in Apple’s store, Benson points out that Apple takes a hefty 30% cut. Moreover, Apple is reluctant to part with consumer research data.
In comparison, Android only takes 10% of the app revenue and is more generous with user statistics. Benson predicts that the FCC will require Apple and others to create a level playing field so that all companies receive the same type of data. My hope is that Apple’s softened data stance with Hearst and News Corp. will pave the way for a market, not regulated, solution.
Bruce Benson has been focusing on the tablet trend particularly as it affects the newspaper and magazine businesses. One thing he says is still up in the air is which company will become the dominant force in serving ads on tablets; he expects that there will be some power plays on that front. The stakes for this market are high, particularly in light of Benson’s expectations that people will move into a mobile experience for traditional media.
While that’s particularly true for newspapers and magazines, tablets are helping to fuel market demand for mobile video. Nearly 86% of tablet owners watch videos on their devices compared to two-thirds of Smartphone users, according to In-Stat. The research firm projects mobile video consumption will surpass 693 billion minutes by 2015.
Interestingly, the In-Stat survey revealed that the majority of video viewing on tablets is occurring in a non-mobile environment, often in the home, and in the consumption of long-form video. Not surprising given that one speaker, in tribute to Steve Jobs at last week’s CTAM NY event, said that part of his brilliance was in recognizing humans have three standard body positions: standing; sitting and slouching. Apple offers products for all three: the computer for sitting; the iPhone for standing and the iPad for slouching in a chair or on a couch.
A study of DTV users conducted for the Open Mobile Video Coalition sheds a little more light on the factors driving this trend. Typically, in-home viewing on DTV-enabled Netbooks occurred in rooms that did not have a standard TV set. In addition, the study also found that a major difference between mobile DTV and standard television viewing is the majority of mobile DTV viewing occurs during the daytime, which also contributed to an increase of 35%-40% in daily television viewing.
Mobile viewing is literally taking users by storm according to that same DTV study. Smartphones and other portable media tablets provide the connection to local news when events like Hurricane Irene knock out electrical power. As TVNewsCheck’s Harry Jessell recently observed, local broadcasters need to be as accessible via portable media as they are via traditional television if they hope to remain the “go to” sources for news and information during local disasters.
Tablets are not only influencing where we experience television, they are helping to re-shape the way we experience it. Multichannel video providers are using tablets to complement the limitations of their program guides and TV remotes. For example, more than 3 million Comcast customers have downloaded the XFinity app that allows them to use their Pads, iPhones and Android devices as remote controls.
These tablet-inspired applications are also finding their way to the growing number of smart TVs and other devices, such as Microsoft’s Xbox, Blu-ray players and other connected devices that come equipped with Apple TV and Google TV media players and applications.
As a result of these developments, FTI Consulting’s Benson expects our interactions on the Web and with our TV sets will ultimately become more tablet-like, helping the TV Everywhere experience to catch on with a growing number of viewers. As I described in an earlier column (“TV Everywhere Can Work for Everyone”), TV Everywhere allows customers to take their pay TV subscriptions with them, preserving traditional business models such as the retransmission content fees derived through those subscriptions.
Tablets are also providing TV stations with new opportunities for reaching mobile viewers. An article by TVNewsCheck Managing Editor Mark K. Miller explains that solutions such as the EndPlay mobile live streaming application, which is being used by E.W. Scripps among others, lets stations deliver live video programming to virtually any mobile device. Additional examples such as News Over Wireless (NOW,), are described in TVNewsCheck’s most recent “Focus On New Media” by Heather Phillips. Common to all of them is the ability to offer new opportunities for our advertisers to reach and engage their target audiences.
What we’re seeing with mobile today is really no different than any of the other technological innovations that have continually transformed TV since its very inception. Thanks to Information Age pioneers like Steve Jobs, tablets are just the latest challenge requiring us to adapt our business models in order to retain customers and grow revenue.
While some might look at this as a reminder that we must continue to keep our eyes open for the next innovation and our minds ready to harness its disruptive influence into new business opportunities, I look at it as another testimonial to the value of associations, particularly MFM. As Alexis de Tocqueville said in 1835: “An association unites into one channel the efforts of divergent minds and urges them vigorously towards the one end which it clearly points out.” To use an Information Age reference, associations are the original form of crowd sourcing.
Our members know they can usually find what they need to know by reaching out to other MFM members. If you are interested in taking advantage of this vast and valuable resource, don’t hesitate to send me an email. As de Tocqueville observed, addressing your interests also assists us in fulfilling our role of uniting the industry around the business practices that should be adopted by each of its members.
Mary M. Collins is president & CEO of the Media Financial Management Association and its BCCA subsidiary. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.