For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment
For many
years there has been just one mantra to take into account when seeking new
business premises.
Although we live in connected times, the advice remains the
same: “Location, location, location”, since without footfall, retail businesses
are in line for failure. Even when there is plenty of traffic in and around an
area, there’s still no guarantee that potential shoppers will find stores and
services that are “off the beaten track”, or that passers-by will come in to
discover the very thing they were looking for.
A
location-based service (LBS) launched in the US that comes to the UK early in
2011 might just change the conventional wisdom. Unlike previous efforts, the
newcomer rides on the back of a social network that already boasts 500 million
members around the world. If it achieves the success that many observers
predict, Facebook Deals could bring new life to the high street.
Fans of
“The Apprentice” will have watched in wonder as contestant Alex Epstein failed
to impress Alan Sugar with a suggestion that in Manchester’s Trafford Centre
his team should locate a promotional site at the opposite end from the team’s
one-day fashion store. His attempts to explain how to get from one end of the
complex to the other might have been prefaced with the proverbial “If I were
you, I wouldn’t start from here at all.”
Facebook
Deals would not necessarily have prevented “The Apprentice” player from being
fired but they would have allowed his team to market their merchandise to the
smartphone user demographic most likely to be interested in fashion.
Although
LBS has been on offer before, notably by Foursquare and Groupon in the United
States, the entry of the world’s most popular social network into this market
is a sign that the concept will become mainstream. Facebook encourages
potential advertisers to develop links to their own applications and no doubt
there will be an increase in pedestrian collisions, as shoppers wander around
shopping malls and city centres with their eyes glued to their phones, as they
search for yet more “deals”.
Promotions
and deals can be limited to a single time slot or store, or may be extended to
every outlet in a chain and there are no charges for a business to use it.
Examples of how Deals might be exploited include discounts for the first 100
customers to arrive, two-for-one promotions via an on-screen voucher and
charitable donations at the checkout.
Gap has
already given away 10,000 pairs of jeans to Facebook Deals users in the US,
around 25 free pairs per store. Few of those lucky recipients would have
started their day by planning a visit to a clothing retailer; once inside Gap,
how many made additional purchases were made? Upon the answer to that question,
the future of Facebook Deals will depend.
It has
been a good week for transactional video. The CEO of US Video On Demand
streaming TV service Hulu, Jason Kilar, told a San Francisco conference that
revenues for this year are expected to reach $240 million, almost double the
2009 figure of $108 million and well ahead of predictions. More than 30 million
users viewed Hulu TV and film content in October, watching an average of eight
streams each.
The
predominantly advertising-supported Video On Demand service from Hulu delivered
800 million advertising streams last month alone, on behalf of 350 clients. The
company is now piloting Hulu Plus, a subscription service for premium content
that will be offered, with limited advertising, for a monthly charge of $9.99.
Kilar
defended the decision to allow advertising on Hulu Plus and claimed that a
survey showed viewers were happy to pay a lower rate in exchange for the
occasional commercial message. He also told the audience at the NewTeeVee
conference that 41% of every dollar earned from premium content comes from
advertising, while just 30% is derived from subscriptions.
While the
ad-backed VOD service is blocked for Google TV, Sony Bravia owners and Xbox
users, Hulu Plus will be available to all who are prepared to subscribe. “Our
ambition is to be on any internet-connected device on the planet. We could
certainly be on any internet-connected device tomorrow if we wanted to,” said
Kilar.
Of course,
there has been talk of Hulu of coming to the UK but Screen Digest Senior
Analyst and Head of Broadband Dan Cryan says that the imminent arrival of
YouView, the erstwhile Project Canvas, could mean that other services have
missed the boat.
Cryan
said, “Google TV will be a difficult sell in competition with the similarly
specified YouView. Content owners see a risk that the mistakes that they made
with YouTube, which some have called the ‘engine of piracy’, could easily be
repeated with Google TV.” He notes that TV companies are worried about the
possible sale of advertising alongside their content although Channel 4 and
Channel Five have negotiated agreements to prevent others advertising in front
of their shows.
Cryan says
that the provision of subsidised boxes by ISPs will help YouView to succeed,
particularly because it will be supported strongly by its content partners.
“Google TV is not going to take over the world,” he says.
Sony might
have other ideas since this week it announced the arrival of an internet
Blu-ray Disc player with integrated Google TV. Available in North America only
at the moment, the $400 fully specified player comes with a QWERTY keyboard as
a remote control and will compete with the Logitech Revue box, which is $300
but lacks a disc drive.
The Sony
announcement coincides with a report from market research company
DisplaySearch, which claims that internet-connected devices are storming ahead
of 3D TV sales. The organisation predicts that worldwide shipments of connected
TVs will exceed 40 million in 2010, rising to 118 million in 2014. In
comparison, 3DTV shipments this year will number 3.2 million, which is less
than 2% of total 3.2 million flat panel TVs sold.
“It’s an
exciting time for the connected TV sector, a battleground where TV
manufacturers, internet video companies, free-to-air broadcasters and Pay-TV
services are rushing to stake their claim,” says DisplaySearch Director of
European Research, Paul Gray. “Most of the TV supply chain senses that this is
a seismic shift in the usage of TV that will be far more significant than 3D,
which will not alter TV function or usage patterns.”
He points
out that the larger part of the marketing spend has focused on 3DTV, yet
consumers choose to spend their money elsewhere. Sony, or at least the CE
division, will benefit whichever way the market decides.
Although
the US can be a useful touchstone for future trends in the UK, home
entertainment audiences on the other side of the Atlantic do not always follow
the same path. Nevertheless, it is worth noting the research report published
this week by the Arizona-based market analysts In-Stat, which indicates
continued growth in VOD revenues up to 2014.
In-Stat
Principal Analyst Keith Nissen says, “Realistically, Electronic Sell-Through
(EST) cannot replace historic retail DVD video sales. However, the migration of
DVD rentals to online transactional VOD services will help fill this revenue
gap. Subscription VOD will see the highest growth rate, but also the most
intense competition.”
Screen
Digest’s Cryan says that enthusiasm for VOD in the UK has been evident for
several years but take-up predictions have always been far too high. Today,
catch-up TV services led by the BBC iPlayer have transformed the VOD landscape.
Commercial services also do well, and Cryan notes “a good chunk of ITV ad
revenues coming from the ITV Player’.
Cryan
says, “The really interesting news of the moment is the healthy growth in VOD,
which comes at the expense of the EST market.”
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