Video-over-IP, Dominoes and Newspapers
Here are a few, somewhat related thoughts for Sunday:
Festoon will video-enable your VoIP conversations on Google Talk or Skype. (Catch: You've got to go out and buy the camera, and so does everyone else.) While this capability is interesting — and eventually will be commonplace (on both "traditional" and mobile phones) — we're probably years from any sort of mainstream adoption of IP-video-telephony. VoIP itself faces a bunch of obstacles.
Speaking of VoIP, yet another company has entered the market: NetZero. The company has announced free PC-to-PC calling and low-cost plans that permit users to call traditional PSTN phones.
To digress for a moment … What's really interesting to me is how seemingly disparate technology developments are driving or affecting one another, directly and indirectly. For example, the success that cable companies have had in pushing high-speed Internet access — cable broadband still has a greater U.S. market share than telco DSL — has led to some consumers abandoning traditional telephone service for the so-called "triple play" (TV, Internet, phone) bundled offerings that cable companies provide.
In terms of demand and market potential, online research firm InsightExpress found in June that 82% of broadband users were interested in triple-play services from a single source. That threat has motivated telcos to pour billions into IPTV to give them the same capability.
High-speed Internet access, which the telcos are aggressively pushing (DSL) with price discounting to drive adoption vs. cable, will contribute to the erosion of both price and subscribers for their traditional telephone business (wireless is playing a significant role here too).
In turn, VoIP adoption (assuming increasing growth), which relies on high-speed Internet, and wireless are going to adversely affect the quality of listings available to Yellow Pages publishers, most of which are still owned by telcos. And, overall, broadband Internet usage is having a negative impact on traditional media usage across the board, in particular Yellow Pages and newspapers.
No one can control these dynamics, nor are they reversible — nor are they truly predictable. But we can see that there's a relationship between these developments and that there€™s a kind of domino effect going on, where one set of competitive market dynamics affects another.
On the subject of newspapers, we're seeing some very interesting trends (or not so interesting if you're a traditional newspaper publisher). Nielsen//NetRatings reported earlier this month that newspaper Web sites have seen significant traffic growth, while their print parents are really suffering in terms of subscribers and circulation.
News, one could quite successfully argue, is more popular than ever, but not newspapers. We observed this anecdotally in our most recent focus group. People want and value news content, but younger readers are increasingly unwilling to pay for it offline.
That means cost cutting and consolidation, which isn't going to be good for the quality of newspaper coverage (or U.S. democracy) over the long run.
I guess it's time for another cup of coffee and to get back to The N.Y. Times.