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I’m down in San Jose at the Consumer Technology Ventures conference, which has featured some engaging panel discussions. The highlight so far for me has been the luncheon keynote yesterday by prolific Wall Street Journal personal tech columnist Walt Mossberg (more on that later).

Like many of the events held by Dow Jones, this had a deal-making angle, with most of the afternoons devoted to breakouts throughout the conference grounds of startup presentations for VCs and potential strategic partners.

Quad Play on Everyone’s Mind

Yesterday, I saw a keynote interview by Wall Street Journal staff correspondent (excellent interviewer) Kevin Delaney with Marco Boerries, SVP of Connected Life at Yahoo!. Boerries had lots of interesting things to say that related directly to bundled services and “quad-play,” which we explored in the recent Advisory, “Triple and Quad Play: Who Will Win the Bundled Services Battle?”.

Without mentioning the terms “triple play,” “quad play” or “bundled services,” most of the Yahoo! strategies he laid out involved partnering with cable and telecom providers to position the company as a media distributor and technology platform provider across the media over which these providers will increasingly compete (mobile, video, data and voice). As we posited in the Advisory, the combination of all four brings interesting opportunities for these providers to not only market cost savings and the ease of bundled services, but to also establish themselves as media and advertising distribution networks as opposed to being just a “dumb pipe.”

But to get there, cable companies and telcos will have to partner with online portals and media networks to utilize their tech savvy and content and advertising aggregation abilities. These battle lines are already being drawn as longstanding partnerships exist between AT&T and Yahoo! and between MSN and Verizon (in other facets of their businesses, including exclusive content distribution, personalized portals for broadband subscribers and local online directory listings).

It was interesting and affirming to hear the other side of the equation  that portals will likewise need telecom and cable operators to gain reach and distribution across the many wireless and at-home connected devices where the next-generation communication ecosystem will take place.

“Yahoo! won’t create end-to-end experience,” said Boerries. “To address global market with a global user base of 500 million monthly unique Yahoo! users, we’ll need to create these types of partnerships.”

Telecoms will also need to form these partnerships, I’m beginning to see, because their power over the content consumers see and the devices they use will begin to erode. This will happen as competing communication networks such as Wi-Fi and corresponding devices (VoIP-enabled wireless phones, for example) will gain capacity and adoption, causing innovative technologies to reach consumers without needing the endorsement of carriers.

Online video that is streamed to the television set by emerging devices such as Apple’s iTV (which everyone, including Mossberg, was bullish on), will likewise disintermetiate cable television and telecom IPTV service. This will become more of a threat when broadband speeds increase and online video reaches a level of quality beyond short video clips of men in lab coats experimenting with exploding candy and soda.

Mossberg later pointed out that the power of telcos and cable companies in exerting this control will indeed erode with wireless and Web-delivered communication media that can substitute traditional voice, video and data driven services. This is already beginning to happen and will ultimately drive innovation for the good of the consumer.

Advertising in The New Media World

Advertising, as always, will play a huge role in all of the above, which was explored in a panel titled “How Far Will Madison Avenue Go to Reach the Consumer?” Traditional advertising metrics are changing and we are very much in a wild west phase of experimentation. The fear of associating major brands with the racy content and sometimes loss of control inherent in social networks and online video-sharing sites has caused hesitancy among advertisers. But this is breaking down, according to the panelists and this recent study from eMarketer.

There is also value and risk in viral marketing campaigns that allow the users to create and promote experiences while using products. And on the horizon, there is an even greater degree of interactivity possible with product placement, in-game advertising and virtual realms such as Second Life. Little was mentioned about Microsoft’s Virtual Earth 3-D, which launched on Monday, but that could also open up new forms of map-based advertising that will evolve as the product and its many possible applications do.

Learning From Our Mistakes

Lastly, during his keynote, Mossberg dissected the power of these new media and the tendency to overhype the businesses built around them. An important distinction must be made, he contended, between disruptive technologies and Web destinations. In other words, YouTube, MySpace and others have created innovative technologies and media outlets. But their positions as online destinations aren’t as powerful as the core technologies underlying them. Video and social networking will soon become standard features or components of every Web site, rather than the specialized offerings of a few. Strip these things away from MySpace and YouTube, and all you have is marketing and a user base  which by the way can go as quickly as it came given a somewhat fickle primary demographic.

“We’re in a moment where the tendency to overvalue companies has gone into the stratosphere,” said Mossberg from the stage, hinting at Google’s US$1.65 billion acquisition of YouTube. This overvaluation, he clarified, has been both financial and in terms of social significance. He likened our short-term memory and inability to learn from recent overvaluation blunders to the Peanuts football bit where Charlie Brown ends up ass-down in the dirt after repeatedly falling for the same trick. It certainly seems that we could be entering such a stage again, as many industry watchers pointed out the day after Google’s YouTube acquisition, and that this could be the defining moment for the onset of “Bubble 2.0.”

I don’t believe this is the case, but we are indeed near an inflection point for online media and advertising, and there is a great deal of experimentation and excitement in the market, which is a good thing, to a certain extent. We’ll dive further into these issues and their intersection with the local marketplace at the upcoming Interactive Local Media conference later this month in Philadelphia. Hope to see you there.

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