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Saturday, October 25, 2014

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  • This Holiday Season, Video Apps' Purpose is to Sell Devices

    It's no secret that consumer electronics makers have long relied on content to help sell their devices.  After all, people buy devices because of what they can do, or consume, on them, just ask Apple, whose iTunes store is the linchpin to its iOS devices' success. However, as the all-important holiday season approaches, there's new evidence that video apps specifically are being embraced by CE providers (loosely defined) to drive their devices' value propositions.

    Just yesterday Amazon announced a raft of apps available on its new Kindle Fire, with Netflix being named at the top of the list (and it's worth noting the irony that Netflix competes directly with the video service embedded in Amazon's Prime service, but I'll leave that discussion for another day). Amazon's update came a day after Barnes & Noble unveiled its new NOOK Tablet which highlighted the availability of both Netflix and Hulu Plus. These announcements followed recent news that Roku would be launching HBO GO, which in turn followed news that the service would be available on Xbox 360. And since it's not yet even Thanksgiving, no doubt there are more announcements coming.

    My takeaway from all this is that as online video consumption has gone mainstream, device-makers have concluded that video apps can have a huge impact on sales. That means that high-quality content providers with familiar apps (e.g. Netlfix, Hulu Plus, HBO GO, etc.) are poised to benefit from the big money promotional programs behind these devices, in turn growing their own subscribers. With respect to HBO GO specifically, one can't help but wonder how impactful a direct-to-consumer offering via these devices would be in penetrating the 75 million or so U.S. homes that do not currently subscribe to HBO (that's a question I'll ask HBO's co-president Eric Kessler at VideoSchmooze on Wed, Nov. 30th).

    In the my recent fireside chat with Jon Miller, News Corp.'s Chief Digital Officer, he touched on this trend of distributors and device-makers using premium video to serve larger strategic goals. With even some large cable operators, like Time Warner Cable and Charter, now looking to redefine themselves as being primarily broadband ISPs, what's being seen among device-makers could soon also become the norm in broadband services as well.

    In short, premium video is more valuable than ever, with new players in the ecosystem recognizing that they can't accomplish their goals without it. Another reminder that content is king.
     
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