An interesting piece by Baldur yet again. In lots of ways touching on the dangers of innovation and change to incumbents:
Building up in-house digital product development is risky and expensive, especially at the start when you have to build up the necessary expertise and tools to do the job and change your organisations implicit value network.
The problem is that changing an organisation’s value network is next to impossible without firing everybody (yourself included) and replacing them with different people. Adding individuals who have different values from those prevalent in your organisation won’t change the value network. It’ll just make your new hires miserable before they quit or get fired. Which means that building a top notch, in-house digital product development team is going to be difficult for most publishers.
So Tesco has sold 400,000 tablets in just three months. The company says it is planning a new edition of its HUDL device and that it could have sold even more tablets before Christmas had they had them in stock. It’s interesting in the context of books and my recent post on Barnes & Noble’s Nook troubles that all of these sales took place without an ebook offering to bolster or encourage buyers (Blinkbox books is to launch in 2014, but is not yet live), cementing the very clear evidence that ebooks are not the biggest motivator for tablets (nor were they ever). Some impressive data on increased sales from Blinkbox itself too:
Tesco’s TV and movie streaming service Blinkbox saw sales spike by a massive 245 per cent year-on-year over the festive period…
New Year’s Day was the biggest day ever for the service with sales up by 266 per cent year-on-year, while mobile sales have increased by 674 per cent and smart TV sales by 465 per cent.
Ahead of Christmas, Tesco launched its own Hudl budget tablet and reported sales of 400,000 in the three months to December. The supermarket brand now plans to launch a second edition of the device later in the year.
Finally, once you have a set of ideas and aspirational projects, you need to whittle them down, or at least prioritise them. That means you need to look at the cost-revenue balance for each one. And to do that you need to figure out the business model, often from scratch because, unlike print, interactive media doesn’t come with a business model attached.
Lurking in a seemingly not related post about how the iconic Apple product is slowly becoming less important to Apple, is a great few lines about the nature of the music business and, more generally, the content business at a meta level:
One could argue that trying to charge a little extra and make more profit is more trouble than it’s worth for Google or Apple (or even profit-hungry Amazon) – better to offer it at cost or thereabouts to enhance the value of the broader platform, which is where the real money comes from (advertising and devices respectively).
The same thing is happening in books and video – content is a condition of entry to the platform game that you provide at cost. This obviously makes life pretty tough for startups – it’s hard to try to build your own ebook store or download-to-own music store right now when any device your customers might use probably already has an at-cost service built-in. The one place this might be different is in video, since in that business it is actually possible to have unique content – but of course this is very expensive.
I’m intrigued by this news. I know how tempting it can be to use an app rather than even the best browser on a smaller screen (and by the way Chrome mobile for Android is my flavour). Even so I find it hard to believe that the app is the end point of this development. I( can’t help but feel that the app is a way-point of a kind, a diversion that will eventually lead back to the browser as that form adapts better to smaller screens.
But when an app is done right, with a clean and uncluttered design, it can make the digital reading experience on a smartphone significantly more comfortable and appealing than browsing the same offering’s internet equivalent.
The latest research from comScore, a digital marketing firm, supports this very premise, with its latest report into US mobile phone industry trends for May 2012 suggesting that 51.1% of its respondents 30,000 mobile subscribers used downloaded apps on their mobiles, compared with 49.8% that used browsers. This shows an increase of 1.6 percentage points over February of this year, while browser usage increased by just 0.6% over the same period.