[opendtv] Analysis: Unbundled Media Content Poses A Challenge

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Tue, 4 Apr 2006 08:39:54 -0400


Unbundled Media Content Poses A Challenge
Oxford Analytica 04.03.06,  6:00 AM ET

This article is part of Oxford Analytica's Daily Brief Service.

Media content is increasingly becoming "unbundled" from its physical 
distribution medium, such as CDs. This "disruptive" technology has 
led to different pricing models and lowered barriers to entry for 
content authors, creating a challenging business environment for 
publishers and media companies.

  Historically, information and entertainment content were captive to 
their physical distribution medium or distribution time. Given the 
technology of the past, consumers were forced to purchase and access 
content using the physical medium or schedule dictated by the content 
distributor. This resulted in "appointment-based" consumption.

  Today, this old model of consumption is vanishing, due to changes in 
three significant areas:

1. Unit pricing: Content and services have increasingly shifted to a 
"unit pricing" system through:

  -- a "free" advertising-based content delivery model;

-- a value-added or "premium" subscription business model;

  -- pricing on a per unit basis; and

  -- pricing for access to specific content on a monthly or yearly basis.

2. On-demand access: Consumers can access or view content on-demand, 
rather than according to a schedule dictated by the distributor. For 

  -- automatic recording of television broadcasts through TiVo;

  --  Comcast's  (nasdaq:  CMCSA -  news  - people  ) "on-demand" cable service;

  -- 24-hour access to newspaper and magazine content online;

  -- digital recording of satellite radio; and

-- podcasting.

3. Digital delivery: All types of content can be delivered digitally 
over the Internet, or via cable systems or satellite radio, for 
viewing or local storage on a user's server or client device. 
Infrastructure for digital content delivery is superseding 
traditional models for delivery, viewing, recording and playback of 
content using physical media and temporally sequenced broadcast 

  Businesses, particularly traditional media companies and publishers, 
face several key challenges in the face of this technological change:

  1. New revenue models: The need to transition from a product 
license-based to a services- or subscription-based revenue model.

  2. New delivery methods: Companies are facing the transition from 
passive content-delivery models, in which the audience is captive to 
the viewing and "one size fits all" advertising, to active and highly 
customized "affinity-based" advertising.

  3. Commoditization of content: Content increasingly is becoming a 
commodity, as it is either provided for free or priced at a very low 
cost, with revenue derived from:

  -- value added services;

-- affinity-based advertising; or

-- development of brand equity and the sale of related products and services.

  Successful Web sites often provide free content in an effort to 
provide value, which in turn supports increased user and customer 

  4. Web search evolution: Web searching is evolving as a replacement 
for manual Web browsing as the primary vehicle for finding 
information and resources.

  5. Content 'filters:' Human "filters," or subject matter experts, 
are becoming increasingly important. They help shorten the "search 
cycle," impose quality control on the vast amount of information and 
resources available online, and help determine "winners" in various 
product categories.

  6. Advice 'ecosystems:' Web services such as eBay provide users with 
information on pricing, demand, availability and the features of 
products for sale. This is provided through self-publishing by 
members in their product listings and in related Web sites. While 
there is no outside human editor or reviewer for eBay content and 
listings, the eBay 'ecosystem' acts as a de facto filter and subject 
matter expert for its users.

  The unbundling of content and services across all media types and 
forms of technology has disrupted traditional content supply chains 
by increasing the power of content authors and producers, and content 
consumers, at the expense of the intermediaries who own and manage 
the traditional content distribution and supply chain. Since 
distributors of content have less power, they must compensate by 
offering more content for free--or at a low, unbundled cost. This has 
forced content distributors to seek additional sources of revenue to 
make up for their lost traditional distribution fees.

  The proliferation of unbundled content business models has benefited 
consumers, by providing access to products and services at a 
significantly reduced cost. The consumption of content in smaller, 
more tailored units of delivery and consumption, will benefit 
companies who adopt affinity-based advertising and customized 
marketing through "advice ecosystems."

To read an extended version of this article, log on to Oxford 
Analytica's Web site.

Oxford Analytica is an independent strategic-consulting firm drawing 
on a network of more than 1,000 scholar experts at Oxford and other 
leading universities and research institutions around the world. For 
more information, please visit  www.oxan.com.

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