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An interesting viewpoint on the potential future of media
There used to be a time where content was king. The companies knew that selling content was how they would make money and the consumer went with the flow. There was a theatrical release, followed a year later by a VHS/DVD release and eventually made its way to Pay Per View and then years later to a network for a “Network Premier”. This indeed was a simple setup and made the studios great cash and consumers were happy. Fast forward to today, the internet age. Consumers want things now and on different platforms. They don’t like to wait for the studio cycle and if the studio does not cater to them, they will look other places, legal or illegal. We are not here to argue the idea of torrenting because the truth is, it’s happening and the cat’s out of the bag. Instead, we need to focus on where do we go from here, not how do we go back 10 years.
Media again can be king, but in a different manner. One needs to leverage content like movies and shows in order to sell and make profit else place and Sony is in the perfect position for this. The genius of Apple and its iTunes is that Apple does not make money or if it does, it’s very little from it’s music sales but it’s now the biggest music store and because of the ease that it was offering to its customers, it was able to make the iPod king and bring in a high profit ratio on that product. Their goal is the same with video and they are leveraging the media for profits on the iPad, AppleTV and other devices.
Sony is in a very unique position because not only is it a consumer electronics company, but also in the professional field, it is a media company with Sony and Columbia Pictures, as well as Sony Television and Sony/BMG. With a service like Crackle, Sony can offer its users something that the likes of Apple or Microsoft cannot. With its media collection, Sony can upload its movies and shows like Spider-man and Seinfeld and give its 50+ million PSP and 35+ million PS3 users the capability to enjoy this content free though Crackle. That means, if somebody had to decide between a Xbox and a PS3, the Playstation becomes a higher value for them because of the media content behind it. This also means that Sony has gained direct profit and a new customer, even though the sale might not directly have come from the Media itself. With this media leverage, Sony is using what they have in house, to add greater value to other products that they already have. In addition to that, the more people are aware and happy with your products they further chance you have to win them as a customer because if I enjoy streaming The Karate Kid on my PSP, I might now want to go purchase the Blu-ray version for further viewing. This synergy of Media and Hardware is a unique position that only Sony has, if they choose to empower themselves with a service like Crackle.
From there on, as Google has clearly shown it, the amount of profits that exist within advertising are nearly endless. That means that Sony does not have to limit it’s media content on Crack with just it’s Sony PSP and PS3. Sony can also offer it’s video on other devices like the iPad and web based, but again make it’s returns via advertising. It is a mistake to attempt to charge for such a service because if I as a user need to pay for it, what is to stop me from going to iTunes or the Netflix or worse off for the studio, back to torrenting. Indeed the goal needs to be to give the consumer freedom and power so they come to your content via official channels, and make your profits via hardware and advertising.
Ultimately, this is only one of the avenues that Crackle offers. One would simply be living under a rock if they did not think that Social Media has taken over. People are more connected then ever via Facebook and games that can be played via the web like bejeweled or Farmville. But if you just look at the situation, you will note that Facebook and it’s many games are free. Why is the developer making a game and maintaining it for free? We again go to hardware vs media. The more user a site can have, the more they are exposed to your services. That means that they will see more of your adds, they will click more of your limit edition offers and they will be in your playground as opposed to others. But surely that cannot be the only way to make a profit off of a service like crackle and it’s not. When users spend that much time, you begin to know and learn about their wants and needs. What better market research then to be there, with the users and figure out the upcoming trend and direction. Another avenue that the creators of Farmville and other biggest app store game developers like ngmoco have taken is micro transactions. Offer your game for free but if they want that additional resource, level or weapon, they then can purchase it for a fee or spend 50 additional hours and be exposed to your ads for that period of time. Regardless of the outcome, they are your users now and are spending time with your content which is free. And the more open and social your website is, the more likely that it will draw people towards it’s content because we live in a age where people want to interact and connect with each other.
So in the end, content is indeed still king because what is an iPad with no apps and what is a Playstation with no games. It’s just that we need to look at our media consumption and change the way we leverage and use it. Sometimes, that means offering it for free, in order to make money off of it.
By Sohrab Osati
Before You are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.
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