Who owns the connected consumer?

Tuesday November 16, I attended CONNECTIONSEurope, courtesy of Parks Associates. The 2-day event in Amsterdam was all about new developments in the digital content industries featuring panels of players in the digital content ecosystem ranging from service providers to content distributors to equipment manufacturers and anything in between, expertly moderated by Kurt Scherf and Stuart Sikes. One of the frequently discussed themes in the panel discussions was the issue of customer ownership. Although most within the digital content ecosystem (and certainly the customer!) would agree that customers can not be owned, the phrase “customer ownership” relates to which vendor – or vendor category – within the digital ecosystem commands the most influential and sticky relationship with the connected consumer and, very important, is also able to monetize this relationship, either through increased content sales, increased ARPU, increased device sales, increased advertising money, or all four combined.

The phrase “connected consumer” is key. A connected consumer interacts with and consumes digital content through a connected device (our definition). Digital content comes in (giga)bits and bytes, connections have mobile, wireless, and fixed flavors, and there is a plethora of device categories that play an important role in digital content consumption and interaction ranging from digital TVs to gaming consoles to set top boxes to mobile devices and anything in between.

At the core of the customer ownership issue is the realisation within the digital content ecosystem that this position is up for grabs and can quickly change hands. Apple, with the iphone and app store, has shown that a device manufacturer can leverage a content distribution store to sell more devices and to get additional revenues from content sales. Sony and Microsoft have shown that connected game consoles can generate online video sales.

In the digital TV market, device and content have always been firmly uncoupled, with content coming from TV channels or DVDs, TV channels coming from cable, and TVs coming from device manufacturers. This is now changing, and increasingly consumers are persuaded to bypass cable, satellite, and IP TV providers for content and go online from their connected TV or bluray player to either buy on-demand video, or consume youtube, accuweather, flickr, or other content.

The above graph shows the current influence structure, with search (Google) influencing web content choice, digital TV operators (e.g. BSkyB) influencing digital TV channel choice and placement, and device vendors (e.g. Apple) influencing application choice.

The potential for disruption is there. We believe network operators will be challenged by both increasing search and device influence, with content owners likely to strike deals directly with others beyond digital TV operators.

Who can do for the TV what Apple did for the smartphone and Google did for the web? There is no hard and fast answer to that one. At the conference the general opinion was that in order to change the current power structure in the digital home three things needed to change:

    1. Customer ease of use needs to be improved. Consuming digital content any other way than operating a remote or popping in a bluray disc is too difficult today.
    2. Inhome networking needs to be better integrated in connected devices and more secure. A consumer should not have to think twice about where digital content is located. The network should find it.
    3. Content rights will need to become country independent. For instance, a Dutch consumer is currently unable to get access to the BBC iPlayer because of this issue.
  • Who do you think will be the new 800 pound gorilla in the digital home? Let us know!

    (Previously published on bilderbeekconsulting.com)

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About Pim Bilderbeek