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MediaPost Publications Reality Check For Sustainable Business Models 02/16/2009

CBS could reveal the most drastic financial fallout yet of any television network company. But all video-related media players should be scrutinizing the sustainability of their business models that are painfully challenged by digital and economic retrenchment.

Time for a reality check. You know your business model is in trouble when …

–revenues and free cash flow recede and profits evaporate

CBS might survive as a general cable network with a second revenue stream from subscriber fees, but will struggle to stay alive as an ad-supported broadcast network. With Bernstein Research forecasting at least a 6% decline in CBS TV Network revenues, a 26% decline in TV stations’ revenues and a 10% drop in syndication and home entertainment revenues, any gains from retransmission fees, Showtime, CSTV and interactive will not fully offset the losses.

Plus, accelerating weakness and changing dynamics in local advertising are killing CBS’ TV station, radio and outdoor businesses. Along with publishing, these segments pushed fourth-quarter earnings down more than 40%; CBS is expected to report Feb. 18.

Barclays Capital warns that the resulting liquidity squeeze that could see free cash flow plunge 81% to $133 million in 2009 will require a slashed dividend as CBS strains to refinance $1.6 billion in debt by mid-2010.

For the record, all broadcast TV networks will be losing propositions this year in the face of rising content costs, fragmented audiences and plummeting ad revenues. ABC’s broadcast segment operating income fell 60% to $138 million on about a 20% decline in revenues last quarter from the prior year, spurred by lower network ratings and a 15% decline in TV station ad dollars.

The Fox TV Network is expected to post high single- to-low-double-digit losses in fiscal 2009. Surely, the NBC TV Network will be hard-pressed for profits with NBC Universal’s overall operating income expected to dive 16% to $2.6 billion on a 14% decline in revenues to $15 billion this year, analysts say. As broadcast network and TV stations go, so goes cable, filmed entertainment and theme parks these days.

–there is no salvation in live big events and national elections

NBC’s recent Super Bowl telecast averaged 95.4 million and $206 million in advertising revenues. More than 100 million viewers initially watched all or part of the Super Bowl game and its commercials online–making advertisers the big winner. The networks and other mainstream media are big losers as long as consumers increasingly watch their content on Internet-connected devices and platforms without effective measurement or monetization.

While Nielsen and Disney research deems that consumers must tolerate double the ad load in a full-length TV program online, no one has designed a dashboard for selling, pricing and placing ads across the digital media spectrum and then stretching them into electronic transactions or micropayments.

Likewise, last year’s presidential election was a bigger hit on cable and online (where presidential campaigns are won) than on broadcast television. ABC-owned TV stations’ ad revenues declined 15% despite the presidential election last quarter, and are expected to decline 21% from the prior year for fiscal 2009, due to lower ratings and the recession. The ABC TV Network ad revenues declined more than 20% (excluding political ads). Even with the political bump, fiscal-year operating income for Disney’s entire broadcasting segment will decline as much as 48%, analysts estimate. Broadcast peers tell a similar story.

–content ROI flat-lines or worse in prime time and online

The industry’s sky-high production costs and license fees, and the inability to generate enough revenues to more than offset them, create negative operating leverage. New Corp.’s television division lost $356 million in profits and $432 million in revenues for a negative incremental margin of 82% in the first half of fiscal 2009, points out Bernstein analyst Michael Nathanson. TV station advertising is down 30%; network upfront cancellations will top 11%.

Credit Suisse analyst Spencer Wang says that Fox TV stations’ revenues will fall 34% and earnings will fall 84.5% due to negative operating leverage (including the sale of eight TV stations). Even Fox Interactive Media display and search sales are flat, which means the company is having difficulty making its content pay on both new and traditional platforms.

Unprecedented advertising weakness at leading cable networks recently reported by Disney, Time Warner, News Corp. and others and the industry-wide collapse of DVD sales supports to film entertainment don’t help either. (Yes, Viacom films made only $22 million on nearly $2 billion in revenues last quarter.)

Headcount reduction, operational integration, evergreen libraries and massive writedowns aside, Disney CEO Bob Iger points to the unmanageable “cyclicality of hit-driven content and a lull in the creative cycle.” Clearly, the recession’s biggest casualty could be the loss of creative innovation and risk.

–major advertisers and categories will never be the same

Auto advertising historically comprised more than one-third of local television ad spending, so a 70% reduction in auto ads is behind the 25% decline in overall TV station revenue, according to Goldman Sachs analyst Mark Winkes. The economic recovery will bring fewer automobile manufacturers, brands, dealerships and overall dollars–already evident in the fourth quarter. Even revenues at Disney’s indomitable ESPN, reduced nearly 10% last quarter by the auto and electronics ad pullback, could be down 9% for the fiscal year, compared with a 6% revenue decline for all Disney cable networks.

It’s the first sign of the thousand cuts to come from the permanent change in autos, financial services, real estate, retail and other major ad categories.

A significant upset to the network’s spring upfront market is unavoidable, given forecasts calling for ad spending reductions of at least 10% for the broadcast networks, 5% for cable networks and 20% for TV stations in 2009.

–emerging deals use existing assets in new ways

Deals are beginning to surface out of necessity, offering new ways to finance, monetize and manage existing assets. Pairing Sirius XM radio with his DirecTV would give Liberty Media CEO and kingmaker John Malone new options to play the satellite card. Liberty would keep Sirius XM out of the clutches of rival EchoStar by assuming its debilitating $3.25 billion in post-merger debt. Under new ownership, the 43 cents-a-day Sirius XM service could get a new test of recession-time pay-for-play.

Similarly, the bankruptcy-related impact on Charter Communications, Midway Games, Clear Channel, Tribune, Young Broadcasting and dozens of other local broadcast companies could also redistribute assets. Alternatively, asset swaps like the one proposed by Nielsen Co. and WPP will theoretically create more efficient business models. Well-funded companies–from Time Warner to Apple and Google–will determine which challenged businesses get a new shot at life. CBS and NBC Universal could be among the next ones up.

SOURCE

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Originally posted here:
Reality Check For Sustainable Business Models

the world  has changed, in the space of a few tweets.

1. i can reach about a thousand people with one 140 character message
2. if im looking & am priced right i can find a project to work on in a matter of hours
3. if i have the following that has the following, i can get any peice of news out there in seconds, Robert Scoble follows me on Twitter, fancy that ! ( name dropping, sorry, but you get the point )
4. this is fundamentally differnt from YAHOO or MSN or GTalk
   ( to be cont ´d in a few mins )

Go here to read the rest:
.. in the space of a few tweets?

Mark Zuckerberg finds ways to create revenue from Facebook’s 150m members

Facebook is planning to exploit the vast amount of personal information it holds on its 150m members by creating one of the world’s largest market research databases.

In an attempt to finally monetise the social networking site, once valued at $15bn (£10.4bn), it will soon allow multinational companies to selectively target its members in order to research the appeal of new products. Companies will be able to pose questions to specially selected members based on such intimate details as whether they are single or married and even whether they are gay or straight.

The company, which has struggled to make money from advertising, has been demonstrating the benefits of its new instant polling tool to some of the most influential business leaders at the World Economic Forum in Davos.

In an interview with The Sunday Telegraph, Randi Zuckerberg, Facebook’s global markets director and sister of founder Mark Zuckerberg, 24, said multinational companies had been bowled over by the ability to receive real-time feedback from the site’s millions of users.

“I had tonnes of people saying ‘this could be so incredible for our business’. It takes a very long time to do a focus group, and businesses often don’t have the luxury of time. I think they liked the instant responses,” she said.

At the conference, Facebook asked a range of questions to its users around the world, before feeding the answers back to delegates within minutes. It selectively-targeted users in Palestine and then Israel with the same question about global peace, before debating the results at a discussion forum. It also asked 120,000 US members whether US President Barack Obama’s economic stimulus package would be enough to save the US economy. Almost 60pc said it would not.

“Davos is really a key place to launch an instant tool like this,” Ms Zuckerberg said. “It’s beneficial for everyone to see us as a global community of 150m users. The vast majority are not just college students in the US talking about things in their bedrooms. We are showing how we are a serious and insightful community.”

Facebook’s presence at the economic and business summit is a radical image change for the social network, which is stereotyped as a website used by students or schoolchildren. It now promotes Facebook users as “serious and insightful” adults in an attempt to advertise its members as a useful demographic for marketers.

Marketing experts have said the vast amount of personal information Facebook holds, together with the loyalty of its users, could be worth “untold millions” to companies engaged in market research.

The power of Facebook, and its members, in driving corporate decisions was illustrated last year, when a campaign on the site led to Cadbury reversing its decision to withdraw the popular Wispa chocolate bar. Cadbury has sold 70m Wispas since it reintroduced the bar in October after the Facebook campaign attracted 40,000 signatories.

Facebook has already sold the new polling system, called engagement ads, to CareerBuilder, a global graduate recruitment company, and AT&T, the US telecoms giant, is trialling the system. A Facebook spokesman said the company’s advertising department is marketing the new service to thousands of companies worldwide and it hopes the polls will go live this spring.

All the company’s previous attempts to monetise the site have failed after members railed against the site’s invasion of their privacy. Mr Zuckerberg pulled Beacon, a service that notified users of their friends’ purchases on external sites such as Amazon, after members launched a campaign in December 2007.

Mr Zuckerberg said the coming year will be “intense” for Facebook as advertising revenue dries up.

Facebook was valued at £10.4bn in 2007 when Microsoft paid £175m for a 1.6pc stake, but analysts have dismissed the valuation as “ridiculous” as the site has failed to find ways of exploiting its vast membership for commercial gain. Madan Sheina, at technology consultancy Ovum, said: “With the economy spiralling into a downturn, that figure might seem to be exaggerated right now.”

The company has denied reports that it is so strapped for cash that it has been forced to approach Middle Eastern sovereign wealth funds for emergency funding. It has also cancelled plans to allow employees to sell off their shares early because of the economic climate.

Market research company eMarketer recently cut its estimate of advertising spending on the social networking sites, including Facebook, MySpace and Bebo, this year by £351m to £912m. It said US advertising spending on Facebook
will fall by 20pc to £147m.

Rival research company IDC said advertisers are turning their backs on social networking sites because they have a lower “click-through rate” than traditional online ads. Only 57pc of social network site users clicked on an advertisement and made a purchase last year, compared to 79pc on the internet at large.

Experts at Deloitte said Facebook is suffering from the double-whammy of collapsing advertising revenue and the soaring cost of electronic data storage. Deloitte estimates that the cost of storing photos and videos on sites like Facebook has increased by more than £70m a year.

“The book value of some social networks may be written down and some companies may fail altogether if funding dries up,” said Paul Lee, Deloitte director of research for technology and telecommunications. “Average revenue per user for some of the largest new media sites is measured in just pennies per month, not pounds.

“This compares with a typical average revenue per user of tens of dollars for a cable subscriber, a regular newspaper reader or a movie fan.”

SOURCE

Continued here:
Networking site cashes in on friends

We’ve covered a few tidbits of what the Windows 7 Beta has to offer, including the mess of machines we’ve installed it on, but we finally gathered together all our thoughts and impressions of the OS into one meaty pile of words and screencaps. Naturally, we’re working with a beta here, so things can absolutely get better (or worse), and Redmond might be hiding a feature or two in the wings — or for the inevitable SP1 — but we’d say Microsoft has really put its best foot forward here. Check out all our ramblings after the break.

Note: all testing was performed by a real live human blogger, running clean installs of Windows 7 Beta (build 7000) natively on a years old Dell Dimensions 9150 and a brand new Vaio P.

What we love

Installation

It’s fast, painless, and usually complication free — what more could we ask? More here.

Speed improvements
This seems to be the thing people most wanted out of Windows 7, and it certainly seems to deliver. We’d say the benefits are most drastic in seriously underpowered hardware, like netbooks — which is, of course, exactly where it’s most needed. Our Vaio P, for instance, booted in two thirds the time it took with Vista. Naturally, the OS is by no means delay free. We bump into slowdowns all the time, with all sorts of apps, but they seem to happen less often, and Microsoft has done the work of mitigating the traditional “hurry up and wait” aspect of booting up the computer — if you can see the desktop, you aren’t far from making something happen, instead of waiting for 100,000 start-up items to do their thing. We would like to point out that most folks installing Windows 7 might be looking at their first clean install in a while, and the OS is definitely not immune to slow downs as more stuff is installed and more things are going on — as we type this we’re trying to sync a Zune and watching the rest of the OS grind to a halt in the process. Speed gains aren’t just at the surface level, either. File transfer times have been improved, especially with SSD.

Stability
It’s a beta, so we won’t harp on this. We’ve had a few BSoDs, and a couple of failed installations that we feared would “brick” our computer, but ended up failing gracefully. Overall, a pretty tame experience for a beta, but Windows 7 definitely isn’t bug free.

New Taskbar

Ooh, this is a tricky one. We’d say it’s most likely going to boil down to a debate between power users and the casual types. It does introduce a certain amount of interface inconsistency to the OS, with non-active applications taking up the same amount of space and sitting right next to running applications, and it means you’re an extra click away from switching windows within an app in certain scenarios — extra windows are buried in a pop-up menu, though you can turn off this functionality. Also, Microsoft has made the odd move of removing any apps that you “pin” as a permanent icon to the taskbar from the frequent items section of the Start Menu — which will no doubt prove frustrating for people expecting to see their frequented apps in that familiar place.

Certain apps also have “jump lists” that can be accessed by right clicking on the icon, bringing up recent documents, frequent tasks and the like. This kills two birds with one stone, allowing for easier access to more tasks right where they’re relevant, and killing off some of the myriad of icons that tend to populate the system tray. Unfortunately, we’ll have to wait for developers to catch on — most of Microsoft’s own apps don’t even support this functionality yet.

Further cleaning up the system tray is an “Action Center” for listing various nagging warnings — instead of closing them out and forgetting about them, you just leave them in the Action Center and forget about them.

Peek

Gimmicky? Sure. But it’s not everyday that a little gimmick like Peek — activated by hovering over a button on the bottom right hand corner of the screen, turning all open windows into just their borders — gives new life to the frequent task of finding the desktop and hunting for windows.

Peek is also activated when you click on an item in the Taskbar with multiple windows open. A pop-up shows large thumbnails of each item, and when you hover over it all windows — below and above it — disappear into their borders. Perfect for finding that misplaced dialog box.

Windows Explorer

Microsoft has reworked some things here, reorganized some others, and made sure to put frequent and relevant tasks in an easy to find spot across the top. We won’t get into all of it, but overall we’d say things are more intuitive and “pretty.”

Windows Media Center
Microsoft hasn’t done a ton here, mainly a new, easier setup method and some interface enhancements — borrowing a bit from Zune in the now playing section. Engadget HD will be looking into this a bit more deeply, so stay tuned.

Window management

They really went overboard on this one, and we’re loving it. There are bunches of ways to find, sort and place windows now, some of which include:

• Shake: grab the title bar and shake vigorously to minimize all other windows.
• Maximize at top (pictured): drag the title bar to the top of the screen and Windows 7 will try and grab it and maximize it if you let it go in the right spot.
• Pop to the left, pop to the right: Windows + Left or Right arrow key to maximize the window to that half of the screen.

More fun shortcuts like this can be found here.

Gadgets run free

Microsoft axed that constricting sidebar, now allowing Gadgets to litter the desktop however you choose — another good excuse for Peek. Unfortunately, some gadgets seem to chafe at this — we’ll have to wait for updates to many of them before they start to look “right” sans sidebar.

Networking

Microsoft’s done a lot of work here, and it really shows. They might not be to the point of “it just works” yet, but the HomeGroups functionality actually allows mere mortals, using no magic tricks or slight of hand, to set up their own home network, and merge existing networks — and actually find and share media, printers and documents! It’s a crazy concept, we know, and won’t get into all the technicalities — through a string of bad luck or some broken functionality, it didn’t “just work” on our first few tries — but we were able to go through Microsoft’s simple hand-holding process from enough different angles and do-overs to get our PCs talking to each other at last.

Multiple display support

Having set up many a projector in our day, we know the incredibly frustrating task that can be at times. Windows 7 makes it easy — just tap Windows + P and there’s a quick selector menu for choosing to extend, duplicate or isolate the screen to your monitor or the projector.

Microsoft has also improved the general display settings, making it easier to detect and arrange multiple monitors.

Play to device

Speaking of talking to each other, one of our favorite new features is the new “play to device” functionality in Windows Media Player. After you set up device sharing — which is vaguely but not really related to HomeGroup setup — you can right click on a song or playlist and blast it out of any device you have set up to receive such blasts. That means an Xbox 360, a Media Center Extender, a family member’s PC (they obviously have to approve this functionality at the outset), or whatever other devices support this function in the future. You can also stream music and video out of networked collections in the other direction, but that’s way less fun.

Brand new Paint

Aww, it’s so pretty!

What we’re looking forward to

Device Stage

A pretty neat feature, in theory, Microsoft brings device management straight into the OS — no longer relegated to a sub-menu of some media player or control panel. Unfortunately, it didn’t work with any of the myriad of devices we had laying around — including the Zune, Samsung’s super-basic YP-S2 mass storage player, a PowerShot SD1000 or the very D90 (pictured) that Ballmer has demoed this feature with. If Microsoft won’t even drink the Kool-Aid with the Zune, or at least build in default support for mass storage devices and generic cameras, it’s hard to see this catching on, but we’re sure there will be more happening here at launch. There’s a compatibility list here.

Multitouch

We’re working on tracking down some gear to give Windows 7 multitouch capabilities the real once over it deserves. Stay tuned! In the meantime, check out this video of multitouch Virtual Earth 3D running on Windows 7 and a HP TouchSmart.

What it still needs

Good software

Sure, this is an incredibly subjective topic, but bear with us. You know that new Peek feature? Well, guess which one single app didn’t show its border when we activated Peek: Zune. Sure, it’s one of the best looking apps on our whole computer, but it’s also incredibly at odds with the majority of our computing experience, and took us a week or so to master back in the day. If Microsoft can’t latch onto some sort of consistent usability and interface paradigms, not to mention basic software development guidelines, how can we expect anyone else to? The “sameness” of software on the Mac side might be frustrating, but we’d say the frustration of re-learning how to operate nearly every single application on the Windows side greatly exceeds that. Also, we need some better Twitter apps.

WinFS
We keep making fun little baby steps in this direction — for instance, the universal search features now built into the operating system makes it much easier and faster find that one particular file, app or function we were looking for — but we still want the incredible power and promise of WinFS. It’s clearly not happening this generation, but that doesn’t mean we can’t complain about it.

A unified vision
Overall, we get a certain vibe from Windows 7 — and most Windows releases — that there are too many cooks in the kitchen. There are too many ways to do the same or similar things, like set up a network, or play music. Sure, it’s getting easier to accomplish those tasks, there’s the new HomeGroup functionality, a myriad of setup wizards, and the ever-present and intimidating “advanced” setup modes; or the choice between Zune, Windows Media Player and Windows Media Center. Or if you’re failing to accomplish something, the OS is all-too-ready to send you to a help page, but you don’t get the idea that these groups really talk to each other. They might be “linked” together, but they’re not “unified” in purpose. There have been plenty of times when we just had no idea where to begin a task, from the seeming endless options on the left side of the control panel, or when the OS forgot about helping us do the task, and just gave us a link to a help section instead — even if a wizard would’ve been the more appropriate way to go. There’s no simple solution to all of this, but the older and bigger Windows gets, the more obfuscated certain tasks become — and that’s not a fun trend.

What we hope we never see

Image courtesy of Boing Boing Gadgets

Three hundred different overpriced versions of Windows 7. We know that Microsoft sells its operating system to a lot of different people, and we’re aware that some people only need the stuff that’s in Vista Basic, while other people Media Center and motion-filled desktop backgrounds, but please, for the love of Bill Gates, don’t hit us with Windows 7 Home / Basic / Business / Ultimate / Whatever. Build a smart installer and figure out how to put the right components on the right computers, but stick the OS in one box and sell it for one price. If you have to sell some crazy enterprise thing at an extra cost, so be it, but stop confusing consumers and stop overcharging — pick a low, flat rate and stick to it.

Wrap-up

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Windows 7 Beta in-depth impressions

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Printing The NYT Costs Twice As Much As Sending Every Subscriber A Free Kindle

Source:
the future of video : jeremy allaire

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Kick Mugabe out. Now.