Content: The value proposition

While new distribution channels continue to enter the market, revenue streams don't seem to go up linearly. As a result the whole value proposition of content business is being challenged. Lets spend some time analysing this space.

Lets start by looking at the variables:

1. Number of customers
2. Access media
3. Distribution networks
4. Content

Adding customers increases the overall market size. But more importantly increasing their spending will impact the total revenue potential of the market. This is common sense. However, this is where we all seem to be struggling. Why? Because we don't know what will make the customer pay more? Is it content, quality of content, availability of content.....

Over the past couple of years, the number of access devices that can store/play content has risen manifold. HDTV and mobile TV are to name a few. Thus definitely we have improved on availability and reachability of content, yet not affecting the revenue to any significance. In fact, newer devices have started a price war for content and has taken the copyright protection battle to newer levels.

The argument of convergence has brought in several players in the content distribution map. Web based players for one, service providers both wireline and wireless, legacy cable players and the antiquated broadcasters of TV and radio have cluttered the industry space trying to win the customers attention. Last year saw a plethora of triple-play and quad-play services being launched in the market. However latest news suggest that the cummulative return from these new distribution networks haven't improved the total revenue earned from content consumption. In fact the competition is attempting to eliminate a few types of players rather than increase the size of the pot.

Having discussed the revenue implications of the three variables, we are left with content. And its here that we find few clear winners. And they are already well known. In fact its their success that started this new revolution. Yes I am talking of Youtube and Myspace. They set up platforms for newer content to be created which were then distributed via web. Some of the lucky creators got recognition and fame while others took pleasure in the experience of sharing their creation. One additional example that might be controversial. I add Skype and Vonage to this list where they share space with Google Talk, Yahoo! and other internet based voice services bundled with IM. They set up platforms where users created content (telephonic conversations) that was distributed over the web. Thus I think that until newer content is created and a strong incentive scheme build to motivate the artists, the distribution channel supporting various access media serving the same consumer will be pushing the same content. And the smart consumer will use the one thats cheap and easily available.

I argue that consumers are happy to compromise on quality to the extent possible. Remember the lack of five 9s in mobile phones. Given the choice of seeing a Bolshoi Ballet at the Royal Opera House or sitting on a cushy sofa and watching on the TV, it will take a connoisseur's effort to enjoy a live performance.