Wednesday, 24 February 2016

MWC 2016: Towards distributed personal devices

Mobile World Congress is not typically a place where innovation is overt. The industry comes here to talk shop and make deals, not to imagine a radical future. In the handset market this means taking steps to assure a place in the shrinking ranges of the big buyers, who're generally trying to slim down the range they show customers to improve the customer experience. This means not stepping too far from what customers understand right now. No innovation & no disruption. But there are exceptions.

Sony, for example showed three products that disaggregate the handset to make it more useful. They showed off a tiny earpiece that enables voice and gesture control of the smartphone that it's Bluetooth tethered to. Although still slightly nerdy-looking, it potentially removes the need to constantly pull out a phone or tap a watch.

Even more radical was the companion camera device. This moves the camera phone to a lanyard or shirt clip. Again, a modicum of AI enables the camera to decide when to take a photo (life-blog style) or it can simply be removed and used to snap selfies to our heart's content. It's similar in concept to the Microsoft Sensecam concept that never saw the light of day.
Sony also showed a projector that turns any surface into a touch screen. This piece of the disaggregation puzzle allows entertainment and more complex use cases (booking a holiday, shopping) that are beyond voice control at the moment to be executed without removing the phone from our pockets.

Away from Sony, I met with Coin, a San Francisco startup who have created an HDK and SDK that enable secure NFC payment to be built into any device for a few dollars. Coin therefore vastly extends the number of devices that can provide touch payment so that rather than being restricted to a watch or a phone, many more pieces of kit (e.g. a wearable camera) can act as a payment card.

At the moment all of this technology (except Coin) is concept-only, but I think that it hints at a near future where AI, improved power management and available HDKs for common functions will lead to further evolution of the phone format. Perhaps by MWC 2020 the phone will no longer be the killer mobile tech and we'll all be talking about AI earpieces and personal area networking. We'll see.

Monday, 15 February 2016

How much does YouTube contribute to the UK creative economy?

YouTube and the multichannel network (MCN)/ vlogger ecosystem it supports represents the largest current emerging media type. By my estimate, YouTube streams 4.2Bn hours of content a month, much of which (probably) ends up substituting for time spent with traditional media. But all of the coverage of the platform focuses on whether YouTube itself is profitable for Google, rather than the impact of a global platform on local creativity.

Just as was my intent with the report we published on TV last year, which highlighted the impact of accelerating sports rights spending on the creative economy, I'm now looking at the effect of a global platform that exchanges local viewing, flowing directly to local creatives, for consumption of global channels, which goes into international pockets.

Numbers on YouTube are really very hard to obtain as the platform is not independently reported on by Alphabet, Google, or anyone else. Even estimates of its top line revenues vary wildly, being as low as $5Bn and as high as $9Bn for 2015. Starting with a Credit Suisse number that seems sensible, I've tried to show how money flows through to UK creators.

This is a simple analysis that assumes two types of creatives monetising the platform, both through MCNs. The larger group are music artists, via the Vevo and Warner Music networks. The smaller are the independent vloggers, disproportionately represented in the UK thanks to the presence of millionaire megastars PewDiePie and Zoella. This latter group is solely dependent on YouTube for sponsorship and other ancillary revenues from books and other content, for which I've made a directional estimate based on the going rate for a placement, versus the amount of revenue made from advertising.

My current thinking (as shown in the schematic) is that YouTube takes about $600Mn from UK advertisers and gives back about $180Mn, much of the latter coming from non-UK advertisers (it's a global platform). This actually compares very favourably to the contribution of ad-funded TV in the UK, which brings in about £2.7Bn and returns about £600Mn to the creative sector... but of course even despite the significant difference in creative ROI, the reality is that thousands of people make a living wage from the UK TV industry, versus a handful on YouTube, which supports only a few thousand creators globally.

Anyhow, this is far from a complete analysis and I'm going to continue to work it up, ahead of a report we're hoping to release in the late spring.