Apologies for a work-centric blog post, but I was fortunate enough to be a speaker at the iPad Entertainment Summit last week and I wanted to capture my thoughts on the event before they evaporated. The conference was held at BAFTA, catering for an audience largely made up of broadcasters and brand-holders. There were some serious names in the auditorium, but many of them had come to listen rather than present.
As the day unfolded, there were some good talks, interspersed by the usual bits of self-promotion and techno-babble, yet I was struck by one or two people on the podium who seemed to have little or no experience of app development, despite the buzzword-laden theories they advanced. There were several excellent speakers but, for anyone new to the iOS space, it may have been tricky to discern who was talking sense and who wasn’t.
At lunch, I had an eye-opening conversation with someone who thought Apple were “a bit rich” taking a 30% revenue share. I’m really not an Apple fan-boy, but this stunned me. Traditionally, high-street retailers take 50-60%, straight off the top. Mobile carriers took similar percentages, and none of them accepted content as easily – or paid as quickly – as Apple do. I was confused by this nostalgia for the bad old days, until it dawned on me that many of these people are new – brand new – to the market. They look at Apple’s model, a model which simply didn’t exist before iTunes, and they wonder why it’s not more favourable to them. They don’t appreciate it because they don’t understand the alternative.
This seems borne out by the eager casting-about for the “next big thing”. Some say it will be Android, others argue that Windows7 Mobile will dominate. The “anyone-but-Apple” mentality is quite in vogue just now. And there’s an element of truth in what’s being said. Certainly, it’s likely that a number of other devices will emerge to challenge Apple’s offering. Critically though, they will be competing on a hardware level – for content providers it’s revenue that matters, not handset numbers.
Perhaps the most surprising take-away from the day was the absence of serious distribution channel discussion. There seems to be an assumption that other manufacturers will simply “do their own App Store”. After all, how hard can it be?
And that’s where the problem lies. Apple already has a trusted, consistent, international, regulated store front. They have pre-existing billing relationships with every customer, pre-existing content relationships with almost every major record label, movie studio, and TV channel. They have an app for everything. And they have it all right now, today.
And to compete with all of this, other companies just need to “do their own App Store”? It might be harder than it looks. Apple certainly won’t be sitting still while the others play catch-up, but there’s yet another problem for the rival manufacturers.
iTunes and the App Store really shook up the mobile content industry, which had previously been serviced by carrier portals. When you bought something for your device, you bought it from Vodafone or T-Mobile – there was a limited amount of content available, and pricing was controlled by the carriers. Apple changed that, opening things up with an unlimited range of items, at a range of pricepoints, including “free”. Suddenly, there was a model where the carriers weren’t getting any of the revenue. To compete, the rival platforms need to get their devices into people’s hands, but their traditional route to market is via the carriers. Will the carriers allow them to “do an Apple” and build their own store fronts? The carriers know how much revenue there is to be made in the space and, crucially, they have a perfect, pre-existing billing relationship with every single one of their customers. Will they really forego their high-ground advantage and help the other platforms to climb past them?
It’s clear that Apple won’t have the field to themselves. Moving forward, a number of competitors will step up, and some of them will become established. Whether their hardware market-share can be translated into app revenue is an entirely different matter that nobody seems to be talking about.
On one level, it’s frustrating. A lot of effort is going to be expended on ill-conceived projects pitched by people who didn’t understand the business. On the other hand, I made a lot of useful new contacts at the event, so I mustn’t grumble.
And, last but not least, Stephen Fry was on the stage, right after me. His words were both witty and enlightened and I am profoundly grateful that I didn’t have to speak after him!
There's something hugely appealing about the Cornish coast. I've always had a horror of "seaside towns", conjuring up visions of crumbling northern outposts where stag and hen parties stumble from t'arcades to t'pubs and grim-faced pensioners sit shivering on rain-lashed promenades. But the area around St Austell bay is different. It's comparatively quiet, and is set in a landscape dominated by cliffs and rocks and rolling hills, rather than one dominated by coloured neon.