Whitepaper: Mobile Media Survival Guide

Mobile Media Survival Guide: Implications for Media Businesses in the Post-PC World

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© 2012 Polar Mobile, www.polarmobile.com

Mobile Media Survival Guide

PrEAMBLE

In 2010, the entire newspaper industry in the US made the same amount of money as it had 60 years earlier1.

The history of the media industry has always been a narrative of ebbs and flows. However, it is clear that the destruction of value that the industry is currently facing is more than an ebb but a reset of who will produce content, when it will be made available for consumption and where it will be consumed.

Traditional media companies need not lay waste to the effort and investments they have made to-date. There are some early examples of organizations that have reset to this new reality.

This whitepaper will look at how the traditional media organization can survive and in fact thrive by making use of digital tools and distribution techniques to return and protect value in their organizations.

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,0001950 1960 1970 1980 1990 2000 2010

Source: Newspaper Assosciation of America, mjperry.blogspot.com

Millions of 2011 Dollars

PRINT AND NEWSPAPER ADVERTISING REVENUE ADJUSTED FOR INFLATION, 1950-2011PRINT AND NEWSPAPER ADvERTISINg REvENUE ADJUSTED FOR INFLATION, 1950-2011

1“CARPE DIEM.” : Newspaper Ad Revenues Fall to 60-Yr. Low in 2011. Web. 11 Apr. 2012. <http://mjperry.blogspot.ca/2012/02/newspaper-ad-revenues-fall-to-50-year.html>.

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IndEx

Preamble ............................................................................................................. 2

Business transformation in the media industry ..................................................... 4

A fragmented world becomes more fragmented ................................................... 4

What platform should I start with? ....................................................................... 5

Can developing in HTML5 solve all my problems? ................................................. 7

Will native apps ever be obsolete? ....................................................................... 8

What can media publishers do to be future-proof? ............................................... 9

Content for different device sizes and contexts .................................................... 10

Where does the time go? ................................................................................... 11

Winning with digital distribution ............................................................................ 11

Future-proof survival guide .................................................................................. 12

The Final Curtain .............................................................................................. 13

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Business transformation in the media industry

To frame our discussion, the prevailing model in the media industry is:

That is, a brand must first achieve Reach, a critical mass of users that know and understand the product, then Engage them over time before they can meaningfully Monetize their activity.

This paper focuses primarily on Reach. For additional resources, please refer to the Polar Mobile Resource Centre.

A fragmented world becomes more fragmented

In 2011, for the first time ever, more smartphones and tablets were sold worldwide than laptop and desktop computers. In 2012, analysts predict that tablet computers will have the same trajectory of growth and robust sales and every new version of Apple iPad seem to support this.

This deluge of new devices can make it confusing about where energy should first be focused to reach the greatest possible audience in the most economical way. At the same time, broad device support and spectrum of HTML5 capabilities make it possible to build rich and engaging experiences for consumers right in the mobile web.

In the end, users want the best possible user experience (which points to a native app experience) while app producers want the most economical means for delivery (which points to a web-based experience).

REAch ENgAgEmENT mONETIzATION

http://www.slideshare.net/polarmobile

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Fortunately, a happy medium exists in “hybrid apps”, which treat the mobile browser as a first-class component of native applications. This enables user interfaces and business logic to be implemented with web technologies, while retaining the ability to seamlessly blend in native-only functionality when required.

This model drives down the cost of ownership of apps both due to the type of resources required to perform this development and the time-to-market for deploying new code.

What platform should I start with?

When reach is considered as a precursor to monetization, not all platforms are created equally. On a global scale, the Apple iPhone continues to claim a disproportionate amount of the mobile media consumers, both paid and free.

While this user group cannot claim the biggest current install base, the revenue potential by creating products for the iOS platform proves to be the greatest whether it is through advertising, or some type of purchase. Additionally, it is more and more the case that new whole and supporting technologies are built to support iOS first before other platforms, giving iOS developers a chance to innovate with their products first.

Global Internet Device Sales:In a Few Years, the Number of Mobile Devices will Dwarf the Number of PCs

Sources: gartner, IDC, Strategy Analytics, company filings, BI intelligence estimates

3,000

2,500

2,000

1,500

1,000

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E

We are here

Personal Computer

Smartphone

Tablet

Millions

gLObAL INTERNET DEvIcE SALES

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The reason for this disparity is the perceived ease of development on the iOS platform, compared to others. An adage that holds is that user delight is preceded by developer delight.

Meanwhile, the Android platform continues to grow at a rapid pace and has achieved high rates of adoption by selling devices at the lower-end of the smartphone price spectrum. The flexibility and opportunities to develop compelling products makes it a formidable platform, but the sheer number of Android devices running a variety of Android operating systems makes it a challenge for many developers to support.

Platforms like Windows Phone and Research In Motion’s BlackBerry still earn significant revenue, but do not have strong stakes in the most revenue-rich consumer markets, or are only very successful in narrow market niches.

Still, we are interested in reaching the greatest portion of our audience, so the best solution is one that easily allows us to cover as many endpoints as possible with a branded experience.

NB: It is very important to prioritize support for devices based on the geography and type of consumer your business is targeting, regardless of the prevailing industry statistics.

58.5%31.9%

15.4%

43.1%

34.1% 5%

iOS Android BlackBerry Other

Source: comScore, MobiLens

OS mARkET ShARE OF DIgITAL TRAFFIc

OS mARkET ShARE OF AUDIENcE INSTALLED bASE

AUgUST 2011

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Can developing in HTML5 solve all my problems?

Though HTML5, JavaScript and CSS have emerged as browser standards that make it easier to build big brand-worth products, there are still a number of gaps in the capabilities of native mobile and web implementations.

The enhanced performance of JavaScript engines (for back-end development) and the addition of Graphics Processing Unit-driven devices (for richer graphics) have pushed web applications to new heights. Moreover, HTML5 now enjoys enhanced access to traditional native structures such as local storage and the GPS. It is clear that the gap between native and HTML5 has decreased substantially.

Despite these advancements, there are important opportunities that have yet to be integrated into the standard HTML5 toolset. In particular, native (and hybrid apps) can support a brand’s reach, engage, and monetization goals through app store distribution, push notifications, and in-app purchase.

Users have become app store savvy, providing brands a unique avenue to drive distribution and access highly-engaged audiences. The Apple App Store has driven over 25 billion downloads in less than 4 years2. Furthermore, some apps that have taken advantage of the vertically integrated iOS Newsstand have driven upwards of a 14x increase in downloads3. The prevalence of the mobile app store as a mechanism for reach may be too large to ignore.

2“IOS.” Wikipedia. Wikimedia Foundation, 04 Oct. 2012. Web. 10 Apr. 2012. <http://en.wikipedia.org/wiki/IOS>.3”Apple Newsstand Already Increasing Sales For Digital Publishers.” - 10,000 Words. Web. 10 Apr. 2012. <http://www.mediabistro.com/10000words/apple-newsstand-already-increasing-sales-for-digital-publishers_b7809>.

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16

14

12

10

8

6

4

2

Q1 2011 Q2 2011 Q3 2011 Q4E 2011

63%

37%

73%

27%

75%

25%

73%

27%

Source: Flurry Analytics, January-December 2011

Android iOS

iOS VERSUS ANDROID PROJECT STARTS

iOS vERSUS ANDROID PROJEcT STARTS

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Native applications provide support and infrastructure that simply isn’t easily available on the web today. Push notifications are mechanism that facilitates an avenue to reactivate and retain users.

Finally, it has been said that “If 2010 was the year of the paywall, 2011 was the year the paywall worked”4. Though web apps have the ability to set paywalls online, they lack fully integrated user experiences like one-click transactions, which has proven to be extremely successful in sales conversion. Studies have shown that Apple’s In-App Purchase drives upwards of 70% of total app revenue5. Additionally, the paywall provides an opportunity to bring subscriber revenue back to traditional media businesses.

Due to the fact that the software platforms participate in the financial transactions they enable, it is highly unlikely that they will make these important experiences available entirely on the web. A number of third-party platforms have sprung up to simplify the use of some native services, like Urban Airship, that simplify push, paywall and subscription services for some developers.

Will native apps ever be obsolete?

Native mobile applications will continue to exist, though the situations they will be used in will become more limited. There are still cases where the app feature requirements and budget exist to support a native app build.

Native apps will continue to have an edge in terms of performance because they tap into on-device services that are not available to the mobile browser and access a device’s processing power more directly, making richer experiences possible.

4“Featured in Social Media.” Mashable. Web. 10 Apr. 2012. <http://mashable.com/2011/12/28/digital-journalism-2011/>.5”72% of IPhone App Revenue Comes from In-app Purchases.” IntoMobile. Web. 10 Apr. 2012. <http://www.intomobile.com/2011/09/23/72-iphone-app-revenue-comes-inapp-purchases/>.

HTML5 Native

P Local StorageP Cross-Platform DevelopmentP Leverage technical skills of current staff (HTML, CSS, JavaScript)P Discovery via SearchP Branding and UX Flexibility

O Browser Fragmentation

P Local StorageP Device Consistent UXP Discovery via App StoresP Push AlertsP In-App Purchase

O OS Fragmentation

http://mashable.com/2011/12/28/digital-journalism-2011

http://www.intomobile.com/2011/09/23/72-iphone-app-revenue-comes-inapp-purchases/

http://www.intomobile.com/2011/09/23/72-iphone-app-revenue-comes-inapp-purchases/

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When tablets began reaching mass consumer adoption, there were calls that prevailing experience would be an extension of the desktop web. In many cases, this has proven to be true, except for media experiences.

The market reality is that most of the digital media apps available for download are native or hybrid implementations, for the types of user experience considerations we have outlined here.

As we have seen, many of the consensus bets placed in recent years have proven unsuccessful. In light of this, what must a media company do to ensure its investments are well-placed for future generations of its business?

What can media publishers do to be future-proof?

Most of the media world produces a highly perishable product, which must be intimately cared for at each stage of its distribution. It is not a stretch to say that the media business is quite similar to the ice cream business.

In fact, an ice cream maker spends a significant amount of time thinking about what happens between mixing ingredients and having it consumed by end users.

IcE cREAm AND cONTENT DISTRIbUTION

Ingredients Blending Storage Transportation Retail

Content Content Management System API and RSS Outlets

NB: This is a simplified analogy to focus on one aspect of the content ecosystem – after all, this is a linear process while most content processes are much more intricate and non-linear.

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It could be said that the quiet heroes in the story of ice cream are mixers, storage and transporters that preserve the product until consumers are ready to enjoy it.

Similarly, effective content distribution requires the same sophisticated care by the people and technology between content creation and final consumption.

Content for different device sizes and contexts

A well-organized content management system also removes barriers to managing the different sizes and contexts of content that are hallmarks of this new generation of content syndication .

After all, you will have all the trouble you need ensuring consistency of presentation on the multitude of devices themselves.

Mobile content takes on many forms from very small nuggets like mobile alerts all the way to feature length articles, photo galleries and videos. At the same time, content that is laid out for magazines can take for granted the relative order and spacing of other content elements, while digital distribution takes regular advantage of the interchangeability of content to maximize engagement in live products.

There are regularly cases of mobile websites not optimized for all devices, with components that fail or are completely unusable. These are the marks of content systems that are not primed to deliver content distinctly to the devices they purport to serve.

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Where does the time go?

In an informal study with Polar Mobile’s customers, a startling metric emerged. While most Publishers agree that what differentiates their content offering is their brand and unique presentation to end users, only about 20% of the time and resources in the business is spent focusing on this end.

The remaining 80% of the time is spent on all orders of business related to the content management system and infrastructure that goes into supporting the distribution of content.

Now, what if publishers could re-allocate the resources spent on technology back into the branding and design of their outlet destination. HTML5 promises to simplify

production of end user interfaces, but not the many ancillary integrations and on-going support that is required to keep these businesses viable.

What publishers need now is not only more flexible and robust technology, but also an opportunity to get more out of their presentation and distribution – the differentiator to their business (and last

stage in our ice cream analogy). Few tools are prepared to handle the broad tasks of maintaining the user interfaces and experiences across a broad spectrum of connected devices like MediaEverywhere™.

Winning with digital distribution

One must remember that when content is syndicated to mobile, there is greater opportunity to profit as readership grows. The variable cost in serving each reader drops rapidly to near zero with digital distribution, which is a unique opportunity that could save the entire media industry.

A number of media businesses are undergoing the business transformation now to earn more meaningful revenue from their digital business, and many more are sure to follow.

“ The variable cost in serving each individual reader drops rapidly to near zero with digital distribution, which is a unique opportunity that could save the entire media industry.”

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Future-proof survival guide

A number of forward-thinking publishers have set the standard in becoming future-proof in the media business, led by The Guardian newspaper and their staff6. Their focus on API and RSS feeds early on has made the difference in their ability to put out new products on brand new platforms and devices at launch.

1) Work with platforms that abstract unnecessarily complicated components of your digital media business. These components usually evolve at a rapid rate, and can take a disproportionate amount of time to manage.

2) Build your API and RSS as strengths to simplify media distribution. You’ll be glad you did when they can easily be leveraged for new digital media opportunities.

3) Remember “screens” means more than phone and tablet. Where once there were only a few options to address, there is now an innumerable lot growing daily.

4) Recognize the types and value of different sizes and contexts of content, and plan for them early in the content tagging and storage process.

5) Do your homework. Not every great technology is a great business. It can be easy to get caught up in the launch of something new, but it takes the right mix of features and business model to make a profitable product.

6“How the Guardian’s Custom CMS & API Helped Take Content Strategy to a Traditional Publisher.” Currybetdotnet. Web. 10 Apr. 2012. <http://www.currybet.net/cbet_blog/2011/09/csforum11-martin-belam.php>.

hERE IS A ShORT SUmmARy OF AcTIvITIES TO DEFEND yOUR bUSINESS IN ThE cOmINg FUTURE OF DEvIcE FRAgmENTATION AND cOmPLExITy:

http://www.currybet.net/cbet_blog/2011/09/csforum11-martin-belam.php

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We would like to hear your feedback. Please visit our website at www.polarmobile.com for more information.

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The Final Curtain

Business transformation in the media industry is an exercise in managed creative destruction as lucrative long-time business lines rapidly contract. Though this is a painful process for most publishers, it is also an opportune time to think about where investments can be made for the next generation of content consumption.

Clear patterns are emerging about consumer behaviours that can be extrapolated to make the case for increased investment in digital distribution. At a time digital content can easily be licensed from any number of sources to create a publication, differentiation through brand and design are important factors in the success of a reputable media brand.

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Whitepaper: Mobile Media Survival Guide