Media 3.0 Part 3

I mean, is it just traditional content being done in a new way online, or are they actually capitalizing on the other features of being online, social networking, social TV? And you mentioned that—

Well, I think it's started with primarily large online communities that have emerged And people then, you know, doing gaming and other things in those communities. But I think the intriguing thing that's going to happen, particularly in the Chinese market, is where the video begins to start colliding with that world and begins to become an integral part of it. And advertising's woven into it, and video becomes part of the online experience, coupled with the way that people have already been participating in communities online. And I think that that's where there's going to be a next wave of innovation, particularly in the Chinese market.

In addition to the gaming phenomenon that Graham just referred to, I think what's very, very exciting and I personally think is going to be a real explosive phenomenon is I recently met with the heads of Alibaba and Taobao, you know, and the numbers are simply staggering in e-commerce in China. It's only going to be a matter of time before we truly will see e-commerce really happen in a way that, that it was— that it was intended to realize all of its full value. Taobao today will do more business on their platform than all of the key accounts— Walmart, Carrefour— combined. You know, that's a staggering amount of money that's being done. It's only going to be a matter of time. And I'm not talking about home shopping television channels. I'm talking about simply beyond that, you know, a truer, richer experience. Than just pure television shopping.

Well, and I think that also the other things happening in the world, particularly with the likes of Apple's platforms, which has shown the way of the application platform, of the content store with digital assets on it that have value to consumers, you're finding that that sort of generic business model then gets translated to this world that we're talking about. And that's the platform or the business infrastructure that allows people to monetize these digital assets that they have, whether they be video, whether they be virtual goods in the game, whether they be mobile casual games.

Right.

And they've got the storefront in order to be able to present those to the marketplace. And that's where, you know, companies like ourselves at Iodato are helping keep those business models intact and integral, and those digital assets that are on them protected during the course of their life. In the marketplace.

But, you know, I think this is— what this leads to is, you know, what about the existing operators? What about the existing networks, the traditional networks, traditional content? It's going to leave them with some hard choices and some pretty difficult problems to solve if they get it wrong. You know, any views on how they can handle that?

Yeah, look, I mean, the question is whether all this is going to add to the market or take away from the perspective of those traditional operators. And probably the answer is a bit of both. And depending how actively or wholeheartedly you embrace this new world. Look, I think broadcasters have an incredibly powerful position. I mean, at the end of the day, for a significant period of time, the mass market interest, live events, particularly sports, is going to still need the medium of delivery of the broadcast platform. And also, you know, the broadcasters have huge brand share. They're trusted brands in the main, and that's an opportunity to capitalize on if they truly embrace this world and make sure that, you know, they pamper to the consumer's choice of wanting the compelling content regardless of where they are or whatever time they want to consume it, and to keep them within their brand. You know, they've substantially got to change in order to be able to take advantage of that and not have their cake eaten, as opposed to adding to their cake.

You know, you've got these content providers, and I'm going outside of China now, looking at the more global aspect. You've got all these content providers like Netflix and Hulu and Google TV. Some of them are backed by traditional content providers, and they're all sort of feeling their way to try and find out how they can make a living out of this, but at a at a risk of disintermediating the local pay-TV operators where they've had a traditional relationship for such a long time. I mean, can they succeed in that area? I've got my own personal view that, you know, we've seen YouTube, and they're trying to make their living out of ad-supported content, and that hasn't really worked, and they're all moving towards a subscription-based service, which effectively moves the pay-TV operator over the net. But I think from our point of view in Hong Kong, if we can't do a better job of pay TV than they can do because of our local presence, advertising, call centers, selling packages of content, you know, we should be shot. So I mean, can they really make it in this world?

I guess putting on my former hat as CMO, where we were spending millions of dollars of advertising, when we looked into this proposition, it was incredibly difficult for us to justify a top-up to the value that they were asking for. And second of all, it was incredibly difficult to measure its efficacy. And it's hard enough to measure reaching eyeballs today in China, but then to suggest that we need to pay a top-up on that was even harder for us to to justify it. So I think it's an uphill battle.

Well, my personal view is that I think that the likes of Netflix in the United States have shown the way here, is that they have a phenomenal growing business, and they are taking business away from existing incumbents. And why are they doing it? Because they're pandering to the consumer's choice. And consumers are seeing that they can purchase what they want in a more piecemeal fashion, when they want it, and where they want it. And that is contrast to the existing pay-TV providers that are providing all-you-can-eat fare, and the consumer's saying, well, I'm paying for things that I don't really want. And unless those existing providers change their method of business model, I think they're going to increasingly find their lunch potentially eaten. So we're very glad to be working with Netflix as a data Because we think that they're responding to this, the new world, and pampering to the consumer's choice.