A bite of the Apple

“The balance of power is shifting, nurtured by social networking sites and the immediacy of Twitter and instant messaging. In this world, media that is static is less appealing.”

You could have knocked Eduardo Zulueta down with a feather.

The managing director of Chello Multicanal was not expecting his digital unit (which did not even exist two years ago) to come up with a service that made national headlines in Spain. But when the Cocina TV recipe app was launched for iPhones in April last year, it soared to the top Spain’s Apple App Store and stayed there for 15 days, with 60,000 people downloading it over 20 days. To give some perspective, before the cooking app the entire Chello Multicanal website got 110,000 unique visitors a month.

Zulueta is now a believer in mobile apps, both as a way to drive downloads and to raise awareness for the Multicanal TV channels. He says that the experience and subsequent focus on the mobile and the web is leading him to think more about alternative distribution channels. “In the context of shrinking TV budgets and revenues this is one area that is growing quickly,” says Zulueta.

Since its launch in July 2008 some two billion iPhone apps have been downloaded. Mobile ad-serving company AdMob estimates that US$2.4bn (a1.7bn) worth of apps were sold by Apple in 2009 alone. The mobile handset is emerging as a communications, entertainment and productivity tool. Just look at BSkyB. It less than six months its six iPhone apps (from Sky News to a remote recording app for Sky Plus) have attracted three million users.
At a time when the ‘cloud computing’ concept is gaining ground, some argue that the mobile apps market could outpace desktop software. Certainly Apple’s App Store success has forced handset operators and others to get on the app bandwagon.

The changes being wrought by mobile and the internet are causing all media companies to re-think how they provide services to their customers and also what these services should look like. The balance of power is shifting, nurtured by social networking sites and the immediacy of Twitter and instant messaging. In this world, media that is static is less appealing.

A strength of the App Store is that it invites developers from outside Apple to join in – in fact some 125,000 developers have already written apps. This is crowd-sourcing serving a corporate interest. The developers make money when people download their apps and Apple makes money selling more iPhones.

People want to interact and have a say in their media. The popularity of social networking has proved that. The iPhone app for Facebook has been hugely successful for Facebook: users access Facebook 70% more than desktop PC-only users.

Mika Salmi, a former executive at Viacom and the founder of Atom Films, a pioneer in the online film business, says that media companies need to think about their future as more interactive and less static. He says there are parallels to be drawn with the software business where the term “software as a service” has revolutionised thinking. Companies including and Google with their ‘cloud-delivered’ office apps prove that selling a shrinkwrapped product that starts aging the second it’s installed on a computer is not the way forward. Software that isn’t put into the ‘cloud’ and available and updatable on request has only a limited future.

Salmi has coined the phrase “media as a service” and he makes a good point. Look at the success of online games like Farmville and Pet Society. Farmville, a virtual farming game, sits on the Facebook platform (for free) and with no registration hurdles it is easy to try. As of October it had some 61 million monthly users. There are many potential revenue streams from offering the sale of virtual goods (a scarecrow or a new plough) to subscriptions and advertising. The social networking aspect of games including Farmville is what makes them compelling to a wide age and social demographic. They are more like a service than a single product that the user owns, plays a few times and then discards. Another Facebook-delivered game is Pet Society. With some 20 million Facebook users a month, its parent company Playfish was snapped up last November by the largest independent game developer EA for a cool US$300m in cash and equity, and an additional US$100m if Playfish performs well.

“Media as a service” is a good mantra for  the TV business, particularly the pay-TV businesses. ITV in the UK has a fan application on Facebook for its popular TV show X Factor. On TV, the show attracts around 14 million viewers. By the end of the last series there were nearly one million Facebook users who had become fans of X Factor on the site. ITV is using Facebook to build a relationship with its viewers that goes beyond the TV screen.
Build it and they will come. As surely will ways to monetise what the viewers or users do. That’s the lesson from Apple’s App Store. Interactive and social media has a future and it’s one that all TV companies and distributors should be embracing fast.

Kate Bulkley is a broadcaster and writer specialising in media and telecommunications. [email protected].

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