iphone 3GS

The advent of the video-enabled iPhone 3GS would be notable –and noted– under any circumstances, given Apple’s leadership in the smartphone space.   However, either due to pure luck or wise planning, both of which Apple has experienced over the years, the iPhone 3GS is hitting at a very opportune time.  The technology is in place for the distribution of video content.  The consumption habits are now in place to create audiences for the video originating on the iPhone 3GS (and other smartphones as well).  And the appetite for ‘reality’ video –which would favor content created/shot on the iPhone 3GS by ordinary people outside of the Hollywood system– is still high.  The only problem is this: the people most likely to afford an iPhone 3GS and who have the most money are the ones most dissatisfied with the places online where they can share their iPhone 3GS-generated videos.

Statistic and Trends:
Consider the following (from Infotrends, Nielsen, Consumer Electronics Association, NPD):

The average American spends 153 hours a month watching video.

It’s 18-24 year olds that are spending the most time watching online video at 5 hours and 3 minutes on average per month. Mobile video watching is also on the rise with 11 million Americans now watching video on their handheld devices, an increase of 9% from Q3 to Q4 [2008].

According to a new report by Infotrends, worldwide shipments of camera phones will jump from 700M in 2007 to surpass 1.3B in 2012.

Consumers aged 35-54 were responsible for 49% of all consumer spending in 2008.  This group equals 47M households and includes the highest number of dual-earner married couples.  These numbers are not expected to change for 2009, despite this being the slowest growing segment of the population.

The average U.S. head of household is 49.5 years old.  80% of growth in the number of households over the next 5 years will be in those headed by people 55 or older.

For every dollar spent by an average consumer on CE products today, households with incomes of $100,000 or more account for $1.69

The amount spent on CE by $100K+ households fell far less (1.2%) between 2008 and 2009 compared to other groups.

Consumers report they would be willing to spend $6-8 a month (or $72-96 per year) to share their photos and videos on a premium web site.

Top sites for video posting among 18-44 year olds: MySpace TV (48%), Youtube (43%), Facebook (42%).  Social net sites top consumer lists

Less than 40% of consumers are satisfied with their video sharing options, while 66% are satisfied with photo sharing options.

History
Though Veit and I have both separately alluded to this point in other places (and I don’t want to be accused of re-stating the obvious ), it’s worth noting again here: devices like the iPhone 3GS, by combining a full-fledged communications and media transport device with a relatively high-quality full-motion video camera, enable consumers to shoot video on a mobile device, do things (or not) to it on the device, and then send it to a remote online server without ever having to download the footage to a desktop computer and/or transcode it so it can be burned to DVD, tape or to an AVI file for viewing on your TV. Again, the implications of this are major because it disrupts a usage model that has been in place for 20 years.

For those of you old enough to remember computing tech in the 1980s and early 1990s (and that includes Veit and me), capturing video –much less full motion video (yes, there was a time when you could only afford devices to capture video at 15 fps)– was a major process that required expensive add-on gear.  TrueVision, RasterOps, SuperMac, Radius were all companies which offered still frame digitizers (capture a 640×480 frame in thousands or even millions of colors) and later motion video capture at a price.  Radius had a series of devices called ‘VideoSpigot’ which could capture 320×240 video in 1993 at around $600, but not at 30 fps.  The 30 fps capability came a few years later.

You could output this video at 640×480 via interpolation.  Keep in mind that not only did you have to have an expensive add-on card with break-out box, but you had to have a first rate hard drive that would cost several hundred dollars up to over $1000 (I think I paid $1800 for a 1.2 Gigabyte drive in 1996) as well as an expensive graphics card capable of 24 bit color (assuming you wanted to see your video in true color) and a monitor capable of displaying 16.7M colors.  To have the whole rig you needed to capture 320×240 video onto your hard drive, edit it, and watch it on your computer RGB monitor would cost no less than $5000 all in, and often closer to $7500.  And that didn’t include the camcorder cost or the software you needed.

For a long time thereafter, at least up until the early 2000s, it was not trivial to capture full-screen full motion video and output it to tape or optical disk as an AVI file or MOV file.  Even if you had all the hardware, you still had to have mastering software that would allow you to transcode the video, assuming you wanted to watch it on TV and not on a computer RGB screen.  No matter what you wanted to do, it was a process you a) had to be committed to; b) had to have some technical knowledge and savvy to make it happen; c) had to understand computer video editing and be willing to apply it via Premiere, Final Cut, Sony’s Vegas Video, Pinnacle Studio, etc.

So, to sum up: until a few years ago you needed expensive hardware to the tune of $5K-10K, technical knowledge, an investment of several hours if not more to create a finished, watchable video; today, a smartphone that costs $399 plus an AT&T service plan (but even if you take the entire 2 year contract for an iPhone and the original purchase price and combine them, they still come out to far less than a third of the total cost of the hardware and software you previously needed to capture, edit and distribute your video just 5-10 years ago), an online account that can accommodate videos sent to it over the airwaves, and the ability to post the video for the consumption of those you wish to view it.  And, importantly, this is done via a process that includes the total time to capture the video plus the short time needed to transmit the video to the remote server plus the time needed to finalize the video resident online.

The differences between today with the iPhone 3GS and yesteryear with a dedicated camcorder and computer, explains why as TechCrunch reports here:

YouTube reports that in the six days since the iPhone 3GS was released last week, the number of mobile uploads has increased by a whopping 400%. For a single phone model to have such a major impact on the site is simply phenomenal.

Even without the iPhone, YouTube is seeing major growth across the entire mobile space — the site has seen uploads go up 1700% over the last six months. It’s not hard to guess why. Video-enabled smartphones are becoming increasingly popular, as are high speed data connections. YouTube also attributes part of the growth to a streamlined upload flow (note how easy it is to upload a video from your iPhone to the site), as well as its improved sharing capabilities (you can now syndicate your videos to services like Facebook and Twitter).

As the still-nascent iPhone 3GS continues to take off and more people figure out how to use the video sharing functionality, these figures are going to skyrocket. Other phones are increasingly getting in on the action too, like Android phones, which introduce direct-to-YouTube uploads with the 1.5 Cupcake update.

Opportunity: Target an underserved demographic
While the streamlined acquisition and transmission processes have definitely contributed to the increase in video sharing and uploading to social sites, what’s most interesting is this:  most middle-aged people, who are the heads of a majority of $100,000+ income households in the United States, by far (U.S. Census Bureau, 2008), are not satisfied with their choices among media-sharing sites.  In other words, though people are using sites like Youtube (for which Google is losing as much as $475M a year) and Facebook (which, at most, is making .17 cents per user per month in 2009) for sharing photos and video, they are looking for something better AND they are probably willing to spend between $70 and 100 per year to do so at a site they find satisfying.

To me, the real interesting opportunity and challenge at the current juncture between the increase in video viewing from all sources (broadcast, satellite, cable, online, DVD, blu-ray, etc.), ease of video capture and distribution, and explosion of communication channels esp. via social networking sites is to provide a media sharing site that appeals to middle-aged people.  Why is this an interesting opportunity when people 15-25 are considered the key demographic for new technology adoption?

In two words, money and time.  People in their 40s and 50s have lots of money and very little time.  And, as reported above, less than 4 in 10 of them are satisfied with their media sharing options while they are willing to pay $72 to 90 a year for the privilege of doing it.

People in their teens and twenties comparatively have much more time and much less money.  Facebook and MySpace are primarily designed for these younger demographics and are being used by older people because they want to stay in touch with old friends from High School and their kids in High School (a gross simplification, but generally true).  Older people use these sites grudgingly but don’t find them particularly user-friendly.

Since the other time problems have been addressed by Apple: namely, relatively easy to use, must-have 3G+ phone with video camera built-in that people can quickly use to capture footage and send off to the Web, the only two that remain are incorporation of web-based automated video editing and a media sharing site that is Baby Boomer friendly.

So, if Apple or some other enterprising company were to create a more user-friendly media sharing site that incorporated automated video editing (such as Muvee Reveal, which was discussed in a prior post) and was targeted at people in their 40s and 50s, the survey seems to indicate that the site could charge an average of $80 a year for the privilege and this group of consumers would be willing to pay it.  Considering, again, that Facebook is only making $2.00 per user per YEAR, if it could monetize middle-aged people at $80 per year, it could vault into the black very quickly. And, it would find a level of stickiness among this desirable head-of-household 45-50 year old demographic heretofore unrealized.

Imagine, social networking services that actually make money!

Of course, the other alternative is for an enterprising startup to come along and use Google Wave to create an easy-to-use video sharing and discussion application that can be incorporated directly into the end-users’ e-mail and chat streams.  But that’s a discussion for another day.

{ Comments on this entry are closed }