I’ve been writing the last few days about the Hobson’s choice faced by TV networks and other content providers: either cannibalize the revenue from your TV programs  by airing them with less profitable ads on the Web; or keep them on TV — and watch users copy them and post them for free on the Web.

At the 11th Annual Milken Institute Global Conference on Monday, I’ll have a chance to flesh out the paradox on a panel with Eric Feng, Senior Vice President of Audience and Chief Technical Officer, Hulu.com; Albhy Galuten, Vice President, Digital Media Technology Strategy, Sony Corporation of America; Andres Jordan, Vice President, Innovation, T-Systems (Deutsche Telekom North America); and Gene Meieran, Senior Fellow, Technology and Manufacturing Group, Intel.

Hulu.com – NBC Universal and Fox’s joint venture that offers full-length episodes from more than 50 broadcast networks and more than 250 TV series, from The Simpsons to Miami Vice – has clearly decided a good offense is better than a play-scared defense (a la record labels). 

Sony’s Albhy Galuten –probably the only Grammy-winning songwriter who’s equally at home in high technology – knows better than most the trade-offs content creators must consider to survive in the digital age.

You can sum it up as surfing: put out enough free content to make sure you have a stake in whatever business model comes down the pike; but not so much that you destroy your core business.

A suitable analogy for a Southern California conference.

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The Playstation 3’s late entry into the game console wars seriously hampered Sony’s ability to take on Microsoft’s well-established X-Box. Amid all the me-too features, its one distinguishing characteristic: a Blu-ray high-definition drive, against Microsoft’s HD-DVD.

Now that Toshiba’s exit from HD-DVD leaves the format officially dead, PS3 is reaping the benefits. The 40GB, $399 PS3 SKU, which comes packed with Spider-Man 3 in Blu-ray, has jumped from No. 10 to No. 6 among Amazon’s most popular videogame products, according to Punch Jump, an interactive news website.

Meanwhile, retailers like Amazon, Best Buy and Target are slashing prices on HD-DVD players to get the dead weight off their shelves.

Now consider that 83% of PS3 owners already watch Blu-ray movies on their consoles, according to Punch Jump.

If you were a consumer contemplating buying a Blu-ray player, would you be more likely to pay $749 for a Panasonic player, or $399 for a PS3, packaged with movies and games?

Sony has a rare opportunity to finally cash in on the long-promised synergy between its film division and its hardware division. It now can choose between dozens of Blu-ray films and games to package with its PS3s.

Now its Microsoft’s turn to play catchup. If consumers start demanding consoles that play DVDs, X-boxes will start looking like yesterday’s game.

See Also

• Toshiba Throws in the Towel in DVD-Format War
• Blu-ray titles see sales gains at Amazon

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Say again? The newest PS3 is not backward compatible?

A new version of the Playstation 3 will soon hit the European market as Sony tries to eliminate the price gap between its next-gen consoles and the Xbox 360 and Wii. The new EURO399 unit will have a smaller 40GB hard drive but will retain the HDMI interface and Blu-ray player. Clearly trying to find a defensive position against the inexpensive and blockbuster Wii and the Halo-fueled Xbox, Sony has got to do something about underwhelming sales in the Western markets.

It won’t work says Banc of America analyst Michael Savner in a research brief today entitled "Don’t Buy into the PS3 Hype." He points out that price is hurting Sony less than core gamer appeal. "For the same price, the Xbox 360 has more compelling games," he says. "Yes, the PS3 has Blu-Ray, but the percentage of consumers who care about that today is small." The Wii is the must-have console of the holiday season, anyway, he argues.

But the real poser is Sony’s announcement today is that the new budget PS3, which likely will come to the U.S. shortly, will not have backward compatibility with PS2 games. Anticipating the inevitable "Say Whats" from the industry, Sony’s own press release seemed to start from a defensive position. "The new model is no longer backwards compatible with PlayStation(R)2 titles, reflecting both the reduced emphasis placed on this feature amongst later purchasers of PS3, as well as the availability of a more extensive line-up of PS3 specific titles (a total of 65 titles across all genres by Christmas)."

They have to be kidding? PS3 owners don’t want to play Final Fantasy XII but are more interested in, gee, the underwhelming LAIR? Forcing customers to move to the next generation of gaming, especially when everyone but Sony knows that the PS3 title library is very weak, is exactly the way a major media company does not want to act.

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Wikipedia’s Dubious Milestone

As of this second on Sunday morning at 8:03 eastern daylight time, Wikipedia boast 2, 000, 389 articles in its massive user-generated database. It tipped past the 2 million threshold sometime during the night. Pardon me if I didn’t stay up late to catch the moment. This is a major Web content milestone of some sort and it already sparked commemorative reflections on the implications of a user-generated, largely self-policed reference system. What’s use of whining about Wikipedia and all of its accuracy lapses, hoaxes and policy holes? At academic blog “Crooked Timber,” Josh Quiggin writes wisely “One thing is clear though. Complaining about Wikipedia now is like complaining about the Internet. There isn’t going to be any alternative, at least not for quite some time to come.”

There is an obvious class divide over Wikipedia, with media and academics usually falling on the side of loathing the site’s lack of rigor, or at least rigor as defined by classic peer-review and fact-checking regimens. At The Decatur Daily, for instance, a less egg-headed columnist defends the populist ethos of the Wiki idea.

The latest controversy over Wikipedia involves companies (often their PR departments) fluffing up their brands’ own entries and sabotaging entries involving rivals. Just this month Sony got exposed for trying to slip a disparaging remark into the “Halo 3” entry. 

You have to wonder what PR lame brain in the Sony organization actually thought that a one line swipe at the game would have any effect at all on the Xbox-selling, PS3-eating juggernaut that will be Halo 3 later this month. Honestly, after a dozen years dealing with media PR flacks, I still wonder where they make some of them.

See Also

• Wikipedia

Posted under Michael's Blog

It was with a sense of déjà vu I read a story in a telecom newsletter reporting a clampdown on illegal satellite television dishes in Shanghai.

Authorities in Shanghai’s Nanhui District are shutting down retailers of illegal satellite dishes and checking up on holders of licenses to show overseas satellite channels reported the Shanghai Evening Post last week.

Such periodic crackdowns have been running for at least the past five years. Estimates for illegal dishes run at up to 30 million across China which makes life hard for any competing Pay-TV service. Indeed, so entrenched are the satellite services I know one Shanghai expat executive who protested he was completely unaware he was watching an illegal soccer feed.

But will it be different this time? Now that Win TV have coughed up $50 million for EPL soccer rights there will be another stake-holder pushing authorities to act.  CCTV will also have an interest to make sure its Olympic coverage is watched after paying for rights. The telecom and cable carriers paying for new digital infrastructure will join that list.

Enforcement is just one part of the solution say some in the industry. It is also necessary to explore innovative low cost alternatives to pirates. Sony for instance in South Korea in June launched a trial of “free” VoD of Hollywood movies on leading web portal Daum – the first time such a model has been used in Asia with a Hollywood studio.

The model allows customers to watch the movie for free and the service will hopefully be supported by advertising revenues. We are not talking new releases but decent library material such as ‘Bad Boys’ or ‘Godzilla’. If the numbers add up, Sony will look to extend the service to other markets. According to Ross Pollack, senior VP of Asian Distribution at Sony he has received various enquiries from China looking to put legitimate content on P2P sites.  

With P2P users often in excess of 100 million in China, there is at least a potentially large audience. Of course to have a chance, pirate sites would need to be tackled at the same time.

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by Shelly Palmer

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