Top news today is the announcement that Microsoft will invest in a new Barnes & Noble subsidiary for the Nook and ebooks. This is a strange one, I think, for the obvious reason that the Nook is an Android device, and the only concession that’s obvious for Microsoft is one for a reader for Windows 8. Given that there’s a reader for both iOS and Windows 7 it’s hard to see how anyone at Microsoft would have thought that Windows 8 would not have been supported.
It seems at least possible to me that Microsoft and B&N might be thinking of creating a line of e-readers based on Win 8 and not just an app. Amazon’s Kindle Fire now accounts for more than half of all Android tablet sales, and it’s pretty likely that B&N is not going to gain any ground against its non-storefront rival. Microsoft is likely starting to get a bit concerned about Amazon as the company turns more to digital properties that collide with Microsoft’s online interest. Microsoft and B&N may also be looking at a cloud alliance to counter Amazon’s. In short, this could be the start of something big.
Speaking of digital content, we’re continuing to get data that shows that mobility and broadband are combining to alter behavior, and marketing, and market practices. This is important for a number of reasons, one being that anything that alters fundamental human behavior creates new risks and opportunities, and another being that near-term advertising trends in mobile might have a major impact on video.
My personal theory has always been that when people use mobile devices on broadband networks, they do things very different from what they do at home. One of the recent indicators of that is the fact that the kind of video consumed on mobile devices is very different; more YouTube and clips and less TV replays and movies. When tablets are considered, we find that tablets tend to be used on WiFi more than on 3G/4G, and when they’re on WiFi they are used more like laptops or desktops in terms of video consumption—TV and longer features. Even when used on cellular networks, laptops are more likely to be used to view longer material. But maybe one of the big factors is that gaming is increasingly a factor on mobile devices, and that’s even showing up in mobile ads. Video ads served inside game apps are already responsible for almost half of total videos served to mobile devices, and those videos account for 40% of total video ads served.
The big question this raises in the near term is whether it means that people might be moving away from streaming to home in favor of mobile streaming, but I think most people realize this is unlikely. What I think is really happening is much simpler; people are exercising entertainment-on-the-road choices they never had before. It’s nice to have something to do while you’re waiting at the Laundromat, but you probably won’t make extra trips there just to do those things. Mobile activity online is a combination of filling in idle time with new entertainment choices and exercising new information options that are appropriate to someone out on a mission instead of at home contemplating.
A more pertinent issue is that of mobile bandwidth use. If video ads in games and in other apps are going to overtake wireline video ads in the near future, as many say they will, then are we seeing a time when in-app mobile video ads will be one of the bigger factors sucking down the remaining usage a broadband user has per month? Can we expect users and regulators to allow in-app bandwidth for advertising to draw down the quotas? If not, can we expect telcos to make in-app usage free and subsidize mobile ads they don’t get revenue on? You can see the dilemma here.