2010.39 | Netflix Canada – Moving to Digital Media?

Selling video entertainment in today’s digital world is a complex business.  The entertainment business in Canada has have moved from a physical product available in stores to an incredible array of options.  While we don’t have all of the options available to our neighbhours to the south, Canadian options were extended with Netflix opening its doors to Canada last week.  Their model is likely to shake up the local entertainment sales and rental industry.   Consider the options currently available for video entertainment.

DVD Rental Blockbuster Canada, Videotron and Rogers Plus are the larger players in Canada.  These stores are far more robust than their equivalents in the US and the are plenty of bricks and mortar sites from which to rent. 

DVD kiosks – There are different options in Canada for DVD rentals from kiosks, though most networks don’t have more than a handful of locations at present. 

DVD Subscription Zip.ca is the main player for DVD subscription rentals in Canada, with subscribers in the tens of thousands.

Digital Download and Rental – Digital downloads have been available on Pay Per View boxes in homes across Canada for some time from Digital Cable/ Satellite providers.  iTunes is the primary player in Canada for digital downloads of Movies and TV shows to own and rent, though some studios include digital copies for download with the physical copy.  With Netflix on the scene in Canada, iTunes is no longer the lone digital player in Canada.  More technologically sophisticated users can use solutions like Boxee to watch online video on their PCs and TVs.

There are a number of factors driving the usage adoption of the different platforms:

  • Bandwidth – Music was easily moved from CD to download with files in the 2Mb size range.  Movies and even TV shows of any sort of quality require files from 200Mb to 2Gb in size.  Internet usage is expansive in Canada with more than three quarters of Canadians online.  With large files, varying download speeds, and no unlimited bandwidth options at present, it may take some time for the digital downloads of video to reach the ubiquity of DVDs, but it appears that the number of people watching video online is growing
  • Portability – DVDs were the original portable option for entertainment.  Netflix has done a great job of moving this sort of portability to a digital format, allowing users to view content on their PC, iPhone, iPad or on their TV via a game console like the Wii.  The service keeps track of the last known viewing point allowing users to resume their place as they travel, commute, or are in any other place.  Allowing consumption of entertainment where and when they wish is key to the success digital media.
  • Licensing  – Every country has a patchwork of licensing rules and every studio and local rightsholder can make their own decisions.  This means that the media available over digital networks can vary by jurisdiction.  The media available will have an impact on the users of a digital service.  Limiting selection will drive the demographics of digital users in various ways.
  • User Experience – Digital media doesn’t currently have the extras available on DVDs like making of the film documentaries, and there are segments of the population who are interested in those extras. Digital options also may not provide the High Definition Surround Sound experience that technophiles may wish to experience. 
  • Cost – While piracy is rife on the internet and there are many fears about that issue, there is always a trade-off on digital media between time and effort.  If digital providers make it simpler to obtain their services, and they are of better quality or different in some way than what can be obtained for free, chargable digital solutions will find a place in people’s homes and wallets.  Nick Bilton’s recent book highlights and explains this point well. 
  • Technology – The ubiquity of technology is making it simpler for consumers to consume media through digital means.   Viewing digital media used to require extra equipment, knowledge of various technologies and either expensive software or open source software.  Services like Netflix make it possible to consume digital video with the simple knowledge of how to browse the internet.

So is digital media going to move the DVD the way of the 8 track?  For those of us with high speed internet, it certainly appears to be going in that direction.  I am an early adopter, always willing to try the newest thing, and I invest in new technology, high bandwidth internet and consume my media in such a way that digital is practical.  For those who are less interested in making technology such a central part of their lives, it will take some time – perhaps years – before digital is the default option.   I believe it will be a situation similar to eBooks.  While they are certainly overtaking books, books aren’t going away.  While DVDs are going away, they are not all going to disappear tomorrow.  It is most likely that all of these options will continue to co-exist for some time and they will probably be joined by other hybrids as well.

[Full disclosure – my employer NCR Corporation, owns and operates Blockbuster Express DVD Rental Kiosks]

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2009.43 | Experience Based Retail

500x_Microsoft_Store_topRetail is certainly moving away from the old fashioned stores we knew as children, where one walks in and just buys something off the shelf.  With so much competition, convenience and so much available for purchase online, it seems inevitable that many specialty retailers will work towards experience based retailing to differentiate themselves.

HMV announced this week that they will open a movie theatre above a store in London.  Microsoft opened its first “we’re hip like Apple, too” Store this week in Arizona.

At the suggestion of Steve Jobs, who is on their Board of Directors, Disney is moving in the same direction, and are reputedly looking at a major overhaul of their retail chain which is expected to leverage the same interactive store model and wireless handheld POS as the Apple store.

On the content side, Disney’s Keychain solution promises consumers the opportunity to use media across platforms. This seems like the answer to the age old problem of buying the same media on multiple formats (anyone remember betamax, VHS, DVD, Blu-Ray), but its use will certainly depend on what price they are looking for as well as the requirement for one to be online all the time to consume.  The technology seems solid as long as consumers can get past the need for the tangible item – did I mention price and bandwidth?  Downloaded a 2Gb movie lately?  Yikes.

In the world of experience with self-service, Tesco opened its first all self-checkout store this week in the UK.   Now they have full self-checkout – assisted self service, really – on two continents.

2009.27 | Strategies for Tough Consumers

Tough times drive tough consumers. Retailers are adjusting their strategy to the new reality around consumer behaviour in varying ways.

2009.17 | Convenience | DVD Landscape | Mobile POS

Taking the Store to Customers – Convenience has ever been important to consumer facing businesses, and there are many new and different ways that these organizations are trying to make their products and services more convenient for consumers to obtain.

The primary inconvenience of purchasing food from a mobile vendor is the difficulty of knowing where they are. Kogi Korean BBQ, a taco truck in LA, lets their customers keep track of their location via Twitter – taking uncertainty out of the mix.

Starbucks is looking to place coffee vending machines across North America that leverage electronic payment – including contactless – avoiding the necessity for having coins or small bills at the ready.

Coinstar is already doing very well with Redbox DVD rental machines. They add additional convenience by providing a reloadable credit card solution – a gap filler for those who wish to rent and don’t have a credit card. This should sound familiar, as this solution is available on an NCR platform used by Readycredit. These would be well placed next to NCR SelfServ Entertainment units.

The Changing DVD Landscape – The DVD rental industry is becoming increasingly complicated, with ever changing players, formats and scenarios. While the cheap DVD rental is a boon for the consumer, there are complications, as it represents a paradigm change for studios and consumers alike. Whatever the issues, expect them to be resolved, and this business to continue its growth for the next few years at the very least.

Mobile POS – I’ve already expressed my admiration for the handheld POS units used in Apple Stores. Now it looks like they might be taking the expected step of moving from their current Windows Based platform to an iPhone based solution with the soon to be released iPhone 3.0 software which allows improved connectivity and interoperability for hardware add-ons. This is key, as swiping a card is much faster than typing in a number, and EMV will require dip card readers in many countries.

While this platform doesn’t suit every environment, look for mobile based payment systems to act as the small business POS of the future. You can already download some from the iPhone app store today.

2009.16 | Mobile Life

Everyone knows that mobile is exploding as a touchpoint for consumers. NCR is banking on it as are many others. I was amazed on a recent trip to Walt Disney World in Florida at the explosion of mobile device usage everywhere I went. I saw hundreds of teens texting on their holiday. I saw their parents using their mobiles to keep track of the rest of the family on vacation, as well as keep tabs on work via email. Disney even has a handheld based adventure for kids to experience at Epcot, indicating they understand the importance of this channel.

While usage numbers on mobile continue to grow, there are also some tremendous opportunities to improve on our mobile world and interactions with customers. Most of the interactions I observed were SMS and email based, and I don’t think that has even begun to leverage the technology to its fullest. This weekend, I used my mobile to:

:: look up new releases on dvd for friday night rental,

:: look up directions in real time from a concert hall to a restaurant,

:: look up the restaurant’s phone number from the maps application to call ahead for a table,

:: view the restaurant menu ahead of time to look for options to suit my wife’s special dietary needs

:: transfer money directly to a friend’s account from my phone to pay him for the show tickets, as I don’t carry cash or cheques,

:: look up the score for Saturday night’s Leafs vs Canadiens hockey game (lost again),

:: read through 3 newspapers (NYT, Toronto Star, Globe and Mail) while waiting to pick up my children at a party,

:: look up an author online while I listened to a radio broadcast about her and bookmarked it,

:: record a voice memo to pick up some things while running errands for my wife,

:: look up Easter themed books while shopping at Chapters,

:: take a picture of a book I thought my wife would enjoy while at the store,

:: look up my bookmark for the author from the radio and look for her books,

:: show an image of my iRewards card to the cashier in my photos on my phone instead of carrying all my loyalty cards.

Most of these items are an opportunity for consumers to leverage a tool they already have in a new way, increasing convenience at little or no cost. On the business side, they are also an opportunity for consumer facing organizations to learn about their customers habits, and increase their wallet share via coupons, services, or leveraging a recommendation engine. This is a true win for both parties – more convenience for more information, allowing better service.

My iPhone makes it easier to do the things on this list, but not so easy that everyone is willing and/or able to do them just yet. Many people don’t even know that they can do these things. Apple and RIM have an opportunity to assist via their interfaces, and organizations have a tremendous opportunity to build or be a part of the applications of the future that blur the line between mobile and self service. Applications like:

Electronic Wallet – Pay with your mobile using credit cards via NFC, or pay with retailer specific declining balance cards tied to an account number via 2D barcode. Carry all of your Loyalty cards without straining your purse or your wallet. Benefit for the consumer; less of a physical burden and less organization. Benefit for the retailer; more in depth understanding of consumer activity as loyalty cards are at hand for every transaction.

Electronic Receipts – You can already get a receipt emailed to you at the Apple Store. Why not have it transferred to your phone in a receipt folder in electronic format? If there is a return or a warranty issue, you always have all of your receipts, and you can transfer them back to the retailer when for validation you complete a return. No more paper cost or paper waste. Never lose the receipt. No more George Costanza wallet.

AutoFill Applications – I saw a terrific example of this at the NCR Executive Briefing Centre. Your phone has all of your vital statistics on it in an encrypted folder. You pull up an application on a kiosk, or Microsoft Surface, and you can use your phone to automatically fill out the application with all of your personal details, much as you can with the Google Toolbar Autofill on your web browser. No more filling out your name and address for the millionth time on an application for a Loyalty card, a car lease, or even a raffle ticket.

Mobile Plan Adjustments – Go directly online and change your phone plan. Traveling to Europe? Go online on your mobile, select the checkboxes to add a la carte options like bulk SMS messages or air time to your plan, and your account is updated. No more IVR or talking to the call centre, no more confusing options, just a quick bullet list of what you have and what you pay, right on your phone.

Hotel and Car Keys – Another great demo at the NCR Executive Briefing Centre. Instead of obtaining a plastic card for your room key, use an NFC chip in your phone to register and open your door during your stay. They could do this with rental cars as well. They use similar technology for car sharing services like Zipcars. No more lost keys.

Mobile Image Recognition – Take a picture of a restaurant, a menu comes up on your phone. Take a picture of a product, and a datasheet or informational video plays on your phone. It’s coming.

Store in the Pocket – As a retailer, what better way to tighten your relationship with your customer by putting a virtual store on their mobile device. Your store is always on and always with them. Amazon has a store that’s optimized for the iPhone, and you can buy books on iPhone kindle app. Watch for ways to connect these stores to the real world, like scanning a barcode or taking a picture of a product. Starbucks has started it by allowing customers to find and purchase the song they hear on the radio at the store from Itunes on their iPhone with no charge for wifi. Expect to this to expand and get smarter. No more wandering the book store trying to remember that music or book your friend suggested.

Order Streamlining – I’ve been waiting for someone to perfect (or even attempt this) for a couple of years now after seeing this great mockup that I carry around on my phone. The real opportunity here is to connect the mobile experience to the self service or assisted service situation. Customers have a menu application on their device, and select their order. The selections are saved, and then the screen shows a 2D barcode on demand, which can be read by a customer facing scanner at the end of the line. That 2D barcode can also encode a retailer specific declining balance card so that payment can also be initiated at the same time as the order is placed. QSR organizations have the opportunity to lock in customers; providing them faster service, and complete tendering – the slowest part of the transaction – while the customer is waiting for their order. No more repeating your order or having it misheard.

These solutions may seem a little like a scene from the film Minority Report, but if you don’t use this technology, you know someone who will. These solutions exist today, they will become increasingly easier to use, more mainstream, and their usage will grow.

I placed my first ecommerce order in 1995, when I purchased a Wired Magazine subscription via email with my credit card number because that was the only way it could be done. If you consider the leaps and bounds the Internet has taken since that time, imagine how mobile will influence our lives in the coming years.

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