We Want our Digital MTV - and More
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Reuters is reporting that Amazon (NASDAQ: AMZN) has obtained up to five or six new SKUs for tablet products. The online retailer is reportedly looking to expand its mobile offerings to compete with the likes of Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), and Microsoft (NASDAQ: MSFT) in the mobile media space.
Amazon jumpstarted the ebook movement in 2007 with the Kindle. Just about every measure out there has shown continued growth of ebook sales, even as sales of hardbacks have tapered off. In June, the Association of American Publishers released a report showing that ebooks outsold hardbacks for the first time ever in the first quarter of 2012, and Amazon recently reported that it is selling more ebooks than hardbacks. The mass market paperback has all but disappeared, replaced by the pricier trade paperbacks and hardback editions.
And it’s not just books that are experiencing a digital revolution. Forbes reported that Netflix (NASDAQ: NFLX) stock is worth $110 per share. Some analysts are doubtful that Netflix can live up to expectations, but others, including Forbes, say that as consumers continue to embrace streaming the company should continue to post positive gains in new subscribers.
Online streaming service Hulu, which launched a premium Hulu Plus in November 2010, has also seen gains and boasts a wide selection of streaming content. Viewers can select not only popular shows such as Castle and Downton Abbey, but late night favorites like The Daily Show and a variety of news shows. At the same time, cable subscriptions continued to slow as more people “cut the cord” and ditch cable and satellite services for streaming. Music saw this move to digital years ago with the success of Apple’s iTunes store. Sales of CDs and DVDs have been on the decline for years.
Clearly, digital is a big deal.
People increasingly want to consume their media in multiple ways – TV, computers, tablets, and even phones. The growth of tablet sales has been enough to prompt speculation about the “death of the PC” in the near future.
But even as consumers want their digital MTV, big media – especially Hollywood – has been slow to move. One only has to skim Netflix’s online movie options to see that. Many of the most popular new movie releases are only available on DVD. Advertisers have also been slow to embrace the digital space. Most of their dollars are still spent in traditional TV viewing, even as numbers consistently show growth in the streaming area.
Why? Are these companies sticking their heads in the sand or is the “digital revolution” merely a blip?
Some speculate that online piracy concerns have dissuaded some providers and advertisers from embracing digital. Why spend millions on streaming advertising if a pirate service can then strip said advertising without much effort?
But if iTunes taught us anything, it’s that if companies can provide an easy, affordable way for consumers to get their media legally, they will. iTunes downloads number in the billions. Apple set the bar with the 99 cents per song price. That price increased to $1.29 per song for most tracks, but that hasn’t slowed the stream of downloads.
Verizon recognized that calls and texting were no longer the focus of smart phones when it released its Share Everything plans last month (confusing pricing notwithstanding). Other carriers are sure to follow.
Yeah, streaming media is big news – and big money to those who play their cards right. And as more companies move into the device space, things will only get better for consumers. The smart investors should keep their eyes on this space.
Fool blogger Mary Sutton does not own shares in any of the companies mentioned in this entry. The Motley Fool owns shares of Apple, Amazon.com, Google, Microsoft, and Netflix. Motley Fool newsletter services recommend Amazon.com, Apple, Google, Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
