New IPO in Wireless ISP Industry
Posted on June 29, 2011
A maker of radio transceivers and related hardware for the Wireless ISP industry recently filed papers with the Securities & Exchange Commission seeking authorization to sell stock to the public. Silicon Valley based Ubiquiti Networks plans to offer $200 million worth of stock. Some of the shares will be sold by existing shareholders which includes a venture capital firm as well as members of management. The venture firm has held the shares less than 18 months. As yet, there is no indication of the price at which public shares will be sold.
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We have no opinion on the merits – or demerits – of the Ubiquiti Networks stock offering.
As the table below illustrates, revenues have grown rapidly. The company’s fiscal year ends tomorrow. From Fiscal 2008 to Fiscal 2010 sales grew from $22 million to $137 million. For the first three-quarters of Fiscal 2011 sales were up 34% from $97 million to $130 million.
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Two Years Before Madison Avenue
Posted on June 28, 2011
Earlier this month a GigaOm analyst interviewed two advertising industry experts and inferred that future TV ads will be bought more like online ads. Specifically he concluded that “TV ads will increasingly become performance-based” and that viewer behavior and intent will trump conventionally accepted demographic statistics. His experts were from a prominent media agency named Initiative.
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Inside Digital Media subscribers got the same message about two years earlier. The superiority of “Behavioral Ad Targeting” was the subject of a podcast in July, 2009. It was followed two months later by our “Thinking the Unthinkable about Video Ads” that explained how accountability and behavioral targeting must ultimately apply to video ads. As we’ve repeatedly explained, Google’s search advertising is conditioning sponsors to a standard in which they only get charged for ads that viewers actually use. It’s only a matter of time before advertisers demand that video ads and TV commercials conform to the new paradigm.
What do we predict next?
First, once TV commercials become performance-based, ad agencies will learn to earn addition revenue by creating commercials that segue into online transactions.
Second, smartphones and tablet computers shall become the ubiquitous tools enabling consumers to interact with such TV commercials and thereby purchase merchandise impulsively online.
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Also, inspect our eBooks including the first half of “Third Generation Television” which is offered at no charge. Our latest analysis, “Television Band White Spaces” is available through The Diffusion Group.
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Three Years Before Blackberry Collapse
Posted on June 27, 2011
Almost three years ago (August, 2008) Inside Digital Media released a video podcast entitled “RIP for RIM Blackberry and the Radio Industry?” Three smartphone and radio industry experts were interviewed. Inside Digital Media concluded both the Blackberry and radio broadcasting would thereafter be challenged with technological obsolescence by launch of iPhone apps the preceding month. In short, we recognized Apple’s App Store as the “game changer” it later proved to be.
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Since the podcast Research-in-Motion stock has dropped almost 80% from $130 per share to about $29. Similarly, privately-owned Clear Channel Communication which is the largest radio broadcaster is struggling financially. While Clear Channel’s problems partly result from a mountain of debt, they also reflect a perilously weak recovery in advertising revenues. The weakness is not merely cyclical, but instead reflects a secular decline much like trends earlier impacting newspapers and record labels.
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Also, inspect our eBooks including the first half of “Third Generation Television” which is offered at no charge. Our latest analysis, “Television Band White Spaces” is available through The Diffusion Group.
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Three Months Before Kleiner Perkins
Posted on June 24, 2011
Earlier this week esteemed venture investors Kleiner-Perkins and Institutional Ventures participated in a $32 million financing for Shazam to fund development of a form of interactive television advertising based upon the company’s music recognition technology. Our March 4, 2011 Interactive TV Commercials Arrive detailed how Shazam pioneered the idea in an TV commercial with Old Navy.
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Specifically, Old Navy created this short music video to run as a TV commercial. Smartphone users activating Shazam while the track is playing, not only identify the song, but also get directed to pages at the Old Navy website where they can inspect merchandise. Hypothetically, they could also be provided with a time-sensitive discount coupon enabling them to impulsively buy clothing online without leaving their homes. The process works with conventional televisions whether broadcast, cable, or satellite.
Moreover, in a later post we explained that similar techniques utilizing digital watermarks could enable viewers to purchase merchandise representing “product placements” that are integral parts of the storyline in scripted TV shows. The method likewise works with conventional TV-sets and app-enabled smartphones or tablet computers.
Finally, we concluded that a variety of content identification technologies will ultimately result in a future in which All Media Shall Become Interactive, whether it be print, audio, or video.
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Wireless ISPs Echo Radio Common Carriers
Posted on June 21, 2011
Prior to the advent of cellular telephony about thirty years ago, a limited form of mobile telephone service was provided by two categories of FCC-authorized common carriers. First, and most familiar, were the telephone companies dominated by Bell. But there was a second class – almost forgotten today – termed Radio Common Carrier (RCC).
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RCCs were small operators who were not permitted to offer landline service. Typically the businesses evolved as a branch of even older family-owned companies involved in telephone answering or two-way radio dispatch services. At the dawn of cellular telephony radio paging was their main revenue source because the available frequencies could accommodate thousands of paging units, but each channel could handle only a single simultaneous telephone conversation. In the pre-cellular era, mobile telephone service was much like the party-lines common in rural areas during the 1930s and 40s. Read more…
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Third Internet Pipe
Posted on June 20, 2011
Earlier this month, the CEO of Time-Warner Cable publicly recognized the primacy of Internet access over traditional video services. Glen Britt said, “People are telling us that if they are down to their last dollar, they’ll drop broadband last.” Consequently, he anticipates a future marketing emphasis on “Single Play” Internet access as higher priced “Triple Play” bundled Internet-TV-Voice packages become less attractive to subscribers.
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Yet it appears Britt wants to implement “Single Play” in a manner failing to save consumers money. For example, he predicted consumption-based pricing which means the more Over-the-Top (OTT) video subscribers watch, the more they will pay. Additionally, he wants to charge subscribers a premium for OTT-videos merely to have them available for mobile devices. Representing consumer interests, David Pogue of The New York Times laments metered pricing “is one crazy, scary development” that could strangle the promise of cloud computing in the cradle. Read more…
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Mad Men’s YouTube Chain Reaction
Posted on June 16, 2011
Special note. – Links to excerpts from copyrighted motion pictures provided below are all from legitimate sources. Since they get less traffic than YouTube, there’s normally a slight delay before the video plays, but once started it normally proceeds without buffering.
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A couple of years ago an episode of AMC’s hit TV show Mad Men included an excerpt of a youthful Ann Margret in a sexy performance of the title song from 1963’s Bye, Bye Birdie. The enticing clip prompted a number of posts to YouTube where the most popular one remaining has been viewed half a million times.
Apparently, nostalgia triggered a chain reaction resulting in YouTube uploads of other popular songs including Birdie’s swoon-inducing Honestly Sincere and the gossipy Telephone Hour. Eventually the entire movie got uploaded. It must be watched in a series of ten minute segments, but the interruptions are less annoying than regular TV commercials. I was able to view the samples and as well as the complete motion picture on my TV-set owing to a YouTube-compatible TiVo.
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The experience initiated a personal reaction-train as I began to recollect other Ann Margret movies from the era. At the top of the list was The Cincinnati Kid staring the iconic and nostalgia-amplifying Steve McQueen. At first I could only find YouTube clips, but finally located the whole movie in a series of eight 14-minute segments. Read more…
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Three Years Before the Pandora IPO
Posted on June 15, 2011
Today Pandora Media completed their initial public offering (IPO) of common stock at a price of $16 per share. In post-IPO trading shares rose as high as $26. When the company filed papers with the Securities and Exchange Commission (SEC) earlier this year, the underwriters declared an intention to sell IPO stock at $7 - $9 per share. But investor demand was greater than expected, so once the SEC declared the registration filing as “effective” Morgan Stanley simply raised the price to $16.
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Nonetheless, regular Inside Digital Media subscribers may recall we interviewed Pandora’s founder almost three years ago and have been an evangelist for the company ever since. The interview was the first month after Pandora had an App available for the iPhone and it was evident from the early statistics that the App was a “game changer” for the company. Furthermore we predicted companies like Pandora would be a serious challenge to traditional broadcast radio. Read more…
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