A review of the latest news on business models in digital media. In this post, we looked at Time Warner, Ngmoco, Dow Jones, Apple, and Corel.
“A content-focused company.” – Jeff Bewkes, Time Warner CEO
In a morning staff memo, Jeff Bewkes elaborated on Time Warner’s new business model around TV Everywhere. TV Everywhere is a partnership between Comcast and Time Warner to allow those who subscribed to TV in their homes to watch popular programs at no extra charge on a wide range of other devices. Several trials were underway with major distributors.
Time Warner planned to develop a similar model for the publishing industry once e-readers like Amazon Kindle, Barnes & Noble Nook and Sony Reader became more popular.
In mid-September, Comcast also partnered with Warner Bros. to release two films (Observe and Report and Ghosts of Girlfriends Past) on VOD for cable subscribers several days before sales on DVD and Blu-ray discs.
As one of the first companies who received funding from KPCB’s $100M iFund, Ngmoco’s latest game, Eliminate Pro for the iPhone incorporated a new in-game feature which enabled purchases of virtual goods from inside the free app. Before the latest system upgrade, in-game purchases were possible only in paid apps.
In Eliminate Pro, players could start playing for free over Wi-Fi or 3G HSPA wireless network. During play, a timer counted down like an arcade racing game. After approximately three minutes of free play, the game paused and the player was given a chance to continue the game by buying more credit or wait four hours for the timer to reset. A quick five-minute credit was $0.99 with more credits priced at $11.99 and $29.99 to up-sell serious gamers. Other virtual goods were available for purchase (such as armour, weapons and customized avatars skins.)
In between a paid and subscription revenue model, this was similar to a freemium model that monetised user-engagement through upgrades and virtual goods by targeting die-hard followers and “tribes”. After introducing online games with subscription revenue models, the virtual goods market in Asia generated $7B per year. For a recent interview with Norwest Venture Partners on virtual goods, see VentureBeat’s article “Norwest’s Tim Chang explains why virtual goods are so hot in social games“.
Dow Jones & Co.
Dow Jones & Co. launched a premium service that incorporates additional content from at a higher price point. The price structure is $49 per month or $600 per year for access to full-text on current and archived articles. Most enterprise customers pay through wire transfers under contracts. Volume discounts for enterprises start at 10 seats. Individual subscribers can pay via credit cards and PayPal on the WSJ.com website.
Apple announced that more than 50,000 developers have created over 100,000 mobile apps for the App Store, the largest mobile software store in the world. There were now more than 50M iPhones and iPod touch sets in the marketplace. Apple also officially entered the Chinese market with one of China’s top wireless carriers, China Unicom (140M subscribers) – it sold 5,000 iPhones in its first week. Apple first unveiled the iPhone in the US two years ago, which sold more than 200,000 in its first week.Meanwhile, RIM, with a business focus on volume, entered China approximately three years ago (today, they have 500 carriers and distributors across 170 countries). There were approximately 700M wireless subscribers in China (250M in the US and 20M in Canada). However, there is still a gap between the purchase power of a Chinese subscriber and one in North America – not to mention the difference in the pricing of the plans.
San Francisco-based private equity firm, Vector Capital launched a bid to take Corel Corp. private after offering to buy up all the company’s shares. Vector Capital already owned 68.2% of the company. Corel’s revenue was 90% from products and 10% from maintenance and services. Digital media products such as WinDVD and Instant On contributed more than half of its revenue growth. Graphic design products such as CorelDRAW, WinZip, iGrafx and CorelDESIGNER drove the other half of the growth. Its product release cycles were between 12 and 24 months and they typically earned the largest portion of revenue for a particular product during the first half of its release cycle.