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Thinking about Microsoft and digital reading business. Reasons why Microsoft should have a closer look at this fast growing market. (disclaimer: ppt created in early 2011)
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Digital reading… and Microsoft?
Digital book… and Microsoft
1. State of Art Music & Video 2. Digital readings market 3. How to become next leader4. Recommandations
Except that… digital experience is
First, a « revolution » for cutomer
1. You can bring with you all music / videos you own2. Buy music / video you want when you want
3. Pay only what you really want
Same as physical experience (but don’t say it!)
Music market in 2009
Video market in 2009
Not consistent trends• In the US: 10% decrease. Digital copies only 1,1% growth (43 % total) • In Europe: -4% total. Digital copies + 29,7 % (13% total). • 13 countries are growing their markets. Digital copies compensate physical copies market.
17B$ business (-7% VS 2008). Despite strong decrease in past years, digital copies are slowly replacing physical copies. From 0$ in 2003 to 4,3B$ in 2009 (25% total sales), 9% growth.
Digital marketFrom 2004-2009, + 940% VS -30% traditionnal industry. More than 400 music plateforms on Internet with 11M titles.
Innovative entertainment industry• New business models (Media, VOD, Online Video…). Free & paid content.• Differentiation via technologies (HD, 3D…) to limit digital business• Price war!
Strong decrease in last years, & digital copies is replacing physical copies.
Overall decrease but strong digital growth• Approx 90B$ among 5 categories • Box office is going up and forecast are good. • Retail is decreasing strongly from 40B$ to 34B$ within 7 years (-15%!)• Rental after going up is now decreasing, suffering from VOD / online video as well• VOD and Online video are getting momentum (from 1 to 11 B$ in 6 years!)
Itunes (23 countries) have 100M members and more than 10B downloads. Wall Mart, Best Buy, Amazon are here too.
Learnings from digital Music & Video business
• Innovative business models• New leaders• New chain value
Forget Video & Music markets business rules
• Only way to postpone full Digital era (3D, HD…)
• And the best way to boost it (Optical network, infrastructure, devices…)
Technology is pro & cons
digital
4 years to get 15% marketshare
US and Europe are the key markets
Digital Market Chain Value
ContentDevice
Software
Device Software
To be the next digital reading leader, (re) build the digital value chain.
But does it worth it?
Content
Books Comics Press
# slates
Opportunity in 2014
CA (trend)Digital %
Tablets will cannibalize netbooks, outselling netbooks starting in 2012. In 2015, 23% of all PCs sold to consumers in the US will be tablets. Approx 100 millions
a year. Slate IB/ebooks IB approx 300M users. (IDC 2010)
Leader Revenue Opportunity in 2014 with 30% market share
60B$
9B$
3B$
1B$
30B$
15B$
8,5B$/ year
Digital Readings = Next digital entertainment eldorado?
Digital Readings = digital Music / Video?
Would readers love to: 1. Bring with them all books/ press they own? 2. Buy books/press you want when you want? 3. Pay only what you really want?
…YES
Are you sure?
• Cultural– Old story (6th century)– Smell & touch fetichism– Pillar of education
• The content is the container • The Music, The Movie but
Readings
Yes we are!
• Education will help digital reading adoption• Fetichism will shift from « smell & touch » to
« design »• Tech will break chains
of books container• Innovative way to sell &
buy books
Mitigate
Remove
Mono usageNon portabilityGood enough hardware
Hardware Price Content priceReading = buying conceptBooks = competitor / Retailers= competitors
Reinforce
Create
Hardware capacity (storage, battery…) E-Books platform as dev platformreadings Diversity (from comics to press)Partnerships Press & Hardware
Books experience (« killer books »)Dev Tools to help publisher to create new books experienceNew business model with Ads Cloud Books
What we’ve learn from the market
Blue Ocean
Where we should go? Price
Experience
Hardware
500$150$ 150$<X<400$
Reading Reading + Video + Web New Reading + Video + Web
1 to 2 3 to 5 100+Business Models
Hardware Content License + Ads + Content
Our Assets
8.6 Million Professional Developers
DEVELOPERS
600K Partners
PARTNERS
1.1 BillionPC Users
Worldwide
CUSTOMERS
60%+ of PC are running Silverlight
PLATEFORM
What about the device? DeviceDefine technical requirements and work with OEM
Cloud by designRely on Azure, Build store, Sync experience
Microsoft digital reader
What about the business? Content PlatformSynergies with Zune to get content
ContentBuild partnerships with Press groups AND retailers
Ads businessInclude Bing, AdCenter asap
Microsoft digital experience
Key question: revenue sharing (OEM, Content, Dev, Microsoft, Retailer)
APPENDIX
The top book retailers in the United States1. Barnes and Noble2. Borders3. Books-A-Million4. Wal-Mart5. Costco6. B. Dalton7. Waldenbooks8. Amazon.com9. Books and Co.10. Bookland