Tuesday, November 27, 2012

The Coming Battle for Second Screen

In the last few weeks, a key number of market events have taken place that give an indication of what lies ahead for Second Screen.

- Game Consoles. While all of us know have known for some time that Microsoft's announcement in the spring about SmartGlass was an important sign to their commitment to the space, most of us (including me) were surprised they delivered a revision-1 level experience relatively quickly and have a serious vision about what this change in consumer behavior can mean to their platform in terms of changing hard core gamer experience AND changing video entertaiment on the platform. But what I think is passing over the heads of most of the industry is what impact the Wii U will have on gaming and the second screen space.
Remember, that when the Wii came out, nearly all of the industry pundits and hard core gaming bloggers "poned" the Wii as a "toy" for the casual consumer. But within a few months, both Microsoft and Sony were scrambling to catch-up to the phenomena that the advent of motion control-based gaming that the Wii launched. Now, with the Wii U essentially leaping out front again with a second screen-based gaming system, the rumors of Microsoft's and Sony's 2013-shippable consoles are all about having a controller with an HD-screen (likely a tablet of sorts).  If you didn't believe consumer behavior was changing before, watch out now.  The good news for Microsoft this time--they were not caught flatfooted and are well-positioned.  Sony...not so much.

- Consolidation phase. The cycles of a new industry segment begin with a technology trigger, the hype of monetizable changes in the market place, and then multiplication of competitors in the space. With well more than 200 apps in the market place and an ecosystem that contnues to grow at break neck speeds, we can certainly say the duplication phase is well underway.  However, there is even more clear evidence now that we are shifting into the consolidation phase. There are a serious number of companies already in the "App Graveyard" where their hope at achieving both consumer adoption and a business model has been killed off by market forces.  Additionally, the investment money in recent months seems to be pouring into making existing players bigger vs. launching new entrants (eg zeebox investment from Sky, Comcast, Viacom, and HBO).  Finally, the announced acquisition of GetGlue by Viggle (previously acquired Loyalize) and the rumored hunt by Yahoo for TVGuide.com (or something better) to supplement their early 2012 acquisition of IntoNow is further evidence that this phase has indeed begun in earnest.

So, assuming that the key players find working business models, that means we will soon see a viable, profitable industry segment emerge in the second screen space.

However, in the meantime, expect a whole lot more effort to be placed by everyone in the ecosystem on securing their near term future in the space.

Want to continue the conversation on finding the money in second screen?  Join us Thursday in LA at the Variety Entertainment Apps Summit @ 11:45am for the panel on Monetizing the 2nd Screen with Magic Ruby, 1K, YuMe and MTV.

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