Internet wins the distribution battle with 5-16 year olds - they spend 50% more time online than watching TV

Arguably the means of distribution makes no difference to a consumer of content but even so the broadband internet seems to be confirming its place as the winner against conventional TV distribution.

It may be the ability to seamlessly access from any device (YouTube), the social interaction / network aspects or the nature of the material available. Zoella - the most popular Vlogger with 5-16 year olds has 10 million followers on YouTube - a dream audience for many small regional cable or satellite channels.

An example is here;

Children between the ages of 5-16 are spending 3 hours a day online against 2.1 hours in front of the TV. YouTube and NetFlix are the stand out winners with a blend of "normal" TV content and new formats.

Amusingly a number of terrified TV people have popped up in the media suggesting that traditional TV content is simply being viewed on the internet without acknowledging that internet content is now also being viewed on the TV.

If the consumer doesn't really care how the pictures get to them it is a very different matter for the media companies who create and deliver the content.

In the case of Zoella she needs decent video and audio equipment, some $100 editing software on a PC / laptop and a broadband connection. If really enthusiastic she can do the editing herself.

Creating this type of content in an old school TV environment you would need to get past the creative gatekeepers first, hire a studio, cameraman, editor etc etc etc - basically a non starter.

In the case of NetFlix going global was about adjusting some IP address ranges and extending the bandwidth / streaming agreements. The old school model would involve painful discussions on satellite time and securing decent slots on the EPG's controlled by others  - many in the pocket of the existing dominant distributors.

Fundamentally to distribute content on the internet is far less capital intensive but also it is impossible to control distribution to the same degree which lessens the reality of exclusivity. There is also far less scope for intermediaries to take a cut along the way. These factors fundamentally change a number of old school business models and will drive the cord cutting and cord never figures.

The return of the turntable shows that old technologies do not die but change and find a very different place in the market.

These new figures from Childwise shows convergence has arrived and will follow 5-16 year old's into adulthood.

Panto in the cord cutting debate

Everybody loves a bit of panto but the recent suggestion that Time Warners additional 32,000 cable customers in 2015 mean that cord cutting is dead have possibly over indulged during Xmas.

Kodi (the re-branded XMBC) provide a very well made and technically respected media interface which aggregates 1000's of channels which are available on the internet. Most of which are unlicensed.

This interface (or software) can be sideloaded onto Apple TV and other things running IOS as well as android systems and the Amazon Fire TV stick. For the plug and play brigade boxes can be purchased with pre-loaded software for about $55 with no ongoing subscription costs and connected directly to the TV.

It is quite amazing that Amazon both promote content via Amazon Prime and undermine that activity by not blocking Kodi from the Fire TV stick. Didn't get the memo ?

At the CES 2016 show lots of snappy new devices which aggregate feeds from across the web in ever greater quality on a subscription free basis were on show.

The argument deployed by these device vendors can be termed the "google defence" which states that merely linking to content which is unlicensed does not break the law. If it did Google might be writing a very big cheque indeed (sorry transferring loads of BitCoin using a BlockChain.)

For the demographic totally unconcerned with costs of pay tv etc these innovations will make little difference but as a younger demographic feeds through will they "step up" or become the cord nevers much feared within the industry ?

The outcome of this debate probably boils down to how copyright law is updated to reflect the realities of the digital age.

At a very top line level it seems likely that loss of control over distribution will reduce the ability to monetize content using the lever of exclusivity. On a rational basis this would reduce the amount distributors could pay to rights holders and still make a return. Looked at another way companies will take extraordinary steps to defend business models under pressure and may be tempted to bid up the value of the very premium content that could draw in subscribers......maybe.

Rear view (mirror) - cybercrime statistics and cord nevers

'When faced with a totally new situation,' McLuhan famously says, 'we tend always to attach ourselves to the objects, to the flavor of the most recent past. We look at the present through a rear-view mirror. We march backwards into the future.'

The announcement today that UK cybercrime statistics to be released on Thursday will show a massive jump - making them the biggest single grouping - is coming straight through the windscreen. Definitions are always a challenge but if file sharing etc was included in this then it is no real surprise. The gap in understanding has been caused by the time it takes to collect the figures.

Similarly the emerging data on cord nevers and cord cutting in the TV industry in the US makes sense given the ease of viewing pirate material from most major distributors nothwithstanding the technology that has been thrown at it.

Cord Nevers steaming into pay tv - by 2025 50% adults under 32 will not pay for TV

Some new research from James McQuivey of Forrester  suggests that by 2025 50% of adults under the age of 32 will not pay for TV.

He identifies a new group of cord-nevers who are in fact a larger group that cord cutters. On the face of it if armed with a high speed connection and some technical knowledge there is no need to subscribe to pay TV why would you ? This chimes with KLipcorp's less formal research which showed that 57% of people think that there is no need to subscribe to pay TV for sport due to the availability of pirate content.

The bloodbath in US Media stocks recently reflects a bundle of concerns regarding the shift to digital but possibly at its heart is the dawning realisation that control over distribution has been allowed to slip away. Anyone who has seen the fantastic new movie The Martian will agree that anything is possible given sufficient creativity and determination but the traditional distributors of media need to pretty quickly get a grip over distribution to avoid becoming candidates for the Darwin Awards.

A potential first step would be an independent Digital Audit to really identify the scale of current leakage and the adoption of a prioritised approach to fill the gaps.

The sector has a great fondness for machines that go ping but as in The Martian the thing that really saved Matt Damon at a key moment was a roll of gaffer tape.