Friday, November 25, 2011

Biz models: technology as entertainment.

In the entertainment industry there's a concept of a movie release window. First, the movie is released in  theaters, then on DVD/Bluray, later on TV, after that on pay-per-view or online. Each  release captures a certain slice of audience, depending on people's willingness to wait out the rush to see the latest and greatest. In economics terms, it is an instance of price discrimination.

Steve Jobs, the late CEO of Pixar and Apple, learned from the entertainment industry how to create a media event out of a high-tech product launch. The introduction of iMac, iPod, iPhone, and iPad were deliberately staged to create a rush to Apple stores, theaters of Apple consumer experience. Now it appears, Apple is  borrowing the release window business strategy as well.
Nov. 4 (Bloomberg) -- Apple Inc.’s iPhone 3GS model is more than two years old and shunned by gadget snobs, and yet it’s turning into one of the company’s bigger weapons against devices running Google Inc.’s Android software this holiday season.
The move pits Apple’s iPhone against bargain Android phones, without much damage to the company’s profit. That’s because Apple gets cost savings from using older, cheaper parts. And though the device lacks some of the whiz-bang features of the 4S, such as the voice-activated assistant Siri, it’s still better than rivals of the same price, said Roger Entner, founder of market research firm Recon Analytics LLC.
“Apple can shovel them out by the millions,” he said. “What free phone or even $50 phone is going to be more appealing to consumers than an iPhone 3GS?”
On the subject of business models, we can also see how the world of entertainment is taking cues from high-tech as well. Compared to movies, sitcoms are becoming more like technology release versions - 1.0, 1.1, 2.0, and etc. Studios leverage  fan "installed base," just like software companies do with their products.
As I noted two years ago, sequels make the most money for Hollywood. With an increased role of video streaming over the Internet, sitcoms are an improvement version of this business model.

tags: media, niche construction, business, model, 10X, control, entertainment, information

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