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Monetization Dominates Digital Media Conference Discussions

Monetization and profitability were the dominant themes at the fifth annual Digital Media Conference held Thursday at the Ritz-Carlton in Tysons Corner, sponsored by Digital Media Wire. Almost 500 attended the event, which is produced by Digital Media Wire, which runs a total of 8 conferences each year, including the Future of Television and Digital Music Forum events. Here’s are some of the highlights from this year’s gathering.

Digital Media by the Numbers
The show began with a panel of analysts assessing the state of the digital media landscape. Shaw DuBravac, chief economist of the Consumer Electronics Association (CEA), said that consumers are now moving on to second generation of digital devices, looking for faster, smaller, and more advanced technology, as well as what he called "360 solutions" that further integrate devices, accessories, content, services, networks, and communities.

He pointed to the living room being the biggest battleground in the digital media world, with new devices and services that give consumers more control over what they consume, not to mention how and when they consume it and satisfying their desire for seamless experience that lets them go directly to the content they want. The CEA surveyed 5,000 industry executives and asked them what technologies they were bullish on—the sectors they’d invest in if they could— and leading the way were TV technologies that bypass cable set-top boxes, direct-to-TV digital downloads, wireless streaming of HD content, and PC-TV integration devices.

DuBravac said the second major battleground is the palm, with the iPhone, Nokia’s new GPS-enabled devices, Google’s Android generating more interest in the mobile device market. The executives surveyed agreed that faster and more widely available broadband connections, as well as converging technologies and changing U.S. demographics, would drive adoption for mobile devices. Notably, only 9% felt that a demand for video on-the-go would be a significant factor in mobile adoption; panelists throughout the conference—from the likes of MTV, Discovery Communications, and kajeet—repeatedly referred to relatively low mobile video adoption at the same time they were committed to growing consumer interest in it.

Mark Donovan SVP and senior analyst from comScore, followed by discussing the top 5 trends in mobile:
1. Mobile broadband, now has 29% penetration in either 3G or WiFi form. 17% of users with 3G phones using video, Donovan noted, while only 4% with 2.5G phones do so; the same numbers apply to music.
2. Adoption of smartphones. Donovan said that 45 smartphone models were available in January 2005, but there were 152 models available in April 2008, marking a shift for the smartphone from "geeky mobile computer to consumer electronics device." Still, only 7% of phone owners are using smartphones, although there’s been a 122% year-over-year increase in adoption.
3. The mobile web. Donovan said that mobile interet is getting closer to an experience that mirrors what you can do with your PC, but is uniquely tailored to mobile devices with GPS. Currently, nearly 33 million people in U.S. use smartphones to access news, info, and entertainment.
4. Mobile advertising. Successful mobile advertising also leverages unique features of the device, including location ad personalization, said Donovan. As for the numbers, the most popular form right now is mobile advertising via text messaging (initiated by consumer) to the 112 million users who texted last year, followed by ad-supported downloadable applications delivered to 48 million mobile gamers, and then ad-supported mobile video to the 14 million mobile video viewers.
5. The iPhone effect. comScore data is showing that apple is really "hitting it out of the park" in terms of driving consumers to use mobile devices, Donovan said. iPhone users are far more likely to browse the internet (almost 90%), watch video (21%) or listen to music (more than 70%). "The iPhone audience is small, but it’s had an outsized impact because of its design, its multi-touch screen," he said, noting the success of its "PC tether" through iTunes and "web tether" via the newly announced MobileMe, both of which reflect the kind of integration and convergence that DuBavac referred to in his presentation.

The final presenter was Jim Wolak, a partner in Acenture’s digital media and entertainment practice, who spoke to the growth of digital advertising across all platforms—online, mobile, and digital signage. Combined, they currently represent 7% of the global advertising spend, but are on trajectory towards more than 20% by 2012. In a later panel on investing in digital media, each speaker—all from investment capital firms—were all confident in the growth potential of online video advertising. At least one panelist, Phil Bronner from Novak Biddle Venture Parters, also felt that despite the dearth of successful subscription models, "someone is going to figure out how to give added value to the consumer that they'll want to pay for."

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