Media Frenzy

Edge: What are you working on these days?

FOSTER: My day job is to help manage our practice that deals with technology, media and telecommunications companies. They really are in so many different spaces. A lot of these companies are taking advantage of convergence; others are hard-core techies trying to develop some new products. Those are probably the two main areas.

Edge: Convergence means so many things to so many people, how would you define it?
FOSTER: It’s really the introduction of different types of technologies trying to create some new product, new service or even a new alliance. You see all kinds of different things. From 1999 to 2000, before the tech bubble burst, it was the buzzword and everybody thought everything would be converging. It never did happen. But now, you see it every day, companies trying to figure it out, trying to build new platforms, and trying to get them to work altogether to create new revenue streams.
Edge: What are some examples of where this is taking place?
FOSTER: Anything related to the media industry, that is going to be the biggest change. But rather than a converged company (like Bell GlobeMedia), you are seeing alliances. QuickPay helps deliver a podcast. Nobody even knew what a podcast was two years ago. Now you can go to the ESPN Web site and get an audio and video of yesterday’s sports news.
Edge: So it’s really the content that is driving it?
FOSTER: If you think about the model and go back 15 years ago you basically had three major networks. Now you get 150 channels. You have a focussed audience keenly interested in a specific subject but a lot less eyes. That changes the whole business model and how you get advertising revenue. It’s just a totally different model than you used to have. You can download an entire program on your iPod. Then you ask, where does the advertising fit in. Those are some of the challenges that people are running into.
Edge: Is advertising dead?
FOSTER: Advertising is not dead, advertising is going to change. You may want to download a program, and this program will carry a message: ‘This download brought to you by Proctor and Gamble.’
Edge: This seems to be a category of technology that is growing. What else do you see happening?
FOSTER: The technology industry obviously went through a slump in 2000/01, and it’s probably not back to where it was which is good because, in the late 1990s, it was unhealthy. It was unsustainable. It was a lot of money chasing technology but nobody knowing how the technology linked together. Now it’s people with better business focus understanding the marketplace before they develop the technology. It’s no longer a field of dreams, if you build it, they will come. I remember dealing with a company that had Bluetooth technology. You’d walk down the street in front of a pizza place and a message would pop up on your cell phone advertising a pizza slice for 99 cents. Do consumers really want that?
Edge: On the flip side, give us an example of a company that is doing it well?
FOSTER: Take Research In Motion, they understand certain things that their customer want. Yes, they want a phone, but they want the basic BlackBerry and the server behind it to give instantaneous e-mail. They could have put in an MP3 player, a camera into that device, but they said, ‘this is going to chew up battery power, it’s going to make the unit less attractive for a lot of people and this is not what our customers want.’ Now if my kids were going to buy it, I would say yes, you need the MP3 player and the camera but their customers are high-end business users.

Edge: What would you say to executives who are overwhelmed by all the choices?
FOSTER: I don’t think they need the leading edge device, like a phone that can download videos. They are not going to watch them anyways, so what do they need it for? I do think they like things simple, convenient and efficient, and the more gadgets you add, the more complicated it becomes.
Edge: Looking ahead, what do you see being the executive device of the future?
FOSTER: At the start of every year, we come up with predictions. A lot of the things you are going to see are refinements of existing technologies. There is not going to be some killer, disruptive technology. Wireless will be further developed and challenge the wireline companies. Voice-over-IP will be further rolled out. I would watch e-Bay’s acquisiton of Skype. Google will become a dominant player. There are two billion cell phones out there. How do you get more money out of those cell phone users? Customized ring tones, that’s really the type of things we are seeing more of. The iPod is a tremendous technology but think about it also as a platform, we can see the advent of not just new devices, but new uses for podcasts.

Edge: What could hold things back?

FOSTER: People are trying to figure out where the revenue is and that is going to be the biggest challenge. It isn’t necessarily going to be just putting in an ad, so the question becomes ‘Where is the money?” I think it will be about driving people to a Web site, and maybe putting a little ad before you get to where you are going.

Edge: Who should feel threatened?

FOSTER: The cable companies, the wire companies and the media companies will feel the challenge. Take LiveDeal, a company which basically places wants ads on the Internet. If you think about it, that threatens a lot of (traditional newspapers). But you can also use your existing base to help drive your new products. When people call into a newspaper to buy a want ad, you can upsell them to also go online, and instead of 30 words, put in a picture and add a lot more detail. All of a sudden, instead of paying X, you are paying X-plus. That X-plus will only get bigger and bigger.

Garry Foster
Deloitte Consulting

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