Dublin City University Business School & School of Computing

Dublin City University
Business School & School of Computing
Business Plan for Arbitro Participatory Media System
Authors:
Student Name
Darragh O’Flanagan
Robert Keogh
Owen Edwards
Richard McDonough
Student Number
50552879
50506010
90279921
54155291
Class
MECB
MECB
MECT
MECT
Supervisors:
Supervisor Name
Alan Smeaton
Des McLaughlin
Area
School of Computing
Business School
Page 1 of 59
Table of Contents:
Business Plan for Arbitro Participatory Media System.............................................1
1 Executive Summary................................................................................................3
1.1Mission Statement.............................................................................................4
1.2Market...............................................................................................................4
1.3Business Model.................................................................................................4
1.4Business Highlights...........................................................................................4
1.5 Company summary..........................................................................................5
2 Strategy....................................................................................................................6
2.1 Our Product......................................................................................................6
2.2 Business Strategies ..........................................................................................6
2.3 Strategic Analysis – Using Porter’s 5 Force Model.........................................9
2.4 Competitive Advantage..................................................................................10
2.5 Business Model..............................................................................................11
2.6 Revenue Model..............................................................................................12
2.7 Targeted Customers and Route to Market......................................................12
2.8 Risk Assessment.............................................................................................15
3 Market Analysis....................................................................................................16
3.1 Segmentation..................................................................................................16
3.2 Customers.......................................................................................................17
3.3 Competition....................................................................................................18
3.4 Marketing.......................................................................................................18
3.5 Survey.............................................................................................................23
4 Operations Plan.....................................................................................................26
4.1 Operations Strategy........................................................................................26
5 Management and Labour Requirements................................................................27
5.1 Salaries...........................................................................................................27
6 Technical Report...................................................................................................29
6.1 System Overview...........................................................................................29
6.2 Web Services..................................................................................................29
6.3 E-Mail Server.................................................................................................32
6.4 SMS / MMS Gateway....................................................................................32
6.5 Message Processing Server............................................................................32
6.6 Graphical User Interface................................................................................33
6.7 Competing Solutions......................................................................................38
6.8 Competitive Advantage..................................................................................39
7 Finance..................................................................................................................39
7.1 Funding & Assumptions.................................................................................39
7.2 Sales & Profits................................................................................................40
3 Cashflow 2005-2006.........................................................................................40
7.4 Cashflow 2006-2007......................................................................................43
7.5 Cashflow 2007-2008......................................................................................43
7.6 Profit and Loss Account.................................................................................44
Appendix:.................................................................................................................45
Appendix 1: Survey Questions Asked, Graphs & Tables of Results...................45
Appendix 2: Entertainment & Media Industry Overview....................................49
Appendix 3: Population numbers (Ireland)..........................................................50
Appendix 4: Mobile Phone Population (4000 users)...........................................51
Appendix 5: Interview with the Channel 6 media company ...............................52
Appendix 6: Broadcasters....................................................................................54
Appendix 7: Arbitro User Interface.....................................................................55
Page 2 of 59
Appendix 8: Sample image of from video capture using XDA mobile device....55
Appendix 9: Using MMS to create TV shows based on the success of SMS-TV
shows....................................................................................................................56
1 Executive Summary
Page 3 of 59
1.1 Mission Statement
We aim to facilitate the general public in having an active role in news coverage,
entertainment programming and to ensure adequate compensation for their efforts.
We will assist media organisations by providing access to a previously untapped
resource of content.
We provide a software system and service whereby the public can send mobile phone
content to a centralised repository. Media companies can then use our software
product to search this repository and purchase selected content.
Revenue will be created through the following:
 A license system where we charge an annual fee to use our product/service.
 We take a percentage of the sale price from each piece of content sold.
 The public pay us a fee, on top of standard network charges, to submit content
to our product/service.
1.2 Market
In 2003, the 9001 million messages sent in the European SMS-TV market generated
an estimated €400 million for broadcasters, mobile operators, and technology
providers. It is estimated that this will be extended using MMS and picture
messaging in 2006. Broadcasters could capture €250 million to €375 million from
this market. Europe is the world leader in SMS-TV, and the market is growing.
Studies suggest that, depending on the show's format, 5 to 15 percent of the total
audience is converted from viewer to active MMS participant [see Footnote 1 or
Appendix 9]. Current trends indicate that this will extend into other media areas such
as news and entertainment broadcasting. Already, media organisations are searching
for new ways of accessing new content2 and are broadcasting video content captured
by the public. The market is edging more and more towards the inclusion of
‘Participatory Journalism’.
1.3 Business Model
The business model is to license the service and product to media organisations. The
license gives media organisations access to content captured by the general public.
The user that captured the media will receive payment minus the commission that will
be deducted by us. A premium will also be charged on the transmission of the content
if delivered by MMS.
1.4 Business Highlights
Revenue for the 2nd half of 2005 will be €45,900. During 2006 revenue will be
€268,322 with the expected growth rate at 5% per annum.
1
2
See Appendix 9: Using MMS to create TV shows based on the success of SMS-TV shows.
See Appendix 5: Interview with the Channel 6 media company.
Page 4 of 59
€600,000.00
€575,000.00
€550,000.00
€500,000.00
€450,000.00
€400,000.00
€350,000.00
€300,000.00
€250,000.00
€200,000.00
€150,000.00
€100,000.00
€50,000.00
€0.00
05 - 06
1.5 Company summary
- 07and arbitror -ari , dep. (1) [to
The name Arbitro stems from the Latin arbitro06-are
07 - 08
witness; to bear witness]. (2) [to arbitrate, judge, decide].
A company external to DCU is to be started-up. It is to be founded by the four
Masters students. All four members will own an equal share in the company.
Page 5 of 59
2 Strategy
2.1 Our Product
Currently many mobile phones have both video and image capabilities. These
capabilities and the number of phones with them are expected to grow. With so many
people with these devices and the growing number of media stations requiring up to
the minute reports of incidences and events, images could be captured by mobile users
and transmitted to the media stations. At present though, video / image messaging is
stuck at the peer-to-peer level.
Our system will allow video / images to be sent to centralised repositories. The
receiver will have processing software which collects the video / images and
processes it. It is then displayed on the screen, along with statistics (e.g. Jim has sent
5 videos/images before this) and is ready to be purchased and broadcast. The camera
phone allows people to act as mobile reporters where they send in video, which will
be almost instantly available to TV stations for news reports, celebrity spotting or for
police to be informed of crime scenes, etc. People can record incidents as they
happen, in the hope that they will be rewarded for it if the video is purchased.
User
captures
Video
Our company will set the price of the video / images to be exclusively or nonexclusively purchased via the user interface. If a TV station decides to use the video /
images exclusively, the piece of media will be marked as being exclusively used for a
number of months so the piece of media won’t be available to other TV stations. The
system will also be able to accommodate for searches of media based on features such
as location. In the future, it is expected that camera phones will be able to record GPS
coordinates in the metadata of the video / images. Our system will be able to translate
these coordinates into place names and this will be stored alongside information on
the video / images.
Basically our product will be a video and image recording service / platform which
receives content from distributed mobile phone users. Users e-mail or MMS videos
or images captured by mobile phones to a centralised server which processes images
for use by media companies.
2.2 Business Strategies
After receiving funds from Enterprise Ireland or from a suitable investor, our product
will be fully developed and ready for the marketplace within one year. We have
examined a number of different business models and we have chosen one that we feel
is particularly suited to our product and that will also generate the greatest amount of
revenue. Media organisations such as TV stations, production companies and the
printed press would be users of our software and therefore purchase our licences.
Page 6 of 59
Bigger organisations will purchase more seats because they will have a more diverse
their range of needs would be and the more employees they would need to research
appropriate content.
•
We would use a license system where there would be a fee per year to use the
system per seat.
•
Also for every video/image purchased, we will take a percentage of the sale
price.
•
We generate revenue from the public sending MMS messages to us. They pay
us a minimal fee on top of the standard network charges.
We will initially launch our product in both the Irish and the UK market at the same
time due to the fact that media broadcasts in the UK are highly likely to be seen in
Ireland and vice versa.
2.2.1 Sustainable Competitive Advantage Through Market Position3
Our competitive advantage will be based on a privileged market position gained
through significant first-mover advantages in skills, infrastructure and market-specific
relationships with customers. Our aim is to establish a “privileged”, hard-to-replicate,
position, in an industry that will be unattractive to enter due to us gaining the majority
of the market as the first-mover. The recipe for doing this comes from:






Right goals: focus on long-run profitability (e.g. this is the beginning of a new
era for news, entertainment, etc.)
Clear value proposition: unique value for particular users/customers (e.g. the
same features cannot be found anywhere else)
Distinctive value chain: same activities as similar companies but done in a
different way (e.g. other companies use web sites whereas we use licensed
software that will not have “down time” and also contains unique features)
Trade-offs: not try to be all things to all customers (e.g. can focus on certain
profitable areas of a very broad market, such as news)
Activity chain: mutually consistent and reinforcing activities (e.g. using
phones to transmit content will increase the interest in their use for usually
non-technologically savvy people and therefore bring them into the frame)
Continuity of direction: keeping to the discipline of the strategy (e.g. future
areas of development, such as branching out into the area of policing and
using the technology to send and maintain crime data, will still require the
same strategies)
See Sections 2.2.4 and 2.2.5 for more information on how we aim to maintain a
privileged market position and/or competitive advantage.
2.2.2 Blue Ocean Strategy4
We will create a blue ocean of uncontested market space. Red oceans represent all
the industries in existence (the known market space), where boundaries are defined
3
“Assessing your strategic alternatives from both a market position and core competence perspective”
by Prof. Brian Leavy.
4
“Blue Ocean Strategy”, By: Kim, W. Chan, Mauborgne, Renée, Harvard Business Review, 00178012,
Oct2004, Vol. 82, Issue 10.
Page 7 of 59
and accepted. Blue oceans denote all the industries not in existence today, where
demand is created rather than fought over. We will create a blue ocean of
“participatory journalism” from within the red ocean of defined, internal acquisition
of media content.
No one else is currently providing the service we offer in the same way that we offer
it. Therefore we will be uncontested in dominating our newly created market for
purchasing mobile phone content. This new market (that we create) is our blue ocean,
as we will be the only company within it when we launch the product/service.
Being the first-mover will mean creating a reputation that has the ability to last.
Customers will be attracted to our reputation and may automatically use our known
product/service because it is the original and best known.
The more customers that submit content and purchase it, the more likely others are to
follow. Existing customers will not deviate from our company, as they will “stick to
what they know works”.
This blue ocean will remain uncontested for as long as the market remains
impenetrable or unattractive to others. The idea and technology may be copy-able by
others but we aim to maintain a blue ocean with the aid of exclusive partnerships [see
section 2.2.4] and intellectual property rights [see section 2.2.5].
2.2.3 The New Frontier of Experience Innovation5
Value is created for customers who submit content, through the experience of filming
video, submitting it, having it purchased by a media company and then receiving a
reward. The role of consumers is becoming more active in an increasingly networked
society. Our product/service allows individual customers to actively co-construct
their own experiences through personalised interaction, thereby co-creating unique
value for themselves. They will achieve a feeling of satisfaction and pride from
having their content visible to the public once a media company purchases and uses it.
They will develop a sense of achievement, and of “winning”, through gaining a
reward, which makes them more likely to repeat the process and recommend it to
others.
2.2.4 Exclusive Partnerships
Being the first mover will allow us to create partnerships with some companies who
buy our product. This will mean that they agree to only use our system (and not use
the system of possible competitors) once they purchase the licences. Therefore the
market becomes less attractive to others and the barriers to entry increase for any
possible future competitors. Not all companies will want to enter into a partnership
but those that do will gain advantages such as having instant access to the latest
content and all the archives. This will help us to maintain a privileged market
position and/or competitive advantage by keeping hold of the business from certain
companies. There will be fewer customers for any future competitors or they may
even be discouraged from entering the market at all due to a lack of possible business.
5
“The New Frontier of Experience Innovation” , By: Prahalad, C.K., Ramaswamy, Venkatram, MIT
Sloan Management Review, 15329194, Summer2003, Vol. 44, Issue 4.
Page 8 of 59
2.2.5 Intellectual Property
We have already consulted Tomkins who specialise in patents and licenses. We are
going to proceed with the process involved in protecting our product/service. As of
the time of writing, we are still undergoing this process. Tomkins need to view the
product/services on offer and make a detailed judgement on what exactly we can gain
intellectual property rights on. If possible, we will also trademark our company name
and any other distinguishing names involved with the product.
Provided we gain intellectual property rights, they will act as a deterrent to anyone
wishing to enter this market. It may block others from entering the market place or
make it less attractive. This will help to maintain a blue ocean of uncontested space
or to maintain competitive advantage if competitors do enter the market.
2.3 Strategic Analysis – Using Porter’s 5 Force Model6
Rivalry among existing competitors:
 Local Irish market has no known direct competitors. The UK market has
some similar competitors (direct and indirect) but they operate in different
ways to us and do not provide the ability to transmit instantly via mobile
phones (instead they use e-mail). They also do not provide varied content for
any interests other than news or advertising.
 Switching costs are high as the money invested in acquiring the application is
lost, the relationships that are created are dissolved, and the pool of existing
and future content is lost.
 A good or established reputation is hard to compete against, making it difficult
to compete against our company who are the first-movers in this new industry.
Threat of substitutes:
 Direct e-mailing to media companies.
 Direct SMS or MMS to media companies.
 Existing products and services for transmission of different content could be
converted to something similar.
Bargaining power of suppliers (people that submit content):
 They could boycott our service and deal directly with companies, but this
requires much unstructured and undefined interaction for both parties. The
business dealings may not prove successful without and intermediary.
 They can switch to another company, if a competitor arises in the future.
However, we are currently the only business of this kind in the UK and
Ireland.
 Suppliers may find it difficult to deal with multiple companies if they bypass
our service. They will need to remember multiple methods of transmitting
content (e.g. phone numbers), multiple process chains of interaction (e.g. steps
in sending content), and they will need to individually keep track of all
interactions without intermediary assistance (e.g. tracking).
Threat of new entrants:
6
http://www.themanager.org/models/p5f.htm Article explaining the model for the Five Competitive
Forces that were developed by Michael E. Porter in his book “Competitive Strategy: Techniques for
Analysing Industries and Competitors“ in 1980.
Page 9 of 59



Requires relationships to be formed on two fronts: the public who submit
content and any companies that purchase the rights to use this content.
They need to enter an existing market (created by us) and pry market share
away from our company.
They need time and resources to copy the idea and enter the market.
Bargaining power of end users / buyers (media companies):
 There is a risk that customers could develop similar in-house applications
rather than outsourcing.
 They face much cost, time, development and relationship establishment
problems if they are to create their own applications and services.
 Our business is the only one of its kind in Ireland and the UK, so they need to
use our product or lose competitive advantage to their competitors.
Potential
Entrants
Threat of new
entrants
Bargaining power of
suppliers (people that
submit content)
Industry
Competitors
Suppliers
Bargaining power
of end users /
buyers (media
companies):
Buyers
Rivalry Among
Exiting Firms
Threat of substitute
products or services
Substitutes
2.4 Competitive Advantage
We believe that our product has a competitive advantage because we have not found
any other system that uses mobile media content in the same way that our system
does. This gives us our first-mover advantage, which will put us in a great position in
the market place. Our system will allow media companies to access and use video
and images, captured at the scene of an event by the general public, faster then ever
before and they won’t have to wait for reporters to arrive on the scene of important
events. The public will also be motivated to use our system as they will be receiving
something in return for their video / images.
Our primary aim is to create a strong image and brand name around our product
through our marketing strategy. In doing this we hope to dominate the market with
Page 10 of 59
our product. This will put off potential competitors from entering the market and
customers will become comfortable with our product making them unwilling to
change to a different system.
With our system fully completed, working and patented before anyone else we feel
that our company will be in a very good position. Our system will be unique and we
strongly believe that media companies will take great interest in our product. It will
be our intention after launching this product in the UK and Ireland, to launch in
markets abroad such as North America and Asia where media companies are
plentiful.
2.5 Business Model
Business Model 1:
Our software will be made freely available on the Internet through our website. A
license system will be used with a fee per seat per year to use the system. Initially
there will three types of licences:
1. Standard License - There will be no alerts with this type and it will only be for
one seat.
2. Premium License – This type will include alerts and it will be for five seats.
3. Enterprise License – This type will include free alerts and the number of seats
will be limited by the size of the company.
Alerts will be sent to the user if a video / image is received from a certain person or
the description contains a certain keyword.
When videos / images are processed by the system they will be priced by us after the
user confirms, through e-mail, that they wish to sell them. They will be given an
exclusive price and a non-exclusive price. When the videos / images are then
purchased by a company, we will deduct a percentage of the money received by the
sender. This will be in the region of 10-30%.
Business Model 2:
Our second business model would be to package our product up and sell it as a
standalone product to a TV station or media company. The selling price for this will
have to be considerately large, as we would receive no more revenue from the product
once we sold it.
The business model that we have decided to use is Business Model 1. We will use
this model because we believe that it will generate the greatest amount of revenue
from our product and this revenue will be continuous. If we were to use Business
Model 2 we would only receive a once off lump sum.
Funding:
For our company’s development we will receive our funding from a suitable investor
or Enterprise Ireland. With Enterprise Ireland the grants will come in three phases,
which are:
1. Proof of Concept Stage
Page 11 of 59
2. Technology Development Stage
3. Commercialisation and Development Stage
Awarding of the grants depends on certain criteria and conditions. Below are the
maximum amounts available at each stage:
2.6 Revenue Model
The revenue for our system is based on a license per seat model and the revenue
received through content sales. The license per seat is a fee charged for the number of
seats that use the system. The charge per seat would be based on the type of license
purchased and would typically be around €5,000 per seat. Commission will be
charged on the content that is sold. The commission rate will be on a sliding scale of
approximately 30%7 for low value content, reducing to 15% for high value content.
We would expect the BBC and BSkyB to purchase the Enterprise versions and
smaller independent media houses would purchase the smaller licenses, such as TV3
and Channel 6.
2.7 Targeted Customers and Route to Market
The main category of media companies that will be interested in our product will be
the large TV stations in both Ireland and the UK. These stations will initially consist
of RTE1, RTE2, TG4, TV3, Channel 6, BBC1, BBC2, UTV, CH4 and SKY NEWS.
All of these channels are available on the SKY Digital Satellite System, which is
available in both Ireland and the UK. We will also target media production
companies. We intend to initially to focus our attention on the TV stations in the UK
and Ireland for the following reasons:
The large increase in the amount of people using their camera phones in the UK and
worldwide: One third of all mobile subscribers in the UK use their phones to take
photos, a growth rate of over 200 per cent on the same time last year.8 It is projected
that worldwide camera phone shipments will grow from 178 million units in 2004 to
over 860 million units in 2009. By 2009, camera phones are expected to account for
89% of all mobile phone handsets shipped9. Although, there is a common perception
that the quality of mobile videos is quite poor, mobile phones are getting better and
better and they will continue to do so for years to come. Most of the camera phones
that Vodafone are now selling have 1.4 mega pixel cameras. This is good enough to
print a good quality 7 X 5 Inch photo. In appendix 8 is a frame from a video taken of
Lance Armstrong in this year’s Tour de France. The video was recorded using an
XDA from O2 on a second floor balcony. The quality of the video is quite good.
7
Appendix 5: Interview with Channel 6 media company
http://www.w2forum.com/p/mms Article on camera phone usage within the UK
9
http://www.capv.com/home/Press/2005/1.10.05.a.html Info Trends/CAP Ventures Releases
Worldwide Mobile Imaging Study Results
8
Page 12 of 59
Worldwide Mobile Phone and Camera
Phone Shipments
1000
900
800
Worldwide 700
600
Handset
500
Shipments 400
300
(M)
200
100
0
Non-Camera Phones
Camera Phones
2003 2005 2007 2009
10
Mobile Phone Companies in the UK and Ireland continue to make huge profits each
year: The graph below illustrates how companies in the Ireland and UK continue to do
extremely well each year due to the amount of people using their mobile networks.
Mobile Company Profits
1200
1000
800
2005
£'000 600
2004
400
200
0
Vodafone UK
02 UK
02 IRE
11
WWI, the company that owns Meteor Mobile here in Ireland, recorded profits of
$5,325,000 in 2004. T-Mobile in the UK had sales increased by over €283 million in
the first 9 months in 2003 compared to the first 9 months in 2002.12
More and more people are using mobile phones in Ireland and the UK: Customer
numbers continued to increase for all companies in the UK and Ireland in 2004.
10
http://www.capv.com/home/Press/2005/1.10.05.a.html Worldwide Mobile Phone and Camera Phone
Shipments
11
Figures taken from the 2004 Vodafone Annual Report sent to shareholders and the O2 Annual Report
which is available on the Web at http://www.o2.com/investor/financial_performance_report2005b.asp
12
Figures taken from the third quarter financial results at http://www.tmobilepressoffice.co.uk/press/international/2003/print/151103-Q3.doc
Page 13 of 59
New Customers in Ireland
160,000
140,000
120,000
100,000
80,000
Series1
60,000
40,000
20,000
0
O2 IRE
Meteor
Vodafone IRE
New Customers in UK
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
Series1
3,000,000
2,000,000
1,000,000
0
O2 UK
T Mobile
Vodafone Uk
13
The large amount of TV stations that are available in the UK and Ireland: Currently
there is a huge amount of stations available to people in the UK and Ireland that have
cable TV or digital satellite. SKY digital currently has over 9 million subscribers in
the UK and Ireland. This figure is up 13% on last years figure.14 NTL Ireland and
UK has nearly 900,000 subscribers.15 A lot of the stations that these companies
broadcast are news stations, which will be our main market. News programs would
use our product to access videos / images of important current events.
The similar usage of Mobile Phones in the UK and Ireland: People in the UK and
Ireland use their mobiles in similar ways. Texting has become huge in both countries
with companies reporting huge amounts of texts being sent each year. Last year over
13
Figures taken from the 2004 Vodafone Annual Report sent to shareholders, the O2 Annual Report
which is available on the Web at http://www.o2.com/investor/financial_performance_report2005b.asp,
from Western Wireless First Quarter 2005 Financial Results at http://www.wwint.com/press.php?state=3&id=58 and T Mobiles financial Results for the 3 quarter http://www.tmobilepressoffice.co.uk/press/international/2003/print/151103-Q3.doc
14
Figures taken from BRITISH SKY BROADCASTING GROUP PLC results for the nine months
ended 31 March 2005 at
http://media.corporateir.net/media_files/lse/bsy.uk/reports/2004ar/sky_2004/our_highlights.html
15
Figure taken from the first quarter 2005 results at
http://www.ntl.com/locales/gb/en/investors/qreports/2005-1.pdf
Page 14 of 59
9 million texts were sent per day in Ireland. MMS and camera usage is following the
same pattern and they can only become more and more popular. The penetration of
mobiles in the UK is 103% compared to 97% in Ireland.16 These are amongst the
highest figures in the world.
2.8 Risk Assessment
As with every business start-up there are certain risks involved. Here are the risks that
we believe would affect our business most.
Unknown Companies using Mobile Multimedia Content in the same way that we
do
There is a risk that another company has developed or is developing a system that is
the same as our system. After extensive research we know that there are companies
that use mobile multimedia in similar ways to us but we believe our system is unique
in the way that people interact with their media once they put it onto our system.
Media is also instantly available to companies once we have priced it.
Unknown Patents
Until a proper search of the patent databases is carried out, there is a small risk that
another group already patents our idea. We will employ an external company to carry
out a search of patent databases and register our patents if they don’t already exist.
Manpower
The company will need 4 full-time staff if our product is to get fully developed and
our company is to get a first mover advantage. If the project doesn’t get the
manpower it needs the product won’t get developed in time and other companies
could beat us to the market place.
External Economic Markets
The mobile communications market has been growing over the last couple of years
and is expected to keep growing but if the market was to collapse it would leave us in
a difficult situation and it might not prove feasible to develop our product. This is
highly unlikely even though the global market for mobile phones suffered a decline in
the rate of increase in 2002 due to the global downturn in electronics. The occurrence
of another such downturn could affect the licensing of our technology to companies.
6 months before entry into Market
It will take approximately 6 months to get a Beta version of our product developed
and to have it ready for the market place. By this stage we intend to have a
partnership formed with a TV station that will help us market our product and develop
it further. The TV station will also be a source of funding for our product. We have
already had some progress in this area. It will cost a lot of money to get the product
to this stage and there is a risk that the product could fail and be unsuccessful. Our
Enterprise Ireland Grant will be given to us in three stages. The awarding of each
stage depends on the success of the stage before.
16
http://www.mobileyouth.org/my_item/9_mn_text_messages_sent_per_day_ireland Article on text
message sending in Ireland
Page 15 of 59
3 Market Analysis
3.1 Segmentation
The telecom market is segmented into the following sectors:
• Broadband & Fixed Telecoms
• Handsets & Devices
• Media & Entertainment
• Mobile Content & Apps
• Mobile & Wireless Strategies
• Networks & Infrastructure
We are interested in the “Media and Entertainment” segment.
3.1.1 Media Organisation Segmentation
Media organisations are segmented as follows:
•
•
•
•
•
•
Television
o News
o Entertainment
o Sport
Radio Broadcasting
Film Industry
Recorded Music Industry
Printed Press
o Newspaper
o Magazine
o Book publishing
Websites
Arbitro intends to service the television “News” and “Entertainment” segments
initially and in the future to include other segments such as “Sport” and “Magazines”.
3.1.2 End User Segmentation
By the end of 2004 there was approximately 3.78 million mobile subscribers in
Ireland. Analysing the results from the survey17 we found that 100% of participants
owned a mobile phone and of the 70% that possessed a mobile phone with a camera,
17
See Appendix 1: Survey Questions Asked, Graphs & Tables of Results
Page 16 of 59
50% came from the age group of 20 to 29. The next largest ownership group was
from the age group of 30 to 44. This amounts to 1,508,593 people18.
The 20 - 44 age group is the segment that is most likely (87%) to send image or video
content in order to receive payment. The 15 - 20 age group is the segment most likely
to send content for no fee or for fun. According to ‘The MORI British
communication survey’19 the following describes the ‘young communicators20’:
90%
87%
84%
61%
59%
know that you can send and receive email on mobile phones, compared to
the national average of 63%
are aware that you can send pictures (national average is 60%)
know that you can access the Internet via a mobile (national average is
55%)
are aware of Instant Messaging capabilities on mobile phones (national
average is 40%)
know that you can access information such as travel timetables on the
mobile (national average is 37%)
These results indicate that the 20 – 44 and the 15 – 20 age groups are both aware of
and familiar with the technologies involved in our business. Therefore, services such
as ours should be easily accessible and used intuitively by people in these segments.
The 2003 McKinsey21 survey demonstrates the success in the use of SMS messaging
in TV programming. The survey concludes that SMS-TV is ready and prepared for
the next generation of SMS, MMS. The research indicates that the user segment that
Arbitro wishes to serve is already familiar with sending SMS messaging to TV
stations and will quickly adopt the use of MMS messages.
3.2 Customers
Our customers are split into two groups. The first group is the public that supply us
with image and video content. They will not directly pay us but will use us as a
broker for the content, which they capture. Commission will be charged on any
payment they receive. In Ireland22 mobile penetration increased by 6% from 88% to
94% with over 3.78 million mobile subscribers. Additionally Vodafone launched its
3G service in November 2004. Meteor has increased its market share to 9% of mobile
subscribers with Vodafone and O2 having 51% and 40% respectively. There were
over 4 billion SMS messages sent in the last 12 months, an increase of almost 10% on
the previous year. This equates to an average of 89 SMS messages per subscriber per
month. The rate of increase in the number of MMS messages sent is expected to
increase in the last quarter of 2005.
The second group of customers are the media companies that use image and video
content. These include television, newspapers, magazines and web sites. There are 2
18
See Appendix 3: Central Statistics office 2002, www.cso.ie
The MORI British communication survey
20
The term ‘young communicators’ relates to respondents fitting the following criteria: 16-34 years
old; household income of £17,500 or above; whose attitude to buying new technology is positive, ie
they did not agree with the statement ‘I rarely buy technology’ and those over 21 years are in
employment.
19
21
See Appendix 9: A pitch for using MMS to create TV shows based on the success of SMS-TV
shows.
22
Source: Baskerville and ComReg Estimates
Page 17 of 59
broadcasting companies in Ireland23 and 29 in the United Kingdom. Currently, end
users have to negotiate on a case-by-case basis with each media company for the sale
of media content so there is no set price scale. Typically, Sky News24 in the UK pays
£250 sterling per video clip purchased.
3.3 Competition
The major competition is from users sending images and video content directly to
media companies. Magazines list e-mail addresses or MMS phone numbers for users
to send their clips to while TV programs display the address on the screen. Media
companies receive the multimedia messages on their phones and they must filter
through the large amount of unusable content in order to find suitable content. The
NewsMarket and NowPublic are two companies providing similar services but are not
considered direct competition.
The NewsMarket is a broadcast news distribution service that brings newsmakers and
journalists together via a single Web-based platform to create a more efficient
environment for the exchange of video news content. The content is of a professional
quality whereas Arbitro’s content is of lower quality but is immediately available.
NewsMarket is not seen as a direct competitor with Arbitro but in the future we plan
to develop a professional version of Arbitro to deal with videos of a professional
quality.
Arbitro performs a similar function but will not be restricted to newsmakers and
journalists. It will receive media from any user with a mobile phone.
NowPublic is an open source news site based in Vancouver that allows users to build
their own news stories. The Web site, located at NowPublic.com, brings together
photographers – both amateur and professional - and bloggers, letting them work
together to cover news stories anywhere in the world.
3.4 Marketing
3.4.1 Marketing Mix:
• Product
Participatory or Citizen Journalism is on the rise as more and more people create
their own blogging sites containing news items including text and media elements.
People are becoming more comfortable with having photographic capabilities on
their mobile phones. They are unlikely to carry a camera everywhere but they
will have their phone with them at all times.
The design of the product was influenced by our survey results, interviews with
media industry organisations and current trends in the use of mobile media. Our
technology will facilitate the reception, storage and sale of media elements. The
product will be operated over the Internet utilising a central server for receiving
and storing multimedia elements. There will be two user interfaces used to access
23
See Appendix 6: Broadcasters
Source: ‘Citizen journos come of age’, http://www.theaustralian.news.com.au, Peter Wilson and
Sally Jackson, July 14, 2005
24
Page 18 of 59
and purchase content. The first user interface will be a consumer version and will
consist of a Web site, which will be used for accessing content by the general
public. This content will be of mass appeal. The second user interface will be a
professional version and will consist of an installable application. This version
will be used by media organisations to access the content. This content will be
filtered based on the needs of the media organisation. The two user interfaces will
have different licensing schemes (see “Price” below).
The benefits to consumers are:
1. An encouragement to record images and video on their phones as there is a
well-known location to send the media to.
2. Media recorded by the consumer will be permanently stored leading to its
value increasing over time.
3. The optimum sale price will be established for the consumer by using domain
specialists to negotiate the value.
The benefits to media agencies and organisations are:
1. Access to content recorded by consumers, which is filtered for quality and
labelled accurately for fast retrieval.
2. A professional business relationship with a single entity with standard
negotiation terms rather than one-to-many relationships with individual
consumers.
Value Chain and Stakeholders:
End Users
Telecom
Operators
Media
Processing
(Arbitro)
Media
Companies
The stakeholders in the value chain are:
• End Users / General Public – These are the people using the service by
recording and supplying media content.
• Telecom Operators – These are the mobile phone networks such as Meteor,
O2, Orange, T-Mobile and Vodafone.
• Media Processing – This is the Arbitro system, which receives content from
the End User via the Telecom Operator and makes it available to the Media
Companies. The content is processed into a more manageable format allowing
Media Companies to save time in locating and deciding on content to
broadcast.
• Media Companies – These are the television and magazine companies which
license the Arbitro service enabling them to purchase content from the End
Users.
System Process Analysis:
Page 19 of 59
The existing process enabling an end user to capture media content and then sell it
to a media company is as follows:
Capture, Negotiation and Sale of Video content
Records Video
on Mobile
Phone
TVStation
Station11
TV
User
User
2nd Sale
Sends Video to
TV Station
The user must
know the
numbers of all
TV stations
they wish to
send.
Offer is made
to user by
contacting
them directly
Sends Video to
2nd TV Station
User accepts
offer
Video is
evaluated on
Mobile phone
screen
Offer is made
to user by
contacting
them directly
Video clip is
broadcast
TVStation
Station22
TV
Video is
evaluated on
Mobile phone
screen
User accepts
offer
Video clip is
broadcast
Without the use of the Arbitro system, the time taken for a user to send their
videos and images to all interested media companies is greatly extended. The end
user must contact all media companies individually and negotiate terms with each.
They will also not receive the best remuneration for their video unless they have
specialised domain knowledge that allows them to set a value for the video
accurately.
The system using Arbitro is as follows:
Sends Video to
Arbitro
Video is
evaluated and
available to
media souces
Arbitro accepts
offers
TVStation
Station11
TV
Video is
processed
Automatically
User receives
payment
Views content
for suitability
Offer is made
to Arbitro
Video clip is
broadcast
TVStation
Station22
TV
Records Video
on Mobile
Phone
Views content
for suitability
Offer is made
to Arbitro
Video clip is
broadcast
OtherMedia
Media
Other
Orgs
Orgs
Arbitro
Arbitro
User
User
Capture, Negotiation and Sale of Video content via Arbitro
Views content
for suitability
Offer is made
to Arbitro
Video clip is
broadcast
Using the Arbitro system the workload on both the general public end and the
media companies is greatly reduced. The end user need only contact Arbitro in
order to sell their videos and images. Arbitro will handle the communication with
all the media companies and will ensure the best price for the content. The media
companies need only communicate with Arbitro greatly reducing the number of
Page 20 of 59
contacts they need to maintain. The media will be processed by Arbitro, which
leads to a more simplified evaluation process by the media companies.
The advantages to this process are as follows:
1. End users will record more images and videos as they have a consistent place
to deliver them to.
2. Media companies will use more content supplied from mobile users as the
procedure of acquiring the content is simplified.
3. End users will be encouraged to send in their content, as they will trust that
they are receiving the best price.
4. Media companies will benefit in the time saved not having to view irrelevant
images or videos on a small mobile phone screen. This is because Arbitro will
have processed all videos and only media of an expected quality will be
delivered to the media companies.
Future Developments:
The mobile environment is changing rapidly. Presently, the mobile operators are
rolling out their 3G networks. Arbitro is compatible with 2.5G and 3G networks.
As network speeds increase the experience of using Arbitro will become
incredibly simple as the time to send video will be minimal. With the use of 3G
and then following with 4G networks, Arbitro will evolve into a live service
where the end user will deliver content to media companies as the event happens.
Initially Arbitro intends to service the television “News” and “Entertainment”
segments of the market. However, our product can be applied to many other
areas. We intend to create different versions of the product for different markets.
It can be adapted to many different areas in different ways and with different
business models.
At later stages we will enter into the following areas with adapted versions of the
product:
 Television
o Sport
 Recorded Music Industry (e.g. album artwork)
 Printed Press
o Newspaper
o Magazine (e.g. celebrity photos)
o Book publishing
 Websites
 Police Information Recording (e.g. crime scene reporting/recording)
 Insurance (e.g. recording of insurable items as proof of ownership)
 Graphic Design (e.g. the selling of images to design firms)
Different versions, such as one for the police, could generate revenue using
differing business models. For example, a package for the police could be sold as
a standalone product as described by Business Model 2 [see section 2.5], as they
would simply want to store and search through content rather than purchase
individual pieces. Another example is of a version for the printed press segment
that would be solely for images. We will create custom versions for each segment
Page 21 of 59
thusly. Each segment will be entered based on market conditions, demand,
projected revenue and competition in the future.
Future developments for our technology are described in Section 6.
• Price
Licensing:
There are two options available for selling the Arbitro product. The first option is
to sell Arbitro as a standalone application to another organisation. The purchasing
organisation would have to maintain all content they receive as well as the
relationship with the mobile network operators. This option would lead to less
revenue for Arbitro in the long term, but could generate revenue quicker in the
short term if a higher license fee was charged for a complete purchase.
The second option is for Arbitro to host the service and to charge a license to each
media company that wants access to the service. The license fee would be
charged per seat on a yearly subscription. Commission will be charged for images
and videos that are purchased by the media companies. The commission rate will
be on a sliding scale rate of approximately 30% for low value content, reducing to
15% for high value content. End users may also have a fee-paying facility, where
they can pay Arbitro a fee for their content to be evaluated quickly. This will
allow the end user to signal that their content is urgent.
• Promotion
In order to promote Arbitro’s services, a one to one relationship or a strategic
partnership needs to be made with a media company. This partnership will be of
mutual benefit to both Arbitro and the media company. Arbitro will benefit from
a connection with an organisation in its primary market channel. The media
company will benefit from the competitive advantage of using the system. They
will also benefit from being part of any promotional activities, such as
demonstrating the product at tradeshows and press releases. It may be necessary
to work with the media company in providing customised features. As a result, a
one to one relationship needs to be maintained between a member of Arbitro and
the media company. This person needs to be available for consultation with the
partnering company.
By having the partnership we can begin to identify our target market better
through the actual running of the beta product. This will help us to not only meet
the public’s and media’s needs better but it will give us the added experience in
both the technical and business aspects of the system.
As part of our partnership with Channel 6, we will have a mutually beneficial
relationship. For example, in our meeting with Michael Murphy [see appendix 5]
he suggested that Channel 6 would give us significant aid by hiring a marketing
company to help deal with advertising. He suggested that TV adverts and
billboard adverts were an example of this aid.
• Place
Target Market Channels:
In order for Arbitro to be successful, it is necessary to get high market penetration
in a very short period of time. It is essential that Arbitro maintain its first mover
advantage. It is therefore important that Arbitro becomes the standard for end
Page 22 of 59
user content delivery to media companies. To achieve this end users must become
quickly aware of the Arbitro service and its benefits. To achieve this a strategic
partnership with a media organisation will be established.
Primary Channel:
Media Organisation
Media organisations such as television stations are the primary target for the
Arbitro system. They are already in the market for images and video captured by
users on mobile devices. Media organisations such as the BBC and Sky News
have a history using content provided by end users. The phenomenon of
participatory journalism is growing. The aim is to establish a strategic partnership
with a television station. The television station will be supplied with access to the
Arbitro system at a significantly reduced license fee. The aim is to become
established in the market and become the standard for mobile content reception.
The other media organisations will require the Arbitro system if they are to remain
competitive. Using the relationship with the television station, it is planned to
develop exclusive television programming which will demonstrate the capabilities
of Arbitro. Revenue will be generated by the commercialisation of the show and
the services of Arbitro will be paid for in the form of a negotiated fee and
advertising time.
Benefit to media company:
1. Competitive advantage in having state of the art technology.
2. Reduce license fee.
3. Access to more content available.
Secondary Channel:
Web Community
Arbitro will be available as a web site allowing end users to send their images and
video content to the site from their mobile phones or e-mail accounts. This site
will allow users to view each other’s images and videos while also providing
functions such as voting and purchasing. This channel will breed familiarity
among the mobile phone / web site users of the Arbitro system leading to the
network effect of Arbitro becoming the standard for image and video content
delivery.
3.5 Survey
3.5.1 Survey Analysis:
Refer to Appendix 1 for an overview of the survey questions asked, graphs and tables
of results.
The survey was conducted by passing out questionnaires to a stratified random
sampling of people that we thought would represent our target market. They had to
fill out a form and only answer the appropriate questions. As certain questions did not
require a response, the percentage results given are those of valid responses only
rather than a percentage of all participants. All results are approximate and may have
been rounded for convenience.
About the participants:
Page 23 of 59

Most of the participants were in the 20-29 age range (40%). The 30-39 age
group were the second biggest group asked (25%). Other age groups ranged
from 5-10% participation.

100% of participants owned a mobile phone. 75% of these used pre-paid
phones, with the other 25% owning bill phones.

20% couldn’t live without their phones, while another 45% valued them a lot.
25% did not value them massively and only 10% said they could live without
them.

40% used all features of their phones (such as cameras, MMS, etc.) and 60%
did not.

70% of people owned a camera phone and 30% did not. Of the people who
did not own a camera phone, 50% said their next phone would be a camera
phone. 30% would not get one and 20% were undecided.
Results from those with camera phones:
 93% did use it to take pictures/videos while only 7% did not use this function.

29% took 1-5 photos/videos a month. 21% took 6-10 and another 21% took
11-15. The remaining 29% took 15+ per month.

The largest use of the camera was for photographing/videoing “going out” or a
“family member”, with 23% and 22% respectively. Other main uses were for
sporting events and pictures of boyfriends/girlfriends. Smaller results arose
for holidays, weddings, birth of children and other non-listed events (such as
work).
Results from all participants:
50% of people used MMS to send multimedia to other people and 50% did
not.


75% of people would take a picture of something interesting if they saw it.
Only 25% would not.

40% would send it to a media company. 60% would not send it and would
prefer to keep it themselves.

Of the 60% who would not send content to a media company, 75% would
decide to send it if they had the possibility of getting money for it. 25% of
that original 60% would still not send it.

Most people (27%) expected to get around €100 for an important piece of
video or photograph they submitted. The second largest result was 19%
expecting €200 with another 19% expecting €1000. Smaller numbers of
people (7% each) would only expect small rewards such as €5 or €10. Other
results were 14% wanting €150 and 7% expecting €300.
Page 24 of 59
In the future we intend to create more and improved surveys that will give us better
details about our market. We will aim to have them completed by a larger and more
random grouping of people.
Page 25 of 59
4 Operations Plan
4.1 Operations Strategy
01/06/2005
Start of Development Phase
17/09/2005
Start of Beta Partnership Program
01/07/2005
01/10/2005
01/06/2005
08/12/2005
16/01/2006
End of Development Phase Launch Phase
01/01/2006
01/02/2006
14/08/2005
Start of Operation Phase
4.1.1 Development Phase
The completion of the product concept development and preparing our technology for
licensing is being funded with the investment of €90,000 made by Enterprise Ireland.
This phase focuses on getting our technology ready for licensing. These funds are
being used as follows:
• Completion of the product development stage
• Completion of the patent application
• Incorporation of the Venture and Legal Fees
4.1.2 Operational Phase
During the operational phase, we officially open our doors for business. We will
initially be launching a beta version of our product. The reason for this is to get our
first-mover advantage in the marketplace. We start by executing a licensing
agreement, and identifying media companies that our product will appeal to. Our goal
is to secure a partnership with a major media company within the UK and Ireland.
We have already made contact with a TV station within Ireland who is interested in
our product.
Personal sales presentations by the executive staff will be used to negotiate licensing
agreements. The original four founders will manage execution of this phase with
limited support staff as outlined under Human Resource Requirements. Licensing
agreements will be for one year with annual minimum thresholds to ensure proper
commercialisation by our licensees.
4.1.3 Full Launch Phase
During the full launch phase our technology is fully developed and we will be
targeting all the media companies in the UK and Ireland. Our primary function
remains supplying proper technical support, continuing to identify new categories,
continuing to developing our system in new ways and defending our intellectual
property.
Page 26 of 59
5 Management and Labour Requirements
There are currently four post-graduate students working on this project. The four
students are working fulltime on the project and the group consists of 2 students with
a business background and 2 students with a computing background. If the research
was found to be commercially viable we would like to have the following
management structure in place by the end of phase three:
CEO
Administrator
CTO
Chief Operations Officer
Business Development
Officer
5.1 Salaries
For the first two phases, our main aim would be to get a fully working beta version of
our product ready. Ideally, one of the developers will double as a CEO. Initially the
salaries for the group will be small and this is unlikely to be a problem, as they will
have already worked on the project for three months without any pay. The salary
amounts will also be limited by the Enterprise Ireland conditions. The CEO would be
responsible for the start-up of the business and the success or failure of the company.
He would take care of marketing, strategy, financing, hiring, firing and general
operations.
In phase three one member of the group will begin to work full time as a Business
Development Officer. He will be responsible for making contact with the TV and
media companies and he will try to sell our product to them. The business
development officer’s role requires someone with specialist domain knowledge of the
TV business and how pieces of media are licensed. As a result a competitive salary
will need to be paid and he would receive commission after that depending on his
sales. The administrator would be taken on part-time for the second phase and by
phase three we would hope to have him/her working with us full-time. We will use
consultants for advice on external markets and external accounting firms will manage
our accounts. Legal advisors will be used to register our patents and deal with any
legal issues that we may have. Tomkins who specialise in Patents and Licenses have
already been consulted for advice on patenting issues with our product and licensing
issues with pieces of media.
Annual Salaries
Page 27 of 59
Phase 1
CEO
Business
Development
Officer
CTO
Chief
Operations
Manager
Administrator
Phase 2
Phase 3
€20,000
€10,000 +
Commission
Full Launch
€80,000
Min. €15,000 +
Commission
€10,000
€10,000
€45,000
€45,000
€5,000
€25,000
Page 28 of 59
6 Technical Report
6.1 System Overview
The Arbitro system is Internet based. It contains a centralised server that is hosted by
us. End users supply the system with multimedia content (images and videos) using
one of two methods. The first method is via email; the second is using MMS. The
media organisations access the content using an installed user interface that uses Web
services to access the media content on our service. The system architecture is as
follows:
Arbitro
Operator’s
SMS / MMS
Server
Internet
HTTP (SMS)
HTTP (MMS)
Arbitro
SMS / MMS
Server
Arbitro
Message
Processing
Server
User
captures
Video
Operator’s
eMail
Server
Internet
HTTP (WebService)
Arbitro
eMail
Server
The system contains the following sub-sections:
• Web Services
• E-Mail Server
• SMS / MMS Gateway
• Message Processing Server
• User Interface
6.2 Web Services
Web Services are used as an integral part of our system. They allow the client
application to communicate with the database; they allow the e-mail and MMS server
to communicate with the database and they allow the notification system to
communicate with the database. Web services are web-based enterprise applications
that use open, XML-based standards and transport protocols to exchange data with
calling clients. They represent a new platform on which developers can build the
same distributed applications they've always built, but with interoperability. This
means that developers can develop applications that work on different platforms and
with different operating systems.
XML is used to transfer data between different applications because it is a crossplatform, extensible, text-based standard for representing data. In our system XML is
used to represent the different objects and data that is transferred between the server
and other applications. These applications are free to do what they want with the data
when they receive it. The fact that data is in an XML format makes it extremely easy
for machines to read.
SOAP or Simple Object Access Protocol is the transport protocol used to transport
client requests and web service responses. SOAP is transported over HTTP to enable
a completely interoperable exchange between clients and web services, all running on
Page 29 of 59
different platforms and at various locations on the Internet. This is the beauty of Web
Services; any computer connected to the Internet can access our service if needed.
HTTP is a familiar request-and response standard for sending messages over the
Internet, and SOAP is an XML-based protocol that follows the HTTP request-andresponse model. This makes interoperability possible.
Our service is described on the Internet using WSDL or Web Service Definition
Language. WSDL is a standardised XML format for describing network services.
Below you can see an example of our WSDL file, which describes our Web Service.
In this section of our WSDL file you can see where the Notification Object and
Message Object are described. The description includes the name of the service, the
location of the service, and ways to communicate with the service, our service is
called MediaService and it uses SOAP encoding. WSDL service descriptions can be
stored in UDDI registries or published on the Web. This allows them to be
discovered and used by other companies who would be interested in our services.
To develop the Web Service for our system we used J2EE, the Java Application
Server and JAX-RPC. JAX-RPC stands for Java API for XML-based RPC. JAXRPC is a technology for building web services and clients that use remote procedure
calls (RPC) and XML. Often used in a distributed client-server model, an RPC
mechanism enables clients to execute procedures on other systems. In our system the
client application will communicate with the application server using our Web
Service. The client will pass arguments to methods on our application server and the
server will return data in the form of XML SOAP messages. On the server side, the
developer specifies the remote procedures by defining methods in an interface written
in the Java programming language. The developer also codes one or more classes that
Page 30 of 59
implement those methods. Client programs are also easy to code. A client creates a
proxy (a local object representing the service) and then simply invokes methods on
the proxy. With the JAX-RPC API, clients and web services have a big advantage:
the platform independence of the Java programming language. In addition, JAX-RPC
is not restrictive: a JAX-RPC client can access a web service that is not running on the
Java platform, and vice versa. This flexibility is possible because JAX-RPC uses
technologies defined by the World Wide Web Consortium (W3C): HTTP, SOAP, and
the Web Service Description Language (WSDL). In our system C++ code was
created from our WSDL file quite easily and we were able to communicate with our
server using this code.
Our Web Service is a service-oriented Web application that implements the endpoint
of a Web Service. In the creation of our Web Service, a war file is created and this is
deployed onto our application server. A deploytool is used to do this, which is a GUI
tool to package applications, generate deployment descriptors, and deploy
applications on the Application Server. Once the Service is deployed onto the server
and the server is up and running, client applications are free to access the service as
they please.
MYSQL Database Server is used to store the tables and information that our system
needs. MYSQL is used because its architecture makes it extremely fast and easy to
customise. Its management system is unmatched in speed, compactness, stability and
ease of deployment. In our system there are a total of 6 tables, which are:
• InternationalWeatherStations: This table stores GPS coordinateds in Ireland
and their nearest place name.
• Media: This stores information on the media sent into our system.
• Notification: This stores information for our notification system, which will
be explained shortly.
• Purchase: Each row in the media table has a corresponding entry in the
purchase table, which stores information about if it’s been purchased before or
it’s been exclusively held.
• Sender: This holds information on the people that send in the media into our
system.
The database and these tables are accessed and manipulated using our Web Services.
The database is connected to our application server using JDBC and connection pools.
Connection pooling is a technique used for sharing server resources among requesting
clients. Our connection pool allows a maximum of 32 connections. This can be
increased or decreased as the developer pleases. The database connection is then
given a JNDI name and this is registered with the JNDI naming service. An
application can then use the JNDI API to access that DataSource object, which can
then be used to connect to the data source it represents.
A notification system also exists to notify people of new media containing a certain
keyword or media that has been sent by a certain person. People create a notification
through the user interface. The user interface interacts with the notification table
using the Web Services. A Java program called Notify runs on the computer that also
hosts the MYSQL database. This program checks the database every 30 seconds for a
new entry using a JDBC connection. If a new entry exists, the program checks to see
if there is a corresponding entry in the notification table. If someone has to be
notified about a new entry the Java Mail API is used to send the person a notification
Page 31 of 59
about the new piece of media and it’s corresponding media ID number. This person
can then use their client application to access the media in question.
6.3 E-Mail Server
The e-mail server is used to receive content captured by users and sent by email. It
uses the Java Mail API to detect if emails received contain video or image file formats
supported by Arbitro attached. Supported messages are forwarded to the Message
Processing Server.
6.4 SMS / MMS Gateway
The MMS Gateway is an interface to telecom operator MMSCs25. At the core is a
Celtius MM1 protocol implementation library, which we will license. Celtius26
Protocol libraries implement a set of protocol stacks in the field of mobile messaging.
The protocol libraries include e.g. PoC (Push-To-Talk), MMS (MM1, MM7, EAIF),
IMPS, WAP, HTTP and Push. We have received a 2-month trial license27 of the C++
MM1 (MMS) protocol implementation. This development license provides us with a
set of APIs, which receive MMS messages either directly from Mobile phones or
from a Mobile Operator. Messages received are forwarded to the Message Processing
Server.
The SMS gateway is used to send instructions to users that send in media content.
When content is delivered to Arbitro via MMS, the sender is sent an
acknowledgement and request for confirmation via SMS. This is implemented using
a bulk SMS messaging services provider. The provider we are using is Clickatell28.
They enable us to send SMS messages for €0.044 each using their SMS Gateway
Connect service. This service allows us to send global SMS messages using their
HTTP APIs.
The SMS and MMS gateway is implemented using VC++.
6.5 Message Processing Server
The message-processing server performs the image and video processing. Messages
received contain images or videos in MIME29 format. The MIME formats supported
by Arbitro are: video/vnd.avi; video/mpg; video/mpeg; image/gif; image/pjpeg. The
video processor currently supports the following codecs: AVI; MPEG-1; MPEG-2;
MPEG-4; 3GP. Current mobile phones capture video in MPEG-4 or 3GP.
The function of the message processor is to extract thumbnail images from the videos.
These thumbnails or key frames represent a synopsis of the video. They facilitate the
fast identification of the subject matter. Key frames are selected using colour
histograms. A histogram is calculated for each frame in the video. Frames, which
have a colour histogram significantly different from the previously chosen key frame,
are selected. The process is iterative and stops when a maximum of 5 key frames is
found. Each key frame is then resized and stored in JPEG format. Image files
received are treated similarly as only a thumbnail needs to be created. This is simply
a resized version of the original.
25
MMSC - Multimedia Messaging Service Centre.
http://www.celtius.com.
27
Full Celtius license is €6,000 per server.
28
http://www.clickatell.com
29
MIME (Multipurpose Internet Mail Extension)
26
Page 32 of 59
Meta data belonging to the message, such as subject, sender, date, content text, is
formatted and sent via the Web Service to the database.
The message processing is written in Java and uses The JMF (Java Media
Framework) for processing MPEG movies and images, QuickTime for Java for
processing MPEG-4 and 3GP movies.
6.6 Graphical User Interface
Our graphical user interfaces (GUIs) are created using Java Swing and JFC30. This
software is free for download from the Java website. JFC is short for Java Foundation
Classes, which encompass a group of features for building GUIs and adding rich
graphics functionality and interactivity to Java applications. It is defined as
containing the features shown in the table below.
Features of the Java Foundation Classes
Feature
Description
Includes everything from buttons to split panes to
Swing GUI Components
tables.
Gives any program that uses Swing components a
choice of look and feel. The Java platform supports
Pluggable Look-and-Feel Support
the GTK+ look and feel, which makes hundreds of
existing look and feels available to Swing programs.
Enables assistive technologies, such as screen readers
Accessibility API
and Braille displays, to get information from the user
interface.
Enables developers to easily incorporate high-quality
Java 2D API
2D graphics, text, and images in applications and
applets.
Provides the ability to drag and drop between Java
Drag-and-Drop Support
applications and native applications.
Allows developers to build applications that can
interact with users worldwide in their own languages
and cultural conventions. With the input method
Internationalisation
framework developers can build applications that
accept text in languages that use thousands of
different characters, such as Japanese, Chinese, or
Korean.
We decided to use Java Swing GUIs because it allows the software to be downloaded
from the web or copied from a CD and installed on individual PCs, rather than simply
using a web site. The GUIs transmit information across the web and communicate
with the databases via Web Services (described earlier in this section). This also
allows us to control copies of our software and how many can be used by each
company that purchase it.
The GUI contains features such as:
• Search functionality
30
http://java.sun.com/docs/books/tutorial/uiswing/14start/about.html Description of Java Swing
Page 33 of 59
•
•
•
•
•
A directory tree structure for manual search
A dynamic table displaying summary information of multiple content
selections
A details panel containing more detailed information on selected content
An alerts interface to set automatic alerts/warnings about incoming content,
without the need to search for it
A purchases interface to allow financial transactions
Frames Panel:
There is a dedicated section of the JFrame located at the bottom of the screen for
displaying fixed information on the video/image such the Senders ID, Location, Price
of Content and information which may be edited by the administrator such as the
message subject and text body. This section also has a dedicated area for displaying
the key frames of each video and holds buttons such as a Purchase Button for
launching the Purchase Panel and the Launch Video button used for playing the
associated video file through the Video Panel.
Purchases:
This GUI displays financial information. The price of content is displayed in various
currencies (namely € and £ sterling) as we are targeting the Irish and UK markets
first. Our company sets the prices.
Users choose to purchase content for a time period of 1-12 months. There are two
ways to purchase content:
• Exclusively – any other exclusive or non-exclusive purchases are then
blocked so that the buyer will be the only one to have the content. Only the
same company can re-buy it exclusively once the selected time period
expires, or else it will become available non-exclusively.
• Non-exclusively – many companies can purchase the content but no one can
ever make an exclusive purchase of this content.
The frequency with which each video/image has been purchased is displayed on
screen. For example, a certain image may have been purchase 0 times exclusively
and 11 times non-exclusively to date.
Financial details (e.g. purchaser details) will not need to be entered every time a
purchase is made. The software sitting on client’s PC will automatically send those
details because they have registered with us once we sold them the software licence.
Once a purchase is made, financial transactions will happen via Secure Socket Layer
(SSL) security.
Future developments would be to have a team of people judging the merit of selling
each video/image exclusively or non-exclusively. They would then decide if each one
required one or both methods of purchase rights. For example, selling many copies of
an important news video non-exclusively could potentially make more money than
selling one high priced exclusive copy.
Video Panel:
We launch another JFrame to house the video component of each video selected to
view. The button is pressed in the “Frames Panel” and the JFrame is launched. We
Page 34 of 59
use the Java Media Framework™ API (JMF™) to handle the rendering of the video
image. The JMF™ provided us with a ‘player’ interface that we used to capture and
display the image. The JMF™ will also allow us to stream the video from our server
to the clients’ desktop machine.
The Details Panel:(JTable)
This is the section that displays a brief summary of the all the messages relevant at
any given time. It is located in the centre of the screen and has been given lots of
space so as to make it easy for the user to get a good overview of the messages
details. It provides us with quick essential info on each message such as the media
type (video/image), the Key Frame, the location taken at, the text content and the
subject.
Tabbed (Filter) Panel: (JTree)
This is the section on the left of the screen. Its function is to act as a filter for
messages. It filters all messages by the date that they were sent on. For example, get
messages sent today, sent in the last 7 days, sent this month, or sent any month
throughout the year. A more specific search is available through the Search Panel.
The Menu Bar: (JMenuBar)
The Menu Bar sits at the top of the main JFrame. It provides us with the facility to
exit the program and allows us to manage your ‘Alerts’. The alert data is actually
stored in the database but it is viewed through the Alerts Panel, which is accessed via
this Menu Bar. There is also a Help function, which gives basic information about the
program and how to use it.
Alerts:
This GUI displays a list of previously initiated alerts and their details. These alerts
can be deleted or new ones can be added. The user can search for alerts based on
Subject, Sender or Content. Certain phone numbers or e-mail addresses can then be
alerted about the arrival of such content without the user manually needing to search
it. For example, one could set an alert to warn them if any videos arrive that relate to
the “London Bombings” and then specify the phone or e-mail account to send this
alert to.
Future developments would be to set alerts based upon video/image similarity, audio
similarity and location based on the GPS positioning system. We would also like to
combine these alert functions. For example, we could keep a look out for videos
about the subject of “Michael Jackson” that have frames of him walking out of court
and have audio that mention the word “verdict”.
Search:
This facility allows users to search for videos/images based on text. They can enter
some text in the search area and then select ID Number, Date, Sender, Subject,
Content or Location as a search option. For example, they could enter the text
“Glasnevin” and select “location” as the search facility. The table will display a
summary of the results of all the videos/images that were taken in that location.
Future developments would be for searches based upon video/image similarity and
audio similarity. We would also like to combine search functions. For example, we
Page 35 of 59
could search for videos about the subject of “Iraq” that have frames of Saddam
Hussein and have audio that mention the word “USA”.
Heuristic Evaluation:
There are nine principles that correspond more or less to principles that are generally
recognised in the user interface community. Almost all usability problems fit well
into one of these categories. The 9 principles are31:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Simple and natural design
Speak the user’s language
Minimise the user’s memory load
Be consistent
Provide feedback
Provide clearly marked exits
Provide shortcuts
Provide good error messages
Error prevention
Four random people from various University courses were chosen to view/use the
GUIs and make comments in relation to the nine principles. These comments were
collated and the results are shown in the table below. The results are abbreviated for
ease of display.
Num.
1
2
Alerts GUI
Purchases GUI
The Main GUI
Logically ordered lists,
buttons and text areas
Logically ordered
information and menus
Easy to determine how
the GUI operates (e.g.
easy to see how to
add/remove alerts)
Easy to determine how
the GUI operates (e.g.
buy a non-exclusive
copy of a video)
The overall look and feel to
the GUI should be very
recognisable to its users. First
of all it has the familiar Menu
bar across the top of the main
Window. Every Panel also
has a specific function and
each Panel has been given a
sufficient amount of screen to
allow it to be clearly visible
Labels are used and
radio buttons are
described simply
Labels are used
A help section may be
needed for those who
may have trouble
A help section may be
needed for first time
users so that they know
what “exclusive” and
“non-exclusive”
purchases are, as well as
the conditions for
purchase (e.g. buying
non-exclusive prevents
exclusive purchases for
The language used to guide
the user around the GUI is
very user friendly. It uses
non-technical English to
describe things such as the
filtering of the messages in
the Filter Panel. Also the
labels for the details and
buttons in the Frames Panel
are easily understood (e.g.
‘Launch Video’ and
‘Purchase’)
31
Molich, R., and Nielsen, J. (1990). Improving a human-computer dialogue: What designers know
about traditional interface design, Communication of the ACM. (March 1990).
Page 36 of 59
3
4
5
6
7
There are only a few
buttons that can be
clicked and they are
intuitive enough so that
not much learning is
required
anyone else)
There are only a few
buttons that can be
clicked and they are
intuitive enough so that
not much learning is
required
The GUI is consistent
with the other GUIs
The GUI is consistent
with the other GUIs
The text fields and
radio buttons are the
same as others that
appear in the other
GUIs
The text fields and radio
buttons are the same as
others that appear in the
other GUIs
The list is a new feature
but is not difficult to
use
Alerts appear and
disappear from the list
so it is easy to see that
actions have been
carried out successfully
Closing the GUI is
simple and operates the
same way as other
windows
Keyboard shortcuts are
available for radio
buttons
Feedback is provided on
the number of purchases
It is obvious that
something has been
purchased successfully
because users are able to
download it
A confirmation of the
financial transfer should
maybe be displayed
Closing the GUI is
simple and operates the
same way as other
windows
No keyboard shortcuts
are available
The user rarely has to use
their memory.
Everything is always there in
front of them and the GUI is
very clear and intuitive.
Therefore it is easy to
navigate by briefly glancing at
the labels.
The look and feel of the GUI
has been kept very similar all
round so as not to cause
confusion among users.
When a user makes a decision
that may alter any of the
messages or involve payment
the user is notified of their
actions and is asked if they
would like to continue or
cancel.
There is also a help feature
that provides information to
the user if they require
assistance.
The main Window (JFrame)
has a clearly marked exit
button as standard, but there is
also an exit option found
within the ‘File’ menu option.
This is very like other popular
applications and should
provide no hindrance to the
user.
There are shortcuts found in
the Menu Bar and Search
Panel.
It would be good to
have keyboard
shortcuts for everything
Page 37 of 59
8
9
(e.g. text fields)
There are no error
messages as users
cannot cause an error
There is no room to
cause an error (e.g. the
GUI prevents users
from adding an alert if
they do not give it a
name)
If something does not
download successfully it
is the fault of the
operating system or
Internet connection, so
the GUI does not
provide any information.
There could be some
facility to re-download it
without extra cost
There is no room to
cause an error (e.g. users
only click buttons and
do not have to enter any
details themselves)
If an error occurs, the system
reports to the user in an easily
understandable manner.
No technical jargon is
included.
Errors have been prevented by
closely following the logical
flow of the GUI.
6.7 Competing Solutions
Current Technologies permit any organisation with a background in Web Based
Image Processing and/or Content Management to enter this arena. Therefore there are
no direct competitors, yet there are companies doing work in similar areas that may
cause a threat. The main difference between ourselves, and the existing companies is
how we use the technologies to act as an agent between individuals acquiring content
and its purchasers, namely various media organisations.
Existing organisations currently doing business in these areas are: Brainstorm,
Flickr™, SmugMug, The NewsMarket and NowPublic
Brainstorm is a company that provides the technologies necessary to send/receive and
manage multimedia data, specifically through the MMS format.
Flickr™ is a Photo Management System. It allows user to share its photos with
anyone they want by posting them in a kind of “blog”. They have a technology
feature similar to ours. It lets you upload images directly from your mobile to your
web space. This is done via an e-mail address unique to the user.
SmugMug is again a Photo Management System but it has more of an e-Commerce
twist to it. You display your images in your own Web space with the option for these
images to be protected by watermarking. You can order prints of your images via the
web site, and others can purchase copies of your images as prints or by downloading
them for a charge. SmugMug handles all of the transactions with the purchaser in
return for 25% of the revenue generated per transaction.
The NewsMarket supplies broadcast-standard video and other multimedia content to
the press. The NewsMarket delivers its content in three ways:
Digital Download with four options – FTP Pull, FTP Push, Telestream Clipmail/Clipmail
PRO, or Pathfire DMG
APTN Satellite Feed
Page 38 of 59
Beta-SP Video Tape
NowPublic allows bloggers and journalists to break stories and you are encouraged to
give your own account of what happens through text/image/video reporting.
NowPublic protects your work with a Smart Media format, ensuring that you get the
credit no matter where your footage is used. With Smart Media, anyone who sees
your work can easily contact you, thank you, praise you, ask you to take an
assignment, or request a hi-resolution version of your photo.
6.8 Competitive Advantage
Our competitive advantage will come from the use of a dedicated MMS short code
service number that will be integrated into all of the existing mobile phone networks.
These short code service numbers are available to the public in the UK at the moment,
but no one uses them for the same purpose as we do at the moment. They are not yet
available in Ireland until Q1 of 2006. Our system will not be released till then but is
full able to handle it now and when it becomes available our system will be the first in
the country to use it for this purpose. The combination of this and the unique way that
we acquire and process multimedia data from mobile phones will keep us ahead of
competitors.
7 Finance
7.1 Funding & Assumptions
7.1.1 Funding
The completion of the product concept development and preparing our technology for
licensing is to be funded with €90,000 grant from Enterprise Ireland. This funding
will be used to get the company started and to develop the system to a suitable level
so that we can begin a beta program. The next phase will be funded by the beta
program partnership we will initiate with a TV station. The TV station will be an
early adopter and revenue will be generated as part income and part advertising time.
Cash income will come from beta license fee and income from premium MMS phone
numbers used by end users to send in video clips. This funding will sustain the
company until the full launch phase. See Section 3.4.1 under the heading of
“Promotion” for more information on how this partnership relates to marketing.
7.1.2 Assumptions
Page 39 of 59
Cashflow 2005-2006 Assumptions
We intend, through the beta program partnership, to be the technology used in a new
format TV show. The TV channel will promote this show. We will receive income
through the license fee (€1,500) and from user sending in clips. The following table
shows the income from the beta program (€13,200) and the estimated monthly income
after full launch. Initially the income will be €32,700 per month increasing by:
No of videos received
Premium rate income
No used
Commission @ 20%
200
€1 each
30 @ €150 each €4,500.00
€900.00
Sub Total
Total after 12 episodes
€1,100.00
€13,200.00
Daily number received
100
Premium rate income
€1 each
No used
22% @ €150 each €3,300.00
Commission @ 30%
Sub Total
Total per month
Total revenue
€200.00
€100.00
€990.00
€1,090.00
€32,700.00
€45,900.00
7.2 Sales & Profits
Sep 1st 2005 - July 31st 2006
Aug 1st 2006 - July 31st 2007
Aug 1st 2007 - July 31st 2008
Revenue
Gross Profit
Net Profit
€268,322.55
€169,156.96
€135,616.64
€595,426.96
€444,383.07
€369,954.70
€595,428.01
€276,488.09
€202,059.59
3 Cashflow 2005-2006
Page 40 of 59
Page 41 of 59
Page 42 of 59
7.4 Cashflow 2006-2007
7.5 Cashflow 2007-2008
Half Year Cash Flow
Aug.2007-Jan.2008
Aug.2007-Jan.2008
Sources of Cash
Sales
Subtotal
€595,428.01
€595,428.01
Cash Disbursements
Salaries
Payroll Taxes and Benefits
Rent
Insurance Premiums
Audit/Accounting
Legal Fees
Telephone + Internet
Light
Travel
Office Supply
Office Furniture
Office Equipment
Depreciation
Total Cash Disbursements
€132,500.00
€14,243.75
€6,000.00
€750.00
€1,500.88
€718.73
€3,000.00
€180.00
€158,893.36
Opening Balance
Closing Balance
€576,770.30
€1,013,304.95
Page 43 of 59
7.6 Profit and Loss Account
Yearly Profit and Loss A/C
Sales
Total Cost of Sales
Salaries
Payroll Taxes and Benefits
Rent
Insurance Premiums
Audit/Accounting
Legal Fees
Telephone + Internet
Light
Travel
Office Supply
Office Furniture
Office Equipment
Total Operating Expenses
Depreciation
Bad Debts
Pre payment
Accruals
Profit and Loss Before Tax
Taxes Incurred
Include Negative Taxes
Profit and Loss
01/09/05-31/07/06
01/08/06-31/07/07 01/08/07-31/07/08
€595,426.96
€595,428.01
€268,322.55
€45,000.00
€4,837.50
€12,000.00
€750.00
€2,500.00
€0.00
€2,033.52
€1,245.75
€6,000.00
€360.00
€1,950.00
€20,449.00
€97,125.77
€2,799.88
€0.00
€1,000.00
€239.95
€169,156.96
€33,540.32
€0.00
€135,616.64
€85,000.00
€9,137.50
€12,000.00
€750.00
€2,500.00
€32,000.00
€2,788.30
€ 1,245.76
€6,000.00
€360.00
€0.00
€0.00
€151,781.56
€0.00
€0.00
€1,000.00
€262.33
€444,383.07
€74,428.37
€0.00
€369,954.70
€265,000.00
€28,487.50
€12,000.00
€750.00
€2,500.00
€0.00
€3,077.74
€1,473.84
€6,000.00
€360.00
€0.00
€0.00
€319,649.08
€0.00
€0.00
€1,000.00
€290.84
€276,488.09
€74,428.50
€0.00
€202,059.59
Page 44 of 59
Appendix:
Appendix 1: Survey Questions Asked, Graphs & Tables of Results
1. In what age category do you fall?
Age Range
0-9
10-19
20-29
30-39
40-49
50-59
60+
% People in Each
5
5
40
25
5
10
5
What age category do you fall?
0-9
10-19
20-29
30-39
40-49
50-59
60+
2. Do you own a mobile phone?
Response
Yes
No
% People in Each
100
0
3. If yes, do you have a bill or are you pre paid?
Response
Pre-Paid
Bill
% People in Each
75
25
4. How much do you value your mobile?
Page 45 of 59
Feelings Towards Phones
Couldn't Live Without it
A Lot
Not Much
Could Get By Without it
% People in Each
20
45
25
10
Value of Mobile Phone
45
40
35
30
Couldn't Live Without
25
A Lot
20
Not Much
15
Could Get By
10
5
0
% People
5. Do you use all the features on your mobile, i.e. WAP, GPRS, MMS, Games, etc.
Response
Yes
No
% People in Each
40
60
6. Do you own a camera phone?
Response
Yes
No
% People in Each
70
30
7. If no, will your next phone be a camera phone?
Response
Yes
No
Don’t Know
% People in Each
50
30
20
8. Do you use it for taking pictures/video?
Response
Yes
No
% People in Each
93
7
9. If yes, how many do you take a month?
Page 46 of 59
Number of Photos
0
1-5
6-10
11-15
15+
% People in Each
0
29
21
21
29
Photos taken each Month
30
25
20
15
% People
10
5
0
0
1-5
6-10
11-15
15+
10. What do you take pictures/videos of?
Photos/Videos Of…
Holiday
Wedding
Going Out
Sporting Event
Boyfriend/Girlfriend
Office Party
Family Member
Other
% People in Each
8
5
23
14
14
3
22
11
Page 47 of 59
% People take Pictures of
Holiday
Wedding
Going Out
Sporting Event
Boyfriend/Girlfriend
Office Party
Family Member
Other
11. Do you use MMS to send mobile multimedia/pictures?
Response
Yes
No
% People in Each
50
50
12. Would you take a picture/video of something interesting you saw?
Response
Yes
No
% People in Each
75
25
13. Would you send that picture/video to a media company like a TV station or magazine?
Response
Yes
No
% People in Each
40
60
14. If no, would you be willing to send them if you got money for them?
Response
Yes
No
% People in Each
75
25
15. What would be the minimum amount of money you would expect for an important picture
or piece of video? €_________
Page 48 of 59
€ Prices Stated by Participants
5
10
100
150
200
300
1000
% People in Each
7
7
27
14
19
7
19
Money People expect for Photos (euro)
1000
900
800
700
600
500
% People
400
300
200
100
0
7
7
27
14
19
7
19
Appendix 2: Entertainment & Media Industry Overview
Page 49 of 59
Entertainment & Media Industry Overview
Amount
$190 bil.
Total Consumer Spending on Media*, U.S.
Date
2004
Source
Veronis Suhler Stevenson
RADIO
FM Radio Stations (Including Educational FM stations), U.S.
8,729 Sept. 2004 FCC
AM Radio Stations, U.S.
4,770 Sept. 2004 FCC
Number of Radio Stations Broadcasting Digitally, U.S.
150
2004
Electronic Business
PRINT MEDIA
U.S. Magazine Revenues
$21.4 bil.
2004
Publishers Information Bureau
Total Number of Daily and Sunday Newspapers, U.S.
2,300
2004
Plunkett Research Estimate
Total Book Publishing Net Sales, U.S.
$25.0 bil.
2004
Plunkett Research Estimate
TELEVISION
U.S. Households with Televisions
109.6 mil.
2005
Nielsen Media Research
Broadcast TV Stations, U.S.
1,748 Sept. 2004 FCC
Cable TV Subscribers, U.S.
73 mil.
2004
Jupiter Media
Digital Cable Subscribers, U.S.
27 mil.
2004
In-Stat
Worldwide Digital Cable Subscribers
42 mil.
2004
In-Stat
Worldwide Revenues for Cable Modem Services
$18 bil.
2004
In-Stat
Number of Mobile Phone TV Subscribers
270,000
2004
In-Stat
Number Projected for 2005
1.2 mil
2004
In-Stat
Mobile Phone TV Revenues in 2004
$32.8 mil.
2004
In-Stat
Revenues Projected for 2005
$47.5 mil.
2004
In-Stat
U.S. Homes with DVD Recorders (DVRs) (est.)
7 mil.
2004
Yankee Group
U.S. Homes with DVRs Projected for 2008
33.5 mil.
2004
Yankee Group
U.S. Homes with Video-On-Demand (VOD) Services
19 mil.
2004
Rainbow Media Holdings
Number of TiVo Subscribers, U.S.
2.3 mil.
2004
Plunkett Research Estimate
Total Digital Televisions (DTVs) Sold
7.2 mil.
2004
CEA
MUSIC
Global Music Sales
$32 bil.
2004
Reuters
CD Sales, U.S.
$12 bil.
2004
Various Sources
Concert Revenues, North America
$2.8 bil.
2004
Pollstar magazine
Approx. Number of Legitimate Music Download Sites
230
2004
IFPI
Number of Tracks Sold in the US and Europe
200 mil.
2004
IFPI
Number of iPods Sold
4.4 mil.
2004
Apple Computer, Inc.
FILM
U.S. Box Office Revenues
$9.4 bil.
2004
USA Today
Average U.S. Ticket Price
$6.25
2004
Exhibitor Relations Co. Inc.
Number of Movie Tickets Sold, U.S.
1.47 bil.
2004
Exhibitor Relations Co. Inc.
DVD Rentals and Sales at Retail, U.S.
$21.2 bil.
2004
USA Today
VHS Rentals and Sales at Retail, U.S.
$3.3 bil.
2004
USA Today
Number of Indoor Movie Screens, U.S.
35,585
2004
National Assoc. of Theater Owners
Number of Drive-In Movie Screens, U.S.
641
2004
Drive-In Theater Assoc.
ELECTRONIC GAMES
Retail Sales of Video Game Products (excl. PC Games), U.S.
$9.9 bil.
2004
NPD Funworld
Total Video Game Industry Software Sales, U.S.
$6.2 bil.
2004
NPD Funworld
Approximate Portable Gaming Software Sales, U.S.
$1.0 bil.
2004
NPD Funworld
IFPI = International Federation of the Phonographic Industry
*Estimate. Includes consumer spending on cable and satellite tv access and services; consumer books; consumer internet
access and content; consumer magazine subscriptions; entertainment (box office, home video, interactive television, recorded
music and video games); newspaper subscriptions, satellite radio subscriptions.
Appendix 3: Population numbers (Ireland)
Age
Number
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0-14
827,428
15-19
313,188
20-24
328,334
25-44
1,180,259
45-54
480,447
55-59
197,294
60-64
154,252
65+
436,001
Source: Central Statistics Office, www.cso.ie
Appendix 4: Mobile Phone Population (4000 users)
Age Percentage
15-24
18%
25-34
23%
35-44
21%
45-54
17%
55-64 Mobile
11% Phone
65+
10%
Population (4000 users)
Source: Central Statistics Office, www.cso.ie
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Appendix 5: Interview with the Channel 6 media company
Minutes of our meeting with Michael Murphy
Michael Murphy is behind a €10 million venture to launch a new TV channel in
Ireland called Channel 6. Michael is a former TV3 and Eircom executive. His new
channel hopes to take a large slice of the Irish audience that watch channels based in
the UK. We started the meeting by giving him a demonstration of our product and we
explained to him how it worked. Below are a couple of questions we had made out
before our meeting with Michael. Michael answered these as the meeting progressed.
•
Q: Do you use video / images already?
A: Michael did use video / images from elsewhere already. He used news
agencies like Reuters do this. He made a point that it would be a good idea to
form a partnership with a news agency or to have our system acting as an agency.
•
Q: How do you pay for these?
A: The way he paid for this media was different for each piece and he said most of
the time they would negotiate a price.
•
Q: What would you use this media for?
A: He would use this media mostly for news programs but he was also interested
in using mobile media for an entertainment program.
•
Q: Would you benefit from our system giving you better contact with the
public?
A: He believed he would benefit from our system giving him better contact with
the public. The system would give him access to more media content and the
system would have the public acting as reporters for him.
•
Q: Would you use people’s media content often?
A: He noted how media from mobiles was beginning to be used on news programs
more and more. This was highly evident in the week of the London bombings.
He believed this was only going to increase over time as more people had access
to camera phones and the quality of pictures from phones improved.
•
Q: Are you interested in our product?
A: Yes, he was interested in our product and he was interested in forming a
partnership with us later on. He also mentioned the possibility of making a
program that would feature peoples interesting videos sent into his station using
our system.
•
Q: Have you heard about any product similar to our product?
A: No, he had not heard of any similar product to ours and he emphasised a
number of times the importance of getting our product quickly developed and
launched before anyone else.
•
Q: What area of television do you think you would use our product in?
A: He thought that news and entertainment programs would benefit from our
product most.
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Below are a couple of important points that Michael mentioned to us during the
meeting:
- We should develop a consumer product and a professional product.
- The best way to make our product professionally would be to link with a news
agency, provide an archive service for the producer of a news program and to use
license system that would cover our costs.
- The fact that the product was web based was fantastic. This meant that anyone in
the world could use the system.
- The user GUI for the professional version would take a bit more work to allow
producers to access media quicker. This meant actually making the interface a bit
simpler to use.
- If we were selling a non-exclusive piece of media we should take 20%. We should
then try to get as many people as possible to access this piece of media. If we were
selling a piece of media exclusively we should take 30%. If the value of the piece
was over €5,000 we should take less.
- Pieces of media should also have an archive value.
- Our consumer product could be a fun product and most of the media should not be
filtered. Our professional product should have filtered media, which should be of
high quality. This would require an editorial input. We may need to cut down and
crop images. Better labelling of pieces of media should be included to allow for fast
browsing of videos / images.
- The header should include a representative name of the video / image, the length of
the piece and the quality.
- Our product should have good branding and marketing behind it. If we went in
partnership with him he would give us a hand in these areas. For example, he
suggested that Channel 6 would hire a marketing company for us and that we would
be advertised on the television and in other media.
- If he went to develop a TV show using our product he would give us some of the
revenue generated or advertising time.
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Appendix 6: Broadcasters
Ireland:
1. RTE including TG4
2. TV3
3. Channel 6 (Launching in December 2005) aiming at 15 to 34 age group
UK:
1. BBC (British Broadcasting Corporation) including World Service, News, beeb
@ the BBC (including the Radio Times and Comedy Zone), BBC Shop and
Monitoring Service (summary of world broadcasts).
2. Bravo
3. Carlton Select (cable)
4. Cartoon Network
5. Channel 4 including schools and on-line chat
6. Channel 5 (new channel, Easter 1997)
7. Classic FM (radio - see also international stations)
8. Disney Channel
9. Freeview digital TV
10. IRN (Independent Radio News) - listen to the hourly news (in ReadAudio
format)
11. ITN (Independent Television News) - watch the world news (in RealVideo
format)
12. ITV (Independent TeleVision). Regions: Anglia, Border, Carlton, Central,
Channel, Granada, Grampian, HTV (Wales), LWT (London Weekend
Television), Meridian, Scottish, Tyne Tees, Westcountry, Yorkshire.
13. Jazz FM (radio)
14. Landscape Channel from CableNet
15. Live TV (cable)
16. London News Network
17. MTV UK
18. NASTA (National Student Television Association)
19. Play UK
20. The Preview Channel
21. S4C (Welsh 4th channel)
22. Sky including Sky News and Sky Sports
23. Student Radio
24. TCC (The Children's Channel)
25. Television X (The Fantasy Channel)
26. Travel (Landmark Travel Channel)
27. Trouble
28. Vega Science Trust
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Appendix 7: Arbitro User Interface
Appendix 8: Sample image of from video capture using XDA
mobile device
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Appendix 9: Using MMS to create TV shows based on the success
of SMS-TV shows.
A survey32 suggests that 42 percent or more of the mobile-phone users, and up to 70
percent of the teenagers, in a number of Europe's largest TV broadcast markets are
interested in some form of interactivity between TV and their mobile phones.
At present, SMS-TV messaging accounts for less than 2 percent of the €22 billion in
gross annual advertising revenues generated in the European TV broadcast market.
But broadcasters could be underestimating the greatest strength of linking SMS to
TV: SMS is an effective direct-marketing tool and can also increase ratings.
McKinsey studies found that adding SMS interactivity to certain shows improved
their viewers' loyalty. In some cases, the addition of SMS boosted the viewer ship of
popular free-to-air television shows by up to 20 percent. Since advertising rates are
directly linked to ratings, well-executed SMS-TV shows could at least preserve, and
perhaps enhance, a broadcaster's bottom line.
McKinsey studies demonstrate that if more than 5 percent of a show's viewers interact
with it, its audience is extremely engaged—and more likely to tune in again, to tell
friends about it, and even to spend money on show-related content or merchandise.
Broadcasters can use their knowledge of SMS activity to accelerate their marketing
efforts and to command higher prices for advertising slots.
In 2003, the 900 million messages sent in the European SMS-TV market generated an
estimated €400 million for broadcasters, mobile operators, and technology providers,
or about 5 percent of the total SMS market included in our research33. If the system's
operational effectiveness were improved and if new shows, chat rooms, and shopping
applications were developed, this market could easily be worth €750 million by the
end of 2005. Broadcasters could capture one-third to one-half of that sum—€250
million to €375 million.
Europe is clearly the world leader in SMS-TV, and the market is growing. Studies of
more than 60 SMS-TV shows in Western Europe suggest that, depending on the
show's format, 5 to 15 percent of the total audience is converted from viewer to active
SMS participant. The results of traditional marketing campaigns pale by comparison:
the best-targeted ones might yield participation rates of 3 to 8 percent, while clickthrough rates for Internet advertising average from 1 to 4 percent.
More viewers will mean more advertising revenue. In a recent survey, about 58
percent of advertisers said they would allocate a larger proportion of their ad budgets
to channels with attractive ratings growth resulting from the use of SMS (Exhibit 1).
In addition, 46 percent of those advertisers would bring new money to TV, either by
reallocating the money from other media or simply by making new investments. Our
studies show that SMS interactivity can encourage ratings growth of 50 to 100 percent
for niche cable and satellite channels. Advertising provides 20 percent of the revenues
of the average thematic pay broadcaster, which can reasonably expect one out of
every five shows to be interactive. SMS interactivity can therefore boost the total
revenues of a niche pay-TV broadcaster by 1.5 to 2.5 percent.
32
In January 2003, McKinsey surveyed 600 mobile users in Belgium, France, the Netherlands, Scandinavia,
Spain, and the United Kingdom about interactive TV.
33
In Belgium, France, the Netherlands, Scandinavia, Spain, and the United Kingdom.
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In the case of free-to-air channels, which depend on advertising sales for as much as
80 percent of their total revenue, McKinsey research shows that SMS interactivity can
attract up to 20 percent more viewers. If 20 percent of the shows in a broadcaster's
prime-time schedule won these increased ratings, TV advertising revenues would rise
by €250 million across Europe—a significant amount, equalling the broadcasters'
share of the viewers' text-message fees.
Adding SMS interactivity to TV programming presents broadcasters with
technological and creative challenges. Typically, once a standard TV show is
produced, it is packaged in an appropriate length and time slot and then distributed.
An SMS-TV show adds an extra loop to this cycle: after it has been distributed, SMS
users must be able to send information to the broadcaster, and this information
must somehow be integrated into the show (Arbitro would do this). To achieve
the full benefit of the technology, a broadcaster must therefore master three important
elements (Exhibit 2).
Software technology
SMS data are received over the Internet, interpreted by middleware, and integrated
into a TV show through software overlays. A show host might, for example, pose a
question to viewers and instruct them to answer by typing 1-2-3 into their mobiles for
"yes" and 4-5-6 for "no." The middleware translates the numbers, aggregates the
results, and passes the data to another software application, which creates a graph that
is overlaid on the broadcast screen (or on a related Internet site) to show the voting
results.
Should a broadcaster buy the software technology or develop it in-house? In-house
development has advantages such as greater control over the end product, but they
must be weighed against outsourcing's benefits, which include access to upgrades.
Since analysis indicates that costs are similar either way, the decision should rest on
the type and complexity of the SMS application. If a broadcaster needs only a simple
voting application—for a music video show, say—off-the-shelf software will suffice.
TV broadcasters have used middleware for fixed-line voting since the early 1980s,
and middleware providers, mainly small software companies that were early players
in the fixed-line market, have already developed excellent off-the-shelf products.
Moreover, these providers are well versed in interactive voice recognition and
understand the broadcasters' needs.
If it is vital to integrate an SMS application tightly with distinctive broadcast content
—for example, in a live talk show—the broadcaster might choose to have more
control over the process and would thus develop its own technology. But even when
middleware and other kinds of software are developed in-house, broadcasters should
make the technology flexible enough to use in a number of interactive applications: a
voting application, for example, could be reused for a game show format. Many
large, first-mover broadcasters, such as Norway's TV2, have developed software
solutions in-house and then sold them to other broadcasters.
Conclusion
Ten years ago, industry experts saw unlimited potential for interactive TV and for
broadcasters that could execute it well. To date, progress in Western Europe has been
hindered by the slow penetration of digital TV. But in the meantime, more than 75
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percent of all Europeans own SMS-enabled mobile handheld devices, and SMS-TV,
which doesn't require digital broadcasts, is giving broadcasters and mobile operators
an important first lesson in interactivity. Thus prepared, they will be able to take full
advantage of the new medium by advancing to the next generation of technology—
Enhanced Messaging System—and then to Multimedia Messaging Services.
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