Connected consumer third-quarter 2012: analysis and outlook

1. Summary

The third quarter saw many parts of the traditional media business in flux. New digital platforms that once had confined themselves to user-generated content began to invest in creating professional-quality content. At the same time, TV programmers began to wrestle with both the threat and the opportunity presented by second-screen and social-TV platforms. The period also saw the rollout of new device-based content ecosystems, red flags and red ink for traditional consumer electronics makers, and a resurgence of consumer purchases of movies.

More-detailed highlights from the quarter include:

• The line between new media and old became harder to define as disseminators and distributors like Microsoft and Google started to create their own content.
• Barnes & Noble, Amazon, Roku, and Google all made moves during the third quarter to beef up the content ecosystems that support their connected devices, a trend that could make life harder for stand-alone content services like Netflix and Pandora.
• Sony, Panasonic, and Sharp posted their biggest losses ever in their most recent fiscal years, leading to credit downgrades and raising questions about whether traditional hardware companies can still compete in a business increasingly defined by software.
• Major TV networks began to invest directly in second-screen app developers to hedge against allowing social TV to become an over-the- top means of monetizing the networks’ own audiences.
• After abandoning movie purchasing in favor of on-demand rentals over the past few years, consumers began to show a bit more appetite for owning movies again.

This quarterly wrap-up discusses these developments as well as offers trends and topics to watch for the remainder of 2012 and beyond.