GLG News by Jay Krihak

Implications: I find it interesting that as gaming sector pundits look at console units sold, the handheld market is rarely mentioned.  As a result, it hasn't received it's due until now because of the DS shortage.  That signifies that there's plenty more growth & development to come in this space in 2008.

Analysis: The DS has been a hit since it launched.  Now, because of the Wii's success, people are finally taking notice of the hot handheld.  Funny thing is that I can see that handhelds being hotter, and having greater penetration, than consoles for the next few years - at least.  Shortages of the Wii, inconsistent hardware of the Xbox, and lack luster software for the PS3, all make for compelling reasons for parents, kids and gamers to go mobile with a PSP or DS.  The college student may also prefer to get their gaming fix while not using up too much space with a console in the dorms.  You only need one console per floor anyway, right?  But with wi-fi integrated, anyone can play anyone, anywhere without being connected to the internet.  You only need to be a few feet away to play against them.

I'm sure there are those that disagree with my statements above.  But to put it simply, you can have 4 handhelds in one household, and have a console, too.  The kids play Nintendogs, Dad plays Zelda and Mom plays Soduko on the DS.  Then, they can all play Wii Bowling when the mood strikes (no pun intended) or company is over.  You can see that a console experience is different than a handheld.  The PSP is more like a console, but does have some benefits in its compact size and portability.  Soon, it may also enable gamers to take all or part of the console experience with them.  All those considered, I stick with my sentiments that handhelds are just starting their growth cycle and will ramp up quicker than consoles overall, especially with lower price points - and few accessories to purchase - than consoles.

Implications: Xbox 360 has no loyalties other than to itself, so it makes sense that it would support Blu Ray in an add-on device, much in the same way it supports HD DVD.  But with a video marketplace on Xbox LIVE, it might not matter much in the end.

Analysis: Just when you thought Xbox wouldn't support Sony, they may have to.  Without an integrated high definition video player, it will be easy for Microsoft to have a Blu Ray add on device available for the low price of $200 (or more), just like they did for HD DVD.  Now all those people who bought the first HD add on will be pissed that they have to buy a new one if they want to watch Blu Ray movies through the Xbox.

Sounds great for Sony, right?  Not so fast.  I think the article missed a huge point that Xbox LIVE offers consumers the opportunity to download high def movies.  If you can rent or purchase video in bits, then why buy the player?  I'm surprised that anyone really cares about Blu Ray discs at all given the movement to digital download of content.  So if Xbox comes out with a Blu Ray player, I'd be shocked.  They'd rather push their gamers to download movies & other video content via Xbox LIVE Marketplace than to buy another piece of hardware.  This way, they get the annual subscription fee plus any royalties from downloads on the service.  I'm not saying there are tons of downloads today, but the fact that you can may someday help Xbox.

In the meantime, I'd rather buy a PS3 than any high definition DVD player.  At least if Blu Ray goes away, I can still play some video games on an awesome piece of hardware.  Until then, I'm good with my old school DVDs.

Implications: If John Riccitiello thinks that there will be less consolidation, then I have to think either he doesn't see any viable merger/purchase options - which is crazy - or he wants us to think that so he can buy another company and reclaim the #1 publisher status.

Analysis: Interestingly enough, while the EA CEO is talking about a changing model for video games, the newly named Activision Blizzard has already achieved a couple of them.  World of Warcraft is a subscription juggernaut, and Guitar Hero could be a console micro-transaction windfall buying single songs for $1.99 like iTunes - if Guitar Hero learns to be more like Rock Band in that arena.  There are already offers of free games due to advertising (Double Fusion & Eidos, for example, with Price of Persia), and the casual market is about ready to take off online and eventually on mobile devices (if the carriers play along) from an ad-supported and micro-transaction perspective.

So instead of acknowledging that their competitors are already doing some of what he said should happen, John Riccitiello says the opposite to make us believe that EA won't acquire anyone soon because top talent has already been scooped up.  Funny thing - he also says that consolidation will continue, and that EA recently acquired BioWare, maker of the awesome Role Playing Game, Mass Effect for the Xbox 360 & Windows.  They also have invested a lot already in EA Mobile, Pogo.com, and have aligned with Massive for in-game advertising, with Sony possibly on line with their dynamic solution in 2008 that EA can also partner with.

Unfortunately for EA, they're missing out on micro-transactions.  Without a strong shooter title like Halo or Call of Duty, or direct ownership of Rock Band, EA will not reap the short term benefits of Map Pack or Song Pack content downloads.  Games like Crysis or Army of Two may change some of that, but Sports have carried the load for EA for a long, long time.  Even if you're a hard core fan of Madden, I can't see the number of people paying for old-school digital jerseys making a difference in revenue or profits.  Even sponsorship would only add so much to the bottom line.  If you can read between the lines, EA needs to make additional purchases of IP to play harder in the non-sports category.  Certainly, BioWare is a start.  But the makers of Assassin's Creed, BioShock and a host of other content may be needed to expand their offerings beyond their current core, or to build out a strong casual game network online (vs Pogo & EA.com only) or in mobile.  We'll see what happens, but to get back to being #1, EA will have to partake in additional consolidation.

Implications: I consider myself to be a pretty hardcore gamer who loves First Person Shooters.  But nothing will ever stop me from playing a Mario or Zelda game, and there are no other icons of gaming like them.

Analysis: This article hits the nail squarely on its head.  Mario is a legend, and not just because Super Mario Galaxy could be the biggest selling video game this holiday season.  It's because everyone knows Mario intimately through playing any of the Mario Brothers or Super Mario games.  You can't tell me there's a bigger icon in gaming - unless you're also talking about Zelda, the other Nintendo hero who also happens to save a Princess.  Let's look at some of the other top game chronicles to determine Mario's supremacy:
- World of Warcraft:  with individual character creation, there's no one to latch on to
- Sonic the Hedgehog:  didn't have the staying power of Mario, even if he did have his own cartoon series
- Final Fantasy:  Soon to enter its 13th installment, every main character has been unique to the single installment
- Halo:  Master Chief is certainly recognizable, but with only 3 episodes, he has a ways to go before hitting Mario's Legendary status.
- Link:  The runner-up to Mario.  He's the reason every big gamer loved the original NES and the first real RPG, Legend of Zelda.  Problem is that people love Zelda, not Link...
- Pac Man:  If there wasn't a Ms., Jr. and some pretty bad 3-D versions, he might have beaten Mario.  Just not enough staying power, but hey - who didn't buy the Pac Man Fever single?

Now, these are just the games & characters that come to mind, have had staying power as franchises and laid the groundwork for video gaming as we know it today.  I'm sure I missed some, and would love to hear everyone's thoughts on their favorite game and if the protagonist is larger than Mario.

That said, Super Mario Galaxy had me up until 2am earlier this week.  I just couldn't put it down and had to beat that one more system that kept me playing for an extra 90 minutes.   With a couple hours sleep, I was cursing Mario the next morning.  But hey, that's the price you pay being a gamer - and trying to save the Galaxy with Mario...

Implications: With a strong lineup, third party publisher support and a strong next-gen installed base, Sony has a ways to catch up and few, strong exclusive titles for this holiday season.

Analysis: Nintendo won't lose any time soon.  Games with Zelda, Dogs and Mario in the title will be driving sales through the first half of 2008.  Also, more publishers are making games for the Wii than for PS3 - even if they are about cooking or non-gaming things.  Playstation 3 games have a smaller installed base than Nintendo and has a ways to catch up.  Even with the recent jump in console sales, they still won't sell as many as Nintendo will of the Wii.  The DS is a juggernaut and continues to outsell the slimmed down PSP.  And now that developers are making games exclusively for next-gen consoles, Playstation loses the PS2 in software sales - and it can't be made up by a higher price point or downloadable content.

It will be a good holiday season for all gamers and gaming companies.  Playstation has Metal Gear Solid 4, Grand Theft Auto 4 and Killzone 2 in the first half to look forward to, while the Wii has support from Mario Galaxy, Mario Kart and Super Smash Brothers Brawl to blow the doors off of any Playstation 3 title sales and make up for fewer key title releases.  Lastly, the Wii doesn't often compete with either the Xbox 360 or PS3 - it's either the only console for a family with young children or a second, change of pace console for the more avid gamer.  So unless something drastic changes - like Nintendo doesn't make any more Wii systems or the date slips on a major release by 12 months - little will change in the near term.

Implications: All of these "parking" sites use paid search & direct navigation to circumvent low organic search result rankings.  But social media doesn't necessarily hinge on search - it's more about friends & application sharing.

Analysis: Ironically, Google invented the practice of ranking sites based on links to and from their site as a measure of quality, interest and overall consumer acceptance.  The more links, the more relevant & liked the site generally is.  Funny how the tides turn when Google, who also invented Ad Sense which only ads links from any site, can tell sites that adding their links are ok, but anyone else's paid listings isn't ok.  Seems pretty hypocritical to me.

But if you look at common, gray practices like "parking" - web URLs for misspelled names like computrs.com that act more like directories than websites that make money on clicks - it's all about links to other sites.  Google doesn't ask them to remove their sites or clean up their act.  This underground system also relies heavily on Ad Sense.

So if you look at two of the more questionable practices for search, Google acts as an enabler.  And that's only two of them.  So who are they to tell sites not to leverage a practice that they condoned in the first place?  If Google is trying to get social media to act a certain way, most social networks don't use search in the traditional sense.  You look for others you know, share common interest or for new applications to add to Facebook or MySpace.  In that environment, Google plays a very small role, if any, especially on Facebook.  Food Fight anyone?

Anyway, I'm not convinced Google has made - or forewarned - of any real or dramatic changes to their algorithms for page rankings.  Google Toolbar is directional at best - even by Google's accounts.  Maybe partners should ask Google to either do away with the function or update it so rankings are more accurate for search planning.  Let's see if they listen to the little guys.

Implications: This reminds me of fraudulent sellers on ebay who cheat people and then are supposedly banned from ever selling again.  And if anyone knows that software is always at risk for being hacked, it's Microsoft.

Analysis: You think Microsoft would have learned a thing or two about software tampering (hacking) by being in the software space.  I guess not since they're trying to ban people who pump up their Gamerscore, which really doesn't mean anything anyway.  Look at World of Warcraft - how many avatars, items and gold pieces have been sold on the virtual black market because people don't have time to build up their characters?  Same thing is going on here, except it's with a Gamerscore that doesn't get you any elite access, discounts or even means you have bragging rights in most cases.  For example, I could have played the Burger King games and received a couple hundred points in Gamerscore.  What hard core gamer really cares about that?  In lingo, the Xbox Fanboys I guess have the most to lose.  And as for the Xbox LIVE account sharing, maybe Microsoft should make it free already so they can sell more downloadable content - that's where the real revenue opportunity is anyway.  At least Sony's Playstation Network got that part right.

Lastly, I'll talk about ebay in the sense that they still have people cheating the system, only to create a new ID with a new PO Box address to sell more bogus items and cheat the system again.  If they can't fully address the problem, then what chance does Microsoft, who can't stop hackers from penetrating Windows?

So relax Microsoft.  It's not a big deal.  Let the Gamerscores go nuts for a while - what's the harm in that?

Implications: Atlas DMT has the ability to weight conversions based on a person's online ad exposure & actions.  And if it ends with a Google search, click & sale/action, then Google still commands the majority of the attribution.

Analysis: Microsoft is trying to make a statement that Google shouldn't get all the money they get based on the overall web exposure & conversion path.  For instance, say an online user saw an ad on MSN.com, then went to MSNBC.com and saw another ad there, then did a Google search, clicked on a link and converted.  Microsoft is claiming that the ads on MSN & MSNBC contributed and therefore should receive part of the credit for that conversion.  Makes sense to me.

However, it won't necessarily move dollars away from Google.  It's like saying that I'll spend more on TV because it generates searches, and less on Google because people watched TV before they searched and clicked on my ads.  In actuality, the marketer would do better if they ensured optimized placement on both TV and in Google rankings - and that's clearly not Microsoft's argument.  They just want more money for their display ads and less money going to Google.  Maybe they should have developed a better search product for consumers and better targeting for display ads and they wouldn't be a distant competitor behind Google & Yahoo! for online advertising.

But will marketers ultimately spend less on Google?  More on display ads that contribute to conversions/revenue?  Or will marketers improve where they place dollars altogether?  It's in this that Microsoft clearly has it wrong by saying that there will be a movement away from search ads on Google (AdWords). When a person searches, their intent - at that moment - is higher than at nearly any other point in the purchase/information gathering process, basically screaming "I have a need and here it is marketers."  What this means is that search will be viewed as part of the overall solution versus a specific silo in online advertising more than it is today for marketers & agencies that use the Atlas DMT tool (which I've seen first-hand).  With this information, agencies, marketers and publishers can offer smarter solutions across multiple platforms & tactics rather than looking at clicks & giggles.

Ultimately, it's not about taking dollars away from Google, it's about leveraging partners to push additional contribution through Google, Yahoo, CNET, Valueclick, AOL, MySpace, Facebook, and any other online publisher to grow the industry overall.  So get in line, Microsoft.  You need to do better than that to earn your percent contribution.

Implications: The Xbox 360 has a bunch of people playing games only available on their platform.  So until PS3 has a game or two that I really have to have, I wouldn't buy one even to have as a "cheap" Blu Ray player.

Analysis: It's all about the games.  Xbox 360 has exclusives, especially the $300 million Halo 3 product.  Ironically, the game isn't all that much different than Halo 2, but it's a juggernaut none the less.  But other exclusive, innovative titles like BioShock are keeping the Xbox 360 ahead of the PS3 in terms of giving gamers a reason to buy.  Games move consoles, which is why the PS2 has such a huge installed user base.  Why upgrade to PS3 for $400 or more when tons of games are still being made for PS2, and it's priced under $150?  And that, in a nutshell, explains why more PS2s have been sold each month than Xbox 360s or PS3s - until the release of Halo 3.

Instead of dropping the price point, Xbox is giving more value in the form of games - Arcade (Uno, Pac Man) or the Forza "bundle" - which means they keep the revenue coming in flat vs a price drop for hardware.  Not a bad move, but still might not be enough to move significant volume of units.  They just hit 12 million in sales (not shipments) and have a long way to go before it's a mass-scale device in the living room.  At some point, Xbox 360 will have to drop in price - and a big drop to boot - before it starts replacing PS2 sales - and pre-empting PS3.

So in a nutshell, Playstation's price has little impact on Xbox 360 sales this holiday season.  When Metal Gear Solid 4 comes out and is exclusive to PS3, it could be the first real competition for Xbox 360 console sales.  Until then, Xbox has little to worry about - except the hardware warranty.

Implications: If search & email can be ad supported business models, then why can't other services or software as it moves from desktop to the Internet?

Analysis: Search & email are the two most used functions of the Internet.  Ironically, they're both ad supported - free to everyone in exchange for ads and a bit of data.  Google clearly sees this as their opportunity with their purchases of word processing & spreadsheet developers, and the evolution of products like Gmail.  But the future will be more about portability and accessibility, which leads me right to things like Google Gadgets and Google Phone.  Two products that will enable ad-supported content to become portable online from the primary dot-com location to properties like Facebook, or simply free phone calls in exchange for ads.  Microsoft and Adobe are trying more to play catch up in some areas and get ahead in others.  Photoshop needs to be free to compete with basic Apple photo editing software as they continue to claim more market share in the PC world.  And Microsoft is losing to Google with innovation that started with search and has now moved into everything else.

But the people looking for free stuff are those either looking to save a buck or two (like a startup) or has no need for professional services that come with a premium price.  In my office, I can't imagine having data that's not controlled by our network & IT department in some way.  It's this issue of control that will "limit" the scale in the next 10 years of this marketplace, even though it satisfies some consumer needs.  More importantly, if I buy a PC that has the upgraded software bundled into it, which replaced my old PC, then why would I suddenly use an online service unless I was forced to?  Consumers don't adapt easily to changes in technology and have a raw fear of losing information to hackers, pirates and any other description for people who will steal your identity.

So while there's a market for these products that come without customer service, it will be slow to grow and evolve.

Implications: This is really interesting.  The need for local search is great, but the offerings are limited.  How that element can drive growth in '08 & '09 is beyond me - unless it's mobile.

Analysis: Both Google & Yahoo! have talked about local search for years and have made little progress in either the product offering or the usage of their services.  If local search is truly going to impact advertising spending, then it will have to happen in mobile.  The two main reasons are:

Cannibalism:  If online Local Search does happen to evolve, then my assumption is that it will take away from "National" or generic search volume and therefore not add to the ad spend pot.  Also, local businesses have to have websites or other types of listings so that they're counted & considered in search algorithms, which further supports this assumption.

Location, Location, Location:  Most often, a person's location at a given moment inspires a need for information - exact address of the client's office, promotion awareness/offer, where's the closest coffee shop - which means the search is most likely to be conducted on a mobile device.  Mobile devices are almost more pervasive than PCs, and certainly are in emerging markets - just look at India, Africa & China.  So the future for local search - and major growth - will happen on the mobile phone.

Implications: People get their news & information from lots of places, so the NY Times did the right thing by opening up their best content.

Analysis: There's a long list of sites, especially in the News category, that started as paid access, then went the advertising route.  CNN tried making Pipeline, their online 24-hour video news "channel", a paid service.  Now it's free and ad supported.  Newspaper websites have gone back & forth with a paid model, and there are free printed editions like the Metro or the Village Voice in NYC.  And with the blogosphere, anyone can have their own column.  So why make any area of your site unaccessible to everyone who comes to the site?

Fortunately for the NY Times, they have heritage, editorial integrity and a number of other things going for them in comparison to other Newspaper-centric organizations.  As ad dollars in printed editions erode quickly, online has to pick up the slack.  Online can't do that if audience scale, page views & time spent isn't maximized and the environment kept sticky with up-to-the-minute, original & quality content.  Most of that differentiating content will come from their celebrity writers, making it a no-brainer that the subscription wall would be removed.

I do have to say, I'm surprised that over 200,000 readers would pay for that content.  But if they learned anything from WSJ.com, it's that subscription figures plateau, making growth beyond a certain point extremely difficult - and costly.  So while NY Times will gain readership, the cost of doing so will remain low - thanks to Google & Yahoo!, of course.  Thus, it's a win for the readers and a win for NY Times in the long term.

Implications: Sony is looking to have consumers think of buying a PS3 for Blu Ray and HOME first, and video games second.  But the PS3 is a video game console first to the consumer, making a delay of Home a minor factor.

Analysis: I'll say it this way - HOME doesn't matter here in the US.  Maybe in Japan or Korea where Avatars have prospered in places like Cyworld & Habbo Hotel.  But in the US, we're still hooked on MySpace & Facebook - the 2D communities - and use 3D widgets to show ourselves.  Basically, we're just not there yet.

As a result, the delay of Playstation's HOME service doesn't matter all that much.  No one is saying that they'll buy a PS3 only when HOME becomes available.  It's still about the games, not the Blu Ray player (which has challenges as it's not a standard yet) or about a virtual world that will ultimately be the gamer's gateway to all-things-Sony.  For example, I doubt Paramount will place their content within Sony's environment, and their move to align with HD DVD format exclusively deepens ties with the Xbox 360 by default.

Lastly, I have used the Beta for HOME and can say that it is pretty cool.  The graphics are top notch and you can play casual games like pool, bowling and classic, stand-up arcade games.  But to me as a gamer, that's a very distant #9 in my priority list.  If I want to bowl or play pool, I'll simply pick up my Wii Remote.

Implications: Playstation, the brand, stands for video games.  After it's in the living room, then Sony - through the Playstation Network & HOME - can tackle the other uses for the PS3.

Analysis: Consoles move for two reasons.  First and foremost, it's the games.  Xbox 360 has the lead in next gen because of Gears of War, Halo 2 (soon 3) and exclusives like BioShock that are reasons kids, adults and I buy consoles.  Second is price.  Playstation 2 continues to outsell both Xbox 360 and PS3 because it's dirt cheap - and not because it's also a DVD player.  Plus, games are still being made for the console that has over 110 million installed user base that aren't that much different than the next-gen brethren in most cases.  And even if there was a real difference, then the PS2 owner wouldn't know it because they won't spend $500+ on a console unless the "must have" game is out there.  Lastly, the battle over high def DVDs isn't over, so why spend all that cash on the possible next Beta tape player?

Perfect example:  Wii.  Dirt cheap (until you buy all the peripherals) at $250 and it comes with fun games in Wii Sports.  Zelda, Mario and titles like Tiger Woods Golf from Electronic Arts are all more fun to play on the Wii.  Now, the Wii still is hard to find in most places and sells 400,000+ per month - which is more than PS3 & Xbox 360 combined.

That said, Playstation 3 needs to:
- Make games that truly leverage Blu Ray and full High Definition.  SCEA has to be the engine because with a couple million consoles, the Microsoft Developer Kit will be the engine, and everything else ported over to the PS3 format until further notice.  The games sell consoles and Blu Ray + Cell processor is the stuff that needs to bring the true point of differentiation to life.
- Drop the price again before the holidays.  If you don't push consoles, you won't sell games and continue to bleed cash.  The PS2 cash cow will only last so much longer - it has to end.  And forget it if Xbox 360 drops the price by more than a token amount.
- Improve the Store on PS Network.  It's hard to find anything, takes forever to download, and has very little content.  No one really wants to use it or cares about it - Xbox LIVE is getting all the press & play.
- Get in the game.  Competitive gamers use PCs and Xbox 360s, and Playstation has been left out.
- HOME:  This isn't going to be a reason to buy the console.  It's a nice to have, not a needed component.  Better not rest your laurels on this one.

Let's see what happens, but they can't win the living room by pitching a device.  It has to be an experience, and video games are the experience they need to focus on.  Blu Ray won't win the day...

Implications: In an age of collaboration & sharing, social sites should take a cue from the users by focusing on rev sharing agreements than on forcing ads on a generation of users accustomed to not having ads there in the first place.

Analysis: It's hard to remember a time when there weren't social networks, video sharing sites and the means to comment on anything, at any time.  Sites like MySpace, YouTube, Facebook and Digg.com have become an integral part of how we socialize, communicate, share and create.  Ironically, sites like these - and the entire blogosphere - have been subsidized by Google thus far and the users have become accustomed to the omission of full frontal advertising.  And if there are banners, they're typically ignored when on someone's space that's more engaging than a forced ad message.

Users have forgotten that advertisers are making the site free for them to use.  Now, advertising is seen as an intrusion, not as an enabler, and is far worse than TV commercials.  As a result, when changes are made by publishers to further monetize the media property, the users who flocked there because it lacked ads now complain - a lot - about ads being more front and center.  Let's look at two examples - YouTube and Craig's List.

YouTube pissed a bunch of people off with the least intrusive ad within video content.  I think they misused the unit, placing it in every video and not thinking about every third or fourth video to minimize the impact.  Instead, they went for the gusto and are paying the price.  YouTube wasn't founded to make money, it was created to make uploading & sharing video easier.  Craig's List was founded on the same principles essentially.  But instead of making a fortune, Craig is maintaining the minimalist site experience because that's what the users have asked for.

And therein lies the quandary.  Either do what the user wants or don't and suffer the consequences.  If YouTube loses a few million users, it's not that big a deal.  If it loses a few million of the "power" users - the ones that post content, share it, comment on other videos and overall make the YouTube experience what it is - then they're in trouble.

So how to correct it?  Facebook tried to improve the experience, got flak for it, and modified it based on the feedback.  Text-based "postcards" are sent out by marketers and are not in your face.  Banners are around, but don't really bring in the dollars.  Groups are functional, not there for the sake of being there.  And users can bring in whatever widgets they want - and Facebook gets a piece of the ad revenue.  So if social wants to succeed, it has to be on the users' terms and in collaboration with other players that can offer rev share in the near term.  After that, it's anyone's guess....

Implications: Aside from video, there are the banner ads, sponsorships and even ad sense that will make up the whole of ad-based revenue from YouTube. And that doesn't include anything from mobile devices.

Analysis: YouTube is essentially taking the Video Egg model for video advertising - an overlay ad that can be clicked on - and replicating it for their users & network.  But the $20 CPM is excessive, even for partner content, without having a video ad as a guaranteed part of the experience.  So I'm not sold on that front.

More importantly, the article makes no mention of any other revenue streams for YouTube.  Understandably, the most premium part of the site is video, so it makes sense to focus on the revenue stream that makes no revenue today.  But let's look beyond this for a moment and think about the other ways YouTube can earn ad dollars in the interim:
- Banner ads
- Homepage Video Ad
- Content & Community Sponsorships (ie: Extreme Sports)
- Sweepstakes & Promotions (ie: Cingular Underground)
- Initiatives like the CNN/YouTube debates
- AdSense links
- Mobile

What this means is that YouTube has options for revenue beyond video.  They also better be careful not to be too interruptive or they could lose audience, which means the video ads should not appear on every video, especially those that might only be 30 seconds long or those viewed in succession.  Users are a finicky bunch, and can find alternatives to YouTube, if they haven't already.  And more importantly, this also depends upon how much premium content is made available to them.  If more content companies like Viacom insist upon having all videos pulled, then there's less for YouTube to place ads against - and less revenue to garner from video placements.

Based on the above, the short-term revenue potential is even lower than the estimates given, and certainly has an impact on the future projections for the video product.  But if YouTube can improve the other facets of their business - particularly integrations like the CNN experiment - they may offer unique, premium products for advertisers that make the video ads look cheap in comparison.

Implications: Internet ad spending will overtake print because: - There's no search feature in Print - Printed editions are folding with online editions sometimes maintained - Targeting, scale, pricing and video are additional drivers - Content update immediacy vs printed editions - It costs less to produce things for Internet advertising today

Analysis: There have been articles suggesting that newspapers like San Francisco Chronicle fold in favor of focusing on sfgate.com.  Consumer publications like Jane have shut down, and others like Business 2.0 have rumors swirling about shuttering to be integrated into other Time Inc. publications or just going web-only.  But is that enough to justify moving ad dollars into the online space?  Not really - magazines close all the time.  Newspapers need to offer greater immediacy through the web.  So these aren't reasons to shift ad dollars.  To the consumer, though, they are reasons to spend more time online - and that engagement is reason enough for advertisers to follow.

On top of higher, more immediate and measurable engagement, online can offer levels of targeting that Print cannot.  Demographic, geographic, behavioral, time of day and other forms of targeting are key differentiators.  And for that degree of targeting, the pricing is still lower than Print on a CPM basis, so there's a cost benefit of going online for media - and for ad production, too.

Lastly, the online space includes two things that Print does not:  (1) a company called Google, which offers a tool called search, and (2) video.  I won't talk about Social Networking (Facebook, MySpace, etc) because most of these items can be rolled into them through widgets or other means of tool integration.  My point is that search makes up around half of all online spending and is showing no signs of growth slowing, and by 2010, video is projected to be around or above $1 billion.  Taking those two items alone into account, it's easy to see why online will surpass Print.

What this all means for newspapers is that we need to look no further than to Classifieds for the beginning of the future. Consumer time spent & advertiser spending have both shifted to the web which has been apparent in newspaper revenue.  As other key local market advertising for autos and real estate move, this will further deteriorate earnings & revenue for local newspapers.  However, if they invest in their digital offerings, newspapers can become the true local media outlet that both consumers & advertisers have been pining for over the past couple years.  No one has truly stepped up in this area, and if Yahoo! can help, it would be of great advantage to everyone.

So no, Newspapers won't go away.  They'll just have to adjust to what's most important to readers, consumers and advertisers to stay relevant.  And sometimes, it will happen without paper.

Implications: The title says it all - if cookie deletion becomes a true problem, the entire data-driven world of online advertising will either have to evolve quicker than ever or will be in for a tremendous set-back.  In the interim, we have AJAX to deal with.

Analysis: The ease of which an industry can overlook one simple thing such as a cookie is astonishing.  Most pundits put cookie deletion at 30%, and that includes prominent data-centric folks at places like Atlas DMT (part of aQuantive, now Microsoft).  What if that climbs to 50%? 80%?  And all because people are tired of company or government infringement on personal rights?  I'm not saying it's because there's illegal stuff going on.  I'm saying that the perception that consumers are being watched, followed and tagged as a "type",  could cause all non-essential cookies to be deleted.  Include any ad server, ad network or behavioral technology in that non-essential bucket and you have yourself a big issue with measurement.

Cookies aside, there's another issue bubbling up in the form of page views vs AJAX.  The industry isn't any closer to figuring this one out, but at least we're talking about it openly.  The biggest reason is that the measurement companies that have the most to lose are stepping up with a focus on engagement (time spent) rather than the "lowly" page view.  This new threat to existing measures is important, but not as important as cookies.

That said, there seems to have been a leveling off of cookie deletion.  So it's easy to understand why the cookie topic hasn't come to a head.  AJAX, however, is an important issue for the industry to tackle, simply because it changes the model of how ad space & time is purchased, evaluated and priced.   We'll see what the consumer does, but better questions need to be asked - and answered soon.

In the end, without cookies and the right approach to AJAX, the one message per person, per moment, that Mr. Kenny discusses is unobtainable.  I do agree with his assessment that more investment is needed in the creative development area, and more individualistic approaches will win the day in the future (or today if we applied it properly - all the tools are there).  What will be most interesting is who owns the network - agencies or media companies or technologies - and who owns the relationship with marketers.  Maybe we'll all be cooks in the same kitchen, maybe not.

Implications: Xbox could have taken a different route versus a straight up price cut.  Regardless, the Xbox isn't selling like hotcakes any longer and something is needed to drive sales in bulk beyond Halo 3.  Playstation is a stronger device and before long, Xbox 360 will be an old-gen system.

Analysis: Xbox's price cut was a good move.  However, it won't drive enough sales with $50 off the top model and a pittance of $25 off the "Core" system.  The "top model", for reference, doesn't include significant storage, wi-fi, HD DVD, or a free trial for Xbox LIVE.  Though $100 more expensive, Sony's PS3 includes Blu-Ray, wi-fi, totally free connectivity and eventually a social interface in HOME.  In the interim, Xbox will nickel & dime gamers for Gold subscriptions, wi-fi, hi-definition beyond 720p (though 480p is the max for some content) with an attachment device (vs integrated) for $200, and even charge for rechargeable battery packs for the one controller you get with the system.  So in the end, you get a 7-to-10-year system at a higher initial price for Sony versus likely paying for a system that will need significant upgrading in 3 years - if not outright replacement.  So from that perspective, the price cut should have been $100 off the top model to match Sony's price cut and get closer to the $250 price tag of their main competition these days - Wii.

The two things Xbox has going for it today are Xbox LIVE and solid, exclusive titles.  Starting with LIVE, the ability to download/rent movies & TV shows, plus messaging, video/content sharing and connected play are outstanding, and at least a year ahead of Playstation.  That alone has driven sales.  But sales have stagnated a bit, and it might be because of the Wii - which I bought for home (but have a 360 & Wii at the office) because my family can also play.  The second area are exclusives.  Halo & Gears of War are solid for pushing consoles.  But I don't know anyone who doesn't own a 360 but plays Halo 2.  Mostly, the folks who will buy Halo 3 already have a Xbox 360 and play Gears of War and Rainbow Six: Vegas shooter games.  Hopefully, Mass Effect and Project Gotham Racing 4 show some strength and continue to push penetration.  Playstation, on the other hand, had Resistance: Fall of Man, which was a great playing title.  Otherwise, there's no Metal Gear Solid, Final Fantasy or Gran Turismo coming out this holiday season to push console sales.  That said, the price cut has done a nice job in helping lift unit volume.

Globally, the gaming core are eagerly awaiting a reason to upgrade to a PS3.  The price cut will do some, but the exclusive titles will have to do the rest.  Killzone 2 can help, and maybe a couple others, but Sony needs one more, new edition of an established franchise.  For me, it's FFXIII that will get me to buy a PS3 (again, I have one in the office).   So until then, I'm working on my Xbox GamerScore.

Implications: Facebook won't sell because: - They can be more effective through partnerships - Won't tell someone they can't be a partner - Is more than happy to be independent - Could cash in more as an IPO than LBO

Analysis: Facebook has been masterful.  Not only have they not sold, they continue to update & upgrade.  Look across the pond at MySpace and you find a property that is worried about losing users & ad dollars - to Photobucket.  Last I checked, MySpace didn't have to worry about a photo widget because their page views are massive and under-sold.  So the closed-minded site then purchased Photobucket, which they saw as a competitor.  So what does Facebook do?  Well, they allow any widget onto their site because banners aren't their core business.  MySpace's Google deal also makes banners secondary.  Why is that important?  It's important because supposed social companies who start putting up barriers suddenly become exclusive, not inclusive.  And Facebook sees that weakness as more reason than ever to not sell themselves because they're stronger than MySpace.

Besides, Mark Zuckerberg would rather tell everyone but the users to kiss off and make his own path, even if he goes down with the ship.  Ironically, his ship hasn't even come close to sailing.  Thus, Facebook will either continue to be a private company or raise cash through an IPO.  My guess is that the property can be more nimble privately, which means almost everything in this Internet day & age.  However, cash is king, and all the people they hire to maintain growth will surely expect more than a paycheck in the form of options.  So an IPO is possible and long term likely.

So all that's been done has been to rule out Facebook being acquired.  Which is, after all, a pretty big deal.