Taxing viewership - the end of online streaming video?

California's new (as of mid-2011) regulations requiring the collection of sales tax on online purchases begs the question: Will online sales taxes affect the sale of streaming (or pay-per-view) video media sources vs. video-on-demand cable?

For instance, take a new release via Comcast's Xfinity (formerly On Demand) service. Since I've referenced it before (and as it remains one of the more recent major releases as of this posting), we'll look at Skyfall. Xfinity's service shows that the film (in SD) is priced at $4.99 for a two-day rental, while the same in high definition commands a $1.00 premium at $5.99; also a 48-hour rental.

Skyfall is not presently available via Comcast's Xfinity website, so - for the purposes of this theoretical problem - we are looking at the Xfinity service as video-on-demand cable.

Hulu, on the other hand, offers unlimited streaming of most of its selections for $7.99 per month. At present, Hulu doesn't charge sales tax - but (in the year 2012) it did deliver 43% of all television content streamed online. That is enough to make it a potential target, as with Amazon (a not "if" but "when" scenario), and the only thing that has saved it during the previous two years is that streaming video does not fall under the conventional definition of an online retailer.

Given the potential for the 9.75% sales tax to affect Hulu's user base, consider the following pricing comparison for a California resident seeking to view the recently-released Skyfall (either via cable or online - the price difference and perception of value forms the crux of the buying decision):

Skyfall (online): Hulu - $7.99 (unlimited monthly streaming) + 9.75% tax = $8.07
Skyfall (SD): Xfinity - $4.99 + 9.75% tax = $5.04

The former includes the streaming of any other film desired that month, while the second is an exclusive rental of the film for 48 hours. Statistically, the pricing benefit is clear, but despite the exponential premium of television, the medium continues to be perceived with a higher value by the public (if not potentially a requirement).

With that in mind, will the additional eight cents per month ($0.96/yr) harm Hulu sales due to a lesser perceived value? Not likely (unless Netflix can deliver something essentially similar at a lower price). In short, Hulu's target market desires the flexibility offered by the service, and the alternative is far more expensive.

-Kurt Kaminer

To read more about taxation upon online sales:

• E-Marking for Sensible Folk: Will Amazon be the next Wal-Mart? New tax laws may be the catalyst.

Twitter - can it sustain itself?

Today, we're going to look at social media and whether its power of promotion (within the entertainment industry, specifically) can sustain itself as the years progress.

Let's take Twitter as an example, particularly as it already experienced a drop in user activity in late 2009.

Twitter has already been at the receiving end of internationally-accessible criticism over its usefulness, though much of this comes from those against the social media bandwagon. Though I happen to sympathize with this crowd, I do not blind myself from understanding that Twitter's regular user base - at this time in its existence - continue to find value in it as a news feed of friends, organizations, and the like.

Therein lies Twitter's strength, as with all social media outlets - perception of usefulness. That's what has separated Twitter, Facebook, and the like from being short-lived novelties.

But can Twitter sustain itself as being useful, rather than novel? Perhaps the biggest potential threat to all social media venues are ourselves - marketers. Any overeager utilization of (or partnership with) social media organizations can turn the value of any of these services 180 degrees in the eyes of their users. (That, and hash-tag linking abuse doesn't help).

In short, Twitter feeds from popular figures in the industry have to ensure that their content matches a certain expectation as to what their followers want to read - because anything else becomes nothing more than social media spam.

Granted, there's another pitfall: Not enough content. Consider the Warner Brothers-managed feed of acclaimed director Christopher Nolan (see: ChrisNolanWB), who has reached unusual publicity levels within the general public (and particularly amongst hobbyist and independent filmmakers) for his Dark Knight series of Batman films. In short, the man himself is as visible as his movie.

Yet, there hasn't been a single post in his Twitter feed for the last two years, including any information about the production of The Dark Knight Rises, which would have easily made up the gap in information for 2012. Unsurprisingly, this feed has all of 13,939 followers, in comparison to the Facebook page for Rises, with 3,164,729 likes and extensive two-way social media activity.

Guess which social media outlet will continue to grow in traffic? Exactly.

If anything, content remains king - and if Twitter is to remain relevant, it better hope that influential users continue to use it as an additional venue to Facebook.

That said, the Christopher Nolan example does indicate one weakness of the Twitter format - despite the ability to re-tweet content, the format does not particularly lend itself to giving users the perception of two-way communication (if you ask me, using Twitter feels as if one is sifting through a huge aggregation of one-sentence press releases). On the other hand, if these re-tweets were somehow reworked as to show the resulting commentary about the previous tweet, it would give one a better feeling that there is a discussion (and two-way activity) on the site. By comparison, look at any post on Facebook filled with an active comments section below it. That's what drives community involvement - everybody loves a forum.

-Kurt Kaminer


To read more about the future of social media:

• E-Marketing for Sensible Folk: Will Twitter, LinkedIn, and Tumblr Really Matter Five Years from Now?

Internet promotion of upcoming entertainment - the best way to keep your audience engaged?

Last week, I was rather critical in regards to the use of internet-based marketing as it is used as a constant method of contact. However, as a promotion source, the internet is a remarkably excellent medium to keep viewers/purchasers of film and television content engaged:

The resolution to a season cliffhanger or upcoming new episode can be promoted through internet teasers and behind-the-scenes clips; media that would not otherwise be as cost-effective to air through a show's syndication channels (assuming the show is not network-based), and would not reach as targeted a viewer base as the same content sent through email newsletters (to those who have subscribed to show updates), and social media.

Not only does this method ensure that followers will be drawn into the upcoming story, given that they are already privy to snippets - essentially the same phenomenon that keeps some of us tuned into a bad movie to the end - we must know the ending. Either that, or - according to Scientific American - "...narrative is inherently interesting." Either way, a good portion of these individuals will religiously set time aside to watch the show on the day of release (whether online or via cable).

Though traditionalists could argue that a conventional press release will cover a greater portion of the market, they fail to account that end consumers generally learn of the content of these press releases through online-based entertainment news sources - accessed via a search engine - and that the inclusion of video content is entirely dependent on whether the journalist framing the release will include embedded or linked content (example: ScreenRant's coverage of Skyfall) referenced in the release.

But creation of hype aside, viewers may purchase the show upon release for internet/computer based viewing through the same sources, bypassing conventional mediums entirely. With computer-based home media centers piping video content straight to television screens through their HDMI outputs, it would seem to be counter-productive to purchase content via any method not connected to the internet (with exception to other interactive - though closed - systems, such as Netflix).

Granted, the encoding of digital content does bring up the question of piracy (and if not piracy, YouTube-based fan parodies which have stretched the limits of the Fair Use rule) - but can we say that any previous system has been superior in preventing piracy? Hardly, and encrypting will not help - whatever man can code, another can decode.

-Kurt Kaminer


For more on how the internet affects purchases:

• E-Marketing for Sensible Folk: Where Is E-Marketing in the Buying Decision Process?