Sunday, May 19, 2002

Fear and greed are both motivating the MPAA.   The fear they feel is something we have heard a lot about.  Not much has been said about the greed driving this. One of the major reasons that the BPDG is so hot to lock down content is Interactive HDTV (a revision of the ITV fantasies of 1993-94).   It's not about protecting broadcast content, although enabling a means to stop PVRs from skipping commercials will be a byproduct.  The dream of iHDTV is to get a major cut of the services revenue associated with distributing first run movies on demand.  This is new revenue to the movie industry. I can tell you that watching a DVD movie with progressive scan on a 42" HDTV plasma screen, with surround sound, is an awesome experience.  It rivals going to the theater.  It is especially attractive now that I have kids and don't get out to see movies as much as I used to.  I am now totally hooked on Netflix as a result. The equipment I am using is getting less expensive daily.  It will soon be available for less than $1k.  Additionally, bandwidth to the home is there in many cases.  Telcos have installed reams of fiber to the local loop.  There just isn't a market that will pay to light it up.  In their minds, the iHDTV market's infrastructure is now almost in place and they didn't even have to pay to build it (as proposed in 1993-94).  Now that it is almost here, they want to use it to generate new revenue, but are caught between fear and greed. 8:40:42 PM    Comment_ Trackback []

Credit Suisse First Boston.  PDF.  Michael Mauboussin writes an Internet euphoria report on the defining characteristics of the new economy.   His conclusion:  invest heavily up front, give away product, and build a networked platform with positive feedback loops.   This was and is horribly wrong. 3:20:20 PM    Comment_ Trackback []

Business 2.0.  (1999 and as valid today as ever) Warren Buffet on corporate profitability and the stock market over the next 14 years.  He expects the market to grow slowly over the next major period.  Why? Corporate profitability will not increase as it has in the past (it is currently at a very high percentage of GDP) and interest rates have little room to decline further.  However, I am more bearish than he is due to the impact of the New Economy on corporate profitability, specifically due to this: >>>I won't dwell on other glamorous businesses that dramatically changed our lives but concurrently failed to deliver rewards to U.S. investors: the manufacture of radios and televisions, for example (also aircraft and cars). But I will draw a lesson from these businesses: The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.<<<  I contend that the "moats" and "barriers" to corporate competitiveness, his pick for the only true predictor of long-term coporate profitability, are starting to fall due to better information flow and outright public resistance to inefficient pricing/business practices.  8:54:55 AM    Comment_ Trackback []