Wednesday, May 15, 2013

GAME OF STREAMS

Want an interesting case study in shifting media consumption habits? Look no further than HBO’s Game of Thrones. Although plenty of consumers are enjoying the show via premium cable subscription (4.4 million viewers tuned in to the third-season Easter Sunday premiere), it’s impossible to figure out how many millions more are thrilling to the latest battlefield brawls via pirated files and passed-around HBO GO subscriptions (more than 1 million people downloaded bit torrents of the episode within a day of its initial broadcast). Game of Thrones isn’t the highest-rated show in TV history, but it is the most pirated.

Underemployed and pop-culture-obsessed Millennials particularly loathe what they perceive as unfair pricing monopolies in the cable-dominated content distribution system. Cord cutters eager for the likes of HBO to acknowledge their growing ranks petitioned the network online in the summer of 2012, asking that it offer its HBO GO streaming service as a standalone subscription. The grassroots campaign, Take My Money, HBO!, was gently rebuffed via the network’s official Twitter account.

But as evidence mounts that the company’s offerings are the most pirated on the Web, and that Millennial “kids” are glomming onto their parents’ cable-package-based streaming services, HBO appears to be softening its stance. HBO CEO Richard Plepler is now publicly mulling the possibility of bundling HBO GO with broadband cable Internet service provider packages, while acknowledging that the network would have to make “the math work” before making any bold decisions.

While content providers and creators are carefully considering new distribution and funding models, consumers are busy busting down content-access barriers. The harsh reality for brands: Give the people what they want at a price they feel is fair, or be prepared for them to find it elsewhere for free — by any digital means necessary.

LUXURY EQUALS VALUE: THE CHANGING EQUATION FOR LUXE SHOPPERS

European luxury shoppers are shifting to a value mindset, and global megabrands are getting left behind. Sales at top European luxury brands are down, as chic Parisians and Milanese can no longer afford to shop with them. At the same time, the much-beloved free-spending international shoppers (especially those from China, Russia and the Middle East) are no longer filling brands’ glittering flagships.

Over half of the 23 brands (such as Gucci, Herm├Ęs and Dior) recently surveyed by Reuters reported lower footfall from tourists (particularly Asian shoppers) in their European flagships. These stores have grown to rely on wealthy luxury travelers to stay afloat, but now the well-shod shopper is going elsewhere. Outlet stores are increasingly enticing those who love a label as well as those who love a deal.

After all, just because consumers have less cash to flash, it doesn’t mean they’re willing to give up on the finer things. Luxe-for-less offers a new opportunity for brands: According to industry analysts FSP Ltd., revenue from Europe’s outlet malls has grown 60% since 2007, to €10.8 billion in 2012. Meanwhile, major European luxe outlet operator Value Retail reports that spend per visit rose 9.4% in 2012. New luxe outlet malls are opening in Russia, while a rising number of designer brands are opening their own discount stores to get in on the act.

The convergence of value-focused spending and a sense of democratic luxury is creating a demanding new luxury consumer. Across the board, consumers are less willing or able to spend as freely as in the past, and they’re applying a complex value equation to all purchases, whether they live in a penthouse or the projects. The luxury establishment may feel unsettled about the rise of the value-luxe shopper, but like consumers themselves, it will soon learn that offering high-value, high-quality goods is always a win-win.