Forrester Research analyzes the impact of the release this week of two new video players — the new RealPlayer and VeohTV as well as the still unreleased Adobe Media Player which provide the first “Tivo-like” general purpose tools for recording Web video streams to a PC.
Forrester says media strategists will struggle to determine whether these tools will increase piracy or threaten their newfound online ad models. In the process, media strategists experience three stages of diminishing anxiety before accepting that these three players offer the one thing they want most: massive Web audiences that advertisers will pay for.
By freeing Web-delivered video streams from the tyranny of a persistent Internet connection, media strategists will have unlocked the real power of digital video: anywhere, anytime consumption of the hottest shows, all supported by advertising, the same fuel that powers $70 billion worth of television programming today.
According to Forrester, this will have specific dramatic effects in the Internet space as well as on good old fashioned TV as everyone works to either preserve or finally get a piece of that multi-billion dollar pie.
Web Video Recording Arrives In Force
In the third in series of papers on oil refining trends, Booz Allen Hamilton wonders whether the decline in oil refining margins last fall was the begininning of a long-term cyclical decline or a temporary blip. Pointing to continuing growth in demand and limits on supply, Booz Allen remains bullish on margins for the next 3 to 5 years.
Volatility will remain high owing to limited spare capacity in the short term.
Expected refining margins are projected to gradually decline from the peak around $11 in late 2006 to around $7 by 2015. However, this remains above the $2-$5 range from 1996 to 2005.
Refining Trends: The Golden Age or The Eye of The Storm
A new commentary from Deloitte chief economist Carl Steidtmann provides a useful antidote to the political hyperventilating over gas prices. In Economist’s Corner: The oil price debate Steidtmann comments that political interventions to deal with rising energy prices can hurt more than help.
One useful chart illustrates the fact that, adjusted for inflation and productivity, the price of oil, though trending upwards, is still well below historic highs. Another shows that the share of consumer spending on gas has stayed in the 3-4% range in the last few years, compared with between 4 and 5% in most of the 1960s and 1970s.
The price of gasoline by volume is less today than the price of bottled designer water and just about as important.
Steidtmann warns against overzealous government intervention. His prescription: “It really isn’t rocket science. As a nation we should pursue policies that increase supply and reduce demand through conservation.”
Indirect taxes seem to be playing an increasingly important role in raising revenue for countries around the world. As corporate tax rates are lowered to attract and keep foreign investment, governments raise their Value Added Tax (VAT) or Goods and Services Tax (GST) to offset the loss.
According to KPMG’s 2007 Corporate and Indirect Tax Rate Survey, although lowering corporate taxes and increasing VAT/GST has its benefits, it can be difficult to convey these advantages to the public. It is obvious to anyone who buys goods and services that when the VAT/GST is raised, the price of the goods and services also go up. What is not so obvious is how the lowering of corporate taxes allows for additional inward investment which can bring about increased employment and infrastructure development.
Another advantage of indirect taxes is that they provide a steady flow of funds throughout the year, as opposed to corporate tax profit that delivers lump sums at sporadic intervals. However, according to KPMG, this increasing dependence on indirect taxes has forced companies to create accounting systems capable of providing accurate real time information on transactions and tax liability. Also, this presents a major cost and resource issue for the business sector in keeping systems up to date with tax authorities’ information requirements.
KPMG’s survey found that corporate taxes worldwide continue to fall, but there are signs that the rate of decline is slowing. Globally, average rates decreased from 27.1 percent last year to 26.9 percent today. This is significantly less than the major year on year reductions seen in the late 1990’s and early 2000’s. It may be concluded in some parts of the world that companies have turned to other methods of attracting and keeping foreign investment, but it is clear from this survey that corporate tax rates in Europe are still being driven down.
The MIT Joint Program on the Science and Policy of Global Change has developed a model to determine how costs associated with mandatory cap-and-trade greenhouse gas emission control systems might affect the US economy. While the program does not endorse any individual bill, the analysis could lend insight into potential climate consequences and the rough effects on prices and consumers.
The MIT model predicts that if no action is taken, U.S. greenhouse gas emissions will double by 2050, with global levels growing even faster and continuing to rise for the rest of the century.
Global temperatures would rise by 3.5 degrees to 4.5 degrees above current levels by 2100
The more ambitious of the Congressional proposals could limit this increase to around 2 degrees Centigrade, but only if other nations, including developing nations, also strongly control greenhouse gas emissions.
The model shows that the cost of meeting the proposed targets for the most stringent of the mandatory emissions caps would be equivalent to losing somewhat less than a year of economic growth through mid-century. The proposals would increase the price of carbon dioxide to $30 to $50 per ton in 2015, rising to $120 to $210 by 2050.
The majority of Europeans with internet access do not buy financial products online. According to a recent report released by Forrester, “Why Europeans Don’t Buy Financial Products Online”, only 15% of Europeans who recently purchased a financial product bought it through the internet, while 48% used bank branches and the rest applied via mail or telephone.
After surveying 8,435 online Europeans, Forrester found that the top five reasons for not buying financial products online:
- Desire to speak to someone while applying, because they cannot find necessary information on the bank’s website.
- Do not trust the internet to keep personal information secure.
- Don’t see any advantage in applying online, find the branch or telephone more convenient or reliable.
- Consumers are using the same channel the product offer originally came through, commonly the mail.
- Applying online is too complicated, mainly due to unclear, lengthy, and hard to find application forms.
Forrester proposes various ways financial service firms can stimulate online applications through improved customer service and addressing the trust issues.
Instead of waiting for consumers to become more comfortable online, Forrester recommends that companies confront these barriers hindering online financial product buying and find ways around them.
A Special Comment from Moody’s Global Credit Services finds that the US public power sector is well positioned to comply with recent environmental regulations requiring significant and continued investment of capital for the long-term, though pressure may be felt more acutely at older coal plants.
The overall credit rating remains stable, with a median rating of A2 covering 250 public power debt issuers.
The 8-page report, Environmental Regulations Increase Capital Costs for Public Power Electric Utilities, includes a summary of recent environmental regulations, plus summaries of ratings of selected coal-fired public power systems and can be downloaded for a fee.
Deloitte just published a 10 page Global Financial Services Offshoring Report 2007 which outlines the offshoring “journey” and offers advice on best practices. The report summary also provides a link to a press release: Financial services companies increase overseas headcount 18-fold as offshoring accelerates and evolves. Highlights include:
- India remains offshoring’s hub but is likely to lose share in the future
- China’s growing competitiveness may dampen salary inflation among Indian offshoring industry workers
- Knowledge-process offshoring, such as investment banking analytics and research, has grown along with transaction processing, finance & HR
Offshoring has created both opportunity and challenges for the financial services industry. The trend towards offshoring of more knowledge-based tasks means that the impact will be further reaching in the coming years.
Many content producers and TV broadcasters consider mobile TV a major potential revenue generator in coming years. Traditional TV is already under siege as people begin to change their habits of how and when they watch programming, forcing companies to find new distribution channels to deliver their content.
Red Herring Research recently released a comprehensive report on the Mobile TV sector, identifying market drivers, investment opportunities, and key issues facing mobile operators.
The report lists the leading public and private companies in the industry (hardware and software), and explores the emerging technologies competing to deliver the next-generation of network upgrades.
Securing a regulatory framework, adopting standards, and validating business models, are some of the current challenges facing the mobile TV sector. Placeshifting is a potential problem for mobile carriers, involving companies who allow users to access their home TV through a mobile device without incurring a fee.
Mobile TV is already offered by several providers in Europe, but according to the Paul Budde Communications report Europe – Mobile Market – Mobile Data, “take-up is unlikely to be strong until the end of the decade. Currently, mobile TV-enabled phones are too expensive for the mass market, and most consumers are uncertain if they want to watch TV on their mobile phones or want to pay for it.”
Utilities will have to make significant investments in compliance infrastructure and new regulatory requirements, in order to bring their organizations up to par with the new industry standards, according to a new study from Ernst & Young.
Under 2005’s Energy Policy Act, the Federal Energy Regulatory Commission (FERC) was granted the authority to enforce the nation’s energy priorities. At the top of their list is ensuring electric system reliability. Meanwhile, cost pressures, combined with a previously lax regulatory environment, led to minimal infrastructure investment by power companies.
Ernst & Young LLP conducted a Regulatory Compliance Survey of senior executives responsible for corporate regulatory compliance, from ninety-five companies including twelve utilities, to asses how compliance programs are structured, implemented and managed.
According to E&Y, today’s utility companies need to establish a compliance reporting function, yet the survey found that utilities placed less emphasis on reporting to the board and reported less information than other industries. Utility companies also reported a disconnection between compliance policy and practice, which can lead to lost opportunities for both the regulated and deregulated sides of the company.
Generally, executive management are supposed to serve as an example for a company, but the survey found that compared to other industries the compliance frameworks for utilities are less likely to incorporate expected leadership behaviors. Two out of three utilities have not developed or are still working on documenting processes for anticipating and addressing future compliance risks and updating programs for new rules and regulations.
According to the study, companies should require compliance training for all employees, especially boards and senior management. However utilities seem to be lacking in new-hire compliance programs. The report also found that companies should not burden their internal audit departments with the task of industry compliance. Utilities have brought their financial reporting internal controls and monitoring procedures into compliance with Sarbanes-Oxley (SOX), but their internal audit departments typically lack the subject matter knowledge to handle regulatory compliance.
E&Y suggests that utilities need to create a stronger more comprehensive compliance model and should bring in the expertise to make this happen.
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