The Kung Fu Panda Problem

Leading smartphones, such as Apple’s iPhone or RIM’s BlackBerry, are having an enormous impact on the mobile industry.

Within five years about half of US users will have upgraded to a smartphone and these customers will represent nearly 60% of industry revenues.   These smartphone users will also represent approximately 75% of wireless data traffic from cellphones (excluding laptops and MiFi) as applications, games, and multimedia content on the go become mainstream.

The Market is Upgrading to Smartphones

In addition to bringing significant change to the mobile ecosystem, this mass-market upgrade to smartphones is finally making convergence a reality.  Apple iPhone users are seamlessly moving content between their computers, iPods, iPhones and televisions using iTunes and simple docking station connectors (or, better still but a bit expensive:  AppleTV).  Other lead users are cobbling together ‘DIY’ solutions with products such as SlingMedia's SlingBox, Roku’s Netflix box or TiVo with Amazon Video On Demand (VOD).

Smartphone’s were the missing link for convergence, and now they will play a critical role in consumer decision-making for content and service providers.  Companies that do not offer a complete solution, including smartphone integration and seamless transfer of content across TV and PC, are beginning to face what we call, “The Kung Fu Panda Problem.”

This past winter our family went skiing in the mountains of Maine.  For the four-hour trip, I purchased ($14.95) and downloaded the movie Kung Fu Panda, so my daughters could watch it on my iPhone.  The user experience for my daughter was pretty good, but the really interesting thing is what happened later, when we were home and they wanted to watch it again.

In today’s world, we seemingly have a myriad of options on how to purchase and watch video across TV, PC, and mobile:  Mobile TV, streaming video, Comcast VoD, or DVD – either purchased or through Netflix.  For a long time, DVD was the best format for covering a wide-variety of circumstances and use cases.  But carrying around a huge collection of DVDs isn’t great.  Once I purchased Kung Fu Panda from iTunes, we could watch it on TV (with a simple connector cable), on our family’s MacBook, on an iPod or on my iPhone.  Perhaps most importantly, I always have it (and any other videos I’ve downloaded) with me.

Here's a comparison of alternative approaches to anytime, anywhere video:

Currently, only Apple and the iPhone enable me to seamlessly move content between mobile, my computer, and my TV

Hence, the Kung Fu Panda Problem:  Not only am I now unlikely to buy the Kung Fu Panda DVD or to rent Kung Fu Panda from Verizon or Comcast On Demand, but – having experienced this just once – I am also unlikely to purchase or rent any video from these providers until they can match the value and seamless integration provided by Apple.

Worse yet, every day thousands of new iPhone users discover this for themselves, and this pattern will extend beyond iPhones and into WebOS, BlackBerries and Android devices as the multimedia smartphone experience improves.  It is likely to be easier to move from smartphones back into other devices in the home than the other way round for a long time to come.

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