The Fairfax Digital and ninemsn media battle
For the last two years we have been reporting on the remarkable turnaround of Fairfax Digital – from a company that was floundering in the digital media space to its present leading position.
At the same time the reverse is happening to ninemsn. It is rapidly losing its lead in this space.
The reasons are fairly clear. Developments are unfolding along very similar lines to what happened in the case of the earlier Internet portals and Walled Gardens. We have been analysing this market since the early videotex days in the 1980s and the developments are strikingly similar. Trying to second guess where users are interested doesn’t work in the age of the (open) Internet.
Once the users are more familiar with the use of online services, they become far more selective in their online choices. Inexperienced users use the broad media portals to get started but as soon as they are comfortable with the services they start creating their own personal ‘portals’, limiting their use to the services that interest them. They are also quickly bored by services that do not keep up with the latest trends and technologies.
While the digital media market is far from saturated, the number of less experienced users is declining. Fairfax Digital has established itself as a highly specialised digital news service but ninemsn has failed to develop a more focussed approach. It is still trying to be all things to all people. This approach may also be related to a decrease in media focus on the part of the parent company.
Partly due to a lack of proper broadband, both Yahoo!7 and ninemsn have failed to properly exploit the digital entertainment market. In the absence of video-quality broadband these companies are unable to develop interesting new video content for their portals. Furthermore, ninemsn suffers from the fact that its parent company was/is a quarter-owner of Foxtel. This pay TV service is shielded from broadband competition because of its 50% ownership of Telstra. The incumbent telco has kept its broadband quality low so as not to compete with Foxtel.
While better broadband services will eventually allow both media companies to develop more attractive content, the current situation is threatening to become a critical issue for ninemsn, which is arguably struggling for survival.
Fairfax Digital is also suffering from the lack of quality broadband, and from the stranglehold Telstra has on this critical infrastructure. Because it is a relative latecomer, however, there is still time for it to take the next step, to video-based broadband.
From a position of strength, Fairfax Digital has a good chance of being able to offer a more focussed service to the customer and build out future online services from this basis and it might therefore have an advantage over ninemsn.
One thing is certain – there are some interesting media battles ahead of us.