Where Did It All Go Wrong?

Adrian J Cotterill, Editor-in-Chief

You know the other day when we said that Google Alerts occasionally throws up the odd reference? Well today we received one of those ‘anomalies’ and what with all the other (bad) news coming out of the European industry at the moment it made us think “where did it all go wrong?”

First, let’s re-iterate. Several other blogs and industry portals have picked up on our stories about the insolvencies with regard Big Media Group in the United Kingdom, Digital Poster AS in Norway and most recently according to Joseph Perez Pla who writes on his blog on Friday last…

Two of the main DS operators have been placed under the protection of the court (Chapter 11) facing financial troubles. One is Novax, the first supplyer of drugstores in France; the second is Cyber Vitrine, which bought Jidea two years ago. Judgements of courts for both companies are officials since last april.

What Google Analytics pulled back for us was a Lovelace Consulting story from well over 2 years ago (dated 05.12.2005)…

Cabvision expands taxi-based mobile TV

Cabvision, the company that installs video screens in London taxis, aims to expand its installed base from 1,000 black cabs to half of the total taxi fleet by 2007.

Cabvision marketing director Tom Paton told The Business newspaper: “We currently have penetration of about 10% of London’s black cabs and in mid-2006 intend to have televisions in another 1,000 cabs, giving us around 20% penetration. In 2007, we intend to have a penetration of almost half of all London’s black cabs.”

The video screens are connected to a Micosoft XP computer which receives television signals via a roof-top aerial. Live news feeds and programmes come from the BBC and other providers via GPRS and 3G networks, reported The Business.

“Cabvision has roughly the same number of viewers as a magazine like the Economist does readers,” added Paton. “And our advertisers appreciate this.”

Lovelace Consulting | 05.12.2005

Cabvision here talking a good story – starting off at 10% penetration, then a year later at 20% and then, rather grandiosely at 50% by last year (2007).

They are still at the original 1,000 cabs – i.e. 10% penetration. Did the advertising revenues that they figured would come not come which stalled the rollout?

Most probably, in fact, most obviously yes! Paying each licensed taxi cab UK PDS 1,000 each year, EVERY year for the privilege of having the screens in the back probably didn’t help their business plan and financial spreadsheets much either!

In 2007 they re-negotiated this deal down to a more manageable UK PDS 750 but still, with a 1,000 taxi cabs that is a total of UK PDS 750,000 up front that you have to claw back from your advertising revenue before you have even started selling anything! Add into that the cost of a screen, computer, installation etc and you are looking at well over UK PDS 2 Million to do every 1,000 cabs.

Big Media Group’s business model seemed to make some sense and most probably they just over committed themselves in terms of growth and mis calculated cash flow.

Digital Posters in Norway gave the equipment away to venues, hoping to get advertising revenues back quickly enough in order to cover their costs – a very hard model to make work – just ask Firebrand Media in the UK how hard it is, even with really good retail experience, knowledge and understanding – and an even harder to make work for you if you want to scale quickly – just where does all that CapEx money from day one come from?

As David Haynes over at sixteen:nine / Broadsign says – he sees an awful lot of poor and unsustainable business models out there.

Here’s hoping it’s just the weak and unprepared going to the wall at the moment!

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