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Warner Bros. recently announced the acquisition of Flixster/Rotten Tomatoes in an effort to further expand the company’s presence in the digital space. If you recall, Flixster acquired Rotten Tomatoes in early 2010 from IGN Entertainment (property of News Corporation). This acquisition, coupled with the trials of Facebook and iOS sales further suggests Warner Bros is seeking to forge more direct relationships with consumers. All of these new elements in the content landscape, be it “TV Everywhere” initiatives, HbbTV, Ultraviolet, or content to connected CE devices rely on remote access to some extent. ABI Research explored this developing market further in an over the top report.

Recently, however, there have been a number of large scale data breaches or interruptions in cloud based services. Amazon Web Services had an outage (leaving some B2B customers without service), Yahoo! Mail and Flickr was down to some users, and Sony’s PlayStation Network has been offline since April 20, 2011, following the “external intrusion” (offline as of May 4).

In Sony’s case the potential repercussions could extend further as personal data from the 70+ million PSN users (and possibly account data from Sony Online Entertainment MMO services) was potentially stolen. In addition, while Sony has not confirmed nor officially denied the loss of credit card information there has been reports of hackers trying to sell this data online and some potential victims of identity theft/credit card fraud have surfaced as well (possibly linked to this PSN intrusion).
While these incidents do not necessarily reflect poorly on the efficacy of cloud based services it does perhaps call into question its ultimate scope or reach. Something other ABI Analysts are pondering as well, as evidenced by John Devlin’s recent post “How will Sony’s mis-adventure affect the future development of the cloud?
The shift however is perhaps already evident with media, where more consumers and services are migrating from physical copies to digital, which engenders a greater reliance on the cloud. Supporting this trend is the expansion of mobile broadband, hotspots, and fixed broadband services, but is this enough to overlook potential hurdles/drawbacks?
It is true that many consumers already rely on email or social networking services over more traditional forms of communication, but as we move more of our daily activities online the importance of the connection to the Internet (and availability of services) likewise grows in kind. Take movies/TV for instance. Many consumers are quick to complain if the cable or satellite feed is interrupted or lost, would this standard not hold true for cord cutters who rely on online content as well? This is not limited to the on/off metric alone, but also the quality of service. Physical media may be cumbersome (e.g. storing discs), but in most cases it can still be enjoyed without relying on an external service or broadband connection.
It is, however, hard to imagine consumers making a significant shift away from broadband services/content, even with the threat of stolen data. In fact many consumers hold a rather low valuation for their personal information; no this does not mean consumers would care little if their personal information were to be stolen, but if we consider how much information about our private lives is made public (or given to third parties) the breach at Sony starts to feel less severe.
Take for instance “loyalty cards.” Many consumers are perfectly willing to give these retailers copious amounts of data about their shopping habits (or gambling, as the case may be) for rather basic rewards, be it discounts (or cash back) or contests. How about home addresses? Some social networkers have no problem posting personal information online and lest we forget about sites like Spokeo.com, where addresses for many individuals are readily available. Yes credit card information is different (and so is large collections of personal data), but much of our lives are no longer private and certainly not immune from identity theft.
In the end change will continue and whether the infrastructure and cloud is ready, more consumers and services will undoubtedly come to rely on it. As for security and personal information, the breach at Sony and Epsilon will certainly not be the last, but if companies learn from these cases then the end might justify these bumps in the road, as it were. And perhaps consumers will start to think more consciously about the choices they make with their identity and the value assigned to their data.

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