We all know that times are tough. As consumers try to find ways to cut costs, Fifth Avenue designers are flocking to strip malls, discount stores are introducing even more affordable designer clothing lines, and celebrity chefs are opening gourmet sandwich shops instead of posh restaurants. “Cheap” is definitely the new “chic.”

Prepaid service is becoming the “cheap chic” of the wireless world. No longer just for people with bad credit, prepaid services gained online interest as the economy faltered. However, this interest isn’t coming to the prepaid market veterans like Virgin Mobile and Tracfone, it is coming to the new and smaller prepaid players in the market. As the chart below illustrates, although online traffic to Virgin Mobile (in red) and Tracfone (in green) have not increased, Metro PCS (in blue), Leap (in orange) and Boost (in black) saw traffic increase 42%, 80% and 93% respectively year over year.

The emergence of unlimited plans, where consumers pay a fixed price for all the services they can use each month, may be the secret ingredient for such strong growth. For example, Boost’s unlimited plan offers unlimited talk, text, web and push-to-talk service for $50 a month with no contract or credit check. Price advantage along with aggressive online and offline marketing (including several memorable TV ads) seems to be doing the job for Boost. In March, almost 40% of visitors to boostmobile.com - about half a million people - went to the Unlimited Plan page.

Unlimited plans aren’t unique to prepaid-only carriers. Sprint’s Simply Everything plan has been around for over a year and both AT&T and VZW offer versions of unlimited plans. But prepaid carriers are often undercutting the competition, and without a commitment. AT&T, T-Mobile and Verizon Wireless have also been relatively slow to capitalize on the new-found interest in prepaid (although VZW recently launched a new, highly flexible prepaid plan). As the chart below illustrates, the average number of unique visitors expressing interest in prepaid handsets on the AT&T, T-Mobile and Verizon Wireless websites has declined 45% in the first 14 weeks of 2009 compared to the same time last year. (Sprint doesn’t offer a prepaid option through its brand.) A large portion of this decline was seen last summer when the iPhone 3G launched. However, prepaid interest has continued to decrease (15% in the last 6 months).

It seems that while bigger prepaid carriers along with AT&T, T-Mobile and Verizon Wireless are hesitating on the sidelines, the little guys are riding the “cheap chic” wave. In this weak economy, carriers have to adjust quickly to the demands of the much more price-conscious consumer or risk loosing their customers to the new kids on the block.

Gone are the days when the Internet was for checking email or searching for the meaning of the word “doppelganger”. Now booking vacations, paying bills and shopping are every day online activities for most people. With such an abundance of things to do on the Internet, many companies find themselves challenged to keep their customers interested and engaged.

One of the new and cool things you can do online that’s near and dear to me personally is watch videos. And I don’t just mean YouTube. More and more people (me being one of them) are developing an appetite for watching full-length movies and/or TV shows online. Advertisers are interested in online video too, hoping that these users will provide an engaged audience for their marketing messages.

Online video sites have delivered promising stats recently. For example, Netflix’s WatchNow, which allows subscribers to any Netflix plan to watch full-length movies and TV episodes online from their collection, had 69% more people using the service this quarter as compared to last quarter. Veoh.com, which allows users to view and share short YouTube-like videos as well as stream full-length TV show episodes, has grown from just under 1.5M Unique Visitors one year ago to over 6M in February (although their traffic has likely declined due to the recent writers’ strike). Barely out of its beta phase, the new kid on the block, Hulu.com, offers both full-length movies and TV shows including the most recent in-season episodes. Despite its newness it has already started gaining traction.

With video becoming an interesting and engaging activity online, everyone is trying to capitalize. Take telecommunications providers for example. Most of them were in business long before the Internet existed and many of us rely on them for such necessary services as our home phone line, cable TV and broadband Internet. Our neighborhood Telcos have since gone beyond mere service providers by building and maintaining customer-centric portals (e.g. myembarq.com or comcast.net). Driving engagement on these portals by offering video viewing (as well as news, email and other activities) also brings Telcos a piece of the ad revenue pie – as long as they can get their customers there.

So are their attempts working? Virtually all customer portals currently offer short news videos and movie trailers but that hasn’t been enough to generate interest yet.

Only 10% of Comcast.net visitors also go to its videos section, and the numbers are even lower for other Telco providers. User-generated content has proven difficult to achieve as well. Comcast tried it with Ziddio.com which only attracted 0.2% of Comcast.net traffic in February.

On the other hand, an emerging success story that has effectively leveraged increased interest in watching TV online is Comcast’s Fancast service. Fancast.com successfully integrates content like OnDemand listings and movie trailers with the ability to watch free full-length episodes of popular TV shows.

Judging by recent traffic this approach appears to be working. The number of fancast.com Unique Visitors has nearly quadrupled since November.

Online video is clearly attracting consumer attention. However the question remains as to which providers will capitalize on the trend before watching TV & movies online becomes as common as checking email. Can portal sites become “the place to watch online video”? This story should be one to watch in the future. Stay tuned.

I think we can all agree that Netflix fundamentally changed the movie rental market. Netflix’s mail delivery and no late fee model lowered the price of rentals, enabled us to choose from more options and forced Blockbuster to re-engineer its entire business. Not bad for a decade’s worth of work. It begs the question – what else can be Netflixed?

CDs? Not really, LaLa.com has yet to take off.
Used DVDs? Nope. Peerflix has literally plummeted.

Turns outs the winner is designer handbags and jewelry. For a fee as low as $5/month (with a commitment to a 12 month membership) bagborroworsteal.com allows its members to rent designer bags ranging in price from a hundred to several thousand dollars. Ladies (and I am pretty sure that the majority of their subscriber base is composed of ladies) can opt for weekly or monthly rentals and if they absolutely fall in love with a certain bag they can “steal” it (ie. buy it at a discounted price). Similar to Netflix, members keep a queue of bags and jewelry they want to borrow, a wish list and can shop their favorite styles at an “outlet store”.

Sound crazy? It isn’t - over two hundred thousand people are interested each month.

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