Analysis Feed 2010-03-17 23:04:54-04:00 2010-03-17T10:04:16-04:00 2010-03-17 10:04:16 News this morning of a $30 million advertising campaign being launched by 8 Hollywood studios and 8 cable operators promoting "Movies on Demand" is fresh evidence that the battle over movie rentals is intensifying. According to the press release, the 12-week campaign, dubbed "The Video Store Just Moved In" is meant to raise consumer awareness of the convenience and affordability of renting movies on cable.

Cable Video-on-Demand (VOD) has been around for a long while (in fact 20 years ago my summer internship for Continental Cablevision was studying the ROIs for VOD's precursor, "Pay-per-view"). What's new more recently is the growth of so-called "day-and-date" availability - which means movies are released to VOD at the same time as they become available on DVD. The other recent phenomenon is the widespread adoption of digital set-top boxes and other technologies which makes selection, ordering and delivery easier than ever.

Day-and-date availability is a key competitive differentiator for cable vs. other options, though on the surface it seems somewhat incongruous that studios are on board with this considering their desire to protect DVD sales (this was the key goal of the 28-day "DVD sale" window Netflix and Warner Bros. recently created). Yet Kevin Tsujihara, president of Warner Bros. Home Entertainment Group said that apparently research has shown that simultaneous VOD release doesn't hurt DVD sales. All titles Warner Bros. releases to VOD this year will have day-and-date availability.

The day-and-date advantage is evident at least vs. Netflix for the 9 movies the press release cited as the opening slate being promoted: "Precious," "New Moon," "Ninja Assassin," "Pirate Radio," "Astro Boy," "Bandslam," "Did You Hear About the Morgans," Fantastic Mr. Fox" and "The Fourth Kind." A search on Netflix for the 9 revealed that 5 are listed as "Short wait," 1 becomes available on Mar 20th, 1 on Mar 23rd, and 2 on April 13th (none are available for streaming). However, it's a different story for Amazon - all of the cable VOD movies are currently available for rental from Amazon (except "Mr. Fox") and for purchase. The Amazon rental price is $3.99 for each, whereas the rental price from Comcast (my service provide) is $4.99.

For now anyway, it seems Hollywood studios have decided that cable VOD and online rental firms get day-and-date access, while subscription services like Netflix wait longer (btw Redbox too is being pushed into the "wait longer" category). According to the NY Times article, this is likely because VOD and online rental give studios a 65% share of revenue vs. lower percentages for other outlets.

For consumers, the cable VOD option is likely the most convenient and instantly gratifying. There's no new box to set up or pay for as with Roku, TiVo or another, which would be needed to access Amazon VOD, for example, on TV. For those that haven't bridged broadband to their TV with such a box or a direct connection, on-computer viewing only would be a limitation in the experience. Still, while the day-and-date option is key for those consumers who just have to see a particular title right then, because it's a la carte, it's a far more expensive option than a monthly Netflix subscription, which starts at $8.99/mo. Convenience clearly has its price.

Consumers aren't monolithic though; there isn't one right or wrong model. Each viewing option offers pros and cons and consumers will choose which one, given the particular moment or circumstance, best meets their needs. With the battle for movie rentals escalating, the real winner here looks like the consumer who is being presented more choices than ever.

What do you think? Post a comment now (no sign-in required).
]]> 2010-03-16T10:17:15-04:00 2010-03-16 10:17:15 The FCC released an executive summary of its "National Broadband Plan" yesterday (more details are expected today), which it has been developing for most of the last year at the direction of Congress. Regardless of your political beliefs, when the government decides to weigh in on key telecommunications issues, it's important to understand its positions and their potential implications. This is particularly true given how dynamic the digital, broadband and mobile landscapes are.

Based on my reading of the Executive Summary, here are my first reactions to some of the most important parts of the plan:

Spectrum reclamation/mobile use - One of the most anticipated pieces of the plan is what the FCC would propose to do with spectrum currently allocated to local broadcasters. Many believe that with the shift to digital delivery, broadcasters should give back some of their spectrum for more pressing uses - mobile being at the top of the list. On the other hand, broadcasters are seeking to keep their spectrum for HD and mobile TV services.

The FCC's proposal, to free up 500 megahertz of spectrum within 10 years, of which 300 megahertz would be used for mobile within 5 years, seems like a good starting point. It pragmatically recommends that the spectrum be freed up through "incentive auctions," with some of the proceeds going to broadcasters. This means broadcasters should be able to run business cases and economic comparisons on the pros and cons of keeping or giving back some of their spectrum, with the government tweaking the incentives to accomplish its bandwidth goals. Given the exploding interest in mobile devices and video apps (e.g. March Madness on iPhones), more bandwidth for mobile use is crucial to achieve.

Competition/transparency - While the FCC makes a host of transparency recommendations for broadband service providers, it wisely did not include "open access" mandates, where broadband ISPs' networks would be opened up for others to use. That would have upended broadband ISPs' business models, likely leading to years of litigation and little progress toward desired goals. The FCC's recommendation for things like market-by-market price and service benchmarking and service disclosures are consumer-friendly and not onerous to broadband ISPs. To the extent that consumers gain access to the information they'll help fuel competition as well.

Promote rural access - The FCC correctly wants to address the issue of broadband "haves" and "have nots," brought about by the hard economic realities of wiring less dense, rural communities. Much as the government sought to subsidize prior infrastructure projects like electricity and telephone service, the FCC now seeks to shift necessary money from the Universal Service Fund to support broadband buildouts in rural America. So long as the FCC policy doesn't spread to more suburban or urban markets that already have robust broadband infrastructure, this seems like sound policy.

Expand digital literacy - A small item in the overall summary, but one which could be quite impactful is the idea of creating a "National Digital Literacy Corps" to teach digital literacy and raise broadband adoption. The practical reality is that even the fastest broadband pipes mean little if citizens on the receiving end don't know how to use a computer or a web browser. Many people today live their lives digitally, but many others still don't. Incenting some of the former group to channel their energy and knowledge to the latter group is in everyone's interest.

The FCC understands how crucial broadband is and also articulates 6 longer-term goals (e.g. 100 million homes with 100 mbps access) which set the bar high for America to keep pace with other countries. Video delivery is already one of the key areas impacted by broadband adoption and under the new FCC plan it is poised for still further change. Overall, the FCC seems to recognize that broadband fuels further innovation in our economy and that it is important to be supportive of its continuing buildout. The Plan now has to make its way through reviews and approvals.  

What do you think? Post a comment now (no sign-in required).
]]> 2010-03-15T10:21:15-04:00 2010-03-15 10:21:15 Brightcove is announcing this morning that EMI Music has chosen the Brightcove platform to power its online video initiatives corporate-wide. According to Brightcove, the EMI deal means that all of the big 4 music industry groups, including Sony, Universal, and Warner, are now using its platform. Shifting to a heavy-duty platform like Brightcove is further proof that the music industry is getting more ambitious about its online opportunities.

While there has been much coverage over the years of illegal music downloading, online video on the other hand has become a big friend to the music business and to artists in particular, opening up new monetization and promotion opportunities. Music videos specifically are a key revenue opportunity for labels, through advertising and by licensing to 3rd parties for their distribution. Live streaming concerts, complete with behind-the-scenes extras have become extremely popular.  Social media, online playlists and video sharing have all contributed to music purchase/download behavior.  Going forward, the growth of video-enabled mobile devices (e.g. iPhone, Android, iPad, etc.) that make on-the-go playback and shared viewing the norm provides more momentum.

According to eMarketer, consumer spending on music is set to increase 11.4% annually over the next 4 years to $4.56 million in 2013, with all of the growth forecast to come from online. Most of this is assumed to come from a shift to subscription, cloud-based music services, and I would anticipate music videos and concerts playing a larger role going forward as well.

Though the specific business models are still evolving, I think that music videos have a long way to run. The recent launch of Vevo, by Sony, Universal and YouTube, and its almost immediate rise to the top 10 most popular video sites (32.3 million unique viewers in January according to comScore) is fresh evidence of how much users like online music video access. Music videos are the perfect format for today's online video user because they are short-form, can be played while performing other tasks and can be shared easily. When convergence devices that bridge broadband all the way to the TV become widespread, then longer-form programs will increase in popularity; until then music videos are in the sweet spot.

What do you think? Post a comment now (no sign-in required).

Note: Fred Santarpia, GM of Vevo, will be on the April 26th VideoSchmooze panel in NYC. Early bird registration opening soon, stay tuned.]]> 2010-03-11T10:23:34-04:00 2010-03-11 10:23:34 College hoops bragging rights won't be the only thing on the line when the NCAA March Madness men's basketball tournament kicks off next week. Also under the microscope will the performance of AT&T's 3G network, since CBS Mobile announced earlier this week that its new $9.99 premium iPhone app will offer live streaming of all the tournament's games over AT&T's 3G, EDGE and Wi-Fi networks. As with last year there will also be a free "lite" app that will offer on-demand clips only.

Presumably AT&T, CBS and NCAA have modeled how many concurrent streams could be requested under different penetration rates for the app and feel comfortable with AT&T's ability to support these in a quality manner. Let's hope for their sake they got the math right. I continue to hear iPhone users expressing frustration with dropped calls and 3G availability, particularly in Manhattan (in fact I've resisted getting an iPhone for this very reason). AT&T does seem to be getting more confident in its 3G coverage though; just last month it approved Sling's SlingPlayer app for use on its 3G network. In that case, I thought that because few people would likely buy the $29.99 app the stakes weren't that high for AT&T. MMOD is a different story; if AT&T's 3G network fails there will be a horde of angry hoops fans banging on its doors.

What do you think? Post a comment now (no sign-in required)]]> 2010-03-11T10:08:40-04:00 2010-03-11 10:08:40 Earlier this week, in "Will Nasty Fee Fights Fuel Consumers' Cord-Cutting Interest," I conjectured that last weekend's WABC-Cablevision retransmission consent fee fight (the most recent of many fee fights) would ultimately sow consumers' interest "cutting the cord" in favor of free, online-only alternatives. Obviously that would be bad news for multichannel video programming distributors (MVPDs), but it would also be bad for the whole video ecosystem that depends on consumer payments for its economics to work.

In this context it's only mildly surprising that subsequently this week a group of MVPDs including Time Warner Cable, Cablevision, DirecTV, Verizon and others petitioned the FCC to intervene and revise the retransmission consent rules (for what it's worth, I can't remember the last time MVPDs asked the government for anything, except to stay out of their business). In a sure sign of who currently has the negotiating leverage, broadcasters sent their own letter saying the playing field was level and in no need of a review.

With broadcasters intent on getting paid for their signals, there are many chapters yet to be written in the retransmission consent story. The big risk here is that the parties' jousting will ultimately kill the proverbial golden goose, with consumers getting fed up and deciding they'll make do with whatever they can get through the combination of good old-fashioned antennas and a cheap convergence device that hooks their broadband connection to their TV. Cord-cutting has lacked a strong catalyst to date, but history shows that a wronged consumer is a motivated consumer. The TV industry as a whole needs to figure out the retransmission morass before consumers take things into their own hands.  

What do you think? Post a comment now (no sign-in required)]]> 2010-03-11T09:50:31-04:00 2010-03-11 09:50:31 I've often remarked that one of the really impressive things about online video is that there's innovation at every level of the ecosystem; it's not just core infrastructure, delivery, "last mile," aggregation, applications, content, etc. - it's all of them at once that are rapidly advancing. This week's announcement by Cisco, of its new CRS-3 router, is further evidence of this dynamic. Though most online video users never think about them, Cisco's routers are one of the key building blocks on the broadband Internet. Cisco itself knows how important video is to its future; it has been publishing its "Visual Networking Index" Internet traffic growth forecast, which identifies video as the biggest single traffic generator in the future. Cisco CEO John Chambers has repeatedly said that "video is the next killer app."

The CRS-3's capacity of 322 Terabits per second scarcely means anything to most people, so as always, Cisco translated it into real-world examples: the whole Library of Congress downloaded in just over 1 second, every person in China making a video call simultaneously, every movie ever made streamed in less than four minutes. (On the first point, coincidentally I just read in the terrific new book, "Startup Nation - The Story of Israel's Economic Miracle" that it took the CRS-1, introduced in 2004, about 4.6 seconds to download the Library of Congress, so the CRS-3 shows significant improvement.)  Next time you're watching something on Hulu, YouTube, Vevo or elsewhere, note that more than likely there's a whole lot of Cisco plumbing helping deliver the experience.


What do you think? Post a comment now (no sign-in required)]]> 2010-03-11T09:45:05-04:00 2010-03-11 09:45:05 If you noticed a little "virtual sand" in your VideoNuze emails this week, that's because I've been posting from St. John, in the U.S. Virgin Islands, where I'm on a quasi-vacation with my wife. If you've never been, I highly recommend it. Lounging on Trunk Bay's powdery white sand and snorkeling in its crystal-clear green water is one of life's exquisite pleasures (see below). Apologies for slow responses to emails and voicemails this week. Tomorrow I'm taking the full day off, so VideoNuze will be back on Monday.


]]> 2010-03-10T09:11:35-04:00 2010-03-10 09:11:35 This year's "March Madness" men's college basketball tournament is just around the corner and in addition to the now-customary live streaming of the games (and this year an iPhone app for additional streaming), a new feature was introduced last week: "NCAA Vault" - a video index to every single moment in "Sweet 16" history for the last 10 years. NCAA Vault is powered by Thought Equity Motion, a technology provider that partners with media companies and rights-holders to digitize, deliver and monetize video assets. Last week I spoke with Thought Equity's CEO and founder Kevin Schaff to learn more about how the Vault works and the background of the deal with the NCAA.

Kevin explained that Thought Equity indexed all 150 of the Sweet 16 games' video with rich metadata for players, teams and highlights. This yielded a searchable database of 6,000 moments, which users of the Vault can tap into in a number of different ways. They can search by player, team, year, game or description of the play they're looking for. For more casual use, the  Vault also presents lists clips of great shots, blocks, plays and finishes, plus most outstanding players and current stars. In addition to being a standalone site, the Vault is linked to from the March Madness main site.  

When you search for a specific play, it will load and when done, the remainder of the game will continue playing until you want to move on. I can say from doing this several times that watching a play quickly and addictively morphs into watching several minutes of the game itself. Below the video window there's a text description of each play in the game. If you scroll the list and begin clicking on different plays what you'll immediately notice is how fast the new video loads and begins playing. Kevin explained that part of the reason is because the system is simply moving to a new cue point in the existing video file (in other words a new video file hasn't been created). This is a similar technique other indexes use; still, I don't think I've ever seen a new clip load as fast as these do. It's comparable to the experience of changing TV channels.


Thought Equity is very mindful of how, for some users, the Vault will be essentially a "stock video" database and so it has done several things to really enhance its value. Most important, it has created a Publishing Guide, which provides URLs to each of the moments so that writers and fans can search for incorporate links to just the plays they want. Conversely, if you're watching a video highlight and want to link to that moment, one click generates a URL for that clip. Thought Equity has even integrated the bit.ly URL shortener, so that you get a Twitter-friendly URL to use. Finally, Thought Equity has created an API so that 3rd parties who want to integrate the database, or pieces of it, with their own services, can do so easily.

Kevin explained that Thought Equity's model is to partner with media companies and rights-holders to license exclusive rights to their archived assets in order to create rich, searchable video databases. In the Vault's case, monetization is through advertising and CBS will sell the new high-value inventory. Thought Equity has worked with other media partners (e.g. Paramount, HBO, NY Times, BBC, etc.) with a monetization mix of advertising and licensing (i.e. the "stock" model). Over 10.5 million hours have been indexed to date with many more on-deck.

From a user's standpoint, the Vault is another exciting example of how the combination of online video and indexing technologies opens up access to memorable sports moments. Consumer usage creates the ad opportunity, but equally interesting are the myriad professional uses of the video. For bloggers and others running sports-oriented sites, the Vault opens a ton of new upside. Last week I wrote about how MovieClips.com is trying to create a similar Vault-like experience for movie clips; no doubt others will follow as the value of archived assets becomes increasingly apparent.

What do you think? Post a comment now (no sign-in required).]]> 2010-03-09T09:59:13-04:00 2010-03-09 09:59:13 comScore released its Jan '10 online video rankings yesterday, and while the numbers were still very strong, they did show declines from Dec '09. For example, in Jan, total monthly views were 32.4 billion, compared with 33.2 billion in Dec '09, a decline of 2.4%. To try to put this blip downward in a little more context see the chart below. I've called out the Dec-Feb period for the past 3 years. In prior years there have been slight to moderate decreases somewhere in this period. This might suggest some seasonality, based on limited historical data.
 


It's also worth noting that over the course of the last 3 years there have been 7 monthly sequential declines in the total monthly video views. Obviously nothing grows uninterrupted forever, and nobody should expect this from the online video market. Still, when you look at the overall growth curve, there can't be too many other Internet activities that have grown as consistently, with the exceptions maybe of social media (e.g. Twitter, Facebook, etc.).

Elsewhere in the comScore stats, YouTube remained the undisputed 800 pound gorilla for another month, once again maintaining its approximate 40% market share (39.4% in Jan to be exact). According to comScore, YouTube's market share hasn't been below 35% since May '08, when total video views were 12 billion. In other words, even as total views have almost tripled, YouTube has consistently held onto its market share. Pretty amazing.

Hulu also had another strong month, notching 903 million views (its 3rd best month) from 38.4 million unique visitors. Still, the unique visitor count tumbled by 13% from 44.2 million in Dec '09 to 38.4 million in Jan (by comparison YouTube increased from 135.8 million unique visitors in Dec to 136.5 million in Jan). As I mentioned recently, I'm looking for evidence that Hulu can expand its U.S. user base beyond the 35-45 million range it's been in for over a year.

One other point worth noting from the Jan data is that Vevo, the music video aggregation site just launched in Dec '09 broke into the top 10 with 32.3 million unique viewers and 226.1 videos viewed. Vevo's rapid growth is further testament to the popularity of music videos online and the continued importance of short-form.

What do you think? Post a comment now (no sign-in required).
]]> 2010-03-08T10:21:32-04:00 2010-03-08 10:21:32 Another weekend, another high-stakes fee fight between a multi-billion dollar media company and a multi-billion dollar cable operator. This time around it was Disney's WABC station in the New York City market in a standoff with Cablevision, which has 3.3 million subscribers there, with the Oscars broadcast the main hostage (WABC, which was pulled late Saturday night, came back on the air at 8:44pm subject to an initial agreement between the companies).

This fight, like recent ones between Time Warner Cable and News Corp, Cablevision and Scripps, plus others, is a no win PR situation for its combatants, and in my mind will lead to one inevitable result - heightened consumer disgust with the hyper-corporatized TV business, where CEOs who are paid tens of millions of dollars per year accuse each other of not being sufficiently focused on satisfying their customers. Inevitably, consumers' disgust will translate into interest in finding alternatives, particularly those that are cheaper. While the WABC/Cablevision brought out switching enticements from Verizon, the real competition is increasingly going to be "cutting the cord" and getting programming from online-only sources.

Generally I don't believe that there's latent cord-cutting interest waiting to explode (even as monthly subscription fees have grown and the amount paid to cable networks is readily available). The fact is that popular cable programs are so diffused across so many channels - and that most of these programs are not available online (the very issue TV Everywhere aims to address) - that cutting the cord is a practical impossibility in most American homes. Sports alone is the ultimate firewall in a huge percentage of homes. How many sports fans would willingly say goodbye to ESPN, Fox Sports or TNT?

That said, more fee fights, affecting more consumers, are certainly in the offing. While fee fights in the past have focused on amounts paid for cable networks, future fee fights are more likely to look like the WABC-Cablevision one - squabbles over how much cable operators should pay for broadcast stations. These fights are related to "retransmission consent" payments and reflect a very different dynamic unfolding between broadcast stations and cable operators.

In the past broadcast stations were plenty happy to have cable operators take in their feed directly, and then position the station on a low channel number, enhancing visibility. Now, however, with broadcast economics under extreme pressure, and intense broadcaster envy for cable networks' dual revenue model (monthly fees + advertising), monthly retransmission fee payments are the new normal. Never mentioned in broadcasters payment demands is the fact that they still have government-granted access to free broadcast spectrum which should likely be returned to the government if they want to operate more like cable networks. To the contrary, in fact broadcasters are arguing that government efforts to reclaim the spectrum for higher value mobile data uses are off-base. But that's a subject for another day.

Even as big media companies and cable operators are poised for future skirmishes, the online universe marches on. Convergence devices that bridge broadband to the TV are gaining further traction. And services like Netflix, iTunes, MLB and others are increasing consumers' expectations for what's expected and possible. As I've pointed out before, big media companies and cable operators have a mutually shared interest in defending the current subscription-based model. Nonetheless, how that model's riches are apportioned between the parties is what's being hotly contested. As they do this though, they risk killing the golden goose.

What do you think? Post a comment now (no sign-in required).]]>