Late last week, Thomas Owadenko, CEO of Octoly, a marketing software company that released a report on YouTube and video games last June, noted that all-time YouTube views of fan-created Minecraft videos are now up to 47 billion, an increase of 16 billion just since the report was released. Underscoring how robust Minecraft's fan community is, just 228 million of these views occurred on Minecraft creator Mojang's own YouTube channel.
Minecraft is a true "unicorn," a one-of-a-kind video game empire built with virtually no paid marketing, which partly explains why Microsoft was willing to pony up $2.5 billion for the company in September. But while Minecraft itself may be a unicorn, its success on YouTube says a lot more generally about the video industry's new rules - including serious challenges for industry incumbents.
The folks at Microsoft are determined to make Xbox 360 a winner in the free-for-all to bridge broadband-delivered video to the TV. Yesterday at E3, Microsoft announced a number of enhancements for Xbox and Xbox LIVE (the console's gaming and content marketplace), further blurring the lines between gaming and entertainment, and raising the stakes for other single-purpose convergence boxes. The new features include:
Of course, Xbox 360's key advantage in moving into entertainment is that it has a huge installed base of early-adopter gamers to leverage; in fast Microsoft said last week that it has sold over 30M Xbox 360 consoles to date and that there are over 20M active members in the Xbox LIVE community (not only a subset are Gold members able to access some of the entertainment offerings like Netflix streaming). Little has been disclosed about Netflix Watch Instantly consumption since February when the companies said that 1M LIVE Gold members had consumed 1.5B minutes of video in the first 3 months of availability.
Microsoft isn't forgetting that Xbox is still primarily a gaming platform; yesterday it rolled out a slew of games for Xbox, including "The Beatles: Rock Band" with Ringo and Paul making personal appearances. Xbox also unveiled its "Project Natal" a controller-less, 3D sensor that detects a gameplayer's movements. All of these will continue to drive console unit sales.
No doubt there are plenty of other things the Xbox 360 team has planned to make the console a highly attractive "over the top" option for those considering cutting the cord on their current video service provider, though Xbox 360 is not being positioned this way - yet.
What do you think? Post a comment now.
Welcome to December and to the home stretch of 2008. Following are 3 key themes from VideoNuze in November:
Cable programming's online distribution narrows - Last month I concluded that cable programmers (e.g. Discovery, MTV, Lifetime) are going to become much more sparing when it comes to distributing their full programs online. As noted in "The Cable Industry Closes Ranks," after hearing from industry executives at the CTAM Summit and on the Broadband Video Leadership Breakfast, it has become apparent that the industry is going to defend its traditional multichannel video subscription model from broadband and new "over-the-top" incursions.
Both programmers and operators have a lot vested in this successful model, and are surely wise to see it last as long as possible. Subscription and affiliate fees are particularly precious in this economy, as the WSJ wrote on Saturday. Still, many VideoNuze readers pointed out the music industry's folly in trying to maintain its business model, only to see it turned upside down. Many predicted the cable industry is doomed to follow suit. Truth-be-told though, as I wrote in "Comcast: A Company Transformed," major cable operators are already far more diversified than they used to be. Broadband, phone and digital TV (+ add-ons like DVR, HD and VOD) have created huge new revenue streams. Surging broadband video consumption only helps them, even as "cord-cutting" looms down the road.
Netflix moves to first ranks of cord-cutting catalysts - Three posts in November highlighted the significant role that Netflix is poised to play in moving premium programming to broadband distribution. Most recently, in "New Xbox Experience with Netflix Watch Instantly: A 'Wow' Moment," I shared early reactions from a VideoNuze reader (echoed by many others) to receiving a subset of Netflix's catalog through Xbox's recently upgraded interface. Netflix CEO Reed Hastings highlighted the increasing importance of game devices in bridging broadband to the TV in his keynote at NewTeeVee Live this month (recapped here).
Still, Netflix lacks the rights to deliver many movies online, a problem unlikely to be rectified any time soon given Hollywood's stringent windowing approach. As such, in "Netflix Should be Aggressively Pursuing Broadcast Networks for Watch Instantly Service," I offered my $.02 of advice to the company that it should build on its recent deal with CBS to blow out its online library of network programs. In this ad-challenged environment, I believe networks would welcome the opportunity. Hit TV programs would help drive device sales, which is crucial for building WI's adoption. While the Roku box is a modest $99, other alternatives are still pricey, though becoming cheaper (the Samsung BD-P2500 Blu-ray player is down $100, now available at $300, I spotted the LG BD300 over the weekend for $245). A robust Netflix online package would be poised to draw subscribers away from today's cable model.
Lousy economy still looms large - Wherever you go, there it is: the lousy economy. Though the market staged a nice little rebound over the last 5 days, things are still fragile. Across the industry broadband companies are doing layoffs. This is only the most obvious of the side effects of the economic downturn. Another, more subtle one could be downward price pressure. As I wrote in "Deflation's Risks to the Broadband Video Ecosystem," economists are now growing concerned that the credit crunch could lead to collapsing prices and profits across the economy. I noted that such an occurrence would be particularly damaging for the broadband industry, where business models are still nascent, so ROIs and spending are softer.
Here's to hoping for some good economic news in December...
What do you think? Post a comment now.
That was the reaction that VideoNuze reader and digital media public relations executive Jeff Rutherford had after downloading the "New Xbox Experience" (or NXE) to his Xbox 360 and activating Netflix Watch Instantly. Jeff relayed the details to me in an email and phone call yesterday, adding that it felt comparable to his (and many others') first experience with TiVo.
Hyperbole? Maybe. I'm always mindful about how gadgeteers' early wows seem to melt away when new technology products reach the broader mass market. Still, the Xbox 360/Netflix Watch Instantly integration seems promising on at least three fronts.
First, Xbox 360 is a relatively mainstream device that has its own clear value propositions, thereby driving a sizable footprint that is only going to grow. Second, Netflix's Watch Instantly is a value-add to its subscription service, requiring no incremental fees, or special new add-on hardware to Xbox 360. And third, as Jeff reported, it was very easy to get going: he was given a code to input online and when he returned to his Xbox, his Watch Instantly queue was displayed there, awaiting his on-demand selections.
These benefits - large distribution, no extra fees, no new hardware and easy install/strong user experience - are all key to a successful broadband-to-the-TV service. But equally, if not more important is content selection and value. This is where the Xbox 360/Netflix implementation hits a speed bump, at least for now.
As I explained recently in "Netflix Should be Aggressively Pursuing Broadcast Networks for Watch Instantly Service," today's windowing model puts the company is in a serious bind with respect to getting top-flight Hollywood films. While Jeff reported seeing some strong titles like Disney's Ratatouille (and other films he noticed carrying the Starz watermark), the reality is that Watch Instantly's catalog is still a small sliver of Netflix's DVD-by-mail catalog and will remain so for some time to come.
Further portending the difficulties of what's ahead for Netflix as it navigates Hollywood's minefields is early word, courtesy of Joystiq and other blogs, that all of Sony's Columbia Pictures movies have been disabled for XBox 360 Netflix users, due to licensing issues. While we may all be rooting for Netflix to find deal terms with Sony and the others, the realist side of me says that Hollywood's overseers understand that the Xbox 360 integration (and others TBD) have real significance in the relentless push to digital delivery. So before the proverbial horse gets out of the barn, they want to ensure the right deals are in place for them to capture appropriate value.
While that drama plays itself out, Netflix would be wise to do everything else it can to bolster Watch Instantly content value and selection. As I wrote in the prior post, incorporating broadcast programs should be a top priority. Also high on the list should be well-branded, high-quality broadband-only content.
Netflix has a very interesting opportunity to accelerate the Watch Instantly adoption curve, leveraging the huge installed base of Xbox 360 users and Microsoft's UI improvements (more on NXE's new look at Engadget if you're interested). With proof of its success in hand, Netflix's negotiations with recalcitrant studios can only be helped along. Meantime, Xbox 360 is getting another strong (albeit likely temporary) value proposition to compete in the game console space. And consumers win - as Jeff pointed out - by gaining ever-better access to the content they want.
What do you think? Post a comment now.
The broadband content provider Crackle is notching a win with its new comedy/interview series "The Jace Hall Show." I received a press release that it generated 500K visitors in the first two days following its launch on June 5th and a million to date. I'm always intrigued with what kinds of original broadband programs are working - and why - so I grabbed some time yesterday with Mary Ray, Crackle's VP of Marketing to learn what's behind Jace's success.
For those of you like me who are not gamers, Jason "Jace" Hall is probably unfamiliar. But Mary explained that if you're in the gaming community he's a fairly well-know producer who has a wide network of relationships in the industry. His show brings you into the world of his relationships, making you feel more connected to gamers' movers and shakers. And since he has his finger on the pulse of what the young male gamer audience is looking for, that gives him a real edge. Plus Mary believes that Hollywood still hasn't paid much attention to this market, despite gaming's huge following.
In the program's first episode Jace provided a sneak peek at a Duke Nukem Forever game that has reputedly been in development for 12 years. Gaining this type of access is practically like having exclusive content. Mary said that Crackle didn't do any advance paid marketing for the show; rather the audience was driven purely by word-of-mouth and buzz-building. I joked with Mary - spend no money but gain a big audience - the show sounds like a marketer's dream!
I asked Mary what she thinks the most important takeaway from Jace's early success is. Her feeling was that tapping into what the audience is hungry for is the key. While I agree, I'd go a step further. I think that trying to find talent that already has a following - whether in gaming, TV or some other medium - is a genuine way to improve a program's odds of success. I'm not necessarily talking about A-list talent per se, but rather talent that is at least known within some kind of niche (e.g. finance, comedy, woodworking, etc). That's not say "don't go with unknown talent looking to break out," but I do think it's important to recognize that doing so carries more risk.
The whole area of original broadband content is surging with players like Crackle, Next New Networks, 60Frames, ManiaTV, Break, Heavy, MyDamnChannel, FunnyorDie and lots of others pioneering the model. It's going to be very interesting to learn more about what works and why.
What do you think works in original broadband video? Share your comments now!
CES 2008 broadband video-related news wrap-up:
NETGEAR® Joins BitTorrent™ Device Partners
Categories: Advertising, Aggregators, Broadband ISPs, Broadcasters, Cable Networks, Cable TV Operators, Devices, Downloads, FIlms, Games, HD, Mobile Video, P2P, Partnerships, Sports, Technology, UGC, Video Search, Video Sharing
Microsoft grabbed the early PR spotlight at the Consumer Electronics Show (CES), now underway in Las Vegas, announcing a variety of deals across the broadband video spectrum. The deals, announced by Bill Gates in his traditional night 1 keynote, reinforce Microsoft's intentions to play multiple roles in what Gates calls the "first true Digital Decade."
Here's a look at Microsoft's deals and why they matter:
NBCU 2008 Olympics on MSN, using Silverlight
Microsoft and NBC, which has the broadcast rights to the '08 Summer Games from Beijing, announced that MSN would be the exclusive partner for NBCOlympics.com including thousands of hours of live video coverage, and that Silverlight, which is Microsoft's "Flash-killer", would be used. As I mentioned in my "6 Predictions for 2008", the '08 games are going to be the biggest broadband video event yet. The deal gains MSN lots of traffic and Silverlight lots of exposure and downloads, not to mention serious validation as a live streaming platform if it executes well.
ABC/Disney and MGM content on XBox LIVE
In a further move to bolster the premium-quality content available in XBox LIVE (the content offering that accompanies XBox 360), Microsoft announced that both ABC/Disney and MGM would now be providing both SD and HD content. These moves bring XBox LIVE's catalog closer to parity with iTunes, while keeping up the competition with Amazon Unbox and other stores. Separately, Microsoft said that XBox racked up 17.7 million units sold during the '07 holiday season.(correction, Microsoft press release misstated this number. Holiday sales were actually 4.3 million units, bringing cumulative units sold to date to 17.7 million, thx Karl)
XBox users have been remarkable active purchasers and downloaders using XBox LIVE, and previous briefings I've conducted with XBox executives suggest that the initiative has been particularly successful with HD. Since Xbox is purchased primarily as a gaming platform, it serves as a great Trojan horse opportunity for Microsoft to gain broadband access to the TV. Meanwhile, XBox LIVE has served as the deal unit for Zune's library as well, so these moves are important to watch as they benefit Microsoft's efforts to dislodge iPod from its perch as the leading digital media player. Only disappointment here is no ad-supported counterpart was announced for ABC programs, leaving AOL as ABC's only announced broadband syndication partner, as best I can tell.
BT and XBox 360 Integration
Microsoft leveraged Xbox 360 for another convergence play, announcing with BT that the company's "BT Vision" IPTV service would be available for XBox 360 owners as an integrated service offering. This means that no separate set-top box would be required for BT Vision subs. Though the box won't roll out until mid '08, this concept has compelling upside for both sides and could be a nice blueprint for future IPTV deals. It eliminates set-top capex for BT, while providing strong marketing benefits to both parties, helping drive broadband/TV convergence on the back of the popular XBox gaming console.
Showtime, TNT and CNN with new apps on Mediaroom, Samsung supporting Extender
Elsewhere, Microsoft announced that Showtime, TNT and CNN would be creating new apps for Microsoft's Mediaroom IPTV platform, which it says is now installed on 1M set-tops globally. And lastly, that Samsung will support Extender for Windows Media Center, which means that HD content can be sent over wired or wireless-N networks from PC to TV. Extender hasn't caught on yet, but Microsoft is continuing to push it as a bridge device. I've yet to test it, but have that on my list of to-do's.
Taken together, these announcements from Microsoft show the company's vast resources allow it to play a role in all aspects of the broadband era - software, devices, services, content, gaming, etc. Less pronounced in these deals was the company's recently added online advertising prowess, which will soon be applied to broadband video as well. Stay tuned for news on this front as '08 unfolds.