During very informative presentations at my NAB panel discussion yesterday, there were 2 slides that really caught my attention. Both shared statistics, new to me, about video piracy and user behavior patterns. These statistics illustrate the important early online window just following when a TV program is aired. Capturing this audience spike can dampen video piracy and also be a big revenue opportunity for providers.
The first slide, shown below, was presented by Rob Adams, director of digital media operations at CTV, Canada's largest broadcaster. CTV offers both clips and full-length streaming episodes from its networks and select partner networks. In the slide below each line represents a single day's unique visitors for a specific TV series CTV offers.
I know the slide is a bit of an eye chart, so I'll summarize the phenomenon Rob explained. In this example a popular network show airs at 7pm on Tuesday. Notice how the purple usage line spikes during the hour of its run. Rob explained that users who go online to find the episode being aired realize it's not yet available and instead begin catching up on previous episodes. That new episode is posted around 2 am, and the spike in usage the following day is shown by the blue line.
Note the far lower behavior in the other lines and it is clear that the 24 hour window during and after airing a new episode is critical. It's also interesting to speculate on whether some users are beginning to look at online availability as pure VOD. If so, that would have implications on DVRs (i.e. why record a show when you've come to expect they'll all be posted quickly online?)
The second attention-getting slide was based on recent research by Akamai and Vobile, which used its digital fingerprinting technology to track the availability of illegal copies of an episode a popular program and their download volume. In the slide below, it is clear that although illegal copies are available immediately, the volume of downloads jumps by more than 500% the following morning (13 hours after broadcast).
What all of this demonstrates is that there is a real window of opportunity for premium video providers to slow video piracy and drive many new video views. By satisfying the obvious demand that users have for this content with legitimate distribution, providers can chip away at, though admittedly not eradicate, illegal sharing. If users gain confidence over time that their favorite programs will be available quickly, in high-quality and with a positive user experience (i.e. not overburdened with ads), the rationale to pursue the illegal route lessens. Conversely, video providers not responding to these viewer needs continue to leave themselves highly vulnerable to illegal behavior.
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
Among the many partnership announcements at CES this week, there are a number worth highlighting. Today I focus on the following three:
Viacom syndication - Viacom announced syndication deals for MTV Networks' stable of content with five leading broadband video sites: Dailymotion, GoFish, Imeem, MeeVee and Veoh. As those of you who have been following my previous posts know, I believe syndication is a critical engine in driving the advertising business model, which itself is the key to broadband video succeeding. As a result, I follow these syndication deals closely.
I've previously been critical of MTVN which appeared reluctant about syndicating its content when it launched its DailyShow.com destination site. However, with its recent deal with AOL, and now these five deals, it appears that MTVN does in fact believe syndication is the way to go. As one of the biggest cable network groups, MTVN is a key barometer for other networks' moves, so I view this as a real positive for the market.
Panasonic/Google - In this deal, Google and Matsushita announced that YouTube videos and Picasa photos would be directly accessible on new model Panasonic HDTVs launching in Q2 '08. Ordinarily I wouldn't be too excited about a deal like this, a permutation of which we've seen with other TV makers such as Sony.
Yet this one rises in potential importance because YouTube is not just the most popular video site - with 40% of all video traffic - but because Google is determined to turn YouTube into a platform for legitimate content distribution. This was underscored by the Sony mini-sode deal also announced this week, and the many partnerships YouTube has already struck with premium content providers. If successful (and there are many if's to be sure), YouTube would be far more than a scraggly collection of UGC. So, marry a broad-based premium video aggregator to HDTVs and you could see a new device/content model emerge.
BitTorrent device deals Netgear and D-Link - In a less publicized move, BitTorrent announced expanded deals with Netgear and D-Link covering a range of home networking products, with an emphasis on HD distribution. BitTorrent, which has been steadily legitimizing itself from its P2P file-sharing roots, has launched an aggressive SDK program called BitTorrent Device Partners, intended to permeate the market with its client software. BitTorrent also integrates easy access to its digital download store with these partners as well.
While I'm not very bullish about the market potential of bridge devices from companies like Netgear and D-Link, I do believe that P2P distribution has a real role to play in content distribution, especially for heavy HD files. I continue to see P2P as more of a "peer assist" play. To the extent that BitTorrent can continue getting its software into multiple devices, it gains validation and strengthens its potential to be a meaningful partner in the larger content distribution ecosystem.
Share your thoughts on these deals, and suggest others you think are noteworthy from CES!
Network or "net" neutrality, a confusing legislative concept being promoted by large online and content players, may be the hottest broadband video topic in 2008, at least according to Jeff Richards, VP of VeriSign's Digital Content Services, who makes his case at his blog Demand Insights.
I had the pleasure of informally debating net neutrality's merits with Jeff (who's officially neutral on the subject by the way) over cocktails at a VeriSign customer event I just spoke at. Jeff is persuasive about why net neutrality is such a hot button issue, and that its resolution - one way or another - has broad repercussions across the technology, content and Internet industries.
First, a primer for those not familiar with net neutrality. To date the Internet has functioned as a level playing field of sorts. Anyone putting up a web site could be confident in the knowledge that broadband ISPs would neither favor nor disadvantage one player's access to users over another's.
Big online content and technology companies now want to codify this tradition in legislation commonly referred to as net neutrality. Big broadband ISPs (i.e. cable operators and telcos) regard this as needless regulatory meddling, a classic "solution in search of a problem" that would unnecessarily limit their future business dealings and influence their investment decisions.
Interest in net neutrality legislation has waxed and waned, as lobbyists for the pro-net neutrality side (content and technology firms) try to convince legislators that this really is an important issue for constituents and that this isn't just a "rich vs. richer" debate that should be left to the industry's participants to figure out, while anti-net neutrality lobbyists (cable and telco firms) argue the opposite point of view.
So what might precipitate the resurgence of interest in passing net neutrality legislation? In two words, broadband video.
As Jeff points out, the massive adoption of broadband video, which still disproportionately comes from illegal video file-sharing networks, is motivating ISPs to reevaluate current policies. Stoking this reevaluation is the awakening that the really big money is now being made by legitimate companies like Google (current market cap $200+ billion) which ride freely over ISPs' networks. As such, ISPs are wondering whether the balance of economics has gotten out of whack and if they can get a bigger share of the pie.
Some ISPs are now blocking or "shaping" certain types of traffic. The most recent example that came to light was Comcast, who the AP recently found is blocking BitTorrent's traffic in the Bay Area. Comcast's vague response, coupled with ill-thought out earlier remarks from telco executives about their own business intentions, have inflamed conspiracy theorists' worst fears about what kind of world could result absent immediate net neutrality action.
Yet for me, preemptive net neutrality legislation can only be justified if you buy into one or both of the following two assumptions.
First, that any new premium tier of service ISPs may want to sell to certain preferred providers (e.g. Google is search engine of choice, so its results somehow load faster) must, by definition, mean that some other provider is disadvantaged as a result. But this presupposes a zero-sum ISP network, which is not true. To enable a high quality-of-service ("QOS") tier for preferred partners does not technically necessitate a degrading other non-preferred services. Not to mention degrading other services would be a foolish, provocative thing for ISPs to do.
The second assumption is that regardless of whether ISPs create QOS-enabled premium tiers, they cannot be trusted not to block or harmfully shape traffic, whether it's legitimate or not. While there have been random acts of blocking by smaller ISPs, this does not seem to be a rampant problem right now. And it's important to distinguish between blocking legitimate vs. illegitimate traffic. For instance, when Comcast blocks illegitimate P2P file-sharing traffic then to me that's a good thing. It frees up network resources for the rest of us who are paying to use the network for legitimate purposes. I'm not going to cry for some 15 year-old kid who can't speedily download a pirated copy of the latest Hollywood thriller, nor should you.
While the pro-net neutrality folks obviously believe ISPs will be bad actors, to my mind, even if you make the above assumptions, this does not form the basis for preemptive net neutrality action now. Sure it's tempting to believe that cable and telco companies, still with plenty of monopolistic DNA flowing through their corporate veins, would indeed act unfairly, for now it is most appropriate to give them the benefit of the doubt.
Washington's laissez-faire attitude toward Internet regulation has been one of the key reasons for the Internet's continued innovation and growth. Attacking broadband video and the Internet, which are among the last few bastions of economic growth left in America is unwise, particularly given the fact that the "law of unintended consequences" is virtually synonymous with all recent telecommunications regulation. Preemptively impose network neutrality and who knows what the actual result will be.
So for now net neutrality regulation should stay on the backburner. When and if it's appropriate, it can be re-prioritized. Instead, I'd prefer keeping Washington's focus on cleaning up a separate, larger and far more pressing problem caused by another rush to preemptive government action (hint, it starts with an "I" and ends with a "Q").
This article in today's Boston Globe points out the looming bandwidth issue that cable ISP customers will be facing as usage of video becomes more widespread. Most people don't realize there are "acceptable use" policies in the user agreements we all sign. That's because today the vast majority of us (99%+) don't come anywhere close to crossing the maximum usage line. However, as this story points out, some people are getting snagged. How many more will cross the line as video usage (particularly from P2P services like Joost and BitTorrent) rises in the coming years?