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Analysis for 'Joost'

  • Scoring My 2009 Predictions

    As 2009 winds down, in the spirit of accountability, it's time to take a look back at my 5 predictions for the year and see how they fared. As when I made them, they're listed below in the order of most likely to least likely to pan out.

    1. The Syndicated Video Economy Accelerates

    My least controversial prediction for 2009 was that video would continue to flow freely among content providers numerous third parties, in what I labeled the "Syndicated Video Economy" back in early 2008. The idea of the SVE is that "destination" sites for online audiences are waning; instead audiences are fragmenting to social networks, mobile devices, micro-blogging sites, etc. As a result, the SVE compels content providers to reach eyeballs wherever they may be, rather than trying to continue driving them to one particular site.

    Video syndication continued to gain ground in '09, with a number of the critical building blocks firming up. Participants across the ecosystem such as FreeWheel, 5Min, RAMP, YouTube, Visible Measures,, Grab Networks, blip.TV, Hulu and others were all active in distributing, monetizing and measuring video across the SVE. I heard from many content executives during the year that syndication was now driving their businesses, and that they only expected that to increase in the future. So do I.

    2. Mobile Video Takes Off, Finally

    When the history of mobile video is written, 2009 will be identified as the year the medium achieved critical mass. I was bullish on mobile video at the end of 2008 primarily due to the iPhone's success and my expectation that other smartphones coming to market would challenge it with ever more innovation. The iPhone has continued its amazing run in '09, on track to sell 20 million+ units. Late in the year the Droid, which Verizon has relentlessly promoted, began making inroads. It also benefitted from Verizon highlighting AT&T's inadequate 3G network. Elsewhere, 4G carrier Clearwire continued its nationwide expansion.

    While still behind online video in its development, mobile video is benefiting from comparable characteristics. Handsets are increasingly video capable, just as were computers. Mobile content is flowing freely, leaving the closed "on-deck" only model behind and emulating the open Internet. Carriers are making significant network investments, just as broadband ISPs did. A range of monetization companies have emerged. And so on. As I noted recently, the mobile video ecosystem is healthy and growing. The mobile video story is still in its earliest stages, we'll see much more action in 2010.

    3. Net Neutrality Remains Dormant

    Given all the problems the Obama administration was inheriting as it prepared to take office a year ago, I predicted that it would not expend energy and political capital trying to restart the net neutrality regulatory process. With broadband ISP misbehavior not factually proven, I also thought Obama's predilection for data in determining government action would prevail. However, I cautioned that politics is a tough business to predict, and so anything can happen.

    And indeed, what turned out is that in September, new FCC Chairman Julius Genachowski launched a vigorous net neutrality initiative, despite the fact that there was still little data supporting it. With backwards logic, Genachowski said the FCC would be guided by data it would be collecting, though he was already determined to proceed. In "Why the FCC's Net Neutrality Plan Should Go Nowhere" I argued, among other things, that the FCC is way off the mark, and that in the midst of the gripping recession, to risk the unintended consequences that preemptive regulation carries, was foolhardy. Now, with Comcast set to acquire a controlling interest in NBCU, net neutrality advocates will say there's even more to be worried about. It looks like we can expect action in 2010.

    4. Ad-Supported Premium Video Aggregators Shakeout

    The well-funded category of ad-supported premium video aggregators was due for a shakeout in '09 and sure enough it happened. Players were challenged by little differentiation, hardly any exclusive content and difficulty attracting audiences. The year's biggest casualty was highflying Joost, which made a last ditch attempt to become a white label video platform before being quietly acquired by Adconion. Veoh, another heavily funded player, cut staff and changed its model. TidalTV barely dipped its toe in the aggregation waters before it became an ad network.

    On the positive side, Hulu, YouTube and continued their growth in '09. Hulu benefited from Disney coming on board as both an investor and content partner, while YouTube improved its appeal to premium content partners and brought on Univision and PBS, among others. Aside from these, Fancast and nichier sites like Dailymotion and Babelgum, there isn't much left to the aggregator category. With TV Everywhere services starting to launch, the opportunity for aggregators to get access to cable programming is less likely than ever. And despite their massive traffic, Hulu and YouTube have significant unresolved business model issues.

    5. Microsoft Will Acquire Netflix

    This was my long ball prediction for '09, and unless something happens in the waning days of the year, I'll have to concede I got this one wrong. Netflix has remained independent and is charging along with its own streaming "Watch Instantly" feature, now used by over half its subscribers, according to recent research. Netflix has also broadened its penetration of 3rd party devices, adding PS3, Sony Bravia TVs and Blu-ray players, Insignia Blu-ray players this year, in addition to Roku, XBox and others. Netflix is quickly becoming the most sought-after content partner for "over-the-top" device makers.

    But as I've previously pointed out, Netflix's number 1 challenge with Watch Instantly is growing its content selection. Though it has a deal with Starz, it is largely boxed out of distributing recent hit movies via Watch Instantly by the premium channels HBO, Showtime and Epix. My rationale for the Microsoft acquisition is that Netflix will need far deeper pockets than it has on its own to crack open the Hollywood-premium channel ecosystem to gain access to prime movies. For its part, Microsoft, locked in a pitched battle with Google and Apple on numerous fronts, could gain advantage with a Netflix deal, positioning it to be the leader in the convergence era. Meanwhile, others like Amazon and YouTube continue to circle this space.

    The two big countervailing forces for how premium video gets distributed in the future are TV Everywhere, which seeks to maintain the traditional, closed ecosystem, and the over-the-top consumer device-led approach, which seeks to open it up. It's hard not to see both Netflix and Microsoft playing a major role.

    What do you think? Post a comment now.

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  • 4 Industry Items from this Week Worth Noting - 7-2-09

    Clearleap announces Atlantic Broadband as first public customer - Clearleap, the Internet-based technology firm I wrote about here, announced Atlantic Broadband as its first public customer. Atlantic is the 15th largest cable operator in the U.S. I spoke with David Isenberg, Atlantic's VP of Products, who explained that Clearleap was the first packaged solution he's seen that allows broadband video to be inserted into VOD menus without the need for IT resources to be involved. Atlantic initially plans to use Clearleap to insert locally-oriented videos into its local programming lineup. It also has special events planned like "Operation Mail Call." which allows veterans' families to upload videos, plus coverage of local sports, and eventually filtered UGC. By blending broadband with VOD, Isenberg thinks Clearleap gives him a "giant marketing tool" to raise VOD's visibility. As I've said in the past, VOD and broadband are close cousins which can be mutually reinforcing; Clearleap facilitates this relationship.

    New Balance's "Made in USA" video - Have you seen the new 3 minute video from athletic shoemaker New Balance? Yesterday I noticed a skyscraper ad for it at and a full back-page ad in the print version of the Boston Globe. New Balance's video promotes the fact that it's the only athletic shoemaker still manufacturing in the U.S. (though it says only 25% of its shoes are made here). There's also a fundraising contest to win a trip to one of its manufacturing facilities. Taking ads in online and offline media to drive viewership of a brand's original video is another way that advertising is being reimagined and customers are being engaged.

    Joost - R.I.P.-in-Waiting - There's been a lot written this week about Joost's decision to switch business models from content aggregation to white label video platform provider. Regrettably, I think this is Joost's last gasp and they are in "R.I.P.-in-waiting" mode. Joost, which started off with lots of buzz and financing ($45M) by the co-founders of Skype and Kazaa, is a cautionary tale of how quickly the broadband video market is moving, and how those out of step can get shoved aside. Joost made a critical strategic blunder insisting on a client download based on P2P delivery when the market was already moving solidly in the direction of browser-based streaming. It never recovered. Given how crowded the video platform space is, I'm hard-pressed to see how Joost will carve out a substantial role.

    Cablevision wins its network DVR case - Not to be missed this week was the U.S. Supreme Court's decision to refuse to hear an appeal from programmers regarding cable operator Cablevision's "network DVR" plan. The decision means Cablevision can now deploy a service that allows subscribers to record programs in a central data center, rather than in their set-top boxes. This leads to lower capex, fewer truckrolls, and more storage capacity for consumers. There's also an intersection point with "TV Everywhere," as cable subscribers will potentially have yet another remote viewing option available to them. Content is increasingly becoming untethered to any specific box.

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  • 2009 Prediction #4: Ad-Supported Premium Video Aggregators Shakeout

    "Look to your left, look to your right. One of you won't be here next year."

    - Professor Charles Kingsfield, The Paper Chase

    Professor Kingsfield's famous admonition to incoming Harvard Law School students applies equally well in 2009 to the ad-supported aggregators of premium video. My prediction #4 for the new year is that a shakeout is coming to this space.

    As I wrote last summer in "Video Aggregators Have Raised $366+ Million to Date," there has been a lot of enthusiasm around broadband-only aggregators, especially those that focus on premium-quality video. Part of the excitement is based on the idea that they could eventually snatch a chunk of the $100 billion/year that today's cable, satellite and telco video distributors generate. This vision is enhanced by the inevitability of broadband connecting seamlessly to millions of consumers' TVs, enabling a pure on-demand, a-la-carte experience. The result has been many well-funded startups (e.g. Joost, Veoh, Vuze, etc.) as well as offensive/defensive initiatives backed by large media companies (e.g. Hulu, Fancast, portal sites, etc.).

    However, ad-supported video aggregators face multiple challenges. First and most is that as their ranks have grown, the audience they're commonly targeting fragments. Not only does this make it hard to achieve scale, it makes it hard to identify meaningful audience differences that advertisers seek when allocating their budgets. The recent economic collapse and ad spending slowdown only exacerbate these audience-related issues.

    The next big problem is that it is very difficult for aggregators to differentiate themselves. As with most web sites, there are really two main drivers of differentiation: content and user experience. On the content side, there is a finite amount of premium video available for ad-supported online distribution and there's no such thing as exclusivity (except to some extent with Hulu and its rights to NBC and Fox shows).

    Increasingly broadcast programs are available in lots of places online, (starting with the broadcasters' own sites), while cable programs are in short supply (more on why that's the case and why it will stay that way in "The Cable Industry Closes Ranks"). Though there is lots of other quality video being produced, the reality is that once you get away from hit TV shows and recently-released movies (which themselves are not available except as paid downloads), little else has the same audience-driving appeal.

    User experience is certainly a bona fide differentiator, and as I have spent time at all these sites, it's evident which sites are better and easier to use than others. But user experience differences are hard to maintain; it's all too easy for one site to emulate what another one does, and with cheap, open technology there are few barriers to doing so. Over time, most of the really important differences melt away (ample evidence of this is found in the ecommerce world, where checkout processes have long since gravitated to a set of best practices).

    Another problem is customer acquisition and retention, which is a particular issue for the independent aggregators, who don't have incumbent advantages to leverage. With premium video only coming online relatively recently, users' video search processes are not yet well understood. Suppose someone is looking for a missed episode of Lost and don't want to pay for it. Do they start with a Google search for "Lost?" Or for "ABC?" Or do they reflexively go to Or maybe they're a heavy YouTube user, so they start by heading over to Still others no doubt start by going to video search sites like blinkx or Truveo. Video aggregators need to insert themselves in the flow of an online user's video search process. But doing effectively is not yet anywhere close to the reasonably well-understood world of web-based optimization techniques.

    I believe all of this leads to the inevitable result that not all of today's video aggregators are going to make it to the end of '09. Some will be bought or merged, others will simply close down. You're no doubt wondering which ones I think will fall into these categories. Though I have my hunches, for now I just can't offer an informed answer. There are just too many variables in play: actual performance (which only the sites themselves know), cash burn rates, strength of commitment by investors/owners, etc. What I will say though is that the list of survivors will include at least Hulu and Fancast. Both are highly strategic to their parent companies, have significant financial backing, and enjoy content or feature differentiation that is hard to replicate and/or is valued by users.

    The landscape for video aggregators is still pretty wide open, so some winners will emerge. But there are just too many entrants chasing the same prize. I'll be keeping close track of the aggregator space on VideoNuze as '09 unfolds, and will keep you apprised of all developments.

    What do you think? Post a comment now.

    2009 Prediction #1:The Syndicated Video Economy Accelerates

    2009 Prediction #2:Mobile Video Takes Off, Finally

    2009 Prediction #3:Net Neutrality Remains Dormant

    Tomorrow, 2009 Prediction #5

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  • 5 Updates to Note: Brightcove 3, Silverlight 2, Google-YouTube-MacFarlane, NBC-SNL-Tina Fey, Joost-Hulu

    With so much going on in the broadband video world, I rarely get an opportunity to follow up on previously discussed items. So today, an attempt to catch up on some news that's worth paying attention to:

    Brightcove 3 is released - Back in June I wrote about the beta release of Brightcove 3, the company's updated video platform. Today Brightcove is officially releasing the product. I got another good look at it a couple weeks ago in a briefing with Adam Berrey, Brightcove's SVP of Marketing. I like what I saw. Much more intuitive publishing/workflow. Improved ability to mix and match video and non-video assets in the way content is actually consumed. New emphasis on high-quality delivery to keep up with ever-escalating quality bar. Flexibility around video player design and implementation. And so on.

    The broadband video publishing/management platform is incredibly crowded, and only getting more competitive. Brightcove 3 ups the ante further.

    Silverlight 2 is released - Speaking of releases, Microsoft officially unveiled Silverlight 2 yesterday, making it available for download today. I was on a call yesterday with Scott Guthrie, corporate VP of the .NET developer Division, who elaborated on the details. NBC's recent Olympics was Silverlight 2 beta's big public event, and as I wrote in August, the user experience was seamless and offered up exciting new features (PIP, concurrent live streams, zero-buffer rewinds, etc.).

    A pitched battle between Microsoft and Adobe is underway for the hearts and minds of developers, content providers and consumers. Silverlight has a lot of catching up to do, but as is evident from the release, it intends to devote a lot of resources. Can you say Netscape-IE or Real-WMP? This will be a battle worth watching.

    Google and Seth MacFarlane are hitting a home run with "Cavalcade of Comedy" - A month since its debut, Google/YouTube and Seth MacFarlane seem to have hit on a winning formula at the intersection of video syndication, audience growth and brand sponsorship. On YouTube alone, the 10 short episodes have generated over 12.7 million views according to my calculations, while this TV Week piece quotes 14 million + when all views are tallied.

    Last month, in "Google Content Network Has Lots of Potential, Implications" I wrote at length about how powerful GCN and YouTube could be for the budding Syndicated Video Economy, yet noted that the jury is still out on whether Google's really committed to GCN. "Cavalcade's" early success surely gives GCN some tailwind. (Btw, for more on Google/YouTube's myriad video initiatives, join me on Nov. 10th for the Broadband Video Leadership Breakfast Panel, which David Eun, the company's VP of Content Partnerships will be a panelist)

    NBC/SNL and Tina Fey set a new standard for viral success - Tina Fey's Sarah Palin skits are hilarious and unlike anything yet seen in viral video. Usage is through the roof: a new study by IMMI suggests that twice as many people watched the skits online and on DVR than did on-air, while Visible Measures's data (as of 3 weeks ago!), shows over 11 million video views. SNL is smack in the middle of the cultural zeitgeist once again, with Thursday night specials and reports of a new dedicated web site in the mix.

    To put in perspective how disruptive viral video can be to the uninitiated, several weeks ago I heard a pundit on CNN's AC360 dismiss the potential impact of the Fey skits on the election with a wave of his hand and a remark to the effect of "come on, how many people stay up that late to watch SNL really?" How's that for being out of touch with the way today's world really works? Political pros and other taste-makers should take heed - viral video can be a cultural tour de force.

    Joost Flash version is here, finally - Remember Joost? Originally the super-secret "Venice Project" from the team that made a killing on KaZaA and Skype (the latter of which was acquired by eBay, permanently undermining former eBay CEO Meg Whitman's M&A acumen), Joost today is announcing its Flash-based video service. You might ask what took the company so long given this is where the market's been for several years already? I have no idea.

    But here's one key takeaway from Joost's story: because of its lineage, the company was once regaled as the "it" player of the broadband video landscape. Conversely, Hulu, because of its big media NBC and Fox parentage, was dismissed by many right from the start. Now look at how their fortunes have turned. When your mom used to tell you "don't judge a book by its cover," she was right.

    What do you think? Post a comment.

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  • TidalTV: Another Well-Funded Aggregator Goes For It

    (Note: This is the first of a series of posts with companies participating in the 2008 Media Summit, a premier industry event which will be held next week in NYC. VideoNuze has partnered with Digital Hollywood, the Media Summit's producer, to provide select news and analysis coverage.)

    Investors continue to show lots of optimism about the broadband video aggregator category. The latest data point is TidalTV, a new entrant that announced last week it has raised $15 million from NEA and Valhalla Partners. This comes on top of a crowd of well-funded startups: Joost ($45M+), Veoh ($40M+ to date), Building B ($17.5M), Vuze ($32M+), Hulu ($100M) and many others who are attacking this space in one way or another.

    To better understand how TidalTV will distinguish itself from the pack, yesterday I had a lengthy briefing with CEO Mollie Spilman. She provided her first extensive remarks about TidalTV's game plan since last week's announcement. (Thanks to my old friend Tom MacIsaac, former CEO of Lightningcast, for facilitating the introduction. Tom recently launched Cove Street Partners and is as smart a player in the broadband video ad space as anyone around.)

    The first thing to know about TidalTV is that it is pursuing mainstream users, not early adopters. This targeting pervades all its decision-making: site design is clean and approachable (Mollie said Apple is their role model), content is professional/well-branded only (no UGC), user experience incorporates a traditional linear programming sensibility combined with full on-demand access and advertising mimics traditional pods, while also integrating new broadband-only formats.


    In short, TidalTV's making a bet that given how nascent broadband video adoption is among mainstream users, there is ample room to become the brand/destination of choice by providing an experience that feels more similar to traditional TV than to online. Though Mollie says that Apple is TidalTV's heaviest influence, I see clear parallels to AOL from the mid-late '90s. Recall that AOL's pervasive consumer-friendly UI, content and marketing (the Steve Case mantra) enabled it to crush all the dial-up ISPs which had more techie, complicated orientations. Watching AOL's rise made me a big believer that consumer-friendliness can indeed be a meaningful competitive differentiator if executed really well.

    AOL is an interesting point of comparison because TidalTV's founder Scott Ferber was a co-founder of, which was sold to AOL in 2004, albeit after the Case era ended at AOL. Mollie was at for 6 years as well. Other TidalTV executives come from, Joost and Fox. The lineage helps explain why TidalTV has chosen to invest significantly in optimizing its advertising capabilities rather than building a lot of its own publishing or delivery features (note TidalTV is all Flash-based streaming with no downloads and no P2P).

    TidalTV has some interesting challenges ahead. First is content. It sounds like the company has made substantial progress in deals to obtain content from the "top 50 brands" which includes not only broadcast and cable network fare, but also print, online publishers and others who produce professional video. Yet Mollie concedes that "90% of TidalTV's content at launch could probably be found somewhere on-air or online," as content providers increasingly pursue widespread syndication. TidalTV's opportunity is to pull the content together in a neat, intuitive manner that mainstream users appreciate.

    TidalTV will do so by using a "faux linear" presentation, which entails it becoming a "digital programmer," assembling its partners' shows into their own channelized formats (e.g. "The CSI Channel"), with traditional linear air times. For example, if you come to the site at 4pm, you'd see "what's on now" on multiple channels. At launch Mollie anticipates offering 10-15 channels, all on a revenue share basis with providers. This presentation approach is meant to appeal to mainstream users by providing a tangible link to a TV-oriented experience. If a user clicks to start watching, a linear "feed" will start playing, including ad breaks. However, TidalTV will also offer all programs on a full, on-demand basis as well.

    But to illustrate how complicated the content acquisition terrain is for 3rd parties like TidalTV, consider Hulu, the NBC/FOX JV. It has insisted that prospective syndication partners take the Hulu player if they're to gain access to popular shows like "Heroes" and "24." Doing so could break TidalTV's user-friendly design. Mollie acknowledged this challenge, but felt confident that in examples like these, there should be adequate incentives to work out an arrangement. Then there's ABC, which to date has not pursued syndication aggressively. If it maintains its centric approach, simply not making its programs available to 3rd parties, that leaves aggregators with obvious holes in their offerings. This would be especially challenging for a site like TidalTV, which appeals directly to mainstream users. Speaking generically, Mollie said that TidalTV's neutral "Switzerland" approach (i.e. no investments from media companies) should help in all of its content negotiations.

    Driving traffic is another key issue. With other players in the market already, they've had a chance to build their traffic, though not necessarily in TidalTV's core target audience. For instance, Veoh alone says it's getting 20M+ unique visitors per month. To jumpstart traffic, Mollie said that TidalTV is prepared to fund an aggressive marketing plan, testing direct marketing, search, offline ads, outdoor, SEO, viral, PR and other tactics.

    TidalTV expects to offer a geo-based limited beta in the Maryland, Virginia and DC area in late March, expanding to a national beta in mid-April. I'll be getting a peek at the beta product next week, so I'll have more to say then. Though it's still far too early to make a definitive assessment of TidalTV's chances of success, I like the fact that Mollie repeatedly uses the word "experimental" in her comments. That's a recognition of how early-stage this market space is and suggests TidalTV will stay flexible and open to all approaches to find success.

    What do you think of TidalTV's chances? Post a comment and let everyone know!

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  • FreeWheel: Helping Monetize the Syndicated Video Economy

    Readers of VideoNuze know that for a long time I've been a big proponent of syndication as a key building block for broadband video success. In last week's webinar I explained that I see this trend only accelerating as content providers increasingly shift from aggregating the most eyeballs to accessing the most eyeballs. That means syndicating video far and wide through social networks, portals, broadband aggregators and others is fast-becoming a key success factor.

    Yet aggressive syndication presents a complex set of issues around how to control and optimize the advertising to all those dispersed viewers. Absent the right set of tools to administer each deal's terms, there's a bias toward simplicity and hence, under-optimization. For example, I continually hear that all the broadcasters' syndication deals are 90-10 ad revenue splits. In some cases a plain vanilla approach like this may be fine. More likely though, to have a biz dev person's hands tied to very limited deal terms because of a lack of technology solutions significantly constrains the ecosystem.

    FreeWheel is a new company aimed at unlocking these constraints with its "Monetization Rights Management" or MRM technology platform. MRM is a full ASP platform that empowers content providers' biz dev teams to cut creative revenue/inventory sharing with syndication partners and then have ad sales teams follow through with far more intelligence about how to implement these deals and sell inventory. The result is revenue optimization for all parties. I caught up with CEO Doug Knopper, co-CEO and co-founder of FreeWheel last week to learn more.

    FreeWheel sits on top of existing ad management systems, as a sort of cross between a digital traffic cop and a green eyeshade - dynamically managing and allocating ad inventory, while keeping track of all ads and revenue across the content provider's syndicated network. MRM interfaces to a content provider's and partner's content management system through FreeWheel's API, allowing MRM to implement its predetermined business rules alongside the content being sent to partners. Clearly there's a huge network affect opportunity for FreeWheel - the more partners its early content provider customers get to implement MRM, the easier FreeWheel's sale will be to subsequent content providers.

    FreeWheel reminds me a lot of Signiant, which I wrote about recently. Signiant is more focused on content distribution in a syndicated economy, while FreeWheel is focused on ad management. But both companies share a common purpose of greasing the skids for both content providers and distributors to play ball with each other with the intention of driving more video views and advertising revenue.

    FreeWheel has signed up Next New Networks, Joost and Jumpstart Automotive Media as initial clients. The company was founded by three former DoubleClick executives, has 40 employees and has raised 2 rounds from Battery Ventures, though the total is undisclosed.

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  • My Reflections on NATPE Conference

    Last week's NATPE conference brought numerous opportunities for attendees to learn about broadband and digital media. Based on the Q&A I heard, plus the hallway chatter, there is intense interest - especially from independent producers - about how to take advantage of the rapidly changing video landscape. Today I want to spend a few minutes reviewing some of what I learned at the conference.

    A big chunk of my time was spent hosting a day-long Digital Briefing track, during which 10 companies presented for 30 minutes each, back-to-back throughout the day. The companies that presented were: Leichtman Research Group, Joost,, Broadband Enterprises, Livid Media, Vuze, Enticent, Teletrax, PermissionTV and Digital Fountain.

    These companies offered a highly diverse range of products, services and solutions, all aimed at growing the broadband video industry. Joost, Vuze and Broadband Enterprises in particular drew lots of audience questions, focused on distribution and monetization, 2 key items for indie broadband producers. Similarly PermissionTV received lot of interest for how it can help large and small content providers build out their broadband presence. And Digital Fountain's demos of its high-quality video distribution network garnered a lot of attention (btw, it's soliciting participants for its beta trial here).

    The other companies also showed valuable products and services: Livid Media demonstrated its personality-based content and Enticent its loyalty programs. SpotStock premiered its new digital stock footage library aimed at helping indie producers quickly and legitimately gain access valuable resources. And Teletrax explained how its watermarking technology helps broadcasters secure and track their digital streams. Last but not least, Bruce Leichtman of Leichtman Research demystified what's really happening with consumer behavior changes based on his firm's extensive market research.

    Outside of the Digital Briefings day, the advertising-related sessions provided lots of needed information to attendees about how monetization is unfolding for broadband delivery. I've already written about Shelly Lazarus branded entertainment speech. Tim Armstrong, head of sales at Google provided insights on how the company is approaching YouTube monetization. Another session elicited reactions from big-time brand marketers about issues with pre-rolls and explored alternatives. And as I previously wrote, NBCU's Jeff Zucker delivered a candid wake-up call to the industry about challenges ahead. Even as someone who follows this stuff pretty closely, I thought there was a lot of new info and perspectives being shared.

    All in all, these sessions all served as another reminder to me about how broadband video is becoming a vibrant part of the overall economy. There is so much entrepreneurial energy going into developing all the pieces of the overall broadband ecosystem. A consistent theme I heard at NATPE was that people recognize broadband is challenging incumbent media distribution, but it is also expanding producers' options in unprecedented ways. For me that's the real potential ahead.

    If you want to discuss the specifics of any of these, just drop me a line!

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  • TV and Broadband: Who's Morphing into Whom?

    Does TV programming beget broadband video programming or is it the other way around?

    If you were expecting a simple answer, recent evidence suggests that none will be forthcoming. Step away from the relatively straightforward model of streamed or downloaded TV episodes, and the question of how original video content will be produced and distributed between broadband and TV is whole lot more complicated. Layer on the writers' strike and the world only fogs up further.

    For those who see broadband as a pathway to TV, Quarterlife's deal announced last Friday with NBC to bring their new Quarterlife series to the network following its run on MySpace offers encouragement that Internet programming can move to the TV (bear in mind that Quarterlife was originally pitched as a TV series however).

    Another example is, which has been successfully syndicated as TMZ TV this fall by Warner Bros. TMZ shows us that a brand that was created and built solely online can make the leap to TV. And just last week TV Week reported that Twentieth Television and Yahoo were close to a deal to create a new syndicated series based on popular broadband videos that they've collected.

    On the flip side, there is plenty of evidence of opportunities for TV programs spinning off broadband programming, or existing TV producers with assets and skills pushing into broadband as a first outlet for their work.

    Consider Sony's Minisode Network, with distribution on MySpace, Joost, AOL and Crackle. In an effort to squeeze more life out of its library of classics, in June Sony launched abbreviated versions, for broadband "snacking". This initiative is being closely watched as a model for how to repurpose existing assets to make them more palatable for attention-challenged online audiences.

    And Endemol's recent deal with Bebo to produce "The Gap Year" series for exclusively for Bebo's audience shows that a successful TV producer is turning its sites on broadband as a first outlet.

    All of these deals underscore broadband's disruptive nature - its ability to create new opportunities for incumbent players, and also for new entrants. My read is that most (though not all) broadband producers would love to make the leap to the TV. In the mean time, broadband offers a low-cost, interactive distribution path to experiment with more engaged audiences.

    Many key industry players are now waking up to the idea that broadband is fundamentally re-writing traditional equations of how to extract value from well-produced video. But these equations are not yet well-understood. Some of the early deals, as outlined above, will be showing everyone the way.

    -Will Richmond

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  • Will eBay's Skype Write-down Hurt Joost and Other Video Players?

    The news that eBay was going to write a portion of its Skype purchase did not really surprise many people, although its magnitude, $1.4B out of $2.6B paid still felt shocking. At the time of the deal, it seemed the only
    people who thought the deal made any sense were eBay's CEO Meg Whitman and her board. Whether they thought there was strategic sense to the deal or not, certainly Skype's founders Niklas Zennstrom and Janus Friis must have been grinning widely at the willingness of eBay to pay such a ridiculous premium for their company.
    This Times piece noted that:
    ... revenue and earnings projections made by Skype executives before the sale to eBay turned out to be "a bit front-loaded" according to Mr. Zennstrom.

    Not to take anything away from the potential of Joost, the pair's much-heralded broadband video aggregator, but if you were considering making an investment in the company or any other in the video space, wouldn't this whole eBay-Skype affair make you cautious? Seeing such a gigantic writedown, and now the admission that the projections has to make prospective investors just a little more cautious about Joost, and all other video players as well.

    I'm asked frequently, is there a bubble in the video space? I think the answer is that yes, investors are getting too enthusiastic, as they always do when they smell a transformative opportunity. The Skype writedown is a reminder to all investors in the space that being optimistic about broadband's potential is right, but keeping their sanity regarding valuations is critical. eBay just reminded all of us of the cost of not doing so.

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  • Joost Names Volpi CEO, Things are About to Get More Interesting


    Today Joost announced that Mike Volpi, formerly a long time senior executive of Cisco, would become its new CEO.
    The NY Times has a story with a couple of noteworthy quotes from Volpi that give a window into how interesting things are about to become.
    "Joost is a piece of software and it can reside on a variety of platforms," he said. "It could be on a television set-top box. Or potentially it could be imbedded in a TV set with an Ethernet connection, or on a mobile phone, or in some alternative device that might come out in the future. The flexibility is really high."
    Would that be a cable set-top box or one possibly made by Apple, Linksys or Sony, perhaps? I'd bet on the latter possibilities. Of all the broadband video aggregators, Joost is most clearly positioning itself to be a new competitor to cable and satellite operators.
    "Content owners don't care where content is distributed so long as it reaches a larger number of users who can be monetized."
    Well, sort of. What content providers care most about these days is doing no additional harm to their already perilous existing revenue streams. If doing a deal to distribute content through Joost is neutral to potentially positive, they'll do it. If it's neutral to potentially negative vis-a--vis current relationships, they won't do it. I believe they'll get all the broadcasters to sign up with them. But the big challenge is whether they can get cable networks to give them their best prime-time programming, available at the same time it's available on cable.
    Even if cable networks can do this (and that's an "if" yet to be unraveled by scads of lawyers), it may not be a good business decision to do so. To my knowledge, Joost isn't paying the precious monthly affiliate fees which are the lifeblood of cable networks. Do a deal with Joost for no fees and you run the risk that existing paying customers (i.e. cable and satellite operators) might just want the same deal next time you meet at the negotiating table. Volpi knows cable operators like the back of his hand. Cisco's made billions supplying them networking gear to power their broadband networks for years and more recently digital cable gear from Scientific Atlanta. Now Volpi needs to convince cable operators' programming suppliers to work with him. This will be interesting to watch.
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  • Prognosticating P2P's Possibilities and Pitfalls - May E-Newsletter

    With Joost's launch upon us, BitTorrent going mainstream, Akamai buying Red Swoosh and a raft of other peer-to-peer (P2P) initiatives underway, it's time to consider legitimate P2P's possibilities and pitfalls.
    First a disclaimer: I don't pretend to know all of the technical ins-and-outs of P2P, but I think I know enough to be dangerous. Here's my current take: P2P has a ton of potential as a legitimate distribution platform, but has to navigate some significant challenges if it is to succeed.
    A P2P Primer
    For those of you new to the P2P game, in essence, P2P's big advantage is that it allows users themselves to become servers of content to other users. In doing so, the load for delivering content is shifted from central servers to the "nodes" or users on the P2P network. Until relatively recently, P2P was popularly associated with the illegal "file sharing" networks (Napster, KaZaa, etc.), most of which were (and still are) used by users to swap audio or video files without permission of the copyright holder. Users could look up where certain content resided and then download it accordingly.
    What's new about P2P is that many (e.g. Joost, BitTorrent, others) see it as an important, if not essential, way for video to be legitimately distributed. P2P companies argue that the Internet's current architecture cannot effectively scale to deliver large quantities of video (especially live streams) in an economic manner. Since P2P gives users the ability to directly share with other users, P2P also has a potentially disruptive effect on the overall value chain and how video aggregators continue to establish value for themselves. P2P requires users to install client software on their computers. These clients are then available on the P2P network, sending files to subsequent users requesting content that they have already stored. In the case of video or audio, files can be delivered for either download or streaming.
    All of this is intended to happen invisibly to the average broadband video user. Of course, to nobody's surprise, the average user couldn't care less how video actually gets to his or her computer, as long as it gets there quickly and in reasonably good shape.
    Potential Abounds
    P2P is a potentially big deal for the biggest broadband video content providers. That's because delivering large volumes of video in the traditional client-server paradigm is still pretty expensive, notwithstanding the significant declines in content delivery networks' (CDN) pricing. With everyone forecasting huge increases in broadband video consumption, together with larger video files (due to better encoding, High Definition, etc.), getting a handle on delivery costs is a key challenge for content providers.
    Compounding matters is that broadband video business models remain relatively immature, so expense containment is all the more important. P2P allows these content providers to shift all or some of the responsibility for video distribution to the users themselves, while establishing direct connections with users (i.e. no 3rd party distribution costs). The users' computers are leveraged for both storage and delivery, while the bandwidth is essentially free, since users upload content using the local broadband ISP's network, not the content provider's CDN service. If P2P succeeds, its potential to cut content providers' delivery costs, while delivering high-quality video, is obviously very significant.
    Important Challenges Lie Ahead
    Of course, potential is one thing, reality is another. From my vantage point, consumers' willingness to become P2P nodes and ISPs' restraint in blocking P2P traffic represent the biggest obstacles to P2P's future success. First the consumer acceptance challenge. Getting the P2P client on millions of users' computers or into their living rooms is not trivial. In this era of spyware, malware, viruses and other technical nuisances, mainstream Internet users are becoming more reluctant than ever about loading anything onto their machines that doesn't come from a recognized and trusted brand. Since P2P's whole promise relies on files being propagated to many users, anything that limits this from happening is obviously very detrimental to P2P's success.
    Then there is the even thornier issue of how broadband ISPs are going to react to users clogging up precious upstream bandwidth by serving as nodes. Virtually all American broadband ISPs offer "asymmetric" Internet access, meaning that the amount of bandwidth offered in the upstream path is usually only a fraction of that provisioned for the downstream path (this is due to some fundamental limitations related to the way that ISPs' networks are allocated). Re-architecting these networks for potentially burgeoning upstream traffic flows would be cost-prohibitive and a non-starter.
    To date, broadband ISPs have used "traffic shaping" technology to identify and limit P2P traffic. They have also kicked customers off their networks who have used too much bandwidth (a little secret in the industry). All of this has been sort of OK to do when most P2P use was for illegitimate file sharing. But what happens when it's for legitimate use, such as Joost or the newly legitimate BitTorrent? Limiting users' access to their full broadband service is going to evoke howls of protest.
    And of course, remember that the net neutrality proponents are waiting to pounce on any sign of broadband ISPs de-prioritizing or worse, blocking, certain types of traffic. Net, net, a big wildcard in P2P's success is how ISPs are going to react.
    Planning for P2P Success
    P2P proponents need a game plan to overcome these looming issues. Here's what I think makes sense: Well-established branded content players will need to take on the primary role for P2P client distribution. Of course, this approach has been used for previous media players' distribution (i.e. Real, WMP, Flash, etc.) and for updates. We've all had the experience of being asked to download player software or an updated version of previously installed software. P2P client distribution could be no different.
    But what will incent major content providers to assume this responsibility on a mass scale? They'll have to see real (not theoretical) business cases for delivery cost reductions and quality improvement. Of course, getting paid to become P2P client distributors (either in cash, or as part of distribution deal discounts, or some hybrid of the two) would also clear the way. Companies like Joost and BitTorrent need to remember that while their brand awareness among the Internet's cognoscenti is high, among more mainstream users it is still low. So leveraging their content partners' brands to turbo- charge distribution is key.
    BitTorrent, for one, is already doing this with their BitTorrent DNA technology. Another opportunity for P2P client distribution is embedding it in various consumer devices. For example, BitTorrent also offers a software development kit (SDK) that consumer electronics and chip makers can use to embed the P2P client in devices. This removes P2P download complexities for users, and is intended to make P2P usage completely invisible. The ISP solution seems more complex.
    Some believe that ISPs should look at P2P as a business opportunity to deliver a quality-of-service (QOS)-guaranteed platform to the P2P application providers such as Joost and BitTorrent. This would be accomplished by installing caching servers in broadband ISPs' facilities. These would essentially allow ISPs to serve content locally, mainly relying on the P2P protocols to deliver from the caches when appropriate, instead of from the nodes. This approach would preserve upstream bandwidth and limit ISPs' need to increase their peering capabilities to handle video coming in from the Internet backbone, while also leveraging P2P's scalability.
    This "peer-assisted" approach may be the optimal migration path to P2P adoption from an ISP perspective. Though the economics still need to be fully fleshed out, I've heard a pretty persuasive argument for this model from a company named PeerApp (disclaimer, they're a client), which is worth understanding further if P2P affects your business. One way or another, ISPs need to be brought into the P2P fold. Simply ignoring them or relying on their reluctance to tempt the net neutrality gods is not a sound business approach.
    Wrapping Up
    P2P offers very exciting potential to enhance users' broadband video experiences. For content providers, it holds the promise of profitably scaling up their broadband video activities. It will be very interesting to see how key P2P players navigate impending challenges to their success.
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  • CBS Announcement is More Great Fodder for Upcoming NAB Super Session

    Yesterday’s announcement from CBS that it has formed the CBS Interactive Audience Network, and partnered with AOL, Microsoft, CNET, Comcast, Joost, Bebo, Brightcove, Netvibes, Sling Media and Veoh provides even more discussion material for the Super Session panel I’m moderating, which is coming up on Tuesday, April 17th at NAB 2007 (“The Revolutionizing Impact of Broadband Video”).

    I’m always a little reluctant to use a word like “revolutionizing”, as it just feels a bit hyperbolic. Yet, what CBS announced yesterday, in combination with the NBC-News Corp JV announcement a few weeks ago sure does seem to signal that these networks themselves are willing to take new risks and be much more opportunistic with how their prized programs get to audiences’ homes. I give these companies all a lot of credit – they are demonstrating a willingness to challenge their existing (and longstanding) business models though the economics and potential of these new models are not yet clear.
    We’ll be getting into all of this and more at NAB – come join us!
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  • Bandwidth Issue Looms as Video Usage Rises

    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?

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