VideoNuze Posts

Daisy Whitney and I are pleased to present the 47th edition of the VideoNuze Report podcast, for January 29, 2010.

With the old adage that "everything's been said, but not everyone's said it" in mind, in this week's podcast Daisy and I talk about what else but the new Apple iPad. Daisy actually attended the iPad unveiling at the Yerba Buena Center for the Arts on Wednesday and offers her first hand observations.

Generally we're in agreement that the iPad is not going to rock the video universe any time soon, with Daisy's write-up here, and my write-up here. We do however disagree about the role of the e-book reader functionality of the iPad. Daisy thinks that, at least for now, Apple should position the iPad as a better e-book reader to the Kindle and other products, while I think that would be pigeonholing it and, because at 2x the price of the Kindle, the iPad's enhanced features would be unlikely to peel off many Kindle buyers anyway. Regardless, given Steve Jobs's aspirations for the iPad, it is almost certainly out of the question that he would narrow the iPad's positioning so drastically; I'm guessing he'd rather see it wither on store shelves first.

Click here to listen to the podcast (13 minutes, 9 seconds)

Click here for previous podcasts

The VideoNuze Report is available in iTunes...subscribe today!

Steve Jobs finally made it official yesterday, unveiling the iPad before a world breathlessly awaiting the next big thing from Apple's factory of wonders. The device did not disappoint from a coolness perspective. It is a digital Swiss army knife of sorts, capable of browsing the web, playing games, reading books, looking at photos, working on docs, etc. all in a gorgeous ("intimate" in Jobs's words) package. All that aside, my main interest has been how significant will the iPad be for video providers and specifically for the evolution of online and mobile video? For now anyway, I think the answer is "not very."

For the iPad to breakthrough for video providers it has to sell really well, creating an addressable universe of millions, if not tens of millions of users. Only widespread adoption makes it a potential game-changer for video economics, possibly enhancing the paid business model. That may happen over time, but in the immediate future I think it's doubtful. For as cool as the iPad is, in many ways, it's still a "gadget" - overflowing with novelty and packed with status appeal, but hard-pressed to be defined as a "must have" device like a cell phone or a laptop. Maybe I'm really missing something but I still haven't drunk the Kool-Aid for why tablets are going to be so critical in users' lives.

To me, the question comes down to how many people will be able to identify the distinct value the iPad brings them and deem it worthy of purchase? Apple certainly exceeded expectations by offering a $499 low-end iPad, putting it in spitting distance for those who may have been clamoring just for an e-book reader and are willing to step up a bit more. But the $499 price is somewhat illusory. If you want connectivity beyond your home or sporadic Wi-Fi hotspots, you'll need to buy at least the lowest end 3G-enabled iPad, for $629. And you'll certainly buy the case to protect that gorgeous screen, likely for another $50. So with tax you're in the $700 range. But the real killer is you'll almost certainly need to take the iPad's $30/mo AT&T all-you-can-eat 3G service to get online when you're outside your house or within reach of a Wi-Fi hotspot.

Despite the iPad's claim that its price is "well within reach," I think that for all but a pretty narrow slice of Americans, that's not the case - $700 plus another $30/mo easily puts it in the "considered purchase" zone for most potential buyers. Think about it another way: if the iPhone had not been so heavily subsidized by AT&T and other carriers, bringing its price down to $100-$200, how many iPhones do you think Apple would have sold at $500-$600 apiece? Not many is right. And that's for a device that has at least partial "must have" appeal (it is a cell phone after all). Now I know Apple just reported a blow-out holiday quarter, but America is still mired in a recession, with high joblessness and the vast majority of people cutting back on discretionary purchases.

Meanwhile, in the demo yesterday, Jobs showed off how well a YouTube video looks on the iPad, and of course, as with the iPods and the iPhone you can purchase and download video from iTunes. But is there something new that the iPad specifically does for video, beyond delivering a more intimate experience? Is the iPad going to offer some new, previously unavailable video access? Or some new interactivity? Or something else Jobs will conjure? If there is, it wasn't demo'd yesterday. Maybe in time.

These days video providers are inundated with options for where to focus their attention and allocate their scarce resources. Online distribution (on their own sites and/or syndicated)? Mobile? Over-the-top devices? Aggregators? IPTV? VOD? Short form? Long form? Branded content? The list goes on and on. Resources are tight and the first filter for any new initiative is always, "how many eyeballs and potential dollars does it offer?"

Of course, over time the iPad's price will come down and more people will adopt it, making it incrementally more attractive. Its beautiful screen, enabling a fabulous video experience, will help sell the device itself. But Apple will still need to surmount certain niggly things like what do about lack of Flash (like the iPhone it's not currently supported by the iPad, meaning no watching Hulu, just for starters), limited battery life when watching video and AT&T's already-overloaded 3G network, which is bound to disappoint iPad buyers. And beyond these, the larger question looms: if I'm interested in watching video on the go on a nice large screen, why not just do so on my laptop, which is almost certainly with me already?

The iPad is a revolutionary device and an Apple engineering marvel. But as a consumer proposition, it's a much bigger leap for Apple to succeed. With Macs, the iPod and the iPhone, Apple made better, revolutionary products in categories that already existed. With the iPad, Apple is trying to create a whole product new category, looking for daylight where none may exist. Maybe it will be big, maybe not. In the near term, I'm skeptical that it will have any major impact for video providers and for the evolution of online and mobile video.

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

I'm excited to announce that VideoNuze has partnered with The Diffusion Group, one of the leading digital media research firms, to host a series of 6 complimentary webinars in 2010. The webinars are sponsored exclusively by ActiveVideo Networks. Each webinar will focus on one specific topic key to the evolving online video/digital media landscape (suggestions are welcome btw!). Colin Dixon from TDG and I will host the webinars and we will also have 1-2 expert guests joining us each time to provide diverse perspectives and insight.

The first webinar in the series will be "Demystifying Net Neutrality" on Thursday, February 4th at 11am PT / 2pm ET. If you're in the digital media industry, it's been hard to miss the intense recent debate over net neutrality, sparked by FCC Chairman Julius Genachowski's speech last September, which called for the FCC to impose unprecedented new Internet regulations. However, earlier this month, the DC Court of Appeals indicated it may invalidate the FCC's 2008 order punishing Comcast for blocking BitTorrent traffic, suggesting the FCC may not even have proper authority to regulate the Internet after all. Meanwhile, large and small media and technology companies have continued to heavily lobby the FCC, providing data and arguments on both sides of the issue.

Net neutrality is so important, the argument goes, because as new over-the-top players (e.g. Netflix, Xbox, Roku, Boxee, etc.) seek to bring video services into the home, they need to be assured their services won't be impaired by broadband ISPs like cable operators Comcast and Time Warner Cable or telcos like Verizon and AT&T, who also happen to be the largest incumbent video providers themselves. Opponents essentially argue that net neutrality is a solution in search of a problem, and that the Internet has thrived until now due to the government keeping its hands off, and it should stay that way.

On the webinar, Colin and I will untangle all of this, with the assistance of Chris Riley, Policy Counsel for Free Press, a national, nonpartisan organization working to reform the media, which is a leading proponent of net neutrality and another guest, TBD who is opposed to net neutrality. The webinar promises to be a deep-dive educational session examining all of net neutrality's pros and cons. For anyone with a stake in broadband/online content delivery, it will be a must attend session.

REGISTER NOW - IT'S FREE!

More online video platform product news today, as Kyte is unveiling its Console 2.0 product. Last week, COO Gannon Hall gave me a rundown of the new features, which include enhanced work flows, playlist creation, channel and player management and show scheduling among others.

It's no news that OVPs are in an intense feature war, and it is increasingly important for each player to find points of differentiation. Three things that Kyte has focused on to separate itself from the pack are support for user generated content, mobile devices and social/video sharing. Gannon sees the UGC functionality as particularly important as Kyte is seeing customer demand growing for user engagement opportunities. Two customer examples he cited were ESPN's "Talk of the Terrace" live studio show in the U.K., which actively solicits user contributions (pictures, video and text), and McGraw-Hill's "Professor for a Day" initiative, which encourages students to upload a short video of themselves delivering a lecture on a subject of their choosing.

In these and other UGC examples, it's critical to be able to quickly moderate submissions and approve them for publishing. In the case of ESPN, Gannon noted that they had a multi-step approval process through compliance and copyright officers, which Kyte enabled. The proliferation of video capturing devices like smartphones and personal video cameras, plus the intense desire by brands to engage their audience, suggests that UGC support will become a more important OVP feature. As far as I'm aware, the only other OVP that has really emphasized UGC moderation is VMIX, a situation that is likely to change.

Mobile is another area where Kyte is trying to differentiate itself. Though its app frameworks for iPhone and Blackberry, and soon Nokia and Android, customers are able to quickly build apps for these mobile devices and then, using Kyte's Mobile Producer feature, can manage and publish video to their channels. Gannon said that for example, Fox News now routinely has field reporters capturing video with iPhones and then uploading it for audience viewing. Kyte was also involved in quickly turning around an iPhone app for last Friday's "Hope for Haiti" digital telethon.

I continue to believe that the world is getting more and more complicated for content producers. That's a theme that I've heard repeatedly at the NATPE conference in Las Vegas, where I am now. In the old days content people focused on producing great content, and then others worried about distribution and audience development. What's changing in the digital era is that content producers need to be just as focused on distribution in order to generate an ROI. In this respect OVPs are playing a more important role, providing the work flow, distribution and engagement functionality. Making all of this ever easier and more effective will continue to be a primary success factor for OVPs.

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

This morning Brightcove is making its first TV Everywhere ("TVE") related announcement, introducing its "TV Everywhere Solution Pack" (TVE-SP), which is the Brightcove 4 enterprise edition augmented with new components and services to support TVE rollouts. It is also unveiling a strategic alliance with Ping Identity to integrate its PingFederate security software with TVE-SP, to enable user authentication and authorization. Lastly, Brightcove has promoted Eric Elia from VP of Professional Services to VP of TV Solutions, charged with leading the company's TVE initiatives. Brightcove's CEO and founder Jeremy Allaire briefed me last week.

To understand how TVE-SP fits in, it is important to quickly review the TVE model. To date, most discussion of TVE has focused on multichannel video programming distributors ("MVPDs") providing their subscribers with online access to TV programming through their own portals or services, for no extra charge (e.g. Comcast's Fancast Xfinity TV). Receiving less attention so far is that the programmers who agree to participate in MVPD portals will likely require they are also able to offer their same programs on their own sites, which are an increasingly important part of their brand identity and direct-to-consumer focus.

Something else that hasn't received a lot of attention to date is that not all MVPDs will follow Comcast's model of managing, hosting and delivering the online programs themselves. Rather, some MVPDs will prefer to provide just the barebones online navigation, with TV programmers providing an embeddable video player and also delivering all the programming. Less-resourced MVPDs could end of relying heavily on programmers to power their TVE offerings. Where programmers already have online video platforms such as Brightcove in place, these OVPs are in a position to influence how TVE operates. (As a sidenote, I've heard multiple times that Comcast itself is also offering a white labeled version of its FXTV portal to other MVPDs).

All of this means there's likely to be plenty of heterogeneity in TV Everywhere rollouts. Recognizing this, a key part of Brightcove's product strategy is aligning with Ping to use PingFederate and the SAML 2.0 standard for user authentication and authorization. SMAL is used to exchange data between domains (e.g. between a TV programmer, whose web site visitor is trying to access a certain program and an MVPD which holds that user's subscription profile). This type of secure exchange will be essential for TV programmers to offer their own programs on their own sites in a TVE world.

SAML has been widely used in the SaaS business applications and Ping itself lists Comcast, Cox, Bell Canada and Discovery, among others, as customers. However, I suspect these are likely on the enterprise side, not the consumer-facing side. As a result, Brightcove's approach will require significant testing before it will be deemed acceptable by MVPDs. In fact, Brightcove's new white paper indicates that additional standards are required and that some of this is underway at CableLabs, the cable industry's development lab.

It's also worth noting that thePlatform (owned by Comcast) has 4 of the top 5 U.S. cable operators, plus Rogers in Canada, as customers, and ExtendMedia has the major U.S. telcos, plus Bell Canada, as customers. With Brightcove powering video at 60+ TV programmer websites, there are no doubt some interesting dynamics ahead as these OVPs' customers negotiate their TVE relationships and influence the interoperability of their respective technology providers. For its part, thePlatform, which also supports many content providers' video, introduced last November an "Authentication Adaptor" as part of its media publishing system to smooth the authentication and authorization process for programmers offering TVE shows on their own sites.

Confused yet? This is pretty dense stuff, and illustrates some of the hurdles ahead for TVE's widespread rollout. Meanwhile, lurking over TVE's shoulder are the raft of over-the-top alternatives (e.g. Netflix, Boxee, Apple, Xbox, YouTube, etc.) that are sure to gain additional traction with consumers (as a sidenote, yesterday's Best Buy Sunday circular promoted no fewer than 5 Blu-ray players as Netflix compatible, with each showcasing the Netflix logo).

As the TVE story unfolds, Brightcove is sure to be in the middle of the action given its market presence and technical capabilities. But how it all shakes out remains to be seen.

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

(Note - Brightcove, thePlatform and ExtendMedia are VideoNuze sponsors)

Last fall, when the WSJ first broke the news that YouTube was negotiating with a number of Hollywood studios about launching a full-blown rental store, I thought the plan was intriguing, but dubious. I argued that YouTube needed to stay focused on getting its ad model right, that it would be hard to differentiate its film rentals from those of myriad competitors and that the revenue upside for YouTube was relatively small.

I continue to believe those things and hope YouTube isn't still pursuing Hollywood dreams. That said, I do like the idea of it offering a paid option for indie and other hard-to-find video. YouTube's massive audience brings real promotional value to these often-obscure, yet high-quality titles, potentially significant revenue to their producers and for YouTube, another meaningful step away from pure UGC content. Rentals won't generate significant revenue for YouTube, but with Google executives on the company's earnings call yesterday saying that "YouTube is monetizing well," so long as it doesn't divert too many resources away from advertising, that's ok.

2. Revenue models matter, just ask the newspaper industry - This week brought news that MediaNews Group, publisher of 54 U.S. newspapers, including the Denver Post and San Jose Mercury News, will file for bankruptcy. For those keeping count, it's at least the 13th bankruptcy filing by a major U.S. newspaper publisher in the last year.

While the newspaper industry has been racked by the recession and ad-spending slowdown, the larger issue is that 15 years since the Internet's popularity took off, newspapers still have not been able to define a sustainable online business model. Many simply lunged headlong into providing their full print editions online, only to find out that online advertising wasn't sufficient to support their overhead and that Google commoditized their headlines. Others, like the NYTimes tried (and will continue to try) to find a balance between advertising and reader payments.

I've touched on this before, but the havoc being wreaked in the newspaper is a red-letter warning to video industry participants to cautiously guard existing revenue models while transitioning to digital delivery. Some consumers and techies may consider a deliberate pace to be bureaucratic foot-dragging, but for video content producers and distributors to remain viable, a deliberate ready-aim-fire approach to digital delivery is essential.

I'm not a Prada patron, and I found the film dreary and odd, nonetheless, what intrigued me was how online video has given Prada a whole new outlet to build its brand's aura, a key to success for all luxury brands. Buying TV ads would be incredibly inefficient for Prada, and magazine spreads only go so far. With a short online film, Prada can target its audience well and engage them as long as it pleases. For creative and advertising types alike, that's a compelling opportunity.

4. Get ready for the week of the Apple tablet - In case you missed it, this week Apple sent invites to the press for a Jan. 27th event to "come see our latest creation" - widely believed to be the company's new tablet computer. The buzz behind the product, thought to be called the "iSlate," has been steadily building for weeks now. Next week it will reach a crescendo. We can expect Steve Jobs to bring his A game to the mother of all product demos as the stakes are high for Apple to deliver major wows.

Daisy Whitney and I are pleased to present the 46th edition of the VideoNuze Report podcast, for January 22, 2010.

Daisy gets us started today, discussing recent smartphone research from eMarketer. According to the research, in Q4 '09, the percentage of people saying they're interested in purchasing an Android phone jumped from 6% to 21%, while the iPhone's dropped from 32% to 28%, creating a narrow 7% gap. In addition, research on how the phones are actually used revealed extremely similar behavior, with usage skewed toward reading news on the Internet, using apps, social networking and IM.

Daisy's takeaway is that this could be early signals that the smartphone market may be getting commoditized. I add that with the proliferation of Android phones, and the disproportionate amount of retail shelf space they'll soon take up, Apple could well find itself in the familiar spot of competing against a large and growing ecosystem of well-aligned competitors (i.e. similar to competing against the Windows ecosystem). Time will tell.

We then switch gears and I add some more detail to Boxee's plan to offer a payment platform, which it unveiled this week. Boxee's move is yet another effort to shift the online video model from advertising, which has of course accounted for the dominant share of the online video industry's revenue to date. In addition to Boxee, this week we've also seen additional paid model initiatives: YouTube dipped its toe into rentals, rumors resurfaced of Hulu's subscription plans, and, outside the video space, the NYTimes.com's announced plans to erect a pay wall early next year. And that's all on top of TV Everywhere's rollout.

Click here to listen to the podcast (11 minutes, 47 seconds)

Click here for previous podcasts

The VideoNuze Report is available in iTunes...subscribe today!

Fox.com has quietly switched from Move Networks' player to Flash for its online video, with Brightcove powering content management and publishing. Separately, a Disney-ABC spokesperson told me that ABC.com will also be transitioning from Move to Flash in the coming weeks, though both will be used temporarily.

Neither of the changes will surprise Move. Earlier this week I spoke with Move's Marcus Liassides, who explained that the company is continuing its own transition, evolving from a technology provider to content owners to an end-to-end broadband delivery platform for powering next-generation multichannel video services. Marcus said that Move has been working closely with its content customers to support their respective swap-outs.

Move was an early leader in adaptive bit rate streaming and gained a ton of visibility for raising close to $70 million, including a whopping $46 million round in April '08. Move gained notice for showing people that the Internet could indeed delivery crystal-clear, high-quality video that could credibly compete with TV viewing. For many, Move's player was very tangible evidence of how far the online video experience had changed since the pioneering days of RealNetworks' RealPlayer just 10+ years earlier.

Unfortunately the company encountered a perfect storm. First, as CDN prices fell, content providers considered Move an increasingly expensive-looking solution. Then, since Move's customers used a free, ad-supported model, as the recession crimped ad spending their ability to afford a luxury video player deteriorated. Meanwhile, both Microsoft (with Smooth Streaming) and Adobe (with FMS 3.5) both launched their own adaptive bit rate alternatives. Between their ultra-competitive pricing and large embedded customer bases, Move was squeezed from all sides. Compounding matters, Move also conveyed mixed messages about its strategy and rumors about its disjointed product development process were widespread.

Last June, Marcus provided me with an extensive overview of Move's revamped game plan, which blends Move's underlying delivery system with "virtual set-top box" technology acquired from Inuk Networks. The goal is to provide telcos, broadband ISPs and others with a platform to deliver an end-to-end multichannel linear, live, on-demand and DVR service, all through broadband.

More recently, Move hired Roxanne Austin, a former DirecTV president and COO as its new CEO, who in turn has brought in new executives to run operations, strategy and business affairs. Last September, Move announced that Cable & Wireless has partnered with it to roll out IP-based TV services. Marcus said that additional customer announcements are forthcoming soon.

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