VideoNuze Posts

Boxee is announcing this morning that it plans to support paid options for premium video by the end of Q2. To date, Boxee has been delivering mostly free, often ad-supported, video, though users of subscription services like Netflix and MLB could also access these. The new initiative means that Boxee will process transactions itself, so Boxee will become a legitimate option for content providers who want to charge for their programming. Avner Ronen, Boxee's CEO and co-founder told me more about the plan yesterday.

Avner likened Boxee's approach to Apple's App Store, in that content providers will be able to set their own pricing and business model (e.g. rental, subscription, etc.). Boxee will work with a payment partner (not yet disclosed) which will provide the platform itself, with Boxee developing a 1-click UI for consumers as well as a content partner console. Avner said Boxee hasn't decided on the transaction percentage it aims to charge, but did say it will be less than the 30% or so that others like iTunes and Amazon ordinarily keep.

Boxee has attracted a strong early adopter following and has unveiled plans to launch its first convergence device, the Boxee Box, with partner D-Link. The move to support paid video is significant because as Boxee reaches into more mainstream homes, it could be yet another meaningful "over-the-top" alternative for consumers to pay for just the content they want, further pressuring the traditional multichannel subscription model. Microsoft's Xbox Live Marketplace with the Xbox 360 is probably the closest comparable set up, although it supports downloading, whereas Boxee is focused solely on streaming.

While digital delivery offers new convenience, an issue for both streaming and downloading is limited portability. Avner said that one way Boxee intends to address this is to offer authentication options to third-party web sites, so that if a user has rented an episode of "Mad Men" for example, through Boxee, they would subsequently be able to go to AMC's web site and watch it again without paying for it a second time. This is somewhat similar to what TV Everywhere providers are also thinking about doing in their second phase, extending user authentication to content providers' sites themselves.

From Avner's perspective, Boxee's ability to support multiple business models, in a content partner and user-friendly approach, is key to success. It is still very early days for over-the-top delivery, and with TV Everywhere now rolling out, incumbent video service providers are fighting hard to maintain their positions.

Still, news this week that Disney is negotiating with Microsoft to extend some of ESPN's programming to Xbox is a potent reminder that premium video providers are exploring (albeit gingerly) all their options for getting into the living room. If Boxee's new box becomes widely adopted, it could become an important player in the unfolding over-the-top drama.

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NATPE is offering a special discounted rate of $650 (a $200 discount) for its NATPE 2010 conference next week in Las Vegas. The conference offers an excellent array of speakers and information about the TV and video industries. With a range of panels on online and mobile delivery, it is a great event for anyone looking to exploit new digital delivery opportunities.

I'll be involved with 2 sessions this year. First, on Monday, Jan. 25th, from 2:45-3:30pm, I'll be moderating "Adopting and Adapting Online Advertising, an Interactive Debate" with Rob Norman, CEO, Group M North America (Group M is the world's largest media buyer) and Shishir Mehrotra, Director of Product Management for Google, who's responsible for Google's video monetization efforts, including YouTube and TV advertising. It promises to be a stimulating discussion of how online video advertising is shaping up.

Then on Tuesday, Jan 26th, from 10-10:30am I'll hosting "Online Video Syndication and Advertising: What's Working" with Brent Horowitz, VP of Business Development for FreeWheel, a leading provider of advertising solutions for content providers pursuing third-party syndication. Brent and I will discuss the pros and cons of online video syndication and how content providers can participate.

Ping me if you're planning to come to NATPE and let's try to meet up!

Making video ads more engaging has become a key initiative for many online video ad companies. They're responding to agencies and advertisers searching for additional ways to generate an ROI from their online video ad campaigns and further flexibility in how they deliver their messages. The moves come amid strong growth across the industry. Companies that have introduced enhanced interactivity include:

YuMe - introducing today the new "Triple Play" ad unit, which allows the advertiser to insert up to 3 calls to action (e.g. sign up for more info, watch more videos, etc.) after the video ends. YuMe's co-founder and president Jayant Kadambi told me that increasing choice for advertisers and agencies is a key goal. Separately, YuMe reported delivering 2.5 billion ads in Q4 '09, its strongest quarter to date, including an average of 30 million ads/day in Dec '09.

Jivox - introducing today custom interactivity allowing advertisers and agencies the ability to add their own Flash and HTML applets so users can interact within the player itself (example here, roll over the "Experience BMW" to see the interactive options). Diaz Nesamoney, Jivox's President, CEO and founder also explained to me last week that while the company continues operating its own ad network, its fastest-growing segment in '09 was licensing its platform to media companies (e.g. Gannett, McClatchy, Meredith, etc.) who want to sell their own video ads. Revenues were up 600% in '09 with 3,000 new advertisers.

Tremor Media - last week Tremor rolled out six new ad formats for enhanced interaction and engagement: Pre-roll Plus Overlay, vChoice Select, vChoice Rotator, Data Feed, Sequencer and In-Stream Live. The formats, which all use the company's Acudeo ad management platform, build on last June's introduction of its vChoice format. According to comScore's most recent Nov '09 numbers, Tremor was the largest video ad network with potential reach of 85 million viewers or 49.8% of the total U.S. viewing audience and actual reach of 20% of viewers.

Innovid - launched the iRoll, interactive pre-roll ad unit, in '09, which can embed a mini-web site in the video ad itself. Innovid originally pursued product placement through the insertion of Flash objects, but CEO and co-founder Zvika Netter told me recently that, based on agency feedback, it has decided to focus on enhancing interactivity. Innovid is still early stage, but its profile is growing. For example, Netter was recently selected as one of Time magazine's eight "Tech Pioneers Who Will Change Your Life."

ScanScout - Last but not least, in Oct '09 ScanScout unveiled its "Super Pre-Roll" unit, which also enhances interactivity within the ad itself (the Vaseline demo for a great example). Waikit Lau, ScanScout's co-founder and president told me that advertisers are drawn to the unit's superior click-through rates, which are up to 4.5 times higher than typical pre-roll ads.

All of these moves show that in-stream video ads are continuing to evolve to provide more value and a better ROI to advertisers, while also delivering an improved experience to users. No doubt this contributed to the strong '09 that many online video ad executives have reported to me. With the ad climate improving and further engagement opportunities inevitable, there is plenty of reason to believe that spending in the medium will continue to grow.

Note - if there are other initiatives you're aware of that I've missed, please leave a comment.

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Question: How much difference is there between Comcast offering its TV Everywhere service to its own multichannel video subscribers in its geographical footprint, who have chosen to get their broadband Internet service from another company (e.g. Verizon, AT&T, etc) vs. Comcast offering TV Everywhere services to consumers who similarly get their broadband Internet service from one of these companies (or another cable operator), but happen to also get their multichannel video service from another company (e.g. another cable operator operating in a non-Comcast geographical area)?

If you answered "not that much," then you'll likely have the same reaction that I did upon reading last week's Light Reading article, "Comcast to Expand 'Xfinity' to DSL Subs," which describes Comcast's plan to offer its Fancast Xfinity TV (which I call FXTV) TV Everywhere service to those of its video subscribers who use DSL or some other method to connect to the Internet instead of Comcast's own broadband service by the second or third quarter of 2010.

(As quick background, in December, Comcast launched the beta of its FXTV service, but it's only been available to homes that subscribe to both broadband and video, which is about 14 million out of the 24 million who subscribe to Comcast's video service. Of that 10 million difference, using the 70% national broadband penetration rate, I'd estimate there are about 3 million of Comcast's multichannel video subscribers who use Verizon, AT&T or someone else for their broadband access.)

When I read the article, my reaction was: if Comcast is going to target this group of users, wouldn't the next logical step in FXTV's rollout be to offer it to non-Comcast video subscribers? This is the concept I suggested back in September in, "How TV Everywhere Could Turn Cable Operators and Telcos Into Over-the-Top's Biggest Players." In that post I argued that with sizable revenue per subscriber gains largely behind it, Comcast' big growth opportunity is to expand into other cable operators' territories, by offering FXTV as a TV Everywhere 2.0 over-the-top service in those areas.

To be sure, I noted that this type of move would be a serious breach of protocol in the insular cable industry, and with today's incomplete FXTV offering it wouldn't be viable competitively just yet anyway. But given nationally-oriented competitors like DirecTV, DISH Network and newer OTT alternatives like Netflix mobilizing, it seems logical that somewhere down the road, Comcast, whose geographical reach today only encompasses about 25% of American homes, will have to go national to stay even.

When Comcast's executives have been asked about the possibility of FXTV as an OTT service they have denied any intentions. With their hands full making sure FXTV is working properly for its current subscribers, that's probably the case, at least for now. Plus, with the NBCU deal facing regulatory scrutiny and the net neutrality debate heating up again, Comcast certainly isn't going to hint at anything that would further expand its dominance. But still, given competitive issues, will limiting FXTV access to its own multichannel video subscribers remain the case? It will be interesting to see if and when this changes.

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1. Goodbye to RealNetworks' Rob Glaser - For broadband veterans like myself, this week's news that RealNetworks' founder and CEO Rob Glaser is stepping down from the CEO role after 16 years brought to mind how far the online video and audio worlds have come, in a relatively short time. Having done a fair amount of work with Real back in my Continental Cablevision days, some of my first memories of seeing video delivered through the Internet were with the RealPlayer.

There is no question Rob was one of the pioneers of the online video industry, and everyone working in the industry today owes him and Real a debt of gratitude. In the Internet's first wave, Real was out ahead of everyone in audio and video. Unfortunately for the company, Microsoft's decision to roll out its own media player (and to bundle WMP with Windows) scrambled Real's future and set off years of antitrust litigation. Over the years Real has tried many things, some of which worked and some of which were serious head-scratchers (Ryan Lawler recounts 5 of the company dumbest moves here).

Personally, it's been a while since any video I wanted to watch required the RealPlayer download. And the last time I did download it, I was so incessantly bombarded with offers that I uninstalled it and swore I'd never download it again. Nonetheless, Real remains one of the largest digital media and technology companies, with $140 million in Q3 '09 revenues and almost $400 million in cash and short term investments. The new CEO will inherit all this, plus the challenge of how to make Real a more significant player in a broadband-dominated world that Rob envisioned so many years ago.

2. ESPN: "Mobile will be bigger than the web" - I'm always on the lookout for insights from content executives charged with building their company's mobile initiatives (and mobile video more specifically) and so I found MocoNews.net's interview with John Zehr, ESPN's SVP and GM of Mobile a worthwhile read. ESPN has made a ton of progress in mobile since its MVNO was shut down and the post provides growth stats on some of ESPN mobile's most successful efforts.

Reflecting the key shift in mobile away from "on-deck" carrier-focused distribution deals to a more open Internet-like environment, Zehr said ESPN's mobile revenue model is built on payments from aggregators like FLO TV and MobiTV, advertising and app sales. That sounds a lot like the traditional cable model of affiliate fees, advertising and ancillary revenues like commerce. And just like in cable ad sales, ESPN sells all of its mobile ads itself, avoiding third-party ad networks that it believes would commoditize the ESPN brand. ESPN is clearly bullish on mobile, with Zehr saying "Not too far in the future, mobile will be bigger than the web." With the Apple vs. Google mobile war getting underway there's a lot of momentum building. Still, to keep things in perspective, we're a long way from mobile eclipsing the web.

Amid all of the attention Netflix has been receiving for embedding its streaming software in one consumer electronics device after another (the Wii just yesterday) and its recent Warner Bros. deal, it's been easy to overlook the fact that Blockbuster has been getting some online traction itself. One announcement at CES last week, by ActiveVideo Networks, caught my attention as it has the potential to leapfrog Blockbuster On Demand's user experience past Netflix's Watch Instantly.

Much as I'm a big fan of Netflix's Watch Instantly streaming feature, one of its limitations is that the user experience is very segregated between computer and TV. You browse and search online for titles - just as you would for DVDs - and then when you've made your choices, they show up in your Instant Queue online and on your connected TV (via Roku, Blu-ray, Xbox or other device). While it's a perfectly functional approach, wouldn't it be nice if you could do the entire process of search, discovery, previewing, selection and viewing on the TV itself?

That's the experience that ActiveVideo Networks' CloudTV will be helping Blockbuster on Demand deliver to its users. As ActiveVideo's CEO Jeff Miller explained to me yesterday, when deployed, the Blockbuster on Demand app (developed using ActiveVideo's JavaScript/HTML authoring kit), will give Blockbuster's users a web-like experience of search, discovery and previewing on their TVs, via connected devices. In addition, it will present viewing options - streaming, download-to-own and in-store rental (via an API it will even show current availability in selected stores).

The requirements are that ActiveVideo's thin client has been integrated with the device, and that Blockbuster has its own deal with to distribute through the specific device manufacturer. Navigation is via the remote control using an on-screen keypad (see example screen shots below from last week's CES demos).

Similarly, ActiveVideo is also focused both on CE (currently through a partnership with middleware provider Videon Central) and on cable. It has deployed on set-top boxes with Cablevision and Oceanic Time Warner Cable in Hawaii, reaching an audience of 5 million homes. Content providers that have developed apps include Showtime, HSN and Fox, among others. No doubt ActiveVideo and Blockbuster will synch up their biz dev activities to proliferate the Blockbuster on Demand app as widely as possible.

I have to admit that I haven't been paying too much attention to Blockbuster, as it has worked to re-position itself, aiming to close another 1,000 stores by the end of the year and installing more kiosks to compete with Redbox. Of course, it can ill afford to allow Netflix to get too far out in front of it in digital delivery as DVD rentals are poised to be supplanted by streaming down the road.

But Blockbuster has an ubiquitous, if somewhat dated, brand that could be skillfully leveraged into the digital era, provided it has the right services in its arsenal. In this respect, the potential to bring a converged user experience between online and connected TVs is a meaningful differentiator. No initial joint customers have yet been announced by Blockbuster and ActiveVideo, though I expect that soon. And, as online video and TV continue to converge, ActiveVideo is likely to find itself in the middle of a lot of action. All of this is worth keeping an eye on.

(Note - ActiveVideo Networks is a VideoNuze sponsor)

Encoding.com, one of the earliest companies to offer video encoding/transcoding as a service, announced yesterday that it would now be using The Rackspace Cloud as its primary cloud computing environment, a switch from Amazon's EC2. The move is significant as it is another indicator of how the still nascent video encoding as a service is evolving to fit into the overall encoding landscape. Jeff Malkin, Encoding.com's COO and Chandler Vaughn, The Rackspace Cloud's director of product development, gave me an update yesterday.

Media companies have traditionally done their encoding and transcoding in-house, using software from companies like Anystream, Telestream, Digital Rapids, Rhozet and others. As I originally wrote last April, companies like Encoding.com, mPoint and HD Cloud have begun offering alternatives that allow these processes to occur in the "cloud." The idea is that media companies can essentially rent encoding/transcoding capabilities as needed for a fee from companies who do their processes on a third party's infrastructure such as The Rackspace Cloud or Amazon's EC2. For media companies, the new encoding/transcoding service providers' primary value propositions are lower overall cost (both opex and capex), elimination of on-site responsibility for hardware and software, and flexibility.

Jeff reported that Encoding.com is now serving 400 customers, with user-generated content sites like StreetFire still a meaningful part of its business. The company has encoded 3.5 million videos to date and is now encoding 30K source videos/day. Jeff said that established companies like MTV and Brightcove are using Encoding.com's services, but noted that larger media companies are still just dipping their toe into encoding as a service. In particular Jeff said that given turnaround times, the ability to do encodes for full-length HD-quality files on a service basis is not yet practical.

This echoes what an executive at a large encoding software company told me recently - that for the biggest media companies, which have large files that need to be turned around quickly, encoding in the cloud doesn't yet make sense. Another issue is the reluctance to move source files outside the media company's firewall.

Encoding.com's move to Rackspace begins to address some of these issues. Jeff highlighted 3 primary reasons for the switch - Rackspace's CPU bursting capability, which can offer 2x the processing performance of EC2 (The Bitsource just posted a performance comparison analysis); closer proximity to customer's files, as Rackspace is the managed hosting provider for thousands of web sites; and Rackspace's customer support, which improves Encoding.com's ability to deliver on its service level guarantees.

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Online video platform provider Ooyala unveiled a partnership yesterday with NTT SMARTCONNECT that expands the company into Japan. Under the non-exclusive deal, the two companies will collaborate to create a localized and co-branded version of Ooyala's Backlot platform. Marketing and sales are set to begin in February.

As part of the announcement Ooyala also provided some 2009 updates: contracted customers grew from 30 to 300, self-serve customers grew five-fold, the Ooyala player now delivers hundreds of millions of streams/mo to 50 million unique users/mo, it transcodes 60K hours of video/mo and the company now has 70+ employees.

Ooyala also said that 50% of its customers are marketers, and outside of the traditional media space. The company cited Electronic Arts, for which it powers video on 30 different properties, General Mills and Cerner. The non-media focus parallels what Brightcove recently told me, that over half its business now comes from non-media customers (e.g. business, government and education).

As I wrote recently, despite all the growth in the online video platform space, it's still relatively early days. To be in the top tier as the market matures will require providers to scale their operations, including international expansion and serving customers outside the core media market. It looks like Ooyala understands this as well.

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