VideoNuze Posts

Below is the 8th edition of the VideoNuze Report podcast, for Feb. 20, 2009.

This week Daisy Whitney and I discuss the recently-revealed plans by Comcast and Time Warner to offer their subscribers online access to cable TV programming. I wrote about this at length this week in "The Cable Industry Closes Ranks - Part 2."

We're now just 2 1/2 weeks away from VideoNuze's Broadband Video Leadership Evening, on Tuesday, March 17th in New York City. There are 160+ people registered and the event will be a premier opportunity to meet industry colleagues and learn from top-tier digital media executives on the front lines of the video revolution.

We'll start with a "VideoSchmooze" cocktail/networking reception from 6pm - 7:30pm, followed by a panel discussion I'll moderate from 7:30pm - 9pm titled, "Broadband Video '09: Building the Road to Profitability." The panel includes:

• Albert Cheng, EVP, Digital Media, Disney/ABC Television Group
• Greg Clayman, EVP, Digital Distribution & Business Development, MTV Networks
• John Edwards, President and CEO, Move Networks (new)
• Karin Gilford, SVP, Fancast and Online Entertainment, Comcast Interactive Media
• Daina Middleton, SVP, Moxie Interactive, Publicis Groupe (new)

Click here to learn more and register now!

There is so much happening in the broadband video world these days that we'll have lots to discuss. We'll certainly dig into the implications of Hulu's recent decision to pull its content from Boxee and TV.com, Comcast and Time Warner Cable's intent to bring cable TV programs online for their subscribers and Nielsen and comScore's recent data around video viewership trends. It's going to be an exciting and insightful panel for sure!

The event will be held at the Hudson Theater on West 44th Street just off Times Square. NATPE, VideoNuze's partner since launch, is on board for the event. And I'm extremely grateful to lead sponsor Move Networks and supporting sponsors ExtendMedia, Horn Group, mPoint and PermissionTV who are making the evening possible.

I've set up a Facebook group so you can start meeting other attendees and also keep up to date on all the recent broadband news we'll discuss on the panel. I also created a short video with key highlights of the evening (thanks to PermissionTV for production assistance).

Click here to learn more and register now!

This past Tuesday I highlighted some of Nielsen's recent data which showed, among other things, significant online and mobile video usage by younger age groups. In that post I noted that marketers need to pay close attention to these trends to ensure their products and services meet these users' needs and expectations.

New research from The Diffusion Group (a long-time VideoNuze partner) provides a window into how users think about accessing video across multiple screens, and who the providers might be. TDG has recently completed a survey of 2,000 adults (18 or above) which tested interest in two-screen and three-screen services along with content and features. TDG has graciously provided a sample of the slides for complimentary download by VideoNuze. You can download the slides here.

TDG defined a three-screen service as "a single video service which feeds all your household TVs, PCs and mobile devices, for a single monthly fee, from a single service provider, and with relatively equal content, variety and quality of service for all three devices."

TDG found that almost 25% of those surveyed responded positively to such a package. Whereas video marketers would have traditionally considered heavy TV viewership (25 hours/week and above) to be the most important criterion for driving more video services adoption, these so-called "three-screen intenders" don't exhibit heavier TV viewership than non-intenders (though they're slightly higher in moderate viewership, 11-25 hours/week).

Rather, the behavior that distinguishes three-screen intenders is how much online viewing they're doing. The intenders are far higher consumers of online video in general, and of online TV programs in particular. In other words, their behaviors are already self-selecting them as the targets for a three-screen service offering. That of course makes it much easier for marketers to find and target them.

All of this certainly supports Comcast's and Time Warner Cable's recently revealed plans to offer their video subscribers online access to programs. Better news still for these companies is that TDG found that cable operators were the top choice by intenders as the preferred three-screen provider. Cable was chosen by 31.7% of intenders, almost double the amount that selected satellite operators. Translation: there is a sizable group of consumers interested in three-screen services and cable appears to be in the prime position to capitalize on this.

Of course, the next question then is whether cable operators should charge for these services or imitate Netflix's example with Watch Instantly by including them as a value add to existing digital services. In my opinion, at least some of the online viewing capability should be included for no extra charge. That would go a long way toward establishing loyalty, and position cable for even greater competitive gains.

Click here to download the complimentary slides.

What do you think? Post a comment now.

Local advertising has of course been around since the beginning of time. And even the idea of allowing local SMBs to create video ads is not a new concept; cable operators' local ad divisions have been doing this for years. What's relatively new in the local ad space are companies that allow a far higher degree of self-service video ad creation and campaign management by the client, online placements of their ads, and much improved analytics and ROI measurement capabilities vs. traditional cable TV.

For some local merchants, engaging in this process will be overwhelming and they'll stick with the tried and true local options like newspaper, radio and yellow page listings. But I believe that for many others, who recognize that their customers are increasingly going online to find local merchants and understand that a video packs far higher emotional punch than a text ad, this new alternative will be highly compelling.

There are multiple fairly well-funded players covering the local SMB video ad space, each with their own particular points of differentiation. They include Spot Runner, Spot Mixer, Jivox, Mixpo, PixelFish and others. Some like Spot Runner don't limit themselves to online distribution only, they're targeting TV as well. But the basics are relatively similar: a low-cost, often self-service ad creation process, a pretty well-defined way of targeting the intended audience through locally-oriented sites, and fairly flexible campaign/spending options. A persistent goal is to make it incredibly easy and cost-effective for local SMBs, who have most likely never done anything like this, to get up and running quickly.

To get a better feel for this all works and how SMBs are benefitting, I recently spoke with both Jim Gustke, VP of Worldwide Marketing at Jivox and Stephen Condon, VP of Marketing at PixelFish. Jivox, which raised $10.5 million last summer, reported that it doubled its customer base in Q4 '08. Jim said a real differentiator for the company is its publishing network of 800 premium sites and 65 million monthly unique visitors. This allows it to offer advertisers improved targeting and analytics vs. competitors who can only promise placements on affiliated sites. Jivox video ads auto-play in a 300x250 window on the publisher's site with audio off until initiated by the user. Better still for the advertiser, Jivox only charges for ads when 100% of the video has been viewed, thereby providing a pay-for-performance value proposition as well.

Jim said the most popular local categories include cosmetic surgeons, dentists, contractors, hospitality and legal. Demonstrating how active the category is, most of Jivox's new business has come through search. New advertisers pay as little as $250 to get started.

Meanwhile, Stephen explained that PixelFish employs a more customized and channel-centric approach, getting 80% of its business through partners like YellowBook, Google TV and others who are interfacing directly with the SMBs. That means PixelFish overlaps a bit with TurnHere and other video production networks. When one of its partners generates an order, PixelFish taps into its network of videographers to shoot specific footage which is then centrally edited and produced for the client. Through online editing tools recently acquired from EyeSpot, the advertiser can make changes to the ad himself and continue to make updates to it as offers change.

"Democratization" is a much-overused word, but here I think it really does apply. Even with local cable advertising, the cost of producing and running a TV ad has been prohibitive for many local merchants. These new companies are changing that, making video advertising accessible and affordable for the first time for broad swaths of local SMBs. Incumbents like local cable, newspapers and radio need to prepare themselves as the power of broadband and search-based marketing disrupt their status quo. I'm expecting this new crop of companies is going to drive a lot of change in this space.

What do you think? Post a comment now.

VideoNuze readers can click here and use code "X104" to obtain a free show pass. There are exhibitor opportunities still available. Contact me to learn more.

Yesterday Nielsen released the Q4 version of its A2/M2 Three Screen Report, which measures video usage across TV, online and mobile. The report is here, and Nielsen does a nice job of summarizing some of the key numbers and trends. In particular, for those concerned about traditional TV's potential demise, the new data should provide some comfort. Nielsen reports that TV viewership was at a record 151 hours per month per average viewer in Q4, up from 140 hours in Q3 (a jump that Nielsen doesn't explain, but which I can only ascribe to the growing ranks of the unemployed spending more time in front of the tube).

I looked at the data Nielsen released and there are additional key insights that I think are worth noting. I always find it most useful to focus on the changes in younger people's consumption habits. That's because younger people are generally more comfortable with technology and what they do today is often a leading indicator of what older cohorts will be doing tomorrow. For marketers in particular, younger people's behavior is crucial because it reveals the preferences of a greater and greater share of would-be buyers in the years to come.

With that context, I was interested in the consumption of three newer forms of video Nielsen is measuring (timeshifted/DVR-based video, Online video and Mobile video) as a ratio of traditional TV consumption. While not exact, I believe these respective ratios give us a glimpse into the emerging viewing preferences by age group, and what trends may lie ahead. When looked at this way, I found three interesting things.

First, the ratio of mobile video consumed to traditional TV consumed for the 12-17 age group is off the charts compared to all other age groups. For those in this age group that watch mobile video, they watch about 6:38 hours/minutes per month, compared to their average of 103.48 hours/minutes of traditional TV per month. That ratio of 6.2% far outpaces all other age groups; the next nearest one is 25-34 year olds which watch 2.4%. The youngest are clearly embracing mobile video and will no doubt expect more out-of-home options and value as they mature.

Second, the ratio of online video consumed to traditional TV consumed for the next youngest age group, 18-34 is significantly higher than for all other age groups. 18-34 year olds watch 5:03 hours/minutes of online video per month on average, compared with just 118:28 hours/minutes of traditional TV per month on average, for a ratio of 4.3%. No other age group exceeds a 3% ratio. Further, 18-34 years watch slightly more online video than time-shifted video. Clearly this group views online as a bona fide on-demand platform and is likely most primed for "cord-cutting." Cable operators' moves to offer programs online will likely resonate strongly.

Lastly, the ratios of timeshifted/DVR video consumed to traditional TV consumed for the 25-34 and 35-44 age groups are far higher than for all the other age groups. 25-34 year olds watch 10:50 hours/minutes of timeshifted TV per month on average, compared to 142:29 hours/minutes of traditional TV per month on average for a 7.4% ratio. For 35-44 year-olds its 9:44 hours/minutes of timeshifted compared to 147:21 hours/minutes of traditional TV for a 6.4% ratio. No other age group even reaches a ratio of 5%. Time-shifting and its ad-skipping - its frequent companion behavior - are becoming increasingly prevalent for these age groups.

On the surface the Nielsen data suggests that traditional TV consumption is quite durable even as newer viewing platforms are introduced. Yet when numbers like those above are factored in, it becomes apparent that for certain age groups, behavioral change is well underway. This is data that market participants need to pay close attention to and then plan accordingly.

What do you think? Post a comment now.

Here's a short video overview of the March 17th Broadband Video Leadership Evening (thanks to Permission TV for producing). Note that I misspoke and that the price for an individual ticket is actually $60. More information and registration is at http://www.nyc.videonuze.com/. Look forward to seeing you there!

An article in Friday's WSJ "Cable Firms Look to Offer TV Programs Online" outlined a plan under which Comcast and Time Warner Cable, the nation's 2 largest cable operators, would give just their subscribers online access to cable networks' programming.

A Comcast spokesperson contacted me later Friday morning to explain that the plan, dubbed "OnDemand Online" is indeed in the works, though a release timeline is not yet set. The move is part of the company's "Project Infinity" a wide-ranging on-demand programming vision that was unveiled at CES '08, but oddly has not been messaged much since. Meanwhile, thePlatform, Comcast's broadband video management/publishing subsidiary also called me on Friday to confirm that - unsurprisingly - it would be powering the OnDemand Online initiative (thePlatform's CEO Ian Blaine explains more in this post).

The idea of cable operators setting up online walled gardens for their subscribers alone was first signaled by Peter Stern, Time Warner's EVP/Chief Strategy Officer on the panel I moderated at VideoNuze's Broadband Leadership Breakfast last November. As I wrote subsequently in "The Cable Industry Closes Ranks" my takeaway from his and other cable executives' recent comments was that the industry was poised to collaborate in order to defend cable's traditional - and highly profitable - business model. Under that model, cable operators currently pay somewhere between $20-25 billion per year in monthly "affiliate fees" to programmers whose networks are then packaged by operators into various consumer subscription tiers.

It should come as a surprise to nobody that both cable networks and operators are mightily incented to defend their model against the incursions of free "over the top" distribution alternatives. Indeed what's surprising to me is why it has taken the industry so long to act forcefully when the stakes are so high and the market's moving so fast? I mean cable operators themselves are the largest broadband Internet access providers in the country, and they have watched for years as their networks have been engorged by surging online viewing, courtesy of YouTube, Hulu, Netflix and others. While they've made some tepid moves to push programming online (though to be fair Comcast's Fancast portal has evolved quite a bit recently), overall their broadband video distribution activities have been underwhelming, evidence of broadband distribution's lower priority status vis-a-vis TV-based video-on-demand.

Meanwhile Friday's article triggered plenty of hackles from the blogosphere that those evil cable operators were up to their old monopolistic tricks, this time moving to control the broadband delivery market and choke off open access to premium video. While it's indeed tempting to see these plans that way, I think that would be the wrong conclusion.

Rather, I look at the Comcast/TWC moves as both welcome and likely to spur more, not less, consumer access to broadband-delivered programming. That's because, if the cable networks are smart in their negotiations, they will gain from operators the approval to push more of their programs onto both their own web sites, and even to distribute some through others' sites. With net neutrality agitators hopeful in the wake of Barack Obama's election, Comcast and TWC need to tread carefully in these negotiations. Yet another part of the model I foresee is archived programs, which have been locked up in vaults due to programmers' concerns over operator reprisals if they leaked out online, becoming much more openly accessible.

The Comcast/TWC hecklers need to remember one simple fact: to make quality programming requires solid business models. And in this economic climate, solid business models are far and few between. Despite having lost a total of over 500,000 video subscribers during the last 6 consecutive quarters, Comcast still owns one of those few sold models. And don't forget it is now investing to increase its broadband speeds, pledging 30 million, or 65% of its homes, will have 50 Mbps access by the end of '09 (a rollout which incidentally is all privately financed, without a dime of federal bailout money or other assistance).

Someday, when broadband video business models mature (as indeed they ultimately will), there will be lots of cable and other programming available for free online. For now though, getting Comcast and TWC to finally pursue an aggressive broadband distribution path is a welcome evolutionary step in unlocking this exciting new medium's ultimate potential.

What do you think? Post a comment now.

(Note: we'll be diving deep into this topic, and others, at VideoNuze's Broadband Video Leadership Evening on March 17th in NYC. More information and registration is here.)