VideoNuze Posts

Brightcove is announcing some significant executive and board additions today and also posting a review of its '08 progress. On the executive front, Jeff Whatcott (formerly at Adobe and Acquia) is coming on as SVP of Marketing, replacing Adam Berrey, who's been in the role from the company's inception. Mike Quinn (formerly at FAST) is joining as SVP, Sales for the Americas. And David Mendels (formerly at Adobe) and Deb Besemer (formerly at Lotus and BrassRing) are joining the company's board of directors.

As for '08, CEO Jeremy Allaire's letter to customers (posted here) provides the following highlights:

• Launch of Brightcove 3, the updated version of the company's platform
• International expansion with a new office in Germany and formation of a Japanese subsidiary
• Launch of Brightcove Alliance, the ecosystem of 100+ partners (see VideoNuze related post)
• Triple digit revenue growth for third consecutive year
• Plan to reach profitability in '09

As the video management/publishing platform company that has raised the most funding, many in the industry continue to focus on Brightcove as a key indicator of the market's health. With economic and ad spending pressure everywhere, their 2009 progress will be closely watched.

What do you think? Post a comment now.

If you haven't noticed, the theme at VideoNuze this week has been broadband-enabled TVs, since this has been one of the main themes of this week's CES. On Monday, when the dust has settled, I'll recap some of the key deals. For today though, I want to inject a small dose of reality into the hype that's starting to build up around broadband-enabled TVs.

First off, I'm thrilled to see an ecosystem of technology leaders, TV set manufacturers, content providers and aggregators taking shape around broadband-enabled TVs. It's looking increasingly inevitable that broadband access is going to be a staple feature of HDTVs in the years to come. Just as you wouldn't consider buying an HDTV without multiple HDMI ports today, at some point in the future you'll be unlikely to buy one without broadband capability. That's pretty cool.

Still, what's missing from the flurry of this week's announcements is how the exciting new broadband path to the TV will actually be monetized by video content providers. I know that mundane questions like this aren't what people tend to focus on at glitzy CES, but they are critical nonetheless. With services like Netflix or Amazon VOD - which have been in the middle of several announcements - it's obvious enough how they'll benefit. The more pertinent question is how video that is ad-supported is going to work, especially since ad-supported video will always represent the lion's share of the average consumer's viewership time.

The broadband video ad model itself is still nascent, and this week's J.P. Morgan report shows that there's no shortage of lingering skepticism still overhanging it. Nonetheless, I'd argue we're at least at a point now where most market participants have a pretty good handle on broadband video advertising's basics - serving technologies/vendors, formats, expected delivery quality, CPMs, user preferences, click-throughs, etc. In short, I believe the foundation is pretty well in place for a strong ramp up of spending (notwithstanding the larger economic issues) as the broadband video world exists today.

But how much of that foundation will still be valid for broadband-enabled TVs vs. how much will need to be re-built (as is the case with mobile video)? Many of the answers are driven by the chips from Intel, Broadcom and others that are going into these TVs. Understanding their respective capabilities and how they'll support broadband video advertising's existing ecosystem is key.

One needs look no further than cable's VOD experience to date to recognize how important the building blocks for an effective advertising model are. While billions of VOD streams are now consumed, very little of it is monetized due to still-inadequate ad capabilities. Years after VOD's launch, these monetization constraints are curtail content providers' interest in participating in VOD. In fact, I'd argue that broadband has actually been a beneficiary of VOD's deficiencies: faced with a choice of where to allocate resources, many content providers have shifted attention to broadband because its monetization mechanisms are so robust.

Anyway, you get the point. Broadband-enabled TVs are very exciting. But to reach their potential, they must deliver a robust user experience and allow advertising to work effectively. In these penny-pinching, resource-constrained times, something that's cool is no longer enough to gain interest. People need to understand how they'll make money from it.

What do you think? Post a comment now.

At CES, Yahoo is making its presence felt in the budding broadband-to-the TV space with its "Yahoo Widget Engine." It has announced deals with TV manufacturers Samsung, LG, Sony and Vizio (see next post). It's an impressive list, and these Yahoo-enabled TVs are expected in the market later in '09.

Some of you may recall that the Yahoo Widget Engine debuted last summer as part of a broader alliance with Intel called the "Widget Channel". The two companies have come together to create an applications framework running on new Intel media processing chips. An SDK allows 3rd party developers to use web-standard technologies to develop applications for TVs and other CE devices. That's a mouthful, but the news coming out of CES appears to show that Yahoo/Intel are making progress building out the ecosystem of both TV manufacturers and 3rd parties applications.

In addition to Yahoo content like news, weather, finance and Flickr, there's 3rd party content from USA Today, YouTube, eBay and Showtime. And there are premium movie and TV programs from Netflix, Amazon VOD and Blockbuster. The list of others involved goes on.

All of this is very positive for the budding broadband-to-the-TV space and clearly demonstrates how much emphasis the non-incumbent video service provider (cable/satellite/telco) world is placing on "over the top" services. As expected, these incumbents have a big disruptive bull's-eye on their foreheads. For the numerous 3rd parties that have never had access to the consumers' TV, broadband's openness provides their first-ever entry pass.

As exciting as all this is, the jumble of TV, content, technology and aggregation brands coming to market is prime to create mass confusion for consumers being targeted with these services. Here's the scenario: a prospective TV buyer walks into a Best Buy just looking for a new HDTV, but pretty quickly starts hearing about all these different services and brands. Within minutes the consumer's head is going to be swimming. Which service and content is free and which costs extra? How does it all connect? What if I already have Netflix, Flickr or YouTube passwords - do they automatically work? Do I need to change something that's already in my house, like my home network? And who do I call if something's not working right? One sure winner with these new broadband TVs coming out is the Geek Squad!

Still, this is exciting stuff. A whole new world of broadband on the TV content and applications is finally poised to see the light of day and with it will come all kinds of new opportunities.

What do you think? Post a comment now.

Broadband video integrated TVs got another big boost as Vizio, one of the top 3 flat panel brands in the U.S. announced its new "Connected HDTV" platform at CES this afternoon. The move comes on top of Netflix's LG announcement, and other chip-based announcements from Adobe with Intel and Broadcom. More broadband TV announcements are sure to follow.

The new Vizio TVs will incorporate the Yahoo Widget Engine and support for Adobe Flash Lite. Importantly, the TVs will allow access to a very broad range of content including Netflix Watch Instantly, Amazon VOD, Blockbuster OnDemand, Accedo, Flickr, Pandora, Rhapsody and Yahoo. For Netflix and Amazon specifically, the Vizio deal continues building out the portfolio of 3rd party devices that play their video libraries.

What do you think? Post a comment now.

There's been a lot of buzz over the last couple of days about J.P. Morgan's just-released "Nothing But Net - 2009 Internet Investment Guide," including many references to Morgan's distinctly bearish commentary on online video. I'm always interested in what other analysts are saying about video, so I downloaded the document yesterday. Though it's 340 pages, only 2 pages (81-82) are devoted to online video specifically. (And incidentally, as best I can tell, that's 2 pages more than the "Nothing But Net - 2008" devoted to the video industry.)

I have to say I found Morgan's write-up to be quite superficial, with a generally dismissive tone regarding online video's opportunity. Like many Wall Street analyst reports I've previously read, it seems more focused on near-term financial prospects than longer-term strategic opportunities. An investment professional without in-depth knowledge of online video trends who read the report would likely conclude that it's not worth spending much time on online video, at least in the near term. That would be a critical mistake, because, as I've said many times, online delivery is the single most disruptive influence on the video industry today.

Morgan's analysis is strictly focused on the ad-supported model. No attention is paid to broadband's impact on the multi-billion dollar multichannel subscription TV or home video markets which companies like Netflix, Amazon, Apple and others are pursuing with disruptive fervor. As for advertising, while Morgan acknowledges that online video usage has taken off, it believes that "performance-based marketers and brand advertisers are looking at three variables in determining their investment: reach, content quality and performance measurability." In Morgan's view, today's "advertising formats do not appropriately address these three variables."

It's important to note that a key Morgan theme is that performance-based advertising models like search are more desirable than CPM-based models like display, and most video ads today. Morgan believes (and I do agree) that performance and ROI-tracking will become even more important in the down economy where ad dollars are scarce and must deliver real sales results.

Still, the reality is that over time, online video ad dollars are most likely to be shifted from TV, which is a CPM-based medium. And online video ad units offer far greater interactivity than TV ever has. But this still misses a larger point - video is a CPM-based medium because video is the pre-eminent media format to make an impression on a consumer. Nothing packs the same emotional impact as video, and that's why brands have always been drawn to TV advertising. In short, while the overall online ad market is shifting to performance, brands will always need a visual medium. With all the challenges traditional TV has (e.g. DVR-based ad skipping, audience fragmentation, etc.), online video formats that are engaging, non-skippable and interactive will gain in appeal.

If brands' interest in online video advertising is so challenged, you wouldn't know it from actual experience. In 10 minutes of random sampling this morning here are ads I saw: Oreos (MTV.com), HP (ComedyCentral.com), Blackberry, Target (Hulu), Gillette, IBM (ESPN.com), Ritz, Sears (ABC.com) and Dunkin' Donuts, Robitussin (Yahoo). I'm not suggesting that the online video medium doesn't have its challenges in attracting brands, but based on everything I continue to hear, the premium video sites in particular - like those cited above - are holding up pretty well even in this environment. Even much-maligned user-generated video may have some unexpected silver linings; just yesterday it was reported that Japanese anime producer Kadokwa Group Holdings is pulling in $110,000/mo from its YouTube channel stocked with user-created material.

Far from being the uninteresting medium that the Morgan report depicts, online video has already become a bright spot for many established content providers whose traditional models are under pressure. It is also opening up new opportunities for new ad-supported entrants. And it is threatening to completely upend the paid part of market through improvements in "over-the-top" technologies and consumer services.

To be sure, the medium is still in its adolescence. But that's all the more reason why savvy investors, entrepreneurs and other market participants who look past cursory industry reports, and instead choose to dig in and understand the massive disruption online video is causing will do quite well in the long term.

What do you think? Post a comment now.

Amazon and Roku announced yesterday that Amazon's VOD service will soon be available on Roku's $99 Digital Video Player. The deal starts to make good on Roku CEO Anthony Woods's intentions about "opening up the platform to anyone who wants to put their video service on this box."

With Amazon VOD's 40,000+ TV programs and movies added to the 12,000 titles already available to Netflix subscribers via its Watch Instantly service (plus more content deals yet to come), little Roku is starting to look like a potentially important link in the evolving "over-the-top" video distribution value chain.

More interesting though, is that I think we're starting to see the battle lines drawn for supremacy in the download-to-own/download-to-rent premium video category between Amazon on one side and Apple on the other. Though Apple dominates this market today, having sold 200 million TV programs alone, there are ample reasons to believe competition is going to stiffen.

Apple is of course in the video download business for the same reasons it was in the music download business: to drive sales of the iPod and more recently - and to a lesser extent - the iPhone. According to the latest info I could find, iTunes now has 32,000+ TV programs and movies, including a growing number in HD. For now that's slightly less than Amazon VOD, but my guess is that over time the two libraries will be virtually identical.

While Apple has a near monopoly on portable viewing via the iPod and iPhone, it is a laggard in bridging broadband-to-the-TV. Its Apple TV device, introduced in January, 2007, and meant to give iTunes access on the TV, has been an underperformer. Certainly a detractor has been price, with the 40GB lower-end model still running $229. But more importantly, as an iTunes-only box, Apple TV perpetuates a closed, "walled-garden" paradigm that consumers are increasingly rejecting (as companies like Roku astutely understand).

For Amazon, the world's largest online retailer, video downloads are a rich growth market. The company brings significant advantages to the table, starting with tens of millions of existing customer relationships with credit cards or other payment options just waiting to be charged for video downloads. Amazon has strong brand name recognition and trust. And of course, it has a near-limitless ability to cross-promote downloads with DVDs and other products.

Determined not to be left behind in the great race to get broadband delivered video all the way to the TV, it has been integrating its VOD service with 3rd party devices like TiVo, Sony's Bravia Internet Video Link, Xbox 360 and Windows Media Center PCs. Its latest deal with Roku is far from its last.

Amazon VOD's adoption will benefit from the fact that there are many non-Amazon reasons that people will be buying these devices. For example, consider Roku, TiVo and Xbox 360. With Roku, Netflix is fueling sales. As Netflix subscribers realize that new releases are generally not available in Watch Instantly, but are through Amazon VOD on Roku, they'll be prone to give Amazon VOD a try (the Netflix limitation is course due to Hollywood's windowing, and another reason why I believe it's crucial for Netflix to make deals with broadcast networks for online distribution of their hit programs). For TiVo and Xbox 360, each has a well-defined value proposition for consumers to purchase. Amazon VOD's availability is a pure bonus for buyers.

Apple and Amazon hardly have the market to themselves though. Others like Microsoft Xbox LIVE, Vudu and Sezmi are vying for a place in the market. And then of course there are the VOD offerings from the cable/satellite/telco video service providers, who have big-time incumbency advantages. Not to be forgotten in all of this is consumer inertia around the robust DVD market, which to a large extent all of these video download options seek to supplant.

In the middle of all this are Joe and Jane Consumer - soon to be overwhelmed by a barrage of competing and confusing offers for how to get on-demand TV program and movie downloads in better, faster and cheaper ways. In this market, I believe simplicity, content choices, brand and especially price will determine the eventual winners and losers. These are front and center considerations for Amazon, Apple and all the others going forward.

What do you think? Post a comment now.

Happy New Year and welcome to 2009.

The new year is picking up right where the old year left off - with Netflix adding yet another way for its subscribers to use its Watch Instantly streaming service on their TVs. Today's announcement that its WI software will be embedded in a select number of new LG "Broadband HDTVs" is more evidence of how content providers and consumer electronics companies are aiming to go "over the top" of cable/satellite/telco, driving high quality broadband video all the way to the TV.

The new LG Broadband HDTVs joins XBox 360, TiVo, Samsung and LG Blu-ray players and Roku as options for Netflix subscribers looking to watch WI on their TVs. The differentiator here is that this is the first "boxless" approach, so it offers a potentially simpler (though not less expensive) solution for consumers. No doubt it is the first of many deals Netflix will announce with TV manufacturers in '09.

Still, my bet is that the group of box-based solutions will matter more to WI usage for a long time to come. That's because, even though LG is the #3 HDTV manufacturer, TV set replacement cycles are getting longer with the down economy, the new Broadband HDTVs will likely have a several hundred dollar price premium, and importantly, a solid portion of the existing Netflix subscriber target audience for these broadband sets may have long since been using one of the box-based alternatives and not see a lot of incremental benefit in buying one of the LG Broadband HDTVs.

Nevertheless, I think an interesting target market for these sets are non-Netflix subscribers, who are open to a "cord-cutting" proposition. Netflix is laying the groundwork for becoming a genuine alternative to today's multichannel subscription video services. As I've said before, to make itself more viable as an alternative, the most important thing Netflix can do is beef-up WI's broadcast network programming library.

When top-tier broadcast network programming is combined with its movie catalog, Netflix could become very appealing for consumers who don't care much about cable network programs or sports. For $17/month for Netflix vs. $60/month or more for a typical digital TV package from cable/satellite/telco, the math on paying the premium for the Netflix-enabled LG TV becomes much more interesting. Importantly, the retailer has a much stronger hook to sell the LG Broadband HDTVs, especially if, as an added incentive, Netflix perhaps threw in a 3-4 month trial subscription.

The bottom line here is that Netflix continues to do the right thing by building out the portfolio of devices that play its WI streaming programming. The bigger the addressable audience is, the more that content providers of all stripes will take notice and want to do deals (Netflix's expansion of its promotional deal with Showtime is a useful data point on this subject). No other non-cable/satellite/telco subscription video service is close to Netflix in terms of number of subscribers, compatible streaming devices, library or brand name. In '09, Netflix is poised to build on these advantages as it morphs itself into an over-the-top broadband powerhouse.

What do you think? Post a comment now.

At last, it's time to say goodbye to 2008. I'm sure we'd all agree that for all kinds of good and not-so-good reasons, the year will be one to remember.

2008 was an important year of growth and change for the broadband video industry. To me, the most significant development was the first-time use of broadband video by millions of users and the deepening use of it by millions of others. Broadband is well on its way to becoming the most adopted and heavily-used medium ever.

There were many key moments during the year which drove users to their PCs (mainly) to check out the videos they wanted, when they wanted them. Moments like the Summer Olympics, Tina Fey's Sarah Palin sketches, Jeremiah Wright's rants, to name just a few. It was also a year in which broadcast programs were viewed online millions of time, offbeat user-generated videos continued their popularity and professional talent launched their own broadband-only initiatives.

As I've said repeatedly, broadband's "openness" - the ability for any content provider to connect directly with its intended audience - is its most critical differentiator. Broadband's openness is causing transformational change in the traditional video distribution value chain, impelling incumbents of all stripes to evolve in order to survive. Meanwhile, a whole new crop of content providers, distributors and technology companies has sprung up to seize broadband's new opportunities.

It is both dizzying and exhilarating to make sense of all of this. When I first started VideoNuze in the fall of '07, the thought of trying to do so was quite nerve-racking. Yet through countless interactions with many of you, I've gotten my groove as the year has progressed. I continue to learn something each day from the large and growing VideoNuze community, and hopefully through the increasing number of comments on the site, you're learning from each other as well.

In 2008, VideoNuze's first full year, between me and a handful of contributors, there were over 300 posts, totaling over 175,000 words, plus 2,000+ news items added to the site from 40 different industry publications. Though that's quite prolific it is still far less output than you'll see elsewhere online. But my goal has been quality rather than quantity. I'd rather you read 1 insightful piece from VideoNuze each day than 5 that do little more than magnify the blogosphere's already deafening echo chamber.

I'm proud that many of you have told me VideoNuze's posts have helped you gain a better understanding of the broadband market's dynamics and how best to develop your own strategies and implementation plans. That's the whole point of VideoNuze; to become indispensible to anyone with a stake in their organization's success with broadband video. In 2009, I'll continue working hard toward that goal. I appreciate your support and time and I look forward to much more interaction with you in the coming year.

In the meantime, I wish you a happy and healthy holiday season...see you in January!