VideoNuze Posts

Online movie delivery is back in the news, but dramatic change is still well down the road in this space as usability, rights issues and incumbent business models/consumer behaviors pose formidable hurdles.

Yesterday Netflix announced a $99 appliance with Roku, enabling the company's "Watch Instantly" streaming service on TVs. That news follows Apple's deals with a number of big studios in early May obtaining "day-and-date" access to current titles. And today brings news that Bell Canada, that country's largest telco, is formally launching its Bell Video Store, also providing day-and-date delivery, of Paramount titles to start (and soon others), plus portable viewing on Archos devices.

Netflix, which I last wrote about here, took a shot across the bow of Apple TV and Vudu by introducing the Roku box, the lowest-priced broadband movies appliance yet. Apples-to-apples comparisons aren't fair as the stripped-down Netflix/Roku box doesn't have a hard-drive or equivalent processing. That inevitably means lower quality delivery vs. locally-stored content with the others, plus uncertainty about HD-delivery. Netflix/Roku's big advantage is that it's a value-add service for current Netflix subscribers, meaning no new fees as with the Apple TV/Vudu approaches.

However, Watch Instantly has older titles and amounts to less than 10% of Netflix's total catalog. I don't see that changing much; Watch Instantly runs smack into studios' incumbent windowing approach and deals with HBO, Showtime and Starz for premium TV. Netflix's model is built on the home video window, so new online delivery rights must be obtained which will be a tough road. However, with Paramount, MGM, Lionsgate and others splintering from Showtime recently to set up their own premium channel, it's possible that some studios' rights may loosen up, but of course at a price.

Still, I don't see the Netflix/Roku box breaking 10% penetration of Netflix's sub base any time soon, barring a box giveaway. Enlarging the value proposition by licensing the Roku technology for inclusion in other devices (e.g. Blu-ray) could also help drive adoption.

Meanwhile, today Bell Canada is announcing the formal launch of its Bell Video Store. In beta since late '07, it offers 1,500 titles, now including day-and-date delivery from Paramount (and others soon according to Michael Freeman, Bell's director of product management who I spoke to yesterday). This is noteworthy, as it appears to be the first time a service provider has received day-and-date online access from any studio. If other providers follow suit we may finally witness some internal competition with sacrosanct-to-date Video on Demand initiatives.

By using ExtendMedia's platform, Bell is also enabling downloads-to-own directly to Archos portable devices. With a couple million satellite homes and fiber IPTV fiber-based deployments continuing, there are multiple three screen options looming for Bell. Yet for now these are limited. Michael confirmed Bell has no plans to offer a branded movie appliance a la Netflix/Roku, meaning it will dependent on XBoxes and other PC-TV bridge devices.

To the disappointment of many, it looks like there won't be any big news about the cable industry's "Project Canoe" at the Cable Show convention in New Orleans this week.

Project Canoe is a high-profile partnership among the nation's six largest cable companies (Comcast, Time Warner Cable, Cablevision, Cox Communications, Charter Communications and Bright House Networks) to enable national interactive advertising campaigns to be executed across the companies' cable operations. The code-name Canoe is meant to emphasize that cable operators are working together in the same boat, so to speak.

For the past nine months, the partners' Canoe leads have been meeting weekly. Once a top secret initiative, Canoe's existence was leaked in a September, 2007 Wall Street Journal article. But since then there has been no new information, leading to speculation about how much progress has been made.

Yet Canoe remains a top priority throughout the industry, and for good reason. With big advertisers like GM and Intel shifting their once big-budgeted TV ad campaigns to the Internet in significant sums, it's key that the cable operators need to figure out a way to not only protect the $5 billion or so that they generate in spot-cable advertising today, but also to increase their piece of the $70 billion dollar TV ad spend or cut into other slices of the massive US total ad spend pie. The next 3-5 years will be critical as cable advertising, the Internet and broadband video jostle for advertisers' affections.

The buzz in New Orleans suggests advertisers and agencies are excited about Canoe, though its development seems slower than they prefer. Why the slow progress that's perceived? Several operators stated that integrating the infrastructure required to execute Canoe with cable's legacy systems is hard stuff. No doubt. Then of course there are other key priorities weighing on the industry resources, such as the February 2009 digital transition.

Meanwhile, the Internet and broadband video advertising continue steaming ahead, giving advertisers and their agencies the measurement and targetability that they yearn for on TV. Cable operators have been stymied in their ability to jointly offer advertisers easy access to a nationwide or near-nationwide footprint, especially critical for Video on Demand. Canoe addresses this and other opportunities, in part by creating a set of standards for all to follow.

The only Canoe "news" at this week's Cable Show came from Comcast's Steve Burke, who stated that a CEO would be announced on June 1. Comcast is a key player in Canoe, funding between $50-70 million of the $150 million initial investment. Rumors have swirled that David Verklin, who recently stepped down as CEO of Aegis North America (a large advertising services firm) will assume the position of CEO. If true, that could be the news to break on June 1.

Why is Fox doing this and why does it matter? According to TV Week's coverage, Mr. Liguori said: "The broadcast business needs a jolt. This gives viewers one less reason to change the channel." The first statement is certainly true, but the second seemed off somehow. If the programming's really compelling, it seems unlikely that viewers are going to change the channel (when did you ever change the channel in the middle of "24" for example?).

Switching channels doesn't seem to be the issue; rather, I think the more pressing concerns behind RFTV are ad-skipping from DVR usage and broadband's growing influence. But on the DVR side, if I'm a viewer watching programs like these in recorded mode, are fewer pods or shorter ads going to make me any less inclined to hit the fast-forward button to skip the ads? Doubtful. I only need to retrain myself to hit the "play" button sooner.

If that's the case, then it seems to me that "RFTV" should be interpreted as a response to viewers' preference for broadband's "limited commercial interruptions" model. But when Fox cuts these programs' on-air ad time in half, it needs to double its fees per ad to remain even. Fox is now talking to advertisers to see if it can turn that goal into a reality. Maybe it can. Maybe it can't. If it can't, then these 2 new programs' on-air monetization will be lower than traditional expectations. Could this mean that "RFTV" may actually end up representing broadband's first demonstrably adverse impact on the network TV business? Quite possibly.

In my post last week, "Does Broadband Video Help or Hurt Broadcast TV Networks?" I argued that while broadband offers short-term benefits, in the long-term it's going to force broadcast TV networks to fundamentally adjust to different economics. Broadband's limited commercial interruptions means far fewer ad slots to monetize. RFTV may be a harbinger that this approach may now be coming to on-air as well.

Though broadband delivery is still nascent, its implications are far-reaching. In this case, having moved most of their prime-time programs online, networks now need to show it brings positive results. That will be interesting to watch. Longer-term may be nearer than I thought.

What do you think of Fox's "RFTV" initiative? And how does it impact the network's business? Post a comment and let everyone know!

I recently bought and set up a Harmony One universal remote control. I had heard about the Harmony products from many friends over the years, but had resisted purchase for a variety of reasons. Now, having completed a new family/TV room with home theater, I bought the latest model, the Harmony One. If you've never seen this device in action, it's a really neat marvel of consumer electronics.

And for the many companies trying to figure out how to build devices to bridge broadband video and TVs for mainstream consumers, it offers many usability lessons. I think that if they remember some of Harmony One's key design philosophies, their probability of eventual success would only be enhanced.

I think these are as follows:

Solve a pain point - The Harmony remotes solve a clear consumer pain point - multiple confusing remotes. The benefits are messaged clearly, starting with: "One-touch access to your entertainment. Enjoy easy, one-touch access to the home entertainment activiites you love." The current pain point in broadband is that you're practically locked to your computer to watch video. Resolve this pain point and message it properly and consumers will quickly "get it."

Make it easy to use - Everything about the Harmony One is easy and intuitive: set-up, use, updates. Nothing has been left to chance by its designers. In consumer electronics, "easy" almost always wins the day. Broadband devices need to execute on the "easy" value proposition. Of course there will be some crawling-behind-the-TV involved, but minimizing the hassle and speeding the process to realizing the benefits is essential.

Replacing may be better than augmenting - When it comes to entry strategy, it's often tempting to augment, rather than replace existing devices and services. That's a more evolutionary and seemingly likely path to success. Sometimes it is. But Harmony shows that a proposition of replacing existing devices (in this case, current remotes from cable operator, DVD player, A/V receiver, etc.) can actually the better way. Think how much more complicated Harmony's marketing task would be if they weren't able to make the simple but powerful claim of being able to replace ALL remotes. It no doubt took them a lot of extra work to execute on this, but it is well worth their while.

Similarly, for broadband device makers, addressing how not just broadband video, but also traditional TV gets delivered to the home may indeed the better way. Of course, that's a far bigger nut to crack, but at least initially, for a certain early adopter audience, the value proposition would likely resonate more clearly. The proposition changes from educating the customer about how the new box fits in, to a more straightforward all-encompassing pitch - "We know you love TV and broadband. Now you can easily get it all, on your familiar TV."

Conclusion

To be fair, figuring out how to bring broadband to the TV is a more involved task than building a universal remote control. There are more stakeholders, technical issues and usability challenges. While adhering to Harmony One's few simple design tenets won't guarantee eventual success it will certainly enhance the likelihood of it. For consumers looking to enjoy broadband video on their TVs, that would be great news.

What do you think? Post a comment and let everyone know!

As a refresher, Magnify is the ultimate Long Tail of video enabler, allowing individuals to create branded personalized channels from video that is publicly available on the net. To date over 37,000 of these channels have been created on virtually every niche subject imaginable.

Magnify Publisher is another example of a tool to advance video syndication. Publisher inverts Magnify's usual approach though, offering bloggers the chance to start building video channels inside their blogs, but without really knowing it. The blogger begins by downloading the Publisher app (today WordPress and Movable Type are supported) and can instantly start searching for relevant videos for specific posts and embed them. The over time, as they've grabbed more and more videos, a channel starts to organically take shape, which itself can then be exposed at some point to users.

All of this is predicated on Magnify's belief that blogging is increasingly going to be multimedia, but only if access to video is easy and well-integrated. My quick reaction was that Magnify Publisher feels close to syndication sites like Voxant, ClipSyndicate and others. Steve suggests that Publisher's differentiators are that a personalized channel can be built rather than just a collection of clips, and that Publisher offers access to content beyond news, which tends to be the others' focus. In fact ClipSyndicate's videos are available to bloggers through Publisher, and Steve sees others being integrated down the road.

HBO's deal with Apple to include its programs in the iTunes store has received widespread coverage in the last couple of days, particularly because it includes differentiated pricing for the first time.

Indeed, while it's a big story that Apple's Steve Jobs has finally consented to deviate from his "one price for all" approach - which NBC couldn't attain last fall - there is another angle on this announcement: the possibility that, at long last, HBO has woken up to broadband video's potential.

HBO's absence from the broadband scene has been noticeable. As the most profitable and acclaimed TV network, I've long thought that HBO had significant upside in pursuing broadband initiatives. Instead it has badly lagged Showtime and Starz, its two principal rivals in the premium network space, as well as other networks.

Showtime in particular has been quite innovative in both creating broadband-only extras for its programs, plus enticing user-involvement opportunities. For its part, Starz has been aggressive in pursuing Vongo, its broadband-subscription service, which continues to make inroads with numerous device partnerships.

Yet HBO has seemed contentedly disinterested in broadband. Between its hefty subscription fees and healthy DVD business, broadband has likely been seen as just a gnat buzzing about. HBO's lack of broadband interest is evident on its web site which has just a smattering of video clips and highlights, and it is fairly static, with little-to-nothing enticing for the broadband user.

In reality, broadband could have likely been adding real value to HBO's business. With the proper incentives, HBO's creative production partners could have easily come up with broadband extras that would have appealed to the diehard fans of its programs. In addition to their sheer programming value, these would have helped drive more fan loyalty and stickiness between seasons. That would help address HBO's churn rate during its off-season periods.

While HBO's iTunes relationship is a step forward, it's a small one. Contrast its approach to soon-to-be-corporate-sibling Bebo's programming model (which I wrote about yesterday), with its intense focus on community engagement and the different philosophies are evident. Of course HBO is a programming powerhouse and there's no arguing with its success. But for it to fully embrace broadband's opportunities, it would benefit from looking at what Bebo and others are currently doing.

If you're in the Boston area next Thursday, May 22nd, please join me for a great panel I'll be moderating, "Driving Audiences to Your Online Video Content: Strategies for Success in a Crowded Market." The session is being presented by MITX, the Massachusetts Innovation & Technology Exchange and includes a terrific group of panelists from Boston-area video companies:

• Murali Aravamudan, CEO/Founder, Veveo
• Michael Kolowich, CEO/Founder, DigiNovations
• Bob Lentz, CEO, PermissionTV
• Brian Shin, CEO/Founder, Visible Measures
• Tom Wilde, CEO, EveryZing

Session details are here. Hope you can make it!

Bebo, the social networking giant being acquired by AOL for $850 million, is pioneering a new programming model by mixing original online-only video series, community engagement and brand integration. While in LA last week I attended an invite-only session in which Bebo VP of Marketing Ziv Navoth provided an overview of its approach and elaborated on its upcoming plans.

Since its inception in 2005, Bebo has quickly mushroomed to 40 million+ members with a core audience of 16-24 year olds, concentrated in the U.K. While a distant third to Facebook and MySpace in size, the depth of Bebo's user engagement is significant.

I think Bebo has cleverly grasped the notion that by offering original online video series, it is providing valuable, relatively inexpensive fodder for its members to engage with. So valuable is this programming to serving Bebo's larger corporate mission that its "Open Media" model allows content partners to keep 100% of revenue generated.

Bebo's programming initiatives are gaining traction with its members. Its first series, "KateModern," the successor to "LonelyGirl15," the YouTube phenomenon, received 35 million views in its first season, and is currently averaging 1.5 million views per week, according to the company. Its next series, "Sofia's Diary," is getting half a million viewers per episode according to the company, and its broadcast rights were just acquired by FIVER, the UK broadcaster. Other programs launched or in the works include Vuguru's "The All-for-Nots", "Conquering Demons" (in association with Oakley, the sunglass company) and "The Gap Year."

When you look across all these programs, a key thread is that they all showcase young characters to whom Bebo's audience can easily relate and/or fantasize about being. Ziv repeatedly referenced that in Bebo's model, community and programming are inseparable. Bebo encourages members' feedback and involvement in the stories, and in some cases will bend the narrative to members' desires. Meanwhile Bebo offers a range of community tools to help shows gain promotion to its member base. Bebo's promotional capabilities, massive reach and member engagement are of course the main reasons why producers will seek out Bebo as a partner.

If there's one current weakness I perceive in Bebo's programming model it is monetization. Given its young, media-savvy audience, Bebo knows that advertising must be approached with care. To date Bebo has emphasized product placement, but in a way that "propels the story line forward" according to Ziv, and is believable, not gratuitous. This of course necessitates a lot of custom, one-off selling, which not a model that is scalable across dozens of eventual programs. My guess is that traditional pre-rolls and even possibly overlays will have to play a bigger part if AOL wants to fully monetize Bebo's viewership. If done with proper targeting and capping this could be acceptable to its audience.

What I like about Bebo's programming approach is that it is clearly indigenous to the online medium. As such, it is distinct from models like Hulu, which though also valuable, are primarily new conduits for existing broadcast programming. To the extent Bebo succeeds, it will become a model for how new programming that is exclusively tailored for the online medium will work.

What do you think of Bebo's programming model? Post a comment and let everyone know!