-
YouTube + Apple TV = A New Consumer Experience
Some pretty big news today from Steve Jobs that YouTube video will be embedded in directly AppleTV.Back in December '06, in my "7 Broadband Video Trends for 2007" e-newsletter, my #1 trend was that Apple's "iTV' box (as it was code-named then) would succeed - but only if Apple nuked its walled garden, iTunes/paid-only content strategy, in favor of allowing easy browsing of free online video. Though it would represent a big departure for Apple, I suggested the killer deal would be to make YouTube videos available to Apple TV users. (read the full entry below and here) True to its roots, Apple did launch Apple TV only with iTunes.And as it has floundered, I've taken plenty of flack from readers reminding me that these 3rd party, standalone boxes don't have a prayer. And that's why today's YouTube deal is a huge step in the right direction for Apple TV. YouTube is the big guerilla of all online video sites. But as big as it is, its use has mainly been constrained to computer screens. So by enabling easy viewership on TVs, Apple has created a whole new consumer experience, which I believe will prompt new buyers of Apple TV.And as Apple embeds more video sites (hey wouldn't it be easier if they just put a browser in Apple TV?), the proposition for box keeps getting stronger. This "over-the-top" or "cable bypass" approach should be another wake up call for cable and satellite operators. There is so much energy being invested in these alternative approaches (e.g. Xbox, TiVo, Sony, Netgear, etc.) that eventually some segment of consumers is just going to drop their traditional subscriptions and go a la carte. My original entry is below from December 20, 2006.All the 7 Trends for 2007 can be read here. -------------------------------------------------------------------------------------- "Apple's iTV box will likely succeed (but only if more than just iTunes video is easily accessible). This is clearly my most controversial prediction and the one I will devote the most ink to. Let me stipulate upfront - standalone appliances like these are indeed the "third rail" of consumer electronics. I understand all the reasons why they don't succeed. And the list of failures is long and undistinguished. However, my bet is that is that if ever a company stood a chance of succeeding and a box potentially met a clear consumer need, it is Apple and iTV. (by the way, "iTV" is just a code name, expect a new name prior to launch). Apple's user-centric design, functionality and coolness quotient are its key differentiators.First, for those of you who missed it, back in September Steve Jobs pre-announced the company's "iTV" box (see it here). Product pre-announcements are very rare for Apple. iTV's suggests that Jobs wanted to both lay some pre-launch buzz groundwork and also simply couldn't contain his enthusiasm for this product's market opportunity. To understand iTV's market opportunity, it is necessary to understand current broadband-delivered video viewership.As I see it, the amazing ramp up in broadband video consumption this year is surpassed by an even more amazing fact - that virtually all of this viewership has occurred on users' computers. Think about it - virtually all those clips, full-length programs and movies are consumed on the PC, not the TV! Nobody could have predicted that. But of course the TV is still the preferred viewing device for just about everyone. So logic suggests that if someone could make an affordable, easy-to-install box that unshackled users from their computers, allowing them to easily bridge the PC/broadband world with the TV, there would be a market for such a product. And that this could be far more than a niche opportunity, given that it could potentially disrupt cable and satellite operators' set-top box/walled garden stronghold.iTV's success turns on one key factor: Apple's content strategy for the product. And the hitch in iTV's potential is that to date Apple's content model has been to aggregate paid-only media in iTunes, its digital download store. The company has gotten off to a decently strong start selling TV programs and the like on an a la carte basis for $1.99 or more. But carrying over this paid approach is not a strong enough content strategy to support iTV.In fact, in the music world, a recent Ipsos study showed that only 25% of MP3 owners use fee-based download services. That's been OK for iPod sales because many people still have large CD collections (or share theirs with friends), which can be easily "ripped" to iPods. But what would the equivalent source of video content be to support iTV? Possibly DVDs, though converting them for iPod use is far from a mainstream activity (plus, why bother anyway?). How about the free video podcasts from a Byzantine array of providers also available through iTunes? Doubtful. Quite simply, if Apple extends its iTunes paid approach to iTV it would be forcing iTV buyers to pay for each and every incremental piece of video content to get value out of their iTV purchase. The number of people willing shell out $299 for an iTV box without readily available free content is tiny.Therefore, the alternative - providing easy TV-based viewing of free, ad-supported broadband video - should be iTV's core value proposition. Cracking this nut allows Apple to break open the video distribution value chain, with consumers finally getting TV-based access to the content they love. And it positions iTV as the key building block in making "long tail" video content accessible on TVs, potentially setting up Apple as a longer-term competitor for all video services (i.e. a possible competitor to cable and satellite).Exactly what content should be easily available through ITV is less clear to me. Certainly a key selection criterion is video that is either NOT currently available through cable or satellite. Many video content providers still dreaming of becoming a digital cable channel would salivate at the opportunity to be accessible on consumers' TVs. Plus broadcast and cable TV networks would love a way to get their broadband-only webisodes and other "broadband channels" all the way to the TV.But the most tantalizing content deal would be one with Google/YouTube. Consider how many YouTube devotees would love to get convenient access to this content right on their TVs. Since Apple has no in-house advertising skills and assets, and Google is the reigning advertising king, a partnership would be mutually beneficial. With Eric Schmidt, Google's CEO, now on Apple's board of directors, the personal relationship between he and Jobs would help clear the way for a deal.Packaging and offering easy access to ad-supported video would be a big content strategy departure for Apple, but a necessary one for iTV to fully flourish. Remember, selling hardware is what Apple's really all about. Given Apple's famous appetite for secrecy, I expect we'll only find out how Steve Jobs has decided to play his hand upon iTV's official launch. If it's to be iTunes-only paid video, I'll downgrade iTV's likelihood of big-time success considerably. "Categories: Devices, Partnerships, UGC
-
Turner Breaks Ice with Streaming Episodes
Turner Networks took a pretty significant step today - for cable networks - by announcing that it plans to stream all 7 of its original TV series slated for this summer. Though broadcast networks have been aggressively launched streaming efforts since last fall, this is the first big network group that has followed suit.
On my Cable IPTV panel last week, we spent some time discussing the divergence in strategies between the cable nets and the broadcast nets. A key takeaway was that it's not going to be so easy for cable nets to stream their programs online. That's because all cable nets have complex provisions in their "affiliate agreements" with cable and satellite operators that circumscribe their ability to distribute through additional channels.
Of course these provisions vary from agreement to agreement, but you can be sure that operators paying hefty per subscriber per month fees to cable nets are going to vigilant about allowing valuable programming to show up elsewhere, thereby (potentially) undercutting the value of their programming packages. For now the issue is being defused by Turner by positioning these streaming activities as primarily promotional. So says Jeff Gregor, CMO of TBS/TNT/TCM in today's B&C piece:
"We want new viewers to come in, and, while we certainly want them to watch shows when we air them live, we want them to watch during encores and on-demand when and where appropriate."
I'm skeptical that we'll see a rash of similar announcements from other cable nets any time soon. Lots of lawyers are still working hard to figure out how much wiggle room affiliate deals allow. Ultimately though, these restrictions will be renegotiated and cable programming will flow freely. Cable nets, like all other content providers, will conclude that online distribution is essential.
Categories: Cable Networks
-
CBS Begins to Embrace
CBS has announced that it is partnering with at least 13 "leading community-building websites and social application providers" to allow its users to incorporate clips in their pages at these sites.I think this is a great step by CBS toward embracing what I have termed the "clip culture."
Our Q4 '06 report on the broadcast industry and broadband video concluded that to date, the networks have looked at broadband as simply a new distribution path for existing programming. While this is a significant opportunity, another big one is using the broadband medium to redefine the kind of programming they offered and how fans could engage with it.
Since traditional networks are steeped in 30 and 60 minute thinking, they've been slow to recognize how powerful short (i.e. 2 minute'ish clips) are online. YouTube exploited networks' reticence, with users uploading tons of networks' clips (albeit without permission, but that's another story).
The language of the CBS press release is a little vague, but it suggests that CBS will determine which clips users can embed. This is a great start. While this announcement is a positive, it doesn't appear to go far enough in allowing users to actually create their own clips for embedding. That would be the ideal. Hopefully that's coming next. That's what today's users want.
Categories: Cable Networks
Topics: CBS
-
CNN Sets Pipeline Free
News from CNN that it is jettisoning the subscription model for its Pipeline service. Smart move for them. Based on our recent report on the top 75 cable TV networks’ broadband video initiatives, I now count only 3 networks still using a subscription model (note, all in conjunction with free, ad supported video).Those 3 are:-
Golf Channel “The Drive” Premium Membership - $29.95/year (lots of instructional video – makes sense to charge)
-
CourtTV “EXTRA” - $5.95/mo (feeds of multiple trials simultaneously, for the armchair criminologists among you)
-
Weather Channel “Desktop Max” $29.99/year – (really the ad-supported Desktop service, but minus the ads, and also more comprehensive than just video)
Categories: Advertising, Cable Networks
Topics: CNN, CourtTV, Golf Channel, Weather
-
-
Prognosticating P2P's Possibilities and Pitfalls - May E-Newsletter
With Joost's launch upon us, BitTorrent going mainstream, Akamai buying Red Swoosh and a raft of other peer-to-peer (P2P) initiatives underway, it's time to consider legitimate P2P's possibilities and pitfalls.First a disclaimer: I don't pretend to know all of the technical ins-and-outs of P2P, but I think I know enough to be dangerous. Here's my current take: P2P has a ton of potential as a legitimate distribution platform, but has to navigate some significant challenges if it is to succeed.A P2P PrimerFor those of you new to the P2P game, in essence, P2P's big advantage is that it allows users themselves to become servers of content to other users. In doing so, the load for delivering content is shifted from central servers to the "nodes" or users on the P2P network. Until relatively recently, P2P was popularly associated with the illegal "file sharing" networks (Napster, KaZaa, etc.), most of which were (and still are) used by users to swap audio or video files without permission of the copyright holder. Users could look up where certain content resided and then download it accordingly.What's new about P2P is that many (e.g. Joost, BitTorrent, others) see it as an important, if not essential, way for video to be legitimately distributed. P2P companies argue that the Internet's current architecture cannot effectively scale to deliver large quantities of video (especially live streams) in an economic manner. Since P2P gives users the ability to directly share with other users, P2P also has a potentially disruptive effect on the overall value chain and how video aggregators continue to establish value for themselves. P2P requires users to install client software on their computers. These clients are then available on the P2P network, sending files to subsequent users requesting content that they have already stored. In the case of video or audio, files can be delivered for either download or streaming.All of this is intended to happen invisibly to the average broadband video user. Of course, to nobody's surprise, the average user couldn't care less how video actually gets to his or her computer, as long as it gets there quickly and in reasonably good shape.Potential AboundsP2P is a potentially big deal for the biggest broadband video content providers. That's because delivering large volumes of video in the traditional client-server paradigm is still pretty expensive, notwithstanding the significant declines in content delivery networks' (CDN) pricing. With everyone forecasting huge increases in broadband video consumption, together with larger video files (due to better encoding, High Definition, etc.), getting a handle on delivery costs is a key challenge for content providers.Compounding matters is that broadband video business models remain relatively immature, so expense containment is all the more important. P2P allows these content providers to shift all or some of the responsibility for video distribution to the users themselves, while establishing direct connections with users (i.e. no 3rd party distribution costs). The users' computers are leveraged for both storage and delivery, while the bandwidth is essentially free, since users upload content using the local broadband ISP's network, not the content provider's CDN service. If P2P succeeds, its potential to cut content providers' delivery costs, while delivering high-quality video, is obviously very significant.Important Challenges Lie AheadOf course, potential is one thing, reality is another. From my vantage point, consumers' willingness to become P2P nodes and ISPs' restraint in blocking P2P traffic represent the biggest obstacles to P2P's future success. First the consumer acceptance challenge. Getting the P2P client on millions of users' computers or into their living rooms is not trivial. In this era of spyware, malware, viruses and other technical nuisances, mainstream Internet users are becoming more reluctant than ever about loading anything onto their machines that doesn't come from a recognized and trusted brand. Since P2P's whole promise relies on files being propagated to many users, anything that limits this from happening is obviously very detrimental to P2P's success.Then there is the even thornier issue of how broadband ISPs are going to react to users clogging up precious upstream bandwidth by serving as nodes. Virtually all American broadband ISPs offer "asymmetric" Internet access, meaning that the amount of bandwidth offered in the upstream path is usually only a fraction of that provisioned for the downstream path (this is due to some fundamental limitations related to the way that ISPs' networks are allocated). Re-architecting these networks for potentially burgeoning upstream traffic flows would be cost-prohibitive and a non-starter.To date, broadband ISPs have used "traffic shaping" technology to identify and limit P2P traffic. They have also kicked customers off their networks who have used too much bandwidth (a little secret in the industry). All of this has been sort of OK to do when most P2P use was for illegitimate file sharing. But what happens when it's for legitimate use, such as Joost or the newly legitimate BitTorrent? Limiting users' access to their full broadband service is going to evoke howls of protest.And of course, remember that the net neutrality proponents are waiting to pounce on any sign of broadband ISPs de-prioritizing or worse, blocking, certain types of traffic. Net, net, a big wildcard in P2P's success is how ISPs are going to react.Planning for P2P SuccessP2P proponents need a game plan to overcome these looming issues. Here's what I think makes sense: Well-established branded content players will need to take on the primary role for P2P client distribution. Of course, this approach has been used for previous media players' distribution (i.e. Real, WMP, Flash, etc.) and for updates. We've all had the experience of being asked to download player software or an updated version of previously installed software. P2P client distribution could be no different.But what will incent major content providers to assume this responsibility on a mass scale? They'll have to see real (not theoretical) business cases for delivery cost reductions and quality improvement. Of course, getting paid to become P2P client distributors (either in cash, or as part of distribution deal discounts, or some hybrid of the two) would also clear the way. Companies like Joost and BitTorrent need to remember that while their brand awareness among the Internet's cognoscenti is high, among more mainstream users it is still low. So leveraging their content partners' brands to turbo- charge distribution is key.BitTorrent, for one, is already doing this with their BitTorrent DNA technology. Another opportunity for P2P client distribution is embedding it in various consumer devices. For example, BitTorrent also offers a software development kit (SDK) that consumer electronics and chip makers can use to embed the P2P client in devices. This removes P2P download complexities for users, and is intended to make P2P usage completely invisible. The ISP solution seems more complex.Some believe that ISPs should look at P2P as a business opportunity to deliver a quality-of-service (QOS)-guaranteed platform to the P2P application providers such as Joost and BitTorrent. This would be accomplished by installing caching servers in broadband ISPs' facilities. These would essentially allow ISPs to serve content locally, mainly relying on the P2P protocols to deliver from the caches when appropriate, instead of from the nodes. This approach would preserve upstream bandwidth and limit ISPs' need to increase their peering capabilities to handle video coming in from the Internet backbone, while also leveraging P2P's scalability.This "peer-assisted" approach may be the optimal migration path to P2P adoption from an ISP perspective. Though the economics still need to be fully fleshed out, I've heard a pretty persuasive argument for this model from a company named PeerApp (disclaimer, they're a client), which is worth understanding further if P2P affects your business. One way or another, ISPs need to be brought into the P2P fold. Simply ignoring them or relying on their reluctance to tempt the net neutrality gods is not a sound business approach.Wrapping UpP2P offers very exciting potential to enhance users' broadband video experiences. For content providers, it holds the promise of profitably scaling up their broadband video activities. It will be very interesting to see how key P2P players navigate impending challenges to their success.Categories: Broadband ISPs, Cable TV Operators, P2P, Telcos
Topics: BitTorrent, Joost, Net Neutrality, PeerApp
-
My Cable IPTV Panel Today: Is Cable Bypass for Real?
I was in NYC today moderating the opening session at Cable IPTV, which is a new and very timely conference organized by Fred Dawson, editor of ScreenPlays magazine (kudos to Fred and his team for a very well run event).The panel was entitled, “The Cable Perspective on Trends in “Over-the-Top” and User-Generated Video” and the panelists were Sean Doherty, CEO, Channels.com, Keith Kocho, Founder, ExtendMedia,Jim Turner , VP, Interactive, A&E Networks and Bill Wheaton, VP, Digital Media, Akamai Technologies, Inc.We had a wide-ranging conversation, mostly focused around the theme of whether broadband video is going to shape up as a real “cable bypass” or “over-the-top” medium, or whether cable operators are going to maintain their dominant role as video packagers.I’ve said for a while that the broadband video aggregation role is cable’s to lose. With tens of millions of traditional video and broadband Internet access subscribers, cable is extremely well-positioned to bring together the best of broadband video with the best of traditional broadcast and cable programming. Yet I’ve been disappointed that cable operators have been slow on the uptake while other aggregators have aggressively ramped up (e.g. Apple, Google, Joost, Yahoo, etc.). Aided by new bypass devices like AppleTV, Xbox, Netgear, etc, these companies are all aiming to eventually steal cable’s video customers.Today’s panelists reinforced my thinking that these would-be bypassers are in for a tough fight. Bill pointed out that since operators own their own networks, they can deliver quality-of-service (QOS) that others can’t. This is especially important when it comes to delivering really big Blue-Ray or HD-DVD files. Meanwhile, Jim reminded all of us that “most favored nations” clauses in most cable networks’ carriage agreements with operators will be keeping plenty of lawyers busy just determining if networks can even make deals with the upstart broadband video aggregators.
And then of course our panel followedAndrew Olson ’s opening keynote (who is co-founder of thePlatform, and now SVP, Strategy and Development for Comcast Interactive Media), during which he highlighted all of Comcast’s new broadband video initiatives (Fancast, Ziddio, etc.). Plenty of messages that Comcast is hip to broadband video and is now moving fast to defend its turf.Lastly, cable operators are now being offered some interesting new technology that will bridge broadband video over to existing digital set-top boxes inexpensively and without truck rolls.I saw a demo of ICTV’s ActiveVideo platform at the Cable Show last week and it was pretty compelling. It is at least one viable alternative for operators to accelerate their own convergence initiatives.The broadband video aggregation area is going to be very interesting to watch…..
Categories: Cable Networks, Cable TV Operators, Events
Topics: A&E Networks, Akamai, Channels.com, ExtendMedia
-
Forrester’s New Report on Paid Downloads: Right on TV Shows, Wrong on Movies
Forrester released a new report last week entitled, “Paid Video Downloads Give Way To Ad Models”. Since I’ve had some requests to comment on it (and the paid video market as a whole), I’m weighing in here.I was able to read the full report, but if you can’t, then their press release is here. It provides the gist. In short, I think Forrester’s conclusion that “The paid download market is, however, ultimately a dead end” is mostly right regarding TV shows, but completely wrong for movies. Lately broadcast and cable TV networks have ramped up deals with many aggregators to distribute streaming versions of their programs. And with advertisers falling all over themselves to support these, it is certainly likely that the concept of paying to download and own a TV program is heading for a decline.However, when it comes to movies, it’s a different story altogether. First off, at a minimum, today’s $15+ billion/year home video market (DVD sell through only) more than demonstrates that people want to own certain content (i.e. mainly movies). This provides a pretty rich pot of revenues for paid downloads to tap for growth. Paid downloads (or “electronic sell-through” as some call this activity), hold the potential to be a far more efficient and flexible way to get content into the hands of those willing to pay for it. Granted there are some current usability issues (namely broadband-to-TV connectivity) to overcome, but these will certainly be resolved in the near future. Ignoring this dynamic (as Forrester does by neglecting to mention, even once, how it expects home video market to evolve in the digital era) is a significant omission.It leaves me wondering how Forrester thinks this vital revenue stream fits into its conclusions. Piggy-backing on this omission, the report also concludes (absent an explanation that I can find) that “Movie studios whose content only makes up a fraction of today’s paid downloads, will put their weight behind subscription models that imitate premium cable channel services." I think this conclusion is way off base. Studios love home video revenues. For many movies, home video revenues ARE the business model, long since displacing theatrical revenues as the main source of profitability. It’s inconceivable to me that, in the digital age, studios are going to move away from emphasizing a la carte purchases to instead take a share of a 3rd party’s monthly subscription revenues, as Forrester believes.That’s not to say there won’t be a place for subscription services (e.g. Netflix). But studios have rich e-commerce-based business opportunities ahead (fueled by all the merchandising tricks folks like Amazon have mastered in other product categories). These have been limited to date by lack of instantaneous product fulfillment (i.e. broadband-delivered downloads). On the cusp of pursuing these opportunities, to suggest that, instead, studios will forsake them for subscriptions, just doesn’t make sense.Finally, Forrester’s prediction that because “only 9% of online users have ever paid to download a movie or TV show”, there is unlikely to be a mass market for paid downloads, is very tenuous, given that broadband video delivery itself has only burst into the public’s conscious in the last year or two. Scant adoption of any new technology in its early days is a pretty unreliable indicator of future potential. For example, consider how few people owned a cell phone in the early days when they were expensive and brick-like. Now cheap and sleek, they are ubiquitous.Paid downloads are not a “dead end” as Forrester asserts. Rather, they are an early-stage business opportunity evolving from an existing business model -- namely home video. While key catalysts are still needed to fuel paid downloads’ growth, these will inevitably come. Digital strategists at studios who dismiss paid downloads’ potential for movies in particular at this early juncture do so at their peril.Topics: Forrester
-
Nisenholtz’s Streaming Media Keynote: Times Gets Broadband Video
I was at Streaming Media East today, moderating a session (“Broadband Video: What’s the Formula for Content Success?). First off, kudos to Dan Rayburn and the SM team – there was a ton of energy at the conference, lots of exhibitors and great sessions.
I got a chance to sit in on Martin Niesenholtz’s keynote. As many of you know, Martin’s the longtime SVP, Digital Operations, for the New York Times Company.
As many of you know, I’ve been very bullish on newspapers’ opportunity to use broadband to morph themselves from print-only outlets to multi-platform content providers. The Times has really been out in front on this. Some key stats Martin shared:-
5M streams/month – up 3x from a year ago
-
20 people dedicated to video
-
100 new video pieces created/month
Martin shared a back-of-the-envelope analysis he’s done to back into how many streams the Times needs to provide to generate $30M in annual revenue from video. His calculation: 60M streams per month, or 12X today’s rate. I didn’t agree with all of his assumptions (for example he assumed $60 CPMs, which is too high, yet only a 1:1 ratio of ads:streams, which I think is too low given the opportunity to surround an in-line video player with display ads), but I did think he was in the ballpark.
Importantly, he’s targeting to generate 5X the viewership of Times video via 3rd party distributors as will be generated at Times.com. Pretty strong endorsement of the syndication model.Categories: Advertising, Events, Newspapers
Topics: NY Times, Streaming Media
-
VideoNuze Posts
Connect with VideoNuze
Exclusive News Roundup
- YouTube CEO Says Revenue From Its TikTok-Like Shorts Videos Is at Parity With Core YouTube in U.S., Other Countries Variety
- Netflix says its ad tier now has 94 million monthly active users CNBC
- Xumo Founder Launches Fairground, Startup Focused Exclusively on AI-Generated TV Series Variety
- YouTube introduces an interactive product feed for shoppable TV ads TechCrunch
- Warner’s Streaming Service Has New Name: Its Old One. Meet ‘HBO Max.’ WSJ
- YouTube Expands Deal With NFL, Scores Global Rights to Week One Brazil Game The Hollywood Reporter
