VideoNuze Posts

Given the pervasiveness of gloomy economic news, I'm always on the lookout for evidence of growth, especially in the broadband video space. That's why news that TurnHere, the broadband video production and advertising company, shared with me last week caught my attention. The company will report later this morning that its business has doubled in '09 vs. '08. John McWeeny, TurnHere's COO briefed me last week on what's behind the improved numbers. Understanding TurnHere's model offers plenty of lessons for other broadband video market participants.

As background, TurnHere has developed a global network of 7,000+ independent filmmakers, which it taps into for soup-to-nuts creation of made-for-broadband content for its clients. TurnHere only accepts into the network well-credentialed professionals who are thoroughly vetted. The company's clients come from two sources. First, from channel resellers, who are primarily Internet Yellow Pages companies selling online ads to local businesses that increasingly want a video presence online. And second, through direct sales to brands who increasingly want to capitalize on video's impact on their web sites. '09 growth is coming in equal parts from both sides of the business.

Listening to John describe TurnHere's business, I was repeatedly struck by the fact that this is a pretty complicated business to run successfully. Clients are in multiple locations, necessitating multiple filmmakers to be involved in projects. Yet brand standards and formats must be adhered to for consistency across videos. And often there's a 3rd party agency or marketing/online consultant involved that must be pleased as well. Tight budgets and timelines are the norm. So making all this work is not trivial. In fact John remarked that one of the company's core competencies is "how to leverage a distributed network of creative people." That seemed like a spot-on assessment to me.

To succeed, TurnHere has developed strict internal policies and procedures to guide its work. Everything from recruiting filmmakers to selecting them for projects to scoping the project with clients to managing the video production process to reviewing filmmakers' work has some formal structure around it. John explained a key differentiator for TurnHere is its laser focus on video that is made-for-broadband. The company is not aiming to make commercials that run on-air and cost hundreds of thousands of dollars. Rather, it looks to produce high-quality, yet inexpensive shorts in a documentary-style, with real people, not actors.

The result is that for clients used to getting just one ad for their budget, they are now getting dozens or even hundreds of web-only videos. TurnHere's surging business is due to more marketing executives opting to allocate budget to the new broadband video medium to reach their target audience vs. following traditional TV advertising rules. When you read research about ad budgets shifting to online, TurnHere is right on the front lines of making this happen. The company has done work for brands like InterContinental Hotels, Williams-Sonoma, American Express and others.

Emphasizing attributes like process development, specialization, customization, flexibility, affordability, reach and quality are the reasons TurnHere is succeeding, despite the down economy. In fact, a lot of what John said echoed what Demand Studios' EVP Steven Kydd told me recently. Demand Studios too is focused on building processes to crank out large volumes of high-quality web-only video. Yesterday's post on how SundaySky is enabling automated video from web-based content is yet another example volume-based video production.

The common themes here are that broadband video is a different medium than TV. People who want to succeed in the broadband video medium - whether as content providers themselves or in service to content providers or brands - need to recognize the differences and engineer their businesses appropriately. Scale and cost-efficiency matter a lot more in broadband than they did in TV where expensive, hand-crafted video was the norm. In this context, learning how to blend technology with creative talent is going to be a real competitive differentiator.

What do you think? Post a comment now.

An occupational hazard of following the online video space as closely as I do is that it's rare when I see a technology that feels truly breakthrough. So when it happens, it's not only an "aha!" moment, but also a tangible reminder of how much running room the online video industry still has ahead of it. These were my reactions when SundaySky's CTO and founder, Yaniv Axen, showed me a private demo of the company's "DynamicVideo" platform and explained its model to me.

In a nutshell, DynamicVideo integrates with a web site's database or content management system, and then upon a user's request, it creates short videos out of specified pieces of web site content, completely on the fly. Yaniv explained that DynamicVideo does for building on-the-fly videos what ASP or JSP does for creating dynamic web pages. All of the generated videos are completely customized based on the specific pieces of site content being assembled.

The process of implementing DynamicVideo starts with an upfront creative step in which SundaySky works with the site's team to create "Videolet" templates. This step includes generating all the creative elements (graphics, voiceovers, music, etc.) that would conceivably be needed in any of the videos to be created, along with the shell templates for the videos. When a user request a video, what's happening is that the required content is pulled from the site's database/CMS, matched against the corresponding creative elements and assembled into the correct shell template. All of this happens instantaneously and the video begins playing as quickly as you'd expect a web page to load. SundaySky also provides full analytics so it's easy to test and optimize different pieces of the video.

All of that may feel a bit abstract for some of you. Yaniv showed me several different mock implementations (though the company isn't ready to show any publicly, Yaniv did supply this example of an Israeli ecommerce site, which really just scratches the surface). One of the mockups was for Expedia. Imagine clicking on a suggested hotel and instead of (or in addition to) scanning the page for the hotel's number of stars, proximity to attractions, pictures, reviews, rates and contact info, a 1+ minute video instead presented it all to you. I believe the video brings the hotel to life far better than even the best-designed page can.

The mockups showed a broad range of potential applications: MyYahoo (personalized video summary of recent updates), CNET (product comparisons), YellowPages search results (vendor profile information), MySpace (social media presentation) and NBA.com (6 degrees of separation game). Basically, any content that can be extracted from a database/CMS becomes fodder for a video, tailored to the site's particular goals.

What's most compelling to me about SundaySky are the financial implications for content providers. Implementing DynamicVideo allows site owners to generate not just a ton of new and highly targetable videos and but also a ton of associated ad inventory (the idea of a "this video brought to you by" brand slate is a natural). Site owners can also deliver a totally new consumer experience that helps them meet users' increasing expectations for video. This can only help drive higher engagement and desired actions.

And last but not least, by providing a low-cost and automated "manufacturing" process for creating an unlimited number of videos, SundaySky completely changes the video business case, thereby enabling more sites to profitably embrace the online video medium. As I wrote recently in "Inside Demand Media's Content Factory," sites that learn how to crank out large volumes of high-quality video will have real competitive advantages in the broadband era.

On the heels of an $8M first round it raised in January, SundaySky is just starting to share more details. Yaniv alluded to a couple of big media deals coming soon. But, for competitive reasons, it's still keeping things very close to the vest. If its platform scales as well as the demos suggest, this is going to be a very interesting company to watch.

What do you think? Post a comment now.

Walking the halls of the NAB Show this week and talking to other attendees, I was constantly reminded that the TV industry - both networks and local stations - is in transition from "what was" to "what will be."

"What was" is well understood: an economic model built over a 50+ year period through a carefully managed, geographically-demarcated distribution network of local stations that until recently held a de facto exclusive right to distribute high-quality programming. This model worked extremely well for both broadcast networks and stations as they tapped into surging advertising budgets fed by Americans' insatiable consumption habits.

As the great consumptive bubble has burst, the broadcast industry's troubles have come into full view. In fact, with every single element of the traditional model now under attack, it is obvious that "what was" is fast-yielding to "what will be." The problem is that "what will be" is still incredibly ambiguous. Having informally taken the pulse of others at the NAB show this week, the picture that emerges is one of deep concern that "what will be" may be radically different and not necessarily very attractive.

I continue to return to the simple fact that as network program viewership shifts to online, maintaining revenue parity is essential to sustain the cost side (i.e. program development) of the business. If ad revenues come up short then the traditional Hollywood production system will be punished. And the program quality issue is all the more urgent since increasingly popular cable TV programs keep peeling eyeballs away.

For local stations the situation is far more complex, and I believe insoluble in the long run. That's because their monetization challenges are much deeper. Limited primarily to local advertising categories that have been hit disproportionately hard by the recession (e.g. autos, retail, real estate) and the shift to online advertising (e.g. classifieds), local stations must find new ad sources to survive. But where these will come from, in a size that matters, is unclear.

Then there's the fact that the news/sports/weather content that has been their bread and butter has been eaten away by online alternatives. And last but not least is the reality that the broadcast networks, which have embraced all manner of alternative program delivery options, have all but gutted stations' prime-time value.

Add it all up and I for one am stumped at where local stations go from here. Massive consolidation, including possible mergers with their local newspaper brethren, to radically rationalize the newsgathering process in local market, seems more and more likely to me.

The sobering reality that two of America's great industries - automobiles and newspapers - are on their way to oblivion should be a big-time wake up call to broadcasters that a sense of permanence can in fact be illusory. At the risk of sounding alarmist, I think the survival of the broadcast TV industry in its traditional form will soon enough be in question.

What do you think? Post a comment now.

Two highly related broadband video themes - HD delivery and convergence between broadband and TV - are both picking up steam at this week's NAB show. Among the key announcements are:

Adobe extending Flash into digital home devices

Move Networks acquiring Inuk Networks (announced just this morning)

Akamai detailing HD monetization opportunities in new white paper with IDC

Microsoft releasing "Smooth Streaming" HD delivery feature in its IIS Media Services

Limelight supporting Microsoft's IIS and Adobe Flash Media Server 3.5

Brightcove and Adobe expanding its partnership to enable delivery higher-quality long-form programming, among other things

CDNetworks commercially deploying first Adobe Flash Media Server 3.5 for first time

And separate from the show, TiVo and Roku supporting Amazon VOD HD titles

The entire broadband video ecosystem is getting more and more focused on both HD delivery and convergence. However, the former, which is primarily an infrastructure upgrade, is easier to execute on than the latter, which almost always requires users to buy and install some new device (either single or multi-purpose). Given the lousy economy and natural replacement cycles, this means that for many users, those gorgeous online HD experiences will be viewed on their computers for some time to come.

I think that's actually OK though. By proliferating online HD delivery, users will increasingly be getting a taste of what would be available to them if their broadband was connected to their TVs. Further, plenty of early adopters will become evangelists, showing off online HD experiences for their friends and families. Making things more tangible will help create the necessary promotional tailwind that convergence devices need to succeed.

Convergence has been a long time in coming, but the elements are now beginning to fall into place. I believe that the more HD content that's available online, the faster the convergence device market will develop.

What do you think? Post a comment now.

I'm en route to Las Vegas today for the annual NAB Show where I'll be moderating 2 panels tomorrow. There's lots of news coming out of the show. Probably the highest profile announcement yesterday was from Adobe, which plans a new press to get Flash onto TVs.

If you're at the show, or coming in for it, my 2 panels are:

11:15am (Wed) "How TV Broadcasters are Capitalizing on Broadband Video"

• Bill Bradford - SVP, Chief Product Officer, Fox Digital Media Broadband Channels Group
• Colin Dixon - Practice Manager, Broadband Media, The Diffusion Group
• Suzanne Johnson - Senior Industry Marketing Manager, M&E, Akamai Technologies
• Clayton Thomson - VP, Video Strategy and Development, WorldNow

3:30pm (Wed) "How Syndication is Powering the Broadband Video Era"

• Jeff Karnes - VP, Marketing, VoloMedia
• Doug Knopper - Co-CEO and Co-Founder, FreeWheel
• Steven Kydd - EVP, Demand Studios, Demand Media
• Chase Norlin, CEO, Pixsy
• Steve Rosenbaum - Founder and CEO, Magnify.net

Both panels will be in the "Content Theater" adjacent to the "Content/Commerce Pavilion" where many industry companies will be exhibiting (e.g. Brightcove, Limelight, Electronic Arts, Akamai, Kyte, MGM, etc.) Access is complimentary by clicking here, and entering code "X104" Hope to see you there!

Digitalsmiths has added to its executive team, hiring Bob Bryson as SVP of Sales and Business Development and Melissa Sargeant as VP of Marketing. Both are industry veterans; Bob was most recently in a similar role at Move Networks and Melissa was director of product marketing at CA.

Digitalsmiths has been expanding beyond its roots in indexing by also offering content management and publishing solutions. In Q4 '08 it raised a $10M round, and in Q1 '09 it received a strategic investment from Cisco. The hirings continue a trend I see throughout the industry - companies with traction are able to continue to raise money and bring on new talent. Other recent examples include Betawave, Brightcove, ExtendMedia and Tremor Media.

Last week, Time Warner Cable tried turning the page on a public relations debacle of its own making. Glenn Britt, TWC's CEO announced that it would postpone for now the company's Consumption Based Billing trials planned in 4 U.S. markets. The move came in response to a massive negative reaction in the blogosphere, at the grass-roots customer level, and in Congress.

On the one hand, it continues to astound me that the cable industry, which has invested billions of dollars of its own capital over the last 15 years to lead the deployment of broadband Internet access across America, receives virtually no credit for this. Instead it is the constant object of derision and conspiracy theories about its uncompetitive behavior. Unfortunately, TWC's Frick and Frack handling of its planned changes to its broadband billing practices explains why this is so.

Having observed the TWC billing melodrama play out over the last month or so, here are 5 lessons I think TWC and other broadband ISPs should learn:

1. A trial must be legitimate, with well-understood objectives that are communicated clearly

It may seem basic, but when a company runs a trial, it needs to have well-understood objectives that are communicated clearly to all constituencies. My sense is that TWC thought it was doing this, but in reality it wasn't. For example, were the trial's objectives to see how user behavior changes in response to the new billing practices? Or how TWC's network loads and costs are altered? Or maybe provide data to guide its strategy vis-a-vis new online video competitors? None of these things are cited. Rather TWC mentions "bandwidth consumption is growing exponentially," "increasing variable costs" and "Internet brownouts." OK, but what are the trial's objectives and how do they address these concerns?

By definition a trial also needs to be legitimately trying something new to see how it works. Instead TWC makes its "trial" look more like the kickoff of a new pricing plan. So why even bother calling this a "trial" when in fact there's no indication the company is seeking to learn something through some kind of testing? If TWC wants to change its pricing, then just call this step what it is - the first phase of rollout of new billing practices. Whiffs of disingenuousness are easily smelled.

2. Make changes in increments, targeting priority user segments first

A core part of the reason TWC and other broadband ISPs want to switch to consumption-based billing is because some users' online video viewing is surging and ISPs justifiably want to get compensated extra for this heavier network burden.

But if broadband ISPs are most worried about these heavy users, then they should address them first. TWC's mistake was to instead simultaneously also introduce lower price tiers and accompanying consumption caps and overage charges. As a result, instead of a contained minority of its users being affected by the new policy, everyone was. That type of comprehensive approach may have seemed smart in the planning process, but in the execution stage, it's very hard to pull off. Comprehensiveness dissipates the main issue - addressing heavy users - while drawing in outside advocacy groups and politicians to plead for everyone. That's a no-win position.

3. Be prepared to justify the billing changes with specific financial information

TWC argued vaguely that rising network costs were behind the need to change its billing practices. That may well be true, but by not disclosing more specifics, the company left itself vulnerable to naysayers. For example, in this NY Times interview, TWC COO Landel Hobbs was thrown some questions about whether in fact much of TWC's costs are fixed. He should have been prepared to respond in detail, citing specific capex or opex numbers that can be correlated with heavy video usage. Instead he ducked the questions, deferring them to a subsequent interview with an engineer. All of that leaves the reader suspicious about his arguments' legitimacy.

If a senior executive is going to be offered up for a NY Times interview, he should use the opportunity to make the strongest case possible for the planned change. In the wake of the Wall Street financial crisis, people increasingly expect accountability and transparency from senior executives. Poorly understood corporate decisions by fiat are prime for backlash.

4. If billing is to be metered, make sure customers have the ability to measure

Here again is PR 101 - if you're going to change to metered billing, customers need to know how they can measure and modify their usage. But TWC offered no specifics about the availability of a useful meter, or any demo of how it would work. Instead it said it would offer a grace period of 2 months on overage charges.

Talk about an impractical plan. I think most people understand and like the idea of variable pricing - paying just for what's used. But if they don't have to right tools to measure their usage, the model looks hollow. TWC ultimately acknowledged it is "working to make measurement tools available as quickly as possible." Hallelujah.

5. Billing changes need to be tied to online video policy

Simmering just below the surface of the billing change backlash is a suspicion that TWC is introducing these caps to constrain online video usage. You don't have to be a conspiracy theorist to understand that if an ISP like TWC charges more for access to 3rd party delivered video it will limit is use. TWC should have known it was prime for this allegation and been proactive about how it relates these 2 issues.

For example, what if TWC had acknowledged that some users prefer online program access, and that if they select its top capped rate of $150/mo now they will be forever grandfathered into that rate, even as their video usage grows further? Only a minority of users would have likely taken the plan, but it would have helped TWC demonstrate acceptance of 3rd party delivery.

Conclusion

What do you think? Post a comment now.

Late yesterday YouTube announced "a new destination for TV shows and an improved destination for movies," moves that continue the site's evolution from its UGC/video sharing roots to an aggregator of premium-quality video.

The reality is that this evolution has been underway for some time now, and I expect it will only continue. Two weeks ago in "6 Reasons Why the Disney-YouTube Deal Matters" I explained again why, as the 8,000 pound gorilla of the online video market, YouTube is in an excellent position to partner with premium content providers. In a media landscape marked by massive audience fragmentation, the online destination (YouTube) that accounts for 40-50% of all streams and is 15 times as big as the #2 destination (Hulu) is quite simply a must-have promotion and distribution partner.

The new destinations address what has been an ongoing Achilles' heel for the site - enabling users to easily find premium video "needles" in YouTube's user-generated "haystack." YouTube's UI weaknesses for premium video have been highlighted by the gold-plated user experience Hulu - and more recently TV.com and Sling.com - have brought to market. The sites have quickly gained passionate fans, and at least in the case of Hulu, significant viewership.

Possibly more important though, is that for content providers they show how YouTube is serious about addressing their needs for clean, well-lit spaces. Premium content providers want the benefits of being in the massive YouTube site, but without the risk of their brands showing up too close to scruffy UGC material. Being clustered with other premium content is a must.

YouTube's concurrent beta launch of Google TV Ads Online, which allows targeted instream ads, is another positive for premium content providers. Beyond YouTube's massive traffic, Google's potent monetization capabilities are the other reason I've been so bullish on YouTube's prospects for premium content. As I wrote on Monday, with increased DVR penetration driving rampant ad-skipping, broadcast and cable's traditional ad model is looking more and more defunct. Online video ads offer a lot of promise as an even higher value ad medium, but much of it is still unproven. Having large players like Google and YouTube involved is significant for showing online video advertising's true upside.

One last take on this is how YouTube continues to position itself in the "over-the-top" sweepstakes, where multiple competitors are vying to be viewed as bona fide substitutes for cable/satellite/telco subscribers itching to cut the cord. I remain skeptical that the trickle of cord-cutters is going to turn into a gusher any time soon, but I will say that with its move up the content ladder, YouTube continues to burnish its standing as a must-have partner for any convergence device-maker looking to make over-the-top inroads (e.g. Roku, Vudu, AppleTV, etc.). YouTube is the most-recognized online video brand, the most-heavily trafficked, and increasingly a credible alternative to premium aggregators like Hulu and others.

For everyone in the online video ecosystem, YouTube continues to be a key player to watch.

What do you think? Post a comment now.