VideoNuze Posts

Yesterday's announcement by Visible Measures that it raised a $10M Series C round is further evidence that broadband video companies are still able to attract financing in this brutal economic climate. Here are other video sector investments I've tracked on VideoNuze in Q1 '09:

• RipCode ($12.5M) - 1/5/09
• SundaySky ($8M) - 1/6/09
• JibJab ($7.5M) - 1/08/09
• Motionbox ($6M) - 1/14/09
• Digitalsmiths (undisclosed from Cisco) - 1/26/09
• Fliqz ($6M) - 1/28/09
• Mixpo ($4M) - 2/2/09
• WhistleBox ($2.3M) - 2/9/09
• Tremor Media ($18M) - 2/19/09
• Auditude ($10.5M) - 3/11/09

Plus 7 others totaling over $80M in the Fall of '08, and no doubt others I've missed.

Since I initially profiled Visible Measures last June, and then followed-up with a post about their deal with MTV Networks last September, the company has continued to build momentum. Brian said that it's now powering video measurement and reporting for many of the largest web properties and dozens of advertisers. Revenue is about evenly split between the two categories.

Despite its progress, Brian explained the company has maintained a relatively low profile because neither it nor its customers have wanted to publicize their activities. Brian said there are a few competitors but none that he feels are that close to offering what Visible Measures has, and he'd like to keep it that way by being low-key about their wins. Skeptics might say "a publicity-shy early-stage company? Hmm...." but knowing Brian and his team as I do, I know that's been their approach since starting the company.

Brian added that the new round, led by Northgate Capital, a fund of funds that has also does some direct investing, "presented itself" without Visible Measures out looking for it. But Brian was quick to note that he considers the company extremely fortunate, given that he believes the current environment is even tougher than the post-bubble years in 2001-2003. Northgate is a limited partner in MDV-Mohr Davidow Ventures, one of the company's two original investors, along with General Catalyst. The company has raised a total of $29M to date.

Visible Measures plans to use the new funds to accelerate product development and grow faster. Brian and Matt made repeated references to the mountain of tracking data the company is sitting on, and that many people are interested in accessing it (which I can believe). The intent is to further productize the data, though no specifics were offered.

What do you think? Post a comment now.

Below is video of last Tuesday night's VideoNuze Broadband Video Leadership Evening. Many thanks to PermissionTV for shooting and editing....As a reminder, my takeaways from the discussion are here. Enjoy!

With the Broadband Video Leadership Evening now behind us, I'd like to turn your attention to three upcoming panels that offer lots of education value.

First, if you happen to be in Boston, or find yourself here next Monday night, March 30th, I'll be moderating a session for MassNetComms, entitled, "Is Convergence Finally Here? Web Video and TV Get Ready to Collide." We have a great group of local Boston-area companies and executives on the panel:

• Chris Gardner - Chief Marketing Officer, ExtendMedia
• Hilmi Ozguc - Former CEO and Co-Founder, Maven Networks
• Andy Roberts - VP of Advanced Technology, Azuki Systems
• Neil Sequeira - Managing Director, General Catalyst Partners

All of these guys are on the front lines of the broadband/mobile video evolution, and will provide tons of market insight. The event is from 5pm - 8pm including networking time. Registration is here.

Then on April 22nd, I'm pleased to be partnering with NAB to moderate 2 panels at the NABShow in Las Vegas. Access is complimentary by clicking here, and entering code "X104"

The first panel, at 11am is entitled, "How TV Broadcasters are Capitalizing on Broadband Video" with the following panelists:

• 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

The second panel, at 3pm, is on one my favorite topics, "How Syndication is Powering the Broadband Video Era," with the following panelists:

• 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
• Brian Steel - President and CEO, VoloMedia

I hope you're able to join us, as both panels are sure to provide lots of great information. The 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, MGM, etc.) Exhibiting opportunities are still available, ping me if you're interested. Hope to see you there!

Access is complimentary by clicking here, and entering code "X104"

Blockbuster and TiVo have announced that Blockbuster OnDemand movies will be available on TiVo devices. Though I'm all for creating more choice for viewers to gain access to the content they seek, in this case I don't see the deal creating a ton of new value in the market, as it comes 6 months after Netflix and TiVo announced that Netflix's Watch Instantly service would be available on TiVo devices and nearly 2 years after Amazon and TiVo made Amazon's Unbox titles available for purchase and download to TiVo users. It looks like the main differentiator here is that Blockbuster will begin selling TiVos in their network of physical stores.

The deal underscores the flurry of partnership activity now underway (which I think will accelerate) between aggregators/content providers and companies with some kind of device enabling broadband access to TVs. I believe the key to these deals actually succeeding rests on 2 main factors: the content offering some new consumer value (selection, price, convenience, exclusivity, etc.) and the access device gaining a sufficiently large footprint. Absent both of these, the new deals will likely find only limited success.

Consumers now have no shortage of options to download or stream movies, meaning that announcements along the lines of Blockbuster-TiVo break little new ground. To me, a far more fertile area to create new consumer value is offering online access to cable networks' full-length programs. As I survey the landscape of how premium quality video content has or has not moved online, this is the category that has made the least progress so far. That's one of the reasons I think the recent Comcast/Time Warner Cable plans are so exciting.

With these plans in the works, but no timetables yet announced, non-cable operators need to be thinking about how they too can gain select distribution rights. There's still a lot of new consumer value to be created in this space. Given lucrative existing affiliate deals between cable networks and cable/satellite/telco operators, I admit this won't be easy. However, Hulu's access to Comedy Central's "Daily Show" and "Colbert Report" does prove it's possible.

We're well into the phase where premium video content is delivered to TVs via broadband. Those that bring distinctive content to large numbers of consumers as easily as possible will be the winners.

What do you think? Post a comment now.

Everywhere I look there are companies doing innovative, clever things to bring broadband video to the TV and to mobile devices.

Yesterday brought another great example, from Vuze, a company with roots as a BitTorrent client that has evolved to an aggregator of hi-def niche broadband video using its desktop application for discovery, download and playback. Vuze announced an update that enables users to drag-and-drop downloaded videos for playback on non-PC devices such as Xbox, PS3 and - via an integration with iTunes - to the iPhone, Apple TV and iPods. It's a pretty cool extension of the Vuze client experience and I spoke with Vuze's CEO Gilles BianRosa and Sr. Director of Marketing Chris Thun to learn more.

Without getting too far into the technical details, what Vuze has done is capitalized on hooks that have existed in these various devices, making videos downloaded via Vuze visible in these devices' interfaces. As Gilles explained it, these hooks have been available for a while, but only the super-technical would have invested the time and effort to benefit from them.

The connections to Xbox (installed base of 30M) and PS3 (installed base of 23M) are quite complimentary to Vuze, which has 10M unique visitors/mo and about 50M downloads to date, because its content library is heavily skewed toward SciFi, animation, games and comedy (all HD btw) along with its user base. In other words, there's an affinity audience who will immediately benefit from being able to watch Vuze's content on their big screens and on-the-go. In fact, in a recent survey of its users for how they'd want to connect their PCs to TV and mobile, Vuze got 30K responses with a strong emphasis on gaming and Apple devices.

In prior conversations with Gilles I've raised a concern about the viability of Vuze's (or anyone's) client download model given the ever-increasing quality of browser-based streaming. But these integrations do shed new light on the value proposition of having a desktop presence. With its update, Vuze actually goes one step further by automatically transcoding downloaded videos into the format appropriate for the target device, often in real-time, thus eliminating playback issues.

Gilles noted that this is a beta release however, and that one current limitation is that ads cannot be passed through. This is a not insignificant gap for an ad-supported site. Vuze hopes to have ads up and running within a month or so. It also has its eye on integrating with additional devices. My bet is that TiVo is next up given that TiVo founder Mike Ramsey sits on Vuze's board.

For now Vuze's content is relatively nichey and Gilles concedes that despite ongoing negotiations with major studios and TV networks, they're still getting comfortable with Vuze's P2P platform. Given the crowded video aggregator space, Vuze's ongoing challenge is to bolster its content library to broaden its appeal.

But Vuze's new update, sure to mimicked by others, which comes on top of Netflix reporting 1M Watch Instantly users connecting to their Xboxes and consuming 1.5 billion in the first 2 months of its availability, Boxee's multiple integrations and other PC-to-TV convergence initiatives underway, shows the huge pent-up interest users have in watching broadband video on their TVs. The genie is way out of the bottle and content providers need to begin adapting to the coming landscape where video flows between PC, TV and mobile, offering unprecedented convenience to users.

What do you think? Post a comment now.

Watching President Obama's appearance on "The Tonight Show with Jay Leno" on NBC.com over the weekend was a classic reminder of how so many sites miss out on so much of their total broadband video advertising opportunity.

The interview, which lasts over 24 minutes, carried just one 15 second pre-roll ad, (for Subway, when I watched it) along with a companion banner. Twice during the interview, Leno interrupted the President to pause for a TV commercial break, but when he did so, there was no mid-roll ad inserted by NBC.com. There was also no post-roll ad appended, just a promo graphic for the show itself.

If you figure there were at least 4 potential 15 second avails (1 pre-roll, 1 post-roll and 2 mid-rolls), but only the pre-roll was filled, it means that NBC.com missed out on 75% of the potential ad revenue that each full stream viewer would have generated. In reality the percentage is probably even higher because the mid-rolls could likely be 30 seconds or more.

That degree of under-monetization is pretty disappointing. Don't get me wrong, I'm not advocating that broadband video streams become overwhelmed with ads, which would surely cause a consumer backlash. But I do believe that providers of premium content like NBC.com (and there are few videos more premium than the first time ever a U.S. President has appeared on the "Tonight Show") must recognize and monetize their opportunities effectively. There are at least three reasons why:

First, and most obviously, broadcast networks' poor recent financial performance demands that they seize every available money-making opportunity. Not doing so is just bad business. How many businesses succeed long-term when they don't execute on all chances to generate revenue?

Second, NBC.com and other premium video providers are setting a bad precedent for consumers' expectations. If I can watch 24 minutes of Leno with just one 15 second ad, then if and when NBC.com tries to increase the ad load, I'm inevitably going to be displeased. In short, NBC is devaluing its own content by not serving notice to broadband viewers NOW, that a "price" - in the form of watching ads - must be paid for access.

Third, and tying together the first two reasons, is that it is urgent that networks learn how to achieve economic parity between programs viewed via broadband delivery vs. on-air delivery.

That's because the era of broadband-connected TVs has already begun, and is poised to gain further steam as new devices and connected TVs proliferate.

As this happens, online viewing will no longer be merely supplemental for many viewers to on-air, as it often (thought not exclusively) is today. Rather it will be substitutive. That means viewers will watch Leno via broadband on their TVs, instead of via cable/satellite/telco or over-the-air delivery. Just as "Tonight" would never go 24 minutes on-air without an ad pod (which consists of more than one just 15 second ad btw); NBC.com should never let this happen online. Doing so will cause major damage to its future P&L.

In his Media Summit interview last week, NBCU's Jeff Zucker said the company has already evolved from "digital pennies" to "digital dimes." Yet Hulu's recent stiff-arming of Boxee underscores the reality that networks are nowhere close to economic parity between online and on-air delivery of their programs today. Neither consumers nor technology are standing still waiting for them to catch up. Behaviors, expectations and future economics are being formed right now.

NBC.com - and others - need to be mindful of this and ensure that when they put their premium video online they're fully capitalizing on their ad opportunities. If they don't, then 5 years from now Mr. Zucker will wind up like so many of today's newspaper CEOs - lamenting, not praising, his company's "digital dimes," long after his "analog dollars" have evaporated.

What do you think? Post a comment now.

Below is the 11th edition of the VideoNuze Report podcast, for March 20, 2009.

This past week Daisy Whitney and I were both on the road, with me hosting VideoNuze's Broadband Video Leadership Evening in NYC, and Daisy attending the annual South by Southwest (SXSW) conference in Austin, TX. We each provide our observations and takeaways from these respective events. (Note I have more detail in yesterday's post)

A highlight of the this past Tuesday's Broadband Video Leadership Evening was our panel discussion with Albert Cheng (Disney-ABC Television), Daina Middleton (Moxie Interactive/Publicis Groupe), Greg Clayman (MTV Networks), Karin Gilford (Comcast) and Dan Beldy (Steamboat Ventures) sitting in for John Edwards.

As moderator, I was trying to listen to panelists' answers, formulate the next question, and scribble down notes. We'll be posting a video of the discussion soon, but in the mean time, here are a few of my key takeaways (also pictures are here):

For ABC, no economic parity for broadband-delivered shows vs. traditional on-air delivery yet, but progress is happening - Albert opened the discussion with an update on ABC.com's profitability. He said that broadband-delivered programs are profitable on a gross margin basis, but that they are not yet as profitable as when viewed on-air. He resisted using the "analog dollars, digital pennies" reference, instead saying it's like comparing "a teenager to a full-grown adult." (I'm still trying to decode that as well)

Albert noted that ABC thinks of itself as a multiplatform entertainment company, with numerous distribution avenues, not simply a traditional broadcaster any longer. That's a distinction that it believes will keep it from facing the dire situation newspapers are now in. Albert said that newspapers trouble began because they didn't pay sufficient attention to changing consumer behaviors and respond effectively, whereas broadcast networks are proactively trying to stay out in front. One example he provided is that in the U.S. where ABC's programs are available online, it has measured file-sharing at just 4% of overall views. Preempting the file-sharing alternative is big win for preserving its ad model.

Cord-cutting not happening, cable's subscription value proposition to grow - "Cord-cutting" or dropping your cable/satellite/telco service in favor of online-only viewing, has become part of the market's mythology. Even some cable CEOs have propagated it. Yet Karin echoed recent Comcast statements that cord-cutting is not yet happening in any significant way. Comcast (and others) will build more value into the subscription by offering online access to cable programming. That's a "natural extension to their business," which was a key theme I heard from all panelists. Cable networks should be excited about this plan, and Greg reminded us there's a strong "culture of collaboration" in the cable industry.

2009 will be a tough year for standalone aggregators - There was strong consensus on the panel that online-only aggregators will struggle in '09 (this was one of my year-end predictions as well). The reasons for this included not getting a big enough share of the ad pie, not having an existing business to grow from, not being able to differentiate, etc. This was a very hot space for investors just a year ago, now it looks like it's going cold.

The "democratization of video" only goes so far - The panel cautioned that the appeal of broadband's openness allowing everyone to be video producer and reach their audiences only goes so far. The realities are that it's difficult to build audience and generate ad dollars. A goal for many independent broadband producers will still be to get on TV, where most consumption happens. A side conversation I had with someone who's very involved with various indies confirmed much of this and predicted a shakeout in this space will be coming as well.

Broadband ad model has a lot of maturing to do - While the broadband ad model has come a long way, it has a lot further to go. Daina provided lots of insights on the challenges of shifting TV ad dollars to broadband. She noted that many agencies still split their online and TV media buying and research teams, making integrated pitches and pricing difficult. Greg described the "happy place" everyone is striving for where broadband ad revenues become large enough to really augment traditional ad revenues, but quickly reminded us that day is a long ways off. He and Albert agreed there needs to be more collaboration among content providers to demonstrate the value of the broadband medium.

There was lots more, but I'll leave it at this for now. If you attended and have other observations, please leave a comment!