VideoNuze Posts

I've been a long-time advocate that broadband video offers print publishers such as newspapers and magazines a whole new strategic growth opportunity. In a recent briefing with Richard Glosser, CondeNet's Executive Director of Emerging Media, he went a step further, telling me that for Conde "all roads lead to broadband video." For those not familiar with CondeNet, it is the digital business unit of Conde Nast, the upscale magazine publisher (Vogue, Gourmet, Bon Appetit, GQ, Details, Wired, etc.).

CondeNet has been pursuing video on its 5 web sites (Style.com, Men.Style.com, Epicurious.com, Concierge.com and Wired.com, which are associated with its magazine brands and collectively generate around 12 million unique visitors/mo) since late '06. Coincidentally, Conde's approach to video is very aligned with how I described magazines' video opportunities in a report I released in Q2 '07, "The Top 40 U.S. Magazines and Broadband Video: Learning to Thrive in a Multi-Platform World."

Conde recognizes that many of the same skills and assets vital to a magazine franchise are transferrable to video, and, when augmented with new video-specific capabilities and people, the combination significantly expands the brand's potential, especially with advertisers, in the digital era. Conde is now producing or licensing approximately 600 videos per year, with most in the 2-3 minute range. While insisting that the its video be high quality, it is very budget-focused, with target production of $1,000/minute.

Since CondeNet is a separate unit, some of its videos stand alone on the site, unaffiliated with print stories. But often the video is related to what's in print, and that brings up one of the main challenges for magazines to successfully pursue video: evolving the editorial process to incorporate a video angle. Conde has hired video producers who now work closely with magazine editors to identify appropriate opportunities. The question guiding these decisions: "What do our audiences expect from us?"

Meanwhile, Conde's early video syndication efforts also show why video is so strategic. Though only distributing to 5 partners as yet (YouTube, iTunes, Sony Bravia, Verizon VCast and Adobe Media Player) - Richard shared that two-thirds of its overall video views now come from these 5 partners, with the other third generated from Conde's own sites, underscoring the opportunities I've previously written about concerning the "syndicated video economy."

Better yet, Richard cited a number of examples where a certain clip breaks out on a partner site, demonstrating that Conde's partners help it reach new audiences it doesn't typically attract on its own. One example was videos it placed on YouTube about Culinary Institute of America students Epicurious was tracking for a series. Video of one student in particular underperformed on Epi, but was off the charts on YouTube. Conde's thinking is that YouTube's younger audiences related better to this student's particular trials and tribulations and embraced her in a way that Conde's traditional audiences had not.

As the proliferation of broadband video continues apace, the task of finding what you're looking for is only intensifying. That's set off a scramble by many to solve this problem, trying to become in effect, the "Google of video search."

I've previously written about players such as blinkx, Truveo, ClipBlast, Veveo and EveryZing. The latest video search company to hit my radar is Pixsy, which has its own distinctive approach for capturing its share of the growing video search market. I recently spoke with Chase Norlin, Pixsy's CEO to learn more.

Pixsy has three key differentiators:

First, it's purely focused on the B2B white-label opportunity, eschewing the destination site route. Pixsy only wants to power other sites' search capabilities as a white-label provider.

Second, in addition to video search, Pixsy also does image search, which Chase believes is actually the fastest growing part of the search market. Being able to offer image search broadens Pixsy's value proposition to partners, driving enhanced monetization opportunities.

Third, Pixsy doesn't seek to have the broadest index, rather it seeks to balance the breadth of its index with having the most current results. It uses RSS feeds, not web crawlers, to build its index and focuses mainly on current events categories like news, sports and entertainment. Clearly having the most up-to-date results in these kinds of categories is a real plus.

Pixsy's approach seems to be paying off, as it is now powering video and/or image search at sites including Veoh, Lycos, PureVideo, National Lampoon and others. This morning it's also announcing a deal with MMORPRG.com, the web's largest massive multiplayer online role playing site.

Pixsy works with a number of business models. Sites generating anything under 10K search queries per month can freely use Pixsy's API. Above that volume, Pixsy licenses its index with about a third of partners selling their own ads, and the other two-thirds relying on Pixsy to sell the ads alongside the search results. As Google and others have shown, search results are extremely monetizable.

Based in Seattle and San Francisco, much of Pixsy's team comes from Microsoft and ValueClick. Considering it has been around for about 2 years, has only 15 employees and has raised just an angel round, Pixsy seems to show that the barriers to entry for savvy video search startups can be relatively low. With so many other video search players, I anticipate the category is going to remain fragmented and chaotic for some time to come.

The last few days' news about Akimbo and Starz's Vongo service, two of the earliest players in broadband video delivery, shows how risky the broadband video market can be for pioneers.

Akimbo - which has closed its doors after raising approximately $50 million since 2003 - demonstrates that misjudging the key characteristics of an early market can be devastating. Akimbo's faulty assumptions included:

• Anticipating that consumers would be willing to buy a broadband-only set-top box, despite overwhelming research to the contrary.
• Expecting that consumers would be willing to pay yet another monthly subscription fee, although broadband's value proposition was still in its infancy and consumers were already complaining about the high cost of cable/satellite subscription services.
• Building its initial content strategy using a pure "Long Tail" approach of aggregating lots of niche programmers, not grasping that Long Tail models only succeed when "head" content - in this case from broadcasters and cable networks - is also included.

As these misjudgments became obvious, the box was dropped, select cable programming was added to the content lineup, pricing was changed and management was overhauled. Ultimately in February '08, the whole company strategy was blown up, as Akimbo unsuccessfully tried to get a toehold in the already over-crowded white-label content management/publishing business. But once a startup is in a deep hole, it's almost impossible to climb out.

Meanwhile, Starz's announcement yesterday with Verizon, of its first "wholesale deal" for broadband delivery of its programming, shows additional risks for early players. Yesterday I caught up with Bob Greene, EVP of Advanced Services at Starz, for whom I did some consulting work several years ago on Vongo's predecessor service, Starz Ticket.

Starz launched Vongo in early '06 as a broadband-only subscription and download-to-own service, featuring programming it had under contract, plus other categories it later added. Vongo went to market direct-to-consumer and through device partners like HP, Samsung, Toshiba, Creative and Archos, but Vongo's growth has been modest as the broadband subscription category has yet to really take off.

Vongo's larger goal was getting deals done with existing service providers like cable, telco, and broadband ISPs. But this aspiration ran into the buzzsaw of incumbents' intransigence, illustrating that reliance on ecosystem partners, who often have divergent motivations, can be very risky. In this case, Vongo's would be distributors perceived Vongo as less as an opportunity to grow the market and tap new consumer behaviors, and more as a potential long-term end-run, with immediate threats to profit margins and cash flow contribution.

Last week I moderated 2 panel discussions, one for Streaming Media East in New York, and the other for MITX, the Massachusetts Innovation and Technology Exchange, in Boston. In the former, "Reinventing the Ad Model Through Discovery and Targeting" and the latter, "Driving Audiences to Your Online Video Content: Strategies for Success in a Crowded Market" panelists discussed many of the key themes I continue observing in the broadband video market.

Today, a quick digression from the daily routine of broadband video analysis.

It's been a little over 6 months since I launched VideoNuze. The question I've been asked most often (after "how do you crank all this out every day?!") is "How are things going?" So I thought it would make sense to take a step back and give all of you a brief answer to that question.

I started VideoNuze with a mission to deliver to busy executives each day a complete, yet highly digestible package of analysis and news about the broadband video industry. I thought an online publication that was relentlessly focused and written from the perspective of an analyst and former industry executive would meet a market need.

Six months later, there have been over 160 original daily analyses/posts and over 1,000 broadband video-related news items added to VideoNuze from multiple sources. To answer the earlier question, it takes a lot of discipline to crank out VideoNuze each day and I often joke that I work for a pretty tough boss! But I'm hardly complaining. Through the countless executive briefings I've conducted, I've continued to learn a ton about the industry from some really smart people. My key challenge is to synthesize this and present it in a way that's valuable to readers. It's stimulating and fun and I thoroughly enjoy it.

VideoNuze is now read each day by thousands of busy executives who either receive the daily email or RSS feeds or visit VideoNuze.com. I've been incredibly gratified by the response I've received. Readers now regularly tell me that VideoNuze's insights and exclusive broadband video news aggregation are indispensable to them. VideoNuze is still very much a work in progress with lots of additional features planned. I continue to optimize the topics of daily analyses trying to balance reader interest and important news and trends. But at the six month mark, I'm very pleased with the overall progress.

I'm particularly proud that 15 industry leaders have run, or are currently running sponsorship campaigns on VideoNuze, including ActiveVideo Networks (formerly ICTV), Adap.tv, Akamai, Anystream, Atlas Venture, Brightcove, Digitalsmiths, ExtendMedia, FAST, KickApps, PermissionTV, thePlatform, Tremor Media, Voxant and WorldNow.

In the coming weeks a number of additional companies will start VideoNuze sponsorship campaigns. I am extremely grateful for all sponsors' support, and encourage you to visit their sites to learn more about them. And if you'd like to learn more about sponsoring VideoNuze, please click here.

VideoNuze has also benefited from two important partnerships, one with NATPE (the National Association of Television Program Executives) and the other with The Diffusion Group, a leading analytics and advisory firm specializing in broadband media. NATPE now distributes the daily VideoNuze email to many of its members looking to make the leap into broadband delivery. And TDG professionals have become regular contributors to VideoNuze, adding a diversity of voices and opinions, while also lessening my work load a bit. To both NATPE and TDG, a huge thanks.

It's been a great first 6 months for VideoNuze. I really appreciate your support and as always encourage you to comment on the posts and add your voice to the community. Broadband video is an exciting and dynamic space, but only though our combined contributions will it reach its full potential.

(Note, tomorrow is a rare day off for me, see you next Tuesday)

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.