VideoNuze Posts

As MTV Networks' Executive VP of Digital Distribution and Business Development, Greg Clayman is the company's main digital deal-maker, striving to reach far-flung audiences in the broadband and mobile era. Given MTVN's stable of powerhouse brands and the myriad opportunities that cross his desk daily, Greg's goals, and the strategies he uses to achieve them, have far-reaching implications.

In this interview on the cusp of the NATPE show, Clayman explains how MTVN has organized its digital deal operation for success, why broadband video's benefits can't always be easily quantified, what the company looks for in syndication deals and why advertising is poised to play a big role in mobile video. An edited transcript follows.

Greg Clayman: I'm the EVP of Digital Distribution and Business Development for MTV Networks. I manage distribution of our content across all digital partners, such as AOL, MSN, Bebo - basically our whole digital syndication business. Just prior to this I ran just the mobile group, which I actually I still do. I report to Mika Salmi, who runs everything digital at MTVN.

VN: You have a pretty broad role, how do you organize things?

GC: We have a group of biz dev people, some dedicated to broadband, some to mobile. Same on the operations and product development side. We learn a lot from each other by being all together, though these areas do diverge in certain ways. Remember, video is just one piece of what we do. We're also in ring tones, games, voting, you name it. But there's a lot of things that broadband and mobile video have in common - I'm always amazed.

Also, our partners were a real motivator for us to organize this way. Some of our key mobile partners like AT&T and Verizon started getting into broadband in a big way around a year or so ago. We wanted to make sure we were all aligned so we worked most productively with them.

VN: Let's talk specifically about broadband - what are MTVN's goals?

GC: Well, there are really two. First is to make money - if that isn't too obvious. We think there's a terrific ad-driven business that's growing nicely. We can measure our performance very well and are getting a pretty good handle on how to grow revenues.

Second, we want to use broadband to drive traffic and awareness to our other platforms, specifically on-air and our various web properties. The latter is a significant business now in its own right. So for example, if someone sees a video of The Daily Show somewhere online, that may entice them to come to TheDailyShow.com and maybe start doing searches for other stuff. We also want to drive awareness of our shows in general. The fact is that the TV business is still where essentially all of our revenue comes from right now. So if we can spark interest in shows and move the ratings by even by a little bit, that pays great dividends for us. So we're balancing how to achieve both goals.

VN: How do you measure the success of the promotional stuff?

GC: Admittedly, that can be tough. Certainly we look at ratings, and what we think is contributing to them. For example, we had excellent ratings for the Movie Awards. But it's hard to say, is that because we had excellent talent? Or because we did a big partnership? Or was it billboards? It's hard to know specifically.

VN: Is MTVN's syndication push a recent phenomenon and how important is it?

GC: It's very important, we're embracing it equally, alongside building out our own destinations. Look, MTV has some of the top online brands, obviously growing them further is a top priority. We want to do everything we can to achieve this.

We've always been interested in getting content in front of lots of consumers, but it's really been only the last few years that broadband video has exploded in a significant way and some of these social networking spaces have taken off. So we want to work with lots of people - people we have good relationships with. Where we see eye-to-eye with them. And importantly people who respect copyright - which by the way is becoming more commonplace these days. This is trending in the right direction I'm happy to say.

VN: Talk about business models in these broadband syndication deals - what do you favor?

GC: In the majority of cases we provide video streams and a player and we serve ads on top of that content. We're experimenting with ad formats - lower third, bugs, pre-rolls, etc. For the most part we sell the ads and give a revenue share to the partner. That's the most basic model. Getting to a point where we have multiple partners and we can turnkey this stuff is a goal. But there's a lot of integration work still to do.

VN: Let's shift to mobile video - how developed is it really, particularly compared to broadband?

GC: Look, we're still very early in both, but certainly earlier in mobile. For example, look at MediaFLO (Qualcomm's initiative) - it's only supposed to launch this quarter. But what's interesting in the mobile space is that people pay for things. I think that matters. So it has the potential to become a pretty material business quickly. And for better or for worse, there's a finite number of players - both carriers and providers. So it's more akin to the cable model in some ways.

Contrast this with broadband - in that world there are tens of millions of users, but they're dispersed across so many different properties. And they don't want to pay. So actually making money can be a lot more difficult.

VN: You're touching on the "closed" nature of mobile video today - how and when will that change?

GC: One of the things we'll start to see more of soon is direct-to-consumer, off-deck video. But platforms for this don't necessarily exist in a big way right now. We're years away from a huge critical mass. In the next few years we'll see developments around open platforms like Google's Android, but it's not going to be material for a while to come. And remember, carriers have tens of millions of happy subscribers, who are willing to pay for services. There's a strong incentive to maintain that. To make this market really take off, we think standards are needed, the same as we've seen online and in broadband to some extent.

VN: So net, net, do you think mobile video remains largely a paid medium?

GC: I think advertising can and will play a big role. We're seeing a big movement in mobile ads. That's because there's a role for advertisers to play in subsidizing content development. But advertising has to be done in a way that's not incredibly annoying to the user.

Where we have done research, we've found people really like mobile video, and they watch it everywhere. The bathroom. The bedroom. Waiting for the schoolbus. Even at work! People are doing it. Bite-sized clips work very well. We see this all the time. So no question, there's a bright future for mobile video.

VN: What's your panel about at NATPE?

GC: I'm moderating a session with a great group of folks who are driving mobile video forward. They have tons of experience and love to talk! Attendees are sure to gain a lot of insights about the mobile video opportunity.

VN: You've been gracious with your time. Thanks and good luck.

(Note: Greg Clayman will be moderating "Mobile Content: What's Hot? What's New? What's Next?" on Tues, Jan. 29th at 3pm)

Some brands are so ubiquitous that they become the touchstone reference point for others that follow. TV Guide is such a brand. With broadband video choices exploding, many companies would love to become the "TV Guide of the broadband era."

Well it turns out that TV Guide itself wants to be the TV Guide of the broadband era. The company's Online Video Guide (OVG), launched in April '07, shows that it is quite serious about morphing its brand as the boundaries between TV and broadband continue to blur. Recently I caught up with Christy Tanner, who is TVGuide.com's VP of Marketing and Editor-in-Chief to learn more.

The key to understanding OVG's approach is that it not another pure algorithmically-driven video search engine. Rather, TV Guide is leveraging the company's strong editorial capability. First, it selectively chooses which video sites to index. Then it organizes/exposes the results in a way that makes sense to users, particularly those in the mainstream. It is also mixing in its own editorial content to give further context to the videos themselves.

A visit to OVG shows that it puts access to networks' programs front and center, along with a prominent search bar. Christy explained that TV Guide has learned users' strong affinity for programs, not networks, is driving their search/discovery behavior. Clearly OVG's growth is intertwined with the surging interest in accessing programs online.

OVG serves up results in both grid and list formats, with relevant metadata exposed. Conveniently, OVG has a tab for "Full episodes" and "Clips". If you click on "Full episodes", it will either display the choices or simply say "We did not find any videos matching your search" when the network hasn't made full episodes available (such was the case for "Mad Men", AMC's new hit, whose last 2 episodes I missed, and have been searching for ever since).

OVG shares its own top picks, top 5 and 10 lists, provides a launch point to purchase programs, and highlights certain celebrities (currently Britney Spears, to nobody's surprise...). It also offers an e-newsletter, the Online Video Daily Scoop, with lots of highlights. OVG now indexes over 60 video sites, with videos from 25,000 shows, movies and celebrities, adding up to a total index for 200,000+ videos.

Another smart thing about TV Guide's strategy for OVG is that it is putting a big push behind syndicating the product. It can syndicate the entire experience, just the front end, or the full data set. This leads to a mix of revenue streams - advertising, licensing and hybrids.

Some of you may have noticed that Vudu announced last Thursday that it was cutting the price of its box by over $100 to $295. I recently wrote about Vudu in "Apple TV Improves, Vudu in its Crosshairs." Looks like it didn't take long for Vudu to start feeling Apple's heat. It's a good move, but I still remain skeptical about this box's mass appeal.

Two weeks ago, in "Here Comes the Video Experience Era", I argued that in the future consumers' satisfaction with video will have less to do with traditional yardsticks. I tried to explain it this way: if you are a TV manufacturer, traditional consumer satisfiers have included "how big is my set and how great is the picture quality" while if you are a content provider, traditional satisfiers have been "how funny is that show, or seeing well-loved actors/actresses."

But in that prior post, coming at the conclusion of CES, I suggested that consumers are beginning to shift from using these metrics to gauge their own satisfaction with video. Instead they are increasingly looking for new and compelling video experiences, many of which are not yet well-defined. These might include how well do broadband-delivered video choices integrate with the overall TV experience, how can I interact with the content and with other viewers, or how can I move it around from device to device depending on my lifestyle?

I raise all of this again today because just this week I was provided with a very tangible data point supporting my assertions. A good friend of mine recently bought a 50 inch plasma HDTV (his first HDTV set). He doesn't work in the technology or content industries. To understand his technical orientation better, if on a scale of 1 to 10, 1 was a technology Luddite and 10 was an uber-geek, he'd be about a 5. He's not afraid of technology, but hardly rushes out to get every new thing. And note, he's 44 years old, not 14 or 24.

With is new TV in place, one of the first things he did was begin figuring out how to connect it to his PC. Since the TV didn't have a VGA port, he researched and found a relatively inexpensive adaptor to convert VGA output to component inputs for his TV. When done, he excitedly emailed me saying that, by his count, he's now playing 10 different formats on his TV (linear TV, broadband content - both free and paid, Netflix Watch Instantly, podcasts from his iTunes library, DVD, Blu-ray DVD, DVR, VOD, CD Music and radio). And he's psyched to read surf the web on his TV, and move files around. Talk about a plethora of choices and experiences!

To understand the emerging mindset of today's consumer, the example of my friend is illustrative. It was not just the 50 inch plasma TV that got him excited. Rather, it was the impetus to expand his video choices and to add new energy to pre-existing options. Here again, the interplay of technology and content is what is cool to him. Not just one or the other in isolation. I believe his mindset is becoming more common each day. It embodies what marketers and product managers in the "video experience era" will need to grasp if their companies are to succeed.

What's your reaction? Post a comment and let us all know!

Bob Pittman will be presenting at next week's NATPE conference. A long time media executive, he is a founding member of Pilot Group LLC, a consumer brand focused private investment firm based in New York. Among other prior roles, he's served as President and COO of America Online and was also a co-founder of MTV and later CEO of MTV Networks.

Yesterday I caught up with him for a pre-NATPE briefing. Read on to learn why he's bullish on broadcast TV stations, skeptical about broadband video's impact on the TV business and emphatic that convenience rules.

VideoNuze: Pilot has been a buyer of broadcast stations. That's somewhat contrarian. What do you see in the industry?

Bob Pittman: Broadcast stations are greatly unappreciated. TV is America's hobby. Look at any category, the biggest is always the most important. So we want to invest in place where most people are. It is a fantastic advertising medium. There's no substitute for TV advertising. It works like nothing else. It's still wildly cheap - for the most part it's a $7-8 CPM, compared with newspapers and magazines which are $25-30, and it outperforms by every measurement - reach, time spent, effectiveness. It's still wildly underpriced.

We have focused on small market television, where local advertising is the predominant revenue stream. We have done that because we believe national advertisers will slow down spending in economic downturns, whereas in local market when you're dealing with a local retailer he still has to sell everything that's on the shelf, come good times or bad. And we believe that in small markets, newspapers and yellow pages are getting wildly disproportionate share of the revenue, so we think there's a great growth opportunity as well. In smaller markets the station's coverage area nicely matches the advertiser's reach goals. It's also a fantastic free cash flow business.

VN: Is broadband video a net positive or a net negative for broadcast stations, or is it not clear yet?

BP: We have to be really careful about broadband video, it's still a very small percentage of use for most people. Most of what people talk about is still 3 minutes or shorter clips on YouTube, many sent to you by a friend in email. The idea of people sitting down and watching their computer is a small part of the overall audience. So we have to be careful not to talk about fringe uses as if they're going to be major uses.

However, we think it presents an opportunity for our stations and we've pursued that, by setting up what are in essence "newspapers online." And in our smaller markets, we're not competing with Google or MSN, so we can get large local audiences, which allow us to better serve our advertisers. But I don't think broadband is competitive with TV, putting TV shows on the Internet is nice, but you're talking about small audiences.

VN: What will the impact of services like Hulu and CBS's Audience Network on broadcast stations' audience size?

BP: Well, you may occasionally watch a program online if you can't get to your TV, or it wasn't available, or you're a little geeky, but as a replacement offering, I don't think so. TVs are big screen, public viewing devices, computers are not. They're 18 inches away and are private experiences, you don't want people looking over your shoulder at it. They're completely separate uses and devices, so to try to put the wrong kind of programming on either one limits your audience severely.

BP: If it's completely invisible to the consumer then yes things change, but if people have to do a whole lot of work then it's not going to be big. The one thing that motivates the consumer through every product category is convenience. The easiest thing to get is what people will use, even if the quality is lower.

I think it's going to be pretty hard to get something in the home that's easier to use than pushing a button on my TV set that I already know how to do and I'm set up to do. To start connecting a box and moving stuff around, then my rule of thumb is about 10% of the population will adopt new technology because it's cool and neat, but it will be hard to get past that threshold.

VN: So it sounds out like you're not that bullish on these new boxes succeeding?

BP: Right now these require a step or two more, and my experience from the Internet is that just one more click means a lot less response. You think, well it's just one more click. But for example, when I was at Time Warner, we had 2 options for ordering PPV - one to click a button and one to call an 800 number. The response rate for the former was three times the latter - that's the power of ease of use and convenience.

VN: How about broadband's larger impact on the video industry - who's helped and who's hurt?

BP: Short form appears to be working very well. If there's a nifty little video that's great, but get above 3 mintues and you start to lose people - certainly you lose me. So who's advantaged - people who have short clips that they can build a business out of. But I still think the best thing to do online is to read and write, because it's quiet, it's personal, you can do it with others in the room. Importantly, it's not sequential. Internet is like a newspaper - it's random access - if I don't like sports I can skip that section. But video by its nature is sequential, it's linear, you have to have a story arc, you have to sit through the whole thing. So I think you're asking people to make a different sort of commitment.

VN: Your take on user-generated video?

BP: I think it's great. Probably 99.9% of it is crap, but the rest of it is brilliant. If you have a way of editing it down to the brilliant stuff and also allowing people to discover it easily, then it can be very appealing. So when you look at YouTube for example, and you can look at the "most viewed" and can skip my neighbor's kid's birthday party, that's great.

VN: Does user-generated video compete at any point with professionally produced content?

BP: Well, what's happening with the level of technology that's now in the hands of consumers plus their ability and knowledge of how to edit makes you ask the question, "who's really the professional now?" So I think you're going to see some shows on TV by what were once considered "amateurs." Professionals are anyone that has a good idea and other people want to see their stuff.

So I think the world is opening up and that's very healthy. When the studios have a set list of actors, writers and directors, by definition you're limiting the innovation process. When you've got those capabilities in the hands of everyone, you're now opening up to the possibility of some real breakthrough innovations. And that's good for the TV business, because if they do it in a 30 or 60 minute form, the best way to watch it is on the TV. And that's the medium that can pay the most for it, and has the biggest audience.

VN: What's your message to NATPE attendees?

BP: I'll be trying to put broadcast television into perspective. You hear so many negative stories yet I think it's one of the most misunderstood mediums out there today. So the idea is to try to point out how it relates to Internet, newspapers, magazines, what the trendlines are and explain why believe it's actually a very good business with a brilliant future.

People keep talking about Internet as if it's competing with TV. But what the Internet has really done is replace print - things like yellow pages, newspapers and traditional research books. It's also replaced communications - phone calls, voice mail. So when you hear these stories about the Internet replacing TV, I think they've got it all wrong.

VN: Thank you and see you in Las Vegas.

(Bob Pittman's NATPE presentation is Tues, Jan 29th at 10am)

Yesterday TiVo and Comcast announced that their joint service offering, known as "Comcast DVR with TiVo" is now available to Greater Boston residents. The announcement comes almost 3 years since the partnership was announced. Multichannel News recently reported that Comcast has funded $24 million of co-development work to date. I have had the service since late October as part of the beta test, but the companies had asked me to stay mum until its official launch.

The first thing to know about this new service is that it really is familiar, lovable TiVo inside a Motorola cable set-top box. I am a long-time TiVo Series 2 owner, and as best I can tell all of the core TiVo features are available (e.g. Season Pass, Wish List, Suggestions) along with the inimitable TiVo blooping sounds effects. The box has a dual tuner so you can record one show while watching another. The navigation also incorporates all of Comcast's VOD selections, so all linear and VOD programs are considered in your searches. It's an HD-capable box, which can hold 15-20 hours of HD video. The peanut-shaped remote control is virtually unchanged.

What's not included are all the wonderful broadband features (e.g. TiVoCast, Amazon Unbox, Rhapsody, Music Choice, Photos, Home Movies, etc.) and network features (e.g. remote scheduling, whole house service). The absence of broadband content (CNET, The Onion, NY Times, etc.) in particular will be missed. TiVo has gradually been introducing this over the last couple years. I've written a lot about broadband-to-the-TV solutions recently, and TiVo's approach has been very solid. However, Comcast obviously wanted to retain strict control over what video gets pumped into the set-top box. I have discussed this "closed" vs. "open" mindset earlier - hopefully something that will change down the road.

The service itself has mostly worked well. There were some initial hiccups requiring the Comcast service techs to return to the house and for me to call in for service. There are a few small issues that have persisted. These include periodically getting a green screen which requires me to turn the box on and off. I can't continuously lower the volume or change channels by suppressing the appropriate button on the remote control (this is possibly a TV-specific issue). I also find the service just a little less responsive than my Series 2 box - my fingers have had to adjust their muscle memory somewhat when working the familiar remote control. None of these are deal-breakers, but I do intend to have Comcast come out a take a look one of these days.

Comcast has priced the service at $2.95/mo, on top of its plain vanilla DVR service fee of $12.95/mo. I continue to believe that for consumers this proposition makes a lot of sense when compared with buying a standalone Series 3 box. It's a $3 delta over paying the monthly service charge directly to TiVo, but you avoid buying the Series 3 box (about $600 street price around $400) and potential maintenance and obsolescence issues. And it means one less box in your rack. The downside is the missing TiVo features described above.

If Comcast markets the TiVo service aggressively and correctly I think they can shift a lot of current DVR subscribers over plus add plenty of new ones down the road. It's a meaningful competitive advantage for a company caught up in a brutal battle with satellite and telco competitors. For TiVo, which has also done a deal with Cox (and others in the future presumably), it's a great shot at migrating itself out of the hardware business, into software and solutions.

The unveiling of HBO's broadband video strategy provides fresh evidence that the 3 major premium cable channels - HBO, Showtime and Starz - are pursuing 3 very different paths in navigating the broadband world.

These 3 channels have traditionally been tight-knit partners with cable operators who leveraged these channels' brands and programming relentlessly in marketing campaigns to gain new revenues and subscribers. But operators' high margin digital services (e.g broadband access, phone, HD, VOD DVR) have lately become the primary focus of cable marketers' finite promotional power. Somewhat mitigating this shift has been powerful original programming, especially from HBO (The Sopranos, Sex and the City, etc.) that has often made these "must have" channels for audiences, helping build powerful consumer brands in the process.

Broadband delivery further scrambles the relationship between these 3 premium channels and their cable operator brethren. For the first time, the premium channels can promote their services, and even deliver them directly to consumers, all without cable operators' involvement. This newfound flexibility has led to 3 very different strategies that I would categorize as "Be bold" (Starz), "Be incremental" (Showtime) and "Be aligned" (HBO).

"Be bold" - Starz has pursued the boldest broadband strategy, launching Vongo, a pure broadband-delivered subscription service several years ago. Starz has invested heavily in making Vongo a top-notch user experience, including hundreds of hours of additional content specifically for the service. Starz has marketed Vongo directly to consumers and through non-cable industry distribution partnerships (e.g. HP, AT&T, Microsoft, Toshiba, Samsung, others). Starz is very clearly trying to grow the market for its programming.

Starz has sought cable operator partnerships as well, I believe correctly arguing that Vongo can be priced and packaged in a way that provides new value for subscribers as well as cable operators. These efforts have been stymied to date as reluctant operators perceive Vongo as possibly opening the door for Starz and others to gain direct access to subscribers, while also creating possible confusion around operators' budding VOD services.

"Be incremental" - Showtime has focused its broadband efforts on new revenue opportunities such as selling episodes through aggregators like iTunes, and also offering innovative new programming and features that capitalize on broadband's ability to directly interface with audiences. Two perfect examples of the latter are the "Dexter" parallel webisode series and season finale producers' video I have previously written about.

Showtime's goal is to create valuable exposure for its programming to non-subscribers on the bet that actual sampling is the best way to drive new subscriptions (in the past sampling was limited to cable operators' offering "preview weekends"). Showtime's "be incremental" approach studiously avoids creating conflicts with its cable operator partners, while not limiting the network's ability to harness broadband's potential.

"Be aligned" - HBO's belated entry into the broadband world is intended to support its cable partners by offering access to HBO Broadband to only those viewers who are both existing HBO subscribers AND cable broadband subscribers. This "value add" positioning is comparable in some ways to Netflix's "Watch Instantly" approach. They are both focused on giving existing subscribers more, not creating a distinct service, a la Vongo, aimed at expanding the market. Further, by limiting HBO Broadband's geographic rollout, HBO is taking an additionally cautious approach compared with the others. The HBO message is clear: we're staying strongly aligned with our traditional cable industry partners.

Three premium channels, three distinct broadband strategies. Further evidence that we currently live in a world of vast experimentation, with market participants focused on different goals and different ways of achieving them. I expect plenty more of this to come, as all players gather data about what works and what doesn't.

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

Although other Wall Street pros fairly yawned at Chieftain's radical proposals - in fact just last week selecting him, for the 2nd year in a row, as Institutional Investor magazine's best CEO in the cable and satellite industry - the letter does provide an opportunity to consider Comcast's stature in the highly dynamic video marketplace. But rather than looking backwards at Comcast's performance, I'd suggest looking forward and asking: how healthy is Comcast's positioning for future success? Is it closer to "Comcastic" or to "Comcastrophe"?

I'd argue that the most important factor determining Comcast's (and other cable operators') future financial success is how well they are embracing delivery of broadband video into their core business models. The adoption of broadband video by consumers, and the enthusiasm for it by content providers large and small are the most crucial fundamental marketplace changes that cable operators are now facing.

This is the case because, as I've said repeatedly over the years, broadband's open access undermines cable operators' traditional closed business model, in which only networks which have so-called "carriage deals" are available to subscribers. This closed approach contrasts with the broadband world, where all programming is accessible by everyone, all the time. Piggybacking on the Internet's own success in driving consumer choice, broadband's openness is poised to drive a stake into the heart of cable's traditional video packaging paradigm and revenue model.

Yet despite this gathering storm, Comcast and other cable operators have been woefully inattentive to explaining how they'll weave broadband video into their TV-based services. Instead, their broadband access businesses, now generating billions of dollars per year in revenues, remain almost entirely siloed from the core video side of the business.

While Comcast should be lauded for initiatives such as broadening Fancast's content, starting Ziddio, announcing an aggressive agenda for bringing more HD content to its VOD menu, and backing Tru2way, none of these directly answer the question of how Comcast will update its closed approach to content, facilitating its subscribers' access to broadband video through their set-top boxes. This would provide for a seamless and highly compelling viewing experience. Comcast's and others' silence is creating the void that is behind the frenzy of activity from technology vendors and consumers trying to kluge the broadband and TV worlds together.