VideoNuze Posts

Among the many partnership announcements at CES this week, there are a number worth highlighting. Today I focus on the following three:

Viacom syndication - Viacom announced syndication deals for MTV Networks' stable of content with five leading broadband video sites: Dailymotion, GoFish, Imeem, MeeVee and Veoh. As those of you who have been following my previous posts know, I believe syndication is a critical engine in driving the advertising business model, which itself is the key to broadband video succeeding. As a result, I follow these syndication deals closely.

I've previously been critical of MTVN which appeared reluctant about syndicating its content when it launched its DailyShow.com destination site. However, with its recent deal with AOL, and now these five deals, it appears that MTVN does in fact believe syndication is the way to go. As one of the biggest cable network groups, MTVN is a key barometer for other networks' moves, so I view this as a real positive for the market.

Panasonic/Google - In this deal, Google and Matsushita announced that YouTube videos and Picasa photos would be directly accessible on new model Panasonic HDTVs launching in Q2 '08. Ordinarily I wouldn't be too excited about a deal like this, a permutation of which we've seen with other TV makers such as Sony.

Yet this one rises in potential importance because YouTube is not just the most popular video site - with 40% of all video traffic - but because Google is determined to turn YouTube into a platform for legitimate content distribution. This was underscored by the Sony mini-sode deal also announced this week, and the many partnerships YouTube has already struck with premium content providers. If successful (and there are many if's to be sure), YouTube would be far more than a scraggly collection of UGC. So, marry a broad-based premium video aggregator to HDTVs and you could see a new device/content model emerge.

BitTorrent device deals Netgear and D-Link - In a less publicized move, BitTorrent announced expanded deals with Netgear and D-Link covering a range of home networking products, with an emphasis on HD distribution. BitTorrent, which has been steadily legitimizing itself from its P2P file-sharing roots, has launched an aggressive SDK program called BitTorrent Device Partners, intended to permeate the market with its client software. BitTorrent also integrates easy access to its digital download store with these partners as well.

While I'm not very bullish about the market potential of bridge devices from companies like Netgear and D-Link, I do believe that P2P distribution has a real role to play in content distribution, especially for heavy HD files. I continue to see P2P as more of a "peer assist" play. To the extent that BitTorrent can continue getting its software into multiple devices, it gains validation and strengthens its potential to be a meaningful partner in the larger content distribution ecosystem.

Share your thoughts on these deals, and suggest others you think are noteworthy from CES!

In his CES keynote today, Comcast CEO Brian Roberts will outline several Comcast's initiatives (under the umbrella "Project Infinity") to stay competitive in the fast-changing video arena.

These include:

"Wideband"- New "wideband" broadband technology which allows much faster downloads (this is impressive, though was previously displayed at '07 National Cable Show). Wideband is aimed at blunting criticism that telcos' fiber networks have more capacity and faster speeds.

HD expansion - Plans for a 10-fold increase in the number of HD movies available in its VOD library to 3,000, with at least 6,000 total titles, including SD programming, eventually available. This is all meant to offset the widely held view that satellite and telco have surpassed cable in current HD offerings, a key value prop to millions of Americans now bringing home shiny new HD TV sets.

Fancast - Comcast's video portal will include 3,000 hours of streaming TV content, from NBC, Fox, CBS and others. These moves will help bring Fancast to parity with other syndicated partners of the networks which are themselves trying to proliferate their programs everywhere. Fancast will also allows remote scheduling of DVRs (both Comcast's and TiVo's), a feature that has been widely available at sites like TiVo.com and Yahoo for years now.

All of these actions are intended to help restore Comcast's reputation as the leading provider of entertainment programming, amid the swirl of changes that have enveloped the company. Despite its formidable size, Comcast is fighting competitive fires on virtually every front: fierce multichannel competition from satellite and telcos, rising expectations of HD content, consumer behavior shifts to broadband video consumption (premium and UGC) and place-shifting/time-shifting/device-shifting. The list goes on. Amid these changes, and with a slowing of the American economy, Wall Street has punished Comcast's stock price, cutting it in half in the last year.

While I applaud today's announcements, there is still one big strategic piece missing which Comcast has yet to comprehensively address: what are its plans to allow subscribers using its digital set-top boxes to seamlessly watch broadband video content as they do broadcast and cable programs?

As many of you know, I have been on a "broadband-to-the-TV" jag recently (see here, here and here) analyzing different options and their potential, or lack thereof. I continue to maintain that incumbents with boxes already in the home - mainly cable, satellite, telcos - are best-positioned to bridge the current divide between broadband and TV.

A breakthrough value proposition for Comcast would be allowing its subscribers to gain easy access on their TVs to YouTube, Break.com, Metacafe, NYTimes.com and all the others broadband sites that have surged in popularity. In theory, Comcast and other cable operators have always been about providing more video choices to subscribers. But the caveat has been those choices are only offered when Comcast makes a deal to carry these new channels. With broadband it's a wide open world. Any video provider - deal or no deal would gain access. This "openness" is a fundamental paradigm change for Comcast and other "walled garden" loyalists.

Surmounting this change to its business and cultural model are in fact Comcast's #1 strategic challenge. How to effectively respond to customers' broadband desires, while maintaining a robust economic and competitive model? When Brian Roberts, and others in the cable industry are finally ready to address the question of how they'll integrate broadband into their TV-based user experience, that will be a keynote well worth watching.

Microsoft grabbed the early PR spotlight at the Consumer Electronics Show (CES), now underway in Las Vegas, announcing a variety of deals across the broadband video spectrum. The deals, announced by Bill Gates in his traditional night 1 keynote, reinforce Microsoft's intentions to play multiple roles in what Gates calls the "first true Digital Decade."

Here's a look at Microsoft's deals and why they matter:

NBCU 2008 Olympics on MSN, using Silverlight

Microsoft and NBC, which has the broadcast rights to the '08 Summer Games from Beijing, announced that MSN would be the exclusive partner for NBCOlympics.com including thousands of hours of live video coverage, and that Silverlight, which is Microsoft's "Flash-killer", would be used. As I mentioned in my "6 Predictions for 2008", the '08 games are going to be the biggest broadband video event yet. The deal gains MSN lots of traffic and Silverlight lots of exposure and downloads, not to mention serious validation as a live streaming platform if it executes well.

ABC/Disney and MGM content on XBox LIVE

In a further move to bolster the premium-quality content available in XBox LIVE (the content offering that accompanies XBox 360), Microsoft announced that both ABC/Disney and MGM would now be providing both SD and HD content. These moves bring XBox LIVE's catalog closer to parity with iTunes, while keeping up the competition with Amazon Unbox and other stores. Separately, Microsoft said that XBox racked up 17.7 million units sold during the '07 holiday season.(correction, Microsoft press release misstated this number. Holiday sales were actually 4.3 million units, bringing cumulative units sold to date to 17.7 million, thx Karl)

XBox users have been remarkable active purchasers and downloaders using XBox LIVE, and previous briefings I've conducted with XBox executives suggest that the initiative has been particularly successful with HD. Since Xbox is purchased primarily as a gaming platform, it serves as a great Trojan horse opportunity for Microsoft to gain broadband access to the TV. Meanwhile, XBox LIVE has served as the deal unit for Zune's library as well, so these moves are important to watch as they benefit Microsoft's efforts to dislodge iPod from its perch as the leading digital media player. Only disappointment here is no ad-supported counterpart was announced for ABC programs, leaving AOL as ABC's only announced broadband syndication partner, as best I can tell.

BT and XBox 360 Integration

Microsoft leveraged Xbox 360 for another convergence play, announcing with BT that the company's "BT Vision" IPTV service would be available for XBox 360 owners as an integrated service offering. This means that no separate set-top box would be required for BT Vision subs. Though the box won't roll out until mid '08, this concept has compelling upside for both sides and could be a nice blueprint for future IPTV deals. It eliminates set-top capex for BT, while providing strong marketing benefits to both parties, helping drive broadband/TV convergence on the back of the popular XBox gaming console.

Showtime, TNT and CNN with new apps on Mediaroom, Samsung supporting Extender

Elsewhere, Microsoft announced that Showtime, TNT and CNN would be creating new apps for Microsoft's Mediaroom IPTV platform, which it says is now installed on 1M set-tops globally. And lastly, that Samsung will support Extender for Windows Media Center, which means that HD content can be sent over wired or wireless-N networks from PC to TV. Extender hasn't caught on yet, but Microsoft is continuing to push it as a bridge device. I've yet to test it, but have that on my list of to-do's.

Taken together, these announcements from Microsoft show the company's vast resources allow it to play a role in all aspects of the broadband era - software, devices, services, content, gaming, etc. Less pronounced in these deals was the company's recently added online advertising prowess, which will soon be applied to broadband video as well. Stay tuned for news on this front as '08 unfolds.

Yesterday's announcement by Netflix and LG Electronics that they are partnering to develop a new set-top box generated a lot of coverage. For me the deal shows at least 2 things. First, there is an endless reservoir of optimism concerning consumers' willingness to adopt standalone devices for broadband-delivered video. And second, that Netflix, which has been all over the board in the last couple years in trying to define a broadband delivery strategy, has seemingly made yet another misstep in this critical area.

Regarding the optimism about standalone devices, as many of you know, I recently wrote about this in a post entitled "Broadband Video on TVs is a Mirage" in which I concluded that these broadband appliances are unlikely to gain widespread market appeal. Though little information was revealed about the Netflix-LG box, for now, I don't see any reason to believe that this new box will be an exception to the logic I laid out in that post. At best I view standalone broadband appliances (e.g. AppleTV, Vudu, Moviebeam, Akimbo, etc.) as appealing to only a small sliver of consumers.

My logic applies to Netflix-LG as follows: how many people are realistically going to shell out $400 (assumed price) for a new box, plus spend the time involved to install it, when the principal benefit is to be able to watch a small subset (6K out of Netflix's current 90K catalog) of content Netflix already makes easily available on the robust DVD format? I'd say maybe 10% of Netflix's current base of 7 million, max. That would be 700K boxes TOTAL - hardly the kind of numbers that make a CE executive's eyes pop.

A greater issue is that this new box seems to represent just the latest in a pattern of dubious moves by Netflix, coupled with poor communications, regarding how it intends to gracefully migrate from its current DVDs-through-the-mail approach to succeed in the broadband era.

For the last two years Netflix has publicly appeared to jump from one broadband approach to the next. For example, yesterday's box announcement was accompanied by news that Anthony Wood, whom Netflix brought on board just 8 months ago as its V.P. of Internet TV, would be departing from the company, reversing Netflix's previous plan of developing its own box (which itself was an ill-considered idea).

The LG box approach continues Netflix's pattern of cloudy planning and communications. On a day that should have been all about articulating why this new co-developed LG box is, at last, the correct approach, Reed Hastings, Netflix's CEO seemed to veer completely off message in his remarks to the NY Times, stating that "We want to be integrated on every Internet-connected device, game system, high-definition DVD player and dedicated Internet set-top box. Eventually, as TVs have wireless connectivity built into them, we'll integrate right into the television."

Continuing my analysis of the video search space, just before the holidays, I had a briefing with Tim Tuttle, CEO and co-founder of Truveo, to preview some information the company released today. Started in early 2004 and acquired by AOL in December, 2005 qualifies Truveo as one of the main established players in video search.

I've been focusing a lot on this area as I believe that broadband video navigation is going to follow a similar pattern as general web content navigation -- with search taking center stage.

Truveo's growth in '07 reflects the overall surge of interest in broadband video. On the demand side, Tim reports that Truveo experienced a 20x increase in number of queries vs. a year ago. And on the supply side, Truveo has experienced a similar jump, now indexing 100 million videos, up from the 5-10 million videos it indexed at the beginning of '07.

Truveo now reaches 50 million unique visitors/mo, through its own site and across a network of partner sites where Truveo search is embedded, including AOL, MSN Video, CNET Search, Time Warner Cable, Qwest, Netvibes and many other smaller players which use Truveo's API. The company doesn't break out uniques by site, but with its recent international emphasis, Tim believes that at least 50% of its traffic now comes from outside the U.S.

A big shift Truveo has noticed in just the last 6 months is toward user searches for network TV programs and other professional video. This has displaced some of the searching for viral videos that was the traditional core. From my perspective, this is further evidence that the networks are succeeding with their online distribution initiatives. Tim sees this trend continuing in '08, as users' expectations for finding high-quality video online continues to grow.

Tim believes this shift is particularly beneficial to Truveo as it specifically built its "visual crawling" technology to find video that's in Flash or Ajax sites, and therefore hard for traditional search techniques to find.

While Truveo still operates with a fair amount of independence from its base in the Bay area, AOL seems to be recognizing more and more its strategic value. AOL has recently begun raising the visibility of Truveo in the overall AOL experience and will continue to do so.

Meanwhile on the revenue front, Tim said that the AOL acquisition has allowed Truveo to "de-prioritize" for a time its focus on revenue growth, instead concentrating on expanded reach. Despite this, Truveo is intent on capitalizing on its traffic and Tim sees the recent flurry of activity around contextual targeting as playing right to Truveo's strengths. We agreed there is much in flux about broadband video advertising and that formats beyond pre-rolls are essential. Of course what those are remains uncertain - overlays or something else?

Happy New Year and welcome to 2008!

With many of you taking last week off, a quick review of what you might have missed is in order:

1. iTunes-Fox download-to-rent movie deal rumors

The FT (reg. required) reported that Apple and Fox are close to announcing a deal under which Fox movies would be available for download-to-rent on iTunes. This would be a deviation from Apple's policy of download-to-own only. Call me a skeptic, but while some analysts think this deal is a big breakthrough, for me it's more of a ho-hum, for at least the following reasons.

Download-to-rent offerings have been around for a while (e.g. Movielink, CinemaNow, Amazon Unbox, etc.) and none have been grand slams. Admittedly none have enabled playback on an iPod. Yet, while many think iPod ubiquity is a killer advantage for iTunes rentals I disagree. It's one thing to watch a 30 or maybe a 60 minute TV show, but watching a 2 hour movie on an iPod? That's only appealing for a tiny minority of iPod owners. Further, while the rumored $2.99 or so price point is attractive, download-to-rent movies will come with the same cumbersome business rules (e.g. 24 hour viewing, window limitations, finite device sharing, etc.) that cause significant customer inconvenience. And DVDs, available for rental or purchase still offer superior portability and flexibility to any download model. Movie downloads' time will come, just not yet.

2. Wal-Mart Folds its Video Download Store

And speaking of download challenges, Wal-Mart decided to unceremoniously close its video download store less than a year since its launch. While it pointed its finger at its vendor HP, which decided to discontinue support for the technology underlying the Wal-Mart store, there are certainly other white label platform alternatives available if Wal-Mart had conviction about the download store's potential. It clearly didn't and so it folded its tent. More evidence of the challenges facing paid downloads.

3. YouTube's Top 2007 Videos Announced

Meanwhile over in YouTube land, the hits keep coming. YouTube released its top 10 list and the year's most popular video, with almost 23 million views, was "Battle at Kruger", which shows the fight to save a baby water buffalo from a group of lions and a crocodile. It's fascinating if you haven't seen it. Other top videos on the list were "Chocolate Rain", "Obama Girl" and "Leave Britney Alone", among others. If nothing else, this diverse group of videos shows that UGC is alive and well.

4. Queen Elizabeth and Roger Clemens Seek Out YouTube

And UGC wasn't for pure amateurs either. YouTube's reach was once again recognized as 2 celebrities, Queen Elizabeth and Roger Clemens posted videos serving their individual purposes. In a first for the 81 year-old queen, she posted her popular Christmas message on YouTube, augmenting its traditional broadcast. The Royal Channel - "The Official Channel of the British Monarchy" - also launched on YouTube.

Clemens, who's been fingered in baseball's steroid controversy, saw fit to post his proclamation of innocence on YouTube. Clemens is adamant in his own defense, and clearly believes that reaching out to fans with video instead of the usual press release is more compelling.

Trivia question: whose video do you think drew more views?

Answer: It's not even close: 741,000 for the queen vs. 274,000 for Clemens.

5. MTV Delivers 1.2 Billion Streams in '07

MTV self-reported that MTV.com, VH1.com and CMT.com delivered more than 1.2 billion video streams in '07, an increase of 30% vs. '06. It also reported the top 30 music videos it streamed, and number 1 was Gimme More by Britney Spears. Broadband is offering MTV an opportunity to return to its brand roots as the go-to destination for music videos even as more and more of the on-air experience is dominated by non-music video fare. As I wrote a couple months ago, music videos are becoming a sought-after new revenue stream for labels and aggregators. We'll see more emphasis on music videos in '08.

As the year winds down, I'd like to extend my best holiday wishes to all of you.

I'll be taking time off next week for some long overdue R&R. I'll post to the site if something interesting comes up, but I'm not expecting too much excitement as pretty much everyone I've spoken to plans to take at least some time off to recharge their batteries.

VideoNuze is now the ripe old age of 2 1/2 months. It's been a whirlwind, and I'd like to thank everyone who has emailed me with terrific feedback - it's extremely gratifying! I love hearing from folks I already know, and also the many that I don't, letting me know that VideoNuze is making a really substantive contribution to their understanding of the broadband video space as well as impacting their decision-making. I also encourage all of you to share your thoughts on the site by posting timely and thoughtful comments to the site. Everyone benefits from hearing your opinions.

I've also heard from many of you who want to brief me on new startups or existing ventures. It's impossible for me to be aware of everything, so keep those pitches coming!

In '08 you can also expect more in-depth topical analyses, guest columns, interactive features and a few other surprises I have up my sleeve. As always, I welcome your feedback and suggestions - what's working, what's not, and what else is needed.

Last but not least, I want to extend my sincere thanks to VideoNuze's awesome sponsors who make all this possible. Currently they are Akamai Technologies, ExtendMedia, thePlatform, Voxant, Atlas Venture, Brightcove, Digitalsmiths, ICTV and PermissionTV. Each is making a terrific contribution to the broadband medium and I encourage you to learn more about all of them.

I've been very encouraged by the many emails and phone calls I've received from prospective sponsors. VideoNuze is quickly being recognized as the premier online publication for reaching busy broadband video executives. This was another key goal of mine. Going into '08, VideoNuze will be welcoming a number of new sponsors!

In closing, I'd like to wish you peace, prosperity and much happiness in the new year.

Regards,

Will