VideoNuze Posts

I continue to be impressed with Showtime's innovative use of broadband video to increase fan loyalty while adding new value to their programs and bolstering their brand image.

The latest example is a mini-site built for its "Dexter" season finale featuring an exclusive video of the 3 executive producers chatting about the finale and the program's story lines, with comments from various actors interspersed. The video premiered after last Sunday night's finale and is paired with a chat capability powered by Meebo, allowing rabid fans to interact with each other.

I caught up with Rob Hayes, SVP of Digital Media at Showtime and his colleagues Ken Todd and Michael Kuritzky to learn more about their motivation and how the mini-site has performed. It sounds like a resounding success. Video views are running 5 times greater than any one clip offered on the Showtime web site and the chat room has generated tens of thousands of users. There's also a sweepstakes on the site, which requires an email address to sign up. Rob reports that these sign-ups have increased Showtime's email list by 30% alone.

Showtime's motivation was to forge a deeper connection between fans and the program by providing ongoing interaction. So while there's no direct monetization of the mini-site, Rob said next time around, they could easily insert pre-rolls or overlays. And that means that Showtime, a stalwart premium programmer, would be leveraging broadband to create a new advertising revenue stream.

All of this demonstrates how this relatively modest video initiative is at the center of generating multiple rewards. It provides new value for fans. A basis around which to interact. Email addresses to use for ongoing communications. A new monetization path. Lessons learned for how to succeed in a multi-platform environment. An enhanced brand image. And the list goes on. Kudos to Showtime for continuing to be an innovator and showing others that broadband success comes in all shapes and sizes.

With 2007 wrapping up, it's time to look ahead to the new year and make 6 predictions about what's ahead for broadband video in 2008. In general, I'm extremely optimistic about broadband's potential in the new year. To be sure, there are lots of challenges ahead, but much to look forward to.

Here's what my crystal ball is telling me:

1. Advertising business model gains further momentum.

Many of you have been hearing me beat this drum for a long time now; I'm just going to go right on beating it in 2008. Advertising is the primary business model for broadband video and this will only continue to grow in importance as the year goes along.

All the elements are falling in place for the ad model's momentum. In '08 we'll see more video consumption, especially of high-quality video, and more syndication, all of which will lead to more ad inventory. But 2008 is about more than just a quality and volume; it's also about better targeting, better formats, more sophisticated sales processes and more interactivity/community building around video. I'm impressed with the range of companies pursuing each of these areas and expect them to gain lots of traction.

2. Brand marketers jump on broadband bandwagon.

2007 marked the continuation of brand marketers creating their own broadband video-centric destinations, wrapped in increasingly clever campaigns. I track these initiatives very closely and wrote about many of them (Dell and Gap, Frito-Lay, Neiman-Marcus, Smirnoff, Dove, CIT, Campari, Universal Pictures, Showtime, etc.).

In 2008, we're going to see a proliferation of these direct-to-consumer broadband-centric marketing campaigns. Marketers and agencies across the board are coming to recognize how important broadband is for engaging their audiences in a way that TV spots simply can't match. Then factor in the high cost of TV and the rampant use of DVRs to ad-skip. I'm expecting lots of creativity from brand marketers in '08 as they push deeper into broadband, further pressuring the traditional TV ad business.

3. Beijing Summer Olympics is a broadband blowout.

NBC plans to stream an unprecedented 2,200 hours of live Olympics coverage at NBCOlympics.com. All of this is going to completely redefine how broadband adds new value to live sporting events. In particular, NBC's coverage is going to shine a very bright light on the appeal of broadband to deliver multiple simultaneous events in their entirety as they occur, instead of the usual chockablock, tape-delayed coverage. It's also going to demonstrate how well-suited broadband delivery is for niche but passionate audiences.

If NBC executes well, I think it has the potential to open up a whole new horizon in how broadband can augment (and in some cases, maybe even replace) broadcast coverage of sports events. For example, golf is a sport that cries out for improved coverage that broadband can offer. Instead of cutting back and forth to players' key shots, broadband would allow for cameras to stream all players' full rounds simultaneously, with fans able to watch just their favorite player, while also keeping an eye on the main feed. Bottom line, the '08 Olympics is going to show sports and live events producers everywhere what broadband can offer them too.

4. 2008 is the "Year of the broadband presidential election."

What TV was to the 1960 presidential campaign is what broadband is going to be to the '08 campaign. Broadband's impact has already been felt. Virginia Gov. George Allen's campaign was aborted after he was caught uttering a racial slur in his classic "YouTube moment." CNN has already hosted joint debates with YouTube. Hillary Clinton announced her candidacy in a video posted on her web site and also just launched TheHillaryIKnow.com with a passel of video testimonials about her softer side. Barack Obama's web site brims with video from the trail.

In '08 broadband video will be interweaved into the fabric of the major candidates' campaigns. It won't be an augment, it will be a central feature for reaching voters, particularly young ones. Broadband offers an unprecedented inexpensive way to convey the candidates' emotions and connect with voters. Presidential campaigning will never be the same again.

5. WGA strike fuels broadband video proliferation.

As the writers' strike slogs on, it is inevitable that many writers and producers (especially below the top tier) are going to look upon broadband as an attractive new medium to ply their trade. The signs are already there. It will be an ironic twist that the strike, which is centered on reallocating "new media" revenues, is going to stoke more interest in broadband productions, but outside the traditional apparatus.

I can't put my finger on exactly how this is going to unfold, but I think I can say with confidence that there is a lot of smart money eager to place bets on broadband video content. Writers and producers with track records and plausible plans will get funded. Quarterlife, Next New Networks, FunnyOrDie are all pre-strike examples of this. The strike only accelerates things.

6. Broadband consumption remains on computers, but HD delivery proliferates.

I wrote about this in detail just last week: regrettably broadband video is NOT coming to the masses' TVs any time soon. My guess is that 99.9% of users who start the year watching broadband video on their computers (or mobile devices in some cases) will end the year no closer to watching broadband on their TVs. Some initiatives will gain some ground, but on the whole, don't expect any mass adoption of devices or mechanisms to converge broadband with TVs in '08.

Nonetheless, do expect that HD or near HD-quality broadband video is going to proliferate in '08. A survey I worked on with a client, whose results will be shared in early '08, will attest to strong content provider interest in HD broadband video. That means that viewer experiences are only going to improve, and for those with big monitors and/or easy chairs, it may actually start to feel like this whole connect-the-computer-to-the-TV is unnecessary anyway.

So there you have it. Post a comment and let me know if you agree or disagree!

As many of you know, business development executives (and CEOs!) tend to be guilty of "throwing completed deals over the wall", expecting operations people and developers to implement as intended, while they move on to do the next deal. I know this first-hand as I was a biz dev guy for many years!

Yet, as I learned over many years and with multiple companies, each and every deal comes with its own particular implementation characteristics. These include things like multiple formats, encoding rates, business rules, file transfer processes, approvals and so forth.  Do enough deals and pretty soon you've introduced massive complexity into your organization involving tons of manual tasks and costs which can quickly erase any profitability the underlying deal assumed.

This is where a company named Signiant comes into play. They're a sort of "plumber for the broadband video era." This unglamorous-sounding description does them no injustice; just think for a moment what the world would be like without actual plumbing, and you then you'll begin to appreciate how important the role is that Signiant plays in powering broadband video. The executive team includes a number of ex-Avid people, who bring a valuable perspective to the challenges of broadband video distribution. And as the broadband video market matures further and a spiraling number of deals get done, the plumbing to move all this video around only becomes more complex.

Last week I caught up with Tony Lapolito, Signiant's VP of Marketing who shared the company's strategy and product details. While the company's been around for over 10 years (staring as an internal project at Nortel), it has only identified the media industry as a key vertical focus in the last 2 years. It has quickly won respect, working with marquee customers like NBC, Disney, BT and just yesterday announcing a deal with Current.

Signiant brings an enterprise orientation to broadband video delivery, considering itself a "digital media supply chain" company. This may be unfamiliar territory for some of you, so to boil it down, the point of Signiant is to ensure that desired content is where it needs to be, when it needs to be there, and delivered with maximum efficiency, least cost and highest security/reliability. Below is a basic diagram depicting how Signiant works.

Signiant allows users to set up work flow processes to automatically handle a wide range of tasks. For example, NBC currently uses Signiant to securely distribute its content to approximately 20 partners following business rules for each. Tony said NBC expects its partnership roster to rise to 200 in the next 2 years and that Signiant will allow it to scale by allowing easy configuration of the content distribution process and business rules for each of these new deals.

Signiant does a lot of other things, such as prioritizing and allocating bandwidth, tracking all digital assets and managing approvals, all while tying into existing digital asset management systems and other legacy platforms in use. For Current, Signiant is streamlining the process of uploading viewer-created content, allowing Current to more quickly collect, approve and post inbound video.

There's not enough space to get into further detail, but suffice to say, if your operation is already groaning under the weight of implementing myriad deals, and/or you're pursuing a distribution-centric business strategy for your broadband video assets, it's well worth understanding the technology and business case behind Signiant.

Last night I had a first-hand experience about why high-quality video delivery matters so much.

Ok, so credit to Charlie Rose that the full episode was offered (commercial free btw, this being PBS), and that it was highlighted right at the top of the home page. But that's about the only thing right about the experience. No exaggeration, the video probably hung at least 20 times and completely failed at least half a dozen times. It ranked as one of the worst broadband video experiences I've had in recent memory.

That said, I stayed with it the entire way, because how else would I get to see the episode? However, only a tiny fraction of viewers would be as patient as I was in this situation, even despite the fact that the site still says "beta."

So memo to all content providers: if you're going to put your top assets and talent online, make sure you have a quality delivery infrastructure in place to do them justice and please your fans. Second chances are hard to come by in the online world.

Move Networks, which quietly closed on a recent $40.1 million second round, may expand it further pending diligence being conducted by one more investor. Move CEO John Edwards shared the information with me in a briefing. The company still hasn't officially announced the round or its participants. John did say they're mainly strategic investors and the official word should come in a couple of weeks. The funding comes on top of its $11.3 million first round announced in February '07.

John shared a few interesting statistics. Its customers have delivered Move-powered video to a cumulative 27 million users since March '07. Using its client, Move can track all manner of user behavior including time spent with the selected video. This yields another stat: for a single one hour episode delivered, approximately 60% watch longer than 30 minutes, with an average session length of 53 minutes.

Demonstrating that it can deliver higher-quality video and consistently longer viewing is at the heart of Move's value proposition, as it allows content providers to sell more ad inventory, driving top line revenue and ROI. Move also offers an ad module, allowing improved targeting and insertion of flexible cue points based on user behaviors plus a drag-and-drop syndication feature. The company also focuses on reducing customer expenses by optimizing delivery over multiple CDNs and augmenting this with a peer-sharing capability.

Move has a lot on its plate going into '08. John says they are running projects with all the major networks, are supporting all the live streaming for the Olympics plus lots of other live event broadcasts, rolling out integrations with set-top boxes and expanding internationally with new offices in Europe and Asia.

Driving home yesterday I caught a pretty interesting interview on NPR with Quarterlife's co-creator Marshall Herskovitz. It's only about 15 minutes, but the last 1/3 is quite insightful as Herskovitz expounds on the problems with today's Hollywood system and what he and partner Edward Zwick are doing with Quarterlife and NBC. You can listen to it here.

Here's more evidence that brand marketers are thinking progressively about how to leverage broadband video to get consumers to connect with their brands and drive sales. Today's examples are holiday campaigns from Dell and Gap.

By far the more unconventional of the two is Dell's initiative, which resides under the separate brand "YoursIsHere." It's a kooky, yet clever mini-site that opens with Burt Reynolds giving you a quickie explanation of how the site works.

Basically you select a product or products you're interested in receiving for the holidays and then enlist one of 6 celebrities (e.g Reynolds, Brooke Burke, Ice T, Estelle Harris, etc.) to make an email video pitch to your friends and family on your behalf (Dell calls this "Star Power"). Dell's taken the extra step of integrating with 4 big email providers so you can easily access your address books. You can even use PayPal if you want to "pass the virtual hat" collecting cash instead.

I chose a digital camera and Brooke. The video is here. It's engaging in a random sort of way ("You've caught me relaxing with my bunny rabbits." Huh?) I could quibble with some of the details of how Dell's executed the campaign, starting with the fact that the site doesn't let me narrow my choice between a digital camera, GPS or digital music player, but I won't. I give Dell lots of points for thinking way outside the box for how to use video. Somebody in Dell marketing went far out on a limb in suggesting YoursIsHere and someone else even further in approving it. Hopefully solid sales will result and that limb won't snap under them!

On the other hand, Gap's initiative, "GapTidings.com," produced with Yahoo, is more conventional, but it definitely requires more work by the user. First off, it requires a little UGC ingenuity to capture yourself giving your video greeting. Then you need to upload it, personalize it and send it to your friends and family. Gap surrounds the greeting with its branding. It's a less bold play than Dell's, but still gives users a nice opportunity to participate, while affiliating with the Gap brand.

These marketing initiatives come on the heels of lots of others, some of which I described in this earlier post. I see no end in sight. Marketers are quickly embracing broadband video, which provides engagement opportunities never before available. I'm betting the upcoming Super Bowl will be a big-time showcase for more of these broadband initiatives.

Yesterday's Internet TV Advertising Forum/Maven Networks webcast "Pre-Roll vs. Overlay: Consumer Reaction to New Online Video Advertising Formats" yielded a lot of interesting usability information about various broadband video ad formats. For any content provider or aggregator who's relying on advertising as their business model of choice, it's clear that there are some significant opportunities and challenges ahead.

Below is a summary of the 5 key usability conclusions I heard in the webcast along with my take on each:

1. Users hate pre-rolls. Respondents overwhelmingly agreed that video ads are annoying and have developed the same kinds of coping techniques (tuning out, bailing out, etc.) they use to avoid TV ads.

My take: Yes, but unfortunately for users, I don't see pre-rolls going away any time soon. They're easy to execute, fit media buying habits well, are selling strongly especially for high-quality long-form video and best for advertisers seeking a tonic from DVR behaviors, pre-rolls can't be outright skipped by users. Given all this, let's all hope that targeting improves and publishers use them with some discipline, so users don't preemptively turn off to the broadband video medium.

2. Overlay ads' effectiveness is correlated to content fit, not demographics. Testing showed that users welcomed ads for products that were highly related to the content itself, and lost interest the less related the two were. Demos were less important.

My take: This point reinforces the importance of contextual targeting, which of course has worked well on the Internet as a whole. Yet as Bob Kernen at Maven says, a lot of content is "non-endemic" (i.e. doesn't lend itself to specific products or ads), so my guess is that this correlation opportunity is going to be lost for many content providers. Network programs in particular seem non-endemic and therefore will need to rely mainly on demo-based and possibly behavioral targeting.

3. Overlay ads need better execution to work well. Jeff Rosenblum from Questus summarized 8 best practices for executing overlay ads, such as appropriate frequency and duration, user control, calls-to-action, navigation and the like. For anyone looking to run an overlay campaign (and even for those who have), these serve as a great roadmap of do's and don't's.

My take: As always, executing right can make the difference between a campaign's success and failure. If you're planning to run an overlay campaign, I highly suggest you review this checklist against your plans to make sure you haven't overlooked anything.

4. It's difficult to engage an audience. The testing again showed how hard it is to engage online audiences, regardless of approach. Bob laid out a handy engagement hierarchy, Impression, Interaction and Immersion (from least to most engaging). Knowing what level of engagement your campaign aspires to must guide specific tactics and execution.

My take: Getting the consumer's attention and prompting them to act is the ad industry's oldest goal. It's even harder in the broadband sector. People have shorter attention spans than ever, so grabbing them and getting them to do what you hope gets more difficult all the time. Fortunately video offers emotional appeal unlike any text or graphical ad in the Internet world, so broadband offers new engagement techniques previously unavailable.

5. More research needed. While this first round of usability testing from the Internet Ad Forum shed a lot of new light on the broadband ad opportunity, it's clearly just a first step. The Forum has ambitious goals to keep researching and testing, continuously educating the market.

My take: As I mentioned in my remarks at the beginning of the webcast, everyone has a vested interest in solidifying the ad model as soon as possible. The enthusiasm around broadband will soon dry up if participants don't earn an acceptable ROI for their efforts.