VideoNuze Posts

Stephen Wildstrom, who writes the "Technology and You" column in BusinessWeek echoes a point this week ("AppleTV's Blurry Future") about AppleTV that I made back in my 12/06 e-newsletter ("7 Broadband Video Trends for 2007"). At that time I suggested that for Apple's device to be a real winner, it needed to embrace a content strategy that was open to all broadband video, not just limited to what's available in iTunes.

Wildstrom similarly highlights this point. For now, AppleTV is a niche product, appealing only to those consumers ready to spend $300 to get iTunes video to their TVs. The big win for Apple would be to have a box that is easily capable of playing the 99% of video consumed daily that is not available in iTunes. That's what consumers are craving - an easy way of watching broadband video in the comfort of their living rooms. My guess is Apple knows this and will soon offer this feature as well.

Recently I was in Florida and I happened to be in one of those “super-sized” supermarkets – you know the kind with the wide aisles that seem a mile long. To fill the place up, there was a product selection such as I’ve never seen before. What does this have to do with broadband video?

 

Well, it seems to me that the same type of vast selection is coming to the world of video. For example, a number of recent broadband video-related announcements have further convinced me that we are on the cusp of experiencing an explosion in the quantity of high-quality video available and choices we’re all offered.

 

Consider these recently-announced examples:

 

- Next New Networks – founded by a group of ex-Viacom executives, plans to launch 101 “micro-networks, consisting of 3-11 minutes of content refreshed on a schedule, daily, weekly, or bi-weekly.”

 

- Michael Eisner, Disney’s former CEO, has launched Vuguru, a studio that will produce and distribute videos. Its first release is a project called "Prom Queen," which is a scripted 80-episode mystery consisting of 90-second episodes.

 

 

- Stephen Bochco (creator of “L.A. Law” and “Hill Street Blues”), has partnered with Metacafe, a broadband video destination site initially to produce “Cafe Confidential," 44-clip online series, with others to follow.

 

 

 

- MSN has continued to rollout of its “Originals” series, having now launched half a dozen different programs.

 

To this list can be added broadband video initiatives from dozens of cable TV networks, online publishers, magazines, newspapers, broadcast stations, brand marketers and others.

 

Add it all up, and indeed, we are on the cusp of a world awash in video.

 

How to Succeed?

With all this video coming online, the question begs: can all of these producers succeed in building their audiences and actually turning a profit? To me, there are 5 key success factors for any of these players:

 

Target your audience and incent their participation – In the cable TV business, the smartest business plans identified target audiences and then relentlessly programmed to them. Examples included music aficionados, sports fans and science fiction fanatics. Knowing the audience you’re going after, what their interests are, where gaps exist in current programming, and how to address audiences on their terms are all key. But all that’s not enough. It’s also crucial to incent audience participation in the development, promotion and review process. Like it or not, audiences are now able to be active programming partners. Their talent and passion needs to be harnessed.

 

Produce inexpensively – Beyond just programming to the target audiences, it is essential to produce inexpensively. Cable budgets are lower than network budgets. Broadband video budgets must be lower still, at least for now. Audience sizes will be smaller and so for a while to come ad dollars will be scarcer. Plus smaller budgets can result in more edgy, authentic-feeling video which broadband users actually expect anyway. Producing on a shoestring will certainly be an adjustment process for the big-name TV talent now piling into broadband.

 

Appeal to advertisers – In the scrappy world of broadband video, understanding what matters to advertisers when developing programming is more important than ever. Since audiences will be far smaller, advertisers aren’t going to be buying reach. Rather, they’re going to being the niches they value. The better your programming appeals to identifiable and valuable audiences (see above), the easier it will be to find advertisers willing to open their wallets.

 

Distribute widely and syndicate often – Traditional TV was about driving audiences to specific channels at specific times. The Internet is all about making content available wherever audiences live and whenever they want access. Broadband will follow the same rules. So learning to distribute content widely and leveraging new syndication networks and technologies is key. For now, terms for these types of deals will vary considerably.

 

Be flexible – Given its early-stage nature, there are no formulas yet for how any of this will ultimately work. So job # 1 is appealing to your audiences and building their loyalty. Since there are no expensive pilots to shoot, it’s key to “invest a little and learn a lot.” Be willing to change direction on a dime. When it comes to broadband video, a rigid mindset is the enemy.

 

The Golden Age is Upon Us I’ve been telling people for a while now that we’re entering a “golden age of video”. Broadband’s open platform removes much of the traditional friction associated with delivering video into target audience’s homes. When combined with new, low cost production equipment and editing software, the result is an exploding array of new video choices. For creative people, this is liberating and exhilarating - truly a golden age. For consumers, it is going to be an era of unprecedented choice. For everyone, it’s going to be a world awash in video.

At Broadband Directions, one of the mantras is that open broadband access allows all kinds of traditional media companies with no video heritage to get into the video business. Newspapers are a perfect example. Since our report last summer on the top 40 U.S. newspapers, I’ve been closely tracking their progress in broadband video.

Reading WSJ Online’s coverage of the NBC-News Corp deal I was very impressed with their approach. If you have an online subscription, the page is available by clicking here. Part way into the story, there were 2 video windows displayed, each with a caption describing the video. Clicking the play button resulted in an in-line, high-quality video. One with reporter Martin Peers, and the other an interview with S&P analyst Tuna Amobi. Both with unobtrusive 5 second pre-roll ads. Truly a “multimedia” experience. I thought it was a great example of how far at least one newspaper has come in incorporating video into their presentation of the news. A real user experience win.

Coicidentally, I’m going to have Bob Leverone, VP of Video at Dow Jones (who oversees WSJ.com video, among other properties) on my Cable Show ’07 panel in Las Vegas on May 9^th.

 

I think it will be a great opportunity for attendees to hear how yet another competitor is moving into video.

Today’s announcement from NBC and News Corp, that they have set up a venture to distribute full length programs plus promotional clips through 4 major distributors (with more to come) heralds a potentially new, and radically different era, for the broadcast, and possibly the cable TV industries.

In one fell swoop, 2 of the major broadcast networks have granted distribution rights to four of the Internet’s most-trafficked sites. If one assumes that it is inevitable that the broadband/PC world will be linked up with consumers’ living room TVs (whether through AppleTVs, Xboxes, Slingcatchers, etc.), then it sure seems to me as though we are on the brink of seeing a full-scale digital replica of the analog broadcast TV affiliate model being born. If that’s the case, what does that mean for existing players, most notably local broadcast TV stations? And how about cable TV and satellite operators, who have long relied on retransmitting high-quality feeds local broadcast feeds of network programming as a staple of their value proposition?

I’ve been writing about how the video distribution value chain is being impacted by broadband video for a while now. My March 2006 newsletter, “How Broadband is Changing Video Distribution” recapped my firm’s Q1 2006 report, “How Broadband is Creating a New Generation of Video Distributors: The Market Opportunity for Google, Yahoo, Microsoft, AOL, Apple and Others”. In this report we identified these companies as a so-called ‘Group of 5” which were best-positioned to benefit as new broadband-centric distributors and explained our reasons for this conclusion.

Flash forward one year. Today’s announcement cements the distribution heft of 3 of the 5 (Yahoo, MSN and AOL). Meanwhile, Google’s acquisition of YouTube has strengthened its distribution prowess. If it can build on initial partnerships with the many content providers with which it works, its power will only grow. And of course, Apple now boasts almost 60 TV networks and content producers providing programming to iTunes. Its launch of AppleTV strengthens its hand as the hardware provider-of-choice in linking up the broadband and TV worlds.

We’re exploring all of this in a report we’re (quite coincidentally) working on right now, which examines broadband’s impact on the video distribution value chain. It both updates the Q1 2006 report, and also expands it to include the roles of emerging players such as Joost, BitTorrent, Wal-Mart and others. We’ve been very fortunate to have access to many of the players in the space to gain unparalleled insights into their plans. The report is due out soon. I’ll keep you posted on its progress.

Pretty gushy review today from Walt Mossberg at the WSJ regarding his 10 day experience with AppleTV. I originally offered my opinions on AppleTV's prospects (then called "iTV") back in my December '06 newsletter ("7 Broadband Video Trends for 2007"). I thought AppleTV was likely a winner, but contingent on its content strategy. If it offered buyers access to iTunes content only then its appeal would be much more limited than if it opened up the box to all broadband video sources.

When Steve Jobs offered more details in his Macworld keynote I downgraded my enthusiasm, as they chose the former content strategy, precluding (for now) AppleTV's role as THE bridge between PC/broadband and TV. Walt reiterates this point ("Apple TV's most important limitation is that it can't stream much video or audio directly from the Internet -- yet.") but hints that this capability will be available in gen2 boxes.

I reiterate my opinion - for now AppleTV is ultracool, but will likely find only a limited audience to fork over $299 mainly to watch iTunes content on their TVs, plus manipulate music and photos. When AppleTV allows easy access to the rest of the world of broadband video, then it's going to be a big hit.

I'm heading off to Pebble Beach on Sunday morning, where I'm delivering one of the keynotes at the NAB Futures Summit (a small executive-level annual gathering) there, entitled, "Profiting from Broadband Video's Disruptive Impact".

We released a report in Q4 '06 analyzing the broadcast industry's (both networks and local stations) broadband video initiatives, and one of the report's key conclusions was that local stations' broadband efforts are all over the board. Many have embraced broadband video big time, while others are still at the starting line. I'll be sharing thoughts on how broadband is transforming the video distribution value chain, and where local stations' most attractive opportunities lie.

Unfortunately, my golf shoes are not making the trip with me...hopefully they will next time!

Was of course Viacom's $1 billion suit against Google. I must say, all eyes are riveted on this one. My take is that it's hard to believe there isn't a business deal to be made between these two companies that wouldn't be better for both than having the lawyers slugging it out.

Sure YouTube traffic is up since pulling down many of the Viacom clips, but really what does that prove except that YouTube's rapid growth rate can compensate for these kinds of hiccups? For YouTube to maintain its position as the ultimate video destination, it can't afford to have gaps in its clips springing up here and there. So it should be motivated to make a deal, not just with Viacom, but with all big media companies.

As for Viacom, it's inconceivable to me that they are better off not being a part of YouTube. Exhibit A is the free promotion and exposure The Daily Show has received over the last year from YouTube. Viacom's going to have to lock a muzzle on Jon Stewart to prevent him from lambasting his corporate parent's decision.

None of us knows how courts will interpret the DMCA in this case. The legal scholars' comments I've followed this week certainly don't form a consensus. So I continue to believe, as I wrote about last November ("Big Media's Most Vexing Challenge"), that big media companies' traditional copyright control mentalities are causing them to underoptimize their broadband opportunities. The sooner they loosen their traditional copyright approaches, the sooner they'll be able to fully exploit broadband's potential.

The vast majority of my own broadband video experiences are work-related. So it's always a pleasant reminder of broadband's value when someone close to me uses it for something a little more personal.

Such was the case tonight. Our elementary school age daughter was invited to a birthday party which includes attending a PG-rated movie. Motivated to make sure it would be age-appropriate, my wife jumped online, Googled the movie's title and immediately found the link to the movie's web site. There she was able to watch a series of video clips that provided a good sense of the movie's content, obviating the need to trust an unknown reviewer's written opinion. Satisfied, she closed down her browser. Time elapsed: 5 minutes. Isn't broadband great?