VideoNuze Posts

Daisy Whitney and I are pleased to present the 36th edition of the VideoNuze Report podcast, for October 16, 2009.

This week Daisy and I first discuss my post from yesterday, "Can Advertising Alone Support Premium Long-Form Online Video?" which picks up on the in-depth discussion panelists had at this week's VideoSchmooze event in NYC. As I said in the post, this is a crucial issue, particularly for broadcast TV networks who have aggressively pursued online distribution of their primetime programs, but have yet to demonstrate they can generate the same revenue per program per viewer online as they do on-air. In the podcast, Daisy explains why she thinks that something has to break, and that a "survival of the fittest," dynamic looms for broadcast networks.

Moving on, Daisy then discusses her New Media Minute episode this week, in which she describes the success that Univision, the Spanish-language network, is having with online-only shows. Univision is so bullish on the format that Kevin Conroy, a company executive, recently told Daisy that he is actively soliciting pitches. Details on the growth in Internet usage among the Hispanic audience underscore why Univision is hitting its stride online.

Click here to listen to the podcast (12 minutes, 44 seconds)

Click here for previous podcasts

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This was the question I started our VideoSchmooze panel discussion off with this past Tuesday night. Yet 20 minutes of debate among our group of panelists yielded no real answers. This lack of consensus suggests an upcoming period of high anxiety in the industry: for even as viewers shift to online consumption, it is far from clear whether advertising alone will be sufficient to support the creative infrastructure needed to produce premium long-form video.

I continue to believe that broadcast TV networks are the companies most at risk from the unknowns around online video advertising. Lacking the additional revenue stream from distributors that their cable TV network brethren enjoy, broadcast networks must figure out how to make online video advertising work.

However, as I originally wrote over a year ago, and then again here, the fundamental problem the broadcast networks face with their current online implementations is that ad revenue per viewer per program is a fraction of what it is on-air (likely less than 25% by my calculations). In my mind, getting the two into balance is the minimum requirement for the networks to keep their top lines even with where they are today, assuming online viewership substitutes for on-air, as I expect it will over time.

As our panel explained though, the constraints to achieving this parity are significant. First is the issue of just how many ads can be inserted into an online episode. Today sites like Hulu, with their very light ad loads bias significantly in favor of the consumer experience rather than revenue optimization (for more on this see Chuck Salter's fine new article, "Can Hulu Save Traditional TV?" in this month's Fast Company). Just how many ads can be forced into an online episode given the DVR ad-skipping generation's expectations is an unknown. For sure it is fewer than the 16-18 minutes in a traditional one hour on-air program.

So if the quantity of ads must be lower, then each one needs to bring a higher price than their on-air counterparts. The traditional "CPM" metric (the cost per thousand viewers reached) is well-entrenched among ad agency media buyers. On the VideoSchmooze panel, George Kliavkoff, now a Hearst executive, but formerly the chief digital officer at NBCU and the first CEO of Hulu, lamented the CPM framework for online video advertising. He threw down the gauntlet, saying essentially that the whole broadband video industry is in for big trouble if it doesn't break out of selling ads on a CPM basis.

George's point was that it's foolish for a new medium like broadband, which offers content providers new technology-based ways to create value for advertisers, to allow itself to get locked in to the monetization techniques from the prior TV medium. That rationale is compelling enough, but for me another strong reason to get beyond CPM pricing is that not doing so means that media buyers will always be presented with a fundamental question: is it worth paying a 25%/50%/100% (take your pick) premium to reach online vs. on-air eyeballs watching the exact same show? This raises the bar for online ads; the research must show demonstrably higher engagement, recall, purchase intent, etc. to justify the premium. All of this may happen due to online's improved targeting, but even if it does, it won't happen overnight and the upside is likely not that large anyway.

If CPM-based pricing is challenged, then what's better? On the panel we discussed examples of interactive ads that can be quantifiably valued, such as by generating a specific lead or purchase for the advertiser, along with other formats. Of course these ideas have been floating around the TV world for years, but have gained little traction (although it is worth noting that in online, paid search marketing is a pure performance ad format that has worked spectacularly well). As several attendees remarked to me afterward though, these new ad formats face the additional challenge of needing to conform to ad agencies' buying processes, which are research-driven, dominated by younger staffers and not well-suited to understanding innovative ad formats.

Add it all up and significant questions remain about whether advertising alone is going to be able to support premium long-form online video and the creative infrastructure that produces it. Just as newspapers are struggling today to support traditional newsroom expenses on skimpier online ad revenues, broadcast networks accustomed to spending $2 million or more for a single episode of a scripted program could face a similar day of reckoning. This is the core issue, made all the more urgent by viewers' relentless shift to online consumption. Only time will tell whether there are any satisfactory answers to be had here.

What do you think? Post a comment now.

Thanks to everyone who came out for VideoSchmooze last night. We had about 250 people in attendance and thousands more watching live via the NATPE-sponsored Stickam feed (replay available soon). I asked Steve Donohue, a veteran cable TV journalist and friend to cover the panel discussion for VideoNuze while I was moderating. His edited coverage is below; more commentary is available on Twitter, search hashtag #VS09.

Media Executives Debate Online Video Trends at VideoSchmooze

by Steve Donohue

Media companies won't succeed in distributing programming online through sites like Hulu and others unless content providers and advertisers develop new ad formats and better ways to measure video that is distributed on multiple platforms, executives on the VideoSchmooze panel said Tuesday night.

Hulu and the sites operated by major broadcast TV networks today rely mostly on distributing 15- and 30-second ad units, a tactic criticized by Hearst Entertainment EVP George Kliavkoff, formerly Chief Digital Officer at NBCU and the first CEO of Hulu.

"If that (traditional TV advertising) is the conversation, then we've failed as an industry. I think the conversation should be what's new and engaging, taking advantage of the technology to deliver ads that are not just repurposed 15- and 30-second spots, " Kliavkoff said, reiterating a theme he espoused throughout the night that more needs to be done, and faster, to improve the online video ad model.

But Matt Strauss, Comcast's SVP, New Media said the industry shouldn't abandon traditional advertising. "We need to embrace the fact that there is a model right now on television that we all live with," Strauss said, adding that he hopes Nielsen Media Research will be able to incorporate online viewing into its C3 ratings reports, which measure viewing on TV and through digital video recorders.

The urgency of going beyond the CPM-based model for online video ads was highlighted by panel moderator Will Richmond from VideoNuze, who noted that "today's sites distributing full-length TV shows will not succeed in the long-term by inserting one-fifth the number of ads as done on-air, even if these ads can command a 20-25% price premium."

Perkins Miller, SVP of Digital Media at NBCU Sports explained that his company's live streaming of Sunday Night Football (now in its second season), which carry full ad loads, have been a big a success, saying "users are watching twice as much content because they're engaged." It is important to note that with built-in time-outs to support ad insertion, live sports are in a unique position to replicate their on-air models online.

Still, blip.tv co-founder Dina Kaplan reported that in the last 2-3 years, the online video ad-supported model for entertainment programming has made great strides. Kaplan revealed that blip has recently inked 8 deals with major advertisers, indicating that auto companies, packaged goods firms and other advertisers are moving budgets to online video ads. On the flip side, Kaplan conceded that generating unique creative for online ads will be a key challenge, saying, "with staff reductions at agencies....it's going to be a bigger problem, not a smaller problem, in 2010."

Another area discussed in detail during the panel was TV Everywhere, an initiative to deliver cable and other programming online to subscribers of traditional multichannel video services. Comcast's Strauss said that with 20-25 cable networks involved in the company's TV Everywhere trial, the company has been running fast to keep up with networks' interest.

Richmond mentioned however, that Hulu's 3 media owners, NBCU, Disney and Fox (as well as Viacom), which together constitute 4 of the 5 biggest cable network owners, have not yet publicly committed to distributing their shows via TV Everywhere. Strauss indicated that these companies are taking a "thoughtful" approach to their distribution strategy, and expressed confidence that while all networks may not be represented when Comcast begins rolling out TV Everywhere commercially later this year, the line-up will become more complete over time. "All programmers we've talked to are in agreement that making content more accessible to viewers is important," Strauss added, while also acknowledging that protecting online-distributed content from theft is a key focus of the TV Everywhere initiative.

Lastly, panelists touched on the proliferation of various viewing devices. In particular, Miller praised the significant popularity of the iPhone as an example of how mobile video is becoming a strong priority for NBCU, though still well behind broadband distribution. He also speculated about what's ahead for e-book readers like Amazon's Kindle, when additional features like color screens and video support are offered. To put an exclamation mark on shifting viewing patterns, especially among younger audiences, Strauss capped the discussion off by relating his experience of coming home recently to find his 4 children under the age of 7 huddled around his iPhone watching a show while his 50 inch plasma TV stood just feet away, silent and dark.

Tonight is VideoNuze's "VideoSchmooze" Broadband Video Leadership Evening, from 6-9pm in NYC.

Over 240 industry executives are registered to attend, from many different technology and media companies.

Our panel (which I'll moderate), "Realizing Broadband Video's Potential" features an amazing group of industry executives:

• Dina Kaplan - Co-founder, blip.tv
• George Kliavkoff - EVP & Deputy Group Head, Hearst Entertainment & Syndication (and formerly Chief Digital Officer, NBCU and first CEO of Hulu)
• Perkins Miller - SVP, Digital Media and GM, Universal Sports, NBCU Sports & Olympics
• Matt Strauss - SVP, New Media, Comcast

Click here to learn more and register now.

Following the panel, we'll have networking and cocktails from 7:45-9:00pm. It will be a great opportunity to meet the panelists and industry colleagues.

VideoSchmooze will be held at the Hudson Theater, a beautifully renovated turn-of-the-century venue on West 44th Street just off Times Square. NATPE, VideoNuze's partner since launch, is teaming up with VideoNuze for the event. And I'm extremely grateful to lead sponsor Microsoft Silverlight and supporting sponsors Akamai Technologies, Digitalsmiths, FAST (a Microsoft subsidiary), FreeWheel, Horn Group, Kyte and mPoint for making the evening possible.

In a quick call yesterday with FreeWheel Co-CEO and Co-Founder Doug Knopper, who was on his way to NYC for tonight's VideoSchmooze, he told me that the company is poised to manage 1 billion video ads next month, all against premium video streams.

In addition, FreeWheel has now been integrated by AOL, MSN and Fancast, among others, with Yahoo testing currently and ready to go live soon. It looks like the major portals are being encouraged to integrate with FreeWheel's Monetization Rights Management system by the company's premium content customers. The benefit to the content providers is better control and monetization of their ad inventory across their portal distribution deals. The portal activity comes on top of FreeWheel's recently-reported implementation with YouTube, allowing the site's premium content partners to sell and insert ads against their YouTube-initiated streams.

FreeWheel is another great example of the Syndicated Video Economy (SVE) I've frequently talked about. Doug says FreeWheel's progress is proof that the SVE is really "hitting its stride."

It is hard though to put FreeWheel's 1 billion number into perspective. One way of thinking about it is comparing it to the data that comScore reported for August '09 for the top 10 video sites. Assuming only 5-10% of YouTube's views are from its premium partners and maybe half of Fox Interactive's are (due to MySpace's user-generated videos being included in its 380M streams) the top 10 video providers would account for about 3.5B videos. If each video had an average of 2 ads (which is a decent assumption when averaging short clips vs. full programs), then the top 10 video sites would account for about 7B video ads.

What do you think? Post a comment now.

Tomorrow is VideoNuze's next "VideoSchmooze" Broadband Video Leadership Evening, from 6-9pm in NYC.

VideoSchmooze promises to be an exciting night of networking and industry learning. We have about 200 executives registered to attend, from across the spectrum of technology and media companies such as MTV, Cisco, NBCU, PBS, Cox, Hearst, Hulu, Tremor Media, Scripps, Showtime, HealthiNation, HBO, FLO TV and many others.

Our panel (which I'll moderate), "Realizing Broadband Video's Potential" features an amazing group of industry executives:

• Dina Kaplan - Co-founder, blip.tv
• George Kliavkoff - EVP & Deputy Group Head, Hearst Entertainment & Syndication (and formerly Chief Digital Officer, NBCU and first CEO of Hulu)
• Perkins Miller - SVP, Digital Media and GM, Universal Sports, NBCU Sports & Olympics
• Matt Strauss - SVP, New Media, Comcast

Click here to learn more and register now.

Following the panel, we'll have networking and cocktails from 7:45-9:00pm. It will be a great opportunity to meet the panelists and industry colleagues.

VideoSchmooze will be held at the Hudson Theater, a beautifully renovated turn-of-the-century venue on West 44th Street just off Times Square. NATPE, VideoNuze's partner since launch, is teaming up with VideoNuze for the event. And I'm extremely grateful to lead sponsor Microsoft Silverlight and supporting sponsors Akamai Technologies, Digitalsmiths, FAST (a Microsoft subsidiary), FreeWheel, Horn Group, Kyte and mPoint for making the evening possible.

Click here to learn more and register now.

The Twitter hashtag for VideoSchmooze is #VS09

EveryZing, the search and publishing technology firm, is announcing this morning that it has been chosen by FOXNews.com and FOXBusiness.com to power universal search for both sites. The deal means that current and archived videos, podcasts, articles and images on each site will be indexed and presented online using EveryZing's SaaS-based Universal Search Solution. The two FOX implementations are great examples of how EveryZing can cohesively present various media formats to benefit both the user and content provider. Tom Wilde, EveryZing's CEO walked me through the FOX implementations last Friday.

The starting point for content providers working with EveryZing is to have their content indexed, transcribed and tagged by the EveryZing system. For the FOX sites that meant millions of content objects, EveryZing's largest implementation to date. From the user's standpoint, the most compelling thing about EveryZing is the control and flexibility it allows to pull out of the index just the results desired and in the preferred media format.

For example, if you start a search with "Stimulus" you're presented with results ordered by relevancy. But if you select to filter by video, then you see just videos tied to the topic. Each video is presented with time stamps you can roll over to see the sentence in which the search term was used. Clicking on that time stamp takes you to that specific point in the video. Other time stamps are presented in the video clip as well, for easy jumping.

Conversely, if you're interested in a comprehensive package of all results tied to the keyword, EveryZing offers related "universal topic pages." So for "stimulus," the two related topic pages are "Stimulus Package" and "Economic Stimulus." Click on either and you'll see all results for these terms. A topic page is EveryZing's way of grouping all related assets onto one page, which enhances discoverability by search engines and engagement by users. On the "Stimulus Package" topic page, you can drill down by media type (e.g. video, story, blogs). You're also presented with a dynamically-upated list of related topics. For the two FOX sites, EveryZing has created 3,500 topic pages, along with 125,000 video landing pages. EveryZing also enables promotions of specific on-air shows that are related to the topic, a great tool for boosting visibility and audience.

With EveryZing's SaaS approach, the FOX sites are not hosting any EveryZing software. Instead, FOX has created the search results page templates, and when a user runs a search, the results are published by EveryZing into these templates and served (along with the videos themselves) by Akamai, which is FOX's CDN. EveryZing's model is to be paid a monthly fee on the basis of how much content it indexes and how many hits to the database are generated. All activity should result in another ad opportunity for the content provider, so as long as the content provider can sell its ad inventory, the model should be positive.

I've been bullish on EveryZing for sometime (see here and here) because it exposes content providers' burgeoning volume of video content to their users' well-established search behavior patterns. Importantly, by blending video with other media formats, EveryZing allows users to decide what format they want to engage with at that particular time. Because no two user experiences are ever the same and more and more content providers are utilizing different media formats, I see EveryZing's approach only increasing in value.

What do you think? Post a comment now.

New research shows TV viewing shifting - Mediapost had a good piece this week on Horowitz Associates' new research showing that 2% of all TV programming watched now occurs on non-TV devices. This translates to 2 hours of the 130.2 hours of TV that viewers watch each month shifting. This top line number is a little deceiving though, as the research also shows that for viewers who own a PC or laptop, they watch 9%, or 13 hours of TV programming per month, other than on their TV. I plan to follow up to see if I can get breakout info for young age groups, my guess is that their percentages are even higher.

I've been very interested in these kinds of numbers because there has been much debate about whether making full-length programs available online augments or cannibalizes traditional TV viewing. The broadcast networks have forcefully asserted that it only augments. I agree online augments, but I've suspected for a while that it is also beginning to cannibalize. If networks generated as much revenue per program from an online view as they do from an on-air view this shifting wouldn't matter. But as I wrote in Mediapost myself this week, the problem is they probably only earn 20-25% as much online. TV viewers' shifting usage is a key area to focus on as broadband video viewership continues to grow.

PermissionTV becomes VisibleGains, targets B2B selling - PermissionTV, one of the original media-focused online video publishing and management platforms, officially switched gears this week, changing its name to VisibleGains. Cliff Pollan, CEO and Matt Kaplan, VP of Marketing/Chief Strategy Officer briefed me months ago on their plans and I caught up with them again this week. Their new focus is on enabling companies to provide their prospects with informative videos during the information-gathering phase of the sales process.

Cliff argues persuasively that in the old days the sales rep presented 80% of the information about a product to a prospect; now prospects collect 80% of what they need to know online, and the sales rep then fills in the blanks. Through VisibleGains "ask and respond" branching format, companies better inform their prospects, qualify leads and add personality to their typical text-heavy web sites. It's another great example of how video can be used beyond the media model.

Unicorn Media demo is impressive - Even as PermissionTV changes its focus, Unicorn Media is entering the crowded video platform space. I mentioned Unicorn, which was founded by Bill Rinehart, founding CEO of Limelight, in my 4 items post a couple months. This week I got a demo from CTO AJ McGowan and Chief Strategy Officer David Rice and I was impressed. Key differentiators AJ focused on were an enterprise-style user rights model for accessing the platform, APIs that allow drag-and-drop content feeds, and an "ad proxy" for configuring ad rules.

Most interesting though is Unicorn's real-time data warehouse feature, which provides granular performance data up to the minute. Data can be displayed in a number of ways, but most compelling was what AJ termed the "magic Frisbee," a clever format for showing multiple data points (e.g. streaming time, ad completes, # of plays, etc.) all at once, so that decision-makers can hone in on performance issues. AJ says prospects are responding to this feature in particular as assembling this level of information today often requires multiple staffers and data sources. David reports that Unicorn is finding its biggest opportunity is with large media companies that have built their own in-house video solutions, as opposed to competing with other 3rd party platforms. Unicorn doesn't charge a platform fee, instead it bills by hours viewed. Separately, I have a briefing next week with yet another stealthy platform company; there seems to be no shortage of interest in this space.

Vitamin D shows breakthrough approach to object recognition in video - Speaking of demos, Greg Shirai, VP of Marketing and Rob Haitani, Chief Product Officer from startup Vitamin D showed me their very cool demo this week. Vitamin D is pioneering a completely new approach to recognizing objects in video streams, using "NuPIC", an intelligent computing platform from Numenta, a company founded by Jeff Hawkins, Donna Dubinsky and Dileep George. Some of you will recognize Hawkins and Dubinsky as the founders of Palm and Handspring.

The demo showed how Vitamin D can recognize the presence of moving humans or objects throughout hours of video footage. While the system starts with the assumption that upright humans are tall and thin, it learns over time that their shapes can vary, if for example they are crouching, or carrying a big box, or are partially obscured behind bushes. Once recognized, it's possible to filter for specific actions the humans are taking, such as walking in and out of a door to a room. Vitamin D is first targeting video surveillance in homes or businesses, but as it is further developed, I see very interesting applications for the technology in online video, particularly in sports and advertising. Say you wanted to filter a Yankees game for all of CC Sabathia's strikeouts, or insert a specific hair care ad only when a blond woman was in the last scene. Vitamin D and others are continuing to raise the bar on visual search which is still in its infancy.