VideoNuze Posts

The partnership between Magnify.net and American Business Media announced last week is further evidence that online video is gaining ground in b-to-b media, and that video shouldn't be looked upon as solely consumer-centric.

For those not familiar with ABM, it's a professional association for 300 business information companies, comprising 6,000 print and online titles, plus trade shows and databases that reach over 100 million professionals. Late last week Magnify's Steve Rosenbaum gave me more details about the deal.

Magnify has focused consistently on helping vertical publishers create engaging video offerings. It does so with tools to curate and aggregate all video relevant to the publisher's audience, rather than requiring the publisher to create all of the video itself. I originally wrote about Magnify's approach a year ago and how it was powering Taste of Home magazine's video initiative.

For editors, the challenge - and opportunity - is to evolve from the mindset of controlling all editorial, and instead think of the web as a rich trove of content that can be sorted through so that the best nuggets can be offered to their audiences. With the cost of creating high-quality original video still relatively high, the economy suffering, and product companies and users getting better at creating worthwhile video, this approach makes a lot of sense.

In the ABM deal, Magnify will initially power ABM's own web site, but the more important part of the deal is that it gives Magnify a stamp of approval to seek out ABM members to power their video offerings. Many of these companies, which focus on niche markets, have long offered their IP in multiple forms - print, online, email, databases, conferences, etc. Video is the newest media opportunity for them, and Magnify's goal is not only to support original video they create, but also educate them about how to harness video that's available from 3rd party sources.

In general, video is becoming more central to b-to-b media. For example, just last week, the WSJ, long an online video leader among business media, launched the News Hub, a twice-per-day show featuring its reporters and guests. As a side note, the show feels a lot like cable with its split screens, fast cuts and guests talking over each other. The News Hub joins sibling FoxBusiness.com which offers a robust video section. Moving a little more into the consumer space, CNNMoney.com continues building on its leadership. There are scores of other video suppliers as well.

Increasingly b-to-b media seem to be recognizing that with their audiences spending more and more time on sites like YouTube and Hulu, it is essential to reach them with video as well. I see no let up in this trend.

What do you think? Post a comment now.

Following are 4 news items worth noting from the week of Sept. 14th:

1. Ad spending slowdown continues - TNS Media Intelligence reported that 1st half '09 U.S. ad spending declined 14.3% vs. a year ago, to $60.87 billion. Spending in Q2 '09 alone was down 13.9% vs. a year ago, the 5th straight declining quarter. The only bright spots TNS reported were Internet display ads (up 6.5%) and Free Standing Inserts (up 4.6%).

Rupert Murdoch and others in the industry have lately been suggesting that advertising is starting to improve and that the worst is behind us. But TNS SVP Research Jon Swallen was less sanguine, saying only that "Early data from third quarter hint at possible improvements for some media due to easy comparisons against distressed levels of year ago expenditures." While the online video ad sector has held up far better than most, the ad spending crash has caused many in the industry to re-evaluate whether ad-only models are viable, particularly for long-form premium content online. Subscription-oriented initiatives will only intensify the longer the ad slowdown lasts.

2. Veoh's court victory is important for all in the industry - I'd be remiss not to note the significance of U.S. District Judge A. Howard Matz's granting of Veoh's motion for summary judgment, effectively throwing out Universal Music's suit alleging Veoh had infringed UMG's copyrights. Judge Matz articulated the specific reasons he believed Veoh operated within the "safe harbor" provisions of the DMCA.

As a content producer myself (albeit at a completely different level than a music publisher or film studio!), I've generally been a huge advocate of copyright protection. But the fact is that DMCA - for better or worse - set out the rules for digital copyright use and they must be enforced clearly and forcefully. Anything less leaves the market in a state of confusion, with industry participants wary of inviting costly, time-consuming legal action (Veoh has said the UMG suit cost it millions of dollars in legal fees). For online video to thrive the rules of the road need to be well-understood; Judge Matz's ruling made an important contribution toward that goal.

3. Digitalsmiths announces new senior level hires - This week Digitalsmiths announced that it has brought on board Josh Wiggins as its new VP, Business Development, West Coast and two others, who will collectively be the company's first L.A.-based presence. They'll report in to Bob Bryson, SVP of Sales and Business Development.

I caught up with Digitalsmiths' CEO Ben Weinberger briefly, who explained that with tier 1 film/TV studios and other content owners (news, sports, etc.) the company's major focus, it was essential to have a full-time presence there staffed with people who know the industry cold. Ben reported that the company has honed in on target customers who have very large files, have video as their core business/revenue center, require sophisticated metadata management and often need a rapid video capture, processing and playout workflow. Digitalsmiths is proving a solid example of how to effectively differentiate through product and customer focus in a very crowded space. Announced customers include Warner Bros., Telepictures and TMZ.com, others are in the hopper (note Digitalsmiths is a VideoNuze sponsor).

4. New EmmyTVLegends.org site is a worth its weight in gold - On a somewhat lighter note, this week the Academy of Television Arts & Sciences Foundation unveiled EmmyTVLegends.org, which offers thoughtful, introspective video interviews with a wide range of TV's most influential personalities. If you have nostalgia for the classic TV shows from your youth, or just appreciate the amazing talent that has made the medium what it is, this site is for you. It is remarkably well-organized and accessible and brilliant proof of online video's power in presenting invaluable material that was previously available only to a lucky few.

I happily got lost in the site listening to Alan Alda talk about the fabulous writers of M*A*S*H and Steven Bochco describing the magic of "Hill Street Blues." I searched by "Happy Days" and quickly found the exact clips of Ron Howard talking about the role of his "Richie Cunningham" character in the show's arc and Henry Winkler revealing the influence of Sylvester Stallone on how he developed the voice of "Fonzie." Mary Tyler Moore is irresistible discussing specific scenes of the Mary Tyler Moore show and her poignant memories of Mary Richards navigating the working world. Kudos to the Academy, the site is a gem.

Enjoy the weekend and L'shanah tova (Happy New Year) to those of you, who like me, will be observing Rosh Hashanah this weekend!

Daisy Whitney and I are pleased to present the 32nd edition of the VideoNuze Report podcast, for September 18, 2009.

This week Daisy and I first discuss my post from earlier this week, "How TV Everywhere Could Turn Cable Operators and Telcos Into Over-the-Top's Biggest Players," which has become one of the most popular posts I've written in the past 2 years.

In the post I asserted that if certain cable operators and telcos were to unbundle their TV Everywhere ("TVE") offering from their video subscription requirement, they could offer a "TVE 2.0" service outside their current geographic areas. In effect they'd be going over the top of their industry counterparts, invading new service territories.

It would be a bold move, but one that I suggested might be irresistible. Between slowing growth in their existing markets and new competitors rolling out OTT services nationwide, big cable operators and telcos could face the prospect of being turned into marginalized, geographically-bound players. I've heard from lots of folks this week about the TVE 2.0 concept - some who think it's inevitable; some who think it's inconceivable. I explain more in the post and on the podcast. You decide.

Meanwhile, Daisy provides an update from this week's iMedia Brand Summit, where marketers and agencies spent a lot of time discussing the effectiveness of traditional TV advertising vs. online video advertising. Daisy shares some very interesting statistics she gathered at the conference concerning how some industries are overspending in TV and getting underperformance. As Daisy explains, the key to advertising is no longer reach, but targeting. Listen in to learn more.

Click here for previous podcasts

The VideoNuze Report is available in iTunes...subscribe today!

Please join me for VideoNuze's next "VideoSchmooze" Broadband Video Leadership Evening, on Tuesday evening, October 13th, 6pm-9pm in New York City. Save by registering now for the early bird rate of $60 which includes hors' d'oeuvres and a drink.

We'll start with a panel discussion I'll moderate, "Realizing Broadband Video's Potential" featuring a terrific group of industry executives:

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

Click here to learn more and register for the early bird discount

Included among topics we'll discuss are the status of TV Everywhere trials and future strategy, how the NFL and other sports leagues are succeeding with broadband distribution, whether independent video producers are getting traction online, if advertising can support TV programs online or if a paid/subscription augment is required, and lots more. We'll have plenty of time for audience Q&A as well!

Following the panel, we'll have networking and cocktails from 7:45-9:00pm. Chat with the panelists and expand your network...whether you're pursuing business or personal opportunities in the industry, the people who come to VideoSchmooze are the ones you want to know!

Once again VideoSchmooze will be held at the Hudson Theater, a gorgeous facility on West 44th Street just off Times Square. NATPE, VideoNuze's partner since launch, is on board 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 and mPoint for making the evening possible.

Space is filling up fast for this must-attend event....at the last VideoSchmooze in March, we had 270+ attendees, so if you're interested in joining us, I encourage you to register early to secure a spot!

Click here to learn more and register for the early bird discount

I look forward to seeing you on Oct. 13th!

Late yesterday Adobe surprised the market by unveiling a $1.8 billion cash acquisition of Omniture, the web analytics and optimization company. With Omniture's trailing 4 quarter revenues of $335 million, the deal was done at a little over 5x revenues and a 45% premium to Omniture's average stock price over the last 30 days - not ridiculous bubble-era terms by any stretch, but still plenty rich in this down economy.

I listened to yesterday's investor relations call explaining the rationale for the deal, talked to a number of industry executives for their reactions, and read some of the online coverage. My takeaway is that while the deal could work out, I'm somewhat skeptical until I see actual proof.

First, when I look at Adobe, I'm focused narrowly on its video-oriented products and strategy (Flash, Flash Media Server, Strobe its open player framework, etc). While a leader currently, Adobe has significant challenges ahead in the video space. It faces major competitive threats from Microsoft, which is ramping up a Silverlight and Smooth Streaming onslaught (we've seen this movie before and know how it ends) and Apple, which has frozen Flash out of its world-beating iPhones in an attempt to thwart the advance of Flash's desktop hegemony to mobile devices. From my perspective, an acquisition the size of Omniture must provide specific differentiated value to Flash, in order to help Adobe compete in the video space.

I hear the top-line rationale being provided for the acquisition: that integrating Omniture's measurement and analysis tools into the front-end creative process will help digital media executives more effectively monetize content and improve advertising ROIs. In Adobe CEO Shantanu Narayen's words, the deal "completes the loop of content creation, delivery and optimization." Omniture's CEO Josh James put the goal simply: "to drive ad dollars from offline to online."

That's an incredibly important goal; I have written many times that advertising, particularly for long-form online video, is not remotely close yet to supporting the high cost of creating premium-quality programs. To the extent that eyeballs shift from offline to online without a parity (or better) economic model, content providers will be in a death spiral - racking up profitless online viewership.

While the deal's high-level rational makes some sense, I have 3 concerns about whether it's robust enough to ultimately pay off for Adobe, and more specifically strengthen their hand in the video space: (1) Are there actually incremental product integration opportunities beyond those already being pursued through the companies' existing partnership? (2) Are there actually incremental sales to be gained (and for which products), by putting the companies together? (3) Is this the optimal use of Adobe's resources given current and future market conditions for video?

The product integration issue received a lot of attention in the analyst Q&A portion of the investor call. Yet, despite the number of times both CEOs answered it, few specifics were ever revealed, leaving what I perceived as a sense among the analysts and me (manifested by repeated similar questions), that the product benefits might not be well-understood, or worse, overblown.

In my mind optimal product integration requires that the same person or team in an organization gets value from the 2 products being put together. Yet today the creative people using Flash are different from the marketing people using Omniture. In the organizations I've worked with there's already significant interaction between these groups as they continually modify apps to enhance user engagement and monetization. Maybe more can be achieved here, but with different audiences for the respective products, I'd want to see evidence.

Incremental sales were another area of intense analyst interest. Typically in acquisitions a key deal driver is that one (or both) of the companies' products can be put through the others' sales channels to increase volume. Yet, per the above, Adobe's creative tools are typically purchased in the creative group, not the marketing organization (sometimes it's even more complicated as a whole different entity is the buyer, as with CDNs and Flash Media Server). However there is a case to be made that as digital revenues become more important to companies, marketing will exert more influence.

But still, is it likely that notoriously autonomous creative types are going to be swayed to use Adobe's tools because marketing types say that improved integration with Omniture makes analysis/tracking better? Conversely, is a marketing executive going to be persuaded to use Omniture because the creative group insists it must use Flash? Looming also is the question of whether one sales team and channel versed in selling packaged software (Adobe) can effectively help sell SaaS analytics (Omniture) and vice versa.

These questions ultimately raise the final one - is this the best use of Adobe's resources? On the one hand, Omniture helps diversify Adobe's revenue and product base, opening up new markets for it. Diversification isn't a bad thing per se, but if the acquired products don't help the core business, it can quickly turn into a distraction, changing the organization into cluster of silos. Plus, while Omniture's revenues have quadrupled in 3 years, it has already forecast slowing growth. Generally I'm very skeptical of big acquisitions. Evidence has shown they rarely deliver the intended results, and often (as in the case of Ebay-Skype) they can actually be a value destroyer.

My guess is that much of what Adobe will eventually achieve with Omniture could have likely been achieved through expanding its current partnership. But I stand ready to be proven wrong as it's quite possible I just don't get it. Both leadership teams are intelligent and savvy about the market. They obviously see the benefits of the deal. We'll eagerly await the proof.

What do you think? Post a comment now.

Have you noticed that live streaming video is getting more and more popular? Lately, sports in particular have been leading the charge, with live streams of PGA golf, US Open tennis, NFL football, Major League Baseball games and British soccer, among others. But sports are hardly the only area where live video streaming is taking off.

Two key catalysts for this part of the live streaming market have been mobile access (with the iPhone and other smartphones' video capture and playback driving the market) and social media/video sharing (with Twitter, Facebook, YouTube and others providing instant outlets). A lot of this activity is Flash-based. As both mobile and social trends gain ground, we can expect even more activity in this segment.

Aside from sports, live streaming is also gaining traction for high-profile events, with some companies moving to support this end of the market. For example, today Kyte, which positions itself as a full mobile and online video platform, is introducing "Kyte Live Pro," an add-on that allows HD live streaming from multiple sources and encoding using Adobe Flash Media Live Encoder.

I chatted with Gannon Hall, Kyte's COO yesterday, who explained that while "authentic" content - mainly short live clips - remain popular, Kyte's customers have also been asking for the ability to live stream longer-form events in HD. For example, TV Guide is using Kyte Live Pro this Sunday night to stream the Emmys red carpet pre-show online. Gannon expects other video platform companies, recognizing the opportunity, will start to offer live HD streaming as well. Swarmcast is one company I'm aware of that has made a name for itself broadcasting high-profile live events over the years. Microsoft is also putting a big push behind live, with its Smooth Streaming product.

Moving even further up-market, there's also a huge amount of live video streaming happening among enterprises, educational institutions and government agencies. These entities have much tighter requirements, often needing an on-premise, behind-the-firewall configuration for capture, broadcast and viewing, multi-location secure distribution, transcoding into various formats, integration with other network and other IT components, and mission-critical reliability.

The leader in this part of the market is a company called VBrick (according to research compiled by Frost & Sullivan), whose executives I've spoken to a couple of times recently. VBrick has over 6,000 customers in 56 countries, including 50 Fortune 500 companies, 100 Federal agencies and 900 schools, among others. The range of VBrick uses includes executive broadcasts, training and education, digital signage and surveillance and monitoring, to name a few.

VBrick deploys a hardware appliance that does video capture and transcoding into multiple formats, high-quality distribution over varied networks (LAN, WAN, Internet) and secure viewing at desktops or conference rooms. VBrick also offers "VBoss," which is a SaaS alternative for less frequent/more budget-minded users.

To date, most online video has been consumed on-demand. But this appears to be changing fast. With nearly infinite use cases and technology providers addressing all potential market segments, live video streaming appears poised for lots of growth ahead.

What do you think? Post a comment now.

I'll be participating in 2 complimentary upcoming webinars that will be of interest to VideoNuze readers.

First, on Thurs, Sept. 24th, Colin Dixon, Senior Partner at The Diffusion Group and I will present "The Terror of Terminology: Demystifying Broadband TV." Colin is one of the smartest broadband analysts around, and we periodically compare notes on the market. In an effort to clarify some of the confusion we continually hear around certain terminology in the market, we're going to discuss 5-6 different concepts and try to clear away the fog. Expect a fun and educational conversation, with plenty of time for audience Q&A. Learn more and register.

Then on Wed, Sept. 30th I'll be participating in a Brightcove-sponsored webinar, "New Video Distribution Strategies - Taking Video Beyond the PC." Other speakers include Chris Little, Technology Director at Brightcove and Rich Ezekial, Director of Strategic Partnerships, Connected TV, Yahoo. Accessing online video on other devices like TVs and smartphones is one of the hottest areas of the broadband video landscape, and we'll be digging in to key trends, best practices and monetization opportunities. In particular, we'll hear specifics about Yahoo's Connected TV strategy. Learn more and register.

I look forward to seeing you on one or both of these exciting webinars!

Though TV Everywhere ("TVE") is still in a nascent stage, with trials either underway or not even yet started, there has been no shortage of hype around it. I've been among those who have argued that if these trials work as intended and the rollouts ensue, TVE would be a big win for video service providers (cable, satellite, telco), content providers and consumers. But recently I've started to think there's another TVE angle that has not really been explored - the possibility that "TVE 2.0" could enable certain cable operators and telcos themselves to become the biggest players in "over-the-top" (OTT) video.

(For those not familiar with the term OTT, it refers to the idea of video being delivered to homes over a broadband network that isn't owned by the video provider itself. So for example, when you watch Hulu in your home over a Comcast broadband connection, Hulu is going "over-the-top" of Comcast. Hulu doesn't own the underlying network, it just rides on top of the one that's there, in effect competing with Comcast's own video service.)

To date TVE has been positioned by incumbent video service providers as an online adjunct solely available to their traditional, paying multichannel subscribers. While Comcast has been most emphatic on this point, no other operator that has announced TVE trials has deviated from this approach either.

But what if, at some point down the road, TVE was "unbundled," meaning that you could subscribe just to TVE, and not the traditional video service? Cable operators and telcos have little incentive to do this within their current service or "franchise" areas, but the lure to offer TVE 2.0 to households outside their franchises could prove irresistible. If pursued, this could actually turn cable and telcos into the biggest over-the-top players themselves, potentially dwarfing those typically thought of as key OTT competitors (e.g. CE companies like Sony or computing companies like Apple, or aggregators like Netflix or Hulu). In a TVE 2.0 world, the hunted could become the hunters.

The franchise concept is key to understanding how the cable and telco video distribution business work. In short, a cable or telco needs to win an agreement with the "franchising authority" - typically a municipal government - to offer video service in the municipality. Agreements are required because the video distributor needs legal access to rights-of-way to operate (to hang its wires on poles, dig up streets when necessary, etc.). Franchising may seem anachronistic in the digital age, but it remains the essential determinant of where cable companies or telcos operate (note that because satellite companies don't require rights-of-way, they operate nationally, outside the franchising domain).

Now put yourselves in the shoes of Comcast, for example. You've worked hard to wring every possible dollar out of subscribers who live in your franchise areas, by successfully introducing triple-play video/voice/Internet bundles, digital tiers, sports tiers, movie channels, HD, additional outlets, DVRs, etc. With all of these services, the average revenue per home serviced today is a multiple of what it was just 15 or 20 years ago.

But growth is slowing, and new competition from OTT providers looms. So where does the biggest new growth opportunity exist? Answer: outside traditional franchise areas. To get a sense of how big this opportunity is, even Comcast, the largest U.S. cable operator, serves only about 25% of the country, meaning almost three-quarters of American homes are currently out of its reach. To grow their addressable universes, Comcast and others traditionally bought other cable operators. In fact, fearful of the power any one cable company could gain, the FCC imposed a 30% ownership cap. Coincidentally that cap was just overturned by a U.S. Court of Appeals a few weeks ago.

In the traditional video distribution business, buying other operators was the only way to build an operator's footprint. But with TVE 2.0, a company like Comcast could use broadband so that, for the first time, it could operate everywhere. They key is being willing to unbundle TVE from core cable service so that a consumer can subscribe solely to TVE service.

Doing so would in effect pit Comcast, for example, against other cable operators, a major breach of cultural etiquette in the clubby cable industry. But faced with the choice of acquiring other operators for around $5,000 per sub, or just introducing a capital-efficient and high-quality linear/on-demand OTT service over broadband, powered by Move Networks (as one option) it wouldn't even be a close call. In fact, Comcast could cherry pick the incumbent's video customers, in turn driving that company's valuation down and thus opening up the option for it to eventually swoop in and acquire the incumbent operator for far less. Or it could decide not acquire, and instead just focus on rolling up OTT subs.

Will cable and telco go over the top? Who knows. They will surely have what it takes - TVE expertise, requisite technology, content relationships, private video delivery networks, customer care facilities and deep pockets. All that's really needed is the motivation to proceed. For now, operators are rightfully focused on getting TVE working right for their own subs. But I suspect the business cases for TVE 2.0 are already being run.

(Note - we'll explore this subject and others at both VideoSchmooze in NYC on Oct. 13th and at VideoNuze's CTAM Summit breakfast on Oct. 26th.)

What do you think? Post a comment now.