VideoNuze Posts

Daisy Whitney and I are pleased to present the 26th edition of the VideoNuze Report podcast, for August 7, 2009.

In this week's podcast, Daisy discusses her article on ExtendMedia's new OpenCase Publisher product targeted to support TV Everywhere-type initiatives, which I also wrote about this week. Daisy is observing a trend toward vendors organizing themselves for TV Everywhere, recognizing that while Comcast appears to be the first to market in testing TV Everywhere, other service providers are moving ahead as well. It's a complex new area and we both expect to see a number of vendors throw their hat in the ring to become preferred solutions.

Separate, I add further detail to my post, "Despite Hurdles, Made-for-Broadband Video Projects Proliferate," which describes many examples of new independent web series that have been announced over the past couple of months. It turns out to be a pretty lengthy list, helping to debunk some of the doom and gloom that's hung over this market, created by the ongoing recession in general plus the failure of some high-profile independents like 60Frames, Ripe, ManiaTV and others. When you review the list, you realize there's still a lot of experimentation going on and plenty of people trying to capitalize on the broadband medium. We expect this to continue.

Click here to listen to the podcast (12 minutes, 58 seconds)

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Continuing a past VideoNuze practice of making key data available from industry research firms, today I'm pleased to provide a dozen excerpt slides from The Diffusion Group's recent study, "Consumer Interest in OTT Video Services." TDG is one of the leading firms studying broadband adoption and shifting video consumption habits (and is also a long-time VideoNuze partner). These slides are from TDG's Q1 '09 proprietary survey of 2,000 U.S. adults, the results of which have only been shared with its paying clients to date.

Click here to download the slides

"Over-the-top" is an industry term for any video provider (e.g. free, paid, on-demand, live, streaming, etc.) using the broadband infrastructure of an unaffiliated ISP to reach their intended audience. Since most broadband ISPs are either cable companies or telcos who also offer their own subscription multichannel video services, the idea is that these new services (e.g. Netflix, YouTube, Hulu, Amazon VOD, etc.) are provided "over-the-top" of these broadband/video incumbents, directly to broadband-enabled audiences.

With the proliferation of convergence devices (e.g. Roku, Xbox, AppleTV, etc.) OTT video is increasingly getting all the way to viewers' TVs. Many of you have heard me talk about how powerful and unprecedented broadband's "openness" is in the traditionally tightly controlled video industry. Like the Internet itself, broadband's openness is foundational; it has enabled a totally new and free-flowing relationship between video content providers and viewers.

There's been no shortage of buzz that OTT providers could disrupt the multibillion dollar per year subscription TV business, enticing subscriber's to "cut the cord" on incumbent cable/telco/satellite providers. I've weighed in multiple times on the likelihood of cord-cutting, originally laying out my arguments last October in "Cutting the Cord on Cable: For Most of Us It's Not Happening Any Time Soon." With cable's TV Everywhere services now gaining steam, I think the likelihood of cord-cutting en masse is even more remote.

Nonetheless OTT remains a genuine long-term threat for many good reasons. So TDG's survey is a welcome effort at quantifying consumers' potential interest in OTT services, at various price points and in multiple types of offerings. TDG identifies 4 audience segments: "Replacers," "Supplementers," "OTT Optimals," and "Non-OTT Consumers." The survey tests demand for paid OTT services at various price points, revealing each segment's willingness to pay. Each segment is motivated by different reasons, meaning that OTT service providers are going to have to be very disciplined about understanding who exactly they're targeting and how to generate appeal.

Click here to download the slides

Please join me for a complimentary webinar thePlatform is hosting on Tues, Aug. 18th at 10 am PT / 1pm ET, "How Broadband Video Players Can Align Business Requirements and User Experience." I'll be moderating a discussion with the AP's Bill Burke, Global Director Online Video, PBS Interactive's Joshua Kinberg, Director, Video Product Management, and thePlatform's Marty Roberts, VP of Marketing.

The webinar will be highly interactive and will focus on how to use player technologies to meet online video business requirements while also providing outstanding user experiences. AP and PBS have extensive affiliate networks, making them both aggregators of online video as well as producers themselves. As a result they've faced key challenges in managing and presenting their video in a compelling, up-to-date manner. Bill and Joshua will share their best practices, and Marty will provide a broader perspective from thePlatform's dozens of customers.

Click here to learn more and for complimentary registration

If you thought the recession and resulting ad spending crunch had dimmed the enthusiasm around independently-produced, made-for broadband video, think again. The market seems to keep chugging along with all kinds of companies and creative talent involved. Here's a sample of the headlines I've noticed in just the last couple of months (some links now require registration):

Jason Priestly Tapped for Online Series

Reveille Revs Production

Reveille to Bow Welches Web Series

Crackle Pops with Porn Star Mom

Break Launches Guy Lifestyle Site MadeMan.com

Web Series Expands Beyond Lexus Promotion

DeVito Serves Up Blood on the Web

Xbox Live Slating New Original Video Series

Alloy Launch "Private" Online Series

A Squared, AOL Toon Up

More Teams With Candace Bushnell for Web Series

DiVide Partners with Generate

Candor, Shariff Hasan Get "Skinny"

The list of projects demonstrates both the breadth of participants and concepts coming to market. Some involve established backers like Microsoft or AOL. Others rely on starpower like Lisa Kudrow, Candace Bushnell or Jason Priestly. Some have ties to existing offline franchises like Alloy's "Private" or Meredith's "More" magazine, while others, like DiVide and Generate are in search of brand involvement. Clearly there's no shortage of experimentation in the made-for-broadband space.

Still, discipline is the key to success. That was my takeaway from a conversation I had yesterday with Michael Wayne, co-founder and CEO of DECA, an online-only entertainment company whose properties include Smosh, Momversation, Good Bite and others. Michael notes DECA's success stems from being very analytical about which projects to greenlight. Key success criteria include how large the targeted audience is, how engaged they are (measured by things like blogging, Twittering, commenting), whether other media properties have succeeded with the audience and if there's demonstrated advertiser interest.

Importantly, DECA looks hard for pre-existing online communities or "tribes" along with "tribal leaders" as Michael puts it - people who have emerged from the online rabble to become recognized leading voices in their vertical space. DECA tries to partner with these tribal leaders to build properties that have video at their core, but capitalize on all the publishing and interactive capabilities the web has to offer. Michael notes the need for all of this to be done on very lean, non-Hollywood budgets.

Meanwhile, I've been a believer that the coming convergence era, where broadband is increasingly connected to users' TVs, will further level the playing field for made-for-broadband projects. At some point it could be as easy to watch one of the above offerings as it is to watch "Heroes" or "Lost." Lastly, recent infrastructure and distribution progress, epitomized by last week's news from YouTube and blip.tv, provide further support for these independent producers.

So while the flameouts this year of 60Frames, ManiaTV, Ripe Digital and Blowtorch are reminders that the made-for-broadband space remains plenty precarious, it also continues to be fascinating to watch evolve.

What do you think? Post a comment now.

Yesterday's announcement by Netflix that it will be adding to its Watch Instantly library past seasons ABC's "Lost," "Desperate Housewives," "Grey's Anatomy" and "Legend of the Seeker" is another step forward for Netflix in strengthening its online competitiveness.

At a broader level though, I think it's also further evidence that the near-term success of Watch Instantly and other "over-the-top" broadband video services is going to be tied largely to deals with broadcast TV networks, rather than film studios, cable TV networks or independently-produced video sources.

Key fault lines are beginning to develop in how premium programming will be distributed in the broadband era. Content providers who have traditionally been paid by consumers or distributors in one way or another are redoubling their determination to preserve these models. Examples abound: the TV Everywhere initiative Comcast/Time Warner are espousing that now has 20+ other networks involved; Epix, the new premium movie service backed by Viacom, Lionsgate and MGM; new distribution deals by the premium online service ESPN360.com, bringing its reach to 41 million homes; MLB's MLB.TV and At Bat subscription offerings; and Disney's planned subscription services. As I wrote last week in "Subscription Overload is On the Horizon," I expect these trends will only accelerate (though whether they'll succeed is another question).

On the other hand, broadcast TV networks, who have traditionally relied on advertising, continue mainly to do so in the broadband world, whether through aggregators like Hulu, or through their own web sites. However, ABC's deal with Netflix, coming on top of its prior deals with CBS and NBC, shows that broadcast networks are both motivated and flexible to mine new opportunites with those willing to pay.

That's a good thing, because as Netflix tries to build out its Watch Instantly library beyond the current 12,000 titles, it is bumping up against two powerful forces. First, in the film business, well-defined "windows" significantly curtail distribution of new films to outlets trying to elbow their way in. And second, in the cable business, well-entrenched business relationships exist that disincent cable networks from offering programs outside the traditional linear channel affiliate model to new players like Netflix. These disincentives are poised to strengthen with the advent of TV Everywhere.

In this context, broadcast networks represent Netflix's best opportunity to grow and differentiate Watch Instantly. Last November in "Netflix Should be Aggressively Pursuing Broadcast Networks for Watch Instantly Service," I outlined all the reasons why. The ABC deal announced yesterday gives Netflix a library of past seasons' episodes, which is great. But it doesn't address where Netflix could create the most value for itself: as commercial-free subscription option for next-day (or even "next-hour") viewing of all prime-time broadcast programs. That is the end-state Netflix should be striving for.

I'm not suggesting for a moment that this will be easy to accomplish. But if it could, Netflix would really enhance the competitiveness of Watch Instantly and its underlying subscription services. It would obviate the need for Netflix subscribers to record broadcast programs, making their lives simpler and freeing up room on their DVRs. It would be jab at both traditional VOD services and new "network DVR" service from Cablevision. It would also be a strong competitor to sites like Hulu, where comparable broadcast programs are available, but only with commercial interruptions. And Hulu still has limited options for viewing on TVs, whereas Netflix's Watch Instantly options for viewing on TVs includes Roku, Xbox, Blu-ray players, etc. Last but not least, it would also be a powerful marketing hook for Netflix to use to bulk up its underlying subscription base that it intends to transition to online-only in the future.

Beyond next-day or next-hour availability, Netflix could also offer things like higher-quality full HD delivery or download options for offline consumption. Broadcasters, who continue to be pinched on the ad side, should be plenty open to all of the above, assuming Netflix is willing to pay.

I continue to believe Netflix is one of the strongest positions to create a compelling over-the-top service offering. But with numerous barriers in its way to gain online distribution rights to films and cable programs, broadcast networks remain its key source of premium content. So keep an eye for more deals like the one announced with ABC yesterday, hopefully including fast availability of current, in-season episodes.

What do you think? Post a comment now.

With momentum growing for "TV Everywhere" type services, it's to be expected that technology vendors will begin offering products that meet the evolving range of requirements video service providers will encounter. One example is ExtendMedia, which today is introducing OpenCase "Publisher." With TV Everywhere type services still so new, even labeling the various capabilities video service providers will require to succeed is still a work in process. In a meeting last week, Extend's executives helped me understand what will be needed and what the Publisher product provides.

To date, much attention around TV Everywhere has focused on "authentication" - how a service provider would implement credentials (e.g. logins and passwords) so only authorized users could access its online video catalog. This gatekeeping step has rightly received a lot of focus, because leakage of any premium video must be prevented. Authentication is tricky though, as users must be verified as being who they say they (e.g. passwords haven't been improperly shared). But assuming for a moment that tight authentication processes are implemented, other challenges and opportunities remain.

For example, once authenticated, service providers need to be able to expose only those parts of their overall catalog each specific user is entitled to view (e.g. if I'm not an HBO subscriber, I shouldn't get access to HBO programs online). This notion of "service management and provisioning" means service providers need to create different bundles online, just as they have done offline. And the bundles need to be easy to change: a service provider may want to change a channel lineup and/or a subscriber may want to add a new channel.

Service management and provisioning itself requires that there's a scalable content management system in place. The service provider will need to be able to ingest lots of premium video from many different sources while also and accepting and assigning specific rules to each program as needed (e.g. one program may be available immediately and indefinitely, while another will be available just for a week, but starting at a specified future time). In addition, metadata must be assigned so programs can be tracked, and searched by users.

The above requirements are further complicated because TV Everywhere services are envisioned to work across multiple devices as well. That means that authentication must also work on smartphones, gaming consoles, portable media players, etc. The devices themselves must be registered and recognized so they can be linked to users' accounts. In some cases license terms will further restrict how specific parts of services are accessible, and under what addition terms (in turn possibly requiring DRM).

Last but not least is monetization. Given current plans not to charge extra for TV Everywhere, advertising from online viewing is the main new revenue-generating opportunity. So integrations with ad servers already used by content providers, along with the ability to measure and report on usage, is another crucial capability. Separate, a totally new monetization opportunity will be trying to upsell online subscribers on new services. For instance, HBO might run a promotion offering a sneak peek of a "True Blood" premiere to all TV Everywhere users. The service provider needs to not only support the promotion, but also offer one-click upsell subscription to HBO, and dynamic provisioning of the whole HBO catalog to the new subscriber.

As I've written previously, TV Everywhere is an exciting step forward for both the broadband industry and video service providers. Yet it is a very new world where things get complicated very fast. Vendors like Extend - and other leaders like thePlatform and Irdeto to name two - which have traditionally focused on cross-platform support for video service providers are increasingly going to be called on to turn executives' visions into reality.

What do you think? Post a comment now.

(Note - ExtendMedia and thePlatform are VideoNuze sponsors)

Following are 4 news items worth noting from the week of July 27th:

New Pew research confirms online video's growth - Pew was the latest to offer statistics confirming that online video usage continues to soar. Among the noteworthy findings: Long-form consumption is growing as 35% of respondents say they have viewed a TV show or movie online (up from 16% in '07); watching video is widely popular, draw more people (62%) than social networking (46%), downloading a podcast (19%) or using Twitter (11%); usage is up across all age groups, but still skews young with 90% of 18-29 year olds reporting they watch online vs. 27% of 65+ year olds; and convergence is happening with 23% of people who have watched online reporting they have connected their computers to their TVs.

FreeWheel has a very good week - FreeWheel, the syndicated video ad management company I most recently wrote about here, had a very good week. On Monday, AdAge reported that YouTube has begun a test allowing select premium partners to bring their own ads into YouTube, served by FreeWheel. Then on Wednesday, blip.tv announced that it too had integrated with FreeWheel, so ads could be served for blip's producers across their entire syndication network. I caught up with FreeWheel's co-CEO Doug Knopper yesterday who added that more deals, especially with major content producers, are on the way. FreeWheel is riding the syndication wave in a big way.

Plenty of action with CDNs - CDNs were in the news this week, as Vusion (formerly Jittr Networks) bit the dust, after going through $11 million in VC money. Elsewhere CDN Velocix (formerly CacheLogic) was acquired by Alcatel-Lucent. ALU positioned the deal as fitting with its "Application Enablement" strategy, supporting customers' needs in a "video-centric world." Limelight announced its LimelightREACH and LimelightADS services for mobile media delivery and monetization (both are based on Kiptronic, which it acquired recently). Last but not least, bellwether Akamai reported Q2 '09 earnings, that while up 5% vs. year ago, were down sequentially from Q1. Coupled with a cautious Q3 outlook, the company's stock dropped 20%.

IAC is making big moves into online video - IAC is making no bones about its interest in online video. Last week the company unveiled Notional, a spin-out of CollegeHumor.com, to be headed by that site's former editor-in-chief Ricky Van Veen. Then this week it announced another new video venture, with NBCU's former co-entertainment head Ben Silverman. IAC chief Barry Diller seems determined to push the edge of the envelope, as IAC talks up things like multi-platform distribution and brand integration. With convergence and mobile consumption starting to take hold, the timing may finally be right for these sorts of plays. At a minimum IAC will keep things interesting for industry watchers like me.

Click here to see an aggregation of all of the week's broadband video news

Daisy Whitney and I are pleased to present the 25th edition of the VideoNuze Report podcast, for July 31, 2009.

This week I provide some additional thoughts on the new web site 15 Seconds of Fame (http://15sof.com/), which I posted about yesterday. The site is a broadband, social media-based version of "American Idol," offering multiple online contests. Users pay $1 to enter their 15 second (max) video, which then funds the prizes ranging from $25-$100. It's a great example of what I call "purpose-driven" user generated video, meant to appeal to people who have talent and already have experience uploading video to YouTube and other video sharing sites.

Speaking of YouTube, Daisy picks up on her post about its latest sensation, the "JK Wedding Entrance Dance" which has gained over 12 million views. The video shows a wedding party proceeding down the aisle dancing to Chris Brown's "Forever." The video is a blast to watch, but more importantly, YouTube is highlighting on its blog that the video has also become a big money-maker for its rights-holders. By using YouTube's content management tools and "Click-to-Buy" links, there are now overlay ads to buy the song at Amazon and iTunes. YouTube reports that the click-through rate is 2x the average and helped drive the song to #3 on iTunes and #4 on Amazon. It's a nice win for everyone. Think the bride and groom (interviewed here on NBC's Today Show) are getting a cut?

Click here to listen to the podcast (12 minutes, 58 seconds)

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