VideoNuze Posts

Happy Friday and welcome to August. Recapping another busy month, here are 3 key topics from July:

1. Skyrocketing video consumption has a downside, just ask the broadband ISPs

This month I touched on the growing problem of broadband ISPs' networks getting overwhelmed by broadband's surging usage. In "Video Usage is Creating a Hairball for Broadband ISPs, Others," I reviewed the issue and solutions ISPs are implementing. To get a sense of why the bandwidth problem is only going to intensify, slides were offered in "Broadband Video Drives Cisco's Zettabyte Forecast."

Two posts provided evidence of how consumption surging is at both ends of the duration spectrum (See "Longer-Form Live Streaming Events Get Traction" and "New Magid Survey: Short-Form Dominates Online Video Consumption and Hurts TV Viewership"). ISPs are scrambling to deal with all this, yet they are constrained in their options by fulminating regulators net neutrality-seeking free-speechers. Just ask Comcast, which today faces a sanction from the FCC for its network management practices. Bandwidth problems are only going to grow over time, requiring all constituencies to work together toward productive solutions.

2. Brand marketers continue to embrace broadband opportunities

What do marketers like Baby Ruth, McDonald's, Klondike, Kmart, Sears, Virgin Mobile and others have in common? They all launched user-generated video contests in July, aiming to engage their audiences in new and creative ways. Meanwhile, what do Hewlett Packard, Sierra Mist, Southern Comfort, Revlon, Unilever, GMC, Home Depot, Red Bull and others have in common? They all announced or launched original broadband video shows (often with partners) during the month. All are chronicled in VideoNuze's news roundup section for brands.

3. Syndication continues to gain ground

In July I also continued chronicling the concept of the Syndicated Video Economy, which I introduced last March. This is a key trend, with multiple dimensions. Just yesterday, in "Dispatch from the Syndicated Video Economy's Front Line" I recapped a panel I moderated on Wednesday, in which four industry executives detailed key SVE opportunities and challenges.

Various forms of syndication are being embraced, as illustrated in two additional posts, "Google, Others Syndicating Video Into the Long Tail" and "EgoTV, Clearspring Show How Widgets Successfully Distribute Video." Mobile is yet another syndication front in the offing. "Azuki Systems is Poised to Ignite Mobile Video" provided a glimpse of how both content providers and users may soon turbo-charge syndication using mobile devices. Based on several briefings I've had in the last two weeks, I'm able to say there's plenty more exciting syndication news coming shortly.

That's it for July. If you want to see a list of all the month's posts, they're available here. See you on Monday!

Yesterday I moderated a panel at the NATPE LATV Festival Digital Day entitled, "The Syndicated Video Economy: Expanding Broadband's Reach." The Syndicated Video Economy or SVE, is a concept I introduced back in March, to help articulate the trend toward widespread video distribution online, and the ecosystem of companies facilitating it.

The session was a unique opportunity to hear from four executives whose companies are very much on the front line of the trend toward syndication. They shared many insights based on their experiences, and I thought it would be worth passing on a synopsis of these today.

The four panelists were:

• Greg Clayman, EVP, Digital Distribution and Business Development, MTV Networks
• John Fitzpatrick, Director of Business Development, blip.tv
• Jonathan Leess, President and General Manager, Digital Media Group, CBS Television Stations
• Brian Shin, Founder and CEO, Visible Measures

Here are four key takeaways:

1. Syndication is required to capitalize on the significant fragmentation of online audiences. John summed this up well, suggesting that content creators need to think in terms of their "total potential audience," not just viewers that may come to their web sites. Particularly for established media companies, steeped in traditional destination-oriented, "must-see" mind-sets, this is a crucial point of adaptation to the online world. Jonathan's group gets this, as he reported 60% of its 25 million monthly are already coming from third parties.

2. Syndication is operationally complex. Jonathan made the point that, for all of syndication's appeal, it poses daunting tactical challenges, particularly with an "always-on" news gathering/dissemination ethos. Challenges he cited include integrating video players with partners' sites, implementing ad management across heterogeneous environments, distributing content correctly and promptly, measuring results and honoring financial obligations. Until the ecosystem of companies enabling the SVE significantly matures, scaling the model will cause ample headaches.

3. Retaining full control of advertising sales is crucial. While the SVE opens up new audiences, Greg reminded us that nobody is better equipped to sell MTV's inventory - wherever it may be generated - than MTV's own sales team. This is one of the reasons content providers seek to syndicate not just their video, but also their player as well. Jonathan echoed this point from the local perspective. Lack of tight advertising control leads to chaos for media buyers and sub-optimization of pricing. A bonus, as John pointed out, is that distributors will often be happy to just collect their revenue-sharing checks and not have to sell themselves.

4. Analytics are the ultimate key to fully exploiting the SVE. While traditional web analytics have focused on on-site performance, SVE analytics must encompass video performance over many distribution points. Brian noted that making sense of how a video performs in varying environments - and then adjusting ongoing syndication strategies accordingly - is necessary to optimize viewership across the total audience. Inevitably viewership and engagement will vary by distributor. Collecting, understanding and acting on the data optimizes syndication and monetization.

Ok, that's a mouthful. Like the panelists I remain optimistic about the SVE's potential, but I'm also clear-eyed about the challenges the SVE raises. I'll continue to track its progress and share findings.

What do you think? Post a comment now!

Here's another example of the multiple cross-currents in the broadband video market.

Just last week I reviewed new Magid research showing that short-form dominates broadband video consumption. Now this week I received news from Swarmcast which provides a high-quality streaming delivery platform, revealing that the average length of live streams it's serving for its customers now averages more than 75 minutes, suggesting the long-form opportunity is now firming up. An apparent contradiction? Yes. An actual contradiction? No.

What's happening is that while short-form still accounts for the vast majority of viewing instances, there are now marquee events from Swarmcast customers like MLB.com being streamed live that are generating sustained viewership. Swarmcast provides multiple examples of events that it has streamed which lead to the 75 minute average:

• July 15 - All-Star Game
• July 14 - Home Run Derby
• July 3-6 - Rothbury Music Festival
• June 28 - Nelson Mandela's 90th Birthday celebration

I think the success in live streaming events speaks to broadband's convenience. While TV is clearly the preferred viewing device, if you don't have access to one when a compelling event is on, or that content provider has chosen to stream it instead of broadcasting it, broadband is incredibly convenient.

Even so, what's traditionally held back longer-form consumption is low-quality delivery. This is the problem Swarmcast has focused on. I've seen examples of some of their events and the quality is impressive, even at scale. So as content providers recognize that they can indeed stream high-quality long-form events, interest will build. The next key challenge of course will be monetize these streams.

MLB has been a poster child for succeeding with the subscription model, leveraging its loyal fan base and exclusive games. While their brand is unique, it seems like there should also be pay-per-view opportunities for high-profile live events, akin to what has worked on cable (e.g. wrestling, boxing, music, etc.). Outside of the paid model, if audiences can be built for free events, advertisers will also take interest.

Swarmcast's customers' success in longer-form live streaming is again showing that despite the current popularity of short-form, broadband is still evolving, opening up diverse opportunities for content providers.

What do you think? Post a comment.

Yesterday, in "Video Usage is Creating a Hairball for Broadband ISPs, Others," I scratched the surface of how ISPs' networks are becoming overwhelmed by the sheer volume of broadband video being consumed each day along with potential solutions currently under experiment.

Today, to help put the problem in some context I'm pleased to offer a dozen slides excerpted from Cisco's recently released Visual Networking Forecast, which shows strong growth ahead for video, as it becomes the predominant type of Internet traffic. To learn more about the forecast and its implications, I recently spoke to Cisco's primary forecasting analyst, Arielle Sumits.

Click here to download the slides.

Arielle explained that Cisco started doing the forecast years ago as an internal project to help inform its own business decisions. As it recognized there was a dearth of this information available publicly, it decided to release the numbers.

Cisco bases its calculations on analyst projections for Internet users, broadband connections, video subscribers, mobile connections and Internet application adoption. As a significant equipment vendor to service providers, it is also able to collect data from these customers to validate its forecast. In fact, Arielle said that in Q4 '08, Cisco will begin supplementing the forecast with actual data from 12-15 service providers, breaking down their users' consumption by video type (professional, UGC, etc.)

The forecast shows that broadband video's growth will continue apace. Cisco is forecasting half a "zettabyte" (definitions are provided) of data will cross the global Internet by 2012, with broadband video accounting for nearly 50% of the total. Accounting for video's rapid expansion, global consumer Internet traffic will quadruple by 2012.

Putting this in perspective, Cisco estimates that in 2012 global broadband video traffic will be 380 times what U.S. Internet backbone traffic was in 2000. Even in 2008, video is already impressive, with Cisco estimating that the video viewed at just 7 sites (YouTube, MySpace, Xbox Live, iTunes, NBC, ABC and Yahoo) is already greater than what U.S. Internet backbone was in 2000. (If you want to read the whole white paper Cisco wrote about the forecast, it is available here.)

While all of this is good news for those pursuing broadband video business opportunities, the forecast again underscores the significant issues facing broadband ISPs, on whom we all rely to actually deliver video across the so-called last mile. Broadband video's growth is dependent on these companies figuring out how to economically keep up with the explosion in video consumption. As I tried to point out yesterday, there are, as yet, no perfect answers to be found.

Click here to download the slides.

What do you think? Post a comment.

The explosion in broadband video consumption is creating a significant and growing hairball for broadband Internet Service Providers, content providers, regulators and others. The core problem is that ISPs' networks are getting overwhelmed by the sheer volume of video being consumed each day.

ISPs have several ways to address the situation, but unfortunately none are perfect. For example, Comcast's approach until recently has been to use network management tools to block or slow certain kinds of traffic, such as peer-to-peer. P2P is a particular issue for cable ISPs because it uses scarce "upstream" bandwidth. Network management is highly technical, making it hard for policy-makers to understand it, let alone legislate it. So Comcast is now facing a sanction from the FCC over its network management practices (which it says it's moving away from anyway), because the FCC didn't consider them "reasonable" by its own vague definition.

Time Warner Cable is experimenting with another approach: tiers of service carrying bandwidth caps for users. This is a little bit like today's cell phone model - you buy a package of minutes, and if you go over, you pay extra. Though that may sound reasonable, it invites all kinds of confusion for consumers (e.g. "do I watch that show on CBS.com? Maybe I'd better not, I think my kids have watched a lot of YouTube clips this week and I don't want to go over my cap."). Content providers are justifiably concerned about this potential scenario. Separately, for its part, AT&T recently tried to clarify what its users can and cannot expect from their broadband subscriptions.

Yet another route is for broadband ISPs to adopt a much more expansive technical approach to how content is hosted in their networks and delivered to their users. Equipment vendors like Alcatel-Lucent and Cisco believe that ISPs could convert the current bandwidth problem into a full-fledged business opportunity. This would involve ISPs deploying hardware and software that would enable "managed services," each to be delivered at a specified quality level and for a specified price. So rather than a consumer buying a tier, they would buy a specific service offering (e.g. unlimited Hulu, with HD delivery guaranteed).

This wouldn't be a totally unfamiliar concept. Content providers have been buying managed hosting/delivery services for years from CDNs like Akamai, Limelight, Level 3 and others which guarantee certain delivery metrics. But these CDNs' guarantees can't reach into the "last mile" the ISPs' networks serve. So as ever-more bandwidth intensive content is launched such as HD and long-form, content providers should have an increasing motivation to see last mile ISPs offer comparable managed services offerings from ISPs as well.

However, ISP managed services would require fundamental changes in how these companies currently work together, and also invites concerns from "net neutrality" advocates that ISPs could bias in favor of one content provider or another when making their deals. Though compelling in concept, there are many details to sort out in the managed services approach, making it a longer-term option.

All of this just scratches the surface of the growing bandwidth hairball. Layer on the free-speech advocates like Free Press and Public Knowledge and the politicians looking to make hay with constituents and it's evident that the debate over bandwidth is only going to intensify.

What do you think? Post a comment now.

Please join me on August 6th at 11am PST / 2pm EST for a complimentary webinar, "Profiting from the Syndicated Video Economy." I'll be sharing thoughts about the trends in broadband video syndication which I first introduced in this post back from March 2008.

Also presenting will be Greg Clayman, Executive Vice President, Digital Distribution and Business Development, MTV Networks, who will explain his company's successful syndication experiences, and Suzanne Johnson, Akamai's, Senior Industry Marketing Manager, who will detail how their offerings are helping facilitate syndication.

It promises to be a packed agenda, full of best practices and useful data. I hope you can join us!

Click here to register

Azuki Systems, a Boston area startup, is poised to ignite the mobile video market with a comprehensive management, publishing and interactivity platform. Mobile video is a space with a lot of buzz, particularly with the recent iPhone launch. However, buzz has not yet translated to anything close to the activity we've seen in broadband as yet.

I spoke with Azuki's VP of Marketing and co-founder John Tremblay and Director of Marketing Communications Laurie Klausner earlier this week to learn more. They are quick to point out the range of issues that has constrained the mobile video market to date: heterogeneous handsets/networks, constrained navigation, slow and inefficient new services creation, download application requirements, lack of interactivity/social media tools, a weak ecosystem and minimal monetization opportunities (that's quite a list...).

Azuki's "MashMedia Platform," a SaaS offering, addresses all of these with a browser-only requirement, meaning content and services can be delivered to 1.8 billion+ handsets immediately(Azuki's estimate). That alone significantly widens the target universe beyond the minority of handsets that today are "video-ready."

But Azuki correctly recognizes that "mobile TV' is not really the market opportunity to chase. Rather, it's the ability to deliver personalized, contextual and snackable video segments that have seamless interactive and social/sharing features. For content providers, Azuki super-charges current WAP offerings. "Facebook-on-your-phone" would be a little inaccurate to describe the experience Azuki enables for both users and content providers, but many elements of web 2.0 and social media have clearly influenced Azuki's product development vision.

John gave me a spin through a sample app created by WheelsTV, an automotive content company. Azuki ingests content from WheelsTV's CMS (or assets could come from a video CMS like thePlatform, Brightcove, etc.), then processes it into media objects. These in turn feed personalized profiles the user can build, or which can help sort content that may have been virally shared by others.

Azuki can use metadata to break down longer segments into mobile-friendly segments, also navigable through a gallery of thumbnails. Posting videos to your Facebook page is one touch away, and videos can be commented on, rated and shared with others through SMS and email. Targeted advertising completes the picture.

Azuki has a big vision which is backed by a blue-chip founding and management team, with past startup successes including ArrowPoint, SightPath, Airvana and Acopia (names very familiar to those in the Boston tech scene). The company will be rolling out beta content and services partners in the coming months, as it pushes toward commercial release later in '08. For content and service providers looking to beef up their mobile video offerings, Azuki is clearly a company to watch.

(Hat tip to Paul Roberts at The 451 Group for steering me to Azuki)

Survey results being released this morning by Frank N. Magid Associates, a research consultancy, and video aggregator Metacafe provide fresh evidence that short-form video dominates online video consumption. Notably, the survey also goes a step further, finding that 28% of respondents who watch online video report watching less TV as a result.

Meanwhile though, on the same day earlier this week that I was talking to Mike Vorhaus, managing director at Magid, and Erick Hachenburg, CEO of Metacafe about this new survey, Mediaweek was reporting a separate Magid survey, commissioned by CBS, which found that "35% of the nearly 50,000 streamers surveyed...reported that they are more likely to view shows on the network as a result of having been exposed to content on the web."

As I learned from Mike, there's no actual contradiction in these 2 surveys' findings, but you do have to squint your eyes a bit to make sure you're understanding the data accurately.

First, the findings on short-form's domination. The Metacafe survey asked respondents about the most commonly viewed types of video and presented them with category choices. The top 5 selected were all short-form oriented: Comedy/jokes/bloopers (37%), music videos (36%), videos shot and uploaded by consumers (33%), news stories (31%) and movie previews (28%). TV shows comes in at #6 (25%), followed by more short-form categories of weather, TV clips and sports clips.

That short-form, snackable video dominates is not really a huge surprise, given YouTube's market share and the preponderance of virally shared clips. Yet Mike emphasized that short-form does not equal UGC, a point that Erick also highlights. Rather, Mike sees short-form as a legitimate alternative entertainment format that creatives are embracing and audiences are adopting. It is causing further audience fragmentation resulting in the TV audience erosion that the survey also uncovered.

Which of course begs how Magid's CBS survey data squares up. Mike explained that the key here is that the CBS survey is based solely on users of CBS.com. These people naturally have a greater affinity for CBS programming and their likelihood of watching CBS shows on TV will be far higher than randomly-selected audiences (such as in the Metacafe survey). Here's the CBS press release for more details.

So the CBS data suggests that networks should be encouraged that streaming their shows builds loyalty and broadcast viewership, and therefore that they should keep on doing it. Nevertheless they need to be mindful that their shows now compete in a far larger universe of video choices, and that short-form - as a new genre - is something they too should be looking to exploit. Appropriately, all the networks, and many studios, are doing exactly that.

There is no shortage of research concerning consumer media behavior floating around these days. As the two Magid surveys show, superficially data may appear to be conflicting, though in reality it is not. Observers need to make sure they're digging in, and taking away the right lessons.

What do you think? Post a comment now!