VideoNuze Posts

In his CES keynote today, Comcast CEO Brian Roberts will outline several Comcast's initiatives (under the umbrella "Project Infinity") to stay competitive in the fast-changing video arena.

These include:

"Wideband"- New "wideband" broadband technology which allows much faster downloads (this is impressive, though was previously displayed at '07 National Cable Show). Wideband is aimed at blunting criticism that telcos' fiber networks have more capacity and faster speeds.

HD expansion - Plans for a 10-fold increase in the number of HD movies available in its VOD library to 3,000, with at least 6,000 total titles, including SD programming, eventually available. This is all meant to offset the widely held view that satellite and telco have surpassed cable in current HD offerings, a key value prop to millions of Americans now bringing home shiny new HD TV sets.

Fancast - Comcast's video portal will include 3,000 hours of streaming TV content, from NBC, Fox, CBS and others. These moves will help bring Fancast to parity with other syndicated partners of the networks which are themselves trying to proliferate their programs everywhere. Fancast will also allows remote scheduling of DVRs (both Comcast's and TiVo's), a feature that has been widely available at sites like TiVo.com and Yahoo for years now.

All of these actions are intended to help restore Comcast's reputation as the leading provider of entertainment programming, amid the swirl of changes that have enveloped the company. Despite its formidable size, Comcast is fighting competitive fires on virtually every front: fierce multichannel competition from satellite and telcos, rising expectations of HD content, consumer behavior shifts to broadband video consumption (premium and UGC) and place-shifting/time-shifting/device-shifting. The list goes on. Amid these changes, and with a slowing of the American economy, Wall Street has punished Comcast's stock price, cutting it in half in the last year.

While I applaud today's announcements, there is still one big strategic piece missing which Comcast has yet to comprehensively address: what are its plans to allow subscribers using its digital set-top boxes to seamlessly watch broadband video content as they do broadcast and cable programs?

As many of you know, I have been on a "broadband-to-the-TV" jag recently (see here, here and here) analyzing different options and their potential, or lack thereof. I continue to maintain that incumbents with boxes already in the home - mainly cable, satellite, telcos - are best-positioned to bridge the current divide between broadband and TV.

A breakthrough value proposition for Comcast would be allowing its subscribers to gain easy access on their TVs to YouTube, Break.com, Metacafe, NYTimes.com and all the others broadband sites that have surged in popularity. In theory, Comcast and other cable operators have always been about providing more video choices to subscribers. But the caveat has been those choices are only offered when Comcast makes a deal to carry these new channels. With broadband it's a wide open world. Any video provider - deal or no deal would gain access. This "openness" is a fundamental paradigm change for Comcast and other "walled garden" loyalists.

Surmounting this change to its business and cultural model are in fact Comcast's #1 strategic challenge. How to effectively respond to customers' broadband desires, while maintaining a robust economic and competitive model? When Brian Roberts, and others in the cable industry are finally ready to address the question of how they'll integrate broadband into their TV-based user experience, that will be a keynote well worth watching.

Microsoft grabbed the early PR spotlight at the Consumer Electronics Show (CES), now underway in Las Vegas, announcing a variety of deals across the broadband video spectrum. The deals, announced by Bill Gates in his traditional night 1 keynote, reinforce Microsoft's intentions to play multiple roles in what Gates calls the "first true Digital Decade."

Here's a look at Microsoft's deals and why they matter:

NBCU 2008 Olympics on MSN, using Silverlight

Microsoft and NBC, which has the broadcast rights to the '08 Summer Games from Beijing, announced that MSN would be the exclusive partner for NBCOlympics.com including thousands of hours of live video coverage, and that Silverlight, which is Microsoft's "Flash-killer", would be used. As I mentioned in my "6 Predictions for 2008", the '08 games are going to be the biggest broadband video event yet. The deal gains MSN lots of traffic and Silverlight lots of exposure and downloads, not to mention serious validation as a live streaming platform if it executes well.

ABC/Disney and MGM content on XBox LIVE

In a further move to bolster the premium-quality content available in XBox LIVE (the content offering that accompanies XBox 360), Microsoft announced that both ABC/Disney and MGM would now be providing both SD and HD content. These moves bring XBox LIVE's catalog closer to parity with iTunes, while keeping up the competition with Amazon Unbox and other stores. Separately, Microsoft said that XBox racked up 17.7 million units sold during the '07 holiday season.(correction, Microsoft press release misstated this number. Holiday sales were actually 4.3 million units, bringing cumulative units sold to date to 17.7 million, thx Karl)

XBox users have been remarkable active purchasers and downloaders using XBox LIVE, and previous briefings I've conducted with XBox executives suggest that the initiative has been particularly successful with HD. Since Xbox is purchased primarily as a gaming platform, it serves as a great Trojan horse opportunity for Microsoft to gain broadband access to the TV. Meanwhile, XBox LIVE has served as the deal unit for Zune's library as well, so these moves are important to watch as they benefit Microsoft's efforts to dislodge iPod from its perch as the leading digital media player. Only disappointment here is no ad-supported counterpart was announced for ABC programs, leaving AOL as ABC's only announced broadband syndication partner, as best I can tell.

BT and XBox 360 Integration

Microsoft leveraged Xbox 360 for another convergence play, announcing with BT that the company's "BT Vision" IPTV service would be available for XBox 360 owners as an integrated service offering. This means that no separate set-top box would be required for BT Vision subs. Though the box won't roll out until mid '08, this concept has compelling upside for both sides and could be a nice blueprint for future IPTV deals. It eliminates set-top capex for BT, while providing strong marketing benefits to both parties, helping drive broadband/TV convergence on the back of the popular XBox gaming console.

Showtime, TNT and CNN with new apps on Mediaroom, Samsung supporting Extender

Elsewhere, Microsoft announced that Showtime, TNT and CNN would be creating new apps for Microsoft's Mediaroom IPTV platform, which it says is now installed on 1M set-tops globally. And lastly, that Samsung will support Extender for Windows Media Center, which means that HD content can be sent over wired or wireless-N networks from PC to TV. Extender hasn't caught on yet, but Microsoft is continuing to push it as a bridge device. I've yet to test it, but have that on my list of to-do's.

Taken together, these announcements from Microsoft show the company's vast resources allow it to play a role in all aspects of the broadband era - software, devices, services, content, gaming, etc. Less pronounced in these deals was the company's recently added online advertising prowess, which will soon be applied to broadband video as well. Stay tuned for news on this front as '08 unfolds.

Yesterday's announcement by Netflix and LG Electronics that they are partnering to develop a new set-top box generated a lot of coverage. For me the deal shows at least 2 things. First, there is an endless reservoir of optimism concerning consumers' willingness to adopt standalone devices for broadband-delivered video. And second, that Netflix, which has been all over the board in the last couple years in trying to define a broadband delivery strategy, has seemingly made yet another misstep in this critical area.

Regarding the optimism about standalone devices, as many of you know, I recently wrote about this in a post entitled "Broadband Video on TVs is a Mirage" in which I concluded that these broadband appliances are unlikely to gain widespread market appeal. Though little information was revealed about the Netflix-LG box, for now, I don't see any reason to believe that this new box will be an exception to the logic I laid out in that post. At best I view standalone broadband appliances (e.g. AppleTV, Vudu, Moviebeam, Akimbo, etc.) as appealing to only a small sliver of consumers.

My logic applies to Netflix-LG as follows: how many people are realistically going to shell out $400 (assumed price) for a new box, plus spend the time involved to install it, when the principal benefit is to be able to watch a small subset (6K out of Netflix's current 90K catalog) of content Netflix already makes easily available on the robust DVD format? I'd say maybe 10% of Netflix's current base of 7 million, max. That would be 700K boxes TOTAL - hardly the kind of numbers that make a CE executive's eyes pop.

A greater issue is that this new box seems to represent just the latest in a pattern of dubious moves by Netflix, coupled with poor communications, regarding how it intends to gracefully migrate from its current DVDs-through-the-mail approach to succeed in the broadband era.

For the last two years Netflix has publicly appeared to jump from one broadband approach to the next. For example, yesterday's box announcement was accompanied by news that Anthony Wood, whom Netflix brought on board just 8 months ago as its V.P. of Internet TV, would be departing from the company, reversing Netflix's previous plan of developing its own box (which itself was an ill-considered idea).

The LG box approach continues Netflix's pattern of cloudy planning and communications. On a day that should have been all about articulating why this new co-developed LG box is, at last, the correct approach, Reed Hastings, Netflix's CEO seemed to veer completely off message in his remarks to the NY Times, stating that "We want to be integrated on every Internet-connected device, game system, high-definition DVD player and dedicated Internet set-top box. Eventually, as TVs have wireless connectivity built into them, we'll integrate right into the television."

Continuing my analysis of the video search space, just before the holidays, I had a briefing with Tim Tuttle, CEO and co-founder of Truveo, to preview some information the company released today. Started in early 2004 and acquired by AOL in December, 2005 qualifies Truveo as one of the main established players in video search.

I've been focusing a lot on this area as I believe that broadband video navigation is going to follow a similar pattern as general web content navigation -- with search taking center stage.

Truveo's growth in '07 reflects the overall surge of interest in broadband video. On the demand side, Tim reports that Truveo experienced a 20x increase in number of queries vs. a year ago. And on the supply side, Truveo has experienced a similar jump, now indexing 100 million videos, up from the 5-10 million videos it indexed at the beginning of '07.

Truveo now reaches 50 million unique visitors/mo, through its own site and across a network of partner sites where Truveo search is embedded, including AOL, MSN Video, CNET Search, Time Warner Cable, Qwest, Netvibes and many other smaller players which use Truveo's API. The company doesn't break out uniques by site, but with its recent international emphasis, Tim believes that at least 50% of its traffic now comes from outside the U.S.

A big shift Truveo has noticed in just the last 6 months is toward user searches for network TV programs and other professional video. This has displaced some of the searching for viral videos that was the traditional core. From my perspective, this is further evidence that the networks are succeeding with their online distribution initiatives. Tim sees this trend continuing in '08, as users' expectations for finding high-quality video online continues to grow.

Tim believes this shift is particularly beneficial to Truveo as it specifically built its "visual crawling" technology to find video that's in Flash or Ajax sites, and therefore hard for traditional search techniques to find.

While Truveo still operates with a fair amount of independence from its base in the Bay area, AOL seems to be recognizing more and more its strategic value. AOL has recently begun raising the visibility of Truveo in the overall AOL experience and will continue to do so.

Meanwhile on the revenue front, Tim said that the AOL acquisition has allowed Truveo to "de-prioritize" for a time its focus on revenue growth, instead concentrating on expanded reach. Despite this, Truveo is intent on capitalizing on its traffic and Tim sees the recent flurry of activity around contextual targeting as playing right to Truveo's strengths. We agreed there is much in flux about broadband video advertising and that formats beyond pre-rolls are essential. Of course what those are remains uncertain - overlays or something else?

Happy New Year and welcome to 2008!

With many of you taking last week off, a quick review of what you might have missed is in order:

1. iTunes-Fox download-to-rent movie deal rumors

The FT (reg. required) reported that Apple and Fox are close to announcing a deal under which Fox movies would be available for download-to-rent on iTunes. This would be a deviation from Apple's policy of download-to-own only. Call me a skeptic, but while some analysts think this deal is a big breakthrough, for me it's more of a ho-hum, for at least the following reasons.

Download-to-rent offerings have been around for a while (e.g. Movielink, CinemaNow, Amazon Unbox, etc.) and none have been grand slams. Admittedly none have enabled playback on an iPod. Yet, while many think iPod ubiquity is a killer advantage for iTunes rentals I disagree. It's one thing to watch a 30 or maybe a 60 minute TV show, but watching a 2 hour movie on an iPod? That's only appealing for a tiny minority of iPod owners. Further, while the rumored $2.99 or so price point is attractive, download-to-rent movies will come with the same cumbersome business rules (e.g. 24 hour viewing, window limitations, finite device sharing, etc.) that cause significant customer inconvenience. And DVDs, available for rental or purchase still offer superior portability and flexibility to any download model. Movie downloads' time will come, just not yet.

2. Wal-Mart Folds its Video Download Store

And speaking of download challenges, Wal-Mart decided to unceremoniously close its video download store less than a year since its launch. While it pointed its finger at its vendor HP, which decided to discontinue support for the technology underlying the Wal-Mart store, there are certainly other white label platform alternatives available if Wal-Mart had conviction about the download store's potential. It clearly didn't and so it folded its tent. More evidence of the challenges facing paid downloads.

3. YouTube's Top 2007 Videos Announced

Meanwhile over in YouTube land, the hits keep coming. YouTube released its top 10 list and the year's most popular video, with almost 23 million views, was "Battle at Kruger", which shows the fight to save a baby water buffalo from a group of lions and a crocodile. It's fascinating if you haven't seen it. Other top videos on the list were "Chocolate Rain", "Obama Girl" and "Leave Britney Alone", among others. If nothing else, this diverse group of videos shows that UGC is alive and well.

4. Queen Elizabeth and Roger Clemens Seek Out YouTube

And UGC wasn't for pure amateurs either. YouTube's reach was once again recognized as 2 celebrities, Queen Elizabeth and Roger Clemens posted videos serving their individual purposes. In a first for the 81 year-old queen, she posted her popular Christmas message on YouTube, augmenting its traditional broadcast. The Royal Channel - "The Official Channel of the British Monarchy" - also launched on YouTube.

Clemens, who's been fingered in baseball's steroid controversy, saw fit to post his proclamation of innocence on YouTube. Clemens is adamant in his own defense, and clearly believes that reaching out to fans with video instead of the usual press release is more compelling.

Trivia question: whose video do you think drew more views?

Answer: It's not even close: 741,000 for the queen vs. 274,000 for Clemens.

5. MTV Delivers 1.2 Billion Streams in '07

MTV self-reported that MTV.com, VH1.com and CMT.com delivered more than 1.2 billion video streams in '07, an increase of 30% vs. '06. It also reported the top 30 music videos it streamed, and number 1 was Gimme More by Britney Spears. Broadband is offering MTV an opportunity to return to its brand roots as the go-to destination for music videos even as more and more of the on-air experience is dominated by non-music video fare. As I wrote a couple months ago, music videos are becoming a sought-after new revenue stream for labels and aggregators. We'll see more emphasis on music videos in '08.

As the year winds down, I'd like to extend my best holiday wishes to all of you.

I'll be taking time off next week for some long overdue R&R. I'll post to the site if something interesting comes up, but I'm not expecting too much excitement as pretty much everyone I've spoken to plans to take at least some time off to recharge their batteries.

VideoNuze is now the ripe old age of 2 1/2 months. It's been a whirlwind, and I'd like to thank everyone who has emailed me with terrific feedback - it's extremely gratifying! I love hearing from folks I already know, and also the many that I don't, letting me know that VideoNuze is making a really substantive contribution to their understanding of the broadband video space as well as impacting their decision-making. I also encourage all of you to share your thoughts on the site by posting timely and thoughtful comments to the site. Everyone benefits from hearing your opinions.

I've also heard from many of you who want to brief me on new startups or existing ventures. It's impossible for me to be aware of everything, so keep those pitches coming!

In '08 you can also expect more in-depth topical analyses, guest columns, interactive features and a few other surprises I have up my sleeve. As always, I welcome your feedback and suggestions - what's working, what's not, and what else is needed.

Last but not least, I want to extend my sincere thanks to VideoNuze's awesome sponsors who make all this possible. Currently they are Akamai Technologies, ExtendMedia, thePlatform, Voxant, Atlas Venture, Brightcove, Digitalsmiths, ICTV and PermissionTV. Each is making a terrific contribution to the broadband medium and I encourage you to learn more about all of them.

I've been very encouraged by the many emails and phone calls I've received from prospective sponsors. VideoNuze is quickly being recognized as the premier online publication for reaching busy broadband video executives. This was another key goal of mine. Going into '08, VideoNuze will be welcoming a number of new sponsors!

In closing, I'd like to wish you peace, prosperity and much happiness in the new year.

Regards,

Will

I continue to be impressed with Showtime's innovative use of broadband video to increase fan loyalty while adding new value to their programs and bolstering their brand image.

The latest example is a mini-site built for its "Dexter" season finale featuring an exclusive video of the 3 executive producers chatting about the finale and the program's story lines, with comments from various actors interspersed. The video premiered after last Sunday night's finale and is paired with a chat capability powered by Meebo, allowing rabid fans to interact with each other.

I caught up with Rob Hayes, SVP of Digital Media at Showtime and his colleagues Ken Todd and Michael Kuritzky to learn more about their motivation and how the mini-site has performed. It sounds like a resounding success. Video views are running 5 times greater than any one clip offered on the Showtime web site and the chat room has generated tens of thousands of users. There's also a sweepstakes on the site, which requires an email address to sign up. Rob reports that these sign-ups have increased Showtime's email list by 30% alone.

Showtime's motivation was to forge a deeper connection between fans and the program by providing ongoing interaction. So while there's no direct monetization of the mini-site, Rob said next time around, they could easily insert pre-rolls or overlays. And that means that Showtime, a stalwart premium programmer, would be leveraging broadband to create a new advertising revenue stream.

All of this demonstrates how this relatively modest video initiative is at the center of generating multiple rewards. It provides new value for fans. A basis around which to interact. Email addresses to use for ongoing communications. A new monetization path. Lessons learned for how to succeed in a multi-platform environment. An enhanced brand image. And the list goes on. Kudos to Showtime for continuing to be an innovator and showing others that broadband success comes in all shapes and sizes.

With 2007 wrapping up, it's time to look ahead to the new year and make 6 predictions about what's ahead for broadband video in 2008. In general, I'm extremely optimistic about broadband's potential in the new year. To be sure, there are lots of challenges ahead, but much to look forward to.

Here's what my crystal ball is telling me:

1. Advertising business model gains further momentum.

Many of you have been hearing me beat this drum for a long time now; I'm just going to go right on beating it in 2008. Advertising is the primary business model for broadband video and this will only continue to grow in importance as the year goes along.

All the elements are falling in place for the ad model's momentum. In '08 we'll see more video consumption, especially of high-quality video, and more syndication, all of which will lead to more ad inventory. But 2008 is about more than just a quality and volume; it's also about better targeting, better formats, more sophisticated sales processes and more interactivity/community building around video. I'm impressed with the range of companies pursuing each of these areas and expect them to gain lots of traction.

2. Brand marketers jump on broadband bandwagon.

2007 marked the continuation of brand marketers creating their own broadband video-centric destinations, wrapped in increasingly clever campaigns. I track these initiatives very closely and wrote about many of them (Dell and Gap, Frito-Lay, Neiman-Marcus, Smirnoff, Dove, CIT, Campari, Universal Pictures, Showtime, etc.).

In 2008, we're going to see a proliferation of these direct-to-consumer broadband-centric marketing campaigns. Marketers and agencies across the board are coming to recognize how important broadband is for engaging their audiences in a way that TV spots simply can't match. Then factor in the high cost of TV and the rampant use of DVRs to ad-skip. I'm expecting lots of creativity from brand marketers in '08 as they push deeper into broadband, further pressuring the traditional TV ad business.

3. Beijing Summer Olympics is a broadband blowout.

NBC plans to stream an unprecedented 2,200 hours of live Olympics coverage at NBCOlympics.com. All of this is going to completely redefine how broadband adds new value to live sporting events. In particular, NBC's coverage is going to shine a very bright light on the appeal of broadband to deliver multiple simultaneous events in their entirety as they occur, instead of the usual chockablock, tape-delayed coverage. It's also going to demonstrate how well-suited broadband delivery is for niche but passionate audiences.

If NBC executes well, I think it has the potential to open up a whole new horizon in how broadband can augment (and in some cases, maybe even replace) broadcast coverage of sports events. For example, golf is a sport that cries out for improved coverage that broadband can offer. Instead of cutting back and forth to players' key shots, broadband would allow for cameras to stream all players' full rounds simultaneously, with fans able to watch just their favorite player, while also keeping an eye on the main feed. Bottom line, the '08 Olympics is going to show sports and live events producers everywhere what broadband can offer them too.

4. 2008 is the "Year of the broadband presidential election."

What TV was to the 1960 presidential campaign is what broadband is going to be to the '08 campaign. Broadband's impact has already been felt. Virginia Gov. George Allen's campaign was aborted after he was caught uttering a racial slur in his classic "YouTube moment." CNN has already hosted joint debates with YouTube. Hillary Clinton announced her candidacy in a video posted on her web site and also just launched TheHillaryIKnow.com with a passel of video testimonials about her softer side. Barack Obama's web site brims with video from the trail.

In '08 broadband video will be interweaved into the fabric of the major candidates' campaigns. It won't be an augment, it will be a central feature for reaching voters, particularly young ones. Broadband offers an unprecedented inexpensive way to convey the candidates' emotions and connect with voters. Presidential campaigning will never be the same again.

5. WGA strike fuels broadband video proliferation.

As the writers' strike slogs on, it is inevitable that many writers and producers (especially below the top tier) are going to look upon broadband as an attractive new medium to ply their trade. The signs are already there. It will be an ironic twist that the strike, which is centered on reallocating "new media" revenues, is going to stoke more interest in broadband productions, but outside the traditional apparatus.

I can't put my finger on exactly how this is going to unfold, but I think I can say with confidence that there is a lot of smart money eager to place bets on broadband video content. Writers and producers with track records and plausible plans will get funded. Quarterlife, Next New Networks, FunnyOrDie are all pre-strike examples of this. The strike only accelerates things.

6. Broadband consumption remains on computers, but HD delivery proliferates.

I wrote about this in detail just last week: regrettably broadband video is NOT coming to the masses' TVs any time soon. My guess is that 99.9% of users who start the year watching broadband video on their computers (or mobile devices in some cases) will end the year no closer to watching broadband on their TVs. Some initiatives will gain some ground, but on the whole, don't expect any mass adoption of devices or mechanisms to converge broadband with TVs in '08.

Nonetheless, do expect that HD or near HD-quality broadband video is going to proliferate in '08. A survey I worked on with a client, whose results will be shared in early '08, will attest to strong content provider interest in HD broadband video. That means that viewer experiences are only going to improve, and for those with big monitors and/or easy chairs, it may actually start to feel like this whole connect-the-computer-to-the-TV is unnecessary anyway.

So there you have it. Post a comment and let me know if you agree or disagree!