VideoNuze Posts

On Monday I wrote that a key mission of mine while attending the Digital Hollywood Fall conference in LA this week was to dig into what impact the economic crises is having on the broadband video industry. Specifically I was focused on three things: financing, staffing and customer spending effects.

I wasn't terribly surprised by what I heard; people are quite nervous. Most significantly they're nervous about financing. Many I spoke to cited the recent Sequoia Ventures presentation which offers a very harsh assessment of the landscape for financings and startups. I heard a lot of lukewarm responses like "we'll have to see what happens" from folks when asked about their ability to pursue future financings.

That said, some deals are still being done. One in particular is a new venture debt deal announced this morning by Clearleap. I caught up with their CEO Braxton Jarratt at DH, and one of my takeaways from that meeting was that venture investing may well be returning to its roots favoring technology-oriented companies that address well-understood industry pain points.

This shift would not bode well for content-oriented startups where investors are bet more on the startup's ability to create enterprise value from audience generation and ad revenue. Evidence of belt-tightening in the content world abounds, with the latest news of layoffs coming from 60Frames. All signs from DH suggest this is going to be one of the hardest hit sectors, as business models remain nascent and ROIs uncertain (one executive told me that every content startup has already eliminated at least 10-20% of their headcount, even if you haven't read about it publicly). While there's no shortage of interest in broadband content creation, the question is whether the dollars will be there to fund these ventures.

Closely tied to content's success is the video management/publishing platform space. I had a numerous conversations with folks about the large number of competitors and concern that both customer spending slowdowns and limited financing are going to force a shakeout. These companies are being advised to watch their cash carefully.

Lastly, there was lots of discussion, especially on panels, around ad spending in this climate. Optimists felt that the fundamentals of consumer behavior embracing broadband consumption would force advertisers to continue their spending in broadband. Conversely many pessimists said that friction, lack of clear ROIs, a flight to safety (i.e. a bias toward TV advertising) and the general slowdown would all conspire against broadband ad spending. It's hard to ignore the pessimists' arguments here; my hope is that any pullback is relatively shallow.

I've been hearing from a number of colleagues about Kaltura, an open source video management platform, and finally got a chance to learn more in a recent briefing with Lisa Bennett, the company's director of marketing.

VideoNuze readers know I've spilled lots of ink covering the broadband video management and publishing platform space. I've continued to express surprise at the sheer number of companies in this category and the money that's been poured into it by eager venture capital investors. To date there's been a lot of business to go around; of course now the nagging question is whether the economic downturn is going to force an early shakeout.

Kaltura will be putting additional pressure on other competitors if for no other reason than its intention to offer a viable, low-priced alternative video platform. The company is positioning itself as a cost effective and flexible alternative to bigger proprietary platforms on the market. For now, it's not really an apples to apples comparison, as Kaltura has not yet aggressively pursued big media company deals.

One of Kaltura's key differentiators is what Lisa calls its "architecture of participation." This is evident with its range of community-oriented features, user-generated upload capability, online video editing and emphasis on engaging users with projects and collaboration. A perfect example of this latter piece is a deal the company's announcing today where the Coca-Cola Blastbeat program in Ireland (a sort of online, teen-centric battle of the bands project) is using Kaltura's platform.

Adding further weight to its user participation emphasis are deals with the Wikimedia Foundation and Wikia for a Kaltura extension allowing wiki builders to easily add video to their sites. Another is Kaltura's recent release of a plug-in for WordPress, one of the most popular blogging platforms. Lisa said the company has a number of other projects of this sort on its roadmap, as it tries to embed itself as the go-to video platform for the large self-serve ecosystem of user-generated content.

Kaltura's relatively new on the video management scene and there's no shortage of competition. Still, its open source approach gives it a lot of pricing flexibility plus leverage in building out its platform. These are real assets in an economic environment where a segment of content providers will no doubt be looking for viable, cost-effective alternatives.

What do you think? Post a comment now!

This week I'll be at Digital Hollywood Fall in LA, the first big industry gathering I've attended since the economic crisis hit. I've been trying to keep my finger on the pulse of what the crisis means for the broadband video industry. Get-togethers like this, with lots of time for informal, off-the-record chats are great for getting a sense of what colleagues think is on the industry's horizon.

Here are 3 interrelated areas I'm most interested in learning about:

Financing

With the credit markets frozen and stock markets tumbling, the availability of financing is topic number one. This is especially relevant for the industry's many earlier stage companies, reliant on private financing from venture capitalists, angels and other private equity investors.

By my count we've seen at least 9 good-sized financings announced since around Labor Day, when the financial markets started coming unglued: Howcast ($2M), blip.tv (undisclosed), Booyah ($4.5M), BlackArrow ($20M), HealthiNation ($7.5M), Adap.tv ($13M), BitTorrent ($17M), Conviva ($20M), and Move Networks (Microsoft, undisclosed). The rumor mill tells me there are at least 2-3 additional financings underway currently. Really smart money (e.g. Warren Buffet) knows that downturns are exactly the time to invest. However, the reality can often be quite different. What's the experience of industry participants trying to raise money these days?

Staffing

In any downturn, the first expense to get cut is people. Headcount reductions are often done quietly, with word later leaking out to the public. Last week brought news of trimming at three indie video providers, Break (11 people), ManiaTV (20) and Heavy (12). More are sure to follow at other companies. As I've written before, the indies are among the most vulnerable in this environment, likely leading many to find bigger partners for both distribution and monetization. But whether layoffs will hit other industry sectors such as platforms, ad networks, CDNs, mobile video and big media is still to be determined by...

Customer spending

Central to the question of how deeply the financial crisis spirals is the interdependence of customer spending at all levels of the economy. Thinking you're safe because you're a B2B company is meaningless if your customers are B2C companies cutting back due to reductions in consumer spending. When consumers tighten their belts that leads to advertisers reducing their spending which leads to media companies scaling back which leads to technology vendors feeling the impact. The reality is we're all in this together.

In fact, the more I read about the economy's fragile condition, the clearer it is that the primary way out is rebuilding confidence and renewed spending at all levels. If a spending paralysis occurs, it could be long road ahead. While there's no reason to believe that consumers are going to slow their consumption of broadband media, the ability to monetize it and innovate around it would be dampened if spending hits a wall.

These are among the topics I'll be looking to discuss at Digital Hollywood this week. If you're attending, drop me a note so we can try to meet up and/or come by the session I'll be moderating on Wednesday at 12:30pm.

What do you think? Post a comment now!

This morning Twentieth Century Fox and Metacafe are announcing "The Thirty Second Film Contest," which challenges contestants to put together a winning thirty second spot for the epic film "Australia," opening on November 26th. Though not yet fully live, I like the direction of this initiative a lot, and believe it provides an innovative example of how to blend traditional film marketing techniques with broadband-enabled audience participation.

Contestants visit the promotional site hosted at Metacafe, a large aggregator of short-form entertainment, to obtain film-related assets provided by Fox. These can be augmented with the contestant's own music, voiceovers, sound effects and artwork to create a highly original entry. Entries are submitted through Metacafe and will be judged by the folks at Fox and Bazmark (Australia director Baz Luhrman's company).

The contest is actually meant to be quite serious and semi-professional; Luhrmann has also created a whole library of videos about film-making, which a student of the art can use to help shape his/her entry, or just watch to learn. The grand prize is enticing: a trip for two to Australia, another to NY for a private screening/meeting with Luhrmann and inclusion of the winning entry on the film's eventual DVD.

The Australia contest builds on a similar one that Metacafe and Universal offered for "The Bourne Ultimatum" last year, which I reviewed enthusiastically here. The concept also follows on previous posts I've done about the value of what I call "purpose-driven user generated video" or "YouTube 2.0" opportunities for users to create videos that have actual business value. I continue to believe that user-submitted videos which go beyond goofball entertainment are a huge area of broadband industry opportunity.

The Australia contest is a winner on multiple levels as it; creates pre-release buzz for the film, allows fans and aspiring artists to get involved and showcase their work, taps into a large base of original (and free!) ideas to help promote the movie, and introduces a fresh, updated approach to film marketing that is sorely needed for differentiation.

This week I've been talking a lot about engagement and why it's so critical in the broadband era. While media and entertainment companies must always focus on driving ratings points or a big opening day box office, the ways to do so are changing. The key change I see is that films, TV programs and other entertainment must become part of a larger experience - complete with multifaceted engagement opportunities - rather than just a one-off moment of audience consumption. Broadband enables this shift in a big way. More marketers need to take advantage of the possibilities.

What do you think? Post a comment now!

Even before the recent economic crisis, broadcast networks were facing unprecedented challenges. An article in yesterday's WSJ, "Network Audience Keep Eroding" caught my attention as it highlighted the current season's viewership shortfalls. The article pointed out that 4 of the 5 major broadcasters have suffered double-digit percentage declines in same day prime-time viewing among 18-49 year-olds as compared with a year ago.

To me, the overarching thematic challenge that broadcasters now face is how to successfully address the core 18-49 year-old audience. This group is important not only for traditional reasons relating to its appeal to advertisers, but also because it represents the leading edge of audience behaviors that will only accelerate in the future.

So what should broadcasters be doing? Here are three suggestions:

Broaden definition of programming and brand promise

Broadcasters must re-imagine what constitutes compelling visual entertainment. The traditional paradigm of 30 and 60 minute time blocks, scripted to accommodate pre-set advertising pods and programmed sequentially on specified evenings is increasingly meaningless in an on-demand world. Programming should be looked at as anything that entertains the audience, on their terms, period. This is particularly relevant for 18-49 year-olds who arguably have the most entertainment alternatives.

Though it breaks with traditional success formulas, network executives should be excited by this, as it loosens creative constrictions. Further, it offers up the opportunity to expand a network's "brand promise" to become positioned as a "wherever, however, whenever entertainment provider." Going forward networks should view themselves as being in the entertainment business, not just the TV business. This would also help bring advertisers along, as they too are suffering from diminished consumer access.

Embrace new distribution platforms, and help drive new development

In the above vein, broadcasters must fully embrace new distribution platforms like broadband, mobile, VOD and DVR. Creating programming specifically for these platforms, suited for each one's strengths and weaknesses is essential. Simply repurposing TV shows for these platforms is insufficient to meet 18-49 year-olds' entertainment appetites.

Further, broadcasters need to take a leadership role in how these new platforms evolve. It is not enough to accept what technology and service providers choose to prioritize and offer. Instead broadcasters must have their own roadmaps and requirements, and work actively to see that their needs are met. This is a new role for broadcasters and they need to learn to embrace it.

Focus on experience, not just ratings

Broadcasters need to look at their shows as the hub of an ongoing and immersive entertainment experience, not just a once per week interaction to be measured in ratings points. A network's "customer relationship" is repeatedly put on hiatus between episodes (and worse, between seasons!), thus undermining the viewer's loyalty and engagement. A friend recently lamented to me that NBC is offering just 14 new episodes of "The Office" this season. Realistically, what kind of customer relationship should NBC expect to have when so many other weeks of the year pass without offering a product to its customers?

Broadcasters have incredibly compelling assets that can be the basis for deeper audience engagement and experiences. Mining all the various interactive tools and capabilities which 18-49 year-olds already regularly engage with are crucial to bonding with audiences and creating excitement and ongoing loyalty. To be sure, some of this is already happening, but in perusing the networks' web sites it's obvious there's a lot more that can be done.

Final Thoughts

Broadcasters are getting squeezed by audience fragmentation, new technologies and the shift to on-demand consumption. The 18-49 year-old cohort is ground zero for networks to maintain their future health. What the networks choose to do, and how well they succeed at it is surely a business school case study in the making.

What do you think? Post a comment now!

EveryZing, a company I wrote about last February, is announcing the launch of its MetaPlayer today and that DallasCowboys.com is the first customer to implement it. My initial take is that MetaPlayer should have strong appeal in the market, and could well shake things up for other broadband technology companies and for content providers. Last week I spoke to EveryZing's CEO Tom Wilde to learn more about the product.

MetaPlayer is interesting for at least three reasons: (1) it drives EveryZing's video search and SEO capabilities inside the videos themselves, (2) it provides deeper engagement opportunities than typically found in other video player environments and (3) it enables content providers to dramatically expand their video catalogs, while maintaining branding and editorial integrity.

To date EveryZing's customers have used its speech-to-text engine to create metadata for their sites' videos, which are then grouped into SEO-friendly "topical pages" that users are directed to when entering terms into the sites' search box. Speech-to-text and other automated metadata generating techniques from companies like Digitalsmiths are becoming increasingly popular as content providers continue to recognize the value of robust metadata.

MetaPlayer takes metadata usage a step further by creating virtual clips based on specified terms, which are exposed to the user. A user's search produces an index of these virtual clips, which can be navigated through time-stamped cue points, transcript review, and thumbnail scenes (see below for example). The virtual clip approach is comparable in some ways to what Gotuit has been doing and is pretty powerful stuff, as it lets the user jump to desired points, thus avoiding wasted viewing time (e.g. just showing the moments when "Tony Romo" is spoken)

Next, MetaPlayer enables deeper engagement with available video. Yesterday, in "Broadband Video Needs to Become More Engaging," I talked about how the importance of engagement to both consumers and content providers. MetaPlayer is a move in this direction as it allows intuitive clipping, sharing and commenting of a specific video clip within MetaPlayer. Example: you can easily send friends just the clips of Romo's touchdown passes along with your comments on each.

Last, and possibly most interesting from a syndication perspective, MetaPlayer allows content providers to dramatically expand their video offerings through the use of what's known as "chromeless" video players. I was first introduced to the chromeless approach by Metacafe's Eyal Hertzog last summer. It basically allows the content provider to maintain elements of the underlying video player, such as its ability to enforce a video's business policies (ad tags, syndication rules, etc.), while allowing new features to be overlayed (customized look-and-feel, consistent player controls, etc.).

MetaPlayer takes advantage of chromeless APIs available now from companies like Brightcove, and also importantly YouTube. For example, the Cowboys could harvest select Cowboys-related YouTube videos and incorporate them into their site (this is similar to what Magnify.net also enables). With the chromeless approach, the Cowboys's user experience and their video player's branding is maintained while YouTube's rules, such as no pre-roll ads are also enforced.

To the extent that chromeless APIs become more widely available, it means that syndication can really flourish. The underlying content provider's model is protected while simultaneously enabling widespread distribution. All of this obviously leads to more monetization opportunities through highly targeted ads.

Bottom line: EveryZing's new MetaPlayer addresses at least three real hot buttons of the broadband video landscape: improved navigation, enhanced engagement and expanding content selection/monetization. All of this should give MetaPlayer strong appeal in the market.

What do you think? Post a comment now!

Notwithstanding the countless times I've received emails with links to video clips or visited social networking pages where video is embedded, I've often had the sense that true social engagement around premium quality video has been lacking.

"Engagement" is one of those nebulous Internet words that can mean many things to different people. To me, the most appropriate online engagement opportunities should be modeled on how we have traditionally engaged with offline media. Some relevant offline examples that come to mind include recommending a movie to a friend, clipping a newspaper article to send to a colleague, chatting informally with friends and family during a TV show or sharing opinions about favorite actors and actresses over drinks.

As consumers shift their viewing to broadband, the key to engagement is to enable users to effortlessly and intuitively emulate some or all of these behaviors. I concede that's easier said than done. Yet in addition to existing efforts, I see new signs that premium video sites are starting to understand how strategic it is for them to incent user engagement. New steps are being taken to make deeper, more consistent engagement a reality, not just a goal.

For example, just yesterday CBS announced its "Social Viewing Rooms" which allow users to view programs together while commenting, interacting and finding each other (note this is something that Paltalk and others have pursued for a while). It wasn't clear from the announcement, but I think a critical success factor for CBS will be allowing users to bring existing friends (from Facebook, MySpace, etc.) into the rooms, rather than requiring new relationships to be built.

I found another example in a presentation I recently attended by Ian Blaine, thePlatform's CEO. In it, he made clear that his company is planning a big push into engagement-oriented features ranging from recommendations to ratings to social networking via sister company Plaxo. Still another initiative is "MediaFriends" a clever application that's coming soon from Integra5 which converges text messaging and social networking with viewing across multiple screens. Finally, another is from Volo Media, which is today announcing a plug-in for iTunes that allows one-touch sharing, bookmarking and more, helping open up a window from iTunes into the larger web environment.

All of these activities are in addition to other social media capabilities being brought to premium video from companies like KickApps, PermissionTV, Brightcove, Gotuit and Magnify.net. Then of course there's the steady migration of premium video into YouTube, which is the granddaddy of video sharing and social engagement.

Broadband is much more than an exciting new distribution outlet for video providers, it's also a whole new platform for extending social behaviors that are deeply valued and highly ingrained in all of us into the virtual world. Embracing opportunities for deeper engagement with and around premium video means thinking of viewers more as participants and less as passive audiences. When done right the payoffs in engagement, loyalty, viewing time and monetization will be substantial.

What do you think? Post a comment now!

Last week Apple announced that it has sold 200 million TV episodes to date and also that all four of the major broadcast networks are now providing HD versions of their prime-time shows. These periodic updates are always welcome as Apple is notoriously parsimonious with its iTunes numbers, making it hard for analysts to get a real handle on how the store is doing.

This latest total got me to thinking about the relative sizes of online aggregators of prime-time TV shows. Below I've made some calculations comparing the revenues of iTunes, the largest paid download store, with the revenues of Hulu, likely the largest free, ad-supported streaming site for TV programs. The conclusion is clear: for now at least, iTunes is a far larger business, demonstrating that despite the obvious appeal of free video, a segment of consumers are still plenty willing to buy and collect individual episodes.

iTunes calculations

I estimate iTunes is currently generating about 10 million TV program downloads/month. TV program downloads officially began just about 3 years ago with ABC's initial iTunes partnership. There's obviously been a ramp over the years, so if you assume 50% of the volume came in the first 3 years combined, and 50% in the 10 months of '08 alone, that produces 100 million TV program downloads year to date or about 10 million downloads/month. (that actually synchs with the fact that Apple last disclosed 150 million total TV program downloads in May, '08, 5 months ago).

To grossly simplify, let's say the download price is $2/episode. I know that doesn't take account of the $3 HD downloads iTunes launched last month (of which it says it sold a million) or the varying prices of international downloads. At $2/episode iTunes does $20 million/month in gross download revenues from TV programs.

Hulu calculations

Conclusions

Though the above numbers need to be taken with a grain of salt, they suggest there's a huge gap in TV program-related revenues between iTunes and Hulu. Now of course iTunes has been around a lot longer than Hulu, and of course it benefits from the massive popularity of the iPod, and more recently the iPhone. We also can't forget there are lots of places to watch free TV episodes online while there are comparably fewer online stores to purchase and download high-quality episodes. So it might actually be fairer to compare the monthly revenues of ALL the online aggregators (and the networks' own sites too) to iTunes to get a clearer comparison.

Still, I think comparing iTunes and Hulu does show how nascent the streaming TV market is today. In the long-run, I'm a believer that free, ad-supported trumps a la carte paid downloading. But for now, when it comes to real revenues - which for many is the only metric that really matters - it's no contest.

What do you think? Post a comment now!