VideoNuze Posts

Broadband-delivered video keeps popping up in unexpected places, offering non-video companies unique engagement and creative opportunities.

The latest example to hit my radar is Shell Oil, the energy giant which is nobody's idea of an entertainment powerhouse. It has released its second documentary-style/fictionalized film entitled "Clearing the Air." This follows last year's "Eureka" release. Whereas "Eureka" was inspired by an actual Shell employee's work, "Clearing the Air" seems to be a composition, and is the simplified story of how Shell developed "GTL" (Gas-to-Liquid) technologies, with a narrative shaped by a subtle romantic relationship (sound intriguing?).

Regardless of your feelings about big oil companies, both films show how corporations are using broadband to pioneer new ways of getting their messages out and engaging their audiences.

I found out about "Clearing the Air" from a TV ad which prompted me to go online and watch. This itself was a nice bit of cross-platform promotion. At the site, "Shell Real Energy World" you can watch the new film and "Eureka" and learn more about Gas-to-Liquids (GTL) through additional collateral. "Clearing the Air" is a well-produced 7 minute film shot on multiple locations. No credits are given, but this was clearly conceived and executed by experienced professionals.

Some may dismiss these films as pure propaganda, and I'll admit it's tempting to do so. Big oil companies are no strangers to the tools of public relations to help massage their corporate images. But regardless of how you feel, one thing's undeniable: broadband offers brands a whole new mechanism to influence audiences. For those used to condensing their messages into a 15 or 30 second formulaic TV spots that represents a sea change and a world of opportunity. For agencies and creative types, the emergence of brands as legitimate producers of high-quality of video means adapting to a very different landscape.

The announcement a couple of weeks ago that YouTube was partnering with TiVo got me to thinking that YouTube is probably the best friend that so called "over-the-top" or "cable bypass" aspirants could have.

As a quick refresher, "over-the-top" and "cable bypass" refer to the emerging category of devices and service providers seeking to bring broadband video to the consumer's TV, but without the involvement of existing video providers such as cable and satellite. Some of these efforts (Apple TV, Vudu and Internet-enabled TVs) are positioned as augmenting incumbent providers, while some (Building B, others) are meant to compete directly.

Today's players share the common trait of being closed, "walled gardens," offering only certain content that they select. This contrasts with the open Internet/broadband model, where users are able to access any content they choose. Many of you know that I have been a strong proponent that open is the winning competitive path for aspiring over-the-top players.

If the over-the-top crowd adopts the open approach, YouTube is their perfect ally; it is the best-known brand name in broadband video, has the largest library of both user-generated and increasingly premium video and has huge loyalty. Positioned properly it could be a killer value proposition for over-the-top players. I've previously argued that Apple missed the boat by not adopting this positioning for Apple TV.

I talked last week with David Eun, VP of content partnerships at Google and Chris Maxcy, head of biz dev for YouTube, and they both made clear that the goal is to morph YouTube from a consumer destination site to a full-fledged video platform distributing video everywhere - devices, mobile, web sites, others. To this end, YouTube recently published an expanded set of APIs to allow 3rd parties to gain easier access to YouTube's content. This of course is great news for over-the-top devices, who should have considerable flexibility for how to incorporate YouTube into their offering. For now TiVo is leading the way in offering YouTube, albeit to a very small audience.

If you were wondering whether YouTube or Google itself will enter the device business, that seems unlikely. David and Chris were clear in saying that devices are not their core competency, and they'll leave it to others to decide how to implement the YouTube APIs and create and test various user experiences. Meanwhile with more premium content flowing into YouTube, its value as an over-the-top partner only increases.

What do you think? Post a comment!

Closing out another busy week, here are 3 diverse broadband video snippets that hit my radar in the past few days:

1. YouTube Drives the Political Newscycle

Back in December, in 6 Predictions for 2008, I suggested that "2008 is the year of the broadband presidential election." This seems to become more evident with each passing week. I find that particularly when watching cable news, YouTube's influence just keeps on growing.

For example, I'm a fan of "AC360" on CNN, which I try to catch at 10pm each night. This week the show was constantly replaying the YouTube videos of Rev. Jeremiah Wright that have dogged the Obama campaign. Conversely, a few weeks ago, Obama got a great tailwind from the massive attention paid to the viral "Yes We Can" music video sensation by will.i.am. That of course was on top of the earlier "Obama Girl" phenomenon. Separately, the McCain campaign just yesterday fired a campaign worker for posting a controversial video on YouTube about Obama and race. This too was covered on AC360 last night. Then of course there were the YouTube co-sponsored debates, offering video-based questions that were constantly replayed afterward.

The point of all this is that broadband video has turned election coverage upside down, making it incredibly hard for candidates to control the political newscycle. The "democratizing" effect of YouTube means that on any given day, at any given moment, something may get posted which diverts the campaign's attention. And with major media outlets paying such close attention to YouTube, everything is immediately amplified. Not since the early 1960s when TV began influencing presidential politics have we seen a new medium have such a profound impact on an election. And we still have 8 months to go until November...who knows what's yet to come!

2. SI Vault is Addictive

On to something more fun, if you haven't yet checked out Sports Illustrated's new "SI Vault" site just launched this week, I suggest you do. It's a highly addictive trip down memory lane. SI has digitized all of its assets and also made available non-SI content, all in one easy-to-use location powered by Truveo. Focusing on video, I found Franco Harris's "Immaculate Reception" from the 1972 Steelers-Raiders playoff game and also Doug Flutie's famous "Hail Mary" pass to beat Miami in 1984. I could have spent hours at the site, although it's not perfect. I tried finding Tom Watson's 1982 U.S. Open chip-in at Pebble Beach to beat Jack Nicklaus, but alas no results were found. Obviously all this stuff is available elsewhere online, but SI Vault creates a great context for sports fans to enjoy themselves, wrapping SI and non-SI content together in one nice package.

 

3. Apple's Roadblocks are Baaaack

And for even more fun, I encourage you to check out WSJ.com and NYTimes.com today. Apple is "roadblocking" the home pages of both again with a new Mac vs. PC ad, as they did back on Jan. 17th. This means that Apple has bought out all the home page leaderboard inventory on these 2 sites, so every time a visitor comes today, they see the same Apple ad. With all the talk about broadband video advertising, pre-rolls, overlays, etc, Apple again shows with its roadblocks how a little bit of creativity with rich media ad units can go a really long way. The ads are a great mix of interruption and opt-in and are no doubt highly effective branding units for Apple. Have a look and enjoy.

Yesterday Magnify.net, a company I've previously written about, released its version 3.0, introducing new social features and also Pro and Enterprise versions. Magnify's CEO Steve Rosenbaum gave me an update.

Why? Because frequently there was at least one or more completely unrealistic assumption in their business plans, which made us skeptical about the company's likeliness to succeed. I often found that otherwise intelligent and analytical executives had somehow convinced themselves of something that just wasn't realistic. I came up with a catchphrase that helped guide our evaluation of proposed deals: our go/no-go decisions would be "constrained by reality."

That principle has stuck with me, and has been reinforced through my own startup experiences, watching CEOs who also understood this principle and those who did not. Being "constrained by reality" especially means that the optimism that all entrepreneurs and startup executives radiate must be tempered by a careful analysis of what's actually happening in the market and what limitations the new product, feature, deal, etc. will meet up against. Not doing so can be a fatal mistake.

I bring this up because, as with early other immature markets, the nascent broadband video space has become a hotbed of entrepreneurial activity. Yet I continue to be exposed to ideas that are not aligned with market realities or key customer priorities. These companies are in for a rocky road ahead.

Conversely, I'm often impressed with CEOs who are no less confident, but do completely grasp the importance of being "constrained by reality." One technology CEO told me recently that his team spends an inordinate amount of time focused on "sequencing" or trying to model their customers' priorities. This informs their product development agenda and helps them stay aligned with recognizable opportunities. Similarly, a content executive told me that his company is very focused on production cost per minute because, having done an analysis of advertising CPMs, sell-out rates and splits, they have a solid grasp of what's required to be profitable. Another content executive acknowledged that while changing behaviors in his large company was critical, it was akin to "turning a barge" - something that needs to be done slowly and with care.

The above examples illustrate the subtle mix of optimism and pragmatism required for success in the broadband video space. I often try to explain that as exciting as broadband video is, it must be looked upon in evolutionary, not revolutionary terms. Feeling the constant pressure of being "constrained by reality" helps instill the kind of discipline that ultimately contributes to success.

Last week I had a chance to sit down with Brent Weinstein, CEO/founder of 60Frames, which is among a new group of companies I refer to as "broadband studios." This is a category that has generated a healthy amount of funding and activity recently, including, among others, Next New Networks ($23 million to date), Generate ($6 million), Revision3 ($9 million), Stage 9 (Disney/ABC's in-house unit), Vuguru (Michael Eisner's shop) and a slew of comedy-focused initiatives. 60Frames itself has raised $3.5 million from Tudor, Pilot Group and others.

The impetus for 60Frames came when Brent was heading up digital entertainment at UTA and observed that many clients wanted to create digital/broadband fare but wanted a partner for the same roles they've come to expect studios to handle (e.g. financing, distribution, legal, creative, etc.). 60Frames aims to differentiate itself from the pack by being "artist-friendly" - allowing greater creative control and more significant ownership and by relying on strong relationships. With an existing staff of 11 and a goal of launching 50 programs by year end, the 60Frames team is no doubt going full tilt.

60Frames is following a traditional portfolio approach, working with great talent (Coen brothers, John August, Tom Fontana, others) but recognizing that results in this new medium will vary - there will be some winners and some losers. The goal is obviously to have the best ratio possible. Traditional studios improve their odds by using collective history and data about what types of projects succeed and which ones don't. But no such lengthy track record or data exists in broadband just yet, so it's a lot more speculative pursuit.

I asked Brent if there's any creative formula 60Frames is using to guide its decision-making. He was pretty emphatic that there's no "formula," but did concede 60Frames is focused on short-form (under 5 minutes), is biased toward comedy where episodes can stand alone more readily, and is mainly looking at niche audiences with a bulls-eye of 18-34 men, where consumption is highest.

Nurturing relationships and developing great content is only part of the equation for these budding studios' success. Distribution and monetization are also incredibly important, as broadband necessitates an entirely different model. Regarding distribution, I was encouraged to see 60Frames is solidly in the syndication camp to the point that it has not even set up destination sites for its 7 launched programs yet. 60Frames has a network of partners including Bebo, blip.tv, DailyMotion, iTunes, MySpace, YouTube and others. Gaining access to all the popular online destinations will accelerate success. Meanwhile advertising is being handled by partner SpotRunner, which has deep hooks in the space.

Broadband studios like 60Frames harken back to the original studio moguls in some ways - taking creative and financial risk to explore what works in a new medium. It's way too early to know if or to what extent they'll succeed, but if they do we can expect a gold rush of imitators.

This morning CBS TV Stations is announcing the CBS Local Ad Network with a goal of widely syndicating CBS TV Stations' content into the maze of locally-focused web sites and blogs. A ground-breaking effort, it is the latest evidence that the local broadcast formula is being re-written by broadband's potential. I got an exclusive briefing on the CBS initiative last Friday from Jonathan Leess, President/GM of CBS TV Stations Digital Media and Aaron Radin, SVP, Ad Sales and Biz Dev.

As I wrote early last week in "CBS TV Stations Get Broadband," syndication is a key driver of video streaming growth for the company. Recognizing changing consumer behavior, the new Local Ad Network enables news "widgets" - small information badges carrying local headlines from CBS's 29 stations which can be easily selected and embedded by local sites and bloggers. When users click on a link in the widget they are carried back to the local CBS station site. See the right column in the below example:

Each widget carries ads which are sold by CBS, with a revenue share back to the local site. Radin is excited about the ad network because it has the potential for vastly expanded and targeted ad inventory, which can be sold to many different types of advertisers depending on their goals. For example for AT&T, a charter advertiser, the network provides a national player with enhanced local access. Additionally, the ad network can provide the local CBS station's digital sales team with more in-depth coverage for a local advertisers.

The significance of the CBS initiative is that it continues to show that broadband is opening up new opportunities for local stations to go well beyond their traditional broadcast models. The concept of local newscasts in the morning, evening and late night is increasingly irrelevant. Also gone is the concept of finite air-time. The CBS deal shows that the "shelf space" on which CBS local content sits doesn't even have to be owned by the station any longer. Now the shelf space could just as easily be a 15 year-old local kid's popular blog on local sports who wants to provide a customized feed of high-quality local video to his visitors. Think about how that expands a local station's business model.

The whole area of local content syndication is really heating up. In this deal, CBS has partnered with SyndiGo, a new unit of Seevast to build out the ad network's local web site and blog distribution network. For other local broadcasters seeking to pursue syndication there are other choices. For example, WorldNow (note: a VideoNuze sponsor), which now supports 260+ stations around the U.S. has also stepped up its syndication activity, in addition to technology provisioning. It recently launched Supernanny-related content into its lifestyle channel, enabling more choice and ad inventory.

WorldNow, like other 3rd parties, believe that, in these tumultuous times, local broadcasters should be focused on content, ad sales and distribution, not technology development. With technology and the market moving so fast, that logic makes a lot of sense. WorldNow and others present the classic "buy" vs. "build" option for stations. While CBS and others may "build," there's no question for many other who want to syndicate and drive new ad sales, they'll prefer to do it in a "buy" scenario. All of this activity will have the effect of spurring continued innovation in the space.

I had 3 key takeaways from the 2008 Media Summit which just wrapped up in NYC. The event just keeps getting better - great keynotes, terrific informal hallway chit-chats/networking and tons of well-directed energy. Though the event's agenda is broad, I was focused on the video-related elements. Here are 3 takeaways:

1. Iger and Moonves Get Tech; Lots of Innovation/Growth Ahead

A clear highlight for all attendees was the 2 morning keynote interviews, day 1 with Disney CEO Bob Iger and day 2 with CBS CEO Leslie Moonves. Both were ably conducted by senior Businessweek editors. Until a couple years ago, big media was in a defensive crouch regarding technology's uninvited incursion into their businesses. No more. Iger and Moonves are obviously convinced that technology, the Internet and broadband video delivery are now their companies' friends. Iger in particular really pounded this theme home.

An example of how technology helps which Iger repeatedly touched on was how Disney will leverage the platform of Club Penguin, its recent acquisition, to build communities for other properties (e.g. "Cars", "Pirates," etc.). These moves are intended to engender ever-greater levels of engagement. By the way, if you're a parent of youngsters and you've ever bemoaned how Disney's gotten its hooks deeply into your kids, you ain't seen nothing yet!

Moonves was emphatic that the Internet extends the value of CBS properties. March Madness was an example he offered. Three years ago it generated $250K of broadband subscription revenue. Two years ago CBS converted to ad-support and generated $4M. Then last year it generated $10M and this year is projected for $23M. And as Moonves pointed out, other than bandwidth, it's all incremental profit for the company. Echoing another conference theme, he further added that "the Internet should not be used to just regurgitate TV," but rather for the medium's unique capabilities.

Iger's and Moonves's mantras are no doubt being sent down to the troops from the executive suite. That suggests we can all expect a whole lot of tech-based innovation springing from these media giants.

2. Engagement and Originality: Buzzwords or More?

Two touchstones in many sessions were "engagement" and "originality." Both reflect the evolving viewpoint that broadband video has its own unique capabilities and that breaking through requires going far beyond traditional, passive programming approaches. With respect to engagement, the concept of introducing "social media" opportunities was often cited as the key tactic. An amorphous term, social media refers to all manner of user participation: content sharing, interactivity, personalization, mashups, uploading, commenting, rating and so on. Basically it's anything that gets viewers to do more than just sit back and enjoy the show. (For those looking to learn more, note next week's webinar on social media, presented by VideoNuze sponsors KickApps and Akamai)

Regarding originality, this relates back to Moonves's comment about not using the medium for regurgitation of TV shows (though to be sure there's value to that). Many people echoed that theme, emphasizing broadband must be used for original programming. The proliferation of independent "broadband studios" is encouraging early evidence that the originality bar will keep rising, prompting established and startup players to harness broadband's limitless possibilities.

3. Missing in Action: Paid business models

It wasn't that long ago that discussions about broadband video business models focused evenly on paid and ad-supported. No more. The paid model was completely missing in action at the event. I think I can count on one hand the number of times the concept was raised in sessions. Also MIA was DRM, the paid model's enabler (or torturer, depending on your perspective).

I detect a broad consensus that the broadband video industry has hitched its wagon to free ad-supported video for the foreseeable future. Many of you know I've been a long-time and enthusiastic proponent of this approach and I'm extremely happy to see things unfold this way. Though the broadband video ad model is still immature, all macro trends point to a bright future. One in particular is video syndication, which I wrote about 2 days ago. Syndication was a dominant theme, as panel representatives from both large and small content providers enthusiastically embraced it. See my post earlier this week, "Welcome to the Syndicated Video Economy" for more on this.

Ok, there you have it. There's plenty more tidbits I took away from the summit, so feel free to ping me if you'd like. And if you attended, post a comment and share your takeaways as well!