VideoNuze Posts

David Pogue at the NYTimes had a great article this week extolling all of the innovations the TiVo has come out with. TiVo is the like the little engine that could. Even with cable and satellite operators rolling out DVR capabilities in their set tops, TiVo continues to set the bar for innovation.

Let’s see if the cable and satellite folks keep pace.

I was talking to a reporter earlier today, who asked me if traditional media companies should view broadband video as a threat.

It’s often tempting to think of anything new or any change as being threatening. That’s probably human nature. So it’s perfectly understandable why broadband video is still perceived as a threat by many.

But in fact, broadband is a giant opportunity.

Here’s a great example. CNNMoney.com launched a new Luxury “channel” on its site. This gives CNNMoney a place to grab the attention of high net worth audiences. By showcasing products with glossy video that luxury products companies and retailers want to be next to, CNNMoney is able to tap into new ad dollars in a targeted way. Could Turner have launched a conventional cable channel on “luxury”? Not a chance. There’s no room left on the dial and financing a 24x7 linear network would take big bucks until it eventually got to break-even.

Broadband lets Turner/CNN get into an important new category for a modest amount, leveraging their brand and traffic to generate new revenues.

I keep saying that media companies should view broadband as not only an opportunity, but one of the biggest ones they seen in ages. CNNMoney seems to get it.

Both are great examples of NBC taking modest, yet important steps, in tapping broadband video’s potential to unleash viewers’ passions for these two shows. As many of you who have been reading my newsletters over the last few months, I’ve been critical of the networks’ paucity of broadband-centric interactivity. NBC has a big social networking initiative launching this summer as well.

Stephen Wildstrom, who writes the "Technology and You" column in BusinessWeek echoes a point this week ("AppleTV's Blurry Future") about AppleTV that I made back in my 12/06 e-newsletter ("7 Broadband Video Trends for 2007"). At that time I suggested that for Apple's device to be a real winner, it needed to embrace a content strategy that was open to all broadband video, not just limited to what's available in iTunes.

Wildstrom similarly highlights this point. For now, AppleTV is a niche product, appealing only to those consumers ready to spend $300 to get iTunes video to their TVs. The big win for Apple would be to have a box that is easily capable of playing the 99% of video consumed daily that is not available in iTunes. That's what consumers are craving - an easy way of watching broadband video in the comfort of their living rooms. My guess is Apple knows this and will soon offer this feature as well.

Recently I was in Florida and I happened to be in one of those “super-sized” supermarkets – you know the kind with the wide aisles that seem a mile long. To fill the place up, there was a product selection such as I’ve never seen before. What does this have to do with broadband video?

Consider these recently-announced examples:

- Next New Networks – founded by a group of ex-Viacom executives, plans to launch 101 “micro-networks, consisting of 3-11 minutes of content refreshed on a schedule, daily, weekly, or bi-weekly.”

- Michael Eisner, Disney’s former CEO, has launched Vuguru, a studio that will produce and distribute videos. Its first release is a project called "Prom Queen," which is a scripted 80-episode mystery consisting of 90-second episodes.

- Stephen Bochco (creator of “L.A. Law” and “Hill Street Blues”), has partnered with Metacafe, a broadband video destination site initially to produce “Cafe Confidential," 44-clip online series, with others to follow.

- MSN has continued to rollout of its “Originals” series, having now launched half a dozen different programs.

To this list can be added broadband video initiatives from dozens of cable TV networks, online publishers, magazines, newspapers, broadcast stations, brand marketers and others.

Add it all up, and indeed, we are on the cusp of a world awash in video.

With all this video coming online, the question begs: can all of these producers succeed in building their audiences and actually turning a profit? To me, there are 5 key success factors for any of these players:

Target your audience and incent their participation – In the cable TV business, the smartest business plans identified target audiences and then relentlessly programmed to them. Examples included music aficionados, sports fans and science fiction fanatics. Knowing the audience you’re going after, what their interests are, where gaps exist in current programming, and how to address audiences on their terms are all key. But all that’s not enough. It’s also crucial to incent audience participation in the development, promotion and review process. Like it or not, audiences are now able to be active programming partners. Their talent and passion needs to be harnessed.

Produce inexpensively – Beyond just programming to the target audiences, it is essential to produce inexpensively. Cable budgets are lower than network budgets. Broadband video budgets must be lower still, at least for now. Audience sizes will be smaller and so for a while to come ad dollars will be scarcer. Plus smaller budgets can result in more edgy, authentic-feeling video which broadband users actually expect anyway. Producing on a shoestring will certainly be an adjustment process for the big-name TV talent now piling into broadband.

Appeal to advertisers – In the scrappy world of broadband video, understanding what matters to advertisers when developing programming is more important than ever. Since audiences will be far smaller, advertisers aren’t going to be buying reach. Rather, they’re going to being the niches they value. The better your programming appeals to identifiable and valuable audiences (see above), the easier it will be to find advertisers willing to open their wallets.

Distribute widely and syndicate often – Traditional TV was about driving audiences to specific channels at specific times. The Internet is all about making content available wherever audiences live and whenever they want access. Broadband will follow the same rules. So learning to distribute content widely and leveraging new syndication networks and technologies is key. For now, terms for these types of deals will vary considerably.

Be flexible – Given its early-stage nature, there are no formulas yet for how any of this will ultimately work. So job # 1 is appealing to your audiences and building their loyalty. Since there are no expensive pilots to shoot, it’s key to “invest a little and learn a lot.” Be willing to change direction on a dime. When it comes to broadband video, a rigid mindset is the enemy.

At Broadband Directions, one of the mantras is that open broadband access allows all kinds of traditional media companies with no video heritage to get into the video business. Newspapers are a perfect example. Since our report last summer on the top 40 U.S. newspapers, I’ve been closely tracking their progress in broadband video.

Reading WSJ Online’s coverage of the NBC-News Corp deal I was very impressed with their approach. If you have an online subscription, the page is available by clicking here. Part way into the story, there were 2 video windows displayed, each with a caption describing the video. Clicking the play button resulted in an in-line, high-quality video. One with reporter Martin Peers, and the other an interview with S&P analyst Tuna Amobi. Both with unobtrusive 5 second pre-roll ads. Truly a “multimedia” experience. I thought it was a great example of how far at least one newspaper has come in incorporating video into their presentation of the news. A real user experience win.

Coicidentally, I’m going to have Bob Leverone, VP of Video at Dow Jones (who oversees WSJ.com video, among other properties) on my Cable Show ’07 panel in Las Vegas on May 9^th.

I think it will be a great opportunity for attendees to hear how yet another competitor is moving into video.

Today’s announcement from NBC and News Corp, that they have set up a venture to distribute full length programs plus promotional clips through 4 major distributors (with more to come) heralds a potentially new, and radically different era, for the broadcast, and possibly the cable TV industries.

In one fell swoop, 2 of the major broadcast networks have granted distribution rights to four of the Internet’s most-trafficked sites. If one assumes that it is inevitable that the broadband/PC world will be linked up with consumers’ living room TVs (whether through AppleTVs, Xboxes, Slingcatchers, etc.), then it sure seems to me as though we are on the brink of seeing a full-scale digital replica of the analog broadcast TV affiliate model being born. If that’s the case, what does that mean for existing players, most notably local broadcast TV stations? And how about cable TV and satellite operators, who have long relied on retransmitting high-quality feeds local broadcast feeds of network programming as a staple of their value proposition?

I’ve been writing about how the video distribution value chain is being impacted by broadband video for a while now. My March 2006 newsletter, “How Broadband is Changing Video Distribution” recapped my firm’s Q1 2006 report, “How Broadband is Creating a New Generation of Video Distributors: The Market Opportunity for Google, Yahoo, Microsoft, AOL, Apple and Others”. In this report we identified these companies as a so-called ‘Group of 5” which were best-positioned to benefit as new broadband-centric distributors and explained our reasons for this conclusion.

Flash forward one year. Today’s announcement cements the distribution heft of 3 of the 5 (Yahoo, MSN and AOL). Meanwhile, Google’s acquisition of YouTube has strengthened its distribution prowess. If it can build on initial partnerships with the many content providers with which it works, its power will only grow. And of course, Apple now boasts almost 60 TV networks and content producers providing programming to iTunes. Its launch of AppleTV strengthens its hand as the hardware provider-of-choice in linking up the broadband and TV worlds.

We’re exploring all of this in a report we’re (quite coincidentally) working on right now, which examines broadband’s impact on the video distribution value chain. It both updates the Q1 2006 report, and also expands it to include the roles of emerging players such as Joost, BitTorrent, Wal-Mart and others. We’ve been very fortunate to have access to many of the players in the space to gain unparalleled insights into their plans. The report is due out soon. I’ll keep you posted on its progress.