Posts for 'Downloads'

  • Paid vs. Free, Where is the Grass Greener?

    Two conversations I had last week, with executives at two separate independent video content companies, one based on a pay model, and the other on an ad-supported model, struck the same theme: the "grass must be greener" for other's model.

    These conversations were illustrative of others going on across the video landscape today. Everyone's grappling with which model offers more profitability, stability and growth. At least for now, ad-supported appears to have the "greener grass".

    Paid sites are struggling with the fact that so much video has come online in the past couple of years that the bar to get users to open their wallets moves higher each day. The question becomes, "what sorts of video are consumers truly willing to pay for when so much is now available for free?" Of course, the more free stuff there is, the less compelled users feel to pay, even to get something good. Thus a major struggle ensues for pay sites to generate sufficient volume to become profitable.

    The rising supply of video makes life equally tough, if not tougher, on the ad-supported sites. Breaking through the noise with quality content is no simple trick. Great content is table stakes. I think the real differentiators are great marketing and distribution which leads to significant awareness, traffic and revenues. So skills like knowing how to create a viral wave, strike partnerships with portals that have real teeth, and syndicating to many smaller players, are all paramount. And that's all before the skills required to sell ads and actually generate revenue.

    The grass will remain greener for ad-supported for some time to come. When broadband to the TV becomes widely adopted, Hollywood is willing to cannibalize DVD revenues, formats are further standardized and consumers are better acclimated to broadband delivery, the pay model is going to take off. The ad-supported model is no layup, but with the right ingredients, success is currently attainable.

  • Good Riddance to Google Video Store


    On Friday, AP carried the news that Google intends to stop offering paid downloads at Google Video and that it will discontinue support for any downloads made since its launch. Thus ends one of the most anachronistic initiatives I've observed in the broadband video industry.

    I was at CES in January 2006 when Google co-founder Larry Page delivered a keynote in which he launched Google Video Store. The press release is here. My recollection of the event is still quite vivid. First, it was such a mob scene that just finding a place to watch the speech was an exercise unto itself. I ended up watching it in a courtesy tent packed cheek-to-jowl with hundreds of others.

    As Larry introduced Google Video Store, I kept thinking to myself, "How is that a company with Google's IQ could have made such a startlingly bad product decision?"

    Go back to that time for a moment, and imagine that you are Google. You are the foremost company in the world at monetizing content through advertising. You have the ability to meet with the CEO of every major media company in the world -- companies whose video is disproportionately supported by advertising. You have the opportunity to suggest trials, experiments and potentially longer-term deals to bring these companies' video online in an ad-supported manner. You can tantalize them with online riches beyond what they currently collect on-air. And you can be their trusted partner, with the Internet's leading technology, to help figure it all out.

    (By the way, at the time, Google's official word was that their choice of the paid model was the only way they could get their hands on full length programs. Yet, just 3 months later, Disney/ABC announced online distribution of ad-supported full length programs. So this was clearly already in the works before January, 2006).

    Instead of doing all of this though, you decide to launch using a commerce model, thus completely turning your back on all of the company's massive online advertising horsepower. In doing so, you choose to compete with Apple's iTunes, which has dominant market share and is seamlessly married to the wildly popular iPod. And in an act of arrogance and silliness, you decide to launch your own player, thus rendering all of the premium video incompatible with WMP, Flash, Real and other devices.

    And yet, all of this is exactly what Google did. Somehow it managed to persuade premium content providers like Sony BMG, the NBA and Charlie Rose to partner. And it even managed to get Les Moonves, CBS's CEO to come on stage with Larry and make a fawning speech about how excited he was to be a part of all this action.

    Now in August, 2007, 20 months later, Google Video Store is dead. Hallelujah. What a ridiculous distraction it has been. I have written over and over that I believe Google is one of the best-positioned companies to exploit broadband video. And yet, like Yahoo most prominently, I still view Google (outside of its YouTube acquisition) as all thumbs in this important new market.

    For example - whatever happened to Google's deal with MTV to syndicate its content through the AdSense network? Did anything important come out of that, which might be used for other partners? What's going on with "click-to-play" video ads? And, any updates on Google for TV ads announced in April with EchoStar? Then there's the overhang of the Viacom lawsuit and the introduction of ‘fingerprinting' technology from Google to deter copyright violators. Recently it's looked like its introduction is imminent, and yet no firm timetables have been established.

    I'm still expecting big things out of Google in the broadband video area, and I was encouraged to see Gabriel Stricker say in the AP piece that "The current change is a reaffirmation of our commitment to building out our ad-supported...models for video." I hope Google means it.

  • Forrester’s New Report on Paid Downloads: Right on TV Shows, Wrong on Movies

    Forrester released a new report last week entitled, “Paid Video Downloads Give Way To Ad Models”. Since I’ve had some requests to comment on it (and the paid video market as a whole), I’m weighing in here.
    I was able to read the full report, but if you can’t, then their press release is here. It provides the gist. In short, I think Forrester’s conclusion that “The paid download market is, however, ultimately a dead end” is mostly right regarding TV shows, but completely wrong for movies. Lately broadcast and cable TV networks have ramped up deals with many aggregators to distribute streaming versions of their programs. And with advertisers falling all over themselves to support these, it is certainly likely that the concept of paying to download and own a TV program is heading for a decline.
    However, when it comes to movies, it’s a different story altogether. First off, at a minimum, today’s $15+ billion/year home video market (DVD sell through only) more than demonstrates that people want to own certain content (i.e. mainly movies). This provides a pretty rich pot of revenues for paid downloads to tap for growth. Paid downloads (or “electronic sell-through” as some call this activity), hold the potential to be a far more efficient and flexible way to get content into the hands of those willing to pay for it. Granted there are some current usability issues (namely broadband-to-TV connectivity) to overcome, but these will certainly be resolved in the near future. Ignoring this dynamic (as Forrester does by neglecting to mention, even once, how it expects home video market to evolve in the digital era) is a significant omission.
    It leaves me wondering how Forrester thinks this vital revenue stream fits into its conclusions. Piggy-backing on this omission, the report also concludes (absent an explanation that I can find) that “Movie studios whose content only makes up a fraction of today’s paid downloads, will put their weight behind subscription models that imitate premium cable channel services." I think this conclusion is way off base. Studios love home video revenues. For many movies, home video revenues ARE the business model, long since displacing theatrical revenues as the main source of profitability. It’s inconceivable to me that, in the digital age, studios are going to move away from emphasizing a la carte purchases to instead take a share of a 3rd party’s monthly subscription revenues, as Forrester believes.
    That’s not to say there won’t be a place for subscription services (e.g. Netflix). But studios have rich e-commerce-based business opportunities ahead (fueled by all the merchandising tricks folks like Amazon have mastered in other product categories). These have been limited to date by lack of instantaneous product fulfillment (i.e. broadband-delivered downloads). On the cusp of pursuing these opportunities, to suggest that, instead, studios will forsake them for subscriptions, just doesn’t make sense.
    Finally, Forrester’s prediction that because “only 9% of online users have ever paid to download a movie or TV show”, there is unlikely to be a mass market for paid downloads, is very tenuous, given that broadband video delivery itself has only burst into the public’s conscious in the last year or two. Scant adoption of any new technology in its early days is a pretty unreliable indicator of future potential. For example, consider how few people owned a cell phone in the early days when they were expensive and brick-like. Now cheap and sleek, they are ubiquitous.
    Paid downloads are not a “dead end” as Forrester asserts. Rather, they are an early-stage business opportunity evolving from an existing business model -- namely home video. While key catalysts are still needed to fuel paid downloads’ growth, these will inevitably come. Digital strategists at studios who dismiss paid downloads’ potential for movies in particular at this early juncture do so at their peril.
  • One Pleasant Experience with Amazon Unbox

    Last night I watched "Thank You For Smoking" (great movie by the way) courtesy of Amazon Unbox and TiVo. I took advantage of the companies' recent announcement which lets TiVo owners choose to have their Unbox videos delivered directly to their TiVos. The whole experience was seamless - linking my Amazon and TiVo accounts, selecting the movie in Unbox, downloading it, watching it, etc. My only complaint is that it was available for only 24 hours after starting it, which is obviously a studio issue, not an Amazon or TiVo issue. However, for the sheer "video-on-demand" spontaneity of finding a movie while already online, and then watching it shortly after, it's hard to beat this.
  • New "Elite" Release Reinforces Xbox's HD Differentiation

    Microsoft announced its 120 GB Xbox "Elite"today, along with 4 new content partners, A&E, ADV Films, National Geographic and TotalVid. This press release has all the specs on the new device, including a new HDMI port for high-quality connections to HD TV sets, while this press release highlights the content activities.
    I got a preview on this announcement in a briefing last week with Xbox executives, in which I also got some stats on Xbox LIVE's video activity (this is all for our upcoming report on broadband-centric video aggregators). Microsoft believes that Xbox LIVE is now the #1 destination for HD video downloads. Though I don't have data to support or refute this, what other site would come close?
    Xbox is doing a great job carving out new, differentiated ground for itself by highlighting HD downloads and building a serious library. For reference, a typical movie is about 3 GB, so about 40 movies could be stored on the new "Elite", assuming no other downloads. Given the ongoing tussling between Blu-ray and HD DVD, Xbox is emerging as a pretty serious contender for getting broadband-delivered HD downloads into the home.
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