Posts for 'Aggregators'

Simon Fuller's 19 Entertainment announced a new reality series yesterday, "If I Can Dream" which will rely on streaming, mobile and social media to dramatically enhance audience engagement. "If I Can Dream" will follow five young actors as they pursue Hollywood fame and fortune. The series will be distributed on its own site and through Hulu, MySpace, Clear Channel and others.

While the show will have a traditional 30 minute television-show format, it's clear that Fuller plans to use technology to differentiate the show from the myriad other reality offerings. All of the actors' moves will be streamed live using new sensor technology and audiences will interact with the actors via text, blogs, Twitter, MySpace and other in real-time. For sponsors Pepsi and Ford, we'll no doubt see new brand engagement opportunities. Some of this has already been done with other shows, but Fuller appears to be looking to take it to a whole new level.

Hulu's role is also intriguing. I haven't thought of Hulu as having a place in broadband-only original productions, but as I consider this move, it makes sense. Though deal terms were not disclosed, Hulu is likely putting up no money, and is instead bringing its substantial traffic and promotional capabilities to the partnership. It costs Hulu nothing to give "If I Can Dream" visibility on the site, so it's in a strong position to help establish the show. With the company's reach into brands and agencies it can sell ads without bumping into broadcast networks' sales reps.

Vevo, the much-heralded "Hulu for the music industry" venture backed by Universal Music Group, Sony BMG, Abu Dhabi Music Company and Google/YouTube (and with video provided by EMI as well) officially launched late last night. I've been browsing around the site this morning and my first reaction is that it's a decent start, but has a long way to go if it is to fulfill its lofty mission.

Conceptually, I like the idea behind Vevo. The music industry, which has suffered multiple blows over the last 10 years, is getting together to create a destination site where music videos are distributed legally, with a coherent ad strategy. YouTube's participation means that videos that have been watched in the labels' YouTube channels can be branded Vevo, giving the new site tons of visibility, and helping migrate traffic over time.

From a design standpoint, the Vevo site has a similar feel to Hulu: large, wide-screen images on the home page promoting certain videos/artists, thumbnails below, of top videos, playlists and artists, quick links to most popular today, and search/navigation. A nav bar at the bottom of the screen invites users to easily create new playlists by adding up to 75 videos with one click. Videos are embeddable and shareable, and there are quick links to buy the music at Amazon and iTunes. The site was periodically very slow to load and occasionally even gave me a server error page. I don't know how much of this to ascribe day 1 hiccups that will be worked out over time or really poor capacity planning.

Less clear to me is how Vevo distinguishes itself from a user experience standpoint from YouTube itself. This has been a question that's nagged at me since the Vevo concept was first unveiled - how do the partners plan to make 1+1=3? The partners have made references to being indifferent to whether users watch at Vevo.com or YouTube, presumably because there would be similar advertising on both with similar splits. Yet, my experience going back and forth between the sites, albeit very limited, reveals lots of inconsistencies and a lot of promotional leverage left untapped.

Focusing on U2, one of my personal favorites, I found only about a dozen of the band's music videos on Vevo. Switching over to YouTube, I found many more tracks, such as "Beautiful Day," "I Still Haven't Found What I'm Looking For" and "Where the Streets Have No Name," all in the Universal Music Group's channel. All of the videos were monetized: the first was preceded by a 15 second pre-roll ad for Chevy Malibu and the latter two carried an overlay ad to "Play Free Games" which was accompanied by a companion ad in the right column (the overlay was incredibly distracting, but that's another story). None of the videos had any Vevo branding whatsoever. It's also worth noting that even the UMG channel in YouTube has no Vevo branding or promotion.

Conversely, a search in YouTube for "All Because of You," a video that is available on Vevo, loads in YouTube with full Vevo branding. Above the video window are options to "Watch with Lyrics," "View Artist Profile," and "Create a Playlist." Clicking on any of these carries you over to the Vevo site. However, none of these actions are well-executed. "Watch with Lyrics" restarts the video, whereas a much slicker implementation would resume playing on Vevo from the point of drop-off. "View Artist Profile" simply displays a list other videos available, without any real artist profile information offered (background, upcoming concerts, etc.). And "Create a Playlist" just brings you to Vevo's home page, without any prompts for what to do next if indeed you want to actually want to create a playlist.

Elsewhere, the Vevo team hasn't even bothered to update its blog to officially announce the site's launch (it still says "Launching Tonight!" at the top). That's a missed opportunity, especially considering there was a splashy launch party in NYC last night (attendees ranging from Google's Eric Schmidt to Rhianna, Bono and Mariah Carey) and pictures and video from that event would have been a big drawing card. Come on - where's the Vevo PR team here?

How much of this should be forgiven to it being early days of Vevo's launch is a subjective call. From my vantage point though, I think the Vevo team could have done a lot more to think through and execute on the user experience. Back in November '07, when I looked at Hulu in its private beta, I gave it a solid B+. The Hulu team had clearly obsessed about each and every detail of the site - and have continued to do so. Hulu's user experience isn't perfect, but it has set the bar very high for those seeking to emulate it. For now Vevo probably rates around a C; much work is still ahead.

Following are 4 items worth noting for the Nov 30th week:

1. Alicia Keys concert on YouTube is an underwhelming experience - Did you catch any of the Alicia Keys concert on YouTube this past Tuesday night celebrating World AIDS Day? I watched parts of it, and while the music was great, I have to say it was disappointing from a video quality standpoint -lots of buffering and pixilation, plus watching full screen was impossible.

I think YouTube is on to something special webcasting live concerts. Recall its webcast of the U2 concert from the Rose Bowl on Oct 25th drew a record 10 million viewers. That concert's quality was far superior, and separately, the dramatic staging and 97,000 in-person fans also helped boost the excitement of the online experience. It's still early days, but to really succeed with the concert series, YouTube is going to have to guarantee a minimum quality level. Notwithstanding, American Express, the lead sponsor of the Keys concert had strong visibility and surely YouTube has real interest from other sponsors for future concerts. It could be a very valuable franchise YouTube is building and is further evidence of YouTube's evolution from its UGC roots.

2. Being a Jeff Zucker fan is lonely business - In yesterday's post, "Comcast-NBCU: The Winners, Losers and Unknowns" I said I've been a fan of Jeff Zucker's since seeing him deliver a brutally candid and very sober assessment of the broadcast TV industry at the NATPE conference in Jan '08. My praise elicited a number of incredulous email responses from readers who vehemently disagreed, thinking Zucker's performance merits him being sent to the woodshed rather than to the CEO's office for the new Comcast-NBCU JV.

To be sure, NBC's abysmal performance under Zucker (falling from first place to fourth in prime-time), will be one of his legacies, but I take a broader view of his tenure. A good chunk of NBCU's cable network portfolio came to the company via the Vivendi deal around the time Zucker took over responsibility for cable. Since that time the networks have grown strongly in audience and cash flow has doubled from about $1 billion to a projected $2.2 billion in '09. NBCU added Oxygen (which combined with its iVillage property makes a strong proposition for women-focused advertisers) and The Weather Channel, in a joint buyout with two PE firms.

While Zucker's hiring of Ben Silverman to run NBC was a misstep, NBCU has enjoyed stability on the cable side, with two of the highest-regarded women in TV, Bonnie Hammer and Lauren Zalaznick cranking out hit after hit for their respective networks. A CEO's tenure is always a mixed one, with plenty of wins and losses. It can be hard to know how much of the wins to ascribe to the CEO personally, rather than the executives below, but at the end of the day, NBCU was transformed from a single network company to a cable powerhouse; even Zucker skeptics have to give him some credit for this.

3. Comcast rebrands On Demand Online to Fancast Xfinity TV - yuck! - Largely lost in the NBCU commotion this week was news that B&C broke that Comcast is changing the name of its soon-to-be-launched TV Everywhere service from On Demand Online to Fancast Xfinity TV. Yikes, the branding gurus need to head back to the drawing board, and quick. The name violates the first rule of branding: pronunciation must be obvious and easy. Not only is it unclear how you pronounce Xfinity, it's a an unnecessary mouthful that doesn't fit with any of Comcast's other workmanlike brands (e.g. "Digital Cable," "On Demand," "Comcast.net"). If we're talking about a new videogame targeted to teenage boys, Xfinity is great. If we're talking about a service that provides online access to TV shows, there's no need for something super-edgy. I'd suggest just sticking with "On Demand Online." But even more importantly, priority #1 is getting the product launched successfully.

4. Sports Illustrated demo builds tablet computing buzz - If you haven't seen SI's demo of its tablet version being shown off this week, it's well worth a look at the video here. Never mind that there isn't such a tablet device on the market yet, the rumors swirling around Apple's planned launch of one has created an air of inevitability for the whole category. As the SI demo shows, a tablet can be thought of a larger version of an iPhone (likely minus the phone), providing larger screen real estate to make the user experience even more interesting. It's fascinating to think about what a tablet could do for magazines in particular, along the lines of what the Kindle has done for books. The mobile video and gaming possibilities are endless. Judge for yourselves.

Enjoy the weekend!

With Comcast's acquisition of NBCU finally official this morning (technically, it's not an acquisition, but rather the creation of a JV in which Comcast holds 51% and GE 49%, until GE inevitably begins unwinding its position), it's time to assess the winners, losers and unknowns from the deal, the biggest the media industry has seen in a long while. I listened to the Comcast investor call this morning with Brian Roberts, Steve Burke and Michael Angelakis and reviewed their presentation.

Here's how my list shakes out, based on current information:

Winners:

1. Comcast - the biggest winner in the deal is Comcast itself, which has pulled off the second most significant media deal of the decade (the first was its acquisition in 2002 of AT&T Broadband, which made Comcast by far the largest cable operator in the U.S.), for a relatively small amount of upfront cash. Comcast has long sought to become a major player in cable networks, but to date has been able to assemble an interesting, but mostly second tier group of networks (only one, E! has distribution to more than 90 million U.S. homes).

The deal moves Comcast into the elite group of top 5 cable channel owners, alongside Disney, Viacom, Time Warner and News Corp, with pro-forma 2010 annual revenues of $18.2 billion and operating cash flow of $3 billion. It also provides Comcast with a huge hedge on its traditional cable/broadband/voice businesses, as the JV, on a pro-forma basis would be 35% of Comcast's overall 2010 revenue of $52.1 billion, though importantly only 18% of its cash flow of $16.5 billion. On the investor call, Roberts emphasized that the deal should not be seen as the company diminishing its enthusiasm for the traditional cable business, but given the downward recent trends in fundamentals (vividly shown in slides from my "Comcast's Digital Transformation Continues" post 3 weeks ago), the conclusion that Comcast will be relying on its content business for future growth is inescapable.

2. Cable networks' paid business model/TV Everywhere - With Comcast's executives' platitudes about cable networks being "the best part of the media business," the fact that cable networks will contribute 80%+ of the JV's cash flow and the ongoing travails of the ad-supported broadcast TV business, the deal puts an exclamation mark on the primacy of the dual-revenue stream cable network model and Comcast's commitment to defending it (see "The Cable Industry Closes Ranks" for more on this.)

The deal can also be seen as cementing the paid business model for online access to cable networks' programs. Comcast is committed to having online distribution of TV programs emulate the cable model, where access is only given to those consumers who pay for a multichannel subscription service. Much as they may resist acknowledging it, Hollywood and the larger creative community must see Comcast as doing them a huge service by preserving the consumer-paid model, helping the video industry avoid the financial fate of newspapers, broadcasters and music. To be sure, some consumers will cut the cord and be satisfied with what they can get for free online, however it is unlikely to be a large number any time soon. As for aspiring over-the-top providers, they'll need to look outside the cable network ecosystem to generate competitive advantage.

3. Jeff Zucker - The current head of NBCU will migrate into the role of CEO of the JV, greatly expanding his portfolio and influence. Zucker has fought the good fight to preserve the NBC network's status, rotating in new creative heads, shifting Leno to primetime, backing Hulu, etc, but the reality, as he pointed out earlier this year, is that NBCU in his mind has long since become a cable programming company. I've been a Zucker fan since seeing him speak at NATPE in '08 when he laid out a sober assessment of the broadcast business. Through solid acquisitions and execution, Zucker has proved himself to be far more than the wonderboy of "Today" - he's going to fit in well at Comcast and be a great addition to its executive team.

Losers:

1. NBC broadcast network and the JV's 10 owned and operated stations - While Comcast executives said they "don't anticipate any need or desire to divest any businesses" and "take seriously their responsibility" to the iconic NBC brand, the reality is that with the broadcast business contributing just 10% of the JV's pro-forma annual cash flow, the network, and especially the stations, are not just in the back seat of the JV, they're in the third row. Though broadcast contributes 38% of the JV's pro-forma revenue and the deal is being struck near the bottom of the advertising recession, it's hard to see things improving much. Exceptions are the sports division (more on that below), the TV production arm and possibly the news division. The only thing saving the stations is retrans and Comcast's need to appease regulators to get the deal done and keep the regulators at bay thereafter.

2. Other cable operators, telcos and satellite operators - It's never good news when one of your main competitors owns the rights to a good chunk of the key ingredients in your product, yet that's the reality for all other cable operators, telcos and satellite operators. Sure Comcast must be disciplined about throwing its weight around too much, but if these distributors cried when NBCU (and other big network owners) forced bundling and drove fee increases, they haven't seen anything until Comcast runs the renewal processes. With 6 channels having 90+ million homes under agreement plus many others in the JV's portfolio, Comcast is in a very strong negotiating position. As the world moves online, the threat that Comcast eventually says to hell with other distributors and goes over the top itself (a scenario I described here), other distributors have even bigger problems ahead.

3. GE - Yes GE gets about $15 billion in cash and a graceful exit from NBCU, but 20 years since incongruously acquiring NBC, the question burns even brighter, what was GE doing in the entertainment business in the first place? Hasta la vista GE, time to focus on manufacturing turbines and unraveling the woes at GE Capital.

Unknowns:

1. Do content and distribution go together any better this time around - With the disastrous results of AOL-Time Warner still fresh in the mind, it's fair to ask whether vertical integration will work any better this time around. Sensitive to the issue and no doubt anticipating questions on it, Roberts said on the call that this is "a different time and a different deal" and, pointing to News Corp-DirecTV, noted that sometimes vertical integration does work. In addition, he highlighted that the deal's financials are not predicated on achieving any elusive synergies. Still, aside from the obvious benefits of getting bigger in cable networks, the primary reasons cited for Comcast pursuing the deal still have synergy at their core: a slide that clearly says that "Distribution Benefits Content" and "Content Benefits Distribution." As always there are plenty of opportunities to pursue in theory; the challenge is executing on them given the rampant conflicts and turf battles that inevitably ensue.

2. Hulu's future - the online aggregator was literally not mentioned once in the Comcast presentation and its logo only appears on just one of the 36 slides in the deck, yet its presence is hard to underestimate. Hulu is the embodiment of the free, ad-supported premium video model that Comcast is so fiercely committed to combating. So how does it fare when one of its controlling partners soon will be Comcast? In response to a question, Steve Burke said he sees "broadcast content going to Hulu" and that "Hulu and TV Everywhere are complementary products." He also tersely dismissed the much-rumored idea of a Hulu subscription offering. It's impossible to know what becomes of Hulu, but with such divergent interests among the owners, it wouldn't surprise me if Hulu is unwound at some point post closing.

3. ESPN's role - With the JV's NBC Sports assets, plus Comcast's Versus, regional sports networks and Golf Channel, the new JV is primed to play a bigger role in national sports. While Fox Sports and TNT have skirmished for high-profile rights deals with ESPN, the new JV has a much stronger hand to play. It's fair to wonder whether Comcast, which likely sends Disney a check for $70-80 million each month to carry ESPN to its 24 million subscribers, won't at some point say, "hey we can do some of this ourselves" and move to become a bona fide ESPN competitor. In fact, ESPN figures into a far larger Comcast vs. Disney story line in the media industry going forward. The two companies are incredibly dependent on each other, and yet are poised to become even tougher rivals. Expect to hear much more about this one.

4. Consumers - last but not least, what does the deal mean for consumers? Likely very little initially, but over time almost certainly an acceleration of digitally-delivered on-demand premium content - but at a price. Comcast has the best delivery infrastructure, with the JV, soon premier content assets and a persistent, if sometimes incomplete (as with VOD, for example) commitment to shape the digital future. I expect that will mean lots of experimentation with windows, multiplatform distribution and co-promotion across brands. Washington will scrutinize the deal thoroughly, but with continued public service assurances from Comcast, will eventually bless it. Then it will be vigilant for anything that smacks of anti-competitiveness. Consumers should buckle up, the next stage of their media experience is about to begin.

What do you think? Post a comment now.

A report this morning by Peter Kafka saying that YouTube is in discussions with TV networks to allow it to stream programs, commercial-free, for $1.99 apiece suggests to me that TV networks are in a tight place when it comes to trying to charge for streaming TV episodes.

The $1.99 figure happens to be the same amount currently charged by iTunes and Amazon (for example) to download and own an episode. If there's no material difference in value, then it's pretty straightforward to conclude that such a YouTube initiative would likely fail. Consumers will quickly ask - why would I rent something one time for $1.99 when I can own it for the same price? The folks at YouTube must surely understand this too, and therefore be angling for something that would provide their rentals differentiated value vs. the current download-to-own models.

The $1.99 figure was set several years ago, likely pitched somewhat arbitrarily by Apple to TV networks to govern the original iTunes download deals. Apple no doubt wanted the price point to be low enough to spur download volume, which would in turn drive sales of video-enabled iPods, yet different enough from the $.99 it was charging for song downloads. At least some of the TV networks likely thought this price point was too low from the start (a position underscored when NBC temporarily pulled its programs off iTunes 2 years ago in order to obtain more pricing flexibility), but acquiesced because of their desire to experiment with digital delivery and their lust to get into business with Steve Jobs.

Now however, the $1.99 price point is pretty well cemented in consumers' minds. Because streaming inherently provides less value than a download (lower video quality, requirement to be connected, etc.), in order for paid streaming to succeed, an episode surely needs to be priced lower than $1.99. But because Hulu and the networks themselves provide programs for free, streaming access to many TV episodes is already a reality. Further, I suspect most TV executives would be loathe to charge $.99 or less for a streaming TV program, as it sets up the consumer perception (albeit an incorrect apples to oranges one) that a TV episode is worth less than a music download.

Given these circumstances, this suggests that pricing for streaming TV episodes likely needs to fall somewhere in the $1-$2 range to have any shot of success at all. Even in this range, I'm skeptical that standalone paid-for streaming episodes will catch on. Few consumers download programs in sufficiently high volume to have the potentially lower differential streaming pricing save them much money. In short, they'll be inclined to keep on buying and downloading, even if they perceive they won't watch the show more than once or twice. The real problem is that the download price was originally set too low. If it were higher - even $2.99 or $3.99 per episode - that would have created more headroom to stake out a value proposition for streaming.

Yet another issue is that TV Everywhere is going to provide streaming of many TV shows anyway. Granted you'll have to be a paying video subscriber, but if TV Everywhere marketers are clever, they'll be able to create the perception that the streaming episodes are "free" causing even more pressure on standalone paid-for streaming. Networks would likely be better off trying to figure out how to get a piece of the TV Everywhere action.

In general I'm a fan of experimentation, but in this case I'm hard-pressed to see how TV program streaming for a fee will succeed.

What do you think? Post a comment now.

Just before the Thanksgiving buzzer went off for many last Wednesday, comScore released its October 2009 Video Metrix data under the banner headline "Hulu Delivers Record 856 Million U.S. Video Views in October During Height of Fall TV Season." Hulu's 856 million views (which are 47% higher than its September total of 583 million) are indeed eye-grabbing. When viewed in the context of Hulu's performance to date, as tracked by comScore since May, 2008 shortly after the site's launch, it's possible to glean a number of valuable insights.

Below is a chart with comScore's data for Hulu's total monthly video views and unique visitors since May '08. The blue bars would make any online content CEO swoon; in the 18 months since it launched, Hulu has increased its monthly views nearly 10-fold, from 88.2 million in May '08 to this past October's 856 million.

Two clear viewership spikes are noticeable - from July '08 to Oct '08 there was a 97% increase in views (from 119.3 million to 235 million) and from July '09 to Oct '09 there was an 87% increase (from 457 million to 856 million). It should be noted that the Nov '08 total of 226.5 million was down nearly 4% vs. Oct '08, potentially foreshadowing a decrease to come in Nov '09 as well. Other than this dip, there has been only 1 other sequential monthly drop in Hulu's views, a 6% drop from April '09 to June '09. Taken together, Hulu's steady, yet dramatic increase in viewership is remarkable.

On the other hand, I believe the red line in the chart, showing unique monthly visitors, raises some concerns. You'll notice that after a solid 20% jump in uniques from Feb '09 (34.7 million) to March '09 (41.6 million), unique visitors have stayed in a fairly level range through Oct '09 (42.5 million), with uniques actually below the 40 million mark for Jun-Sept. This contributes to a theory I've been developing about Hulu for some time now: in its current configuration, I think it's quite possible that Hulu has saturated the market for its content and user experience. This isn't a hard-and-fast conclusion, but it's worth noting that even with the addition of the ABC programs, Hulu's uniques are scarcely better than they were 6 months ago. Unless the unique number jumps in the coming months (and I doubt it will), Hulu will have to meaningfully enhance its value proposition to grow its audience (can you say "Hulu-to-the-TV-via-Xbox/Roku/Apple TV/etc?").

With its exclusive access to 3 of the 4 broadcast networks' hit programs, Hulu has significant competitive advantages, which it has further capitalized on with its superb user experience. Despite positive and encouraging reports about its ad sales efforts, Hulu still has a long way to go to prove it can monetize its audience as effectively as its parent companies can do with programs viewed on-air. As a result speculation about a Hulu subscription service (which I consider inevitable) will continue to loom.

Other variables affecting Hulu's future also swirl: what will Comcast do if/when it acquires NBCU and therefore becomes a Hulu owner? What happens to Fox's programs on Hulu should Rupert Murdoch expand his focus beyond his newspapers' online content going premium? What if Disney decides to launch its own subscription services? What if Google or Microsoft or Netflix (or someone else) decides to open their wallet and make a bigger play in premium online video?

Hulu is still a relatively young site and the insights above are not fully conclusive, especially because they're based on 3rd party data. Hulu has clearly built a solid brand and user experience. Its monthly performance is well worth following.

What do you think? Post a comment now.

Following are 4 items worth noting for the Nov 16th week:

1. FCC raises "Open Access" possibility, would further government's control of the Internet - As reported by the WSJ this week, the FCC is now considering an "Open Access" policy that would require broadband Internet providers to open up their networks for use by competitors. The move comes on top of FCC chairman Julius Genachowski's recent proposal for formalizing net neutrality, a plan that I vigorously oppose. Open Access gained steam recently due to a report released by Harvard's Berkman Center that characterized the U.S. as a "middle-of-the-pack" country along various broadband metrics. The report has been roundly dismissed by service providers as drawing incorrect conclusions due to reliance on incomplete data.

The FCC is in the midst of crafting a National Broadband Plan, as required by Congress, aimed at providing universal broadband service throughout the U.S. as well as faster broadband speeds. Improving broadband Internet access in rural areas of the U.S. is a worthy goal, but the FCC should be pursuing surgical approaches for accomplishing this, rather than turning the whole broadband industry upside down. As for increasing speeds, major ISPs are already pushing 50 and 100 mbps services, more than most consumers need right now anyway. Broadband connectivity is the lifeblood for online video providers and any government initiative that risks unintended consequences of slowing network infrastructure investments is unwise.

2. Broadcast TV executives waking up to online video's challenges - Reading the coverage of B&C/Multichannel News's panel earlier this week, "Free Streaming: Killing or Saving the Television Business" featuring Marc Graboff (NBCU), Bruce Rosenblum (Warner Bros.), Nancy Tellem (CBS) and John Wells (WGA), I kept wondering where were these sentiments when the Hulu business plan was being crafted?

Hulu is of course the poster child for providing free access to the networks' programs, with just a fraction of the ad load as on-air. While the panelists agreed that the industry should be dissuading consumers from cord-cutting, Hulu is (purposefully or not) the chief reason some people consider dropping cable/satellite/telco service. For VideoNuze readers, it's old news already that broadcast networks have been hurting themselves with their current online model. What was amazing to me in reading about the panel is that what now seems obvious should have been very apparent to industry executives from the start.

3. Motorola Droid sales off to a strong start - The mobile analytics firm Flurry released data suggesting that first week Verizon sales of the Motorola Droid smartphone were an estimated 250,000. Flurry tracks applications on smartphones to estimate sales volume of devices. While the Droid results are lower than the 1.6 million iPhone 3GS units sold in that device's first week, Flurry notes that the iPhone 3GS was available in 8 countries and also had an installed base of 25 million 1st generation iPhones to draft on.

The Droid's success is important for lots of reasons, but from my perspective the key is how it expands the universe of mobile video users. As I noted in "Mobile Video Continues to Gain Traction," a robust mobile ecosystem is developing, and getting more smartphones into users' hands is crucial. I was in my local Verizon store this week and saw the Droid for the first time - though it lacks some of the iPhone's sleekness, the video quality is even better.

4. AOL's downsizing suggests further pain ahead - AOL was back in the news this week, planning to cut one-third of its employees ahead of its spin-off from Time Warner on Dec. 9th. The cuts will bring the company's headcount to 4,500-5,000, down from its peak of 18,000 in 2001. As I explained recently, no company has been hurt more by the rise of broadband than AOL, whose dial-up subscribers have fled en masse to broadband ISPs. Now AOL is going all-in on the ad model, even as the ad business itself is getting hurt by the ongoing recession. New AOL CEO Tim Armstrong is clearly a guy who loves a challenge; righting the AOL ship is a real long shot bet. I once thought of AOL as being a real leader in online video. Now I'm hard-pressed to see how the AOL story is going to have a happy ending.

Enjoy your weekends!

Daisy Whitney and I are pleased to present the 41st edition of the VideoNuze Report podcast, for November 20, 2009.

This week Daisy leads off with thoughts on what the NFL is doing with both online and mobile video, based on her recent interview with Laura Goldberg, GM of NFL.com.

I then dig deeper into my post from yesterday, "YouTube Direct is Yet Another Smart Move" in which I explained why YouTube Direct, a new initiative which was unveiled earlier this week, makes a lot of sense for both YouTube and its content partners. I've been impressed with how YouTube continues to evolve away from its wild-west UGC roots, finding ways to add value for both its users and also for its partners. Listen in to learn more.

Click here to listen to the podcast (12 minutes)

Click here for previous podcasts

The VideoNuze Report is available in iTunes...subscribe today!

I continue to be impressed with how YouTube is evolving from an upstart UGC site, reviled by major media companies for its nonchalant approach to copyright, into a video platform with unmatched audience reach that can be leveraged in myriad useful ways. A great example is how YouTube is attempting to channel some of its users' recreational interest in video creation into more purposeful, and valuable, initiatives for 3rd party partners and brands. I wrote about the concept of "purpose-driven" user-generated content over a year ago and also recently cited YouTube's brand engagement contests.

Now, with "YouTube Direct," the company's latest initiative, unveiled earlier this week, news-oriented web sites can embed YouTube's upload functionality directly into their sites, giving them the ability to request videos directly from their audience members. YouTube Direct also gives the news organization a moderation panel so videos can be approved or rejected. For videos that are posted there's a link back to the organization's own site.

It's no secret that newsroom budgets have been under huge pressure, so the opportunity to access free video reporting should resonate with any organization seeking to bolster its coverage. There are different ways a news site can use YouTube Direct ranging from the CNN iReport model which invites users to upload whenever they see news happening to a more targeted approach of asking for video coverage of a certain event (e.g. a high-school football game or local election coverage) to soliciting video responses to news-of-the-day questions. In short, "citizen journalism" can have a lot of different flavors. YouTube Direct is already being used by NPR, Politico, ABC News, The Washington Post and others.

YouTube Direct capitalizes on the growing trend of consumers carrying pocket video recording devices. Whether a smartphone like the iPhone or Droid, a video camera like the Flip, or just a digital camera with video capability, more and more people are ready to shoot at a moment's notice. The prevalence of video devices is set to grow dramatically as smartphones proliferate.

The key to success is having a platform that's easy for news organizations to manage and for users to access. With tens of millions of individual user accounts, more and more devices that offer one touch "YouTube" uploading, and news organizations hungry for inexpensive video coverage, YouTube Direct has a lot going for it. What would make it even stronger would be ad insertion capability, more extensive video editing functions and integration with the news organization's social media applications. I expect all of these features will come over time.

YouTube Direct is another smart move by the company to change mainstream media's perception of it from foe to friend. Combined with Content ID, which allows media companies to manage and monetize user-uploaded videos, and the trial with FreeWheel to allow premium partners to sell their own ads, plus other initiatives, YouTube is well on the road to repositioning itself. From an outside observer's standpoint, the moves don't necessarily feel methodical or as well-communicated as part of a larger strategy, but they are producing dividends. This week's YouTube deal with Univision for full-length programs, which would have been unheard of not that long ago, is just the latest evidence.

With its share of all views continuing to hover around 40% and its monthly streams now exceeding 10 billion, YouTube has enormous reach to capitalize on. Figuring out how to tap its users' energies for the benefit of premium partners and brands should be a key objective.

What do you think? Post a comment now.

Following are 4 items worth noting for the Nov 9th week:

1. Will Cisco's new Flip Video camera ad campaign fly? - Cisco deserves credit for its new "Do You Flip" ad campaign for its Flip Video camera, a real out-of-the-box effort comprised entirely of user-generated video clips shot by ordinary folks and celebrities alike. As the campaign was described in this Online Media Daily article, finding the clips and then editing them together sounds like heavy lifting, but the results perfectly reinforce the value proposition of the camera itself. The ads are being shown on TV and the web; there's an outdoor piece to the campaign as well.

Cisco acquired Flip for nearly $600 million earlier this year in a somewhat incongruous deal that thrust the router powerhouse into the intensely competitive consumer electronics fray. Cisco will have to spend aggressively to maintain market share as other pocket video cameras have gained steam, like the Creative Vado HD, Samsung HMX and Kodak Z series. There's also emerging competition from smartphones (led by the iPhone of course) that have built-in video recording capabilities. I've been somewhat skeptical of the Cisco-Flip deal, but with the new campaign, Cisco looks committed to making it a success.

2. YouTube brings ad-skipping to the web - Speaking of out-of-the-box thinking, YouTube triggered a minor stir in the online video advertising space this week by announcing a trial of "skippable pre-roll" ads. On the surface, it feels unsettling that DVR-style ad-skipping - a growing and bedeviling trend on TV - is now coming to the web. Yet as YouTube explained, there's actually ample reason and some initial data to suggest that by empowering viewers, the ads that are watched could be even more valuable.

One thing pre-roll skipping would surely do is up the stakes for producing engaging ads that immediately capture the viewer's attention. And it would also increase the urgency for solid targeting. Done right though, I think pre-roll skipping could work quite well. At a minimum I give YouTube points for trying it out. Incidentally, others in the industry are doing other interesting things improve the engagement and effectiveness of the pre-roll. I'll have more on this in the next week or two.

3. Watching the NY Times at 30,000 feet - Flipping channels on my seat-back video screen on a JetBlue flight from Florida earlier this week, I happened on a series of highly engaging NY Times videos: a black and white interview with Oscar-winning actor Javier Bardem, then a David Pogue demo of the Yoostar Home Greenscreen Kit and then an expose of Floyd Bennett Field, the first municipal airport in New York City. It turned out that all were running on The Travel Channel.

Good for the NY Times. Over the past couple of years I've written often about the opportunities that broadband video opens up for newspapers and magazines to leverage their brands, advertising relationships and editorial skills into the new medium. By also running their videos on planes, the NY Times is exposing many prospective online viewers to its video content, thereby broadening what the NY Times brand stands for and likely generating subsequent traffic to its web site. That's exactly what it and other print pubs should be doing to avoid the fate of the recently-shuttered Gourmet magazine, which never fully mined the web's potential. I know I'm a broken record on this, but video producers must learn that syndicating their video as widely as possible is imperative.

4. Nielsen forecast underscores smartphones' mobile video potential - A couple of readers pointed out that in yesterday's post, "Mobile Video Continues to Gain Traction" I missed relevant Nielsen data from just the day before. Nielsen forecasts that smartphones will be carried by more than 50% of cell phone users by 2011, totaling over 150 million people. Nielsen assumes that 60% of these smartphone owners will be watching video translating to an audience size of 90 million people. Its research also shows that 47% of users of the new Motorola Droid smartphone are watching video, vs. 40% of iPhone users. Not a huge distinction, but more evidence that the Droid and other newer smartphones are likely to increase mobile video consumption still further.

Enjoy your weekends!

Following are 4 items worth noting for the Nov 2nd week:

1. Media company and service provider earnings underscore improvements in economy - This was earnings week for the bulk of the publicly-traded media companies and video service providers, and the general theme was modest increases in financial performance, due largely to the rebounding economy. The media companies reporting - CBS, News Corp, Time Warner. Discovery, Viacom and the Rainbow division of Cablevision - showed ongoing strength in their cable networks, with broadcast networks improving somewhat from earlier this year. For ad-supported online video sites, plus anyone else that's ad-supported, indications of a healthier ad climate are obviously very important.

Meanwhile the video service providers reporting - Comcast, Cablevision, Time Warner Cable and DirecTV all showed revenue gains, a clear reminder that even in recessionary times, the subscription TV business is quite resilient. Cable operators continued their trend of losing basic subscribers to emerging telco competitors (with evidence that DirecTV might now be as well), though they were able to offset these losses largely through rate increases. Though some people believe "cord-cutting" due to new over-the-top video services is real, this phenomenon hasn't shown up yet in any of the financial results. Nor do I expect it will for some time either, as numerous building blocks still need to fall into place (e.g. better OTT content, mass deployment of convergence devices, ease-of-use, etc.)

2. Blu-ray players could help drive broadband to the TV - Speaking of convergence devices, two articles this week highlighted the role that Blu-ray players are having in bringing broadband video to the living room. The WSJ and Video Business both noted that Blu-ray manufacturers see broadband connectivity as complementary to the disc value proposition, and are moving forward aggressively on integrating this feature. Blu-ray can use all the help it can get. According to statistics I recently pulled from the Digital Entertainment Group, in Q3 '09, DVD players continue to outsell Blu-ray players by an almost 5 to 1 ratio (15 million vs. 3.3 million). Cumulatively there are only 11.2 Blu-ray compatible U.S. homes, vs. 92 million DVD homes.

Still, aggressive price-cutting could change the equation. I recently noticed Best Buy promoting one of its private-label Insignia Blu-ray players, with Netflix Watch Instantly integrated, for just $99. That's a big price drop from even a year ago. Not surprisingly, Netflix's Chief Content Officer Ted Sarandros said "streaming apps are the killer apps for Blu-ray players." Of course, Netflix execs would likely say that streaming apps are also the killer apps for game devices, Internet-connected TVs and every other device it is integrating its Watch Instantly software into. I've been generally pessimistic about Blu-ray's prospects, but price cuts and streaming could finally move the sales needle in a bigger way.

3. Apple lurks, but how long will it stay quiet in video? - The week got off to a bang with a report that Apple is floating a $30/mo subscription idea by TV networks. While I think the price point is far too low for Apple to be able to offer anything close to the comprehensive content lineup current video service providers have, it was another reminder that Apple lurks as a major potential video disruptor. How long will it stay quiet is the key question.

While in my local Apple store yesterday (yes I'm preparing to finally ditch my PC and go Mac), I saw the new 27 inch iMac for the first time. It was a pretty stark reminder that Apple is just a hair's breadth away from making TVs itself. Have you seen this beast yet? It's Hummer-esque as a workstation for all but the creative set, but, stripped of some of its computing power to cost-reduce it, it would be a gorgeous smaller-size TV. Throw in iTunes, a remote, decent content, Apple's vaunted ease-of-use and of course its coolness cachet and the company could fast re-order the subscription TV industry, not to mention the TV OEM industry. The word on the street is that Apple's next big product launch is a "Kindle-killer" tablet/e-reader, so it's unlikely Steve Jobs would steal any of that product's thunder by near-simultaneously introducing a TV. If a TV's coming (and I'm betting it is), it's likely to be 2H '10 at the earliest.

4. Get ready for the "Anywhere" revolution - Yesterday I had the pleasure of listening to Emily Green, president and CEO of tech research firm Yankee Group, deliver a keynote in which she previewed themes and data from her forthcoming book, "Anywhere: How Global Connectivity is Revolutionizing the Way We Do Business." Emily is an old friend, and 15 years ago when she was a Forrester analyst and I was VP of Biz Dev at Continental Cablevision (then the 3rd largest cable operator), she was one of the few people I spoke to who got how important high-speed Internet access was, and how strategic it would become for the cable industry. 40 million U.S. cable broadband homes later (and 70 million overall) amply validates both points.

Emily's new book explores how the world will change when both wired and wireless connectivity are as pervasive as electricity is today. No question the Internet and cell phones have already dramatically changed the world, but Emily makes a very strong case that we ain't seen nothing yet. I couldn't help but think that TV Everywhere is arriving just in time for video service providers whose customers increasingly expect their video anywhere, anytime and on any device. "Anywhere" will be a must-read for anyone trying to make sense of how revolutionary pervasive connectivity is.

Enjoy your weekends!

Daisy Whitney and I are pleased to present the 39th edition of the VideoNuze Report podcast, for November 6, 2009.

This week Daisy and I first dig into the research I shared about Netflix's Watch Instantly users that I wrote about earlier this week. The research, by One Touch Intelligence and The Praxi Group, indicated that 62% of respondents have used the Watch Instantly streaming feature, with 54% saying they use it to watch at least 1 movie or TV show per month. Daisy and I discuss the significance of these and other data from the research. As a reminder the research is available as a complimentary download from VideoNuze.

Daisy is in NY this week attending Ad:Tech, and she then shares observations from a couple of sessions she's attended. In particular she passes on the advice that Sir Martin Sorrell, head of large agency holding company WPP, about where the advertising business is heading and how he's preparing WPP for the future.

Click here to listen to the podcast (14 minutes, 45 seconds)

Click here for previous podcasts

The VideoNuze Report is available in iTunes...subscribe today!

Surfing over to YouTube the other day, I was struck by how the site could well become the ultimate brand engagement platform. Below is a screen shot of what I found - nearly all the visible real estate showcased 2 different brand contests encouraging users to submit videos for a chance to win prizes.

The first contest, the "Kodak True Colors: Video Portrait Challenge," was just kicking off, and therefore had prominent positioning. The contest urges users to submit as many 10-second videos as they'd like in pursuit of a grand prize including 2 tickets to a taping of the "Conan O'Brien" show. The other contest, "The Best of Us Challenge," by the International Olympic Committee, shows athletes doing something outside their specialty (e.g. Michael Phelps doing speed putting, Lindsey Jacobellis doing the hula hoop) and asks user to emulate these or create their own challenge. The winner receives a trip for 2 to the 2010 Vancouver winter games. The contest was featured in YouTube's "Spotlight," a section on the home page populated by YouTube's editors based on user ratings.

These types of brand contest are not necessarily new, nor are their inclusion in YouTube. Over a year ago I suggested there was real opportunity in what I called "purpose-driven user-generated video" - the idea that with YouTube turning millions of people into amateur video producers, their enthusiasm and skills could be channeled to specific purposes. The success of campaigns like Doritos' $1 Million Super Bowl challenge has amply demonstrated that great creative and great buzz can be generated from a well-executed UGV campaign.

What YouTube's home page that day demonstrated to me is that as brands continue embracing online video and user participation, the go-to partner will be YouTube. There's simply no better way to reach a broad audience of likely contestants than by making a big splash on YouTube. While YouTube's monetization challenges have become one of the most-talked about industry topics this year, I'd argue there's been insufficient focus on the fact that since May '08, YouTube's share of overall video viewing has stayed right around 40%, at least according to comScore. In that time, YouTube's videos viewed per month have more than doubled, from 4.2 billion, to 10.4 billion in September '09.

Even as sites like Hulu and others have launched and promoted new and innovative sites, YouTube continues to retain its share of the fast-growing online video market. YouTube has also matured considerably, with its Content ID system largely sanitizing the site from pirated video and helping change its perception among copyright owners. (Note that on my recent visit to YouTube I searched in vain for a video of Johnny Damon's double steal in Game 4 and found nothing but "This video is no longer available due to a copyright claim by MLB Advanced Media." In the old days a video like that would have been available all over the site.)

While YouTube has made headway adding premium content partners, a significant part of its appeal remains users uploading and sharing videos. YouTube's combination of massive audience, ubiquitous brand, user interactivity and promotional flexibility make it an ideal partner for brands looking to engage their audiences through video.

Last summer I got plenty of flak for my post, "Does It Actually Matter How Much Money YouTube Loses?" in which I argued that YouTube's long-term strategic value (and Google's financial muscle to support the site's short-term losses) superseded the company's current losses. While I didn't mean to suggest in that post that a company can afford to lose money forever, I was trying to contend that YouTube, the dominant player in a fast-growing and highly disruptive market will eventually find its way to profitability and is well worth Google's continued investment.

YouTube is a rare example of a "winner take all" situation; there is no other video upload and sharing site even on the radar. As video becomes ever more strategic for all kinds of brands, they will increasingly recognize that YouTube is a must-have partner. If Google can't figure out how to make lemonade out of YouTube's lemons, then shame on them. I'm betting, however, that they will.

What do you think? Post a comment now.

Netflix's "Watch Instantly" streaming video usage is surging, according to new research by One Touch Intelligence, in association with The Praxi Group. The firms surveyed a qualified online panel of 1,000 Netflix subscribers in October. I've been eagerly following the Netflix's streaming initiative and this is the first research I've seen which reveals Netflix subscribers' Watch Instantly usage patterns. I'm pleased to offer the top-line results and analysis as a complimentary download.

Click here to download the research

The research confirms that Watch Instantly ("WI") enjoys broad support, with 62% of respondents (extrapolated to approximately 6.9 million of Netflix's 11.1 million subscribers) reporting that they have used WI since it was introduced and 54% (extrapolated to approximately 6 million subs) saying that they use it to watch at least 1 movie or TV show per month. Netflix itself has only disclosed (on its recent Q3 '09 earnings call) that 42% of its subscribers streamed at least 15 minutes of a TV show or movie during the 3rd quarter.

Netflix subscribers also appear to be using WI intensively, watching an average 6 titles per month. The following chart shows the distribution of usage from zero to 8+ titles per month.

WI usage is heavily tilted toward movie watching, with 92% saying they've used WI to stream a movie vs. 55% for a TV show. For each monthly usage level, more movies were watched than TV shows, likely reflecting the fact that movies are the majority of the 17,000 title WI catalog.

Though Netflix has made huge strides in embedding the WI client software in CE devices (e.g. Xbox, Roku, Blu-ray DVD players, PS3, etc.), over 60% of WI viewing still happens on the computer. Coming in second, with 13.4% is computers connected to a TV. Only then do the CE devices start showing up in the research: video game console (11.1%), DVD player (5.7%) and Roku (3.6%). Clearly we're still in the very early days of the "convergence era" where broadband is widely connected to the TV. The research does highlight that the 3.6% Roku figure could be extrapolated to suggest that about 400,000 Roku devices are being used by Netflix subscribers, a relatively strong showing by the company.

Meanwhile, if you thought Netflix WI would be leading to rampant "cord-cutting" of current video services (cable/satellite/telco), think again. Only 2% of the respondents said they've cancelled their incumbent video service, and it should be noted that the question asked if the disconnect was due to Netflix in general, not just WI in particular.

Further encouraging to current video service providers is that 67% of respondents say they prefer to have both a Netflix and a cable/satellite subscription. Asked if they had to give up one, 20% said they'd give up Netflix first vs. 13% who said they'd give up cable/satellite first. None of this is reason for incumbent for relax - especially as WI and other streaming video services are poised to improve - but it does suggest that at least for now, Netflix isn't an either/or proposition for most people.

This is just a quick summary of the findings; there's more available in the report. My view is that Netflix has made enormous progress with WI in a very short period of time. The decision to make it a value add to subscribers, rather than charging for it, has no doubt been key. In fact, TV Everywhere providers have wisely taken a cue from WI by also planning to offer TVE as a value add. Netflix has also made WI extremely easy to use, with only 15% of survey respondents saying it is "too complicated to use regularly." This too is a lesson for others to follow.

Following are 4 items worth noting from the Oct 19th week:

1. FCC kicks off net neutrality rulemaking process among flurry of input - As expected, the FCC kicked off its net neutrality rulemaking process yesterday, with all commissioners voting to explore how to set rules regulating the Internet for the first time, though Republican appointees dissented on whether new rules were in fact needed.

Leading up to the vote there was a flurry of input by stakeholders and Congress. Everyone agrees on the "motherhood and apple pie" goal that the Internet must remain open and free. The disagreement is over whether new rules are required to accomplish this, and if there are to be new rules what specifically should they be. As I argued here, the FCC is treading into very tricky waters, and law of unintended consequences looms. Already telco executives are talking about curtailing investments in network infrastructure, the opposite of what the FCC is trying to foster. The FCC will be seeking input from stakeholders as part of the process. Even though chairman Genachowski's bias to regulate is very clear, let's hope that as the data and facts are presented, the FCC is able to come to right decision, which is to leave the well-functioning Internet alone.

2. New Cisco research substantiates video, social networking usage - Speaking of the well-functioning Internet, Cisco released its Visual Networking Index study this week based on research gathered from 20 leading service providers. Cisco found that the average broadband connection consumes 4.3 gigabytes of "visual networking applications" (video, social networking and collaboration) per month, or the equivalent of 20 short videos. (Note that comScore's Aug data said of the 161 million viewers in the U.S. alone, the average number of videos viewed per month was 157.) I'm not sure what the difference is other than Cisco is measuring global traffic and comScore data is at U.S. only. Regardless, the Cisco research continues to demonstrate that users are shifting to more bandwidth-intensive applications, and the Internet is scaling up to meet their demands.

3. Netflix reports strong Q3 '09 earnings, streaming usage surges - Netflix continues to stand out as unaffected by the economy's woes, reporting its Q3 results late yesterday that included adding 510,000 net new subscribers, almost double the 261,000 from Q3 '08. The company finished the quarter with 11.1 million subs and projects to end the year with 12 to 12.3 million subs. If Netflix were a cable operator it would be the 3rd largest, just behind Time Warner Cable, which has approximately 13 million video subscribers.

Netflix CEO Reed Hastings also disclosed that 42% of Netflix's subscribers watched a TV episode or movie using the "Watch Instantly" streaming feature during the quarter, up from 22% in Q3 '08. Hastings also said in 2010 the company will begin streaming internationally, even though it has no plans to ship DVDs outside the U.S. He added that in Q4 Netflix will announce yet another CE device on which Watch Instantly will be available (just this week it also announced a partnership with Best Buy to integrate Watch Instantly with Insignia Blu-ray players). Net, net, Watch Instantly looks like it's getting great traction for Netflix and will continue to be a bigger part of the company's mix. Yet as I've mentioned in the past, a key challenge for Netflix is making more content available for streaming.

4. Yahoo's pact with GroupM for original branded entertainment raises more questions - Shifting gears, Yahoo and GroupM, the media buying powerhouse announced a deal this week to begin co-producing original branded entertainment for advertisers. The idea is to then distribute the video throughout Yahoo's News, Sports, Finance and Entertainment sections. GroupM has had some success in the past, as its "In the Motherhood" series, created for Sprint and Unilever, was picked up by ABC, though it was quickly canceled. As I pointed out in my recent post about Break Media, branded entertainment initiatives continue to grow.

Less clear to me is Yahoo's approach to video. CEO Carol Bartz said last month that "video is so crucial to our users and our advertisers..." that "there's a big emphasis inside Yahoo on our video platforms" and that "a big cornerstone of our strategy is video." OK, but these comments came just months after Yahoo closed down its Maven Networks platform, which it had only acquired in Feb '08. Having spent time at Maven, I can attest that its technology would have been well-suited to supporting the engagement and interactivity requirements of these new Yahoo-GroupM branded entertainment projects. Yahoo's video strategy, such as it is, remains very confusing to me.

Note there will be no VideoNuze email on Monday as I'll be in Denver moderating the Broadband Video Leadership Breakfast at the CTAM Summit...enjoy your weekend!

1Cast, an aggregator of short-form news-oriented video clips from premium content providers, is announcing its commercial launch today, joining others in the personalized video news category like Voxant, ClipSyndicate, RedLasso (for local news), plus other online news aggregators. Following its year-long private beta test, 1Cast is also announcing today a redesigned UI, distribution partnerships with boxee and Clearwire, the WiMax wireless provider, and a new entertainment category anchored by E! Entertainment and Style. Yesterday I caught up with Anthony Bontrager, 1Cast's CEO to learn more.

Anthony explained that 1Cast users are now consuming 3.5 million video clips/mo, contributing to average session lengths of 14 minutes on the desktop and 36 minutes on mobile devices. With average clips running 2-3 minutes apiece, that means users are watching a series of clips back-to-back when checking the site. 1Cast gives users the ability to set up their own "casts" selecting from preset categories and networks. The casts are automatically updated each time new content is added by 1Cast. I've played around with the site and have found it very straightforward to find and organize content. My only knock is that sometimes content is not that current. For example, even though the Red Sox played until Oct 11th when they lost the ALDS to the Angels, a search for "Boston Red Sox" on 1Cast listed the first video result from Aug 26th.

1Cast obtains clips from news providers like AFP, Barron's, BBC, MarketWatch and Reuters. For these providers 1Cast represents additional distribution and revenue. 1Cast is completely ad-supported, and Anthony said that it is selling 80% of its own ads, with YuMe selling the rest. CPMs are in the $25 range. Ads are primarily 15 second mid-rolls and post-rolls, with bumpers at the beginning of sessions. 1cast revenue shares with its content partners, but Anthony wouldn't disclose what percentage. He did point to a recent 6 figure campaign Infinity ran on the site as a major validation of 1Cast's model.

1Cast and the other personalized video aggregators play well to the short-form consumption behavior of online video users. This is even more so the case with mobile consumption. The distribution deals with boxee and Clearwire will help 1Cast gain more visibility and usage.

As I said when I first covered 1Cast in Aug '08, I think personalized video news is a very compelling concept, but my concern with 1Cast and the others specializing in this area is whether they can build sufficiently large audiences and scale their businesses.

While many in the industry are focused on the shift of long-form premium content to online viewing - and importantly its financial viability - Metacafe and others are continuing to prove the appeal of short-form premium content online. Although it's tempting for many to see the online video platform as a me-too medium to distribute existing programs, Metacafe's success shows that online video has its own unique usage characteristics which can be exploited. I caught up with Metacafe's CEO Erick Hachenburg recently to learn more.

Metacafe focuses on 5 "hubs": TV, Movies, Music, Sports and Video Games, which was just launched in mid-September with EA as the lead sponsor. There are also "channels" which group content by partner. Metacafe works closely with content partners like studios, TV networks, sports leagues, independent broadband-only producers and video game publishers. It also accepts user uploads, but these are filtered through an internal process before being posted on the site. Erick explained that Metacafe strives for an "entertainment sensibility" across the hubs as a differentiator.

Browsing through the site reveals a combination of clips, trailers and UGC videos. One thing you notice quickly about Metacafe is that it is very orderly. It's not just that content is well presented, but also that videos seem to be where they should be, have accurate descriptions and play with uniform quality. While YouTube can often feel overwhelming, Metacafe feels like a better managed environment. This reflects Metacafe's emphasis on curating everything that goes on its site, so that specific content gets showcased and any duplicates are removed.

The approach appears to be working. In July Metacafe had its best month, attracting 12 million unique visitors in the U.S. according to comScore, up 67% vs. July '08. Because Metacafe doesn't syndicate out its content, preferring instead to build a community-centric destination, it wants to be judged by how well it ranks as a destination video site. By this count according to comScore, it's behind only YouTube, which is a clear #1 with 98 million visitors. Globally Metacafe was #3 in July at just over 50 million visitors, behind YouTube (437 million) and Dailymotion (58 million) according to comScore. Of course because syndication is such a huge trend, the rankings are completely different when this is factored in, with Metacafe falling out of comScore's top 10.

Validating the short-form genre's online appeal, research Frank N. Magid Associates conducted over the summer showed that 37% of consumers it surveyed said they found short professional videos equally or more entertaining than full-length TV shows on their television set. In addition, it found that 8 of the top 10 most watched types of online video are short form, with UGC, news, music videos, movie previews and comedy topping the list. While the Magid research was sponsored by Metacafe, it synchs with what I continue to hear anecdotally. With most online viewership still on the computer, and in-browser, short clips are most natural to watch for many.

Erick also reported that Metacafe is generating 20-25% quarter-over-quarter revenue growth and is poised to break even sometime in 2010. A key ad unit the site uses is a large billboard which dominates the top of the page. Pre-rolls seem to be inserted before every clip viewed; I didn't notice any frequency capping.

Add it all up and Metacafe's focus on curated short-form premium content in entertainment-related categories seems to be paying off, proving that there's success to be had operating in the long shadow of both YouTube and TV-oriented sites like Hulu.

What do you think? Post a comment now.

Adobe launches Flash 10.1 with numerous video enhancements - Adobe kicked off its MAX developer conference with news that Flash 10.1 will be available for virtually all smartphones, in connection with the Open Screen Project initiative, will support HTTP streaming for the first time, and with Flash Professional CS5, will enable developers to build Flash-based apps for the iPhone and iPod Touch. All of this is part of the battle Adobe is waging to maintain Flash's lead position on the desktop and extend it to mobile devices. The HTTP streaming piece means CDNs will be able to leverage their HTTP infrastructure as an alternative to buying Flash Media Server 3.5. Meanwhile Apple is showing no hints yet of supporting Flash streaming on the iPhone, making it the lone smartphone holdout.

Hulu gets Mediavest multi-million dollar buy - Hulu got a shot in the arm as Mediaweek reported that the Publicis agency Mediavest has committed several million dollars from 6 clients to Hulu in an upfront buy. Hulu has been flogged recently by other media executives for its lightweight ad model, so the deal is a well-timed confidence booster, though it is still just a drop in the bucket in overall ad spending.

IAB ad spending research reports mixed results - Speaking of ad spending, the IAB and PriceWaterhouseCoopers released data yesterday showing overall Internet ad spending declined by 5.3% to $10.9B in 1H '09 vs. 1H '08. Some categories were actually up though, and online video advertising turned in a solid performance, up 38% from $345M in 1H '08 to $477M in 1H '09. Though still a small part of the overall pie, online video advertising's resiliency in the face of the recession is a real positive.

Yahoo ups its commitment to original video - Yahoo is one of the players relying on advertising to support its online video initiatives, and so Variety's report that Yahoo may as much as double its proportion of originally-produced video demonstrates how strategic video is becoming for the company. Yahoo has of course been all over the map with video in recent years including the short tenure of Lloyd Braun and then the Maven acquisition, which was closed down in short order. Now though, by focusing on short-form video that augments its core content areas, Yahoo seems to have hit on a winning formula. New CEO Carol Bartz is reported to be a big proponent of video.

AEG Acquires Incited Media, KIT Digital Acquires The FeedRoom and Nunet - AEG, the sports/venue operator, ramped up its production capabilities by creating AEG Digital Media and acquiring webcasting expert Incited Media. Company executives told me late last week that when combined with AEG's venues and live production expertise, the company will be able to offer the most comprehensive event management and broadcasting services. Elsewhere, KIT Digital, the acquisitive digital media technology provider picked up two of its competitors, Nunet, a German company focused on mobile devices, and The FeedRoom, an early player in video publishing/management solutions which has recently been focused on the enterprise. KIT has made a slew of deals recently and it will be interesting to watch how they knit all the pieces together.

Product news around video delivery from VBrick, Limelight and Kaltura - Last but not least, there were 3 noteworthy product announcements yesterday. Enterprise video provider VBrick launched "VEMS" - VBrick Enterprise Media System - a hardware/software system for distributing live and on-demand video throughout the enterprise. VEMS is targeted to companies with highly distributed operations looking to use video as a core part of their internal and external communications practices.

Separate, Limelight unveiled "XD" its updated network platform that emphasizes "Adaptive Intelligence," which I interpret as its implementation of adaptive bit rate (ABR) streaming (see Limelight comment below, my bad) that is becoming increasing popular for optimizing video delivery (Adobe, Apple, Microsoft, Apple, Akamai, Move Networks and others are all active in ABR too). And Kaltura, the open source video delivery company I wrote about here, launched a new offering to support diverse video use cases by educational institutions. Education has vast potential for video, yet I'm not aware of many dedicated services. I expect this will change.

Following are 4 news items worth noting from the week of Sept. 26th:

1. Summer '09 was a blockbuster for online video - comScore released U.S. online video viewership data early this week, providing evidence of how big a blockbuster the summer months were for each metric comScore tracks. The 3 metrics that I watch most closely each month showed the healthiest gains vs. April, the last pre-summer month comScore reported. Total videos viewed in August were 25.4 billion, a 51% increase over April's 16.8 billion. The average number of videos watched per viewer was 157, up 41% from April's 111. And the average online video viewer watched 582 minutes (9.7 hours), a 51% increase from April's 385 (6.4 hours).

Also worth noting was YouTube crossing the 10 billion videos viewed in a single month mark for the first time, maintaining a 39.6% share of the market. According to comScore's stats I've collected, YouTube has been in the 39% to 44% market share range since May '08, having increased from 16.2% in Jan '07 when comScore first started reporting. Hulu also notched a winning month. While its unique viewers fell slightly to 38.5M from 40.1M in April, its total video views increased from 396M to 488.2M, with its average viewer watching 12.7 videos for a total of 1 hour and 17 minutes. It will be very interesting to see if September's numbers hold these trends or dip back to pre-summer levels.

2. So this is how to make funny viral branded videos - I was intrigued by a piece in ClickZ this week, "There's a Serious Business Behind Funny Viral Videos" which provided three points of view - from CollegeHumor.com, The Onion and Mekanism (a S.F.-based creative production agency) - about how to make branded content funny and then how to make it go viral. The article points out that a whole new sub-specialty has emerged to service brands looking to get noticed online with their own humorous content.

Humor works so well because the time to hook someone into a video is no more than 2-3 seconds according to Mekanism's Tommy Means. Beyond humor, successful videos most often include stunts or cool special effects or shock value. Once produced the real trick is leveraging the right distribution network to drive viral reach. For example, Means describes a network of 100 influencers with YouTube channels who can make a video stand out. After reading the article you get the impression that there's nothing random about which funny videos get circulated; there's a lot of strategy and discipline involved behind the scenes.

3. Wired magazine's article on Netflix is too optimistic - I've had several people forward me a link to Wired magazine's article, "Netflix Everywhere: Sorry Cable You're History" in which author Daniel Roth makes the case that by Netflix embedding its streaming video software in multiple consumer electronics devices, the company has laid the groundwork for a rash of cable cord-cutting by consumers.

I've been bullish for sometime on Netflix's potential as an "over-the-top" video alternative. But despite all of Netflix's great progress, particularly on the device side, its Achilles' heel remains content selection for its Watch Instantly streaming feature (as an example, my wife and I have repeatedly tried to find appealing recent movies to stream, but still often end up settling for classic, but older movies like "The English Patient").

Roth touches on this conundrum too, but in my opinion takes a far too optimistic point of view about what a deal like the one Netflix did with Starz will do to eventually give Netflix access to Hollywood's biggest and most current hits. The Hollywood windowing system is so rigid and well-protected that I've long-since concluded the only way Netflix is going to crack the system is by being willing to write big checks to Hollywood, a move that Netflix CEO is unlikely to make. The impending launch of TV Everywhere is going to create whole new issues for budding OTT players.

Although I'm a big Netflix fan, and in fact just ordered another Roku, I'm challenged to understand how Netflix is going to solve its content selection dilemma. This is one of the topics we'll discuss at VideoNuze's CTAM Summit breakfast on Oct. 26th in Denver, which includes Roku's VP of Consumer Products Tim Twerdahl.

4. VideoSchmooze is just 1 1/2 weeks away - Time is running out to register for the "VideoSchmooze" Broadband Video Leadership Evening, coming up on Tues, Oct 13th from 6-9pm at the Hudson Theater in NYC. We have an amazing discussion panel I'll be moderating with Dina Kaplan (blip.tv), George Kliavkoff (Hearst), Perkins Miller (NBC Sports) and Matt Strauss (Comcast). We'll be digging into all the hottest broadband and mobile video questions, with plenty of time for audience Q&A.

Following the panel we'll have cocktails and networking with industry colleagues you'll want to meet. Registration is running very strong, with companies like Sprint, Google/YouTube, Cox, MTV, Cox, PBS, NY Times, Morgan Stanley, Hearst, Showtime, Hulu, Telemundo, Cisco, HBO, Motorola and many others all represented. Register now!

Following are 4 news items worth noting from the week of Sept. 21st:

1. Bashing Hulu gains steam - what's going on here? - These days everyone seems to want bash Hulu and its pure ad-supported business model for premium content. Last week it was Soleil Securities releasing a report that Hulu costs its owners $920 per viewer in advertising when they shift their viewership. This week, it was a panel of industry executives turn. Then a leaked email from CBS's Quincy Smith showed his dissatisfaction with Hulu, and interest in trying to prove it is the cause of its parent networks' ratings declines.

What's happening here is that the world is waking up to the fact that although Hulu's user experience is world-class, its ad model implementation is simply too light to be sustainable. I wrote about this a year ago in "Broadcast Networks' Use of Broadband Video is Accelerating Demise of their Business Model," following up in May with "OK, Hulu Now Has ABC. But When Will it Prove Its Business Model?" Content executives are finally realizing that it is still too early to put long form premium quality video online for free. Doing so spoils viewers and reinforces their expectation that the Internet is a free-only medium. When TV Everywhere soon reasserts the superiority of hybrid pay/ad models, ad-only long-form sites are going to get squeezed. At VideoSchmooze on Oct 13th, we have Hulu's first CEO George Kliavkoff on our panel; it's going to be a great opportunity to understand Hulu's model and dig further into this whole issue.

2. TiVo data on ad-skipping for Emmy-winning programs should have TV industry alarmed - As if ad-skipping in general wasn't already a "hair-on-fire" problem for TV executives, research TiVo released this week on ad-skipping behavior specifically for Emmy-winning programs should have the industry on DEFCON 1 alert. Using data from its "Stop | Watch" ratings service, TiVo found that audiences for the winning programs in the 5 top Emmy categories - Outstanding Comedy Series, Drama Series, Animated Program, Reality-Competition and Variety/Music/Comedy Series - all show heavier than average (for their genre) time-shifting. The same pattern is true for ad-skipping; the only exception is "30 Rock" (winner of Outstanding Comedy Series) which performs slightly better than its genre average.

The numbers for AMC's "Mad Men" (winner of Outstanding Drama Series), are particularly eye-opening: 85% of the TiVo research panel's viewers time-shifted, and of those, 83% ad-skipped. (Note as an avid Mad Men viewer, I've been doing both since the show's premiere episode. It's unimaginable to me to watch the show at its appointed time, and with the ads.) The data means that even when TV execs produce a critical winner, their ability to effectively monetize it is under siege. How long will BMW sign up to be Mad Men's premier sponsor with research like this? TiVo's time-shifting data shows why network executives have to get the online ad model right. When TV Everywhere launches it will cater to massive latent interest in on-demand access by viewers; it is essential these views be better monetized than Hulu, for example, is doing today.

3. Radio stations push into online video as GAP Broadcasting launches with VMIX - Lacking its own video, the radio industry has been a little bit of the odd man out in the online video revolution. Some of the industry's bigger players like Clear Channel have jumped in, but there hasn't been a lot of momentum, especially with the ad downturn. But this week GAP Broadcasting, owner of 116 stations in mostly smaller markets announced a partnership with video platform and content provider VMIX. I talked to VMIX CEO Mike Glickenhaus who reported that radio stations are starting to get on board. For GAP, VMIX is providing an online video platform, premium content from hundreds of licensed partners, user-generated video tools and sales training, among other things. GAP's goal is to be a "total audience engagement platform" not just a radio station. Sounds right, but there's lots of hard work ahead.

4. So is there a "Long Tail" or isn't there? Ever since Chris Anderson's book "The Long Tail" appeared in 2006 there have been researchers challenging his theory which asserts that infinite shelf space drives customer demand into the niches. The latest attempt is by 2 Wharton professors, who, using Netflix data, observe that the Long Tail effect is not ironclad. Sometimes it's present, sometimes it's not. Anderson disputes their findings. The argument boils down to the definitions of the "head" and "tail" of the markets being studied. Anderson defines them in absolute terms (say the top 100 products), whereas the Wharton team defines them in terms of percentages (the top 1 %).

I've been fascinated with the Long Tail concept since the beginning, as it potentially represents a continued evolution of video choice; over-the-air broadcasting allowed for 3 channels originally, cable then allowed for 30, 50, 500, now broadband creates infinite shelf space. Independent online video producers and their investors have bet on the Long Tail effect working for them to drive viewership beyond broadcast and cable. With Nielsen reporting hours of TV viewership holding steady, we haven't yet seen cannibalization. However, with Nielsen, comScore and others reporting online video consumption surging, audiences may be carving out time from other activities to go online and watch.

Enjoy your weekends! There will be no VideoNuze on Monday as I'll be observing Yom Kippur.