Posts for 'Aggregators'

A piece of news that emerged about Blockbuster courting mobile handset makers to make movies available strikes me as wrong-headed. And note this is from someone who's sometimes been accused of being insufficiently critical of even the most new-fangled video delivery concepts.

However, this idea stretches the mind too far. Watching a 2 hour movie on a mobile handset's tiny screen. How many people are going to be willing to do that? And to run their battery down for this pleasure? Not many is my guess. Not to mention that mobile content is all about short-form, bite-sized chunks. You know - you find yourselves with 5-10 minutes of downtime waiting for your plane, your kid or your coffee. So watch some news or sports clips. But a whole movie? Forget it.

These days people are so enthusiastic about broadband and mobile as opening up new market opportunities that they often focus too quickly on the technology-based, "Cool, we can really do this?" question, instead of the consumer-based, "Is there really a need to be filled?" question. My bet is that more of the latter and less of the former will lead to success. Hopefully Blockbuster will realize this soon and not waste too many cycles on this idea.

Traditional relationships between content providers and powerful aggregators/distributors are being fundamentally challenged broadband video. That's because broadband is an open medium, allowing content providers and brands to enjoy unprecedented direct access to their target audiences. This diminishes a lot of the leverage that aggregators/distributors have traditionally had.

Yet, as I have said for a while, I believe that there's a place for direct-to-consumer and third party distribution/promotion to co-exist harmoniously. But finding good examples has been a challenge. That's why a deal that KickApps announced today with MySpace and VIBE for its "Vibe Verses 3" promotion resonated strongly for me.

 In a nutshell here's how the deal works: a major social networking site (MySpace) has partnered with a specialty publisher (VIBE) for a user generated video-dominated contest (VIBE Verses 3) to build a long term user-generated franchise (powered by KickApps), which will be mainly supported by ad sales.

To understand the deal better, I talked to Michael Chin, SVP of Marketing at KickApps earlier this week. For those not aware, VIBE is a major brand for the urban scene and VIBE Verses 3 is the third round of a contest that "challenges aspiring rap artists to upload videos of themselves performing original lyrics over pre-selected music tracks." Basically you can think of it as an "online-only, urban American Idol." All of the video uploads and social networking is powered by KickApps.

What's interesting to me is that MySpace is involved as the main promotional partner, seeking to build out its strength in this key category. As a large general purpose community site, they're partnering with VIBE, a well-known brand in the category, to bring more value to their members. As Josh Brooks at MySpace puts in the release, "VIBE is a pillar in hip hop and this partnership will help solidify MySpace as the place online for established and developing hip hop artists."

 And according to Michael, this was done as a biz dev deal, not an ad sales deal. MySpace and VIBE believe that together they can build a franchise in hip hop that generates longer term value by creating a large, engaged audience of interest to other brands (e.g. Coke, Nike, etc.).

Of course none of this would be possible without broadband - it's the enabler for the user-generated videos that are at the heart of the contest.

Not breaking news now, but Hulu lifted the veil of secrecy a bit today, releasing some screen shots and setting up a private beta (I'm trying to yank some strings to get access), in advance of a planned public launch early next year.

Hulu's been surrounded by a bunch of naysayers from the beginning, though much of the nay-ing has been based on little else than cheap shots about the name, delayed launch, etc. Things that in the grand scheme of things mean virtually nothing in my opinion and only serve to distract attention from the real question at hand: can Hulu become NBC and Fox's (for now) formula for success in the broadband video era?

Now it's time for Hulu to silence the rabble. Until I get my own hands on it, I'm going to reserve in-depth commentary. But at least several things that look intriguing:

• Shorter commercial breaks and overlays - Looks like the tension between user focus vs. advertiser focus is skewing toward users. A welcome change from traditional media thinking.
• Widespread distribution - I've been a big fan of this from the start. Deals with AOL, Yahoo, MySpace, Comcast, etc. ensures that Hulu content is widely available where users already are.
• More content deals - One of the knocks on Hulu was that neither CBS nor ABC joined up front. However, recent deals with Sony and MGM show Hulu continues to gain traction with other premium providers.
• Features - Beyond the standard range of embed, full-screen, send-to-friend features, it looks like there's an interesting "custom clip" capability to let users crop out scenes from favorite shows to pass along. This user control could enable massive new short form video inventory and could be a precursor to more interesting and creative user-generated mashups. All of this is highly monetizable.

More thoughts on Hulu to come.

One of the things I really enjoy about being an analyst in the burgeoning broadband video industry is getting first-hand exposure to all the clever innovation that's going on. I find it endlessly fascinating to hear directly from entrepreneurs on the front lines where the kernel of their idea came from which led to their business plan. A user experience issue? A technology deficiency? A business model flaw? Over the years I've heard many stories. Some kernels have real weight, while some don't quite resonate for me.

Magnify.net falls into the former category. My read is that this is a company trying to solve a real problem with a very clever solution and the right "corporate attitude" to make it a likely winner.

Magnify is actually solving a number of real problems, many of which relate to the highly distributed or "Long Tail" nature of the Internet and broadband video. First is that while consumers love broadband video, finding what they want is problematic. Novelty quickly turns to frustration when rummaging through big video sharing sites to find something relevant. No matter how much users want choice, some level of editorial or "curation" is essential to optimize their experience.

Magnify enables existing enthusiast or vertical web sites (whether independent or major media) to obtain video from the best video sharing sites (YouTube, Metacafe, etc.) and coherently present a screened assortment to their users. The sites' use their editorial skills to sort the wheat from the chafe, with easy-to-use admin tools ensuring that no offending video slips through the cracks.

So the second problem Magnify solves is enabling thousands (17,500 and counting to be exact) of sites to provide quality video to their users without the hassle and expense of creating it themselves (the "matchmaker" role). These sites get 50% of the revenue from the ads Magnify sells around the video (or they can keep up to 50% of the inventory to sell themselves), leveraging their audience and subject matter expertise. Incorporating video into web sites is becoming online table stakes. I agree with Steve, in the years ahead, sites without video are going to look "charming".

The only real hole I can find in Magnify's model is that it doesn't currently compensate the content creators themselves (a la Revver for example). However I'd expect that to change as creators upload directly to Magnify and the company's network and traffic builds out over time.

Lastly, I like Steve's attitude. He views the market as an incredibly expanding pie, and not "winner take all." As a result, while there are others who touch on Magnify's space (Brightcove, ROO, VideoEgg, Ning, KickApps, etc.), he's less concerned about competition per se and matching feature-for-feature, but rather on responding to the needs and wants expressed directly by their own user base. Companies that do this ultimately win, regardless of competition.

The Magnify story plays into a number of areas I follow closely - the changing role and power of video distributors, the continued "nichification" of video, the challenge of video discovery and the reliance on ads, not subscription fees. To the extent that their approach succeeds it will further morph traditional video models. For a 10 person company that's only done an angel round, they've accomplished a lot in addressing genuine Long Tail issues in the broadband video industry. (Btw, TechCrunch has 2 great reviews, here and here).

The news that eBay was going to write a portion of its Skype purchase did not really surprise many people, although its magnitude, $1.4B out of $2.6B paid still felt shocking. At the time of the deal, it seemed the only

Not to take anything away from the potential of Joost, the pair's much-heralded broadband video aggregator, but if you were considering making an investment in the company or any other in the video space, wouldn't this whole eBay-Skype affair make you cautious? Seeing such a gigantic writedown, and now the admission that the projections has to make prospective investors just a little more cautious about Joost, and all other video players as well.

I'm asked frequently, is there a bubble in the video space? I think the answer is that yes, investors are getting too enthusiastic, as they always do when they smell a transformative opportunity. The Skype writedown is a reminder to all investors in the space that being optimistic about broadband's potential is right, but keeping their sanity regarding valuations is critical. eBay just reminded all of us of the cost of not doing so.

Herb Scannell, who was on my CTAM panel yesterday pointed me to "Internet People" part of his firm's Channel Federator "Meth Minute 39" series (side note, it's actually quite clunky to try to adapt traditional TV lingo to describe broadband video properties...). If you haven't seen it, I highly recommend. It's like a stroll down the Internet's memory lane. All the famous and infamous characters over the years.

What's impressive about Internet People how it shows how fluid creative development and partnerships around broadband video (especially animation) is. Herb said that his partner at NNN was exposed to Dan Meth's "Hebrew Crunk" animation and that spurred them to work together. They had a similar philosophy and were able to figure out a relationship quickly. Also, I asked Herb how long he estimated it took to create Internet People..he thought less than 100 hours probably. And NNN coordinated to premier Internet People on YouTube, helping drive 800K views in the first week.

Pretty impressive, see for yourself.

Today I moderated a spirited discussion panel at CTAM NY’s annual Blue Ribbon Breakfast at Gotham Hall in NYC. The title was "Over the Top TV....Can Broadband Video Be Cable's Newest Opportunity?" We had an amazing group of panelists (click here to see list and listen to podcast) and with 450+ attendees a packed house as well.

A key question we dug into was whether and to what extent cable’s traditional (and highly successful) paid subscription model will be impaired by the rise of broadband video usage. Try as I did to see if any of the panelists believe that it will, none would admit to it. The reasons given included, "some form of a paid model will always exist but will never succumb entirely to a free, ad-supported model" to "cable networks won’t push broadband video distribution of their programs so hard as to upset the current model of receiving affiliate fees from cable operators", to "the low probability that inexpensive PC-to-TV bridge devices will proliferate any time soon" to "viewers have shown that they want a selection of channels to browse."

While I think each of these answers is quite legitimate, my point of view is that we are in the early days of an fundamental transformation in the video (and indeed the media more generally) business that will eventually (though of course who knows when and to what eventual degree) see most, if not all programming get unbundled into a fully on-demand paradigm.

I believe the ultimate answer to how cannibalistic broadband is toward cable ultimately turns on whether consumers believe it’s a "zero sum" game, meaning they choose between EITHER accessing programs via a VOD or DVR offering only available if they’ve bought into a monthly multi-channel video subscription (that’s to say the way the world works today) OR if they opt out of that subscription offering and INSTEAD choose to buy these programs a la carte, or receive them free, courtesy of a highly targeted ad model. The opt out option would of course be available through open broadband video distribution.

All trends point to the latter ultimately prevailing. While cable operators are well-positioned to shift their models to exploit this behavior if they act aggressively, they are also vulnerable to it if they don’t. The most important driver of the "opt out" scenario is that for an increasingly larger portion of our society, their behavior and expectations are formed by the Internet. And the ‘net is a completely personalizable and on demand medium. Especially for most online media, it is also mainly free, or paid on a fully a la carte basis (e.g. iTunes). Users’ expectations are through the roof and only getting higher. As broadband proliferates they will bring these same expectations to their decision-making.

Is it really realistic to believe that in 5 years when today’s MySpace/Facebook/YouTube/iTunes crazed 16 year old kid goes to set up his/her first apartment, s/he is going to embrace the notion of subscribing to a hundred channel package just so s/he can watch a handful of programs on demand? And of course, the ‘net’s behavior change isn’t confined to kids, it’s pervasive across all age groups.

Cable operators have an outstanding opportunity to capitalize on these macro behavioral trends. But doing so will require cable operators to make a significant and risky departure from their traditional subscription-based business models. It’s a classic incumbent’s dilemma. It will be interesting to see if they can do so.