If you’re like me, you may have noticed that recently you’ve become a little less patient when you to try to watch a video and things don’t go exactly right. Whether it’s difficulty finding the desired video, momentary buffering, an intrusive/irrelevant ad or some kind of device issue - these sources of friction are increasingly noticeable and in turn disappointing.
I don’t find this surprising. We live in a world where instant gratification and seamless user experiences are becoming the new normal. Those that don’t measure up stand out more readily as sore thumbs. Among other things, we can now do a super-convenient voice search using a smart speaker, request a personal driver though Uber or Lyft with just a few taps on our smartphones, get a refund on an Amazon return the moment the package is scanned at UPS and lots more. Simply put, for many of us, the Internet and apps are making life easier all the time.
Yesterday's WSJ article about Disney's new DRM initiative, dubbed "Keychest" was another sign that in the digital era, Disney keeps walking to the beat of its own drummer. Combine Keychest with Disney CEO Bob Iger's repeated skepticism about TV Everywhere and the need for Disney to receive incremental payments for online distribution and it's not hard to conclude that Disney envisions retaining much more control over how its content is delivered and priced going forward. It's also not hard to conclude that Disney's largest individual shareholder Steve Jobs's influence is being felt in the company's decision-making.
The Keychest DRM initiative in particular shows a real streak of separatism by Disney given the critical mass that DECE (the Digital Entertainment Content Ecosystem) has gained. DECE counts among its members multiple studios (Sony, Warner Bros., NBCU, Lionsgate, Fox), technology providers (Microsoft, Intel, Dolby, Philips, HP, Cisco, etc.) and delivery outlets (Comcast, Best Buy). Granted, DECE hasn't shown a whole lot of progress yet, but that's pretty much to be expected when you have this many big players at the table. Still, even getting all these companies to join forces is a hopeful sign of inter-industry collaboration.
And as the WSJ article underscores, the need to introduce some form of standardized DRM for movies in particular is growing more urgent. DVD sales, the industry's cash cow for years, are off by 25% at certain studios, yet movie downloads don't yet come close to filling the gap. Downloading is not only still a new experience for many, but it introduces key limitations (lack of portability, non-ubiquitous playback and confusing usage rights) that are significant inhibitors for future growth. Let's face it, not a lot of people are going to invest in building downloaded movie libraries when it's difficult or impossible to do something basic like play a movie on 2 different TV sets in their home. Downloading's issues need to be solved quickly if it is going to take off.
Meanwhile, Disney's posture on TV Everywhere has created real questions about what the company's goals are in online content distribution. VideoNuze readers know that I've been bullish on TV Everywhere because it's a win for the 3 main constituencies - incumbent video providers (cable operators and telcos), cable TV networks and consumers. By forcefully advocating a plan to offer TV Everywhere as a value-add to existing subscribers, with no incremental fees, video providers laid the logical foundation for cable networks not to expect incremental distribution fees ("We're not charging anything extra, so you shouldn't expect to either.").
From my point of view, rationale cable network executives should be excited with the prospect of TV Everywhere, as it provides them an on-ramp to online distribution (which they've been shut out of to date, given the absence of a sound online business model and fearing a backlash from paying distributors if they offered their content for free streaming) while preserving their incumbent dual revenue-stream approach and expanding their advertising potential.
Nonetheless, Disney seems unsatisfied. CEO Iger continues to float the idea of incremental payments for online access, even suggesting it will launch its own subscription services. That could mean consumers face the prospect of paying twice for the same content, which is unrealistic even for ESPN's vaunted sports coverage. Disney has seen success with ESPN 360, its premium online service, but it offers distinct content (supplementary pro-sports coverage and niche sports coverage) from its flagship channels. And it should be noted that broadband ISPs pay for 360, not consumers directly.
I tend to believe we're seeing Steve Jobs's influence behind the scenes with both Keychest and Disney's posture on TV Everywhere. That's pure speculation on my part I'll admit. But "Think Different" is more than a slogan for Jobs and Apple. The company's ability to succeed by pursuing a non-conformist, innovative path (e.g. iPods, iTunes, iPhones, Macs, etc.) in the face of market norms is beyond dispute. Emboldened by Apple's success and understanding the strength of Disney's franchises as an insider suggests Jobs would encourage Disney not to be constrained by nascent industry-wide initiatives. At a minimum Apple provides Disney with a pretty compelling case study of how to succeed by zigging when others are zagging.
No question, Disney has incredible brands, and is probably in the best position among major content providers to influence how things will unfold in the digital era. And its investment in Hulu shows it is willing (albeit belatedly), to align with joint industry initiatives. Still, its Keychest project and resistance to TV Everywhere raise the possibility that in pursuing its own path it could not only miss out on or delay benefiting from the efforts of others in the industry, but could also be over-reaching with the result being consumer confusion and discontent. Disney holds strong cards, but it needs to be careful how it plays them.
What do you think? Post a comment now.
On this Friday, something a little different from VideoNuze.
For all of us, these highly uncertain economic times are upending many assumptions and expectations we hold about the business climate in general and the broadband industry in particular. Questions abound: Will VCs continue to invest or will they recoil to the sidelines? Will media companies continue to push new broadband initiatives, or will they curtail them? Will advertising and consumer electronics spending hold up, or crater?
The economic crisis is causing tremendous anxiety, which I hear about daily from industry colleagues. This has all prompted me to recall a piece I wrote 3 1/2 years ago when I was doing a lot of consulting. The concepts feel more relevant today than ever, and so I'd like to share an except today. I hope it's valuable food for thought.
A Question for You
Several years ago I attended my business school reunion. At these reunions, various professors hold sessions featuring short lectures and mini-case studies. These are invariably thought-provoking and amusing.
One of the sessions I attended focused on understanding how we as human beings make our decisions. The assumption is that by breaking down and studying this process, we can improve the odds that our decisions and actions will lead to the results we seek.
To stimulate the audience's thinking and illustrate the particular points one professor sought to make, throughout the session he posed a series of questions and puzzles.
One of the questions was as follows:
"You are stranded on a deserted island. A genie allows you to have one book or person with you. Which book or person would you choose?"
(To play along, pause for a moment before reading on and consider how YOU would answer.)
...OK, who or what did you choose? And be honest!
In my session, attendees immediately started calling out all kinds of answers ranging from "my wife/husband/kid(s) to "Jennifer Anniston/Halle Berry/Brad Pitt/Harrison Ford" to "the Bible/Torah/Koran, etc.
The professor kept listening until someone quietly provided the answer he was hoping for:
"The best boat builder in the world."
At this point the professor said, "Let me help you by this time asking the question a little differently:"
"You are stranded on a deserted island. On the likely assumption that you didn't choose to be in that situation, what's the SINGLE MOST IMPORTANT THING TO YOU?"
In unison now, the attendees exclaimed:
Thinking in Terms of a "GOTI" Objective Radically Simplifies the World
"GOTI" stands for "Getting Off the Island." When faced with being stranded on a deserted island, there is really only one objective that matters (or should matter!) to you. Thinking in terms of a "GOTI" objective radically simplifies how to use your energies. It filters out the noise, distractions, anxieties and misperceptions about things you might be tempted to consider important, but which in fact aren't.
Like it or not, our motivations drive our actions. And our motivations are deeply influenced by the outcomes we are seeking. In the above example, not accurately identifying what should be the most important outcome (getting off the island) distracts our decisions and subsequent actions.
Why "GOTI" Thinking Matters Now More Than Ever
Most of the time we operate in a "multiple chances" environment. You don't quite get things right the first time, you get multiple chances to iterate and eventually find your way. That's not the case in uncertain economic times, when the difference between getting things right upfront or not could determine the actual survival of your company, job, initiative, etc.
"GOTI" thinking matters more than ever right now. Here's an example to make this tangible: The other day I had breakfast with a friend who's on the board of a young'ish technology company trying to get a foothold against a more established and better financed incumbent. The young company has limited resources and it believes it has two main differentiators: superior technology and the flexibility that its technology gives it to significantly under-price its larger competitor. Should it emphasize both differentiators equally?
In normal economic times the answer is likely yes. But GOTI thinking would lead its team to ask, "Look, we need sales NOW, so what's the quickest path to doing so? Might we actually lengthen the sales cycle by spending time trying to convince prospects of both of our benefits, especially since we already know that cost-reduction is one of THEIR key goals?"
This company would likely be better off just trying to establish technology parity with its competitor (an easier, "table stakes" positioning) and instead focusing heavily on proving its business case and cost-savings benefits. This kind of GOTI thinking would save the company's marketing and sales team from expending valuable energy on establishing technology superiority, which is not what matters most to the prospects right now anyway. This is an example of the kind of tradeoffs that GOTI thinking forces.
A Final Thought
I'm not suggesting GOTI thinking is easy, but I do think it's necessary. In the coming months many companies will squander valuable time and resources on things that are not truly important. Conversely, others will use GOTI thinking to stay focused and improve their odds of successfully coming through this economic storm. Which kind of company will yours be?
What do you think? Post a comment now!
I recently bought and set up a Harmony One universal remote control. I had heard about the Harmony products from many friends over the years, but had resisted purchase for a variety of reasons. Now, having completed a new family/TV room with home theater, I bought the latest model, the Harmony One. If you've never seen this device in action, it's a really neat marvel of consumer electronics.
And for the many companies trying to figure out how to build devices to bridge broadband video and TVs for mainstream consumers, it offers many usability lessons. I think that if they remember some of Harmony One's key design philosophies, their probability of eventual success would only be enhanced.
I think these are as follows:
Solve a pain point - The Harmony remotes solve a clear consumer pain point - multiple confusing remotes. The benefits are messaged clearly, starting with: "One-touch access to your entertainment. Enjoy easy, one-touch access to the home entertainment activiites you love." The current pain point in broadband is that you're practically locked to your computer to watch video. Resolve this pain point and message it properly and consumers will quickly "get it."
Make it easy to use - Everything about the Harmony One is easy and intuitive: set-up, use, updates. Nothing has been left to chance by its designers. In consumer electronics, "easy" almost always wins the day. Broadband devices need to execute on the "easy" value proposition. Of course there will be some crawling-behind-the-TV involved, but minimizing the hassle and speeding the process to realizing the benefits is essential.
Replacing may be better than augmenting - When it comes to entry strategy, it's often tempting to augment, rather than replace existing devices and services. That's a more evolutionary and seemingly likely path to success. Sometimes it is. But Harmony shows that a proposition of replacing existing devices (in this case, current remotes from cable operator, DVD player, A/V receiver, etc.) can actually the better way. Think how much more complicated Harmony's marketing task would be if they weren't able to make the simple but powerful claim of being able to replace ALL remotes. It no doubt took them a lot of extra work to execute on this, but it is well worth their while.
Similarly, for broadband device makers, addressing how not just broadband video, but also traditional TV gets delivered to the home may indeed the better way. Of course, that's a far bigger nut to crack, but at least initially, for a certain early adopter audience, the value proposition would likely resonate more clearly. The proposition changes from educating the customer about how the new box fits in, to a more straightforward all-encompassing pitch - "We know you love TV and broadband. Now you can easily get it all, on your familiar TV."
To be fair, figuring out how to bring broadband to the TV is a more involved task than building a universal remote control. There are more stakeholders, technical issues and usability challenges. While adhering to Harmony One's few simple design tenets won't guarantee eventual success it will certainly enhance the likelihood of it. For consumers looking to enjoy broadband video on their TVs, that would be great news.
What do you think? Post a comment and let everyone know!
One of the hottest corners of the broadband video market is the ad-supported "how-to" category. How-to lends itself well to video because, if a picture's worth a thousand words, a video is surely worth a million. Recognizing this, there's now a host of start-ups in this category which together have raised tens of millions of dollars. I wrote about some of this a couple months ago.
Several recent calls with industry participants got me to thinking the how-to category actually offers many valuable insights for all broadband industry participants. These fall into 3 key areas: content development, traffic acquisition and monetization.
1. Content: "Build Our Own" or "Offer a Superstore of Others' Videos"?
Players like Expert Village, 5Min, VideoJug and MonkeySee are pursuing the "build our own" video library approach, incenting individual "experts" to contribute to their sites. On the other hand, sites like WonderHowTo (WHT) and SuTree rely primarily on scouring user-generated video sites like YouTube, plus those above to aggregate the best videos available. With how-to being the ultimate "Long Tail" space, WHT's Stephen Chao told me in a recent briefing that trying to cover the infinite number of niches would be impossible. So to be comprehensive, relevant and high-quality, WHT curates what its crawlers return with a small in-house team and presents the cream of the crop to users, complete with a range of community-building features.
Here's one non-statistically significant example that illustrates the two approach's results: I did a search for "bbq steak video" on Expert Village, which bills itself as the "World's Largest How-to Video Site" and on WHT. EV returned 15 results, regrettably not one of which was relevant. WHT returned 357 results, and on the first page of 20 results alone, at least 12 looked relevant. These came from a wide variety of sources. Try doing a few searches and see what you find - my guess is your experience will be consistent with mine.
2. Traffic acquistion: Syndication or SEO?
All of these sites are ad-supported, so traffic is key. The sites with private libraries can syndicate to heavily-trafficked partners. Ordinarily, as a big syndication fan, I'd say that sounds like an advantageous traffic generating plan. But how-to may have a different traffic acquisition dynamic. It may well be that far more traffic will always come to these how-to video sites via searches at Google and other search sites, as compared with the sum of various syndication deals. That's because, absent a household brand-name in how-to, default consumer behavior may well be to simply type their how-to video query into Google.
If that's the case, then it will actually be those sites which have the most highly-optimized pages for all the niche videos that will gain greater traffic. Though I'm not an SEO expert, it seems to me that, taking my "bbq steak videos" example, WHT, with 357 related videos can optimize better than say EV with 15. And sure enough, when I ran the "bbq steak video" search on Google, right on the first page is a result from WHT, whereas nothing shows up for EV even after 5 pages. Bottom line: more relevant videos = more zero cost, Google-driven traffic.
3. Monetization: Video ads or Keyword-driven text/display ads?
Last but not least is monetization. How-to sites have lots of contextual ad potential. In my "bbq steak" example, any company that sells grills, steaks, sauces, etc, would love to advertise to me. It's tempting to believe that those with their own video libraries have more profit potential, because they can sell pre-roll or overlay ads, whereas a superstore site like WHT or SuTree cannot, because they're linking off to the source sites.
But consider this: how many of these potential advertisers will actually have video ads or the budget to create them? Unlike entertainment video, how-to, with its Long Tail character, seems to lend itself more to a low cost keyword ad approach which can be pursued by even the smallest advertiser. So say WHT or SuTree can build traffic in all those video niches and surround the video with keyword-driven text or display ads, all automated through a bidding system. Though yielding lower revenue per ad, my bet is that the total revenue for all ads with the keyword approach would be greater.
The how-to category is nascent and dynamic. I'm not suggesting for a second that it's a winner-take-all space or that all of the above are strictly "either/or." But I do believe the above analysis raises valuable points all industry participants should consider when developing their content, traffic and monetization strategies.
What do you think? Post a comment now!
Back in the mid-to-late '90s when I was running business development for Continental Cablevision, then the 3rd largest cable operator in the US, I had the opportunity to meet with a lot startups that wanted to partner with us to gain access to our 5 million subscribers. Meeting these startups and hearing their ideas was almost always interesting but all too often our talks were inconclusive.
Why? Because frequently there was at least one or more completely unrealistic assumption in their business plans, which made us skeptical about the company's likeliness to succeed. I often found that otherwise intelligent and analytical executives had somehow convinced themselves of something that just wasn't realistic. I came up with a catchphrase that helped guide our evaluation of proposed deals: our go/no-go decisions would be "constrained by reality."
That principle has stuck with me, and has been reinforced through my own startup experiences, watching CEOs who also understood this principle and those who did not. Being "constrained by reality" especially means that the optimism that all entrepreneurs and startup executives radiate must be tempered by a careful analysis of what's actually happening in the market and what limitations the new product, feature, deal, etc. will meet up against. Not doing so can be a fatal mistake.
I bring this up because, as with early other immature markets, the nascent broadband video space has become a hotbed of entrepreneurial activity. Yet I continue to be exposed to ideas that are not aligned with market realities or key customer priorities. These companies are in for a rocky road ahead.
Conversely, I'm often impressed with CEOs who are no less confident, but do completely grasp the importance of being "constrained by reality." One technology CEO told me recently that his team spends an inordinate amount of time focused on "sequencing" or trying to model their customers' priorities. This informs their product development agenda and helps them stay aligned with recognizable opportunities. Similarly, a content executive told me that his company is very focused on production cost per minute because, having done an analysis of advertising CPMs, sell-out rates and splits, they have a solid grasp of what's required to be profitable. Another content executive acknowledged that while changing behaviors in his large company was critical, it was akin to "turning a barge" - something that needs to be done slowly and with care.
The above examples illustrate the subtle mix of optimism and pragmatism required for success in the broadband video space. I often try to explain that as exciting as broadband video is, it must be looked upon in evolutionary, not revolutionary terms. Feeling the constant pressure of being "constrained by reality" helps instill the kind of discipline that ultimately contributes to success.
Yesterday's interview with market researcher Bruce Leichtman highlighted a key point in his latest study: that broadband video is most heavily adopted by 18-34 year old males. That point has been supported by research from other firms and is one of the key drivers behind a lot of the new broadband-only video programming that's sprouted up in the past couple of years.
A clear implication of this finding is that current video providers that target 18-34 males better be aggressively pursuing broadband video offerings if they want to stay competitive in this new media landscape.
But less clear is whether video providers that don't primarily target 18-34 males, or maybe have them as secondary audiences, should also be investing in this new medium in order to stay in synch with broadband users. Though other age groups and demos are also adopting broadband video, they are clearly less fervent, at least for now. In a world with finite resources, should these other video producers not worry so much about broadband video and instead stay mainly focused on their traditional approaches? Or should they invest in the broadband medium as well, even if their true target audiences may be smaller for now? I think they should do the latter, for the following 3 reasons:
1. Eventually broadband video usage will deeply penetrate all age groups. This is a macro trend that all programmers need to be in synch with. Previous technology adoption patterns show that what starts with young, and often male, early adopters, eventually spreads out to other groups as well. There's no putting the broadband video genie back in the bottle. Three-to-five years from now, virtually all Internet users will view video as just another routine application, alongside email, search, commerce, etc. Today's video providers need to position themselves properly.
2. Cultivating younger audiences is critically important. Marketing types always emphasize how important it is to cultivate younger audiences. Brand choices and loyalties are developed early, and it is more difficult down the road to influence these. Look around and see brands that once targeted somewhat older, and wealthier, segments but which now also try to target the young - Heineken, BMW and Tiffany to name a few.
The fact is that young people have energy, enthusiasm, spending power and a strong desire to promote their favorite brands to cohorts. So even video providers need that may not normally skew young need to figure out how to have some appeal to this group, because they will be key drivers of the brand's strength down the road. In fact this is what a number of cable networks, like Lifetime, AMC and Food Network been doing in recent years. Though they didn't originally target younger audiences, they began cultivating them through programming choices and marketing campaigns. They are all succeeding.
3. Now is the time to learn about broadband video. Given the above two reasons, it is urgent that video producers targeting all age groups and demos start their learning process now. Finding pockets of current heavy users to appeal to is the key challenge. As a new medium, broadband has its own set of capabilities well beyond being just another pipe to funnel current programming. Understanding these opportunities will not happen overnight. No video producer should wake up one day 3 years from now, when a healthy percentage of its viewers are spending substantial time on broadband, and realize they didn't cultivate the knowledge and skill sets to succeed in this new medium.
Video producers across the spectrum are grappling with how to attract and retain audiences in the broadband and on-demand era. Though 18-34 year old males are today's heaviest users, that will change over time. All video providers need to stay in synch with this.
What do you think? Post a comment and let us all know!
If you had any doubts that brand marketing and entertainment programming are converging, an hour spent listening to a presentation at the NATPE conference yesterday by Shelly Lazarus, Chairman and CEO of Oglivy & Mather Worldwide would have quashed them in a hurry.
This new reality is a direct result of the audience-fractured, advertising-averse world in which we now live. Ms. Lazarus believes that for agencies, "the challenge as stewards of brands is to help them tell a better story." In fact, telling a better story (the traditional agency imperative, I would argue) is no longer sufficient, as Ms. Lazarus continued: "Now brands need to be a part of the content story."
As such, she envisions far tighter links between ad agencies and the Hollywood creative community. Drawing a meaningful distinction about these industries' respective roles, she explained to the audience of content types: "We need all of you desperately...we can come up with a brand idea, but we can't do programming."
She emphasized repeatedly that to optimize the branded entertainment relationship, agencies and the advertisers they represent should not be called upon to "write a check" when production is virtually wrapped up. Rather, they should be brought in as early in the creative process as possible, and be provided an opportunity to help shape the story narrative and become a vital part of it.
Even while recognizing the role that brands have played since the early TV days of sponsored "soap operas", this proposed tight intertwining of advertising and programming will no doubt strike creative purists as heretical, while sending consumer protection advocates to DEFCON 5.
Regardless, the branded entertainment initiatives Oglivy is now encouraging its clients to selectively pursue reflects nothing more than the hard realities of today's complex and brutally competitive marketplace. Empowered by ever-stronger technologies - broadband chief among them - consumers are getting choosier in their media consumption habits, with advertisers and their messages getting the short end of the stick. With technology increasingly defining young people's lifestyles, this is a trend that will only intensify.
Faced with this daunting prospect, leaders in the agency world like Ms. Lazarus have astutely recognized that by carefully placing their clients' brands within the story line itself, they are creating a much-needed firewall, not to mention a breakthrough new consumer engagement opportunity. To be sure, branded entertainment is not a willy-nilly pursuit, at least not at Oglivy. The agency has set up a unit solely to create, execute and manage these opportunities. Listening to Ms. Lazarus, it was apparent that for all her enthusiasm for branded entertainment, she knows it's neither universally appropriate for all brands nor a catch-all cure to all that ails the industry.
Branded entertainment and broadband video are a perfect match in many respects. Broadband video's nascent development, combined with its still unclear monetization mechanisms and flexible/interactive capabilities make it fertile ground for agencies such as Oglivy to experiment.
So where specifically does all this lead? Three things I would bet on: more product-centric viral video initiatives like Dove's Evolution (presenting an opportunity for Dove - an Oglivy client - to "have a point of view about beauty," as Ms. Lazarus put it), more product sponsored and conceived programming (e.g. Hellmann's "In Search of Real Food" on Yahoo; Hellman's is another Oglivy client) and more user-generated video contests around products (e.g. Frito-Lay, Heinz, etc.).
Broadband video is flowering just as traditional advertising and entertainment forms are under increasing duress. As such, it will be an enormous sandbox for agencies, brands, content creators and their audiences to all play in.
Two weeks ago, in "Here Comes the Video Experience Era", I argued that in the future consumers' satisfaction with video will have less to do with traditional yardsticks. I tried to explain it this way: if you are a TV manufacturer, traditional consumer satisfiers have included "how big is my set and how great is the picture quality" while if you are a content provider, traditional satisfiers have been "how funny is that show, or seeing well-loved actors/actresses."
But in that prior post, coming at the conclusion of CES, I suggested that consumers are beginning to shift from using these metrics to gauge their own satisfaction with video. Instead they are increasingly looking for new and compelling video experiences, many of which are not yet well-defined. These might include how well do broadband-delivered video choices integrate with the overall TV experience, how can I interact with the content and with other viewers, or how can I move it around from device to device depending on my lifestyle?
I raise all of this again today because just this week I was provided with a very tangible data point supporting my assertions. A good friend of mine recently bought a 50 inch plasma HDTV (his first HDTV set). He doesn't work in the technology or content industries. To understand his technical orientation better, if on a scale of 1 to 10, 1 was a technology Luddite and 10 was an uber-geek, he'd be about a 5. He's not afraid of technology, but hardly rushes out to get every new thing. And note, he's 44 years old, not 14 or 24.
With is new TV in place, one of the first things he did was begin figuring out how to connect it to his PC. Since the TV didn't have a VGA port, he researched and found a relatively inexpensive adaptor to convert VGA output to component inputs for his TV. When done, he excitedly emailed me saying that, by his count, he's now playing 10 different formats on his TV (linear TV, broadband content - both free and paid, Netflix Watch Instantly, podcasts from his iTunes library, DVD, Blu-ray DVD, DVR, VOD, CD Music and radio). And he's psyched to read surf the web on his TV, and move files around. Talk about a plethora of choices and experiences!
To understand the emerging mindset of today's consumer, the example of my friend is illustrative. It was not just the 50 inch plasma TV that got him excited. Rather, it was the impetus to expand his video choices and to add new energy to pre-existing options. Here again, the interplay of technology and content is what is cool to him. Not just one or the other in isolation. I believe his mindset is becoming more common each day. It embodies what marketers and product managers in the "video experience era" will need to grasp if their companies are to succeed.
What's your reaction? Post a comment and let us all know!
OK, one last post related to CES, and then I promise to shut up about the show.
Observing the goings-on this week, it is evident that both content and consumer electronics firms have come to the same basic conclusion: each industry's success is inextricably tied to the other's. Each recognizes that the business dynamics of the future requires a new way of differentiating their products than they are accustomed. That means, for example, that TV makers can no longer just boast about better pictures. And that content companies can no longer bank on bigger stars or funnier sitcoms to deliver audiences and profits.
Rather, both industries recognize that we are moving into what I would call the "experience era" for video. That's to say, success with consumers is going to rest more on these industries' ability to deliver superior experiences which integrate content and technology in new and compelling ways. Rather than oohing and ahhing about their new TV's picture quality or how hilarious a certain episode was, going forward consumers will increasingly cite "how cool" something is.
"How cool" are code words for "how compelling is the experience". The new currency of video hipness will require that when I invite friends to my house and want to show off, I need to have more than just a honking-big screen or a digital collection of old programs - those will be commonplace. Instead, the experiences are what will matter. Things like seamlessly accessing broadband content on my TV, interacting with it -- along with other viewers -- from my couch, and moving it around my house for playback anywhere, in a snap. Delivering these types of experiences (and more) is the new competitive bar that content and technology firms should be aiming for.
My sense is these industry executives know this, and the partnerships we saw unveiled -- and those yet to come -- demonstrate this recognition. Listen to what Bob Scaglione, Sharp's SVP Marketing said in this NY Times piece: "We already all have beautiful HD televisions. How do you differentiate? One way to provide some really unique differentiation is to provide new content. That's why we're fighting to find the right content providers."
And then what Beth Comstock, president of NBC Universal Integrated Media said: "You can't talk about consumer electronics without talking about content.....We try every new technology that comes along."
Executives across the content and technology spectrum must understand the experience era is now upon us. Steve Jobs and Apple's iPod ushered in the experience era in the music business. We now wait to see which companies in the video industry will do the same and reach for Apple's success. In a hyper competitive world, those who deliver strongly against consumers' needs and desires will be the ultimate winners in the experience battle now underway.
Agree or disagree? Post a comment and let us all know!
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:
More thoughts on Hulu to come.
Two conversations yesterday, one with a broadcaster and one with a cable operator, had the same basic theme with regard to broadband video: "hey, we understand this broadband stuff is happening, but we don't see it as a threat to our core business YET, so we're not going to be very aggressive in pursuing it for now." Instead they are each focusing most of their resources on defending their incumbent businesses, while only dabbling in broadband projects.
With broadband revenues still nascent (the biggest concern I hear), is it wrong to "play defense" by focusing on defending current businesses instead of investing more aggressively in broadband? I think so as it leaves these companies quite vulnerable down the road.
At least three macro trends suggest that ALL companies currently in the video business should be aggressive with broadband:
Consumer behavior is changing: consumers love broadband for its convenience and choice. Just last week, TNS and The Conference Board released a study indicating that 16% of Internet users now watch TV online. Usage will only increase going forward, the "horse is out of the barn."
Technology risk is minimal: broadband video already works well, is accessible to tens of millions of users without any further investments by them and video quality is improving all the time.
Competition is escalating: capital is flowing into the industry to fund more competition. Not all of these will become winners, but at a minimum they will create lots of headaches for incumbents.
For these reasons and more, I think it's essential for companies involved in video to play offense and invest accordingly to ensure they're properly positioned for the coming broadband era.