Posts for 'YouTube'

First up, YouTube introduced the beta version of "Leanback," the new 10-foot experience that it introduced at the recent I/O conference. With Leanback, you only need to use the 4 arrow keys and Enter key on your keyboard to navigate the YouTube experience. Video plays in full-screen mode and in automatically in HD when available.

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If you want to get a sense of how significant an inflection year 2009 was for online video, have a look at the chart below.

As you can see, according to comScore data, while Jan-Dec growth in 2007 (up 2.8 billion views or 39%) and 2008 (up 4.5 billion views or 46%) were impressive by any standard, the Jan-Dec 2009 growth of 18.4 billion views, up 124%, completely blows them away. Growth was so significant in 2009 that I think years down the road it will be pointed to as the year that online video really turned the corner.

But if that's the case, the question begs, "Why did growth accelerate so much in 2009 vs. prior years?" That's what I've been asked several times by industry colleagues since posting "comScore Data Shows 2009 Was a Blistering Year for Online Video" 2 weeks ago. It's a great question and though I don't have a really precise answer, here's my best sense of what happened.

No surprise, the most important contributor to the year's growth was YouTube. It zoomed from 6.3 billion views in Jan '09 to 13.2 billion in Dec. '09. That increase of 6.9 views accounts for 38% of the 18.4 billion delta between Jan and Dec. So what did YouTube do to generate such significant growth? Part of the reason is surely organic; more people uploading, sharing and viewing YouTube videos. But in 2009 YouTube also made strides in professionalizing the content on YouTube, broadening its value proposition to users. For example, its "Content ID" program, which lets media companies manage and monetize user-uploaded videos, has largely addressed the copyright infringement concerns from past years (the Viacom suit is a notable exception).

In 2009, among other things, YouTube also signed up Disney/ESPN, Univision and others as content partners, began implementing FreeWheel's ad system so 3rd party content providers could better monetize their views, engaged a number of leading brands to use it as a promotional platform, and with "YouTube Direct" engaged news organizations as partners. In short, YouTube continues to immerse itself into the fabric of the Internet. Whether users are viewing videos at its site or through its wildly popular embeds, YouTube has become omnipresent. YouTube now also claims to be the 2nd largest search site.

A second, but distant contributor to 2009's growth was Hulu, which saw its views increase by over 763 million from Jan to Dec, accounting for about 4% of the 18.4 billion increase in total views during that period. Hulu's mindshare leaped following its 2009 "Evil Plot" Super Bowl ad featuring Alec Baldwin and the subsequent ones. No doubt the addition of ABC programs throughout the year, plus other new content partners, also helped generate more viewership, along with the hugely popular SNL clips.

Once you get beyond these top 2 sites, the individual contributions to 2009's growth are more dispersed. The comScore data shows that across all video sites, usage intensified significantly during the year. For example, the number of videos viewed per viewer increased from 101 in Jan to 187 in Dec. The number of minutes watched jumped from 356 in Jan (almost 6 hours) to 762 in Dec (more than 12 1/2). There were also 31 million more U.S. Internet users watching video in Dec vs. Jan (178 million vs 147 million).

Looking beyond the numbers and thinking more qualitatively, it's also fair to conclude than in '09 online video reached a certain level of awareness that made it almost ubiquitous. There is just so much video online, and it is shared so widely, and highlighted so frequently by mainstream media, that it is unavoidable, even for the least technically-savvy among us. People are increasingly entertaining themselves with online video, but they're also finding new uses for it in their daily personal and professional lives.

I think it's unlikely we'll see the same level of growth in 2010 as in 2009, but I do believe the growth curve over the next 5 years will be very steep. The primary contributor will be convergence devices (e.g. game consoles, Blu-ray players, Roku, etc.) that are bridging online video to the TV where longer-form consumption will be the norm. Another key contributor will be TV Everywhere services, which are just now getting off the starting blocks. Lastly, I think growth in mobile consumption will be another important contributor. Add them all up and the 33.2 billion videos viewed in Dec. '09 will look relatively small 5 years from now.

What do you think? Post a comment now (no sign-in required).

Daisy Whitney and I are pleased to present the 49th edition of the VideoNuze Report podcast, for February 12, 2010.

This week Daisy and I dig into the 2009 comScore data that I detailed in my post on Tuesday (slides available for download too). It was a blistering year for online video, with total streams growing from 14.8 billion in Jan '09 to 33.2 billion in Dec '09. All the other relevant metrics also recorded strong growth. I share more details on the numbers and what they mean, focusing particularly on the top 2 sites YouTube and Hulu.

Then Daisy discusses her takeaways from the recent iMedia conference she helped organize. She talks about how brands are trying to break through the clutter, and the role of online video ad networks. Finally, she also discusses recent interviews she conducted with Facebook executives.

Click here to listen to the podcast (13 minutes, 55 seconds)

Click here for previous podcasts

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

Last Friday, comScore released its Dec. '09 data for online video usage. I've been tracking comScore's data for the last 3 years and Dec put an exclamation mark on what many of us already knew: 2009 was a blistering year of growth in online video consumption. Below are graphs of the most important data (Click here if you'd like a complimentary PDF download of all of the slides.)

The first graph shows total online video views more than doubled from 14.8 billion in Jan '09 to 33.2 billion in Dec '09. The historical growth is even more impressive. Just two years ago, in Dec '07, comScore reported 10 billion video views.

Online video usage is now nearly ubiquitous in the U.S. According to comScore, in Dec '09, 86.5% of all U.S. Internet users watched online video, up nearly 10 percentage points from the 76.8% in Jan '09. That translates to 178 million people watching video in Dec '09, up from 147 million in Jan '09. Back in Jan '07, there were 123 million viewers.

Those users are watching a whole lot more videos as well. For Dec '09, comScore reported that 187 videos were watched per average viewer, up 85% from 101 in Jan '09, and more than triple the 59 watched in Jan '07.

As well, those viewers spent a lot more time watching online video. In Dec '09 comScore said that the average online viewer watched 762.6 minutes or 12.7 hours, more than double the 356 minutes viewed on average in Jan '09. Here's the really incredible stat: back in Jan '07, comScore pegged this number at just 151 minutes or about 2 1/2 hours, meaning average viewing time has more than quintupled in the last 3 years.

I've talked many times about how YouTube is the 800 pound gorilla of the online video market, and 2009 only further cemented this. Videos viewed at YouTube surged from 6.3 billion in Jan '09 to 13.2 billion in Dec '09. To put this in perspective, Google closed its acquisition in Nov '06. In Jan '07 (the first month comScore publicly released online video data), YouTube notched 1.2 billion views. That means that in the 3+ years that Google has owned YouTube, it has grown more than 10x in size. More amazing is that even with all the growth by other sites (particularly Hulu), YouTube has kept up its approximate 40% share of the overall online video market, starting the year at 42.9% and ending at 39.8%.

Speaking of Hulu, in its first full year of operation, the site surged from 250 million views in Jan '09 to 1,013 billion views in Dec '09. Unique viewers increased from 24.4 million in Jan '09 to 44.1 million in Dec '09. But if you look at the red line in the graph below, you'll see that uniques jumped to 41.6 million by Mar '09 which I believe must be due, at least in part, to a likely measurement change by comScore. Since Mar you'll notice that uniques hovered right around 40 million each month, dipping below during the summer and then bouncing back in Q4.

A few months ago I speculated that Hulu's relatively flat pattern in uniques could suggest that, in its current configuration, Hulu may have saturated the market for its content and user experience (for example, contrast Hulu with YouTube, which grew its uniques by 33% in '09 to 135.8 million by Dec '09). I'll be looking to see if Hulu can notch more noteworthy increases in uniques during '10; if not, then I think my thesis will be proven correct.

Nonetheless, Hulu's viewers clearly love the site, with average number of videos per viewer more than doubling to 22.9 in Dec '09, up from 9.8 in Dec '08. Users are spending more time on Hulu, increasing the amount of total minutes on the site from 58 in Mar '09 to 132 in Dec '09. What's remarkable though is that the average minutes watched per video (the yellow line below), has stayed virtually constant at around 6 minutes each month. That shows that while there's plenty of long-form consumption happening at Hulu, clips are still very popular too.

comScore is a great source of month in and month out online video data, but as always my caveat is that no third party can ever track usage as closely as the sites themselves, so take these numbers with a small grain of salt!

Click here if you'd like a complimentary PDF download of all of the slides.

What do you think? Post a comment now (no sign-in required).

This week brought news that YouTube's recent foray into rentals netted the company a whopping $10,709.16. I wasn't surprised by the results, as YouTube only made 5 Sundance films available for 10 days. As I suggested 2 weeks ago, even with YouTube's massive audience, it would be unreasonable to expect too much. Still, it was great promotion for the indie film producers and no doubt a learning experience for YouTube.

I'm not religiously opposed to YouTube broadening its model beyond free and ad-supported video, but I do think YouTube needs to be wary of spending a lot of time trying to secure me-too rights for distribution of Hollywood's prime TV and movie output. That's highly competitive ground, and Netflix for one, has enormous advantages given its robust subscription model. YouTube is in the pole position when it comes to the ad-supported online video model and it needs to be relentlessly focused on proving it can make the model profitable.

What do you think? Post a comment now (no sign-in required).

Last fall, when the WSJ first broke the news that YouTube was negotiating with a number of Hollywood studios about launching a full-blown rental store, I thought the plan was intriguing, but dubious. I argued that YouTube needed to stay focused on getting its ad model right, that it would be hard to differentiate its film rentals from those of myriad competitors and that the revenue upside for YouTube was relatively small.

I continue to believe those things and hope YouTube isn't still pursuing Hollywood dreams. That said, I do like the idea of it offering a paid option for indie and other hard-to-find video. YouTube's massive audience brings real promotional value to these often-obscure, yet high-quality titles, potentially significant revenue to their producers and for YouTube, another meaningful step away from pure UGC content. Rentals won't generate significant revenue for YouTube, but with Google executives on the company's earnings call yesterday saying that "YouTube is monetizing well," so long as it doesn't divert too many resources away from advertising, that's ok.

2. Revenue models matter, just ask the newspaper industry - This week brought news that MediaNews Group, publisher of 54 U.S. newspapers, including the Denver Post and San Jose Mercury News, will file for bankruptcy. For those keeping count, it's at least the 13th bankruptcy filing by a major U.S. newspaper publisher in the last year.

While the newspaper industry has been racked by the recession and ad-spending slowdown, the larger issue is that 15 years since the Internet's popularity took off, newspapers still have not been able to define a sustainable online business model. Many simply lunged headlong into providing their full print editions online, only to find out that online advertising wasn't sufficient to support their overhead and that Google commoditized their headlines. Others, like the NYTimes tried (and will continue to try) to find a balance between advertising and reader payments.

I've touched on this before, but the havoc being wreaked in the newspaper is a red-letter warning to video industry participants to cautiously guard existing revenue models while transitioning to digital delivery. Some consumers and techies may consider a deliberate pace to be bureaucratic foot-dragging, but for video content producers and distributors to remain viable, a deliberate ready-aim-fire approach to digital delivery is essential.

I'm not a Prada patron, and I found the film dreary and odd, nonetheless, what intrigued me was how online video has given Prada a whole new outlet to build its brand's aura, a key to success for all luxury brands. Buying TV ads would be incredibly inefficient for Prada, and magazine spreads only go so far. With a short online film, Prada can target its audience well and engage them as long as it pleases. For creative and advertising types alike, that's a compelling opportunity.

4. Get ready for the week of the Apple tablet - In case you missed it, this week Apple sent invites to the press for a Jan. 27th event to "come see our latest creation" - widely believed to be the company's new tablet computer. The buzz behind the product, thought to be called the "iSlate," has been steadily building for weeks now. Next week it will reach a crescendo. We can expect Steve Jobs to bring his A game to the mother of all product demos as the stakes are high for Apple to deliver major wows.

Google and Apple both unveiled key mobile initiatives yesterday, underscoring the collision path the two companies are on, and how long-term, video is poised to benefit from their battle.

First, as you no doubt already know, Google introduced the Nexus One, an Android-powered smartphone that it is selling directly to consumers. It is Google's first foray into consumer devices and many more products sure to follow. Meanwhile, Apple, in a rare significantly-sized deal, acquired Quattro Wireless, a mobile advertising company, for around $300 million. Quattro represents Apple's first real push into advertising, an important shift from its traditional iTunes-driven paid media model.

With its own device, Google is primarily looking to compete against Apple's iPhone, which has practically owned the U.S. smartphone market since its introduction 2 years ago. And Apple, with a toehold in the exploding mobile advertising market, is positioning itself to disrupt Google's planned dominance of mobile advertising through its pending $750 million AdMob acquisition. If Apple were to make additional acquisitions, particularly in the online video advertising space, that would further strengthen its position.

Mobile video is poised to be a real winner in the Google vs. Apple face-off. At a minimum, the two companies' considerable marketing spending (plus those of competitors Palm, RIM, Nokia and others) will mean smartphones in millions more consumers' hands, dramatically expanding the video-ready universe. In addition, the experience of watching mobile video will just keep getting better. For example, the Nexus One's screen resolution (480x800) surpasses the iPhone's (320x480), which only means Apple will need to up the ante even further with its next generation. The range of video applications is sure to surge as more and more players stake out their ground.

Importantly, because there are no powerful incumbent distributors in mobile video - as there are in the living room, with cable/satellite/telco - I believe there is more flexibility in how premium video can be distributed to smartphones. Until recently mobile was an "on-deck" world where everything had to be approved and carried by the wireless carrier. But mobile is quickly evolving to take on open Internet-like characteristics, where applications and services are not gatekeeped by a distributor. In short, mobile looks to be more like online distribution than traditional video distribution. As power in mobile shifts to players like Apple and Google, it should also be a wake-up call to the FCC, whose planned wireless carrier-focused net neutrality paradigm already looks out of date.

While there have been recent rumbles about Apple doing something with subscription video for the living room, instead the company likely has more latitude in mobile to go well beyond the pay-per-use iTunes model, especially if it can also bring in advertising. Meanwhile, by having its own device and operating system, Google is optimizing the YouTube mobile experience. As this YouTube blog post points out, the Nexus One is an improved way to search, view and upload YouTube videos. With YouTube enjoying such benefits not just on Nexus One, but on all Android phones, YouTube becomes an even more valuable partner for premium content providers looking to generate mobile usage.

Google and Apple will be jousting for years to come in the mobile space. The opportunities for growth for both companies are sizable. I fully expect that video is a going to be an increasingly important part of the battle.

What do you think? Post a comment now.

Happy New Year. If you're just back from a holiday vacation and have been partially or totally off the grid for the last week or two, here are 7 video-oriented items you may have missed:

1. Time Warner Cable and News Corp fight over fees, then settle - Two behemoths of the cable and broadcast TV ecosystem spatted publicly during the holidays over the size of "retransmission consent" fees that News Corp (owner of the Fox Broadcast Network and cable channels like Fox News) wanted TWC (the 2nd largest U.S. cable operator) to pay to carry its 14 local stations. While a last minute deal averted the channels going dark, broadcasters' interest in dipping into cable's monthly subscription revenues will only intensify as audience fragmentation accelerates and ad revenues are pressured.

For my part I wish Fox and other broadcasters were as focused on building new and profitable digital delivery models for their programs as they were on trying to redistribute cable's revenues. Even as Rupert Murdoch continues advocating the paid content model, the freely-available Hulu is seeing its traffic skyrocket (see below). But if Hulu's viewership isn't incrementally profitable, then all that growth is pointless. Urgency is mounting too; in '10 convergence devices that bridge broadband to the TV are going to get a lot of attention. In the wake of their adoption, consumers are going to want Hulu on their TVs. If Hulu doesn't allow this it will be marginalized. But if it does without first solidifying its business model, it could hurt broadcasters further.

2. Hulu has a big traffic year, but no further information provided on its business model - Hulu's CEO Jason Kilar pulled back the curtain a bit on the company's strong progress in 2009, citing 95% growth in monthly users, to 43 million, 307% growth in monthly streams, to 924 million (both as measured by comScore) and a doubling of available content, to 14,000 hours. While noting that its advertisers increased from 166 to 408 during the year, with respect to performance, Jason only said that "we are extremely excited about atypically strong results we have been able to drive for our marketing partners."

Though Hulu is under no obligation to disclose details of its business model, I think it would dramatically increase the company's credibility if it shared some metrics about how its lighter ad load model is working (e.g. improved awareness, click throughs, leads, conversions, etc.). Per the 1st item above, as Hulu grows, a lot of people have a lot at stake in understanding what effect it may have on broadcast economics. In addition, as I pointed out recently, it is important to understand whether Hulu thinks it may have already saturated its U.S. audience. After a jump in Q1 '09 from 24.6 million to 41.6 million users, traffic actually dipped below 40 million until October. What does Hulu do from here to gain significantly more users?

3. Cable networks' primetime audience is nearly double broadcasters' - Punctuating the ascendancy of cable over broadcast, this Multichannel News article pointed out that in 2009, ad-supported cable networks as a group captured 60.7% of primetime audience vs. 32% for the 4 broadcast networks. That's a major change from 2000 when the broadcasters had a 46.8% share vs. cable's 41.2%. Cable increased its share every single year of the last decade, powered by its innovative original programming. NBCU's USA Network in particular has become the real standout performer, winning its second consecutive ratings crown, with 3.2 million average primetime viewers, up 14% vs. 2008.

The surging popularity of cable programming is a crucial barrier to consumers cutting the cord on cable. Since cable networks are highly invested in the monthly multichannel subscription model, they are unlikely to disrupt themselves by offering their best shows to others under substantially different terms than how they're offered today. So to the extent cable programs are either unavailable to over-the-top alternatives or offered less attractively (e.g. less choice, higher cost, delayed availability), little cord-cutting can be expected. And if TV Everywhere achieves its online access goals, the cable ecosystem will only be further strengthened.

4. YouTube is working to drive higher viewership - Amidst the turmoil in the traditional ecosystem and Hulu's growth, YouTube, the 800 pound gorilla of the online video world, is working hard to deepen the site's viewership. As this insightful NYTimes article explains, a team of YouTube developers is analyzing viewing patterns and tweaking its recommendation practices to encourage more usage. YouTube says time on the site has increased by 50% in the last year, and comScore reports that the average number of clips viewed per user per month jumped to 83 in October, up from 53 a year earlier. Still, as comScore also reports, duration of an average session has yet to crack 4 minutes, meaning video snacking on YouTube is still the norm. YouTube's moves must be watched closely in '10.

5. Showtime's "Weeds" available online before on DVD - This WSJ article (reg req'd) pointed out that Lionsgate, producer of Showtime's hit "Weeds" series is offering episodes online before they're available on DVD. By putting the digital "window" ahead of DVD's, Lionsgate is further pressuring DVD's appeal. We've seen periodic experimentation in this regard, and I anticipate more to come, especially as the universe of convergence devices expands and consumers can watch on their TVs instead of just their computers. Until a tipping point occurs though, "Weeds" like initiatives will be the exception, not the rule.

6. Netflix goes shopping in Hollywood - And speaking of reversing distribution windows, this Bloomberg Businessweek piece was the latest to highlight Netflix's efforts to woo studios into giving it more recent releases. Netflix has of course made huge progress with its Watch Instantly streaming feature, but its appeal to heaviest users will slow at some point unless it can dramatically expand its current slate of 17K titles available online. Hollywood is understandably wary of Netflix given all the variables in play and a desire to avoid Netflix becoming master of Hollywood's post-DVD, digital future. Whether Netflix will spend heavily to obtain better rights is a major question.

7. Get ready for Google's Nexus One and Apple's "iSlate" - Unless you've really been off the grid, you're probably aware by now that two very significant mobile product releases are coming this month. Tomorrow (likely) Google will unveil the Nexus One, its own smartphone, powered by its Android 2.1 operating system. The Nexus One will be "unlocked," meaning it can operate on multiple providers using GSM networks. The device will further fuel the mobile Internet, and mobile video consumption along with it. Separately, Apple is widely rumored to introduce its tablet computer later in the month, which many believe will be called the "iSlate." The tablet market is completely virgin territory, and while it's early to make predictions, I believe Apple could have most of the ingredients needed to make the product another big hit. The prospect of watching high-quality video on a thin, light, user-friendly device is extremely compelling.

It's time to say goodbye to 2009 and begin looking ahead to 2010.

2009 was yet another important year in the ongoing growth of broadband and mobile video. There were many exciting developments, but several stand out for me: the announcement and launches of initial TV Everywhere services, the raising of at least $470 million in new capital by video-oriented companies, YouTube's and Hulu's impressive growth to 10 billion streams/mo and 856 million streams/mo, respectively, the iPhone's impact on popularizing mobile video, the Comcast-NBCU deal, the maturing of the online video advertising model, the proliferation of Roku and other convergence devices and the growth of Netflix's Watch Instantly, just to name a few.

Looking ahead to next year, there are plenty of reasons to be optimistic about video's growth: the rollout of TV Everywhere by multiple providers, the proliferation of Android-powered smartphones and buildout of advanced mobile networks, both of which will contribute to mobile video's growth, the launch of Apple's much-rumored tablet, which could create yet another category of on-the-go content access, the introduction of new convergence devices, helping bridge video to the TV for more people, new made-for-broadband video series, which will help expand the medium's appeal, and wider syndication, which will make video ever more available.

In the midst of all this change, monetization remains the fundamental challenge for broadband and mobile video. More specifically, for both content providers and distributors, the challenge is how to ensure that the video industry avoids the same downward revenue spiral that the Internet itself has wrought on print publishers.

Regardless of all the technology innovations, high-quality content still costs real money to produce. If consumers are going to be offered quality choices, a combination of them paying for it along with advertising, is essential. While it's important to be consumer-friendly, this must always be balanced with a sustainable business model. In short, no matter what the size of the audience is, giving something away for free without a clear path for effectively monetizing it is not a strategy for long-term success.

VideoNuze will be on hiatus until Monday, January 4th (unless of course something big happens during this time). I'll be catching my breath in anticipation of a busy 2010, and hope you will too.

Thank you for finding time in your busy schedules to read and pass along VideoNuze. It's incredibly gratifying to hear from many of you about how important a role VideoNuze plays in helping you understand the disruptive change sweeping through the industry. I hope it will continue to do so in the new year.

A huge thank you also to VideoNuze's sponsors - without them, VideoNuze wouldn't be possible. This year, over 40 companies supported the VideoNuze web site and email, plus the VideoSchmooze evenings and other events. I'm incredibly grateful for their support. As always, if you're interested in sponsoring VideoNuze, please contact me.

Happy holidays to all of you, see you in 2010!

As 2009 winds down, in the spirit of accountability, it's time to take a look back at my 5 predictions for the year and see how they fared. As when I made them, they're listed below in the order of most likely to least likely to pan out.

1. The Syndicated Video Economy Accelerates

My least controversial prediction for 2009 was that video would continue to flow freely among content providers numerous third parties, in what I labeled the "Syndicated Video Economy" back in early 2008. The idea of the SVE is that "destination" sites for online audiences are waning; instead audiences are fragmenting to social networks, mobile devices, micro-blogging sites, etc. As a result, the SVE compels content providers to reach eyeballs wherever they may be, rather than trying to continue driving them to one particular site.

Video syndication continued to gain ground in '09, with a number of the critical building blocks firming up. Participants across the ecosystem such as FreeWheel, 5Min, RAMP, YouTube, Visible Measures, Magnify.net, Grab Networks, blip.TV, Hulu and others were all active in distributing, monetizing and measuring video across the SVE. I heard from many content executives during the year that syndication was now driving their businesses, and that they only expected that to increase in the future. So do I.

2. Mobile Video Takes Off, Finally

When the history of mobile video is written, 2009 will be identified as the year the medium achieved critical mass. I was bullish on mobile video at the end of 2008 primarily due to the iPhone's success and my expectation that other smartphones coming to market would challenge it with ever more innovation. The iPhone has continued its amazing run in '09, on track to sell 20 million+ units. Late in the year the Droid, which Verizon has relentlessly promoted, began making inroads. It also benefitted from Verizon highlighting AT&T's inadequate 3G network. Elsewhere, 4G carrier Clearwire continued its nationwide expansion.

While still behind online video in its development, mobile video is benefiting from comparable characteristics. Handsets are increasingly video capable, just as were computers. Mobile content is flowing freely, leaving the closed "on-deck" only model behind and emulating the open Internet. Carriers are making significant network investments, just as broadband ISPs did. A range of monetization companies have emerged. And so on. As I noted recently, the mobile video ecosystem is healthy and growing. The mobile video story is still in its earliest stages, we'll see much more action in 2010.

3. Net Neutrality Remains Dormant

Given all the problems the Obama administration was inheriting as it prepared to take office a year ago, I predicted that it would not expend energy and political capital trying to restart the net neutrality regulatory process. With broadband ISP misbehavior not factually proven, I also thought Obama's predilection for data in determining government action would prevail. However, I cautioned that politics is a tough business to predict, and so anything can happen.

And indeed, what turned out is that in September, new FCC Chairman Julius Genachowski launched a vigorous net neutrality initiative, despite the fact that there was still little data supporting it. With backwards logic, Genachowski said the FCC would be guided by data it would be collecting, though he was already determined to proceed. In "Why the FCC's Net Neutrality Plan Should Go Nowhere" I argued, among other things, that the FCC is way off the mark, and that in the midst of the gripping recession, to risk the unintended consequences that preemptive regulation carries, was foolhardy. Now, with Comcast set to acquire a controlling interest in NBCU, net neutrality advocates will say there's even more to be worried about. It looks like we can expect action in 2010.

4. Ad-Supported Premium Video Aggregators Shakeout

The well-funded category of ad-supported premium video aggregators was due for a shakeout in '09 and sure enough it happened. Players were challenged by little differentiation, hardly any exclusive content and difficulty attracting audiences. The year's biggest casualty was highflying Joost, which made a last ditch attempt to become a white label video platform before being quietly acquired by Adconion. Veoh, another heavily funded player, cut staff and changed its model. TidalTV barely dipped its toe in the aggregation waters before it became an ad network.

On the positive side, Hulu, YouTube and TV.com continued their growth in '09. Hulu benefited from Disney coming on board as both an investor and content partner, while YouTube improved its appeal to premium content partners and brought on Univision and PBS, among others. Aside from these, Fancast and nichier sites like Dailymotion and Babelgum, there isn't much left to the aggregator category. With TV Everywhere services starting to launch, the opportunity for aggregators to get access to cable programming is less likely than ever. And despite their massive traffic, Hulu and YouTube have significant unresolved business model issues.

5. Microsoft Will Acquire Netflix

This was my long ball prediction for '09, and unless something happens in the waning days of the year, I'll have to concede I got this one wrong. Netflix has remained independent and is charging along with its own streaming "Watch Instantly" feature, now used by over half its subscribers, according to recent research. Netflix has also broadened its penetration of 3rd party devices, adding PS3, Sony Bravia TVs and Blu-ray players, Insignia Blu-ray players this year, in addition to Roku, XBox and others. Netflix is quickly becoming the most sought-after content partner for "over-the-top" device makers.

But as I've previously pointed out, Netflix's number 1 challenge with Watch Instantly is growing its content selection. Though it has a deal with Starz, it is largely boxed out of distributing recent hit movies via Watch Instantly by the premium channels HBO, Showtime and Epix. My rationale for the Microsoft acquisition is that Netflix will need far deeper pockets than it has on its own to crack open the Hollywood-premium channel ecosystem to gain access to prime movies. For its part, Microsoft, locked in a pitched battle with Google and Apple on numerous fronts, could gain advantage with a Netflix deal, positioning it to be the leader in the convergence era. Meanwhile, others like Amazon and YouTube continue to circle this space.

The two big countervailing forces for how premium video gets distributed in the future are TV Everywhere, which seeks to maintain the traditional, closed ecosystem, and the over-the-top consumer device-led approach, which seeks to open it up. It's hard not to see both Netflix and Microsoft playing a major role.

What do you think? Post a comment now.