Posts for 'BitTorrent'

  • Looking for Economic Signals at Digital Hollywood This Week

    This week I'll be at Digital Hollywood Fall in LA, the first big industry gathering I've attended since the economic crisis hit. I've been trying to keep my finger on the pulse of what the crisis means for the broadband video industry. Get-togethers like this, with lots of time for informal, off-the-record chats are great for getting a sense of what colleagues think is on the industry's horizon.

    Here are 3 interrelated areas I'm most interested in learning about:


    With the credit markets frozen and stock markets tumbling, the availability of financing is topic number one. This is especially relevant for the industry's many earlier stage companies, reliant on private financing from venture capitalists, angels and other private equity investors.

    By my count we've seen at least 9 good-sized financings announced since around Labor Day, when the financial markets started coming unglued: Howcast ($2M), (undisclosed), Booyah ($4.5M), BlackArrow ($20M), HealthiNation ($7.5M), ($13M), BitTorrent ($17M), Conviva ($20M), and Move Networks (Microsoft, undisclosed). The rumor mill tells me there are at least 2-3 additional financings underway currently. Really smart money (e.g. Warren Buffet) knows that downturns are exactly the time to invest. However, the reality can often be quite different. What's the experience of industry participants trying to raise money these days?


    In any downturn, the first expense to get cut is people. Headcount reductions are often done quietly, with word later leaking out to the public. Last week brought news of trimming at three indie video providers, Break (11 people), ManiaTV (20) and Heavy (12). More are sure to follow at other companies. As I've written before, the indies are among the most vulnerable in this environment, likely leading many to find bigger partners for both distribution and monetization. But whether layoffs will hit other industry sectors such as platforms, ad networks, CDNs, mobile video and big media is still to be determined by...

    Customer spending

    Central to the question of how deeply the financial crisis spirals is the interdependence of customer spending at all levels of the economy. Thinking you're safe because you're a B2B company is meaningless if your customers are B2C companies cutting back due to reductions in consumer spending. When consumers tighten their belts that leads to advertisers reducing their spending which leads to media companies scaling back which leads to technology vendors feeling the impact. The reality is we're all in this together.

    In fact, the more I read about the economy's fragile condition, the clearer it is that the primary way out is rebuilding confidence and renewed spending at all levels. If a spending paralysis occurs, it could be long road ahead. While there's no reason to believe that consumers are going to slow their consumption of broadband media, the ability to monetize it and innovate around it would be dampened if spending hits a wall.

    These are among the topics I'll be looking to discuss at Digital Hollywood this week. If you're attending, drop me a note so we can try to meet up and/or come by the session I'll be moderating on Wednesday at 12:30pm.

    What do you think? Post a comment now!

  • The FCC's Comcast Sanction: More Problems, Fewer Solutions Ahead

    In case you missed it, last Friday the FCC took the unprecedented step of sanctioning Comcast for what it considered unreasonable network management policies. Before you deem this "inside-the-beltway" bureaucratic wrangling and click away to your next piece of business, I suggest you take a moment to consider the broad-reaching implications of the FCC's action, and how they will undoubtedly affect you and your video business long-term.

    (If you'd really like to dig in, the FCC commissioners' opinions are here)

    There has been a lot written about what precipitated the FCC's action, so I won't restate all the gory details here. Very briefly, last Fall formal complaints were filed with the FCC alleging that Comcast treated certain of its broadband subscribers' use of BitTorrent, a peer-to-peer (P2P) application, in a discriminatory manner vis-a-vis other network traffic.

    After collecting comments and taking testimony from experts, the FCC concluded (with its Republican chairman leading the charge) to sanction, but not fine, Comcast for its actions. Importantly, it also stipulated that Comcast has to submit its network management plans to the FCC going forward, effectively anointing the FCC as the nation's new broadband network management czar.

    I submit that for those in the broadband video industry, nothing good will come from the FCC's action. The FCC and other governmental bodies are understaffed and ill-equipped to be making highly technical network management decisions. The FCC's decree may well usher in an era of confusion and sclerotic decision-making, forcing broadband ISPs to curtail network investments at exactly the time when they need to be increasing their spending to enable more video traffic to flow.

    It is worth noting that the Internet's periodic growing pains have been overcome not by the government stepping in, but by the government stepping away. This surely seems counter-intuitive to regulatory traditionalists. But it works because the ethos of the Internet's technical community is by and large collaborative and forward-looking. Supplanting that spirit with litigious, bureaucratic sprawl benefits nobody. In saying all this, I'm guided by pragmatism, not political bias.

    Though we all want to be able to use the Internet free from any interference, the problem is that the Internet is still a wild west of sorts, where lawless and lawful behavior can be heavily intertwined. P2P is a perfect example. While legal (when used appropriately), its use can wreak havoc for other users and for network operators. Previously, there were no clear rules about how operators should respond when a handful of P2P users swamp the network. The Comcast sanction doesn't change that, it just puts the FCC in the position of judging, case-by-case the reasonableness of the network operator's containment actions.

    So here we are. An odd stew including a militantly anti-cable FCC chairman, two flag-draped Democratic cohorts, a clutch of freedom of speech instigators and a large ISP (Comcast) which flunked PR 101 in how it implemented and communicated its network management practices, has opened up a new era in broadband regulatory policy. Ugh.

    What do you think? Post a comment now!

  • CES 2008 Broadband Video-Related News Wrap-up

    CES 2008 broadband video-related news wrap-up: 



    Sony Pictures Television Launches YouTube Channels; The Minisode Network to be First of Several Brand Channels


    Panasonic and Comcast Announce Products With tru2way™ Technology


    Panasonic And Comcast Debut AnyPlay™ Portable DVR



    NETGEAR® Joins BitTorrent™ Device Partners

    D-Link Joins BitTorrent™ Device Partners



    Samsung and HP Unveil Extender for Windows Media Center Extender Devices, Bridging the Gap Between PC and TV


    BT and Microsoft Announce Partnership to Deliver Powerful, First-of-its-Kind Entertainment Experience to Consumers Through Xbox 360


    Hollywood Heavyweights Disney-ABC Television Group and MGM Offer High-Definition Entertainment Content on Xbox LIVE


    Vudu Expand High Definition Content Available Through On-Demand Service



    Sling Media Unveils Top-of-Line Slingbox PRO-HD


    High Definition Video to Internet Computers, Cell Phones and Handhelds Aim of New Agreement Between Broadcast International and On2 Technologies


    Open Internet Television: A Letter to the Consumer Electronics Industry


    Paid downloads a thing of the past


    MobiTV Has ESPN on the Go


    Samsung, Vongo Partner To Offer Movie Downloads For P2 Portable Player


    Comcast Interactive Media Launches


    Comcast CEO Brian L. Roberts Announces Project Infinity: Strategy to Deliver Exponentially More Content Choice On TV


    MTV Networks Unveils Targeted Online Syndication Strategy, Delivering the Most Diverse Line-Up of Video Content through First-Class Partners


    New Year Brings Hot New Shows and Longtime Favorites to FLO TV


    Widevine® and Move Networks Announce Partnership & Integration to Secure Delivery of Video Content for Major Broadcast Networks


    P2Ps and ISPs team to tame file-sharing traffic


    ClipBlast Releases OpenSocial API


    "Penn Says" Exclusive New Unscripted Web Series From Penn Jillette to Debut on Sony Pictures' Crackle January 9th

  • Highlighting 3 Partnerships Announced at CES

    Among the many partnership announcements at CES this week, there are a number worth highlighting. Today I focus on the following three:

    Viacom syndication - Viacom announced syndication deals for MTV Networks' stable of content with five leading broadband video sites: Dailymotion, GoFish, Imeem, MeeVee and Veoh. As those of you who have been following my previous posts know, I believe syndication is a critical engine in driving the advertising business model, which itself is the key to broadband video succeeding. As a result, I follow these syndication deals closely.

    I've previously been critical of MTVN which appeared reluctant about syndicating its content when it launched its destination site. However, with its recent deal with AOL, and now these five deals, it appears that MTVN does in fact believe syndication is the way to go. As one of the biggest cable network groups, MTVN is a key barometer for other networks' moves, so I view this as a real positive for the market.

    Panasonic/Google - In this deal, Google and Matsushita announced that YouTube videos and Picasa photos would be directly accessible on new model Panasonic HDTVs launching in Q2 '08. Ordinarily I wouldn't be too excited about a deal like this, a permutation of which we've seen with other TV makers such as Sony.

    Yet this one rises in potential importance because YouTube is not just the most popular video site - with 40% of all video traffic - but because Google is determined to turn YouTube into a platform for legitimate content distribution. This was underscored by the Sony mini-sode deal also announced this week, and the many partnerships YouTube has already struck with premium content providers. If successful (and there are many if's to be sure), YouTube would be far more than a scraggly collection of UGC. So, marry a broad-based premium video aggregator to HDTVs and you could see a new device/content model emerge.

    BitTorrent device deals Netgear and D-Link - In a less publicized move, BitTorrent announced expanded deals with Netgear and D-Link covering a range of home networking products, with an emphasis on HD distribution. BitTorrent, which has been steadily legitimizing itself from its P2P file-sharing roots, has launched an aggressive SDK program called BitTorrent Device Partners, intended to permeate the market with its client software. BitTorrent also integrates easy access to its digital download store with these partners as well.

    While I'm not very bullish about the market potential of bridge devices from companies like Netgear and D-Link, I do believe that P2P distribution has a real role to play in content distribution, especially for heavy HD files. I continue to see P2P as more of a "peer assist" play. To the extent that BitTorrent can continue getting its software into multiple devices, it gains validation and strengthens its potential to be a meaningful partner in the larger content distribution ecosystem.

    Share your thoughts on these deals, and suggest others you think are noteworthy from CES!

  • Net Neutrality in 2008? Let's Hope Not.

    Network or "net" neutrality, a confusing legislative concept being promoted by large online and content players, may be the hottest broadband video topic in 2008, at least according to Jeff Richards, VP of VeriSign's Digital Content Services, who makes his case at his blog Demand Insights.

    I had the pleasure of informally debating net neutrality's merits with Jeff (who's officially neutral on the subject by the way) over cocktails at a VeriSign customer event I just spoke at. Jeff is persuasive about why net neutrality is such a hot button issue, and that its resolution - one way or another - has broad repercussions across the technology, content and Internet industries.

    First, a primer for those not familiar with net neutrality. To date the Internet has functioned as a level playing field of sorts. Anyone putting up a web site could be confident in the knowledge that broadband ISPs would neither favor nor disadvantage one player's access to users over another's.

    Big online content and technology companies now want to codify this tradition in legislation commonly referred to as net neutrality. Big broadband ISPs (i.e. cable operators and telcos) regard this as needless regulatory meddling, a classic "solution in search of a problem" that would unnecessarily limit their future business dealings and influence their investment decisions.

    Interest in net neutrality legislation has waxed and waned, as lobbyists for the pro-net neutrality side (content and technology firms) try to convince legislators that this really is an important issue for constituents and that this isn't just a "rich vs. richer" debate that should be left to the industry's participants to figure out, while anti-net neutrality lobbyists (cable and telco firms) argue the opposite point of view.

    So what might precipitate the resurgence of interest in passing net neutrality legislation? In two words, broadband video.

    As Jeff points out, the massive adoption of broadband video, which still disproportionately comes from illegal video file-sharing networks, is motivating ISPs to reevaluate current policies. Stoking this reevaluation is the awakening that the really big money is now being made by legitimate companies like Google (current market cap $200+ billion) which ride freely over ISPs' networks. As such, ISPs are wondering whether the balance of economics has gotten out of whack and if they can get a bigger share of the pie.

    Some ISPs are now blocking or "shaping" certain types of traffic. The most recent example that came to light was Comcast, who the AP recently found is blocking BitTorrent's traffic in the Bay Area. Comcast's vague response, coupled with ill-thought out earlier remarks from telco executives about their own business intentions, have inflamed conspiracy theorists' worst fears about what kind of world could result absent immediate net neutrality action.

    Yet for me, preemptive net neutrality legislation can only be justified if you buy into one or both of the following two assumptions.

    First, that any new premium tier of service ISPs may want to sell to certain preferred providers (e.g. Google is search engine of choice, so its results somehow load faster) must, by definition, mean that some other provider is disadvantaged as a result. But this presupposes a zero-sum ISP network, which is not true. To enable a high quality-of-service ("QOS") tier for preferred partners does not technically necessitate a degrading other non-preferred services. Not to mention degrading other services would be a foolish, provocative thing for ISPs to do.

    The second assumption is that regardless of whether ISPs create QOS-enabled premium tiers, they cannot be trusted not to block or harmfully shape traffic, whether it's legitimate or not. While there have been random acts of blocking by smaller ISPs, this does not seem to be a rampant problem right now. And it's important to distinguish between blocking legitimate vs. illegitimate traffic. For instance, when Comcast blocks illegitimate P2P file-sharing traffic then to me that's a good thing. It frees up network resources for the rest of us who are paying to use the network for legitimate purposes. I'm not going to cry for some 15 year-old kid who can't speedily download a pirated copy of the latest Hollywood thriller, nor should you.

    While the pro-net neutrality folks obviously believe ISPs will be bad actors, to my mind, even if you make the above assumptions, this does not form the basis for preemptive net neutrality action now. Sure it's tempting to believe that cable and telco companies, still with plenty of monopolistic DNA flowing through their corporate veins, would indeed act unfairly, for now it is most appropriate to give them the benefit of the doubt.

    Washington's laissez-faire attitude toward Internet regulation has been one of the key reasons for the Internet's continued innovation and growth. Attacking broadband video and the Internet, which are among the last few bastions of economic growth left in America is unwise, particularly given the fact that the "law of unintended consequences" is virtually synonymous with all recent telecommunications regulation. Preemptively impose network neutrality and who knows what the actual result will be.

    So for now net neutrality regulation should stay on the backburner. When and if it's appropriate, it can be re-prioritized. Instead, I'd prefer keeping Washington's focus on cleaning up a separate, larger and far more pressing problem caused by another rush to preemptive government action (hint, it starts with an "I" and ends with a "Q").

  • DailyMotion Raises $34 Million, Is Category Over-Funded?


    WSJ reported today that DailyMotion, the French video sharing site, has raised $34 million in a round led by Advent Venture Partners LLP of London and AGF Private Equity. This financing adds to a wave of capital that has poured into the overall ad-supported video sharing/video aggregator platform space in the last few months.

    Companies that I think fit in this group that have recently raised big money are Joost ($45 million), Veoh ($26 million), Metacafe ($30 million) and ($10 million). Hulu, the NBC-News Corp JV which raised $100 million could even be considered in this category. And thinking a little more broadly you could include sites like, Break, Vuguru, Next New Networks, DaveTV, Babelgum, BitTorrent and others which are creating and/or aggregating broadband programming.

    To be fair, each of these companies has a slightly different approach to their content strategy (pure aggregation vs. original development vs. hybrids), market positioning and technology capabilities. However, as best I can tell, they're all trying to offer distinctive video content into broadband-only delivery networks and to one extent or another, surround this programming with interactive tools. The intended result is unique viewing experiences.

    In the aggregator roles they play, they're muscling themselves into the market owned by traditional video distributors like cable and satellite operators, and more recently telcos. These new companies are all very interesting to watch because ultimately they must do at least 3 things to generate traffic and revenue: (1) differentiate themselves from each other, (2) add value to content providers/producers relative to CPs/producers relying solely on a direct-to-consumer approach and (3) shift viewing time from the traditional distributors' programming to their own.

    Any one of these would be a pretty high hurdle to get over. Doing all three will be even tougher. Yet a lot of smart money keeps backing these companies, further demonstrating how hot this overall category is -- and how quickly it could become overfunded. But I don't expect things to cool down any time soon. We can expect further funding in this space as investors clamor to get a piece of the action in broadband video.

  • Prognosticating P2P's Possibilities and Pitfalls - May E-Newsletter

    With Joost's launch upon us, BitTorrent going mainstream, Akamai buying Red Swoosh and a raft of other peer-to-peer (P2P) initiatives underway, it's time to consider legitimate P2P's possibilities and pitfalls.
    First a disclaimer: I don't pretend to know all of the technical ins-and-outs of P2P, but I think I know enough to be dangerous. Here's my current take: P2P has a ton of potential as a legitimate distribution platform, but has to navigate some significant challenges if it is to succeed.
    A P2P Primer
    For those of you new to the P2P game, in essence, P2P's big advantage is that it allows users themselves to become servers of content to other users. In doing so, the load for delivering content is shifted from central servers to the "nodes" or users on the P2P network. Until relatively recently, P2P was popularly associated with the illegal "file sharing" networks (Napster, KaZaa, etc.), most of which were (and still are) used by users to swap audio or video files without permission of the copyright holder. Users could look up where certain content resided and then download it accordingly.
    What's new about P2P is that many (e.g. Joost, BitTorrent, others) see it as an important, if not essential, way for video to be legitimately distributed. P2P companies argue that the Internet's current architecture cannot effectively scale to deliver large quantities of video (especially live streams) in an economic manner. Since P2P gives users the ability to directly share with other users, P2P also has a potentially disruptive effect on the overall value chain and how video aggregators continue to establish value for themselves. P2P requires users to install client software on their computers. These clients are then available on the P2P network, sending files to subsequent users requesting content that they have already stored. In the case of video or audio, files can be delivered for either download or streaming.
    All of this is intended to happen invisibly to the average broadband video user. Of course, to nobody's surprise, the average user couldn't care less how video actually gets to his or her computer, as long as it gets there quickly and in reasonably good shape.
    Potential Abounds
    P2P is a potentially big deal for the biggest broadband video content providers. That's because delivering large volumes of video in the traditional client-server paradigm is still pretty expensive, notwithstanding the significant declines in content delivery networks' (CDN) pricing. With everyone forecasting huge increases in broadband video consumption, together with larger video files (due to better encoding, High Definition, etc.), getting a handle on delivery costs is a key challenge for content providers.
    Compounding matters is that broadband video business models remain relatively immature, so expense containment is all the more important. P2P allows these content providers to shift all or some of the responsibility for video distribution to the users themselves, while establishing direct connections with users (i.e. no 3rd party distribution costs). The users' computers are leveraged for both storage and delivery, while the bandwidth is essentially free, since users upload content using the local broadband ISP's network, not the content provider's CDN service. If P2P succeeds, its potential to cut content providers' delivery costs, while delivering high-quality video, is obviously very significant.
    Important Challenges Lie Ahead
    Of course, potential is one thing, reality is another. From my vantage point, consumers' willingness to become P2P nodes and ISPs' restraint in blocking P2P traffic represent the biggest obstacles to P2P's future success. First the consumer acceptance challenge. Getting the P2P client on millions of users' computers or into their living rooms is not trivial. In this era of spyware, malware, viruses and other technical nuisances, mainstream Internet users are becoming more reluctant than ever about loading anything onto their machines that doesn't come from a recognized and trusted brand. Since P2P's whole promise relies on files being propagated to many users, anything that limits this from happening is obviously very detrimental to P2P's success.
    Then there is the even thornier issue of how broadband ISPs are going to react to users clogging up precious upstream bandwidth by serving as nodes. Virtually all American broadband ISPs offer "asymmetric" Internet access, meaning that the amount of bandwidth offered in the upstream path is usually only a fraction of that provisioned for the downstream path (this is due to some fundamental limitations related to the way that ISPs' networks are allocated). Re-architecting these networks for potentially burgeoning upstream traffic flows would be cost-prohibitive and a non-starter.
    To date, broadband ISPs have used "traffic shaping" technology to identify and limit P2P traffic. They have also kicked customers off their networks who have used too much bandwidth (a little secret in the industry). All of this has been sort of OK to do when most P2P use was for illegitimate file sharing. But what happens when it's for legitimate use, such as Joost or the newly legitimate BitTorrent? Limiting users' access to their full broadband service is going to evoke howls of protest.
    And of course, remember that the net neutrality proponents are waiting to pounce on any sign of broadband ISPs de-prioritizing or worse, blocking, certain types of traffic. Net, net, a big wildcard in P2P's success is how ISPs are going to react.
    Planning for P2P Success
    P2P proponents need a game plan to overcome these looming issues. Here's what I think makes sense: Well-established branded content players will need to take on the primary role for P2P client distribution. Of course, this approach has been used for previous media players' distribution (i.e. Real, WMP, Flash, etc.) and for updates. We've all had the experience of being asked to download player software or an updated version of previously installed software. P2P client distribution could be no different.
    But what will incent major content providers to assume this responsibility on a mass scale? They'll have to see real (not theoretical) business cases for delivery cost reductions and quality improvement. Of course, getting paid to become P2P client distributors (either in cash, or as part of distribution deal discounts, or some hybrid of the two) would also clear the way. Companies like Joost and BitTorrent need to remember that while their brand awareness among the Internet's cognoscenti is high, among more mainstream users it is still low. So leveraging their content partners' brands to turbo- charge distribution is key.
    BitTorrent, for one, is already doing this with their BitTorrent DNA technology. Another opportunity for P2P client distribution is embedding it in various consumer devices. For example, BitTorrent also offers a software development kit (SDK) that consumer electronics and chip makers can use to embed the P2P client in devices. This removes P2P download complexities for users, and is intended to make P2P usage completely invisible. The ISP solution seems more complex.
    Some believe that ISPs should look at P2P as a business opportunity to deliver a quality-of-service (QOS)-guaranteed platform to the P2P application providers such as Joost and BitTorrent. This would be accomplished by installing caching servers in broadband ISPs' facilities. These would essentially allow ISPs to serve content locally, mainly relying on the P2P protocols to deliver from the caches when appropriate, instead of from the nodes. This approach would preserve upstream bandwidth and limit ISPs' need to increase their peering capabilities to handle video coming in from the Internet backbone, while also leveraging P2P's scalability.
    This "peer-assisted" approach may be the optimal migration path to P2P adoption from an ISP perspective. Though the economics still need to be fully fleshed out, I've heard a pretty persuasive argument for this model from a company named PeerApp (disclaimer, they're a client), which is worth understanding further if P2P affects your business. One way or another, ISPs need to be brought into the P2P fold. Simply ignoring them or relying on their reluctance to tempt the net neutrality gods is not a sound business approach.
    Wrapping Up
    P2P offers very exciting potential to enhance users' broadband video experiences. For content providers, it holds the promise of profitably scaling up their broadband video activities. It will be very interesting to see how key P2P players navigate impending challenges to their success.
  • Bandwidth Issue Looms as Video Usage Rises

    This article in today's Boston Globe points out the looming bandwidth issue that cable ISP customers will be facing as usage of video becomes more widespread. Most people don't realize there are "acceptable use" policies in the user agreements we all sign. That's because today the vast majority of us (99%+) don't come anywhere close to crossing the maximum usage line. However, as this story points out, some people are getting snagged. How many more will cross the line as video usage (particularly from P2P services like Joost and BitTorrent) rises in the coming years?

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