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  • VideoNuze Report Podcast #80 - Nov. 19, 2010

    Daisy Whitney and I are back this week for the 80th edition of the VideoNuze Report podcast, for November 19, 2010. Before getting started, congratulations to Daisy on the release of "The Mockingbirds," her first fiction book, for young adult readers. It debuted 2 weeks ago and is published by Little Brown. In addition to writing the book, Daisy has put together a clever social media campaign which has lifted the book's visibility. Congrats Daisy!

    This week Daisy and I discuss my post from yesterday, "Broadcast TV Networks Are Wrong to Block Google TV - Part 2" in which I laid out the case for why the networks are using a backwards-looking strategy in their decision to block their programs from access by Google TV and other browser-based connected devices.

    To their credit, the networks have actually been quite forward-looking in releasing many of their programs for free viewing on their web sites and on Hulu. But now, by creating an artificial distinction between computer-based and TV-based viewing of online-delivered content, they are violating one of the most basic rules of the Internet era: don't create friction between the product and the customer. While that may help them win retransmission consent deals in the short term, I believe that in the long term it will hurt them. Listen in to learn more.

    Click here to listen to the podcast (11 minutes, 43 seconds)


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  • Broadcast TV Networks Are Wrong to Block Google TV - Part 2

    When Fox decided last week to block access to its programs by Google TV, it was no big surprise since its broadcast brethren ABC, CBS, NBC and Hulu had already done so. By speaking in a unanimous voice, the broadcasters have sent a clear signal that viewing their programs on TV, for free, via online delivery, is not to be. While they're happy to make Hulu Plus subscriptions available via connected devices, if you want to watch for free, you'll be restricted to computer, or limited mobile device-based, viewing.

    A few weeks ago in the first part of "Broadcast Networks Are Wrong to Block Google TV," I speculated on what was motivating the broadcasters to block Google TV, boxee and other browser-based connected devices. In the case of Google TV, it's tempting to believe they are looking to extract payments from Google to distribute their programs. Another possible explanation is that programs aren't monetized as well in online as they are on-air (the "swapping analog dollars for digital pennies" argument). Yet another explanation is that measurement of online viewing is not yet fully mature, so they're worried that if their audience shifts to connected device-based viewing, it would hurt their ratings points, and consequently their ad revenues. But none of these are broadcasters' main motivation.

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  • Broadcast TV Networks Are Wrong to Block Google TV

    Since word broke late last week that ABC, CBS and NBC are blocking access by Google TV to their full-length programs, I've been scouring the web and  speaking to colleagues, attempting to get some insights about what's going on here. Though I've heard plenty of free-floating concerns raised, I've yet to really understand solid reasons for why broadcast networks are doing this that can't be addressed somehow. Therefore, as best I can tell, for now at least, I think the broadcast TV networks are wrong to block access.

    The most obvious reason is that they're creating a false and meaningless distinction between screens. Whereas you can "go online" and freely access plenty of ABC, CBS and NBC shows at their own web sites, (and at Hulu for ABC and NBC), the networks have decided that if you're trying to "go online" via your Google TV, that's unacceptable. In an age where computer screens are getting bigger all the time - looking more like TVs - why exactly should this distinction matter?

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  • 6 Items of Interest for the Week of Oct. 18th

    It was another busy week for online/mobile video, and so VideoNuze is continuing its Friday practice of curating 5-6 interesting industry news items that we weren't able to cover this week. Read them now or take them with you this weekend!

    Networks block Google TV to protect themselves
    Yesterday news started breaking that ABC, CBS and NBC are blocking access by Google TV. There are numerous concerns being cited - potential disruption of advertising, encouraging cord-cutting, incenting piracy, diminished branding, unsatisfactory ad splits with Google, and general worry about Google invading the living room. Each item on its own is probably not enough to motivate the blocking action, but taken together they are. Still, doesn't it feel a little foolish that broadcasters would differentiate between a computer screen and a TV screen like this? For Google, it's more evidence that nothing comes easy when trying to work with Hollywood. I'm trying to find out more about what's happening behind the scenes.

    TWC Lines Up For ESPN Online Kick
    An important milestone for TV Everywhere may come as early as next Monday, as #2 cable operator Time Warner is planning to make ESPN viewing available online to paying subscribers. Remote access is part of the recent and larger retransmission consent deal between Disney and TWC. TV Everywhere initiatives have been slow to roll out, amid cable programmers' reluctance.  Further proving that remote authenticated access works and that it's attractive with a big name like ESPN would increase TV Everywhere's momentum.

    Hulu Plus, Take Two: How's $4.95 a Month?
    Rumors are swirling that Hulu may cut the price of its nascent Hulu Plus subscription service in half, to $4.95/mo. That would be a tacit recognition of Hulu Plus's minimal value proposition, largely due to its skimpy content offering. As I initially reported in August, over 88% of Hulu Plus content is available for free on Hulu.com. More important, Netflix's streaming gains have really marginalized Hulu Plus. Netflix's far greater resources and subscriber base have enabled it to spend far bigger on content acquisition. Even at $4.95, I continue to see Hulu Plus as an underwhelming proposition in an increasingly noisy landscape.

    Viacom Hires Superstar Lawyer to Handle YouTube Appeal
    Viacom is showing no signs of giving up on its years-long copyright infringement litigation against Google and YouTube. This week the company retained Theodore Olson, a high-profile appellate and Supreme Court specialist to handle its appeal. While most of the world has moved on and is trying to figure out how to benefit from YouTube's massive scale, Viacom charges on in court.

    Verizon to sell Galaxy Tab starting November 11th for $599.99
    Verizon is determined to play its part in the tablet computer craze, this week announcing with Samsung that it will sell the latter's new "Tab" tablet for $600 beginning on November 11th. The move follows last week's announcement by Verizon that it will begin selling the iPad on Oct. 28th, which was widely interpreted as the first step toward Verizon offering the iPhone early next year. Apple currently owns the tablet market, and it remains to be seen whether newcomers like the Tab can break through. For his part, Apple CEO Steve Jobs said on Apple's earnings call this week that all other tablets are "dead on arrival." Note, if you want to see the "Tab" and learn more about how connected and mobile devices are transforming the video landscape, come to the VideoSchmooze breakfast at the Samsung Experience on Wed., Dec. 1st.

    One-Third of US Adults Skip Live TV: Report
    A fascinating new study from Say Media (the entity formed from the recent merger of VideoEgg and Six Apart), suggesting that 56 million, or one-third of adult Internet users, have reduced their live TV viewership. The research identified 2 categories: "Opt Outs" (22 million) who don't own a TV or haven't watched TV in the last week and stream more than 4 hours/week, and "On Demanders" (34 million) who also stream more than 4 hours/week and report watching less live TV than they did a year ago. Not surprisingly, relative to Internet users as a whole, both Opt Outs and On Demanders skew younger and higher educated, though only the latter had higher income than the average Internet user. This type of research is important because the size of both the ad-supported and paid markets for live, first-run TV is far larger than catalog viewing. To the extent its appeal is diminishing as this study suggests poses big problems for everyone in the video ecosystem.


     
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  • 5 Items of Interest for the Week of Sept. 27th

    It's Friday and that means that once again VideoNuze is featuring 5-6 interesting online/mobile video industry stories that we weren't able to cover this week. Have a look at them now, or take them with you for weekend reading!

    Nielsen Unveils New Online Advertising Measurement
    comScore Introduces Digital GRP `Overnights` in AdEffx Campaign Essential
    Dueling initiatives from Nielsen and comScore were announced on Monday, aimed at translating online usage into comparable TV ratings information, including reach, frequency and Gross Ratings Points (GRPs). While online video ad buying is ramping up, the tools to measure viewership in a comprehensive way have been lacking. This is one of the main issues holding back content providers from participating in TV Everywhere. 

    Analyst: Cord-cutting fears overblown
    New research shared this week by BTIG analyst Rich Greenfield concludes that less than 8% of the market is actually interested in cord-cutting. The big impediment: losing access to sports and cable programming, which is unlikely to migrate to free over-the-top alternatives. Greenfield's conclusion is that cord-cutting isn't a major threat to pay-TV operators over the next 3-5 years. Notwithstanding the research, another factor I'd point to that could tip cord-cutting the other way is consumers' belt-tightening. Much as nobody wants to lose access to programming, if the price is perceived as too high, they'll make compromises.

    Why YouTube Viewers Have ADD and How to Stop It
    Abandonment rates for online video have always been a concern, and using new research, Visible Measures CMO Matt Cutler now quantifies the behavior. Expect 20% of the audience to drop out within 10 seconds of hitting play, 33% by the 30 second mark and 44% by 60 seconds in. Pretty sobering data but incredibly important in thinking about content creation and monetization.
     

    Networks Have Sharing Issues With Hulu
    Hulu's New Hoop
    On the one hand, Hulu's network partners, ABC, NBC and Fox are reportedly pulling back ad inventory that Hulu is allowed to sell, yet on the other, Hulu is reportedly out aggressively selling ads in Hulu Plus, its subscription service. Meanwhile this week Hulu also announced that Hulu Plus will be accessible on both Roku devices and TiVo Premiere, as it continues chasing Netflix in the subscription game.

    The New Apple TV Reviewed: It`s All About the Video
    Apple TV devices started shipping this week, and reviews began popping up all over the web. This mostly positive review indicates that the user experience is solid, but that content selection is still skimpy. That's no surprise given how few deals Apple has struck to date. Yet to be seen is how Apple TV performs when it can access other iOS apps.
     
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  • Over 88% of Hulu Plus Content is Already Available for Free on Hulu.com

    A new analysis of all the content available on Hulu Plus reveals that over 88% of all the full-length TV program episodes available in the $10/mo subscription service are already freely accessible on Hulu.com. For clips, it's almost 98%. Research firm One Touch Intelligence found that out of 28K+ episodes on Hulu Plus, just 3,345 of them can't also found on Hulu.com. Two-thirds of these incremental program episodes are sourced from Hulu's broadcast TV network partners/owners, ABC, Fox and NBC.

    In fairness, Hulu Plus has been live for less than 60 days and will no doubt will be adding more content down the road. But for now the high proportion of free availability diminishes the Hulu Plus value proposition for Hulu.com users considering an upgrade. In addition, the relatively small amount of incremental episodes risks inducing churn, particularly for heavy users most familiar with the service, as they come to realize much of what they've paid to watch is actually available for free. Compounding the problem, Hulu Plus viewers see the same quantity of ads as do free Hulu.com users, so there's no ad-avoidance benefit to subscribing either.

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  • Pondering the (Potential) Impact of Apple's New iTV Device

    Once again it's the silly season, when rumors and pronouncements about still-shrouded-in-secrecy Apple products start flying around the Internet, often forecasting a future radically changed by another wave of Steve Jobs' magic wand. The latest Apple product in the speculative crosshairs has been dubbed "iTV," and was originally described back in May by Engadget as an "iPhone without a screen" (and a phone for that matter), that would bring the world of Apple's App Store to the big screen and would also be capable of playing some flavor of HD video. It would also carry a surprisingly low (for Apple products anyway) $99 price tag.

    It's easy to see an iTV device being a volume success for Apple, though given its low price point, profit margins could be a different story. The groundwork for iTV's success has been laid by the massive success of Apple's App Store and iTunes, which would now would be inexpensively connected to the TV. The concept "apps on TV' is getting a lot of attention lately, with Samsung making a big push, and of course Google TV being primed to deliver apps from the Android Market.

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  • For Broadcast TV Networks, Google TV is Friend, Not Foe

    Reading this morning's WSJ story, "Google TV Is a Tough Sell Among Would-Be Partners," you get the impression that broadcast TV networks are viewing Google TV as a potential disruptor of their business models. While the networks should take time to fully understand Google's new product, plus assess additional work being asked of them (e.g. enhanced metadata) and how their programs will be incorporated in Google TV's UI, on the whole, broadcast TV networks should view Google TV as beneficial, not disruptive, to their digital distribution efforts.

    Broadcast networks are right to be concerned about what effect viewing on any new digital device will have on their on-air business models. I've written often about my concern that the networks' web sites and Hulu's "ad-lite" approach was threatening to their on-air economics. However, more recently the networks (and likely Hulu) have been increasing their digital ad loads. ABC for one has said that digital delivery profitability is already on a par with "DVR economics" (accounting for ad-skipping by DVR households), and more ads will only further enhance digital's ROI. Certainly ABC's decision to make its programs available on the iPad is evidence that proper monetization, along with a coherent windowing approach, can yield incremental views and profits from distribution to new devices.

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  • 7 Quick Reactions to Hulu Plus

    Hulu unveiled its much-rumored subscription service this afternoon, dubbed "Hulu Plus." I haven't used the new service, but based on the explanation and the teaser video, here are 7 quick reactions:

    1. Is there consumer demand for Hulu Plus? - This looms as the fundamental question that will be answered as Hulu Plus rolls out. From CEO Jason Kilar's blog post, it appears that, at least initially, Hulu Plus is a bet on consumers having an appetite for a library of broadcast network programs since that's all that's been highlighted so far. Hulu identifies about 2,000 library episodes in addition to current seasons. Unless Hulu Plus really beefs up its catalog, it won't be long before the library holds few surprises for returning visitors.

    2. Hulu Plus lacks many of Netflix's advantages - It's tempting to think of Hulu Plus competing directly with Netflix, and to an extent of course they're after the same general target consumer. But Netflix has several very significant advantages: a brand that's identified with subscriptions and 14 million+ currently paying subscribers, a deep DVD library of 100,000+ titles (which has every single episode Hulu Plus will be offering), a streaming library of 17,000+ titles (offered at no extra cost to subscribers) and integrations with all the same devices Hulu Plus is touting (except the iPhone, which is coming soon). Further, Netflix has far deeper resources; it is a public company with a $6 billion market cap that spends $250 million/year on marketing and has publicly-stated commitment to obtain more streaming rights from Hollywood. With Netflix on one side and cable on another, it's unclear how Hulu Plus will expand its menu. I don't see Hulu Plus diminishing Netflix's rapid growth.

    3. Ads in Hulu Plus would be a big-time buzz-kill - I did a double-take when I first read this line in Jason's post: "Hulu Plus is a new revolutionary, ad-supported subscription product that is incremental and complementary to the existing Hulu service." Whoa - are there going to be ads in Hulu Plus? That will be a flat-out non-starter for many prospective subscribers. Yes, I know about ad-supported cable networks, but that's for first-run programming, not for library or catch-up fare. Hulu Plus must be an ad-free zone. Meanwhile, it's important that Hulu still prove the 100% ad-supported business model for its existing experience. With much in flux regarding ad loads there's new messaging Hulu will likely be rolling there too.

    4. Why wasn't Android or Google TV mentioned? - Is it a little weird that there was no mention of Android or Google TV in today's unveiling? I think so. Android is fast-gaining on the iPhone (surpassed by some metrics) and Google TV is poised to make a big splash in the fall. Why no mention? Is there an anti-Google bias at work?

    5. Hulu Plus adds more support for HTML5 - Hulu Plus is another boost for HTML5 and another small dent for Flash. By making Hulu Plus available on non-Flash supported Apple devices, the it seems the Hulu team has been willing to make the investment to diversify beyond Flash, which it has used since launch.

    6. Comcast must already be considering how it exits the Hulu joint venture - When the Comcast-NBCU deal clears, Comcast will inherit NBCU's ownership stake in Hulu. With Hulu Plus it's hard to see why Comcast will want to retain that stake. There's no discernible benefit to Comcast owning a minority position in a new over-the-top subscription service that whets the appetite of potential cord-cutters. It's one thing for selective NBC programs to be freely available for catch-up on Hulu.com, but a deeper library in a paid subscription service? No way, especially not as Comcast is trying to build value in its own TV Everywhere service.

    7. Hulu gets credit for a well-executed launch - Stepping back, the Hulu team deserves credit for keeping its subscription under tight wraps and executing a solid launch. There have been no shortage of rumors, but to my knowledge there haven't been any specifically identifiable leaks in the Hulu ship. That's a big accomplishment, especially when you consider how many people must have had knowledge of the plans. The launch includes a well-articulated CEO message, a nicely-done sizzle reel (that is in Flash, which makes it not viewable on the iPad or iPhone!), several device integrations and a roadmap of add-ons, and a slow-rollout plan that will generate excitement among early adopters.

    There are still many unknowns about Hulu Plus, but for now this is plenty to chew on.

    What do you think? Post a comment now (no sign-in required).
     
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  • Here's What Fox, NBC and Hulu are Doing with Increased Online Ad Loads

    Get ready to see more ads in TV programs viewed online. Following my exclusive 2 weeks ago about ABC doubling the number of ads in its iPad app, and soon on ABC.com, the same increased ad load is happening with Fox's and NBC's online programs, and in my opinion, likely with Hulu as well. Here's what I've learned:

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  • VideoNuze Report Podcast #65 - June 18, 2010

    Daisy Whitney and I are pleased to present the 65th edition of the VideoNuze Report podcast, for June 18, 2010.

    This week Daisy and I return to the topic of cord-cutting, with Daisy tamping down some of what she reported about possible momentum here. Daisy cites new research from Nielsen and from Leichtman Research Group as evidence that in fact cord-cutting isn't actually happening (at least not yet). For my part, as I've said going back to my post in Oct, '08, I don't see much cord-cutting happening any time soon, both because viewers would lose cable TV network programs they love and because it's still not mainstream to connect broadband to TVs.

    We then discuss my post early this week about ABC doubling the ad load on its iPad app, and soon on ABC.com as well. As I said earlier this week, it's tough from a consumer standpoint to see more ads, but the reality is these programs need to be effectively monetized, or well, these programs will cease to exist.

    Click here to listen to the podcast (15 minutes, 29 seconds)


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  • Exclusive: ABC Has Doubled the Number of Ads in Its iPad App; ABC.com Will Be Next

    Yesterday ABC began implementing a new ad policy for its popular iPad app, which up to doubles the number of ads included per episode. ABC intends to apply the new ad policy to programs viewed on ABC.com soon as well. Albert Cheng, EVP, Digital Media for Disney/ABC Television briefed me on the changes last week, adding that he believes the new ad policy will become common in the industry. ABC also shared with me that its iPad app has been downloaded over 800,000 times, with 4.2 million episodes started since the iPad's launch on April 3rd.

    The changes are very significant as they signal a new push by broadcast networks to improve the profitability of their free online and mobile streams. For example, a typical ABC.com program has included 5-6 ads that are 30-seconds, totaling up to 2 1/2-3 minutes of ad time. This compares with around 20 minutes of ads shown in an hour-long program broadcast on-air.

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  • ABC Unveils "The VIEWer's Choice," Powered by Gotuit

    Late yesterday, ABC unveiled "The VIEWer's Choice" an online library of video clips of every single topic, co-host, guest and segment from the popular daytime talk show "The View." Clips can be searched, and are also organized by playlist topics such as Celebs & Entertainment, Sex & Relationships, Mom's View, etc.

    For fans of The View, the clips offer unparalleled access to the show's most memorable moments, which can also be shared easily through a dozen social media sites. For example, here you can see last Friday's episode featuring guest Melissa Etheridge. I played around with it a bit and was quickly able to find all the relevant clips with Tiger Woods and discussions about American Idol.

    The VIEWer's Choice is powered by Gotuit Media Corp, a company I've written about in the past.  Producers use Gotuit's Video Metadata Management System to set up the "virtual clips" from the source broadcast, based on time-based metadata. The metadata is used to both categorize the video clips into the playlists, to power search and to define ad inventory. Gotuit is used in other key sites like NBA.com's "Inside the NBA," ESPN's "Pardon the Interruption" and SI's "The Dan Patrick Show."



    Almost 2 years ago I wrote a post "Non-Linear Presentation + Long-form Premium Video = Big Opportunity," in which I explained how deconstructing full-length programs into searchable clips offers big opportunities to drive fan engagement and new ad inventory. With the explosion of social media like Twitter and Facebook since, the opportunity to leverage clips to promote specific moments in programs is even higher now. Looking around the web though, I'm still surprised at how many full-length programs don't take advantage of this. As "The VIEWer's Choice" demonstrates, talk shows, news and sports programming are probably the most natural fit.

    Engagement is the big idea behind The VIEWer's Choice; it is exactly the kind of initiative that bridges broadcast to the Internet, where more interactivity, choice and personalization are expected. As a side-note, I think it picks up nicely on what Martin Nisenholtz, SVP of The NYT's digital operations said in a recent speech at Wharton: "we've begun to view (engagement) as the essential moat around which our defenses are based; it is the emotional connection that our users have with us."

    I think that point is right on the money - since Internet users are always just 1 quick click from moving on, the need to immerse them in the content experience is stronger than ever. The traditional metrics of ratings points, circulation, box office gross, etc will still be important, but going forward, measuring how solid the bonds are with audiences and users will become a key new currency when measuring a brand's value.

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

    (Note - we'll be talking in-depth about engagement at the VideoSchmooze breakfast in LA on June 15th, where our topic is "How Hollywood Succeeds in the Digital Distribution Era." Among our panelists will be Albert Cheng, EVP of Digital Media at Disney/ABC Television and Ben Weinberger, CEO and co-founder of Digitalsmiths which is powering metadata creation and management for many studios. Please join us - early bird discounted registration is now available).
     
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  • New comScore Research Available: More Ads Tolerable in Online TV Programs

    An article I read last week in Mediaweek about new comScore research which concluded more ads are tolerable in online-delivered TV programs really intrigued me. The research was presented by Tania Yuki, comScore's director of cross media and video products at an Advertising Research Foundation meeting. I called Tania to follow up and learn more about the data. Today I'm pleased to share her presentation with the research findings as a complimentary PDF download. Outside of the ARF meeting, this is the first time this data has been made available.

    Click here to download the research presentation

    As VideoNuze readers know, I've been a proponent of increasing the number of ads in online TV shows, in order to improve their economics. Note, I'm not advocating a jump to 18-20 minutes of ads typically found in on-air distribution that would likely turn users off. But I do believe that the current model of 3-4 minutes of ads in premium network programs is way too light, and that viewers will tolerate more without any drop-off in usage, particularly if the ads are well-targeted and engaging. ABC has told me in the past that research it conducted when it experimented with doubling its ad load corroborated this point, just as the comScore research now does as well. Just last week the CW announced it would double the number of ads in its online-delivered programs.

    Increasing the number of ads - and thereby strengthening the economic model for online-delivered TV - is critical for the industry to succeed long-term. The current lack of economic parity between online and on-air is gaining urgency; just last week when Hulu blocked access to its content via the new Kylo browser (meant for on-TV browsing), we were reminded of the absurd lengths to which the popular site will go to prevent its viewership from migrating to TVs. This is because Hulu was conceived as an online-only augment. Given its lack of economic parity with on-air (or with DVR viewing, as ABC.com is now achieving), Hulu on TV would undermine its owners' P&Ls.

    The new comScore research concludes that viewers will tolerate 6-7 minutes of "total advertising time" during online-delivered TV programs. And note that this response reflects expectations of conventional advertising. I think it's quite possible that if respondents had been shown the kinds of targeted, entertaining and interactive video ads that blip.TV and others are now offering, they would have said their tolerance would be even higher. Providing further comfort that more ads are reasonable, when asked about the most important reasons for watching TV online, the answers were first, "Missed an episode on TV" (71%) and second, "Convenience" (57%). A distant third was "Less ads" (38%). Ad avoidance is important to online viewers, but it isn't their sole motivator.

    The comScore research further underscores the growing importance of online, particularly in terms of raising programs' visibility and sampling. For example, for people who watch both on TV and online, an "online video site" (28%) is already the third most-cited way of discovering new TV shows, following "TV advertising" (59%) and "Friend/family member recommendation" (44%). Related, 28% said that they believed that if they hadn't been made aware of their favorite program online first, they probably wouldn't have discovered it on TV, and therefore would have missed the show entirely. Across all respondents, 20% of shows watched regularly had been watched first online.  

    As Tania reminded me, TV is still by far the dominant platform for viewing TV programs and that it's important to remember that online-only viewing is nascent. ComScore's research found that only 6% of respondents tune-in online only, though another 29% view both online and on-air. The key for me is looking toward the future. When the 6% of online-only viewers is broken down by age groups, about 75% are between 18-34. And if my 8 and 10-year old kids are any example, no doubt that those under 18 are only going to be even more avid online video viewers. In order for the TV industry to succeed in the future, it is essential that the business models to sustain online viewing be figured out pronto.

    For this research, comScore which surveyed 1,825 people from its U.S.-only panel, weighted to match the total online population in age, income and gender. The  research was conducted between Dec. 30, 2009 and Jan. 22, 2010. It was not sponsored by any third-party.

    A reminder that if you're keen on this topic, join us for the complimentary April 8th webinar, "Demystifying Free vs. Paid Online Video" and then at the April 26th VideoSchmooze in NYC, where our panel topic is "Money Talks: Is Online Video Shifting toe the Paid Model?" (early bird tickets now available).

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

     
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  • Will Nasty Fee Fights Fuel Consumers' Cord-Cutting Interest?

    Another weekend, another high-stakes fee fight between a multi-billion dollar media company and a multi-billion dollar cable operator. This time around it was Disney's WABC station in the New York City market in a standoff with Cablevision, which has 3.3 million subscribers there, with the Oscars broadcast the main hostage (WABC, which was pulled late Saturday night, came back on the air at 8:44pm subject to an initial agreement between the companies).

    This fight, like recent ones between Time Warner Cable and News Corp, Cablevision and Scripps, plus others, is a no win PR situation for its combatants, and in my mind will lead to one inevitable result - heightened consumer disgust with the hyper-corporatized TV business, where CEOs who are paid tens of millions of dollars per year accuse each other of not being sufficiently focused on satisfying their customers. Inevitably, consumers' disgust will translate into interest in finding alternatives, particularly those that are cheaper. While the WABC/Cablevision brought out switching enticements from Verizon, the real competition is increasingly going to be "cutting the cord" and getting programming from online-only sources.

    Generally I don't believe that there's latent cord-cutting interest waiting to explode (even as monthly subscription fees have grown and the amount paid to cable networks is readily available). The fact is that popular cable programs are so diffused across so many channels - and that most of these programs are not available online (the very issue TV Everywhere aims to address) - that cutting the cord is a practical impossibility in most American homes. Sports alone is the ultimate firewall in a huge percentage of homes. How many sports fans would willingly say goodbye to ESPN, Fox Sports or TNT?

    That said, more fee fights, affecting more consumers, are certainly in the offing. While fee fights in the past have focused on amounts paid for cable networks, future fee fights are more likely to look like the WABC-Cablevision one - squabbles over how much cable operators should pay for broadcast stations. These fights are related to "retransmission consent" payments and reflect a very different dynamic unfolding between broadcast stations and cable operators.

    In the past broadcast stations were plenty happy to have cable operators take in their feed directly, and then position the station on a low channel number, enhancing visibility. Now, however, with broadcast economics under extreme pressure, and intense broadcaster envy for cable networks' dual revenue model (monthly fees + advertising), monthly retransmission fee payments are the new normal. Never mentioned in broadcasters payment demands is the fact that they still have government-granted access to free broadcast spectrum which should likely be returned to the government if they want to operate more like cable networks. To the contrary, in fact broadcasters are arguing that government efforts to reclaim the spectrum for higher value mobile data uses are off-base. But that's a subject for another day.

    Even as big media companies and cable operators are poised for future skirmishes, the online universe marches on. Convergence devices that bridge broadband to the TV are gaining further traction. And services like Netflix, iTunes, MLB and others are increasing consumers' expectations for what's expected and possible. As I've pointed out before, big media companies and cable operators have a mutually shared interest in defending the current subscription-based model. Nonetheless, how that model's riches are apportioned between the parties is what's being hotly contested. As they do this though, they risk killing the golden goose.

    What do you think? Post a comment now (no sign-in required).
     
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  • VideoNuze Report Podcast #52 - March 5, 2010

    Daisy Whitney and I are pleased to present the 52nd edition of the VideoNuze Report podcast, for March 5, 2010.

    First up this week I discuss my post from this past Monday, "ABC.com is Now Achieving 'DVR Economics' for Its Programs," in which I described how ABC is now generating roughly the same revenue per program per viewer in online as it is when its programs are watched in DVR playback mode. Albert Cheng, EVP of Digital Media at Disney-ABC had explained to me last week that ABC recently concluded that since online and DVR are both "catch-up" opportunities, it was more appropriate to compare them to each other than to on-air.

    Key to this logic is that ABC maintains a release window for its programs, with them being posted on the site 4-6 hours after broadcast. As a result, people who really want to see the program when it's first available still watch on-air (and may in fact re-watch online or via DVR). As long as there's an audience for broadcast, and online doesn't cannibalize it, the logic makes sense to me. Albert also explained that there's further upside in online through increasing the ad load, which is something ABC has experimented with.

    Daisy picks up on that point, noting that CBS's Anthony Soohoo told her in an interview for Beet.tv that CBS is considering moving to a full ad load online because the online and on-air experience are converging, which suggests to them that viewers would tolerate more ads. We dig into the interplay between online and DVR usage, which I think is increasingly going to be a key focus for networks in how they choose to monetize online viewing.

    Wrapping up, we review what some of the social media "listening" sites that are tracking the Oscar predictions are saying. Daisy appears officially addicted to following the online chatter.

    Click here to listen to the podcast (14 minutes, 41 seconds)

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  • ABC.com is Now Achieving "DVR Economics" for Its Programs

    Last week while I was in LA I had a chance to sit down for an extended chat with Albert Cheng, EVP of Digital Media for Disney-ABC Television. Aside from general catch-up, I wanted to dig into a comment I'd heard Albert make at the recent NATPE conference - that full-length programs on ABC.com are now achieving "DVR economics."

    The comment caught my attention because, as I've written a number of times, I've been concerned that the broadcast networks' streaming initiatives (and Hulu specifically) could be undermining their traditional business models. The main reason for this is that the ad load in streaming programs is a small fraction vs. what it is in on-air. If all online viewing is incremental to on-air that wouldn't matter. But despite certain research that suggests online doesn't cannibalize on-air, for some viewers who have long since transitioned to time-shifted consumption, it surely does. More importantly, as convergence devices that link broadband to TVs gain penetration, the choice for viewers of how to watch a particular program - via online or via on-air - gets even more pronounced, putting further pressure on on-air.

    Albert explained that ABC has been closely following the economics of programs' different viewing methods and recently concluded that it was more appropriate to compare online's economics to DVR's economics than to on-air's. Their reasoning is that because online is a "catch-up" medium it should be weighed against other comparable opportunities, not against on-air. Importantly, ABC "windows" the online release of its programs by 4-6 hours, so that hard-core fans who have to watch immediately will skew to on-air, rather than waiting. (Of course the question arises - in our increasingly on-demand, time-shifted world, how sizable is the "must-see" audience for all but the most popular programs like "Lost?" But that's a question for another day.)

    When looked at this way, ABC believes online delivery compares favorably to DVR. No surprise, Albert would not disclose ABC's revenues or research, but he did give me a wink-and-a-nod when I shared my estimate that the on-air revenue per program per viewer is in the $.50-$.75 range (of course specific programs and specific episodes are above and below this range). To be clear, this only means the revenue generated is in this range. Because of bathroom breaks, channel flipping, viewers chit-chatting, etc. obviously not all of the ads are actually viewed.

    Estimating the revenue per program per viewer range for DVR playback, given its attendant ad-skipping, is more complicated. Ad-skipping is surely high, but it's unclear exactly how high. For example, last Nov, the NY Times reported Nielsen research that somewhat remarkably showed that 46% of viewers age 18-49 still watched a program's commercials when in DVR playback mode. A different story is told by TiVo, which released data last Sept saying that for the programs that won the top Emmy awards, somewhere between 55-83% of the audience viewing these programs in DVR mode skipped the ads.

    Just to round off, if we say that 60% of the ads in DVR playback are skipped, then DVR economics - and therefore ABC.com's economics - are in the $.20-$.30 range on a per program per viewer basis (i.e. 40% of $.50-$.75). Even on the low side of that range, that's better than my previous estimate of $.15 per program per viewer for Hulu in particular (which in reality was probably a little high anyway).

    Further, Albert said that there's plenty of room for improving online's economics. One key focus is increasing the ad load, possibly to as much as double the current 5 ads per program. ABC.com has experimented with this and its research shows that neither the viewer nor the advertiser experience is diminished. As a result, ABC is inclined to increase the ad load to continue improving online economics further, but is somewhat constrained by advertisers' desire to minimize clutter and their own desire to remain consistent with non-ABC sites' ad loads.

    Online distribution of full-length programs is still in its relative infancy. Yet as consumers hunger for it, broadcast networks have little choice but to provide it. The key is how to make this new delivery method profitable and also not harmful to the traditional network P&L. The use of windows for example, seems like an effective tactic insofar as there exists an audience intent on watching a program the moment it's shown on-air. Based on last week's conversation with Albert, along with prior ones, it seems like ABC is balancing things well - taking steps to pursue online, but doing so in a well-researched and analytically sound manner.

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

     
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  • The Fuzzy Math of Apple's TV Subscription Service Doesn't Add Up

    Yesterday's Wall Street Journal story, suggesting that CBS and Disney may participate in Apple's planned TV subscription service, caused was yet another tremor in the already chaotic video industry. Though Apple's plans are still preliminary, when I consider the numbers the Journal reported, the company's fuzzy math suggests incumbent distributors have little to worry about just yet.

    The Journal said that in "In at least some versions of the proposal, Apple would pay media companies about $2 to $4 a month per subscriber for a broadcast network like CBS or ABC, and about $1 to $2 a month per subscriber for a basic-cable network..." Let's assume the mid-points for both: $3/mo for broadcast networks and $1.50/mo for cable networks. With 4 broadcast networks (assuming NBC participates, which under Comcast ownership is itself unlikely), that would be $12 in fees/mo. Say Apple signed up 12 cable networks, that would be another $18 in fees/mo. Together the $30 in fees/mo equals what Apple is reportedly looking to charge consumers. And this package would only deliver 16 channels, which would induce few consumers to cut the cord. And by the way, there's zero chance that one of those 16 cable channels would be Disney's ESPN, which already gets north of $3/mo/sub in all of its existing affiliate deals.

    Given the broadcast networks' woes, it's within the realm of possibility that they would be enticed by the $2-$4/mo, considering it's above the $1/mo/sub that is often bandied about in retransmission consent discussions. Yet, Apple is supposedly talking about delivering the programs commercial-free, which means broadcasters' total revenue per month has to equal or exceed what they're already making per month for the plan to be interesting to them. With $60 billion/year in TV advertising revenue at stake, that's a big gamble for broadcast networks to make. Even the notion that consumers would pay for broadcast programs simply because they're commercial-free is speculative. Most research I've seen suggests the opposite consumer preference (they'd rather stomach ads in exchange for free content).

    An even bigger challenge for Apple is to get cable networks to play ball. Starting with my post over a year ago, "The Cable Industry Closes Ranks," I've continued to assert that, despite ongoing skirmishes, cable networks and cable operators are joined at the hip in their desire to defend the traditional multichannel subscription model. In the model, big owners of cable networks bundle smaller channels with bigger, more popular ones, and require that cable operators, telcos and satellite operators take these as a package. This is the backdrop for why consumers often grouse that there are lots of channels, but little on that interests them personally. Meanwhile, TV Everywhere is intended to preserve this model as online viewing expectations build.

    It stretches my imagination to believe that big cable network owners (Disney included) are going to allow Apple to cherry-pick which cable networks they want and disrupt the traditional model, especially at a time when cable networks want more, not less control. That cable networks would be willing to put Steve Jobs in the driver's seat of their digital futures is very unlikely. Analogies to the music business only go so far: remember, music companies were already under assault from rampant piracy and reeling under financial pressure when Apple came riding to their rescue. Cable networks feel no such urgency; they've been the brightest star in the media landscape as the recession has worn on.

    I've learned never to underestimate Steve Jobs or Apple. But based on what's been reported so far, Apple's subscription TV math seems very fuzzy and any service that emerges from it is likely, for the most part, to be non-threatening to incumbent distributors. And that's before getting to the issues of Apple being a closed system and requiring consumers to buy a proprietary Apple TV box to get their programs onto their TVs. In the budding 'over-the-top" sweepstakes, Apple is one to watch for sure. But there are a lot of variables in play here. It will be fun to see if Jobs has yet another rabbit up his sleeve.

    What do you think? Post a comment now.

     
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  • VideoNuze Report Podcast #30 - September 4, 2009

    Daisy Whitney and I are pleased to present the 30th edition of the VideoNuze Report podcast, for September 4, 2009.

    This week Daisy shares more detail from her most recent New Media Minute, concerning what broadcast networks are doing this Fall with online video extensions of their shows. For example, CW is launching an original series in conjunction with "Melrose Place." ABC is doing a 3rd season of an "Ugly Betty" web series and a tie-in for "Lost." CBS is launching its first web series, via TV.com, with Julie Alexandria, focused on recapping highlights from various shows. Daisy notes that these efforts are focused mainly on marquee shows and when advertisers are already on board.

    In the 2nd part of the podcast we discuss my post from yesterday, "2009 is a Big Year for Sports and Broadband/Mobile Video." In that post I observed that many big-time sports, and the TV networks that have the rights to televise them have realized this year that broadband and mobile distribution are friend, not foe. As a result they've rolled out many different initiatives. We also touch on the various lessons other content providers can take away from what's happening with sports and broadband/mobile distribution.

    Click here to listen to the podcast (13 minutes, 54 seconds)
     
     

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  • Hulu is Broadcast TV Networks' Best Bet for Generating Online Video Payments

    Last Monday, in "Netflix's ABC Deal Shows Streaming Progress and Importance of Broadcast TV Networks," I tried making the case that from Netflix's perspective, in order for its Watch Instantly streaming service to succeed, it would most likely need to strike more deals with the broadcast TV networks (as it announced with ABC).

    Now how about the flip side of the question: how can broadcast TV networks make online video payments a significant revenue stream?

    There is certainly no lack of interest by broadcasters in getting paid for online access to their content. For example, CBS has joined Comcast's TV Everywhere trial, and its CEO Leslie Moonves has been outlining his arguments for why cable's authentication plans should generated new revenue for the network. News Corp head (and Fox owner) lately Rupert Murdoch hasn't been shy about his interest in charging for content, though his first focus appears to be on newspapers. And Disney CEO Bob Iger (and ABC owner), recently told the WSJ, "People are going to pay for content. We are not worried about that." Meanwhile NBC's Jeff Zucker is trying to reposition NBCU as a cable network company (i.e. one that sells ads AND gets paid for its programs).

    For broadcast TV networks though, figuring out how to get paid for online distribution is not trivial. Years of giving viewers free access to their shows has set expectations. Consider for example recent CBS research in which respondents were asked if they could watch a program online for free with commercials or pay $1.99 for it; 92% chose the former. This echoes mountains of research that has reached similar conclusions (a conundrum likewise bedeviling newspapers who are also seeking to charge for their content).

    As I think through how broadcasters can succeed with getting paid, I keep returning to 3 core beliefs: first, broadcasters' efforts should not be undertaken individually, but rather through its joint initiative Hulu, second, the model needs to be subscription-based, not per program-based and third, the subscription service should be made in partnership with incumbent video service providers (cable, satellite, Netflix, etc.) and convergence device makers (Roku, Xbox, etc.).

    Hulu has established a strong online brand, built a large audience and demonstrated online savvy. I have the most confidence in Hulu to be able to identify the differentiators needed to drive new value vs. free, including things like more timely access to hit programs, deeper libraries, higher quality streaming, options for downloading and mobile, etc. And assuming the federal government didn't step in and cry "collusion!" Hulu would provide the greatest negotiating leverage.

    The key challenge for Hulu would be gaining the rights from the networks, producers, talent and others to launch such a comprehensive service. These stakeholders would be understandably wary, not knowing exactly how to value what they'd be providing.

    Several months ago, I suggested a Hulu subscription service was in the offing, but so far Hulu has stayed on message, only emphasizing its free, ad-supported model. I hope it and its parents recognize that time is of the essence. With each passing day, as more people use Hulu ever more intensively, their expectations for free are being set, thereby raising the bar on their eventual willingness to pay. I do believe broadcast networks have any opportunity to evolve their business model and charge, but they must not dither. The online medium is still immature enough that they can influence its rules by acting now.

    What do you think? Post a comment now.

     
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