VideoNuze Posts

Below is the 11th edition of the VideoNuze Report podcast, for March 20, 2009.

This past week Daisy Whitney and I were both on the road, with me hosting VideoNuze's Broadband Video Leadership Evening in NYC, and Daisy attending the annual South by Southwest (SXSW) conference in Austin, TX. We each provide our observations and takeaways from these respective events. (Note I have more detail in yesterday's post)

A highlight of the this past Tuesday's Broadband Video Leadership Evening was our panel discussion with Albert Cheng (Disney-ABC Television), Daina Middleton (Moxie Interactive/Publicis Groupe), Greg Clayman (MTV Networks), Karin Gilford (Comcast) and Dan Beldy (Steamboat Ventures) sitting in for John Edwards.

As moderator, I was trying to listen to panelists' answers, formulate the next question, and scribble down notes. We'll be posting a video of the discussion soon, but in the mean time, here are a few of my key takeaways (also pictures are here):

For ABC, no economic parity for broadband-delivered shows vs. traditional on-air delivery yet, but progress is happening - Albert opened the discussion with an update on ABC.com's profitability. He said that broadband-delivered programs are profitable on a gross margin basis, but that they are not yet as profitable as when viewed on-air. He resisted using the "analog dollars, digital pennies" reference, instead saying it's like comparing "a teenager to a full-grown adult." (I'm still trying to decode that as well)

Albert noted that ABC thinks of itself as a multiplatform entertainment company, with numerous distribution avenues, not simply a traditional broadcaster any longer. That's a distinction that it believes will keep it from facing the dire situation newspapers are now in. Albert said that newspapers trouble began because they didn't pay sufficient attention to changing consumer behaviors and respond effectively, whereas broadcast networks are proactively trying to stay out in front. One example he provided is that in the U.S. where ABC's programs are available online, it has measured file-sharing at just 4% of overall views. Preempting the file-sharing alternative is big win for preserving its ad model.

Cord-cutting not happening, cable's subscription value proposition to grow - "Cord-cutting" or dropping your cable/satellite/telco service in favor of online-only viewing, has become part of the market's mythology. Even some cable CEOs have propagated it. Yet Karin echoed recent Comcast statements that cord-cutting is not yet happening in any significant way. Comcast (and others) will build more value into the subscription by offering online access to cable programming. That's a "natural extension to their business," which was a key theme I heard from all panelists. Cable networks should be excited about this plan, and Greg reminded us there's a strong "culture of collaboration" in the cable industry.

2009 will be a tough year for standalone aggregators - There was strong consensus on the panel that online-only aggregators will struggle in '09 (this was one of my year-end predictions as well). The reasons for this included not getting a big enough share of the ad pie, not having an existing business to grow from, not being able to differentiate, etc. This was a very hot space for investors just a year ago, now it looks like it's going cold.

The "democratization of video" only goes so far - The panel cautioned that the appeal of broadband's openness allowing everyone to be video producer and reach their audiences only goes so far. The realities are that it's difficult to build audience and generate ad dollars. A goal for many independent broadband producers will still be to get on TV, where most consumption happens. A side conversation I had with someone who's very involved with various indies confirmed much of this and predicted a shakeout in this space will be coming as well.

Broadband ad model has a lot of maturing to do - While the broadband ad model has come a long way, it has a lot further to go. Daina provided lots of insights on the challenges of shifting TV ad dollars to broadband. She noted that many agencies still split their online and TV media buying and research teams, making integrated pitches and pricing difficult. Greg described the "happy place" everyone is striving for where broadband ad revenues become large enough to really augment traditional ad revenues, but quickly reminded us that day is a long ways off. He and Albert agreed there needs to be more collaboration among content providers to demonstrate the value of the broadband medium.

There was lots more, but I'll leave it at this for now. If you attended and have other observations, please leave a comment!

NBCU CEO Jeff Zucker provided the opening keynote interview at the Media Summit in NYC this morning with Businessweek Executive Editor Ellen Pollock. I've seen him speak a number of times and true to form he was pragmatic, quite candid and humorous. Highlights below:

"We're at digital dimes now" - Zucker of course famously worried aloud about the risk of "exchanging analog dollars for digital pennies," the notion that half-baked online delivery models would only serve to cannibalize traditional profitability. Zucker sees progress, saying Hulu is "well ahead of plan" and is yes, is now making money. Zucker repeatedly praised the success of the company's wide-ranging digital initiatives, but also noted often there is still a lot of work to do. He also wondered aloud whether digital would ever be a 1 to 1 revenue substitute for traditional revenue streams, but that further cost rationalization would help drive profitability.

"We're in process of finding new economic models" - On the above point, Zucker was candid in saying that the work to be done on new economic models is still experimental and that "a lot of success is often accidental." He readily concedes that nobody has all the answers, and that a key challenge is bridging from the traditional business models to new ones, balancing the interests of older audiences comfortable with the status quo with younger ones that are aggressively embracing the new. Describing his own kids' media activity, which focuses on Hulu, generating their own content and being interactive must give Zucker ample perspective.

"Technology is unbelievably exciting" - Zucker has always emphasized the importance of technology on NBCU's various businesses and today was no exception. He noted that technology is increasing access to TV programs and movies in unprecedented ways, which is a good thing. However he also candidly observed that it has fundamentally changed the broadcast business, primarily through consumers' use of DVRs and online delivery. All of that, plus NBC's lagging primetime performance, has caused it to completely re-think the broadcast model. He observed that newspapers' current woes can be traced to them not being willing to quetion the fundamentals of their model and the role of technology. Like other video providers, he seems determined to confront realities and avoid repeating this mistake.

"NBCU is first and foremost a cable programming company" - Zucker has often highlighted the benefits of the two revenue stream cable programming model (affiliate fees and advertising), but this was the first time I've heard him so clearly position the company as being mainly in the cable business. NBCU's stable of channels, USA, SciFi, Oxygen, MSNBC, Bravo, etc. contributed 60% of NBCU's operating profit last year. The networks' ability to "outperform the market, especially in women's programming and news" is key to NBCU's overall success. Zucker noted that USA is increasingly a "must buy" for advertisers, and with its mass appeal, should justifiably be considered the 5th broadcast network.

"We're hopeful we'll resolve TV.com-Hulu issues soon" - Zucker only briefly touched on Hulu's recent decision to pull its programming from TV.com, which is fast emerging as a Hulu competitor. As has been previously reported, Hulu's attorneys obviously believe TV.com compromised its Hulu distribution agreement as part of its new configuration subsequent to CBS's acquisition of CNET. With a battle looming between aggregators especially in the down economy, I think it remains to be seen whether a settlement can be found.

Over 250 people came out last night for VideoNuze's Broadband Video Leadership Evening in NYC, with a great cross-section of media and technology companies in attendance. For me it was great to actually meet people in person who I've only known from email and phone exchanges.

A highlight of the evening was our panel discussion with Albert Cheng (Disney-ABC Television), Daina Middleton (Moxie Interactive/Publicis Groupe), Greg Clayman (MTV Networks), Karin Gilford (Comcast) and Dan Beldy (Steamboat Ventures) sitting in for John Edwards.

The panel covered a lot of ground including how broadcast networks are trying to achieve economic parity for online viewing vs. on-air viewing of their programs, if/how/when more cable networks' programming will find its way online, what changes must occur for advertisers to shift more of their spending to broadband video, why it's hard and getting harder for independent video producers to succeed online and why '09 is going to bring a shakeout to video aggregators.

Today I'm at the Media Summit (waiting now for the Jeff Zucker keynote interview), so I'll hold off until later summarizing my conclusions from the panel. I also have plenty of pictures, and we'll try to get the video posted shortly as well.

I'm looking forward to seeing many of you tonight at VideoNuze's Broadband Video Leadership Evening at the Hudson Theater in NYC.

We'll kickoff at 6pm with our "VideoSchmooze" networking reception, and then at 7:30pm we'll begin our panel discussion with Albert Cheng (Disney-ABC Television), Daina Middleton (Moxie Interactive/Publicis Groupe), Greg Clayman (MTV Networks), John Edwards (Move Networks) and Karin Gilford (Comcast) and me moderating.

The session is titled "Broadband Video '09: Building the Road to Profitability" and we have tons of topics to discuss. I'm looking forward to hearing all of the panelists weigh in with their insights and experience. There will be ample time for audience Q&A as well.

If you're planning to attend, I encourage you to come early, as there are over 290 people now registered, and it's going to be a bit chaotic. For those of you unable to come, we'll be recording the entire event and will post the video as soon as possible. I'll also try to share some key takeaways and pictures in tomorrow's VideoNuze email.

The NY Times is reporting that Yahoo is ramping up its original broadband video offerings, with the impending launch of "Spotlight to Nightlight," a new series showcasing celebrity moms, hosted by former Miss USA Ali Landry and sponsored by State Farm Insurance. The new show highlights how far Yahoo has evolved from its era of failed dreams of grandeur directed by former Yahoo Media Group head Lloyd Braun. Before you say, "ugh, its Yahoo, they'll never succeed with video," I'd suggest that their new plan has some merit.

As we all know, Yahoo has suffered through all kinds of recent challenges and significant management turnover. But it is still one of the most popular online brands - the 2nd most-trafficked web site with over 146 million monthly unique visitors, the #3 search engine (now just behind YouTube) with a 21% market share and operator of the second-largest ad network behind Platform A.

Despite these strengths, I've thought Yahoo has been somewhat unimpressive in the video area. It has focused heavily on aggregating and distributing others' content in a bland, mechanical manner though still managing to become a highly popular video streaming destination. I've sometimes wondered whether anyone really "owned" the video experience at Yahoo or whether it had been diffused over so many managers that it had been orphaned along the way. It's not been uncommon for me to see broken links, repetitious ads, 30 second pre-rolls adjacent to under 1 minute clips, and other annoyances that can quickly turn off users.

In the midst of this confusion, a bright spot on the original video front has been "Primetime in No Time" a short, energetic TV recap show that has gained a sizable following plus other series in specific verticals like sports and finance. On the flip side, in a sign of the mixed internal signals, it also killed "The 9" a recap show of top online content, which had both a following and a sponsor in Pepsi.

With "Spotlight to Nightlight" Yahoo seems to be further recognizing that it is sitting on mounds of data that, if properly analyzed, can reveal lots of clues about what kinds of programming would match up with its users' and advertisers' interests. Given Yahoo's size and resources, there are few online companies that should be better tuned in to what's hot and could be the strong basis for a new series.

Yahoo's opportunity is to capitalize on this information by creating short, upbeat (and humorous where possible) series that appeal to users' demonstrated interests. It should then promote the shows like crazy in appropriate vertical areas of its site (as "Spotlight to Nightlight" will be with Yahoo's "OMG"), and adjacent to relevant searches.

Recently I wrote about Demand Media, which has built a "content factory" by doing many of these same kinds of things. Yahoo could create a stable of inexpensively produced but high-quality broadband-only series that can instantly find their natural audiences. Advertisers looking for adjacency to premium video that aggregates sought-after audiences, would soon follow.

New Yahoo CEO Carol Bartz has a lot of issues on her plate to resolve, but also plenty of opportunities. Video is a big one that has been largely untapped by the company. If Yahoo builds a cohesive video strategy that relies on the significant data it has unrestricted access to, it may finally be on a winning video path.

What do you think? Post a comment now.

Happy Friday the 13th...

Below is the 10th edition of the VideoNuze Report podcast, for March 13, 2009.

This week Will adds some detail to his recent post, "Clarifying Comcast's and Time Warner's Plans to Deliver Cable Programming via Broadband to Their Subscribers." These plans are not fully locked in, but since there have been a lot of questions about them, it seemed worthwhile to provide a quick update.

Also, Daisy discusses a recent article she wrote about Clearleap, a new broadband-to-the-TV technology company that recently announced its platform. The whole broadband-to-the-TV area has been really hot recently and we expect a lot more activity to come.

Since this is the 10th edition of the VideoNuze Report podcast, we thought it would be a good time to check in with listeners and get you reactions. What do you think of the format and length? We thought the most meaningful content approach would be to provide some additional insight about what we've written recently, but does this feel fresh and substantive enough? Would it be better if we discussed recent market activities that we haven't necessarily written about yet? Or maybe answered some listener questions? Or something else?

The podcast format is very flexible and Daisy and I view the VideoNuze Report as a work in progress. We'd love to hear what listeners think and how we can change and improve. Either drop me an email (wrichmondATvideonuze.com) or leave a comment.

Click here to listen to the podcast (14 minutes, 29 seconds)

Click here for previous podcasts

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

The first round games of the NCAA's March Madness are a week from today and the hype surrounding the tournament is in full swing. But the tournament itself is no longer the only story; the broadband-delivered "March Madness on Demand" has become a big part of the 3 week experience as well. Since converting from a subscription service to a free, ad-supported format 4 years ago, CBS Sports and the NCAA have made MMOD a huge winner, providing plenty of lessons for others. These include:

1. Under the right circumstances, free with ads beats paid with subscriptions. It was big news back in '06 when CBS converted MMOD from subscription access to free, ad-supported. In retrospect, it looks like a stroke of genius. The $30M in ad revenue MMOD will generate for CBS this year would have required 1.5 million of the old $20 subscriptions. Hitting that subscription number would have been miraculous. With the free model, instead of allocating scarce marketing dollars and resources on acquiring temporary subs, CBS can focus on promoting the games, selling ads and striking high-quality distribution deals - 3 things that networks do very well. Free vs. paid will be a perpetual debate for premium video, but solid market research, well-thought out business cases and a willingness to experiment can lead to big payoffs, as MMOD has shown.

2. Well-executed online access burnishes the brand. Following the above, MMOD is a huge win for the CBS brand and for the NCAA. Fans love MMOD and appreciate the easy online access. Of course, anything for free is always well-received, especially in a down economy. Large audiences mean lots of cross-promotional opportunities for other CBS programs. Abundant media coverage means the brand gets tons of free promotion. And the list goes on.

3. Advertisers love being a part of engaging, high-quality online experiences. The increase in MMOD ad revenue from $4M in '06 to $30M this year speaks to advertisers' interest. It's no surprise that big brands are increasingly challenged to access large target audiences and have their messages heard (that's why the Super Bowl maintains its massive appeal). MMOD offers an exciting, immersive and interactive avenue to augment brands' on-air tournament spending. MMOD gives CBS ad sales teams a formidable differentiator. As AdAge notes, that helped CBS retain wounded GM as an advertiser, while the company dropped the Super Bowl and the Academy Awards from its media plan.

4. User experience matters, a lot. MMOD is a hugely complex undertaking for CBS, but delivering a positive experience that lives up to the hype is ultimately what matters. In the past, not knowing how many simultaneous users to expect or what bandwidth would be required, CBS cautiously proceeded with its so-called "waiting room" model. That's now been eliminated, and everyone can watch on-demand. This year CBS is also offering a high quality or "HQ" option, powered by Silverlight. Overall, CBS's player is clean and easy to use. My experience in the past has been that the ads are obvious, but not overwhelming. All of this registers with users and contributes to a positive experience.

5. The side dishes complement the main meal. There's no question that the games themselves are the primary attraction. But CBS has been clever in augmenting the games with lots of other stuff that contribute to the overall experience. For example, if you go to the site now, you can see highlights of past championship games. Then on Sunday will come the selection show. There's a Facebook integration, widgets and the "Selection Sunday Challenge." And this year CBS is also introducing mobile access, albeit for a fee. Add it all up and CBS has been able to build a far larger franchise around MMOD than just offering the games themselves.

What do you think? Post a comment now.