VideoNuze Posts

Late yesterday YouTube announced "a new destination for TV shows and an improved destination for movies," moves that continue the site's evolution from its UGC/video sharing roots to an aggregator of premium-quality video.

The reality is that this evolution has been underway for some time now, and I expect it will only continue. Two weeks ago in "6 Reasons Why the Disney-YouTube Deal Matters" I explained again why, as the 8,000 pound gorilla of the online video market, YouTube is in an excellent position to partner with premium content providers. In a media landscape marked by massive audience fragmentation, the online destination (YouTube) that accounts for 40-50% of all streams and is 15 times as big as the #2 destination (Hulu) is quite simply a must-have promotion and distribution partner.

The new destinations address what has been an ongoing Achilles' heel for the site - enabling users to easily find premium video "needles" in YouTube's user-generated "haystack." YouTube's UI weaknesses for premium video have been highlighted by the gold-plated user experience Hulu - and more recently TV.com and Sling.com - have brought to market. The sites have quickly gained passionate fans, and at least in the case of Hulu, significant viewership.

Possibly more important though, is that for content providers they show how YouTube is serious about addressing their needs for clean, well-lit spaces. Premium content providers want the benefits of being in the massive YouTube site, but without the risk of their brands showing up too close to scruffy UGC material. Being clustered with other premium content is a must.

YouTube's concurrent beta launch of Google TV Ads Online, which allows targeted instream ads, is another positive for premium content providers. Beyond YouTube's massive traffic, Google's potent monetization capabilities are the other reason I've been so bullish on YouTube's prospects for premium content. As I wrote on Monday, with increased DVR penetration driving rampant ad-skipping, broadcast and cable's traditional ad model is looking more and more defunct. Online video ads offer a lot of promise as an even higher value ad medium, but much of it is still unproven. Having large players like Google and YouTube involved is significant for showing online video advertising's true upside.

One last take on this is how YouTube continues to position itself in the "over-the-top" sweepstakes, where multiple competitors are vying to be viewed as bona fide substitutes for cable/satellite/telco subscribers itching to cut the cord. I remain skeptical that the trickle of cord-cutters is going to turn into a gusher any time soon, but I will say that with its move up the content ladder, YouTube continues to burnish its standing as a must-have partner for any convergence device-maker looking to make over-the-top inroads (e.g. Roku, Vudu, AppleTV, etc.). YouTube is the most-recognized online video brand, the most-heavily trafficked, and increasingly a credible alternative to premium aggregators like Hulu and others.

For everyone in the online video ecosystem, YouTube continues to be a key player to watch.

What do you think? Post a comment now.

To date most cable networks have put a lot of promotional clips online and a few have even put some full length programs up as well. But for the most part cable networks have been constrained in how much original content they distribute online due to their lucrative monthly affiliate deals with cable/telco/satellite operators (though this too may change with Comcast and TWC pursuing online distribution plans).

I've noticed these webisodes announced just in the last couple of months:

• Freshman Year (CNN) - follows the day-to-day lives of 2 first-year congressmen
• In Men We Trust (WETV) - 4 single women learn the rules of the dating game
• Great and Telling Tales by Timothy Dickinson (History) - animated shorts explaining unexpected moments in history
• Off Track with Tony Stewart (Turner Sports/NASCAR) - behind the scenes with star racing driver
• Special Report with Bret Baier (Fox News) - webcast continuation of on-air news discussion
• Walt's Warning (AMC) - first-person video featuring "Breaking Bad" cast
• FoxBusiness.com Live (FBC) - one hour weekday financial show

(No doubt there are others as well, so apologies to those I may have missed)

The webisode format breaks the traditional limitation of having a finite 24 hours/day of "shelf space" for networks to program. I think what's happening here is that cable networks are experimenting with the low-cost webisode format both to reach online users and also to see what might graduate to on-air. The webisodes allow them to bridge their brands between traditional TV and broadband to see what sticks. And some webisodes may even making money for their networks already. "Off Track" for example is showcased in an Armor All "Owner Center" sponsored environment.

CNN's Freshman Year is a good example of how one network is pushing the envelope. In the series, CNN has given Flip video cameras to 2 new congressmen, who use them to show what life is really like on and off Capitol Hill (it's not glamorous that's for sure). The concept is a natural extension for CNN's politically-interested audience, and capitalizes on the tailwind of the '08 election cycle. While the production values are well below what's typically seen on-air, there's something compellingly authentic (and yes voyeuristic) about the wobbly, poorly framed footage offered up by the congressmen. For sure you come away with a far better sense of what these guys' lives are like than you would from a slickly-produced 1 hour special.

All of the 7-13 minute episodes have pre and post rolls, from brands like IBM and Sprint. I've noticed CNN starting to promote the series through on-air spots as well, which is a key webisode audience-building all the networks have. However, CNN really needs to make the series more visible on the web site. Aside from a periodic ad, a site visitor wouldn't know the series existed or how to find it. This is a common problem with the other networks' sites as well.

It's way too early to know how sticky the webisode concept will be for cable TV networks, but on the surface I think it offers a lot of opportunity. Cable networks are not immune from audience fragmentation and consumers' changing expectations. Finding ways to reinforce viewer loyalty and generate additional revenues is a must.

What do you think? Post a comment now.

As more and more companies begin to exploit the power of video for promotion or product support, many individuals who have never managed the process of actually creating a high-quality video are getting a taste for how hard it is. Market7 is a new company that streamlines the collaboration process essential to producing high-quality video. Market7 was born from the frustrations that founder/CEO Seth Kenvin experienced trying to create company and product videos while VP of Strategic Marketing at Big Band Networks. Last week Seth explained to me how Market7 works.

As with other marketing or promotional collateral, at high level, the video production process starts with getting all stakeholders on board with the project, its goals and budget. But once approved, there are myriad production steps such as writing and finalizing the script, shooting and then managing the assets, editing, gathering comments on rough cuts, editing some more, and of course trying to keep the project on schedule. Often these steps are managed by a 3rd party video producer, but they still involve a lot of client interaction. While there are individual products for each of these process steps, Seth believes Market7 is the first all-in-one solution.

Market7 allows the project lead to manage process, including setting up tasks, timelines/deliverables and team member responsibilities. Producers upload video assets and other team members are able to annotate the video with their comments, including on the video itself at specific points. That allows feedback to be highly targeted ("the background is too dark in this scene") and thus more actionable by editors. Market7 is not meant to be an online editor, but rather a collaboration environment that moves a project from script development through to final cut as efficiently as possible. The full product suite is available as Software-as-a-Service (SaaS), with pricing based on storage, admin accounts, support level and branding flexibility.

While Seth believes there are lots of different potential customers, he sees the sweet spot in corporate video production, with the videos used for online promotion, trade show support, on-site product demos or internal use. That said, there are a number of agencies using the product, along with an animation studio, infomercial producer and a couple of broadcast and cable TV networks. Market7 is a little bit like Wistia, another early stage company I wrote about recently that's also enhancing collaboration around video production. I'm very intrigued by these kinds of companies that are sprouting up around the video ecosystem. Neither one is likely to become a direct substitute for big budget video productions, but with so many new companies now trying to tap the power of online video, cost-effective yet robust tools like Market7's address real pain points in the market today.

What do you think? Post a comment now.

Three significant trends are behind today's launch of HD Cloud, a new video transcoding service being announced today: the proliferation of video file formats and encoding rates, the increase in syndication activity to multiple distributors and the cost and scale benefits of "cloud computing." HD Cloud founder and CEO Nicholas Butterworth (who I have known since he ran MTV's digital operations 10 years ago) walked me through the company's plan yesterday and how it benefits content providers looking to cost-effectively capitalize on broadband video's surging popularity.

Data that TiVo released last week indicating that nearly 60% of broadcast TV programs in the 8pm and 9pm primetime slots are timeshifted for later viewing should be interpreted as another positive for broadband video advertising for two reasons.

First, because the high propensity of DVR users to skip ads means that broadband delivery can be increasingly considered the only way for big brands' ads to be guaranteed to be seen. And second, because all that ad-skipping is making the effective cost of each TV ad more expensive, thereby making broadband-delivered ads look like a better value.

In prior posts (here and here) I've outlined how a top network show drives around $.50-$.75 of ad revenue per on-air viewer. Said another way, advertisers are willing to pay $.50-$.75 to reach that show's audience. But now factor in that nearly 60% of the targeted viewers are watching via DVR, and that of this group maybe only 10% watch any ads at all. That means maybe only half or so of the intended audience actually see the ads. With half the audience, an advertiser is effectively paying 2x the CPM it thought it was.

Advertisers understand this as well, and as we know from newspapers' current plight, expecting they'll pay more to reach shrinking audiences is not a sustainable strategy. So, on the assumption that smaller and smaller targetable audiences long-term reduces the demand for on-air network ad inventory, CPMs should decline as well. On a relative basis that means that for broadcast networks, broadband video ads, which can't be skipped, have better targeting and more interactivity (all of which already drives higher broadband CPMs), start looking better and better. In short, DVRs' surging popularity is very good news for broadband video ads.

But as I explained in the posts cited above, the problem for networks today is that higher CPM broadband ads still result in lower total revenue per program for broadband vs. on-air. That's because networks are inserting a far smaller number of ad in a broadband-delivered program vs. an on-air delivered program (my estimate is somewhere around 3 minutes for broadband vs. 20 minutes for on-air). Hence the broadcasters' challenge - get total broadband ad revenue up while DVR usage acts to drive on-air revenue down.

Doing so requires better strategy and better execution. On the strategy side, I've said it before (and it always pains me to say it again), but broadcast networks have to increase ad avails in their broadband-delivered programs. That probably means more ads per pod, but could also mean other types of non-intrusive units like banners. On the execution side, it means more attention to each stream to ensure well-targeted ads that are actually delivered.

With broadband revenue still accounting for a miniscule amount of total broadcast network revenue, it's tempting to deprioritize addressing these issues. I think that would be a mistake. TiVo's stats on DVR usage in primetime (combined with other shifting consumer behaviors) should be a major wake-up call for networks about how their business models need to change. Fortunately for them, broadband offers an even-higher value delivery option if it is exploited properly.

What do you think? Post a comment now.

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

This week will discusses lessons that the broadcast TV networks might draw from the decline of U.S. newspapers, in order to avoid a similar fate. It is based on this post from Mon, April 6th. Meanwhile, Daisy speculates on the question of whether, with the explosion of iPhone apps, we're starting to witness iPhone app overload. Coincidentally, this week comScore reported that the top apps are games (no surprise there) and that major media companies are not experiencing much success with the apps they've launched.

Click here to listen to the podcast (13 minutes, 15 seconds)

Click here for previous podcasts

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

I'm pleased to be partnering with NAB to moderate 2 panels at the annual NAB Show in Las Vegas on Wednesday, April 22nd. Access is complimentary by clicking here, and entering code "X104"

The first panel, at 11:15 am is entitled, "How TV Broadcasters are Capitalizing on Broadband Video" with the following panelists:

• Bill Bradford - SVP, Chief Product Officer, Fox Digital Media Broadband Channels Group
• Colin Dixon - Practice Manager, Broadband Media, The Diffusion Group
• Suzanne Johnson - Senior Industry Marketing Manager, M&E, Akamai Technologies
• Clayton Thomson - VP, Video Strategy and Development, WorldNow

The second panel, at 3:30 pm, is on one my favorite topics, "How Syndication is Powering the Broadband Video Era," with the following panelists:

• Doug Knopper - Co-CEO and Co-Founder, FreeWheel
• Steven Kydd - EVP, Demand Studios, Demand Media
• Chase Norlin, CEO, Pixsy
• Steve Rosenbaum - Founder and CEO, Magnify.net
• Brian Steel - President and CEO, VoloMedia

I hope you're able to join us, as both panels are sure to provide lots of great information. The panels will be in the "Content Theater" adjacent to the "Content/Commerce Pavilion" where many industry companies will be exhibiting (e.g. Brightcove, Limelight, Electronic Arts, Akamai, Kyte, MGM, etc.) Exhibiting opportunities are still available, so send me an email if you're interested. Hope to see you there!

Access is complimentary by clicking here, and entering code "X104"

Babelgum, the ad-supported broadband/mobile video aggregator and platform has recently embarked on an expansion into the U.S. market. A discussion I had with Karol Martesko-Fenster, the producer of Babelgum's film channel about the company's recent deal for exclusive worldwide Internet and mobile distribution rights for the new documentary film "The Linguists" reveals how Babelgum is seeking to succeed in an already crowded market, and also provides an outline for how independent content creators can tap the broadband medium.

Karol explained that Babelgum is focusing on premium-only content that fits within its half dozen curated channels. Babelgum's focus is the "Internet Free on Demand" (IFOD) window and it always seeks worldwide distribution rights, since it targets a global audience. A window of exclusive distribution is also important. To find new films, Babelgum has an acquisitions team that scouts film festivals and also works closely with digital rights aggregators such as Cinetic Rights Management, Content Republic, CAA and others. In addition it often deals directly with the content creators.

That was the case with The Linguists, a new documentary film from Ironbound Films which Babelgum spotted at the 2008 Sundance Film Festival. Karol noted that the producers had been careful about retaining all of their rights. Babelgum secured a 4 month IFOD exclusive window for The Liguistics in exchange for an advance payment and a 50-50 split of ad/sponsorship revenue. Karol wouldn't specify the size of the advance, but said it's typically in the 4 to 6 figure range and is fully recouped before the splits kick in.

Karol believes Babelgum's willingness to pay advances is a key differentiator relative to competitors who he said are mainly focused on pure revenue-sharing deals. His experience is that for most creators who are even somewhat established, revenue-sharing alone won't be appealing.

Of course to make this model work on ad/sponsorship revenue alone requires Babelgum to be pretty careful about which films it acquires. Karol explained the variables that go into calculating the advance. Among other things, how exposed the film is, the length of exclusivity period and the ad sales team's projections. Then there's the traffic expectations. Babelgum pursues an aggressive online campaign including distributing excerpts to social media sites like Facebook and also distributing the film via an affiliate player to film festival sites and on mobile platforms (iPhone only today).

Karol acknowledges that there's some risk involved here, and that it's still very early days in figuring out the formula for how ad-supported only films will work online. However, Babelgum believes the IFOD window augments other distribution (theatrical, DVD, paid online, TV, etc.) and that the industry has recently begun to understand this. Babelgum's progress will be well worth following.

It's no secret that there's a huge amount of interest among independent content creators to exploit the emerging broadband medium. Karol's advice for independents is to get talks started with online distributors simultaneous with hitting the film festivals, clear all the worldwide rights, and be willing to carve up distribution rights into many different slices (with or without the help of digital rights aggregators).

What do you think? Post a comment now.