Posts for 'Cable Networks'

MTV Networks released some interesting research yesterday on the optimal way to present advertising in short-form online video. Its "Project Inform" looked at how multiple ad presentations from 3 blue chip advertisers performed and were liked by users across 50 million video streams on MTV.com, ComedyCentral.com, VH1.com, NickJr.com and CMT.com. The research was conducted in partnership with InsightExpress using Panache's video ad platform.

The research found that the most effective ad product was a "lower 1/3 product suite" consisting of a 5 second pre-roll combined with a 10 second lower 1/3 semi-transparent Flash overlay that began about 10 seconds after the video itself began. Effectiveness was defined as brand lift, measured by metrics like unaided awareness, aided awareness and purchase intent. The research also measured consumers' likeability of each ad product. This finding provides support for why overlays seem to keep popping up; for example I now see overlays on most of the video clips I watch on YouTube.

In second place was a conventional 30 second pre-roll which did well on both effectiveness and consumer likeability. That surprises me somewhat because I've believed for a while that 30 seconds is way too long for an ad where the content itself may only be 1-3 minutes in length. Granted it's a subjective judgment, but my personal experience has been that 30 seconds feels like an eternity when I know the content I'm accessing is going to be pretty brief. In fact I've noticed a clear trend toward 15 second pre-rolls accompanying short video clips, which I assumed suggested content providers had thankfully come to a similar conclusion.

In third place in the MTV research was a "sideloader product suite", which included a 5 second pre-roll with a 10 second custom unit that slides out of the right side of the video window 10 seconds after the video itself began (so it sounds like the lower 1/3 product suite except the overlay is on the right instead of the bottom). I've never seen a unit like this, but to the extent that it may block valuable content in the right side of the window I could see users feeling it was intrusive.

There's lots of research underway about different ad formats' effectiveness, and the MTV research adds to the industry's collective knowledge about best practices. There's still a ways to go though as industry participants launch and test new types of ad formats in search of the ultimate ad presentation.

What do you think? Post a comment now.

Another day, another flurry of announcements from Comcast with news of more networks participating in its On Demand Online technical trial. Newly on board are CBS (also the first broadcast network to participate) and 17 more cable networks such as A&E, AMC, BBC America, Food Network, History Channel, Sundance and others. Together with those already announced, there are now over 20 networks in the trial.

The cable networks' interest isn't surprising. I've been saying for a while that On Demand Online will be a real boon to them, providing a secure, scalable on-ramp to online distribution, new ad impressions and most important, significant enhanced value to their viewers. Still, despite all of Comcast's progress, most of the big cable network groups (e.g. NBCU, Fox, Disney, Viacom, Discovery) have not yet publicly signed on. I think that's just a matter of time.

There's no question Comcast is building real industry momentum for On Demand Online. But given the trial hasn't even begun yet, all of these announcements are really raising the visibility of the trial - and of course the pressure to make sure its "authentication" processes work as intended. No doubt each of these announcements is creating a lot of sweaty palms among Comcast's technical staff - the people who are responsible for proving authentication works. With all the PR buildup, if for some reason all does not go according to plan, Comcast will have lots of people looking for answers.

What do you think? Post a comment now.

The list of cable networks participating in Comcast's upcoming technical trial of On Demand Online continues to grow. This afternoon HBO and Cinemax announced that initially they will provide 750 hours a month of programming, which will expand over time.

Full length episodes of True Blood, Hung, Entourage, etc, along with recent movies such as Transformers, The Dark Knight, Atonement and classics like Jurassic Park, Speed and Rosemary's Baby will all be available. Some programs will be available in HD and immediately after they're shown on the linear networks.

HBO/Cinemax follows last week's announcement that Starz is on board with the trial, which itself followed the launch announcement that Time Warner networks TNT and TBS were participating. The list will no doubt grow further in the coming weeks.

I've been bullish on Comcast's On Demand Online initiative from the outset, and HBO/Cinemax's perfectly illustrates the power of the model. As the most popular premium TV network, HBO would confer a lot of additional value to its subscribers by making its programs conveniently available online. But to date the only real option for doing so has been to sell them on a per program download basis through outlets like iTunes. The problem is that HBO subscribers end up paying twice for the same content.

On Demand Online gives HBO a mechanism, finally, to give its subscribers online access without additional fees. This is accomplished through Comcast's "authentication," which queries its database to enable online viewing privileges. The upcoming technical trial is intended to prove that the authentication process actually works. It must, as the stakes are quite high when premium networks like HBO are in the mix. The last thing they want is to have unauthorized broadband users watching their coveted shows instead of subscribing to the monthly service.

All of the details of On Demand Online are not yet understood, but I continue to believe that if it's executed properly, it will be a game-changer for the cable and broadband industries.

I'm back in the saddle after an amazing 10 day trip to Israel with my family. On the assumption that I wasn't the only one who's been out of the office around the recent July 4th holiday, I've collected a batch of industry news links below so you can quickly get caught up (caveat, I'm sure I've missed some). Daily publication of VideoNuze begins again today.

Hulu plans September bow in U.K.

Rise of Web Video, Beyond 2-Minute Clips

Update on New Channels

ABC Content Now on Hulu

Nielsen Online: Kids Flocking to the Web

Amid Upfronts, Brands Experiment Online

Clippz Launches Mobile Channel for White House Videos

Prepare Yourself for iPod Video

Study: Web Video "Protail" As Entertaining As TV

In-Stat: 15% of Video Downloads are Legal

Kazaa still kicking, bringing HD video to the Pre?

Office Depot's Circuitous Route: Takes "Circular" Online, Launches "Specials" on Hulu

Upload Videos From Your iPhone to Facebook Right Now with VideoUp

Some Claims in YouTube lawsuit dismissed

Concurrent, Clearleap Team on VOD, Advanced Ads

Generating CG Video Submissions

MJ Funeral Drives Live Video Views Online

Qik Raises $5.5 Million

Why Hulu Succeeded as Other Video Sites Failed

YouTube's Pitch to Hollywood

Invodo Secures Series B Funding

Comcast, USOC Eye Dedicated Olympic Service in 2010

Consumer Groups Push FTC For Broader Broadband Oversight

Crackle to Roll Out "Peacock" Promotion

Earlier Tests Hot Trend with "Kideos" Launch

Mobile entertainment seeking players, payment

Netflix Streams Into Sony Bravia HDTVs

Akamai Announces First Quarter 2009 State of the Internet Report

Starz to Join Comcast's On-Demand Online Test

For ManiaTV, a Second Attempt to be the Next Viacom

Feeling Tweety in "Web Side Story"

Most Online Videos Found Via Blogs, Industry Report

Cox to Turn "MyPrimeTime" Dial to 100

How to Start a Company (and Kiss Like Angelina)

Below is the 23rd edition of the VideoNuze Report podcast, for July 2, 2009.

This week Daisy shares additional information about ESPN's Ad Lab for emerging media. The Ad Lab, which was first disclosed by ESPN last year, is intended to various ad formats in the ESPN video player. It is one of many different tests and research projects in the market. As Daisy and I say, everyone's trying to learn how best to monetize the nascent online video; this creates a lot of valuable data, which market participants then need to parse through to fully understand.

I get into further details on my post yesterday, "Video Companies Raised $64M in Q2 '09, Notching Another Stellar Quarter." Despite the recession and the slowdown in venture capital investments, at least 26 industry companies have raised at least $219M over the last 3 quarters, which is impressive by any measure. Still, it hasn't been easy, and one indicator of what investors prefer is that not one of the 26 investments is in a content provider or video aggregator.

Click here to listen to the podcast (14 minutes, 24 seconds)

(Note, with vacations planned, our next podcast will be July 24th)

Click here for previous podcasts

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

Below is the 22nd edition of the VideoNuze Report podcast, for June 26, 2009.

This week Daisy and I discuss the TV Everywhere and OnDemand Online initiative that Comcast and Time Warner unveiled this week. As I wrote in this post on Wednesday, the companies are beginning a trial in July for 5,000 Comcast subscribers, who will gain online access to a selection of TNT and TBS programs. The primary purpose of the trial is to test security of the content. The companies anticipate that other cable networks will join the trial too, and that other video service providers will begin their own trials in the near future.

In the podcast we explore further why granting cable subscribers online access is an important step forward in the evolution of the broadband video medium, and what it means to the overall ecosystem. There are a lot of unknowns about how TV Everywhere/OnDemand Online will work; Time Warner's and Comcast's CEO were candid about that. For now they released a set of "principles" to guide their pursuits. There will be much more to come on this story.

Click here to listen to the podcast (15 minutes, 27 seconds)

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

Move Networks, the well-funded Internet television technology company which has been virtually silent for the last 60 days since acquiring Inuk Networks and bumping former CEO John Edwards to Executive Chairman, is pursuing a major repositioning. Earlier this week I met with Marcus Liassides, Inuk's former CEO and founder who joined Move's management team, who previewed the company's new strategy to be a wholesale provider of IPTV video services delivered over open broadband networks.

Broadband video industry participants know Move best for its proprietary adaptive bit rate (ABR) technology and player, which power super-high quality live and on-demand video streams for broadcasters like ABC and Fox. Move gained a lot of attention by raising over $67M, including a $46M Series C round in April '08 from blue chip investors.

Despite all this, Marcus explained that coming into 2009 Move had at least 3 significant problems, symbolic of how fluid the broadband video market remains.

First, its core business of charging content providers in the range of $.30/GB of video delivered was being pressured by the fact that advertising-only business models couldn't support this pricing. Content providers loved Move's quality; they just couldn't afford it, particularly given the alternative of plunging CDN delivery rates.

Second, Move's pricing and business model were being challenged by both Microsoft and Adobe entering the market with ABR streaming features of their own (I wrote about this here). But because both were enabled on the server side (IIS and FMS respectively), the cost of ABR moved from content providers to CDNs, who might or might not choose to charge extra for these features. Either way, Move's direct cost looked comparatively more expensive, especially as the recession pounded ad spending.

Last, but not least, Marcus explained that Move's product development approach was undisciplined, leading to resources being spread too thin in too many directions. That was reflected by the market's ongoing difficulty in categorizing which business Move was really in.

Meanwhile, U.K.-based Inuk, which had been on its own funding and product development roller-coaster, was delivering its Freewire IPTV service to about 200K university students in the UK, Ireland and Canada. Because Inuk needed to serve these students when they were off campus, it had developed a "virtual set-top box" application that duplicates on the PC the IPTV service that had traditionally been delivered via an expensive IPTV set-top box. Inuk was using Move's ABR technology to power video delivery to the PC. Recognizing potential synergies and trying to address its other issues, Move acquired Inuk in April.

Move's new positioning as a provider of IPTV video services delivered over open broadband networks essentially replicates what Inuk has been doing, except that going forward services will be offered wholesale, not retail like with Freewire. Move's strategy starts from the proposition that to get cable TV networks online requires that they be paid consistent with the norms, rather than expecting them to free and ad-supported only. It also anticipates that consumers demand not just VOD offerings, but a full linear lineup as well (as an aside, that aligns with Sezmi's thinking too). While Move will continue supporting existing customers like ABC and others, its new wholesale model is a major shift in that it uses the company's core technology to support packaged multichannel video services, instead of a la carte web-based video.

Marcus explained that Move is targeting 3 verticals: (1) telcos which haven't traditionally offered video services (or have through direct satellite partnerships), (2) broadband ISPs looking to get into the video business, and (3) existing video service providers looking for a lightweight capex approach for extending their service either for remote access (a la "TV Everywhere") or in other rooms in the house (a model which has traditionally required another set-top box and truck roll for installation).

Marcus demo'd the Freewire service to me using his PC and a large monitor, and it looks great. There's instant channel changing, HD (when available), a great looking guide and auto-DVR of every program, all in the cloud. Freewire also offers targeted advertising, and HTML-based apps like Twitter integration, etc. My caveat is that I have no idea how well the service would scale to millions of homes.

Move's new positioning puts it in the middle of tectonic video industry shifts. For example, what's the appetite of 3rd parties like telcos and ISPs for new video solutions? Will other, well-suited consumer brands like Google, Netflix, Yahoo enter the multichannel video business, and if so how? What approach will cable operators like Comcast use for emerging, "TV Everywhere" services that would benefit from Move's lightweight capex model (note Comcast said it was using Move in its 5,000 subscriber technical trial yesterday)? How will major cable TV networks expect to get compensated in the broadband era where individuals, not homes, are the new unit of measurement? How will local ISPs, over whose networks remotely-accessed video will run, expect to be compensated? It's way too early to know the answers, but if Move's technology works as intended, and its costs are reasonable, it will likely find itself in the middle of a lot of very strategic industry discussions.

Another big change is that Marcus said the company's messaging will be focused more around business cases and services than its specific technologies. That seems smart given giants like Microsoft and Adobe are closely circling these waters with lots of their own technology, which could easily swamp Move. If all this wasn't enough, Move is also in the midst of hiring a new CEO and implementing a new management team, all of which will be announced imminently. One thing Move isn't doing for now is raising additional capital, which Marcus said is not needed.

What do you think? Post a comment now.

(Note: Move Networks is a current sponsor of VideoNuze)

This morning I listened in on the press conference with Comcast CEO Brian Roberts and Time Warner Inc. CEO Jeff Bewkes where they announced a 5,000 subscriber technical trial of TV Everywhere/OnDemand Online starting in July along with a set of "principles" guiding their efforts. Primarily the trial will test the security of the authentication technology.

TW will make available TNT and TBS programs in the trial, and will offer additional programs over time. Comcast plans to bring in other networks too. Both executives emphatically stated that for cable subscribers there will be no additional charge for online access. The companies clearly hope to use the trial and the publicity that will surround it to galvanize interest from other cable operators and programmers.

The partnership effectively unifies the companies' disparate initiatives so that paying video subscribers will be "authenticated" to receive certain cable network programming online. Up until now Comcast has been pursuing its own vision of online access under a plan it dubbed "OnDemand Online," while TW has been pursuing a plan it called "TV Everywhere." The essential difference between the two, as I wrote about here, was that Comcast planned to only make programs available on its owned sites (at least initially), which TW talked of multiple third parties gaining access as well, right off the bat.

I've been critical of TW's approach to date as I thought it was wildly ambitious and under-estimated the technical challenges involved in pulling off third party integration. On the other hand, Comcast's walk-before-you-run attitude seemed far more practical. On the call, Mr. Bewkes in particular continued to downplay the difficulty of authenticating third parties, a position I think is unrealistic.

Regardless, I've been supportive of the general idea that paying video subscribers gain online access to cable programs. While some decry this as antithetical to the open, free-flowing Internet ethos, and a plot by evil cable companies to control video on the 'net, I've seen it differently.

The key is finding a model that's attractive to cable programmers (e.g. MTV, USA, CNN, etc) and consumers. Programmers benefit because they'd be provided with a viable online extension of their proven hybrid (monthly affiliate fee + advertising) business model. Until now they've been largely shut out of online distribution. That's because doing so for free would antagonize their cable/satellite/telco distributors who pay them around $25B/year. And that's before the point that free, ad-supported premium sites like Hulu have not yet proven themselves economically viable. Meanwhile, aside from a la carte paid download sites like iTunes/Unbox/others there hasn't been an online subscription model available to programmers.

These are some of the real, but often not well-understood business issues. Everyone wants something-for-nothing, and the Internet has too often set those expectations. But cable programmers need to get paid for their efforts so they can continue to deliver the quality programming consumers have grown accustomed to. The newspaper industry's woes offer tangible proof of what happens to an industry when its proven business model gets stripped away.

Despite what some skeptics say, consumers also stand to gain. All that great cable programming that's been locked to the set-top box in the home would now be available online. It sort of like cable's version of on demand Sling, but without any upfront or monthly charge (at least that's what we're hearing for now).

With TV Everywhere/OnDemand Online, Comcast and Time Warner are taking a solid step forward in delivering more value to their subscribers who increasingly live their lives online. Now they need to tamp down the hype and just focus on executing in a logical, user-friendly way.

What do you think? Post a comment now.

As the annual "upfronts" - the TV industry's program preview and ad sales extravaganza - kick off today, the recent financial performance of the network TV industry and the cable TV industry continue to diverge. The cable network model, powered by both ad sales and monthly affiliate fees, is proving very durable in the Great Recession, while the ad-only network TV model has been hammered. One conclusion from these numbers is that Hulu's owners must be pushing to figure out how the site can introduce a paid subscription model.

I pulled together financial information for a select group of companies comparing performance for the recently concluded March 31 quarter vs. a year ago.

As the chart shows, operating income increased for all the cable networks and revenue was up for all of them as well, except Scripps Networks, where it was flat. The press release commentary from these cable networks was the same: affiliate revenues are up, with ad sales soft, but not disastrous. Cable operators like Comcast and Time Warner Cable also fared well in the quarter with both revenue and operating income/cash flow increasing.

Contrast this with the broadcast TV numbers for Disney, Fox and CBS, all of which operate both TV networks and own local TV stations. Disney fared the best, with revenues down 2% and operating income down 38%. CBS followed with revenues down 12% and operating income down 49%. Fox was affected the worst, with revenues down 29% and operating income down 99%. As two examples of purely local station performance, Gannett's broadcasting segment revenues were down 16% and operating income down 24%, with Sinclair's revenues down 19% and operating income down 43% (before an impairment charge). The commentary from all the broadcasters was the same: the ad market is terrible, and they're doing their best to contain costs (meaning laying off staff).

As the TV industry gears up to sell billions of dollars of ad time this week, a clear lesson from the above financial performance is that it is essential to diversify into the paid subscription ecosystem instead of relying on advertising alone. Disney, Fox and NBCU have recognized this for a while and have strongly built up their portfolio of cable networks.

With ad sales in the doldrums, it's hard not to wonder what Disney, Fox and NBCU, the three major owners of Hulu, are thinking about with respect to Hulu's own business model, which is of course currently 100% reliant on ads. I mean, if your incumbent business model is frayed, wouldn't it make sense, when essentially "starting over" online, to aggressively pursue the one that is resilient even in the recession?

Hulu's exclusive online lock on high-quality programming from 3 of the 4 broadcast networks would seem to position the company perfectly for a subscription play. If its owners looked hard at the divergent fortunes of cable vs. broadcast, it seems inevitable we'll see some type of paid subscription offering from Hulu - either directly or through distributors - sometime in the near future.

What do you think? Post a comment now.

Below is the 16th edition of the VideoNuze Report podcast, for May 15, 2009.

This week I provide some further detail on a post I wrote earlier this week, "Comcast's Sam Schwartz Offers Some Insights into OnDemand Online Authentication Plans." Comcast's and Time Warner Cable's intention to make cable programs available online to their paying subscribers would be a big leap forward for the video and broadband industries. A key piece of how to bring this to life is "authentication" - how to ensure users are who they are, and that they gain access to programs they're supposed to. Sam explains how Comcast is approaching authentication and what we can expect later this year.

Meanwhile Daisy talks about her post on Beet.tv, "CBS Expanding Original Web Video for New Personal Finance Site," which explores how CBS is pulling video together from its online content group, news division and local stations to beef up the video available at its recently-launched financial destination site, CBSMoneyWatch.com. Also, with the demise of TV Week as a print publication, Daisy talks about the range of industry coverage she's providing at other online and print pubs.

Click here to listen to the podcast (14 minutes, 40 seconds)

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

I've written a number of times (here, here, here) over the last few months about the recently disclosed plans from Comcast and Time Warner to deliver cable programs online to their paying subscribers. In general I'm a big fan, as these plans offer the potential for users to watch cable shows online that are mostly available through in-home set-top boxes only today. I'm also encouraged that cable operators seem to be going on the offensive to satisfy their subscribers' desire for anytime, anyplace access to content they're already paying for. Being offensive will certainly help mitigate "cord-cutting" tendencies.

However, if there's a fly in the ointment in these plans, it's how the cable subscriber will be "authenticated," or recognized as qualified to access that particular content at the web site where he/she's trying to watch. This is a crucial step because again, these cable operators only plan to provide access to paying subscribers of their traditional video services. To understand this how Comcast is approaching authentication, last week I spoke to Sam Schwartz, Comcast Interactive Media's EVP of Strategy and Development, and president of Comcast Interactive Capital, who is a point man for the company's OnDemand Online initiative.

Overall, Sam explained that the company is still working through how best to authenticate online users and keep content secure. Users will need to log in and then have their credentials checked to ascertain what programming they're entitled to. So the crucial step here is opening up traditional cable billing systems for access by web sites serving up the desired content. This isn't trivial because these billing systems weren't originally built to do this. Therefore there's a need for some type of entitlement database which must be pinged with the user's credentials to verify content access.

To prevent leakage in the authentication process Sam said the company is studying best practices from other digital providers. iTunes is one model which limits content availability to 5 devices. Alternatively, if access is within the home, then Comcast, as a large broadband ISP, would be able to verify IP addresses. Yet another method would be to require a credit card, which would disincent credentials sharing by subscribers. Two Comcast companies, thePlatform and Plaxo are playing key roles in supporting both the content management/distribution and user identification.

All of this is magnified because Comcast's programming partners rightfully expect that any content Comcast is distributing will be done so in a fully secure manner. In the digital TV realm, this has traditionally been handled by the set-top box and "conditional access" software in the headend (a cable operator's distribution hub). Paid online services which are connected to incumbent video services present new issues which free ad-supported sites like Hulu and YouTube haven't had to address.

Sam said pulling all of this together has been a major project, involving 100+ people throughout the company. The complexity becomes quickly apparent as this initiative touches so many different areas - video product management, technology, operations, billing, content acquisition, customer service, online media, etc. Partly as a result of this complexity, Sam explained that at the outset simply enabling its own sites like Fancast or Comcast.net is the goal. Other 3rd party sites may come on board later, only after the model is proven in.

Though it's evident that Comcast is taking a "walk before we run" approach, Sam emphasized the company is moving this along as fast as possible. Its goal is to be in the market this year with OnDemand Online. While the utopian gadflies are already decrying these kinds of paid access services, I think they balance multiple interests well, and will help to preserve the multi-billion dollar video value chain from decomposing into a free but profitless quagmire (like other media sectors have already). If all this ends up working properly, it will be a major milestone for the video industry in general and broadband video specifically.

What do you think? Post a comment now.

(Side note: I was also encouraged to see Time Warner move Turner Broadcasting System veteran Andy Heller to vice chairman yesterday overseeing its networks' push for "TV Everywhere." His role as champion of TV Everywhere gives the initiative added heft. Still, the bottom line here, as explained above, is that the back-end technology must be in place before any programming starts to flow. I hope he has this priority in his new role.)

Below is the 15th edition of the VideoNuze Report podcast, for May 8, 2009.

Daisy Whitney and I are back on track with our weekly VideoNuze Report podcast. This week Daisy adds more detail to a story she wrote for TV Week, "Targeted Ads: The Holy Grail?" which explores some recent ad targeting successes and ongoing challenges.

On the same targeting theme, I discuss a post I wrote earlier this week "Food2: A New Example of How Cable Networks Leverage Broadband." Scripps Networks, owner of Food Network and other lifestyle cable channels recently launched Food2, a destination targeted to the age 21-34 demo. It's a move that I believe will be closely watched by other channels looking to benefit from broadband's rise by "super-serving" specific audiences.

Click here to listen to the podcast (14 minutes, 38 seconds)

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

(note: I've been under the weather this week, which explains yesterday's absence of VideoNuze. I'm getting back on my feet and hope to be resuming regular publication)

Late last week Scripps Networks, parent of cable networks Food Network, HGTV, FLN and others, launched Food2, a web site targeting the 21-34 demo. Scripps has long been a leader among cable networks in capitalizing on online/broadband's potential, and this newest entry is yet another example of how important broadband is to cable networks' future growth. I spoke with Bob Madden, GM of Food's online properties to learn more.

First and foremost, Food2 is distinguished by its focus on the 21-34 demo. One of the interesting things about Food Network on air has been its appeal to younger audiences (this will likely resonate with those of you who have teenagers). But based on research it conducted Food executives realized that - no surprise - younger audiences want to experience food-related content in different ways: with shorter form non-linear content, more emphasis on experimental tastes and increased access to social/content sharing tools.

So Food2 was conceived as an effort to "super-serve" this audience. Scripps defines Food2 as "designed to be a social experience - just like food itself. It's the intersection of food, drink and pop culture." With a heavy emphasis on Facebook/Twitter integration, tons of short videos featuring hip young culinary talent and original webisodes plus challenges, recipes and tips, Food2 seeks to live up to its goal of experiencing food through the eyes of millennials.

To me, Scripps' real insight from a business perspective is recognizing that broadband creates new "shelf space" for them to launch properties that target specific audiences and in turn specific advertisers seeking to reach those audiences. This matters a lot because due to existing contracts with cable/satellite/telco operators, cable networks have been constrained, at least relative to broadcast networks, in their ability to fully distribute online their popular full length programs (for example, there is no Food Network content on Hulu). While these contracts have led cable networks to achieve highly stable financial performance in this rocky economy, it has deprived them of fully serving their audiences.

Food2 demonstrates that there's online value to be built separate and aside from simply distributing full-length programs online. And because Food2 will be promoted on Food Network's air, and will have some of its advertising sold in packages with Food Network and other Scripps properties, it is off to a running start. Lastly, while Scripps doesn't want Food2 to be seen as a "farm team" for Food Network, there's no question that if talent gets traction on Food2, it has the potential to migrate to the 90M homes that Food Network is carried in, offering lots of interesting upside.

Food2 is a tangible example of a traditional media company recognizing that younger audiences want to consume media differently and that broadband is a new kind of medium that can serve them accordingly. With practically all cable networks savoring access to younger audiences, I expect Food2 will be watched by others and eventually spawn similarly targeted sites.

What do you think? Post a comment now.

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.

Yet when I read Mr. Bewkes's comments about TV Everywhere and its implementation, he inevitably points to what Time Warner Cable (btw, not the company he runs any longer with the spinoff now almost complete) is doing with HBO in Milwaukee. By continuing to do so, I believe he is trivializing how complicated implementing something like TV Everywhere would be across the industry and across the country.

Mr. Bewkes's sketchiness with the details of how TV Everywhere would work is obvious in his interview with PaidContent's Staci Kramer here and here. There are plenty of generalizations and descriptions of the end-state, but little offered about how this would all be accomplished. One example: "...all of the video providers would have a link in their software where they could be pinged to see if the person is a video subscriber. That's not a complicated thing. It's simply a software program that asks does anybody have Staci as a sub and then Charter says, yes, I've got her and bang."

Meanwhile because the details have been so sparse, the media has been left to come to its own confusing and often conspiratorial conclusions about what TV Everywhere really means to consumers. Here's a sample of the recent headlines: "TV Everywhere - As Long As You Pay for It," "Time Warner Goes Over the Top," "Some Online Shows Could Go Subscription-Only" and "Pay Cable Tests Online Delivery." Talk about message mismanagement...

Meanwhile cable networks are also being hurt by TV Everywhere's hype. They are being forced to respond in public (as Disney's Bob Iger did in his keynote yesterday) to these vague ideas. But it is a PR nightmare-in-the-making for them, as they need to defend why consumers will have to continue paying subscription fees to watch their programs online, while broadcast TV network programs are freely available. That's a thankless job for them, and reading through Mr. Iger's speech yesterday, you could almost sense his resentment at being forced into this position.

Why Mr. Bewkes isn't modulating his comments about TV Everywhere in light of all this eludes me. Anyone who's ever created a product knows about "roadmaps," where product features are added over time, and customers are methodically messaged about enhancements to come. With TV Everywhere, it's as if all that matters to Mr. Bewkes is talking about the glorious end state, thereby erasing meaningful online benefits that can be delivered along the way. Contrast this with Comcast's OnDemand Online plan that offers the simple, but still highly-valuable near-term proposition of online cable programs on its own sites, and possibly the networks' as well.

Late yesterday's announcement that Disney-ABC and ESPN would launch a number of ad-supported channels focused on short-form content was yet another meaningful step in broadband video's maturation process. Here are 6 reasons why I think the deal matters:

1. It validates YouTube as a must-have promotional and distribution partner

For many content providers it's long since become standard practice to distribute clips, and often full-length content, on YouTube. Yet aside from CBS, no broadcast TV network has seriously leveraged YouTube. That's been a key missed opportunity, as YouTube is simply too big to ignore. It's not just that YouTube notched 100M unique viewers in Feb. '09 according to comScore, it's that the site has achieved dramatically more market share momentum over the past 2 years than anyone else, increasing from 16.2% of all streams to 41% of all streams.

Increasingly, YouTube is not the 800 pound gorilla of the broadband video market; it's the 8,000 pound gorilla. Disney has acknowledged what has long been tacitly understood - as a video content provider, it's impossible to succeed fully without a YouTube relationship.

2. It creates a path for full-length Disney-ABC programming to appear on YouTube and elsewhere

While this deal only contemplates short-form video, and more than likely, mostly promotional clips, it almost certainly creates a path for full-length episodes to appear as well, as the partners build trust in each other and learn how to monetize. Full-length content is most likely to come from ABC, not ESPN (the release pointedly states no long-form content from ESPN's linear networks is included) as part of a newly expanded distribution approach.

For YouTube, which has been aggressively evolving from its UGC roots in its quest to generate revenues, the current clip deal alone is a big win; gaining distribution rights to full-length programs would be an even more significant step. Underscoring YouTube's flexibility, the current deal allows ESPN's player to be embedded, and for Disney-ABC to retain ad sales. YouTube's reported redesign, which places more emphasis on premium content, is yet another way it is getting its house in order for premium content deals.

3. It opens up a new opportunity for original short-form video to flourish

When you think about broadcast TV networks and studios, you immediately think of conventional long-form content. Yet all of these companies have been producing short-form content that either augments their broadcast programs, or is originally produced for broadband, as Disney's own Stage 9 is pursuing. The levels of success of this content have been all over the board.

With YouTube as a formal partner, Disney can aggressively leverage it as its primary distribution platform, gaining more direct access to this vast audience. Facing unremitting market pressures on many fronts, broadcast TV networks themselves need to reinvent their business models. Short-form original content married to strong distribution from YouTube would be a whole new strategic opportunity.

4. It puts pressure on Hulu and other aggregators

It's hard not to see YouTube's gain as Hulu's - and other aggregators' - loss. For sure nothing's exclusive here, and as PaidContent has reported, discussions about Disney distributing full-length programs on Hulu (as well as YouTube) are also underway. But the Disney deal underscores something important that differentiates YouTube from Hulu: YouTube is both a massive promotional vehicle and a potential long-form distributor, while Hulu is really only the latter.

YouTube's benefit derives from its first-mover status. Hulu has done a tremendous job building traffic and credibility in its short life, but it is still distant to YouTube in terms of reach. I continue to believe it is far easier for YouTube to evolve from its UGC roots to become also become a premium outlet than it is for Hulu - or anyone else - to ever compete with YouTube's reach.

5. It raises threat warning to incumbent service providers by another notch

It's also hard not to see the Disney deal moving YouTube's threat level to incumbent video service providers (cable/satellite/telco) up another notch. We discussed YouTube's importance to these companies at the Broadband Video Leadership Evening 2 weeks ago (video here), and I thought the panelists generally did not give YouTube much credit as it deserves.

I continue to believe that of all the various "over-the-top" threats to the current world-order, YouTube is the most meaningful ad-supported one. It has massive audience, a potent monetization engine in Google's AdWords, and with the Disney deal, increased credibility with premium content providers. Especially for younger audiences, the YouTube brand means a lot more than any incumbent service provider's. If I were at Comcast, Verizon or DirecTV, I'd be keeping very close tabs on YouTube's evolution.

6. It exposes the absurdity of the ongoing Viacom-Google litigation

Two weeks ago at the Media Summit I listened to Viacom CEO Philippe Dauman describe the status of his company's $1 billion lawsuit against Google and YouTube. As he talked of mounds of data and reams of documentation being collected and reviewed, I found myself slumping in my chair, thinking about how well all the lawyers involved in the case must be doing, and yet how pointless it all seems.

The old adage "2 wrongs don't make a right" fits this situation perfectly. There is no question that in the past YouTube was lax about enforcing copyright protection on its site and cavalier about how it responded publicly to the concerns of rights-holders. But it has made much progress with its Content ID system and a good faith effort to become a trusted partner. All of this is evidenced by the fact that Disney wouldn't even be talking to YouTube, much less cutting a deal, if it didn't view YouTube as reformed. While the media world is moving on, adapting itself to the new rules of video creation, promotion and distribution, Viacom continues to waste resources and executive attention pursuing this case. To be sure, Viacom has been plenty active on the digital front, but it is long overdue that these companies figure out how to resolve their differences and instead focus on how to work together to generate profits for themselves, not their lawyers.

What do you think? Post a comment now.

Summary:

What: Major cable operators Comcast and Time Warner intend to offer broadband access to cable programs for the first time, but they have provided few specifics to date, thereby creating a swirl of confusing interpretations. This post seeks to clarify their plans.

Important for whom: Cable networks, other content providers, cable operators, consumers

Potential benefits: Flexible access and first-time online availability of popular cable programs.

Background

Since the WSJ reported two weeks ago today that Comcast and Time Warner Cable plan to offer online access to cable TV programming to their subscribers, there has been a significant amount of confusion and misinterpretation about what these companies are actually planning to do. Absent official statements from either company, there has been an ongoing debate about whether cable operators, who want to defend their traditional model, were moving to choke off the largely open access to broadband video that users have grown accustomed to.

Things got more confusing this past Monday when AdAge ran an interview ("TV Everywhere -- As Long As You Pay For It") with Jeff Bewkes, CEO of Time Warner Inc. in which he elaborated on a company initiative dubbed "TV Everywhere" that major cable network owners such as Time Warner Inc. Viacom, NBCU, Discovery and others are said to be collaborating on. Bewkes outlined a broad online vision including the idea that cable programming could also be available on sites like Hulu, MySpace, Yahoo and YouTube as well, provided that users were paying a fee to some underlying service provider (cable/satellite/telco).

The NYTimes' technology reporter Saul Hansell then picked up on the interview and wrote a piece on the paper's widely-read "Bits" blog entitled "Time Warner Goes Over the Top," which provocatively began, "Just as soon as Time Warner has divested itself from the cable business, Jeff Bewkes, its chief executive, is preparing to stab the cable industry in the back. That's what I read in an interview with Mr. Bewkes in Advertising Age..."

Saul went on to describe his interpretation of one particular Bewkes comment as implying that Time Warner Inc. would offer its networks directly to consumers (or "over the top" of cable operators), thereby setting off a domino effect in which others' networks did the same, all of which would ultimately lead to the destruction of the cable industry business model.

The attention all of this received, particularly in the blogosphere, prompted a fair number of people to contact me and ask what's really going on here.

Time Warner's Plans

Yesterday I spoke with Keith Cocozza, TWI's spokesman, who said that Bewkes's comments do represent both TWI and TWC. Their mutual vision is to have cable programming offered not just at TWC's RoadRunner portal, but also at various third-party aggregators (Hulu, etc.) so long as they subscribe to any multichannel video service (whether from TWC, Verizon, DirectTV, etc.). They do envision offering a streaming-only service for those that don't want the traditional cable subscription, but it would only be available in their geographical footprint. All of that means that there's in fact no over-the-top threat involved here at all. TWI and TWC are "agnostic" about third-party aggregator access to the cable programs, because they recognize that people want to go to whatever sites make them most comfortable. And they do not plan to charge subscribers extra for online access.

From a consumer standpoint, all of this is quite enlightened. But from an operational standpoint, it feels incredibly complex. For example, I asked Keith about how a remote user, seeking to watch programs at a third party aggregator's site like Hulu, would be authenticated as an actual customer of a video service provider? While acknowledging it's too early to have all the answers, he said a test TWC has conducted in Wisconsin with HBO has shown this not to be a big technical problem. I don't agree. It's hard enough for companies to do a bilateral account integration (e.g. tying a user's Amazon account to a user's TiVo account); the idea of doing multilateral account integration (the numerous combinations of potential aggregators and service providers) is fraught with complexity and seems highly daunting.

Then there are financial issues to address. With no incremental subscriber payments, online program delivery needs to be sustained through ads alone. This would be quite workable if it were just cable operators and networks involved (they could split the ad avails proportionately as they've traditionally done with linear delivery), but by allowing third-party aggregators in too, a third mouth now needs to be fed. That will trigger a whole new negotiating dynamic, as each aggregator lobbies for a different share. And it's questionable whether there's even enough ad revenue for three parties to begin with, though Keith believes there is.

Comcast's Plans

Conversely, Kate Noel, Comcast's spokeswoman, told me yesterday that while it's still early to say anything definitive about Comcast's plans for distribution through third-party aggregators, their first priority is distribution of cable programs on their own sites (e.g. Fancast, Comcast.net) and the networks' own sites. Comcast seems to have more of a "walk, before you run" approach. It recognizes that protecting subscribers' privacy in any account integration is crucial so it plans to proceed carefully. I tried to pin Kate down on whether Comcast intends to charge for online access. Again she felt it was too early to be definitive, but it sounds like they're leaning toward a no-charge model as well. The timeline is to begin rolling out access in the 2nd half of '09.

Clearly there are a lot of moving pieces involved with these companies' plans. In general Time Warner has a more aggressive, yet I believe far less pragmatic, plan. They're trying to get all the way to the end zone right away, when just advancing the ball further downfield would be real progress for today's broadband users seeking improved access to premium content. Time Warner's "TV Everywhere" seems like a great vision, but it would take years to fully implement. Comcast's plan is probably achievable in a year or less. Either way, major cable operators finally seem to have the ball rolling toward broadband distribution of cable programming. As I pointed out last week, this can only be viewed as a positive.

What do you think? Post a comment now.

(btw, if you want to learn more about all this, come to the Broadband Video Leadership Evening on March 17th in NYC, where we'll dig deeply into these issues with our top-notch panel)

Netflix confirmed for me that the first 9 seasons of "South Park" are indeed coming to its "Watch Instantly" streaming service. This was mentioned by South Park's Matt Stone in a longer NY Times story yesterday about the program's digital activities. However, since there was no formal announcement yesterday and I couldn't add South Park episodes to my Netflix Watch Instantly I followed up to verify.

A Netflix spokesman told me that a deal has indeed been signed, and that the formal announcement will follow later this month when the release timeline has been finalized. He did not comment on the Times report that Netflix is paying for the episodes, though I assume this is almost certainly the case.

Netflix's move demonstrates the beginnings of what I think is real power in its Watch Instantly model, namely the ability to pay to get great content which itself can be a subscriber acquisition and/or retention tool. I expect we'll see a lot more of Netflix cherrypicking programs and or specific networks to build out its Watch Instantly feature. As it does, it will become an increasingly appealing alternative for early adopter cord-cutters.

What do you think? Post a comment now.