Posts for 'Cable TV Operators'

Google's recently-announced fiber-to-the-home experiment (which I estimated could cost the company $750 million or more) looks even sillier in the context of continued announcements by cable operators of faster broadband deployments. As an example, this week brought news that Virgin Media, a large U.K. cable operator, is launching 100 megabit/second service by the end of this year, and also intends to expand its trial of 200 megabits/second service. Virgin's announcements came on top of Shaw Communications (a large Canadian cable operator) news from last week that it would soon test expanding its current 100 megabit/second service to 1 gigabit/second, a 10x increase. And big U.S. cable operators themselves continue deploying "DOCSIS 3.0" equipment to offer ever-faster broadband services.

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

This week brought yet another new twist in the sizzling broadband-to-the-TV convergence space, as Cablevision unveiled a technical trial of its "PC to TV Media Relay" service. Cablevision didn't release a lot of details, but from what it said, it seems that users will download software to their computer which will allow them to then share content to their Cablevision digital set-top box for viewing on TV.

If it works - and of course that's an if for now - Media Relay could have broad implications, first and foremost for those trying to either sell standalone convergence boxes (e.g. Roku, soon Boxee, Apple TV, etc.) and other CE devices trying to leverage convergence functionality (e.g. gaming consoles, Blu-ray players, Internet TVs). Depending on how Cablevision prices Media Relay, it may make a lot more sense for consumers to use it than to go buy a convergence device. Online content providers and aggregators like Netflix and Hulu would also benefit from seamless TV-based viewing. While TV Everywhere seeks to expand access to cable programming outside the home, Media Relay complements it by offering online content within the home, on the TV. It's a very interesting development and worth keeping an eye on to see if others emulate it.

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

Daisy Whitney and I are pleased to present the 51st edition of the VideoNuze Report podcast, for February 26, 2010.

First up this week Daisy discusses the Beet TV online video roundtable in which she participated this week. Beet got a bunch of industry executives together for a discussion moderated by Kara Swisher of AllThingsD. Daisy talks about what she learned and the one-on-one interviews she conducted which will be available soon at the Beet site.

Then we discuss my post from yesterday, "Sezmi is Slick; Marketing It Will Be the Big Challenge," in which I reviewed the opportunities and challenges that Sezmi, the recently-launched next-gen video service provider is facing. Sezmi is now available in the entire LA area, with expansion to other U.S. geographies in store for later this year. I delve into why I think the skeptics are getting ahead of themselves in their downbeat assessments.

Click here to listen to the podcast (14 minutes, 52 seconds)

Click here for previous podcasts

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

While in LA this week, I caught up with Phil Wiser, Sezmi's president and co-founder and got another good look at the Sezmi service, which just officially launched in the entire LA market with Best Buy. I've been covering Sezmi for over 3 years, and from a technical and product standpoint, I continue to be impressed with what it has accomplished, especially for a 1.0 launch. Out-of-the box set up is very straightforward and a series of intuitive menus quickly creates a personalized user profile complete with recommended shows based on your interests and selections from linear and on-demand channels.

Sezmi gained my attention early on because unlike other broadband-only devices (e.g. Roku, Vudu, ZillionTV, AppleTV, gaming consoles, etc.), Sezmi's goal has always been to become a full replacement for existing multichannel video programming distributors ("MVPDs"). That "boil the ocean" strategy has required it to develop its own hybrid broadcast/broadband content delivery system, sign up local broadcasters for access to their bandwidth, ink carriage deals with cable networks and design the user experience from scratch, among other things. Having done much of that work (with a key exception being to still get the remaining cable channels from Disney/ESPN, Fox, Scripps and A&E into the line-up), Sezmi's next challenge is to actually market the service and add subscribers cost-effectively. This could well prove to be Sezmi's biggest challenge.

The market for multichannel video subscriptions has never been more competitive than it is today. Deep-pocketed cable operators, satellite operators and telcos (and in some places 3rd party "overbuilders" like RCN) are beating the hell out of each other in many U.S. geographies. For example, here in the Boston area we're bombarded daily with ads on radio, in newspapers, in direct mail, through door-hangers and other means, to switch providers. While there are a lot of noisy promotional offers, there are plenty of product and technology-based pitches as well - more HD channels, faster broadband speeds, better VOD and so on. The "triple play" bundle of video, voice and data is a significant marketing lever. I don't know what the marketing cost per acquired customer is for Comcast or Verizon these days, but I have no doubt it has never been higher.

This is battleground that Sezmi is now entering after nearly four years of development. Many people are skeptical about Sezmi's odds of success (read TDG president Michael Greeson's well-done piece from last week for a rundown of the issues), at least as Sezmi is currently configured. Some of these concerns are very valid, in particular Sezmi's $299 upfront equipment fee (which is pretty much unique in the industry), its currently incomplete channel lineup (note also that HBO, Showtime and Starz are also not available) and the $20/mo rate which is marginally better than alternatives (but is likely to increase anyway as more channels and especially expensive ones like ESPN are added).

No question, Sezmi faces a steep marketing challenge. Still, I believe there are reasons for optimism. First, as Sezmi has said many times, it is not a box company and Best Buy isn't its only route to market. It plans deals with telco and ISP partners who will not only bundle its pricing but also erase the upfront charge through a rental model. The rental could be very aggressive depending on the partner's goals, opening up more pricing competitiveness for Sezmi. Second, Sezmi's user interface and certain product features are very compelling differentiators. Granted, incumbent MVPDs are not standing still (see Cablevision's "Media Relay" announcement just yesterday), but the fact that Sezmi owns its whole system from end to end gives it more control and flexibility to enhance the product (for example in VOD it is not relying on traditional vendors).

Lastly, and I'll admit this is where things get fuzzy, but I do think there's a segment of existing MVPD customers who hunger for something new, better and lower cost than is currently available. I've made the analogy for Sezmi to what JetBlue has done in the airline industry and I think that still holds. Depending on how distinctive Sezmi's positioning and messaging is, I think it could really resonate with younger, urban, tech-savvy users. One Sezmi feature alone - access to all YouTube videos - is a totally new value proposition. Phil and I quickly searched YouTube yesterday for "Alec Baldwin Hulu Super Bowl Ad" and in seconds there it was. Can any other MVPD offer that today?

There are plenty of reasons to discount Sezmi's chances of success, but I think that's premature thinking, especially given how dynamic the video landscape is today. But even if Sezmi doesn't thread the needle and fully surmount the marketing challenges ahead, the company still has a lot of value in its technology and products. If Vudu fetched a reported $100 million from Wal-Mart, and Sling got $380 million from DISH as announced a couple years ago, then there should be a palatable financial exit in store for Sezmi as well, even with $75 million or so invested to date. Of course its investors and executives are hoping for far more than just a "palatable" final chapter. The real test of what's in store for Sezmi is just now beginning.

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

Overshadowed this week with the launch of HBO Go is that Synacor has been powering access to the subscriber-only portion of NBC's Olympics video for 14 of its cable operator customers, reaching 9 million subscribers. As Synacor's CEO Ron Frankel told me earlier this week, this is the most extensive TV Everywhere authenticated access instance to date, though it is really just a continuation of the kinds of services Synacor has been offering for years.

Synacor has flown somewhat below the radar as it has steadily built out its content offerings, with deals with 60 different providers now in place (e.g. MLB, NHL, MTV, etc.). Synacor offers a portal to its customers which provides its cable operator customers with single sign-on access via pre-integrated billing and user ID management. This is the same way that TV Everywhere is intended to work as it rolls out. Given its experience, Synacor looks like it will be a key player in making TV Everywhere happen in 2010.

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

Question: How much difference is there between Comcast offering its TV Everywhere service to its own multichannel video subscribers in its geographical footprint, who have chosen to get their broadband Internet service from another company (e.g. Verizon, AT&T, etc) vs. Comcast offering TV Everywhere services to consumers who similarly get their broadband Internet service from one of these companies (or another cable operator), but happen to also get their multichannel video service from another company (e.g. another cable operator operating in a non-Comcast geographical area)?

If you answered "not that much," then you'll likely have the same reaction that I did upon reading last week's Light Reading article, "Comcast to Expand 'Xfinity' to DSL Subs," which describes Comcast's plan to offer its Fancast Xfinity TV (which I call FXTV) TV Everywhere service to those of its video subscribers who use DSL or some other method to connect to the Internet instead of Comcast's own broadband service by the second or third quarter of 2010.

(As quick background, in December, Comcast launched the beta of its FXTV service, but it's only been available to homes that subscribe to both broadband and video, which is about 14 million out of the 24 million who subscribe to Comcast's video service. Of that 10 million difference, using the 70% national broadband penetration rate, I'd estimate there are about 3 million of Comcast's multichannel video subscribers who use Verizon, AT&T or someone else for their broadband access.)

When I read the article, my reaction was: if Comcast is going to target this group of users, wouldn't the next logical step in FXTV's rollout be to offer it to non-Comcast video subscribers? This is the concept I suggested back in September in, "How TV Everywhere Could Turn Cable Operators and Telcos Into Over-the-Top's Biggest Players." In that post I argued that with sizable revenue per subscriber gains largely behind it, Comcast' big growth opportunity is to expand into other cable operators' territories, by offering FXTV as a TV Everywhere 2.0 over-the-top service in those areas.

To be sure, I noted that this type of move would be a serious breach of protocol in the insular cable industry, and with today's incomplete FXTV offering it wouldn't be viable competitively just yet anyway. But given nationally-oriented competitors like DirecTV, DISH Network and newer OTT alternatives like Netflix mobilizing, it seems logical that somewhere down the road, Comcast, whose geographical reach today only encompasses about 25% of American homes, will have to go national to stay even.

When Comcast's executives have been asked about the possibility of FXTV as an OTT service they have denied any intentions. With their hands full making sure FXTV is working properly for its current subscribers, that's probably the case, at least for now. Plus, with the NBCU deal facing regulatory scrutiny and the net neutrality debate heating up again, Comcast certainly isn't going to hint at anything that would further expand its dominance. But still, given competitive issues, will limiting FXTV access to its own multichannel video subscribers remain the case? It will be interesting to see if and when this changes.

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

Following are 4 items worth noting for the Jan 4th week:

1. TechCrunch disagrees with my Netflix-Warner Bros. deal analysis - In "Netflix Stabs Us In The Heart So Hollywood Can Drink Our Blood," (great title btw) MG Siegler at the influential blog TechCrunch excerpts part of my post from yesterday, and takes the consumer's point of view, decrying the new 28 day "DVD window" that Netflix has agreed to in its Warner Bros deal. Siegler's main objection is that "Hollywood thinks that with this new 28-day DVD window deal, the masses are going to rush out and buy DVDs in droves again." Instead, Siegler believes the deal hurts consumers and is going to touch off new, widespread piracy.

I think Siegler is wrong on both counts, and many of TechCrunch's readers commenting on the post do as well. First, nobody in Hollywood believes DVD sales are going to spike because of deals like this. However, they do believe that any little bit that can be done to preserve the appeal of DVD's initial sale window can only help DVD sales which are critical to Hollywood's economics. Everyone knows DVD is a dying business; the new window is intended to help it die more gracefully. And because new releases are not that critical to many Netflix users anyway, Netflix has in reality given up little, but presumably gotten a lot, with improved access for streaming and lower DVD purchase prices.

The argument about new, widespread piracy by Netflix users is specious. With or without the 28 day window, there will always be some people who don't respect copyright and think stealing is acceptable. But Netflix isn't running its business with pirates as their top priority. With 11 million subscribers and growing, Netflix is a mainstream-oriented business, and the vast majority of its users are not going to pirate movies - both because they don't know how to (and don't want to learn) and because they think it's wrong. Netflix knows this and is making a calculated long-term bet (correctly in my opinion) that enhancing its streaming catalog is priority #1.

2. comScore's November numbers show continued video growth - Not to be overlooked in all the CES-related news this week was comScore's report of November '09 online video usage, which set new records. Key highlights: total video viewed were almost 31 billion (double Jan '09's total of 14.8 billion), number of videos viewed/average viewer was 182 (up 80% from Jan '09's 101) and minutes watched/mo were approximately 740 (more than double Jan '09's total of 356).

Notably, with 12.2 billion views, YouTube's Nov '09 market share of 39.4% grew vs. its October share of 37.7%. As I've previously pointed out, YouTube has demonstrated amazingly consistent market dominance, with its share hovering around 40% since March '08. Hulu also notched another record month, with 924 million streams, putting it in 2nd place (albeit distantly) to YouTube. Still, Hulu had a blowout year, nearly quadrupling its viewership (up from Jan '09's 250 million views). But with 44 million visitors, Hulu's traffic was pretty close to March '09's 41.6 million. In '10 I'm looking to see what Hulu's going to do to break out of the 40-45 million users/mo band it was in for much of '09.

3. Consumer groups protest TV Everywhere, but their arguments ring hollow - I was intrigued by a joint letter that 4 consumer advocacy groups sent to the Justice Department on Monday, urging it to investigate "potentially unlawful conduct by MVPDs (Multichannel Video Programming Distributors) offering TV Everywhere services." The letter asserts that MVPDs may have colluded in violation of antitrust laws.

I'm not a lawyer and so I'm in no position to judge whether any actions alleged to have taken place by MVPDs violated any antitrust laws. Regardless though, the letter from these groups demonstrates that they are missing a fundamental benefit of TV Everywhere - to provide online access to cable TV programming that has not been available to date because there hasn't been an economical model for doing so. In the eyes of people who think that making money is evil, the TV Everywhere model of requiring consumers to first subscribe to a multichannel video service seems anti-consumer and anti-competitive. But to people trying to make a living creating quality TV programming, the preservation of a highly functional business model is essential.

These advocacy groups need to remember that consumers have a choice; if they don't value cable's programming enough to pay for it, then they can instead just watch free broadcast programs.

4. 3D is the rage at CES - I'll be doing a CES recap on Monday, but one of the key themes of the show has been 3D. There were two big announcements of new 3D channels, from ESPN and Discovery/Sony/IMAX. LG, Panasonic, Samsung and Sony announced new 3D TVs. And DirecTV announced that it would launch 3 new 3D channels by June 2010, with Panasonic as the presenting sponsor. 3D sets will be an expensive proposition for consumers for some time, but prices will of course come down over time.

Something that I wonder about is what impact will 3D have on online and mobile video? Will this spur innovation in computer monitors so that the 3D experience can be experienced online as well? And how about mobile - will we soon be slipping on 3D glasses while looking at our iPhones and Android phones? It may seem like a ridiculous idea, but it's not out of the realm of possibility.

Enjoy your weekend!

Happy New Year. If you're just back from a holiday vacation and have been partially or totally off the grid for the last week or two, here are 7 video-oriented items you may have missed:

1. Time Warner Cable and News Corp fight over fees, then settle - Two behemoths of the cable and broadcast TV ecosystem spatted publicly during the holidays over the size of "retransmission consent" fees that News Corp (owner of the Fox Broadcast Network and cable channels like Fox News) wanted TWC (the 2nd largest U.S. cable operator) to pay to carry its 14 local stations. While a last minute deal averted the channels going dark, broadcasters' interest in dipping into cable's monthly subscription revenues will only intensify as audience fragmentation accelerates and ad revenues are pressured.

For my part I wish Fox and other broadcasters were as focused on building new and profitable digital delivery models for their programs as they were on trying to redistribute cable's revenues. Even as Rupert Murdoch continues advocating the paid content model, the freely-available Hulu is seeing its traffic skyrocket (see below). But if Hulu's viewership isn't incrementally profitable, then all that growth is pointless. Urgency is mounting too; in '10 convergence devices that bridge broadband to the TV are going to get a lot of attention. In the wake of their adoption, consumers are going to want Hulu on their TVs. If Hulu doesn't allow this it will be marginalized. But if it does without first solidifying its business model, it could hurt broadcasters further.

2. Hulu has a big traffic year, but no further information provided on its business model - Hulu's CEO Jason Kilar pulled back the curtain a bit on the company's strong progress in 2009, citing 95% growth in monthly users, to 43 million, 307% growth in monthly streams, to 924 million (both as measured by comScore) and a doubling of available content, to 14,000 hours. While noting that its advertisers increased from 166 to 408 during the year, with respect to performance, Jason only said that "we are extremely excited about atypically strong results we have been able to drive for our marketing partners."

Though Hulu is under no obligation to disclose details of its business model, I think it would dramatically increase the company's credibility if it shared some metrics about how its lighter ad load model is working (e.g. improved awareness, click throughs, leads, conversions, etc.). Per the 1st item above, as Hulu grows, a lot of people have a lot at stake in understanding what effect it may have on broadcast economics. In addition, as I pointed out recently, it is important to understand whether Hulu thinks it may have already saturated its U.S. audience. After a jump in Q1 '09 from 24.6 million to 41.6 million users, traffic actually dipped below 40 million until October. What does Hulu do from here to gain significantly more users?

3. Cable networks' primetime audience is nearly double broadcasters' - Punctuating the ascendancy of cable over broadcast, this Multichannel News article pointed out that in 2009, ad-supported cable networks as a group captured 60.7% of primetime audience vs. 32% for the 4 broadcast networks. That's a major change from 2000 when the broadcasters had a 46.8% share vs. cable's 41.2%. Cable increased its share every single year of the last decade, powered by its innovative original programming. NBCU's USA Network in particular has become the real standout performer, winning its second consecutive ratings crown, with 3.2 million average primetime viewers, up 14% vs. 2008.

The surging popularity of cable programming is a crucial barrier to consumers cutting the cord on cable. Since cable networks are highly invested in the monthly multichannel subscription model, they are unlikely to disrupt themselves by offering their best shows to others under substantially different terms than how they're offered today. So to the extent cable programs are either unavailable to over-the-top alternatives or offered less attractively (e.g. less choice, higher cost, delayed availability), little cord-cutting can be expected. And if TV Everywhere achieves its online access goals, the cable ecosystem will only be further strengthened.

4. YouTube is working to drive higher viewership - Amidst the turmoil in the traditional ecosystem and Hulu's growth, YouTube, the 800 pound gorilla of the online video world, is working hard to deepen the site's viewership. As this insightful NYTimes article explains, a team of YouTube developers is analyzing viewing patterns and tweaking its recommendation practices to encourage more usage. YouTube says time on the site has increased by 50% in the last year, and comScore reports that the average number of clips viewed per user per month jumped to 83 in October, up from 53 a year earlier. Still, as comScore also reports, duration of an average session has yet to crack 4 minutes, meaning video snacking on YouTube is still the norm. YouTube's moves must be watched closely in '10.

5. Showtime's "Weeds" available online before on DVD - This WSJ article (reg req'd) pointed out that Lionsgate, producer of Showtime's hit "Weeds" series is offering episodes online before they're available on DVD. By putting the digital "window" ahead of DVD's, Lionsgate is further pressuring DVD's appeal. We've seen periodic experimentation in this regard, and I anticipate more to come, especially as the universe of convergence devices expands and consumers can watch on their TVs instead of just their computers. Until a tipping point occurs though, "Weeds" like initiatives will be the exception, not the rule.

6. Netflix goes shopping in Hollywood - And speaking of reversing distribution windows, this Bloomberg Businessweek piece was the latest to highlight Netflix's efforts to woo studios into giving it more recent releases. Netflix has of course made huge progress with its Watch Instantly streaming feature, but its appeal to heaviest users will slow at some point unless it can dramatically expand its current slate of 17K titles available online. Hollywood is understandably wary of Netflix given all the variables in play and a desire to avoid Netflix becoming master of Hollywood's post-DVD, digital future. Whether Netflix will spend heavily to obtain better rights is a major question.

7. Get ready for Google's Nexus One and Apple's "iSlate" - Unless you've really been off the grid, you're probably aware by now that two very significant mobile product releases are coming this month. Tomorrow (likely) Google will unveil the Nexus One, its own smartphone, powered by its Android 2.1 operating system. The Nexus One will be "unlocked," meaning it can operate on multiple providers using GSM networks. The device will further fuel the mobile Internet, and mobile video consumption along with it. Separately, Apple is widely rumored to introduce its tablet computer later in the month, which many believe will be called the "iSlate." The tablet market is completely virgin territory, and while it's early to make predictions, I believe Apple could have most of the ingredients needed to make the product another big hit. The prospect of watching high-quality video on a thin, light, user-friendly device is extremely compelling.

It's time to say goodbye to 2009 and begin looking ahead to 2010.

2009 was yet another important year in the ongoing growth of broadband and mobile video. There were many exciting developments, but several stand out for me: the announcement and launches of initial TV Everywhere services, the raising of at least $470 million in new capital by video-oriented companies, YouTube's and Hulu's impressive growth to 10 billion streams/mo and 856 million streams/mo, respectively, the iPhone's impact on popularizing mobile video, the Comcast-NBCU deal, the maturing of the online video advertising model, the proliferation of Roku and other convergence devices and the growth of Netflix's Watch Instantly, just to name a few.

Looking ahead to next year, there are plenty of reasons to be optimistic about video's growth: the rollout of TV Everywhere by multiple providers, the proliferation of Android-powered smartphones and buildout of advanced mobile networks, both of which will contribute to mobile video's growth, the launch of Apple's much-rumored tablet, which could create yet another category of on-the-go content access, the introduction of new convergence devices, helping bridge video to the TV for more people, new made-for-broadband video series, which will help expand the medium's appeal, and wider syndication, which will make video ever more available.

In the midst of all this change, monetization remains the fundamental challenge for broadband and mobile video. More specifically, for both content providers and distributors, the challenge is how to ensure that the video industry avoids the same downward revenue spiral that the Internet itself has wrought on print publishers.

Regardless of all the technology innovations, high-quality content still costs real money to produce. If consumers are going to be offered quality choices, a combination of them paying for it along with advertising, is essential. While it's important to be consumer-friendly, this must always be balanced with a sustainable business model. In short, no matter what the size of the audience is, giving something away for free without a clear path for effectively monetizing it is not a strategy for long-term success.

VideoNuze will be on hiatus until Monday, January 4th (unless of course something big happens during this time). I'll be catching my breath in anticipation of a busy 2010, and hope you will too.

Thank you for finding time in your busy schedules to read and pass along VideoNuze. It's incredibly gratifying to hear from many of you about how important a role VideoNuze plays in helping you understand the disruptive change sweeping through the industry. I hope it will continue to do so in the new year.

A huge thank you also to VideoNuze's sponsors - without them, VideoNuze wouldn't be possible. This year, over 40 companies supported the VideoNuze web site and email, plus the VideoSchmooze evenings and other events. I'm incredibly grateful for their support. As always, if you're interested in sponsoring VideoNuze, please contact me.

Happy holidays to all of you, see you in 2010!

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

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

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

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

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

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

What do you think? Post a comment now.

Daisy Whitney and I are pleased to present the 44th edition of the VideoNuze Report podcast, for December 18, 2009. This will be the last podcast for 2009, and we'd both like to say a huge thanks to everyone who's been listening in this year.

This week I start things off by providing further detail on my experience so far with Comcast's TV Everywhere initiative, Fancast Xfinity TV (or "FXTV" as I call it for short), which was released in beta to 14 million subscribers this week at no additional charge. On the whole I think it's a respectable effort, and in the big picture, is exactly what the company should be doing with online distribution. The main challenge for improving it is getting lots more content from ad-supported and premium cable networks, so that users are more likely to find what they're looking for. For all kinds of reasons, this won't be easy, but if any company can make it happen, it's surely Comcast.

Then Daisy reviews her '09 predictions and shares her "New Media Minute Awards for Excellence." She recognizes Kaltura, 5Min, boxee, Quantcast, and  number 1 pick, MyDamnChannel. All have excelled this year, attracting new venture financing, signing new deals and growing their business. Daisy is particularly proud of MyDamnChannel because it also achieved profitability this year. Listen in to find out more.

Click here to listen to the podcast (14 minutes, 18 seconds)

Click here for previous podcasts

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

Amid much anticipation, Comcast launched its "Fancast Xfinity TV" (my shorthand will be "FXTV") service yesterday. FXTV is Comcast's TV Everywhere offering and it will initially be available only to the company's approximately 14 million "dual play" (digital cable + broadband Internet access) subscribers. Comcast is keeping a "beta" label on FXTV for now, to give it some time to work out the kinks. As a Comcast triple-play customer, I have access to FXTV and I played around with it yesterday and last night. While there's plenty of room for improvement, overall FXTV is off to a respectable start.

When dual play customers now visit Fancast they are immediately notified through a prominent pop-up that there's "Great News for Comcast Customers" about online access to over a 1,000 new shows and movies. "Get started" prompts the user to enter their Comcast.net email address and password, then a 17.5MB download begins which includes the Move Networks player and an Adobe Air application. After naming your computer (you're allowed up to 3 devices to access FXTV), the site reloads with the new FXTV Beta branding. All of that worked fine for me.

A prominent window at the top of the page promotes 4 current TV shows, but FXTV misses a big opportunity to immediately demonstrate its value by oddly showcasing just 1 program (TNT's "Men of a Certain Age,") that's not sourced from Hulu. Savvy users will know the rest are already freely available there. Why not promote 4 programs that are only available to FXTV users? And why not include messaging like "Exclusively for FXTV Users!" to remind users of the payoff for having just gone through a download process?

On the positive side, below this window, FXTV promotes programming from premium channels HBO, Starz and Cinemax. As a non-subscriber to Cinemax, when I clicked on "Juno," which had a little key icon, FXTV's authentication process kicked in, prompting a message to subscribe to Cinemax to watch. However, when I clicked "Learn more" my popup blocker interceded which meant I needed to disable it and then reload the page. The Cinemax promotional page that loads is generic from the Comcast.com web site, featuring a graphic of "Gran Torino" and promotions for 3 other movies. Comcast has a golden upsell opportunity when FXTV users click on premium content. It would no doubt improve its conversion ratio if the landing page were customized to load a graphic of the original movie or show selected at FXTV, well merchandised with trailers, clips and other information. A special offer/reward for FXTV users would also help.

Back on the FXTV site, below the premium channel promotions is an area for Full Episodes, categorized by "Celeb News," "The Hot List," "Dramas," etc. Once again, many of the thumbnails link to content that is freely available online and to all other Fancast users. Once again, I'm surprised that Comcast isn't doing more to promote programs that are only available to FXTV users, making it more explicit what's special about FXTV.

I clicked and watched parts of a number of shows and in general my experience was positive. I've read other reviews describing buffering delays, but I didn't experience any issues, or at least anything different than I typically do when starting videos at other sites. One thing Comcast disclosed on the press call yesterday was that FXTV would be available to dual play subscribers outside their homes. Recall that in the 5,000 person trial, users could only access the service from within their homes, so this is a major step forward. I haven't yet tested FXTV remotely, but will do so while in Florida next week.

The biggest challenge FXTV faces is content availability, particularly from the ad-supported cable networks. For example of last week's top 10 rated cable shows, only TNT's "The Closer" and "Men of a Certain Age" are available on FXTV. Among the top 10, there are no sports (football or WWE) or kids shows like "Sponge Bob" (Nick) or "Phineas and Ferb" (Disney) available. Even for #10 show "Keeping up With the Kardashians" the most recent episodes are from Season 2, back in May 2008 - and this is a show that's on E! Entertainment, a channel that Comcast itself owns! There are no episodes offered of my favorite cable show, AMC's "Mad Men."

The content selection on the premium channels HBO, Starz and Cinemax (note Showtime is not yet available on FXTV) is better, but not eye-popping. For example, the only episodes of HBO's "Entourage" that are available are from Season 2 in 2005, despite the fact that Comcast's CEO Brian Roberts specifically demonstrated and highlighted the idea that all episodes of Entourage would be available when he showed the service at the Web 2.0 conference less than 2 months ago. For some reason HBO must have pulled the rights to Entourage in this time.

A lot of the questions on the press call Comcast conducted yesterday focused on content availability and it's clear that obtaining the rights to distribute the full slate of cable programs online is devilishly complex. To be sure, Comcast has made progress, saying it has 27 networks are supplying programming, totaling 12K titles. There's no distributor in a better position to make online distribution happen than Comcast, yet as I wrote last week about Nielsen not yet being able to collect and then synthesize online viewership, Comcast (and other TV Everywhere providers) are subject to forces beyond their control.

Yet another complicating factor is how advertising in FXTV will work. Comcast said that for now, while "nobody really knows what works best," each network will be permitted to experiment with ad loads. It's not clear how long this will go on, nor what role Comcast will play to guide networks to a certain load. In the meantime though, the downside is that the user experience is inconsistent from one network to another. For an offering that's free to subscribers that's not a big drawback, but the lack of consistency does chip away at least a little bit from the overall experience.

Taken together, Comcast deserves credit for getting FXTV out the door just 6 months since announcing it this summer, which is light speed in cable TV terms. There are lots of ways it can and will be improved upon. Gaining credibility with content providers, so that FXTV can beef up its library is priority #1. As I've been saying for a while now, conceptually FXTV is right on all fronts - it preserves the paid consumer model for content providers, offers users enhanced value and helps Comcast and other providers defend against cord-cutting. Hopefully Comcast and other providers will sufficiently invest in these services to let them reach their full potential.

What do you think? Post a comment now.

Based on a number of conversations I've had with cable programming executives, Nielsen's current inability to measure online viewing of TV programs and meld that data effectively with on-air viewing is emerging as a key stumbling block to successful rollouts of TV Everywhere services.

Cable networks are justifiably concerned that any viewership that potentially shifts from on-air to online that they are not credited for will adversely impact their ratings and therefore their advertising revenue. Until the issue is fixed cable networks will be reluctant to offer their most popular programs to TV Everywhere providers, in turn diluting TV Everywhere's appeal to consumers.

Nielsen, the de facto standard in TV ratings measurement, is well aware of these concerns and as Multichannel News reported this past Monday, it plans to accelerate the deployment of its "TVandPC" software which measures online viewing to 7,500 of its National People Meter households by Aug. 31, 2010. While that's a start, as industry executives have told me, it's not just the online viewing data that's needed, but also the proper blending of that data with the on-air data that's critical.

Among the issues is how online viewing, which offers consumers the potential of much-delayed on-demand viewing, should be aligned with Nielsen's "C3" ratings, which captures up to 3 days playback on DVRs. Another issue is understanding and measuring new TV Everywhere viewership patterns (e.g. college students remotely watching shows on a laptop which has been authenticated by Mom and Dad's cable account). Then there's the question of whether the online ad loads are going to be comparable to those on-air (e.g. if the online share of a program's overall viewership carried far fewer ads than the on-air viewership, advertisers and media planners will want to know this). No doubt other issues loom as well.

Add it all up and the process of collecting and then blending online and on-air viewership data is non-trivial and will require a significant investment and testing on Nielsen's part to accomplish. From Nielsen's standpoint, it could be reluctant to make such an investment in overhauling its measurement service unless there were pre-commitments from some of its clients to accepting and buying the enhanced ratings service.

On the one hand, it would seem that cable networks' reluctance to embrace TV Everywhere until adequate measurement systems were in place would be a strong incentive for TV Everywhere providers to support Nielsen's enhancements. However, I've been told that when Nielsen previously made improvements to track Video-on-Demand viewership, not many service providers implemented necessary mechanisms to denote programs were VOD-based, and therefore Nielsen's investment yielded little return. Particularly given the tough economic times, that could make Nielsen more cautious about how it proceeds with online ratings. For now Nielsen has not disclosed its plans.

Still, Nielsen is under pressure to move forward given the formation of the Coalition for Innovative Media Measurement (CIMM), which is comprised of 14 TV networks, agencies and advertisers. CIMM's goal is to explore new methodologies for audience measurement, particularly for set-top box data and cross-platform media consumption. While some in the industry have tagged CIMM as a Nielsen challenger, its members have said they have no intention of trying to replace Nielsen. Regardless, the presence of an industry-backed group trying to wrap its arms around cross-platform audience measurement is likely to only accelerate Nielsen's online tracking efforts.

As VideoNuze readers know, I've been quite enthusiastic about TV Everywhere's potential, though I'm plenty cognizant of the challenges it faces. Measurement is surely near the top of that list. One of the benefits to Comcast of owning NBCU is that, if it chooses to, it can release NBCU's cable networks' programs for TV Everywhere viewing, absent complete online tracking. This would be comparable to what Hulu's owners have chosen to do by distributing their broadcast network shows online (they're at least partly motivated by the belief that online viewing augments on-air viewing). But Comcast won't take ownership of NBCU for another year or so. By that time Nielsen may well be close to rolling a blended online/on-air offering.

In sum, it could well be that 2010 ends up being more a year of experimentation for TV Everywhere while building blocks like audience measurement get put in place. VOD, which years since its launch still lacks many primetime programs as well as dynamic advertising insertion, offers a cautionary example for TV Everywhere providers of how a lack of investment can block the realization of a new medium's full potential. Cable networks in particular will keep looking for signals that TV Everywhere will be more robust than VOD before they get too enthusiastic about online distribution.

What do you think? Post a comment now.

Following are 4 items worth noting for the Nov 30th week:

1. Alicia Keys concert on YouTube is an underwhelming experience - Did you catch any of the Alicia Keys concert on YouTube this past Tuesday night celebrating World AIDS Day? I watched parts of it, and while the music was great, I have to say it was disappointing from a video quality standpoint -lots of buffering and pixilation, plus watching full screen was impossible.

I think YouTube is on to something special webcasting live concerts. Recall its webcast of the U2 concert from the Rose Bowl on Oct 25th drew a record 10 million viewers. That concert's quality was far superior, and separately, the dramatic staging and 97,000 in-person fans also helped boost the excitement of the online experience. It's still early days, but to really succeed with the concert series, YouTube is going to have to guarantee a minimum quality level. Notwithstanding, American Express, the lead sponsor of the Keys concert had strong visibility and surely YouTube has real interest from other sponsors for future concerts. It could be a very valuable franchise YouTube is building and is further evidence of YouTube's evolution from its UGC roots.

2. Being a Jeff Zucker fan is lonely business - In yesterday's post, "Comcast-NBCU: The Winners, Losers and Unknowns" I said I've been a fan of Jeff Zucker's since seeing him deliver a brutally candid and very sober assessment of the broadcast TV industry at the NATPE conference in Jan '08. My praise elicited a number of incredulous email responses from readers who vehemently disagreed, thinking Zucker's performance merits him being sent to the woodshed rather than to the CEO's office for the new Comcast-NBCU JV.

To be sure, NBC's abysmal performance under Zucker (falling from first place to fourth in prime-time), will be one of his legacies, but I take a broader view of his tenure. A good chunk of NBCU's cable network portfolio came to the company via the Vivendi deal around the time Zucker took over responsibility for cable. Since that time the networks have grown strongly in audience and cash flow has doubled from about $1 billion to a projected $2.2 billion in '09. NBCU added Oxygen (which combined with its iVillage property makes a strong proposition for women-focused advertisers) and The Weather Channel, in a joint buyout with two PE firms.

While Zucker's hiring of Ben Silverman to run NBC was a misstep, NBCU has enjoyed stability on the cable side, with two of the highest-regarded women in TV, Bonnie Hammer and Lauren Zalaznick cranking out hit after hit for their respective networks. A CEO's tenure is always a mixed one, with plenty of wins and losses. It can be hard to know how much of the wins to ascribe to the CEO personally, rather than the executives below, but at the end of the day, NBCU was transformed from a single network company to a cable powerhouse; even Zucker skeptics have to give him some credit for this.

3. Comcast rebrands On Demand Online to Fancast Xfinity TV - yuck! - Largely lost in the NBCU commotion this week was news that B&C broke that Comcast is changing the name of its soon-to-be-launched TV Everywhere service from On Demand Online to Fancast Xfinity TV. Yikes, the branding gurus need to head back to the drawing board, and quick. The name violates the first rule of branding: pronunciation must be obvious and easy. Not only is it unclear how you pronounce Xfinity, it's a an unnecessary mouthful that doesn't fit with any of Comcast's other workmanlike brands (e.g. "Digital Cable," "On Demand," "Comcast.net"). If we're talking about a new videogame targeted to teenage boys, Xfinity is great. If we're talking about a service that provides online access to TV shows, there's no need for something super-edgy. I'd suggest just sticking with "On Demand Online." But even more importantly, priority #1 is getting the product launched successfully.

4. Sports Illustrated demo builds tablet computing buzz - If you haven't seen SI's demo of its tablet version being shown off this week, it's well worth a look at the video here. Never mind that there isn't such a tablet device on the market yet, the rumors swirling around Apple's planned launch of one has created an air of inevitability for the whole category. As the SI demo shows, a tablet can be thought of a larger version of an iPhone (likely minus the phone), providing larger screen real estate to make the user experience even more interesting. It's fascinating to think about what a tablet could do for magazines in particular, along the lines of what the Kindle has done for books. The mobile video and gaming possibilities are endless. Judge for yourselves.

Enjoy the weekend!

Daisy Whitney and I are pleased to present the 42nd edition of the VideoNuze Report podcast, for December 4, 2009.

Today's sole topic is of course the big news of the week, Comcast's acquisition of NBCU. Daisy and I chat about the winners/losers/unknowns that I detailed in my post yesterday. There are a lot of aspects to the Comcast-NBCU deal and the new entity will have wide-ranging implications for the media industry. Listen in to learn more.

Click here to listen to the podcast (15 minutes, 24 seconds)

Click here for previous podcasts

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

With Comcast's acquisition of NBCU finally official this morning (technically, it's not an acquisition, but rather the creation of a JV in which Comcast holds 51% and GE 49%, until GE inevitably begins unwinding its position), it's time to assess the winners, losers and unknowns from the deal, the biggest the media industry has seen in a long while. I listened to the Comcast investor call this morning with Brian Roberts, Steve Burke and Michael Angelakis and reviewed their presentation.

Here's how my list shakes out, based on current information:

Winners:

1. Comcast - the biggest winner in the deal is Comcast itself, which has pulled off the second most significant media deal of the decade (the first was its acquisition in 2002 of AT&T Broadband, which made Comcast by far the largest cable operator in the U.S.), for a relatively small amount of upfront cash. Comcast has long sought to become a major player in cable networks, but to date has been able to assemble an interesting, but mostly second tier group of networks (only one, E! has distribution to more than 90 million U.S. homes).

The deal moves Comcast into the elite group of top 5 cable channel owners, alongside Disney, Viacom, Time Warner and News Corp, with pro-forma 2010 annual revenues of $18.2 billion and operating cash flow of $3 billion. It also provides Comcast with a huge hedge on its traditional cable/broadband/voice businesses, as the JV, on a pro-forma basis would be 35% of Comcast's overall 2010 revenue of $52.1 billion, though importantly only 18% of its cash flow of $16.5 billion. On the investor call, Roberts emphasized that the deal should not be seen as the company diminishing its enthusiasm for the traditional cable business, but given the downward recent trends in fundamentals (vividly shown in slides from my "Comcast's Digital Transformation Continues" post 3 weeks ago), the conclusion that Comcast will be relying on its content business for future growth is inescapable.

2. Cable networks' paid business model/TV Everywhere - With Comcast's executives' platitudes about cable networks being "the best part of the media business," the fact that cable networks will contribute 80%+ of the JV's cash flow and the ongoing travails of the ad-supported broadcast TV business, the deal puts an exclamation mark on the primacy of the dual-revenue stream cable network model and Comcast's commitment to defending it (see "The Cable Industry Closes Ranks" for more on this.)

The deal can also be seen as cementing the paid business model for online access to cable networks' programs. Comcast is committed to having online distribution of TV programs emulate the cable model, where access is only given to those consumers who pay for a multichannel subscription service. Much as they may resist acknowledging it, Hollywood and the larger creative community must see Comcast as doing them a huge service by preserving the consumer-paid model, helping the video industry avoid the financial fate of newspapers, broadcasters and music. To be sure, some consumers will cut the cord and be satisfied with what they can get for free online, however it is unlikely to be a large number any time soon. As for aspiring over-the-top providers, they'll need to look outside the cable network ecosystem to generate competitive advantage.

3. Jeff Zucker - The current head of NBCU will migrate into the role of CEO of the JV, greatly expanding his portfolio and influence. Zucker has fought the good fight to preserve the NBC network's status, rotating in new creative heads, shifting Leno to primetime, backing Hulu, etc, but the reality, as he pointed out earlier this year, is that NBCU in his mind has long since become a cable programming company. I've been a Zucker fan since seeing him speak at NATPE in '08 when he laid out a sober assessment of the broadcast business. Through solid acquisitions and execution, Zucker has proved himself to be far more than the wonderboy of "Today" - he's going to fit in well at Comcast and be a great addition to its executive team.

Losers:

1. NBC broadcast network and the JV's 10 owned and operated stations - While Comcast executives said they "don't anticipate any need or desire to divest any businesses" and "take seriously their responsibility" to the iconic NBC brand, the reality is that with the broadcast business contributing just 10% of the JV's pro-forma annual cash flow, the network, and especially the stations, are not just in the back seat of the JV, they're in the third row. Though broadcast contributes 38% of the JV's pro-forma revenue and the deal is being struck near the bottom of the advertising recession, it's hard to see things improving much. Exceptions are the sports division (more on that below), the TV production arm and possibly the news division. The only thing saving the stations is retrans and Comcast's need to appease regulators to get the deal done and keep the regulators at bay thereafter.

2. Other cable operators, telcos and satellite operators - It's never good news when one of your main competitors owns the rights to a good chunk of the key ingredients in your product, yet that's the reality for all other cable operators, telcos and satellite operators. Sure Comcast must be disciplined about throwing its weight around too much, but if these distributors cried when NBCU (and other big network owners) forced bundling and drove fee increases, they haven't seen anything until Comcast runs the renewal processes. With 6 channels having 90+ million homes under agreement plus many others in the JV's portfolio, Comcast is in a very strong negotiating position. As the world moves online, the threat that Comcast eventually says to hell with other distributors and goes over the top itself (a scenario I described here), other distributors have even bigger problems ahead.

3. GE - Yes GE gets about $15 billion in cash and a graceful exit from NBCU, but 20 years since incongruously acquiring NBC, the question burns even brighter, what was GE doing in the entertainment business in the first place? Hasta la vista GE, time to focus on manufacturing turbines and unraveling the woes at GE Capital.

Unknowns:

1. Do content and distribution go together any better this time around - With the disastrous results of AOL-Time Warner still fresh in the mind, it's fair to ask whether vertical integration will work any better this time around. Sensitive to the issue and no doubt anticipating questions on it, Roberts said on the call that this is "a different time and a different deal" and, pointing to News Corp-DirecTV, noted that sometimes vertical integration does work. In addition, he highlighted that the deal's financials are not predicated on achieving any elusive synergies. Still, aside from the obvious benefits of getting bigger in cable networks, the primary reasons cited for Comcast pursuing the deal still have synergy at their core: a slide that clearly says that "Distribution Benefits Content" and "Content Benefits Distribution." As always there are plenty of opportunities to pursue in theory; the challenge is executing on them given the rampant conflicts and turf battles that inevitably ensue.

2. Hulu's future - the online aggregator was literally not mentioned once in the Comcast presentation and its logo only appears on just one of the 36 slides in the deck, yet its presence is hard to underestimate. Hulu is the embodiment of the free, ad-supported premium video model that Comcast is so fiercely committed to combating. So how does it fare when one of its controlling partners soon will be Comcast? In response to a question, Steve Burke said he sees "broadcast content going to Hulu" and that "Hulu and TV Everywhere are complementary products." He also tersely dismissed the much-rumored idea of a Hulu subscription offering. It's impossible to know what becomes of Hulu, but with such divergent interests among the owners, it wouldn't surprise me if Hulu is unwound at some point post closing.

3. ESPN's role - With the JV's NBC Sports assets, plus Comcast's Versus, regional sports networks and Golf Channel, the new JV is primed to play a bigger role in national sports. While Fox Sports and TNT have skirmished for high-profile rights deals with ESPN, the new JV has a much stronger hand to play. It's fair to wonder whether Comcast, which likely sends Disney a check for $70-80 million each month to carry ESPN to its 24 million subscribers, won't at some point say, "hey we can do some of this ourselves" and move to become a bona fide ESPN competitor. In fact, ESPN figures into a far larger Comcast vs. Disney story line in the media industry going forward. The two companies are incredibly dependent on each other, and yet are poised to become even tougher rivals. Expect to hear much more about this one.

4. Consumers - last but not least, what does the deal mean for consumers? Likely very little initially, but over time almost certainly an acceleration of digitally-delivered on-demand premium content - but at a price. Comcast has the best delivery infrastructure, with the JV, soon premier content assets and a persistent, if sometimes incomplete (as with VOD, for example) commitment to shape the digital future. I expect that will mean lots of experimentation with windows, multiplatform distribution and co-promotion across brands. Washington will scrutinize the deal thoroughly, but with continued public service assurances from Comcast, will eventually bless it. Then it will be vigilant for anything that smacks of anti-competitiveness. Consumers should buckle up, the next stage of their media experience is about to begin.

What do you think? Post a comment now.

Oprah Winfrey's decision last week to voluntarily wrap up her long-running talk show captured the biggest headlines, but a more subtle takeaway message should also be noted: even in the broadband age where content providers can connect directly to their audiences, there's still enormous value in working through distributors who are willing to pay a guaranteed monthly fee to carry a 24/7 linear channel. In this case the channel is new Oprah Winfrey Network (OWN), which is a 50-50 joint venture with Discovery Communications and will be Oprah's main business focus.

OWN is actually taking over the 70 million home (U.S.) carriage that Discovery established for its digital channel Discovery Health Channel which didn't generate much ratings success. This allows OWN to count on an established revenue stream from its distributors before a single program has been put on air or a single ad has been sold. As a result, a portion of the new venture's financial risk is mitigated from the start. Of course there will still be huge pressure on OWN to create programs that have sustainable audience appeal (the bread and butter of all networks, cable or broadcast), but the cushion of those monthly distributor payments cannot be underestimated.

I've said for a long time that the fundamental differentiating aspect of broadband video is that it is the first open video delivery platform. By open I mean that content providers are able to reach their intended audiences without requiring deals with any third party cable operator, satellite operator, telco, cable network, broadcast network, local broadcast TV station, etc. If you're a producer, that's incredibly liberating: just put your video up on a server and online audiences have immediate access to it. YouTube's 10 billion+ monthly streams, many of which are user-generated, attest to how powerful a concept open video delivery is.

Of course the problem is that just because you can produce video and make it available, doesn't mean it has any economic value to an advertiser or to a distributor. By definition distributors only seek to take on products that they believe have value in the retail marketplace. In cable's early days, operators were desperate to differentiate themselves as more than retransmitters of broadcast stations and were willing to take on channels with untested and often quizzical formats: 24 hour news (CNN), music videos (MTV) and low-popularity sports (ESPN), among others. Over time the fees these channels and others command have grown significantly, helping fuel their programming budgets and in turn their audience popularity.

A comparable paid distribution model has not yet developed for broadband video. For a time I believed that sites like Hulu, Joost and Veoh might be able to develop such a model given the amount of capital that each had raised. Only Hulu now has the potential to do so, though there's no indication as yet that it intends to. Absent a paid distribution model, the vast majority of broadband-only video producers are reliant on advertising, just like broadcast TV networks. Some broadband producers are proving that an ad-only model works, yet there's no question a viable paid distribution model would be a tremendous boost for the industry.

Watching Revision3's Tekzilla on TV the other night via Roku, I was reminded that until broadband video is widely available on TVs it will remain hard for any new paid distribution model to take root. That's because consumers will require a comparable living room viewing experience before many of them show a willingness to pay. The good news is that this experience is coming, as millions of TVs will soon have broadband access, either on their own or through a connected device (e.g. Roku, Xbox, Apple TV, etc.). Until then though, the paid distribution model will only be available to Oprah and others with gold-plated appeal.

What do you think? Post a comment now.

TV Everywhere is getting another shot of momentum this morning as thePlatform, one of the leading online video platform companies (and a subsidiary of Comcast) is rolling out new features aimed at giving TV networks greater control of their programs in the coming TV Everywhere world.

The key new feature is what thePlatform calls an "Authentication Adaptor," which is a mechanism for networks that want to offer their programs on their own web sites to authenticate users as current paying video subscribers of a multichannel video provider (recall that under current TVE plans it is a requirement to be a multichannel video subscriber in order to access programs online). The authentication adaptor works by instantly checking with appropriate multichannel providers' billing systems and returning a yes/no authentication response for that user.

If the user is authenticated, then the adaptor verifies that the specific program is available for viewing to that user, depending on what tier of service the user subscribes to. thePlatform does this by mapping each individual show to specific channels that each have an ID. The channel IDs are in turn mapped to the multichannel provider's subscription packages. For example if you were to try watching "Entourage" on HBO.com, but you didn't subscribe to HBO the linear channel via your service provider (e.g. Comcast, Time Warner Cable, etc.), your request would be denied. As one can imagine, with the endless permutations of shows, networks, subscription packages and multichannel providers, linking all of this together and delivering fast response times to the user is quite a challenge.

What's also interesting here is that if indeed a request has been denied, a marketing opportunity has been created for both the TV network and the multichannel provider. In the Entourage example above, the denial message could be accompanied by offers to watch now on a pay-per-view basis or to instantly become a subscriber to HBO via Comcast, or to buy the DVD, etc. Or maybe the offer is just to watch free clips to improve sampling. thePlatform supports the creation of these types of rules and integration to appropriate 3rd parties. This is a great example of how TV Everywhere also opens up the instant-gratification online economy to networks and video providers.

The new features gain in importance as thePlatform is also announcing this morning more than 20 TV networks have recently become customers including Fox Sports Networks, E!, G4, Style, Comcast Sports Group (a group of regional sports networks), Travel Channel, Big Ten Network and others yet to be named. As TV Everywhere rolls out next year, TV networks will become increasingly interested in offering their programs themselves, in addition to offering access on their distributors' web sites.

Separate, thePlatform is also announcing today that it is working with Rogers, which is Canada's leading multichannel video provider, on an online video initiative. Though details aren't provided, Rogers recently disclosed that is also pursuing TV Everywhere, so it's probably logical to put two and two together. thePlatform also provides video management services to large American operators Cablevision, Cox, Time Warner Cable, in addition to parent company Comcast. Between the video provider deals and the TV networks deals, thePlatform finds itself squarely in the middle of the TV Everywhere action.

What do you think? Post a comment now.

Yesterday's Multichannel News described a deal between MaxPreps.com and Comcast that shows how well broadband video and video-on-demand fit together, a notion I suggested earlier this year. In the deal, MaxPreps, a provider of high-school sports content (which is owned by CBS), is producing video content in the Houston market for exclusive distribution on Comcast's VOD system. The deal gives Comcast a local sports differentiator vs. satellite and telco competitors, while for MaxPreps it gives valuable access to TV viewers.

Gluing the parties together is Clearleap, a technology provider I last wrote about here. As Braxton Jarratt, Clearleap's CEO explained to me, MaxPreps uses a team of freelance videographers to shoot and edit the video. They're given access to dedicated Clearleap accounts so that they can upload the video for a local MaxPreps content manager to review their work.

The content manager uses Clearleap to make edits, set the release schedule, create playlists if desired, and approve the final package. Clearleap then transcodes the video to the appropriate format and pushes it to Comcast for general availability. Braxton said an hour-long football game could be live within 15 minutes for VOD viewing and that the deal was operationalized in just a few weeks, with very limited capex. In effect the process helps turn VOD into a dynamically programmed content outlet much the way we think of the web.

For those accustomed to working solely online, constant, near real time content updates are routine. But for anyone who has worked with VOD systems, which are characterized by long lead times to get content ingested, prepared and made live, this workflow is a breakthrough. In fact, the MaxPreps-Comcast deal and workflow provides a possible glimpse into how a hybrid broadband-VOD model could work in the future and again why incumbent video providers who already have a set-top box sitting in the living room enjoy certain advantages.

As I illustrated in last week's post about Comcast's results over the last 3 years, incumbent video providers are in a steel cage match for subscribers, particularly higher-spending ones who value digital options. Yet it has become exceptionally difficult to differentiate through exclusive content, as most channels now seek as wide distribution as they can get.

For cable companies, whose roots are in their local communities, local sports VOD content could be a meaningful point of difference. And sports are just a starting point. One can imagine local entertainment, events, and localized versions of national programs all created/managed via the web, but viewed by consumers on VOD. The key is having the technical ability to cost-effectively collect and manage the video, and then insert it into the VOD system.

If the MaxPreps-Comcast deal in Houston scales to additional territories, and Comcast rolls out additional VOD content, I expect other video providers will adopt a similar model.

What do you think? Post a comment now.

Talk about the big bang theory of PR: Sezmi, the next-gen video provider, is unveiling today a public pilot project in Los Angeles, pricing for its 2 tiers of service, and $25 million in additional financing. Dave Allred, Sezmi's SVP of Marketing and Product Management briefed me on the news last week.

Sezmi hit my radar 2 years ago, when, as "Building B," its co-founders Buno Pati and Phil Wiser began pulling back the curtains on a bold plan to create a full substitute for cable/satellite/telco TV service. Key to the company's plan was its "FlexCast" model for delivering video via digital broadcast and broadband networks, to a proprietary receiver which is packed with a terabyte of storage. Having seen multiple demos of the product, I've been consistently impressed with how it combines traditional linear TV with on-demand, broadband, DVR, personalization, social networking, advanced advertising and sophisticated navigation.

While Sezmi is the sleekest multichannel video experience I've seen, I've continued to be concerned about the following questions: Was the system technically sound and could it scale? Would the company overcome venture capitalists' nuclear winter to satisfy its fund-raising needs? Could it land a full complement of cable programming deals to offer a bona fide alternative to incumbent providers? Would Sezmi's eventual pricing live up to the company's assertions that it would be "substantially less" than today's providers? Today's announcements begin to answer those questions.

The pilot, which Dave says will be open to about a thousand LA-area residents will be the first time Sezmi will go beyond successful friends and family technical trials. The goals of the pilot are to do a final shakedown of the service before broader launch, test marketing collateral and start to scale up in advance of a Q1 rollout. The pilot will also begin a process of close scrutiny by consumers and competitors of how well Sezmi stacks up.

Pilot participants will get their service for free and be offered equipment discounts to continue after the pilot wraps up. Dave explained that going forward Sezmi plans to offer 2 tiers of service, a $24.99/mo "Supreme" option that includes all local broadcast channels in the LA market, many familiar basic cable channels (the pilot includes 23 channels, from Turner, NBCU, Discovery, Viacom and Rainbow), broadband programming from YouTube and others. Premium programming from networks like HBO, Showtime and Starz will be available on a subscription VOD basis (i.e. no linear feed will be available). A "Select" tier for $4.99/mo, which will carry just the broadcast channels. Subscribers to both tiers can either buy the equipment for $299 or lease it for $11-$12/mo (for each TV).

Sezmi's value-pricing will invite immediate comparisons to DISH Network, which has been the low-price leader in video services. On the other hand, Sezmi's next-gen technology approach will resonate most with early adopters. Dave said that the company's research consistently found a sweet spot of consumers interested in having DVR and HD capability, plus an integrated video system, but unhappy about paying $60-$70/mo, which is the typical monthly rate from cable/telco competitors once promotional discounts expire. Sezmi's belief is that people are "over-served" by today's providers and that by focusing on the basics, executing on them with a tech-forward but approachable solution and pricing aggressively the company will gain share. Its marketing strategy feels similar in some ways to what JetBlue has pursued in the airline industry.

Prospective customers will first focus mainly on Sezmi's content. As yet, Sezmi does not have deals with all the major cable programmers. Most prominently missing from the current list are the channels owned by Disney-ABC, Fox, Scripps and A&E. While its likely to assume Sezmi will eventually close those deals, until they do the company is playing with one hand tied behind its back (it's impossible to compete effectively without, for example, ESPN, Fox News or Food Network). The company's goal is to carry channels that account for 80-90% of consumers' actual viewing.

Sezmi will not have the full array of channels now available in HD. Dave explained that Sezmi's bandwidth constraints forced it to make choices. For some viewers that won't matter if the price is right; for others it will be a deal-breaker. Sezmi also will not be carrying linear feeds of premium channels like HBO, Showtime and Starz, instead focusing on offering them on a subscription VOD basis, plus offering thousands of pay-per-view movie titles. Lastly, Sezmi will have limited appeal for sports fans as it lacks content like NFL Sunday Ticket, RedZone, MLB packages and popular regional sports channels.

Still, Sezmi has a lot going for it. Beyond low price, the personalization features are likely to resonate most. Once Sezmi learns a user's profile, it automatically records programs, and organizes them into each family member's "Zone." Pressing the "mi" button on the remote provides a customized view of that particular content. Sezmi also seamlessly integrates broadband content, today from YouTube, but in the future from many others into the overall experience.

As I've described before, Sezmi's model is to partner with telcos, broadband ISPs and retailers for its go-to-market strategy (there's an unnamed partner involved in the pilot). There will be heavy marketing costs involved to educating the public about Sezmi's benefits, so partnerships are essential. While no names are being cited yet, Dave alluded to a number of key partners, who will be announced in January. I'd bet on AT&T for one, although anyone who wants to be in the video business likely will have a look at Sezmi as well, particularly those seeking to offer a triple play bundle.

Despite all the talk about over-the-top video and cord-cutting, Sezmi is still the only bona fide new competitor I'm aware of that could be a replacement for cable/satellite/telco services. The company still has a long road ahead of it, but today's announcements are solid evidence of its progress.

What do you think? Post a comment now.