Posts for 'Devices'

Among the many partnership announcements at CES this week, there are a number worth highlighting. Today I focus on the following three:

Viacom syndication - Viacom announced syndication deals for MTV Networks' stable of content with five leading broadband video sites: Dailymotion, GoFish, Imeem, MeeVee and Veoh. As those of you who have been following my previous posts know, I believe syndication is a critical engine in driving the advertising business model, which itself is the key to broadband video succeeding. As a result, I follow these syndication deals closely.

I've previously been critical of MTVN which appeared reluctant about syndicating its content when it launched its DailyShow.com destination site. However, with its recent deal with AOL, and now these five deals, it appears that MTVN does in fact believe syndication is the way to go. As one of the biggest cable network groups, MTVN is a key barometer for other networks' moves, so I view this as a real positive for the market.

Panasonic/Google - In this deal, Google and Matsushita announced that YouTube videos and Picasa photos would be directly accessible on new model Panasonic HDTVs launching in Q2 '08. Ordinarily I wouldn't be too excited about a deal like this, a permutation of which we've seen with other TV makers such as Sony.

Yet this one rises in potential importance because YouTube is not just the most popular video site - with 40% of all video traffic - but because Google is determined to turn YouTube into a platform for legitimate content distribution. This was underscored by the Sony mini-sode deal also announced this week, and the many partnerships YouTube has already struck with premium content providers. If successful (and there are many if's to be sure), YouTube would be far more than a scraggly collection of UGC. So, marry a broad-based premium video aggregator to HDTVs and you could see a new device/content model emerge.

BitTorrent device deals Netgear and D-Link - In a less publicized move, BitTorrent announced expanded deals with Netgear and D-Link covering a range of home networking products, with an emphasis on HD distribution. BitTorrent, which has been steadily legitimizing itself from its P2P file-sharing roots, has launched an aggressive SDK program called BitTorrent Device Partners, intended to permeate the market with its client software. BitTorrent also integrates easy access to its digital download store with these partners as well.

While I'm not very bullish about the market potential of bridge devices from companies like Netgear and D-Link, I do believe that P2P distribution has a real role to play in content distribution, especially for heavy HD files. I continue to see P2P as more of a "peer assist" play. To the extent that BitTorrent can continue getting its software into multiple devices, it gains validation and strengthens its potential to be a meaningful partner in the larger content distribution ecosystem.

Share your thoughts on these deals, and suggest others you think are noteworthy from CES!

Yesterday's announcement by Netflix and LG Electronics that they are partnering to develop a new set-top box generated a lot of coverage. For me the deal shows at least 2 things. First, there is an endless reservoir of optimism concerning consumers' willingness to adopt standalone devices for broadband-delivered video. And second, that Netflix, which has been all over the board in the last couple years in trying to define a broadband delivery strategy, has seemingly made yet another misstep in this critical area.

Regarding the optimism about standalone devices, as many of you know, I recently wrote about this in a post entitled "Broadband Video on TVs is a Mirage" in which I concluded that these broadband appliances are unlikely to gain widespread market appeal. Though little information was revealed about the Netflix-LG box, for now, I don't see any reason to believe that this new box will be an exception to the logic I laid out in that post. At best I view standalone broadband appliances (e.g. AppleTV, Vudu, Moviebeam, Akimbo, etc.) as appealing to only a small sliver of consumers.

My logic applies to Netflix-LG as follows: how many people are realistically going to shell out $400 (assumed price) for a new box, plus spend the time involved to install it, when the principal benefit is to be able to watch a small subset (6K out of Netflix's current 90K catalog) of content Netflix already makes easily available on the robust DVD format? I'd say maybe 10% of Netflix's current base of 7 million, max. That would be 700K boxes TOTAL - hardly the kind of numbers that make a CE executive's eyes pop.

A greater issue is that this new box seems to represent just the latest in a pattern of dubious moves by Netflix, coupled with poor communications, regarding how it intends to gracefully migrate from its current DVDs-through-the-mail approach to succeed in the broadband era.

For the last two years Netflix has publicly appeared to jump from one broadband approach to the next. For example, yesterday's box announcement was accompanied by news that Anthony Wood, whom Netflix brought on board just 8 months ago as its V.P. of Internet TV, would be departing from the company, reversing Netflix's previous plan of developing its own box (which itself was an ill-considered idea).

The LG box approach continues Netflix's pattern of cloudy planning and communications. On a day that should have been all about articulating why this new co-developed LG box is, at last, the correct approach, Reed Hastings, Netflix's CEO seemed to veer completely off message in his remarks to the NY Times, stating that "We want to be integrated on every Internet-connected device, game system, high-definition DVD player and dedicated Internet set-top box. Eventually, as TVs have wireless connectivity built into them, we'll integrate right into the television."

In yesterday's WSJ, Nick Wingfield wrote a lengthy article outlining the 5 key challenges encountered by the myriad devices aimed at bringing broadband video to TVs. He lists them as: consumer resistance to adding another box, complications in setting them up, cost, lack of content and slow downloads.

The article has a generally optimistic tone, posing "solutions" to each of the challenges. You're left with the impression that mass-scale broadband video on TV could actually happen sometime soon.

At the risk of being the "skunk at the picnic," I have recently come to believe that broadband video on TVs is a mirage, tantalizingly close yet in reality nowhere on the horizon. Unless there is some new box or approach I've yet to hear about, I've regrettably concluded that broadband video will be tied to computers, and select mobile devices, for a long time to come.

The minority of consumers who will actually see broadband video on their TVs will either (1) shell out big bucks to buy a broadband appliance such as Vudu or Apple TV, (2) tackle the challenge of connecting their TVs via wireless networks (3) use a device built for another primary purpose, such as Xbox 360 or TiVo, to selectively augment their viewing with broadband-delivered choices or (4) use a service provider that has decided to throw in a few morsels of broadband video.

Those of you with good memories will remember that in a Broadband Directions newsletter at the end of 2007 I wrote bullishly about Apple TV's ability to become the breakout convergence device, if only Apple opened up the box to all broadband content. Instead Apple has kept the box closed, available for iTunes downloads and selected YouTube videos. Consequently it has been a flop.

To help explain why products succeed or not, I tend to reach for Prof. Clayton Christensen's abiding lesson that people "hire" products to do "jobs" they have to be done. In other words, products that meet the buyer's true desires are the ones that succeed.

For me, the "job" that consumers increasingly want "done" is to be presented with an integrated, easy-to-access service (not just a new box) that offers all video programming they value in an on-demand manner and priced appropriately. That's a tall order, but ultimately one which will drive wide-spread success of any new product in this space.

Some of the possibilities include TiVo, which believes in this "seamless" philosophy, though it is still dependent on current service providers (cable, satellite, telco) to deliver programming. ICTV has a very interesting approach, though it is also reliant on existing service providers. Building B is taking a bold approach that seems to meet the full test for success, though it's still too early to know whether they can successfully execute on their vision.

But hodge-podge, costly broadband appliances just create new inconveniences while only partially addressing true consumer needs. As a result, they're not going to find a broad market. And so, barring some other new innovation, most of the world will still be watching broadband video on their computers and some mobile devices for a long time to come.

Building B is major league stealthy company with an audacious vision for how consumers will access video content in the future. If it succeeds current multichannel video service providers (namely cable and satellite providers) will feel the brunt.

Building B has a blue chip executive team and pantheon of accomplished investors and advisors. It made headlines a few months ago when it announced a $17.5M funding round led by Morgenthaler Ventures, OmniCapital and Index Ventures.

Last week I had a briefing with Buno Pati, CEO/Co-founder and Phil Wiser (Chairman/President/Co-founder). They are both highly-experienced and successful technology executives who are also quite PR savvy. They know how to stay on message and close to their stealthy script. I needed to use my "virtual crowbar" persistently to try to pry a few new morsels of information out of them. From what I learned, it's a pretty cool story. Following is what I learned about what the company.

• TV must be the center of the consumer video experience, and today's service must be redefined
• Access to broadcast content is critical for success
• On demand, high def is in, linear, standard def is out
• Open access to robust wireless networks will be prevalent
• Advertising will be key value driver in the future
• Price of storage is going to virtually zero;

Given all this, in Buno's words, "Building B's opportunity is to unify, simplify and deliver a video experience to consumers at a more palatable price." This simple sounding statement belies an excruciatingly tall order.

The company is creating a next generation set top box of sorts that will deliver the gamut of video: TV, movies and broadband. Buno and Phil don't see their box as comparable to ones from say Akimbo, Vudu or Apple TV. These are really broadband-only augments, whereas Building B aspires to be a full-on substitute for cable or satellite. Their box will be able to access content through both wired and wireless delivery infrastructures. One engineering challenge is to match content with the optimal delivery network. So for example, one-to-many broadcast networks might be delivered over wireless while niche and interactive content would use broadband.

But Building B doesn't see a model selling the box at retail (though Phil concedes this might be a secondary outlet). Others have tried and failed at retail. Rather, its go-to-market strategy contemplates partnering with service providers like telcos and ISPs which want or need to be in the video business, but don't have the stomach or cash to upgrade their networks to do so.

Building B plans to develop a video entertainment service offering incorporating its box which can be made available turnkey to partners. These partners could include smaller telcos, particularly in rural areas, which have traditionally stapled on a satellite offering to fill out their triple play bundle. Or they could be larger telcos like AT&T or Verizon, who might augment their fiber rollouts with Building B's approach. Or they could be broadband ISPs, portals and others who aspire to be in the video business.

A key hurdle for Building B is assembling a fully competitive video lineup to what today video providers offer. This is no easy feat. Cable programmers in particular are reluctant to make advantageous deals with new distributors for fear of antagonizing existing cable and satellite affiliates. Yet Buno feels confident that Building B will gain access to major cable networks' fare, on demand, and on deal terms that are both economic to the company and non-disruptive to these networks' current arrangements. Accomplishing these deals alone would be noteworthy.

Lastly, Building B envisions delivering a personalized and easy-to-access service. Buno speaks of having a "dumbed down approach" aimed at satisfying only primary consumer needs and routines. Given its emphasis on HD, this is the part of the Building B vision that must necessitate a colossal hard drive in the box to cache content for ready access. Indeed, Buno said the company is "betting heavily that the price of storage is going to zero." If this assumption is off the bill of materials on storage alone could bust the box's budget.

Listening to Building B's vision, it's hard not to get enthusiastic about the world it seeks to create. As a consumer it would be thrilling. Yet the technology landscape is littered with ambitious would-be contenders whose aspirations foundered when faced with real-world engineering, marketing and business model challenges. Building B is simultaneously climbing tall mountains in multiple directions. If it succeeds, it will become a big-time disruptor of today's business models. It's going to be fun to watch it try.

I recently caught up with Keith Kocho, founder of ExtendMedia to discuss how Extend is supporting SanDisk's recently announced Sansa TakeTV player and companion Fanfare application. In a recent review, I was impressed with SanDisk's approach, which is somewhat akin to the iPod-iTunes pairing. Extend (disclaimer, a VideoNuze sponsor) is playing a key behind-the-scenes role, which will become especially important as FanFare transitions from its current trial model to a hybrid ad-supported and paid download approach.

Keith explained that Extend's OpenCASE product is providing the ability for SanDisk to manage Fanfare's content catalog, create the business rules for each piece of content and deliver encryption depending on the rules. OpenCASE also allows SanDisk to bake ads into the video file as its currently doing, or dynamically insert them as SanDisk intends to do in the next phase.

The screen grab below illustrates how a piece of content uploaded to OpenCASE can be delivered into Fanfare with appropriate rules.

Kate Purmal, SanDisk's SVP/GM for Digital Content offered this perspective, "OpenCASE is seamless and flexible and has proven to be truly 'plug and play; with our encryption and DRM software with Extend's business rules layered on top. As we expand into our next phase with more content and commerce options, OpenCASE is going to be able to easily scale up with Fanfare."

I think Kate's latter point hits the nail on the head: in the future, for any of these digital video stores to succeed - whether they are tied to a device, as Take TV is to Fanfare, or they aren't - the digital video stores of the future are going to all offer hybrid approaches for consumer to access content.

The concept of an iTunes, which only offers an a la carte purchase/download model is going to quickly become antiquated. Instead consumers will be offered choices including a la carte downloads, ad-supported downloads, ad-supported streaming, ad-supported and paid subscriptions and more. This is one of the hallmarks of broadband - that it offers content providers and aggregators unlimited monetization flexibility depending on the circumstances and rights. As such, I think that platforms such as OpenCASE and others that can support flexible models are going to become increasingly valuable.

I saw an early version of this product at the NAB Futures Summit last April (CNET's Brian Cooley brought one along) and for simplicity it's hard to beat. You download the Fanfare software (a snap), plug the device into your USB, download files, and then plug the device into its cradle, which is connected to your TV. What I haven't seen is the UI for the TV, so I can't comment on that.

Considering I witnessed my 8 year-old nephew figure out how to plug his digital camera into his TV to do slide shows, I'd expect Sansa TakeTV to appeal to a pretty wide audience of non-techies. And at $100 for the 4GB model (saves about 5 hours of video), it's a solid "stocking stuffer" for the upcoming holiday season.

Sansa TakeTV is another example of the limitless innovation underway to converge the PC/broadband video world with the TV world. To date most of the solutions here (except AppleTV and Xbox probably) have been pretty techie, requiring some degree of user intervention to marry the PC and the TV over the home wireless or wired network. It's safe to say that none of these devices has yet caught on.

Sansa TakeTV's issue is whether it can be anything more than a short term, low end solution. A lot of the answer is wrapped up whether USB Flash storage can scale up to inexpensively handle lots of video. For example, the low-end AppleTV holds 40 GB and costs $299, while the 16GB USB Flash drives I found online approach $200 alone, never mind the software and other component costs in the Sansa Take TV package. (see below).

However, if anyone's going to figure out how to make USB Flash storage competitive for video, it'll be SanDisk. In the meantime, there's nothing wrong with accepting Sansa Take TV for what it is - an easy-to-use, low end product for the masses to watch high-quality broadband video on their TVs.

As many of you are aware, Comcast has been on the cusp of kicking off this trial for some time now, which will let real users experience the joys of TiVo software running inside a Comcast digital set-top box. This will mark a milestone for Comcast in delivering a better user experience than the generic DVR feature that it and other cable operators rolled out a couple of years ago.

After hosting Jeff Klugman, TiVo's Senior VP, GM of its Service Provider and Advertising Engineering Division for a "fireside chat" at a cable industry conference last July, I became very bullish on the opportunity for TiVo to transform itself through these cable deals into a software and services powerhouse. In other words, long-term getting out of the high-cost, low-margin consumer device business.

Running a successful trial with Comcast is all-important to TiVo and they've been working for 2 years on this integration. Success will likely mean wide rollouts with Comcast, followed by #3 operator Cox (with whom TiVo already has a deal), and then others no doubt to follow. I'll be keeping you posted on my experience when I get the box. If it works as advertised it's going to be a killer device.