Posts for 'Satellite'

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).

The 2010 Consumer Electronics Show (CES) is now behind us. There were tons of announcements to come out of this year's show, including many in the online and mobile video areas. Increasingly a core focus of new devices is how to playback online and mobile-delivered video, how to move it around the consumer's house and how to make it portable. Following is a filtered list of the product announcements (or pertinent media coverage if no release was available) that I found noteworthy. They are listed in no particular order and I'm sure I've missed some important ones - if so, please add a comment with the relevant link.

DISH Network Partners with NeuLion to Distribute Live International TV Channels Through IPTV Platform

Boxee box internals revealed. NVIDIA Tegra 2 FTW

Netgear Collaborates with Intel to Launch TV Adapter for Intel Wireless Display, an Intuitive and Easy Way to View Entire Laptop Screen on HDTV Wirelessly

Syabas Announces Popbox for Big Screen Everything

Sling Media Announces Support for Adobe Flash Platform in Hardware and Software Products

LG Electronics Expands Access to Content-on-Demand with New High-Performance Blu-ray Disc Players

ESPN 3D to show soccer, football, more

Discovery Communications, Sony and IMAX Announce Plan to Launch First 24/7 Dedicated 3D Television Network in the U.S.

TV Makers ready to test depths of market for 3D

DirecTV is the First TV Provider to Launch 3D

DISH Network Introduces TV Everywhere

Microsoft Unites Software and Cloud Services to Power New TV Experiences

FLO TV and mophie to Bring Live Mobile TV to the Apple iPhone and iPod Touch

Broadcom Drives the Transition to Connected Consumer Electronics at 2010 International CES

New NVIDIA Tegra Processor Powers the Tablet Revolution

Digital Entertainment Content Ecosystem (DECE) Announces Key Milestones

Disney offers KeyChest, but where is the KeyMaster?

DivX Launches New Internet TV Platform to Redefine the Future of Entertainment

Cisco Eos Social Entertainment Platform Expands Footprint with New Customers, Feature; Introduces Partner Ecosystem

Blockbuster, ActiveVideo Announce Agreement for Cloud-based Online Navigation

Brightcove Expands Online Video Distribution to Millions of Internet-Connected Televisions with Yahoo TV Widgets

Skype Ushers in New Era in Face-to-Face Online Video Communication

Rovi Grows Content Providers List to Include More Movies and TV Shows in its Next-Generation Media Guide

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.

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.

When boxee announced it raised a $6M second round last week it caught my attention for two reasons. First, it was further evidence that broadband video-related companies are continuing to raise money right through the current economic meltdown (industry companies raised at least $64M in Q2 '09, $75M in Q1 '09 and $78M in Q4 '08).

Second, and more noteworthy to me was how much industry experience and insight now backs boxee. The new lead investor in the round was Boston venture firm General Catalyst Partners (joining prior investors Spark Capital and Union Square Ventures), whose portfolio includes broadband video companies like Brightcove, DECA, EveryZing, Maven Networks (acquired by Yahoo), ScanScout, ViTrue and Visible Measures.

Spark also has many investments in the industry, including 5Min, Adap.tv, EQAL, KickApps, Next New Networks, thePlatform (acquired by Comcast) and Veoh. And Union Square is one of the most active firms in the online media/advertising industry with stakes in MeetUp, OddCast, Twitter (with Spark), Tacoda (acquired by AOL) and others.

Beyond the firms themselves are the individuals helping steer boxee. Joining its board from GC is Neil Sequeira, a veteran of the cable industry, who was most recently Managing Director, Technology of AOL Time Warner Ventures. Already on the board is Spark's Bijan Sabet who knows the cable/satellite ecosystem equally well, having done stints at Moxi, WebTV and Apple and Union Square's Fred Wilson, who is deeply immersed in online media and writes a hugely popular blog.

I corralled Neil and Bijan (two old friends) for a phone interview late last week to explain boxee's future and where it fits into the current video ecosystem. Following is an edited transcript.

VideoNuze: What attracted you to invest in boxee?

Neil Sequeira: Three things. The boxee team, the market opportunity and our ability to be a great partner. We think boxee has the potential to be the next generation "Firefox for media," a widely- used consumer platform. That's incredibly exciting to us.

Bijan Sabet: We've been involved with boxee for a while now, and we're convinced the time is right for something like this. boxee has the right ingredients: it is open source and includes social media capabilities, an app store and a huge community of users/developers.

VideoNuze: boxee has gained a loyal following, but it doesn't have a business model yet. What do you see as boxee's business model and it what time frame must it develop it in order to succeed?

BS: boxee's still a very young company, but we have a number of ideas around business models. But the key is patience. The company has a very low burn rate, with around 16 people or so , most of whom are in Israel. The focus for now is building the product and the user base. And the company's been very successful doing that. Last year boxee had 10,000 users, now it has 600,000.

NS: It also has a very excited developer community. But I agree - patience is needed here. Too often companies can get themselves focused to early on a specific business model, which then constrains them. With the new funding, box has room to see how things evolve.

VideoNuze: Hulu recently told boxee to remove its content. What do you think boxee needs to do to win Hulu (and others) onto its platform?

NS: At a high level boxee we believe boxee is an incredible friend to content providers, and we want to work with everyone. We're big believers that consumers want access to everything and that's where the market will go over time.

BS: All of us are Hulu fans and of course would love to have Hulu on boxee. But each content provider has its own business model, and has to decide what works best for them. boxee will continue to be a content provider-friendly platform, where different business models can be used and different technologies integrated. We think that's powerful.

VideoNuze: How should established video service providers (i.e. cable/satellite/telco) regard boxee - as friend, foe, or something else?

NS: We want boxee to be regarded as friend and we think boxee can add a lot of value to the ecosystem. Consider for example, the case of TiVo. Early on it looked like a foe. But now see how Comcast is integrating TiVo into its set-top boxes and driving incremental revenue. boxee brings great search, apps and context to the broadband viewing experience. All that will drive usage of broadband Internet connections, which in turn helps "fill the pipe" making cable and telco Internet access services that much more valuable to users - and to their providers.

BS: Agreed. We believe that in an IP world, these things aren't either/or, mutually exclusive. Again look at Comcast, which has great assets like Fancast, and is now working on entitlements with TV Everywhere. boxee can help drive more value from them. This is especially true for certain user segments, like new college grads, for whom the Internet is now far more important than is traditional TV. The point is traditional service providers need to figure out how to delight a variety of user segments. We believe boxee can help.

VideoNuze: You guys and your firms have deep relationships in the cable/satellite/telco industries. How are those folks reacting to boxee?

NS: People in the ecosystem are taking a "wait-and-see" approach. There's a certain amount of fascination, and though we don't see any impending deals, Avner (Ronen, boxee's founder/CEO) has multiple conversations ongoing with the industry.

VideoNuze: Who are boxee's primary competitors?

BS: What Apple and Microsoft are doing is most competitive, though their approaches include both hardware and software. We think of boxee like Android (Google's mobile OS), sort of the "inside-out" version of Apple TV. And we believe convergence device/hardware providers want alternatives.

VideoNuze: How about Roku?

NS: We believe Roku should be partners with boxee. Hardware companies have core competencies and typically those don't include open source media platforms. So boxee can help devices like Roku be even better. We'll have a number of device deals to announce soon.

VideoNuze: A lot has been written about "over-the-top" services. Are they starting to succeed, and if so, what must happen for them to gain further success?

NS: Well, yes, when we look at what Netflix and others are doing already, we do believe over-the-top services are starting to succeed. And we think this isn't necessarily a bad thing for cable operators for example. That's because the video business has had margin compression due to rising programming costs, whereas broadband Internet service has been incredibly profitable for them.

Consider that that cable operators didn't offer DVR or voice services just 10-11 years ago, but now they are a significant driver of ARPU (average revenue per unit). There's a lot more that cable operators can derive from broadband services than they currently are, considering the IP connection is now - for many - the most important connection they have. Content providers know this and are looking for more, not fewer, ways to distribute their content.

BS: Agreed, look at an example like CNBC, whose ratings are down something like 30% year-over-year. What's causing this? Is there demo changing? Is the web providing alternatives? Some of both? The point is content providers need to figure out how to control their destiny. That doesn't mean they have to give their stuff away for free. But it does mean they need to figure out how to distribute as effectively as possible. We want to help them do that. You can't go backwards here. Broadband is too interesting and too important to too many people.

VideoNuze: Thanks guys.

The answer to that question will start to come early next week when Sling.com, the latest entrant in this already crowded space, officially launches. Recently Jason Hirschhorn, president of Sling Media's entertainment group and Brian Jaquet, Sling's Director of Public Relations came through Boston and caught me up on their plans to launch commercially on Nov. 24th.

Many of you know that Sling is the maker of the Slingbox, which connects to your TV or DVR, allowing you to remotely watch programs on your computer. It's a very clever product, though I have to admit its use case has always been a little confounding to me. Nonetheless, just over a year ago, Sling was acquired by EchoStar in a $380 million deal. Shortly thereafter, EchoStar split itself into two parts, Dish Network, the satellite-delivered programming company, and EchoStar Corporation, which includes Sling and other technology-based businesses.

Sling.com, developed by Jason's entertainment group, is the first Sling offering not tethered to any of its devices and therefore open to all users. Acknowledging that Hulu has set a high bar on user experience, Jason explained that Sling.com is attempting to go one step further on usability, and will also differentiate itself with updated social networking capabilities and highly focused editorial content.

In particular, Sling.com offers a slew of Facebook-like features that allow users to subscribe to and favorite programs and networks, with users in turn able to follow these activities. As Jason aptly put it, the goal is to "digitize the water cooler conversation." The whole experience is geared toward engaging the user at a far deeper level than we're accustomed to in passive linear viewing, or even typical at other aggregators' sites.

The real differentiator for Sling long-term though is the integration of Sling.com with the remote viewing offered by Slingbox. Enabled by a new web-based player (instead of the prior downloadable client), users are able to seamlessly browse back and forth between watching live TV and cataloged programs, as shown below.

Taking this one step further, Sling's goal is to get its remote viewing technology embedded in others' set-top boxes as well. So for example, a Comcast STB with Sling inside would allow you to have live TV integrated into your Sling.com, without having to go buy another box.

That's an enticing prospect, but making it happen will be no small feat; the STB giants like Motorola and SA (now part of Cisco) will get on board only when their biggest customers - America's cable operators - ask for it. The prospect of these cable executives wanting to incorporate any technology controlled by Charlie Ergen, Echo's founder/CEO and the cable industry's arch-enemy, stretches my mind. However, stranger deals have been done, so who knows. In the meantime, there are a whole lot of other non-cable homes globally Sling can address first.

But much of that is down the road anyway. For now, Sling.com is going to compete head on with Hulu (which by my count supplies virtually the entire current movie catalog at Sling.com, in turn begging the question of how many different ways one relatively small ad revenue stream can get carved up?), Fancast, the portal sites, YouTube and so on. Jason readily admits that these sites will not compete on content exclusivity; ultimately they'll all have access to everything that's available.

So in this incredibly crowded space, is there room for a newcomer? On the surface, it's tempting to say "no." But history teaches us that "better mousetraps" can elbow their way into even the most crowded spaces. Remember how many search engines already existed when Google burst onto the scene? On a totally different level, I can relate to this challenge myself. A year ago I wondered whether there was room for a new broadband video-centric blog when so many others already existed; now here we are.

The reality is that newcomers succeed because they don't accept the status quo as final. Rather, they find smart ways of delivering new and better value to customers who didn't necessarily even know what they wanted, but when they got it, were delighted. That's Sling.com's challenge. Whether it can meet it remains to be seen. But in this crummy economy, their deep-pocketed backing certainly gives them a leg up on any VC-funded competitors when it comes to long-term staying power.

What do you think? Post a comment now!