Posts for 'Showtime'

My wife, who ordinarily shares my taste in TV, was completely grossed out by "Dexter" in the first 5 minutes (which is easy to understand considering blood is practically a supporting character in the show), so watching it together on our main big-screen TV wasn't going to be in the cards. However, I noticed that the first two seasons were available on Netflix streaming, and so I decided early on to watch most of the first season's 12 episodes on my iPad, the first time I would do so with any TV series. Along the way I became completely hooked on the show, and am now well into season 2.

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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.

Today Brightcove is announcing the beta version of its Brightcove 3 platform. Last week CEO/Founder Jeremy Allaire briefed me on what he called a "pretty dramatic new version of the platform." There are three new areas:

1. Contextualization - Brightcove is changing how its customers display their video from the current standalone video player/index environment to one where the player window is embedded within in an HTML page with surrounding contextual content and ads. In tests it has done, Brightcove has found that, no surprise, integrating the video window results in more video and page views. Also by surfacing video in context, it enhances search engine optimization. This is similar to EveryZing's SEO-focused approach. (see my profile). Brightcove has new APIs that work with existing content management systems to match relevant non-video content.

2. Dynamic delivery - Brightcove is upping its emphasis on high-quality long-form content by introducing a dynamic delivery feature that modulates the quality of the video delivered based on detection of the user's bandwidth. This adaptive bit rate streaming idea was pioneered by Move Networks and allows on-the-fly video file delivery adjustments. Brightcove is doing this on top of Flash with no new plug-in required by users. It will also automatically generate various encoded files for customers.

3. Producer tools overhaul - Brightcove is updating the back-end work flow tools that its customers' producers use, so they can more quickly do things like upload large video files, create tags, generate business rules, transcode files and so forth. Jeremy demo'd it for me; it's a complete drag and drop environment that looked pretty straightforward.

All-in-all these look like positive steps. Since Brightcove had invested heavily in its earlier versions, I give them credit for emphasizing continuous improvement and not sitting still. Brightcove 3 is in beta (Showtime is one site that's already using it) with wider deployment in the fall. Jeremy added that other updates are expected then too. I pried out of him that these will include monetization and distribution/syndication among others.

Online movie delivery is back in the news, but dramatic change is still well down the road in this space as usability, rights issues and incumbent business models/consumer behaviors pose formidable hurdles.

Yesterday Netflix announced a $99 appliance with Roku, enabling the company's "Watch Instantly" streaming service on TVs. That news follows Apple's deals with a number of big studios in early May obtaining "day-and-date" access to current titles. And today brings news that Bell Canada, that country's largest telco, is formally launching its Bell Video Store, also providing day-and-date delivery, of Paramount titles to start (and soon others), plus portable viewing on Archos devices.

Netflix, which I last wrote about here, took a shot across the bow of Apple TV and Vudu by introducing the Roku box, the lowest-priced broadband movies appliance yet. Apples-to-apples comparisons aren't fair as the stripped-down Netflix/Roku box doesn't have a hard-drive or equivalent processing. That inevitably means lower quality delivery vs. locally-stored content with the others, plus uncertainty about HD-delivery. Netflix/Roku's big advantage is that it's a value-add service for current Netflix subscribers, meaning no new fees as with the Apple TV/Vudu approaches.

However, Watch Instantly has older titles and amounts to less than 10% of Netflix's total catalog. I don't see that changing much; Watch Instantly runs smack into studios' incumbent windowing approach and deals with HBO, Showtime and Starz for premium TV. Netflix's model is built on the home video window, so new online delivery rights must be obtained which will be a tough road. However, with Paramount, MGM, Lionsgate and others splintering from Showtime recently to set up their own premium channel, it's possible that some studios' rights may loosen up, but of course at a price.

Still, I don't see the Netflix/Roku box breaking 10% penetration of Netflix's sub base any time soon, barring a box giveaway. Enlarging the value proposition by licensing the Roku technology for inclusion in other devices (e.g. Blu-ray) could also help drive adoption.

Meanwhile, today Bell Canada is announcing the formal launch of its Bell Video Store. In beta since late '07, it offers 1,500 titles, now including day-and-date delivery from Paramount (and others soon according to Michael Freeman, Bell's director of product management who I spoke to yesterday). This is noteworthy, as it appears to be the first time a service provider has received day-and-date online access from any studio. If other providers follow suit we may finally witness some internal competition with sacrosanct-to-date Video on Demand initiatives.

By using ExtendMedia's platform, Bell is also enabling downloads-to-own directly to Archos portable devices. With a couple million satellite homes and fiber IPTV fiber-based deployments continuing, there are multiple three screen options looming for Bell. Yet for now these are limited. Michael confirmed Bell has no plans to offer a branded movie appliance a la Netflix/Roku, meaning it will dependent on XBoxes and other PC-TV bridge devices.

HBO's deal with Apple to include its programs in the iTunes store has received widespread coverage in the last couple of days, particularly because it includes differentiated pricing for the first time.

Indeed, while it's a big story that Apple's Steve Jobs has finally consented to deviate from his "one price for all" approach - which NBC couldn't attain last fall - there is another angle on this announcement: the possibility that, at long last, HBO has woken up to broadband video's potential.

HBO's absence from the broadband scene has been noticeable. As the most profitable and acclaimed TV network, I've long thought that HBO had significant upside in pursuing broadband initiatives. Instead it has badly lagged Showtime and Starz, its two principal rivals in the premium network space, as well as other networks.

Showtime in particular has been quite innovative in both creating broadband-only extras for its programs, plus enticing user-involvement opportunities. For its part, Starz has been aggressive in pursuing Vongo, its broadband-subscription service, which continues to make inroads with numerous device partnerships.

Yet HBO has seemed contentedly disinterested in broadband. Between its hefty subscription fees and healthy DVD business, broadband has likely been seen as just a gnat buzzing about. HBO's lack of broadband interest is evident on its web site which has just a smattering of video clips and highlights, and it is fairly static, with little-to-nothing enticing for the broadband user.

In reality, broadband could have likely been adding real value to HBO's business. With the proper incentives, HBO's creative production partners could have easily come up with broadband extras that would have appealed to the diehard fans of its programs. In addition to their sheer programming value, these would have helped drive more fan loyalty and stickiness between seasons. That would help address HBO's churn rate during its off-season periods.

While HBO's iTunes relationship is a step forward, it's a small one. Contrast its approach to soon-to-be-corporate-sibling Bebo's programming model (which I wrote about yesterday), with its intense focus on community engagement and the different philosophies are evident. Of course HBO is a programming powerhouse and there's no arguing with its success. But for it to fully embrace broadband's opportunities, it would benefit from looking at what Bebo and others are currently doing.