Posts for 'Hulu'

"Look to your left, look to your right. One of you won't be here next year."

- Professor Charles Kingsfield, The Paper Chase

As I wrote last summer in "Video Aggregators Have Raised $366+ Million to Date," there has been a lot of enthusiasm around broadband-only aggregators, especially those that focus on premium-quality video. Part of the excitement is based on the idea that they could eventually snatch a chunk of the $100 billion/year that today's cable, satellite and telco video distributors generate. This vision is enhanced by the inevitability of broadband connecting seamlessly to millions of consumers' TVs, enabling a pure on-demand, a-la-carte experience. The result has been many well-funded startups (e.g. Joost, Veoh, Vuze, etc.) as well as offensive/defensive initiatives backed by large media companies (e.g. Hulu, Fancast, portal sites, etc.).

However, ad-supported video aggregators face multiple challenges. First and most is that as their ranks have grown, the audience they're commonly targeting fragments. Not only does this make it hard to achieve scale, it makes it hard to identify meaningful audience differences that advertisers seek when allocating their budgets. The recent economic collapse and ad spending slowdown only exacerbate these audience-related issues.

The next big problem is that it is very difficult for aggregators to differentiate themselves. As with most web sites, there are really two main drivers of differentiation: content and user experience. On the content side, there is a finite amount of premium video available for ad-supported online distribution and there's no such thing as exclusivity (except to some extent with Hulu and its rights to NBC and Fox shows).

Increasingly broadcast programs are available in lots of places online, (starting with the broadcasters' own sites), while cable programs are in short supply (more on why that's the case and why it will stay that way in "The Cable Industry Closes Ranks"). Though there is lots of other quality video being produced, the reality is that once you get away from hit TV shows and recently-released movies (which themselves are not available except as paid downloads), little else has the same audience-driving appeal.

User experience is certainly a bona fide differentiator, and as I have spent time at all these sites, it's evident which sites are better and easier to use than others. But user experience differences are hard to maintain; it's all too easy for one site to emulate what another one does, and with cheap, open technology there are few barriers to doing so. Over time, most of the really important differences melt away (ample evidence of this is found in the ecommerce world, where checkout processes have long since gravitated to a set of best practices).

Another problem is customer acquisition and retention, which is a particular issue for the independent aggregators, who don't have incumbent advantages to leverage. With premium video only coming online relatively recently, users' video search processes are not yet well understood. Suppose someone is looking for a missed episode of Lost and don't want to pay for it. Do they start with a Google search for "Lost?" Or for "ABC?" Or do they reflexively go to ABC.com? Or maybe they're a heavy YouTube user, so they start by heading over to YouTube.com? Still others no doubt start by going to video search sites like blinkx or Truveo. Video aggregators need to insert themselves in the flow of an online user's video search process. But doing effectively is not yet anywhere close to the reasonably well-understood world of web-based optimization techniques.

The landscape for video aggregators is still pretty wide open, so some winners will emerge. But there are just too many entrants chasing the same prize. I'll be keeping close track of the aggregator space on VideoNuze as '09 unfolds, and will keep you apprised of all developments.

What do you think? Post a comment now.

2009 Prediction #1:The Syndicated Video Economy Accelerates

2009 Prediction #2:Mobile Video Takes Off, Finally

2009 Prediction #3:Net Neutrality Remains Dormant

Tomorrow, 2009 Prediction #5

comScore's latest video traffic rankings came out earlier this week, and it was hard to miss Hulu's big growth in 2008. As the chart below show, the site, which only launched officially in March landed in the #6 spot with 235 million video streams in October, up from 119 million in July, 88 million in May and not in comScore's top 10 in April.

While Hulu's latest stats benefited from the SNL political skits, it's worth noting that in October Hulu delivered more streams than Viacom, Disney, AOL, ESPN, Time Warner and ABC.com as recently as April (when Hulu wasn't yet in the top 10). As Todd Spangler points out, Hulu's success is also a very significant syndication data point: in October it generated "only" 5.3 million uniques on its own site with the remainder of its 24 million uniques coming from partners.

By anyone's standards Hulu's off to a pretty amazing start. Hulu's pre-launch naysayers have been proven dead wrong. A year ago I gave Hulu's beta a solid B+; it has now become one of the best out there. In '09 its key challenge is to maximize the revenue from all that traffic.

What do you think? Post a comment now.

1. Advertising business model gains further momentum

I saw '08 as a year in which the broadband ad model continued growing in importance as the paid model remained in the back seat, at least for now. I think that's pretty much been borne out. We've seen countless new video-oriented sites launch in '08. To be sure many of them are now scrambling to stay afloat in the current ad-crunched environment, and there will no doubt be a shakeout among these sites in '09. However, the basic premise, that users mainly expect free video, and that this is the way to grow adoption, is mostly conventional wisdom now.

The exception on the paid front continues to be iTunes, which announced in October that it has sold 200 million TV episode downloads to date. At $1.99 apiece, that would imply iTunes TV program downloads exceed all ad-supported video sites to date. The problem of course is once you get past iTunes things fall off quickly. Other entrants like Xbox Live, Amazon and Netflix are all making progress with paid approaches, but still the market is held back by at least 3 challenges: lack of mass broadband-to-the-TV connectivity, a robust incumbent DVD model, and limited online delivery rights. That means advertising is likely to dominate again in '09.

2. Brand marketers jump on broadband bandwagon

I expected that '08 would see more brands pursue direct-to-consumer broadband-centric campaigns. Sure enough, the year brought a variety of initiatives from a diverse range of companies like Shell, Nike, Ritz-Carlton, Lifestyles Condoms, Hellman's and many others.

What I didn't foresee was the more important emphasis that many brands would place on user-generated video contests. In '08 there were such contests from Baby Ruth, Dove, McDonald's, Klondike and many others. Coming up in early '09 is Doritos' splashy $1 million UGV Super Bowl contest, certain to put even more emphasis on these contests. I see no letup in '09.

3. Beijing Summer Olympics are a broadband blowout

I was very bullish on the opportunity for the '08 Summer Games to redefine how broadband coverage can add value to live sporting events. Anyone who experienced any of the Olympics online can certainly attest to the convenience broadband enabled (especially given the huge time zone difference to the U.S.), but without sacrificing any video quality. The staggering numbers certainly attested to their popularity.

Still, some analysts were chagrined by how little revenue the Olympics likely brought in for NBC. While I'm always in favor of optimizing revenues, I tried to take the longer view as I wrote here and here. The Olympics were a breakthrough technical and operational accomplishment which exposed millions of users to broadband's benefits. For now, that's sufficient reward.

4. 2008 is the "Year of the broadband presidential election"

With the '08 election already in full swing last December (remember the heated primaries?), broadband was already making its presence known. It only continued as the year and the election drama wore on. As I recently summarized, broadband was felt in many ways in this election cycle. President-elect Obama seems committed to continuing broadband's role with his weekly YouTube updates and behind-the-scenes clips. Still, as important as video was in the election, more important was the Internet's social media capabilities being harnessed for organizing and fundraising. Obama has set a high bar for future candidates to meet.

5. WGA Strike fuels broadband video proliferation

Here's one I overstated. Last December, I thought the WGA strike would accelerate interest in broadband as an alternative to traditional outlets. While it's fair to include initiatives like Joss Wheedon's Dr. Horrible and Strike.TV as directly resulting from the strike, the reality is that I believe there was very little embrace of broadband that can be traced directly to the strike (if I'm missing something here, please correct me). To be sure, lots of talent is dipping its toes into the broadband waters, but I think that's more attributable to the larger climate of interest, not the WGA strike specifically.

6. Broadband consumption remains on computers, but HD delivery proliferates

I suggested that "99.9% of users who start the year watching broadband video on their computers will end the year no closer to watching broadband video on their TVs." My guess is that's turned out to be right. If you totaled up all the Rokus, AppleTVs, Vudus, Xbox's accessing video and other broadband-to-the-TV devices, that would equal less than .1% of the 147 million U.S. Internet users who comScore says watched video online in October.

However, there are some positive signs of progress for '09. I've been particularly bullish on Netflix's recent moves (particularly with Xbox) and expect some other good efforts coming as well. It's unlikely that '09 will end with even 5% of the addressable broadband universe watching on their TVs, but even that would be a good start.

OK, that's it for '08. On Monday the focus turns to what to expect in '09.

What do you think? Post a comment now.

A short interview in Multichannel News with Rouzbeh Yassini before the Thanksgiving break last week caught my eye.

Rouzbeh's name is likely unfamiliar to many of you. But for others who have been in and around the cable and broadband industries since the '90s, he is semi-famous. In those days Rouzbeh ran a company called LANCity, which was a pioneer in designing and manufacturing cable modems. These of course are the devices that now reside in tens of millions of homes around the world, enabling broadband Internet access and the high-quality video services like YouTube, Hulu, iTunes and others that run through them.

Though it's only been about 15 years, the early-to-mid '90s seem like another age entirely. Can you remember dial-up Internet access? Busying up your phone line if you wanted to be online? Listening to all those weird tones as your creaky 56K modem connected you to Prodigy, CompuServe, AOL, or eventually this thing everyone seemed to be talking about called the "World Wide Web?"

In my opinion, Rouzbeh deserves as much credit as anyone for the transformation of the dial-up Internet era to the broadband world we now enjoy. He played a crucial role in articulating broadband's business potential to scores of senior cable executives who barely knew what a computer was, much less this new-fangled thing called the Internet. Importantly, he was a key technical architect of modern cable networks, which today barely resemble the passive, one-way networks of old.

In short, I've learned to take notice of Rouzbeh's prognostications. Though he can be irrepressibly optimistic, he's directionally right more often than not.

All of that brings me to his Multichannel interview. Rouzbeh now envisions the era of gigabit or 1,000 megabit Internet access within a decade. To put this in perspective, today's cable modems typically deliver around 10 megabit service or 1% of a gigabit. Spurred by competitive pressures, Comcast has recently announced the rollout of 50 megabit service to certain regions, with expansion to its entire footprint by 2010. These new rollouts are part of the cable industry's "DOCSIS 3.0" standards, covering a new generation of modems and channel management techniques.

There's an axiom in the broadband industry that usage always rises to the level of bandwidth provided. Yet when we're talking 1 gigabit service, one has to rightly ask, "what in the world are people going to do with all that bandwidth?" Rouzbeh posits things like corporate networking, remote offices, medical services and the like, but only touches briefly on video delivery.

From my perspective, video is the killer application that will drive this bandwidth explosion. As I wrote recently in "Video Quality Keeps Improving - What's it All Mean?" we are on the front end of a shift toward dramatically higher video quality, with near HD delivery already becoming common (Hulu, Netflix and Vudu are among the most recent to announce HD initiatives). This shift will only accelerate going forward. And to accommodate it will require lots more bandwidth from network providers.

In reality, the trickiest part of bandwidth expansion is less the technology development and deployment and more the business models that support the investments and make the most strategic sense. Questions abound: Is the right model to charge $150/mo for 50 megabit access as Comcast plans? Or to build a content service available only to those high-powered users? Or act like a CDN and provide services so as to charge content providers themselves to deliver higher-quality video? Maybe some hybrid of these, or some other model? And of course, what impact do these models have on the incumbent multichannel subscription video offering?

While there's murkiness now, like Rouzbeh, I'm a big believer that these things will ultimately be worked out and that bandwidth expansion is inevitable. Just as we now look back on the dial-up era and wonder how we got by, eventually we'll look at the mid-to-late 2000s and wonder how we survived on so little bandwidth.

What do you think? Post a comment now.

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!

Welcome to November. October was a particularly crazy month with the unfolding financial crisis. Here are 3 key themes.

1. Financial crisis hurts all industries; broadband is no exception

In October the financial crisis was omnipresent. During the month I addressed its probable effects on the broadband industry here and here so I'm not going to spend much more time on it today. Suffice to say, for the foreseeable future, the key industry metrics are financing, staffing and customer spending. Conserving cash and getting to breakeven are paramount for all.

In particular, in "Thinking in Terms of a 'GOTI' Objective" I tried to provide some food for thought about why focus is so important right now. Industry CEOs' jobs have gotten a whole lot harder in the wake of the meltdown; those with the best strategic and financial skills will come through the storm, others will encounter significant challenges.

I'm constantly trying to gauge just how developed the broadband video industry actually is. All kinds of indicators continue to suggest to me that we're still in the very early days. For example, in one post this month comparing iTunes and Hulu, it was evident that iTunes is currently far outpacing Hulu in TV episode-related revenues. Remember that Hulu is the undisputed premium ad-supported aggregator. And that the ad-supported business model itself is predicted by most to eventually be far larger than the paid model. That iTunes is so far ahead for now shows how young Hulu really is (in fact, just celebrating its first anniversary) and how much more development the ad-supported model still has ahead of it.

I think another relevant indicator of progress is how well the broadband medium is distinguishing itself from alternatives by capitalizing on its key strengths. In "Broadband Video Needs to Become More Engaging," I noted that while there have recently been positive signs of progress, overall, much of broadband's engagement potential is still untapped. That's why I'm always encouraged by compelling UGV contests like the one Fox and Metacafe unveiled this month or by technology like EveryZing's new MetaPlayer that drives more granular interactivity. To truly succeed, broadband must become more than just an online video-on-demand medium.

As ISPs, cable operators account for the lion's share of broadband Internet access. Further, their ongoing efforts to increase bandwidth widens the universe of addressable homes for high-quality content delivery. Still, their multichannel subscription-based business model is increasingly threatened by broadband's on-demand, a la carte nature. As delivery quality escalates and consumer spending remains pinched, the notion of dropping cable in favor of online-only access become more alluring.

Yet in "Cutting the Cord on Cable: For Most of Us It's Not Happening Any Time Soon," I explained why restricted access to popular cable network programs and an inability to easily view broadband video on the TV will keep cable operators in a healthy position for some time to come. Still, it's a confusing landscape; this month I noticed Time Warner Cable itself helped foster cable bypass, when in the midst of its retransmission standoff with LIN TV, it offered an instructive video for how to watch most broadcast network programming online. Comcast also got into the act, unveiling "Premiere Week" on its Fancast portal. These kinds of initiatives remind consumers there's a lot of good stuff available for free online; all you need is a broadband connection.

Lots more to come in November, stay tuned.

Last week Apple announced that it has sold 200 million TV episodes to date and also that all four of the major broadcast networks are now providing HD versions of their prime-time shows. These periodic updates are always welcome as Apple is notoriously parsimonious with its iTunes numbers, making it hard for analysts to get a real handle on how the store is doing.

This latest total got me to thinking about the relative sizes of online aggregators of prime-time TV shows. Below I've made some calculations comparing the revenues of iTunes, the largest paid download store, with the revenues of Hulu, likely the largest free, ad-supported streaming site for TV programs. The conclusion is clear: for now at least, iTunes is a far larger business, demonstrating that despite the obvious appeal of free video, a segment of consumers are still plenty willing to buy and collect individual episodes.

iTunes calculations

I estimate iTunes is currently generating about 10 million TV program downloads/month. TV program downloads officially began just about 3 years ago with ABC's initial iTunes partnership. There's obviously been a ramp over the years, so if you assume 50% of the volume came in the first 3 years combined, and 50% in the 10 months of '08 alone, that produces 100 million TV program downloads year to date or about 10 million downloads/month. (that actually synchs with the fact that Apple last disclosed 150 million total TV program downloads in May, '08, 5 months ago).

To grossly simplify, let's say the download price is $2/episode. I know that doesn't take account of the $3 HD downloads iTunes launched last month (of which it says it sold a million) or the varying prices of international downloads. At $2/episode iTunes does $20 million/month in gross download revenues from TV programs.

Hulu calculations

Conclusions

Though the above numbers need to be taken with a grain of salt, they suggest there's a huge gap in TV program-related revenues between iTunes and Hulu. Now of course iTunes has been around a lot longer than Hulu, and of course it benefits from the massive popularity of the iPod, and more recently the iPhone. We also can't forget there are lots of places to watch free TV episodes online while there are comparably fewer online stores to purchase and download high-quality episodes. So it might actually be fairer to compare the monthly revenues of ALL the online aggregators (and the networks' own sites too) to iTunes to get a clearer comparison.

Still, I think comparing iTunes and Hulu does show how nascent the streaming TV market is today. In the long-run, I'm a believer that free, ad-supported trumps a la carte paid downloading. But for now, when it comes to real revenues - which for many is the only metric that really matters - it's no contest.

What do you think? Post a comment now!

With so much going on in the broadband video world, I rarely get an opportunity to follow up on previously discussed items. So today, an attempt to catch up on some news that's worth paying attention to:

Brightcove 3 is released - Back in June I wrote about the beta release of Brightcove 3, the company's updated video platform. Today Brightcove is officially releasing the product. I got another good look at it a couple weeks ago in a briefing with Adam Berrey, Brightcove's SVP of Marketing. I like what I saw. Much more intuitive publishing/workflow. Improved ability to mix and match video and non-video assets in the way content is actually consumed. New emphasis on high-quality delivery to keep up with ever-escalating quality bar. Flexibility around video player design and implementation. And so on.

The broadband video publishing/management platform is incredibly crowded, and only getting more competitive. Brightcove 3 ups the ante further.

Silverlight 2 is released - Speaking of releases, Microsoft officially unveiled Silverlight 2 yesterday, making it available for download today. I was on a call yesterday with Scott Guthrie, corporate VP of the .NET developer Division, who elaborated on the details. NBC's recent Olympics was Silverlight 2 beta's big public event, and as I wrote in August, the user experience was seamless and offered up exciting new features (PIP, concurrent live streams, zero-buffer rewinds, etc.).

A pitched battle between Microsoft and Adobe is underway for the hearts and minds of developers, content providers and consumers. Silverlight has a lot of catching up to do, but as is evident from the release, it intends to devote a lot of resources. Can you say Netscape-IE or Real-WMP? This will be a battle worth watching.

Google and Seth MacFarlane are hitting a home run with "Cavalcade of Comedy" - A month since its debut, Google/YouTube and Seth MacFarlane seem to have hit on a winning formula at the intersection of video syndication, audience growth and brand sponsorship. On YouTube alone, the 10 short episodes have generated over 12.7 million views according to my calculations, while this TV Week piece quotes 14 million + when all views are tallied.

Last month, in "Google Content Network Has Lots of Potential, Implications" I wrote at length about how powerful GCN and YouTube could be for the budding Syndicated Video Economy, yet noted that the jury is still out on whether Google's really committed to GCN. "Cavalcade's" early success surely gives GCN some tailwind. (Btw, for more on Google/YouTube's myriad video initiatives, join me on Nov. 10th for the Broadband Video Leadership Breakfast Panel, which David Eun, the company's VP of Content Partnerships will be a panelist)

NBC/SNL and Tina Fey set a new standard for viral success - Tina Fey's Sarah Palin skits are hilarious and unlike anything yet seen in viral video. Usage is through the roof: a new study by IMMI suggests that twice as many people watched the skits online and on DVR than did on-air, while Visible Measures's data (as of 3 weeks ago!), shows over 11 million video views. SNL is smack in the middle of the cultural zeitgeist once again, with Thursday night specials and reports of a new dedicated web site in the mix.

To put in perspective how disruptive viral video can be to the uninitiated, several weeks ago I heard a pundit on CNN's AC360 dismiss the potential impact of the Fey skits on the election with a wave of his hand and a remark to the effect of "come on, how many people stay up that late to watch SNL really?" How's that for being out of touch with the way today's world really works? Political pros and other taste-makers should take heed - viral video can be a cultural tour de force.

Joost Flash version is here, finally - Remember Joost? Originally the super-secret "Venice Project" from the team that made a killing on KaZaA and Skype (the latter of which was acquired by eBay, permanently undermining former eBay CEO Meg Whitman's M&A acumen), Joost today is announcing its Flash-based video service. You might ask what took the company so long given this is where the market's been for several years already? I have no idea.

But here's one key takeaway from Joost's story: because of its lineage, the company was once regaled as the "it" player of the broadband video landscape. Conversely, Hulu, because of its big media NBC and Fox parentage, was dismissed by many right from the start. Now look at how their fortunes have turned. When your mom used to tell you "don't judge a book by its cover," she was right.

What do you think? Post a comment.

Two questions I like to ask when I speak to industry groups are, "Raise your hand if you'd be interested in 'cutting the cord' on your cable TV/satellite/telco video service and instead get your TV via broadband only?" and then, "Do you intend to actually cut your cord any time soon?" Invariably, lots of hands go up to the first question and virtually none to the second. (As an experiment, ask yourself these two questions.)

I thought of these questions over the weekend when I was catching up on some news items recently posted to VideoNuze. One, from the WSJ, "Turn On, Tune Out, Click Here" from Oct 3rd, offered a couple examples of individuals who have indeed cut the cord on cable and how their TV viewing has changed. My guess is that it wasn't easy to find actual cord-cutters to be profiled.

There are 2 key reasons for this. First it's very difficult to watch broadband video on your TV. There are special purpose boxes (e.g. AppleTV, Vudu, Roku, etc.), but these mainly give access to walled gardens of pre-selected content, that is always for pay. Other devices like Internet-enabled TVs, Xbox 360s and others offer more selection, but are not really mass adoption solutions. Some day most of us will have broadband to the TV; there are just too many companies, with far too much incentive, working on this. But in the short term, this number will remain small.

The second reason is programming availability. Potential cord-cutters must explicitly know that if they cut their cord they'll still be able to easily access their favorite programs. Broadcasters have wholeheartedly embraced online distribution, giving online access to nearly all their prime-time programs. While that's a positive step, the real issue is that cord-cutters would get only a smattering of their favorite cable programs. Since cable viewing is now at least 50% of all TV viewing (and becoming higher quality all the time, as evidenced by cable's recent Emmy success), this is a real problem.

To be sure, many of the biggest ad-supported cable networks (MTV, USA, Lifetime, Discovery) are now making full episodes of some of their programs available on their own web sites. But these sites are often a hodgepodge of programming, and there's no explanation offered for why some programs are available while others are not. For example, if you cut the cord and could no longer get Discovery Channel via cable/satellite/telco, you'd only find one program, "Smash Lab" available at Discovery.com. Not an appealing prospect for Discovery fans.

Then there's the problem of navigation and ease of access. Cutting the cord doesn't mean viewers don't want some type of aggregator to bring their favorite programming together in an easy-to-use experience. Yet full streaming episodes are almost never licensed to today's broadband aggregators. Cable networks are rightfully being cautious about offering full episodes online to aggregators not willing to pay standard carriage fees.

For example, even at Hulu, arguably the best aggregator of premium programming around, you can find Comedy Central's "The Daily Show" and "Colbert Report." But aside from a few current episodes from FX, SciFi and Fuel plus a couple delayed episodes from USA like "Monk" and "Psych," there's no top cable programming to be found.

As another data point, I checked the last few weeks of Nielsen's 20 top-rated cable programs and little of this programming is available online either. A key gap for cord-cutters would be sports. At a minimum, they'd be saying goodbye to the baseball playoffs (on TBS) and Monday Night football (on ESPN). In reality, sports is the strongest long-term firewall against broadband-only viewing as the economics of big league coverage all but mandate carriage fees from today's distributors to make sense.

Add it all up and while many may think it's attractive to go broadband only, I see this as a viable option for only a small percentage of mainstream viewers. Only when open broadband to the TV happens big time and if/when cable networks offer more selection will this change.

What do you think? Post a comment now.

There are reports today that Hulu intends to stream tonight's second presidential debate along with the third debate planned for Oct. 15th. VideoNuze readers will recall that I observed two weeks ago that NYTimes.com streamed the first debate on its home page. I regarded this as a noteworthy incursion of a print publisher onto broadcast/cable's traditional turf and asserted that the debates give the NYTimes a plum opportunity to use video to expand its audience appeal and ad revenue potential.

Cause and effect that Hulu, backed by two broadcasters Fox and NBC, is now planning to stream the remaining debates? Hard to say. But no question, if Hulu hadn't done this, it would have been leaving the door open, again, for NYTimes to be a prime destination for live streaming of the debate. For broadcasters fighting for every eyeball out there, that would have been a mistake. More evidence of how broadband is creating competition between previously disparate media worlds.

Welcome to October. Recapping another busy month, here are 3 key themes from September:

1. When established video providers use broadband, it must be to create new value

Broadband simultaneously threatens incumbent video businesses, while also opening up new opportunities. It's crucial that incumbents moving into broadband do so carefully and in ways that create distinct new value. However, in September I wrote several posts highlighting instances where broadband may either be hurting existing video franchises, or adding little new value.

Despite my admiration for Hulu, in these 2 posts, here and here, I questioned its current advertising implementations and asserted that these policies are hurting parent company NBC's on-air ad business. Worse yet, In "CNN is Undermining Its Own Advertisers with New AC360 Live Webcasts" I found an example where a network is using broadband to directly draw eyeballs away from its own on-air advertising. Lastly in "Palin Interview: ABC News Misses Many Broadband Opportunities" I described how the premier interview of the political season produced little more than an online VOD episode for ABC, leaving lots of new potential value untapped.

Meanwhile new entrants are innovating furiously, attempting to invade incumbents' turf. Earlier this week in "Presidential Debate Video on NYTimes.com is Classic Broadband Disruption," I explained how the Times's debate coverage positions it to steal prime audiences from the networks. And at the beginning of this month in "Taste of Home Forges New Model for Magazine Video," I outlined how a plucky UGC-oriented magazine is using new technology to elbow its way into space dominated by larger incumbents.

New entrants are using broadband to target incumbents' audiences; these companies need to bring A-game thinking to their broadband initiatives.

2. Purpose-driven user-generated video is YouTube 2.0

In September I further advanced a concept I've been developing for some time: that "purpose-driven" user-generated video can generate real business value. I think of these as YouTube 2.0 businesses. Exhibit A was a company called Unigo that's trying to disrupt the college guidebook industry through student-submitted video, photos and comments. While still early, I envision more purpose-driven UGV startups cropping up in the near future.

Meanwhile, brand marketers are also tapping the UGV phenomenon with ongoing contests. This trend marked a new milestone with Doritos new Super Bowl ad contest, which I explained in "Doritos Ups UGV Ante with $1 Million Price for Top-Rated 2009 Super Bowl Ad." There I also cataloged about 15 brand-sponsored UGV contests I've found in the last year. This is a growing trend and I expect much more to come.

3. Syndication is all around us

Just in case you weren't sick of hearing me talk about syndication, I'll make one more mention of it before September closes out. Syndication is the uber-trend of the broadband video market, and several announcements underscored its growing importance.

For example, in "Google Content Network Has Lots of Potential, Implications" I described how well-positioned Google is in syndication, as it ties AdSense to YouTube with its new Seth MacFarlane "Cavalcade of Cartoon Comedy" partnership. The month also marked the first syndication-driven merger, between Anystream and Voxant, a combination that threatens to upend the competitive dynamics in the broadband video platform space. Two other syndication milestones of note were AP's deal with thePlatform to power its 2,000+ private syndication network, and MTV's comprehensive deal with Visible Measure to track and analyze its 350+ sites' video efforts.

I know I'm a broken record on this, but regardless of what part of the market you're playing in, if you're not developing a syndication plan, you're going to be out of step in the very near future.

That's it for September, lots more planned in October. Stay tuned.

What do you think? Post a comment!

Yesterday's post, "Broadcast Networks' Use of Broadband Video is Accelerating Demise of their Business Model" spurred some great comments on the site, and as usual, a flurry of private emails to me from folks who don't want to comment publicly (this is a recurring VideoNuze phenomenon I've mentioned before...).

Since there's substantial interest in this topic and I thought some of my comments from yesterday needed some clarification, I want to dig in a little further today.

First I want to address the numbers I outlined, especially the benchmark of $1 of ad revenue per viewer per episode that I asserted NBC derives from "Heroes" on-air. I've had some push back that this number is too high and that it more likely is 50-75 cents/viewer/episode. As I refined my assumptions further, I do think I was probably a bit too optimistic, particularly regarding the actual number of ad units NBC sells. I do think all of these numbers are somewhere in the ballpark, but what they actually are on a show-by-show basis is obviously only known only to NBC itself.

That all said, the gap between today's "analog dollars" and the revenue being derived from online distribution (the so-called "digital pennies") may still be pretty close to what I suggested yesterday. That's because I also had push back on my assumption that Hulu is generating an effective CPM of $60 (note, I had characterized that as "generous"). According to some folks, it's possible their eCPM could in fact be closer to $30 - or less. This is all private data, so again, it's really hard to pin this down.

One point I'd like to make again, so nobody's left with any misimpressions: I don't believe networks have been wrong in pursuing online distribution of their shows. I applaud their proactivity. Rather, my problem is that I think the way they've chose to monetize broadband delivery - with such a paucity of ads - is not only under-monetizing and undervaluing their product, but also creating a set of consumer expectations about the online medium that are going to be hard to reverse.

For Hulu to put the equivalent of 1 1/2 minutes of advertising against "Heroes," when NBC can command premium on-air rates for about 20 minutes of ads, strikes me as seriously out of whack. At the risk of sounding anti-consumer, I think Hulu is hurting its parent company's financial interests by over-emphasizing its user experience. The consequences of Hulu's "limited commercial interruptions" policy are really the thesis of yesterday's post: I believe the networks own use of broadband is accelerating the demise of their traditional ad model.

To be clear, I'm not suggesting Heroes on Hulu should carry 20 minutes of ads, but I do think it can carry more than 1 1/2 minutes. As important, its ad model needs to quickly evolve to include better targeting, more engagement, more creative units, etc, to break from a purely CPM-based paradigm. I know that many folks are hard at work on these items.

Net, net, these are incredibly complicated times for networks. As the Portfolio piece says, NBC's Zucker is "unsparingly harsh about the prospects for broadcast television..." And NBC's issues don't end with broadband; as commenters to yesterday's post noted, it's also being buffeted by the effects of DVRs, VOD and fragmentation driven by social networks, mobile and other shifting consumer behaviors.

I love Zucker's sense of honesty and urgency about the network business. I thought NBC's hardheaded approach to obtaining variable pricing from iTunes was terrific. And as many of you know, I think Hulu's site execution has been world-class. But Hulu, NBC, and the other networks must recognize that their current approach to ad-supported broadband delivery is undervaluing their own product and hastening the demise of their traditional P&L.

What do you think? Post a comment now!

Last weekend I finally got a chance to read "Zuckervision," the splashy cover page piece about NBCU's CEO and president Jeff Zucker in the September issue of Conde Nast's Portfolio magazine. It's a pretty candid expose of the challenges that Zucker faces turning around the flagship NBC brand. More broadly though, it describes the challenges that all network executives have in trying to profitably navigate the digital era.

Zucker says, "Predicting what the media world is gonna look like in eight years is incredibly daunting. I defy anybody to that." He's right, and I'm not going to take him up on his offer. What's more salient though is to focus on the here and now - on what networks are doing with ad-supported broadband distribution today. From this perspective I think it's fair to conclude that broadcast networks' current use of broadband is accelerating the demise of their business model.

That's right. For all of Zucker's and his compatriots' lament about "analog dollars being turned into digital pennies," as best I can tell, the networks themselves are actually the ones most responsible for turning this fear into a reality. I touched on this in a previous post, but here are the numbers explaining why.

When each of us, watches an episode of NBC's "Heroes," for example, on-air, NBC generates approximately $1.00 of advertising revenue (assuming NBC sells 75% of the 22 minutes of ads at a CPM of $30). That $1/viewer/episode figure obviously varies by program, but it's a good benchmark to use. (Note: per the following post, I think these assumptions are a little high, a more accurate range for NBC's revenue/viewer/episode is probably $.50 - $1.00.)

Now consider what happens when we watch "Heroes" on Hulu, NBC and Fox's well-respected aggregator. There are 5 ad breaks with just one 15 second ad in each break. There's also a 7 second "brand slate" at the beginning of each episode ("The following program is brought to you by....") and a display ad at the conclusion. Rounding up, let's say that totals three 30 second ads. Assuming Hulu sells all the ads at a generous $60 CPM (note that's 2x the on-air rate), the revenue/viewer/episode is 18 cents. That means that when you watch Heroes on Hulu, NBC is generating less than 20% of its customary revenue (hence the "digital pennies" fear).

Hulu's ad implementation is not unique - if you look at the other network sites, their ad models are roughly comparable. I don't know who came up with this ad approach, but I would contend that in their zeal to move prime time programs online, the networks have all gone too far in emphasizing a user-friendly experience over sound business discipline.

Of course, as consumers this new ad model is great. We get high-quality, free content at our fingertips, with minimal interruptions. For the vast majority of consumers, this value proposition beats buying and downloading an episode at iTunes any day (all the more so as popular shows like Heroes are bound to cost even more under NBC's new variable pricing relationship with Apple).

With the current model, NBC needs for Hulu to get more 5x its current CPM (which would be more than 10x NBC's current on-air CPM) just to stay even with its traditional ad model. That's a pipe dream. It doesn't matter how much interactivity or exclusivity Hulu can give an advertiser (and by the way Nissan already had full exclusivity in the Heroes episode I watched) no advertiser is going to pay 10x on-air rates. Simply put, Hulu's and others' minimal quantity of ads cannot be compensated for using higher prices.

Now that the genie is out of the bottle with the networks' online ad model, it's going to be awfully hard to make major modifications to it. As eyeballs inexorably shift from on-air to online, NBC and the other networks' top line ad revenues is going to get pinched. Also poised to bear the brunt is the whole Hollywood community accustomed to benefiting from on-air economics (Zucker's aggressive attempts to reduce expenses are also discussed in the Portfolio piece).

Bottom line: the way NBC and other networks have implemented broadband accelerates the vast change that is buffeting the broadcast business.

What do you think? Post a comment!

Comcast's Fancast broadband portal has received a much-needed facelift, adding new features and content to compete with other well-funded players in this space. (Note: before you conclude that VideoNuze has become obsessed with covering Comcast - since just yesterday I dug into its ISP policies - rest assured, tomorrow I'll move on!)

Fancast is by far the most ambitious portal effort among the major cable operators. In fact, while other operators' portals target just their own ISP customers, Comcast's goal is to have Fancast compete for ANY broadband user's attention. That means that Fancast goes head to head with ad-based broadband aggregators like Hulu, Veoh, Joost, Metacafe, etc. And now with Fancast's new video download store, it also butts up against folks like iTunes, Amazon Unbox, Xbox LIVE Marketplace, etc. Then of course there's YouTube, the 800 pound gorilla of the broadband video world, which all aggregators, compete with on one level or another.

With such a formidable array of competitors, Fancast has a high bar to succeed. Still, I've maintained for a while that Comcast, with its 14 million+ broadband subscribers and 22 million+ cable subscribers is extremely well-positioned and needed to play aggressively in broadband video distribution. To date though I've been underwhelmed by Fancast, which seemed to have a solid vision, but sub-par execution. (For more on this, see 2 previous posts, here and here, comparing Hulu and Fancast.)

Now, with Fancast's facelift, the portal is getting some mojo. Fancast's director of communications Kate Noel recently took me on a spin through what's new. First up is a new home page (see below) that nicely showcases premium content that is curated by an in-house editorial team. Clicking on a selection reveals an oversize video player (which can be further enlarged to full screen). New features include embedding and sharing, along with a handy tool to be notified when a new episode is offered.

There's also a noticeable improvement in content selection, which Kate says now includes over 37,500 video assets; 320+ individual TV programs, 250+ movies and countless trailers and clips from over 100 content partners. Fancast is also putting a heavy emphasis on editorial differentiation, and has created sections such as "Today's Top 5," "Daily Buzz (blog)" and "Discover All Your Favorites." to help orient users on the site and provide editorial perspective.

This all plays to what Kate says is Fancast's larger mission to not just "offer TV online," but rather to "use Fancast as a cross-platform hub" that draws value from and drives value to Comcast's other offerings - digital cable, VOD and DVR service in particular.

With Comcast's huge cable subscriber base, that sounds right in theory. But how exactly Fancast fully executes on that potential still feels squishy. For example, doing a search for a current episode of "Mad Men" reveals a nice option to watch on VOD (since it's not currently on Fancast - that's a whole other story...), but is this really a game-changer? A much more significant lever at Comcast's disposal would be getting Fancast onto their digital cable boxes, so all that great Fancast content could be consumed in the living room (maybe along with YouTube, Funnyordie, NYTimes.com and other video?). The nagging question remains: will that day ever come?

One last thing that struck me about Fancast was its seemingly murky relationship with Hulu, which supplies many of Fancast's movies, and some of its TV programs. Is Hulu a Fancast competitor, a partner, both? Kate says Hulu is not competitive. Yet at the end of the day, aren't both Hulu and Fancast competing for the same ad dollars, and eyeballs? Here's another question: with Comcast's vast programming arm, why can't it procure movies directly from studios, instead of cutting Hulu in on the action? I must say, it's all very confusing.

Still, to the average user, the new Fancast is an improvement, and there is more progress yet to come.

What do you think? Post a comment now!

TheWB.com's curtain is finally going up, with the site set to officially open for public beta at 11am Pacific Time today. Along with fellow analysts and press, I was given a sneak peek at the site and so I'm able to offer some initial impressions. At first blush, and after having some of my specific questions answered by a WB spokesman, my reaction is that the site is executed well, but that its strategy seems fuzzy.

As many of you know, TheWB TV channel went off the air in September, 2006. In April, 2008 Warner Bros. Television Group announced that it would launch TheWB.com as an online network. The new site contains a mix of about 20 classic WB and Warner Bros. programs and a slew of forthcoming original web-only programs created by big-name talent. Many of the classic programs have cult-like followings and will no doubt find an ardent online audience.

In addition, TheWB site has some nifty features such as a mashup capability called "WBlender" powered by Adobe Premiere Express, video search powered by Digitalsmiths (including full scene-by-scene indexing of all programs which allows search at the dialogue, character, location, episode, session and series level) and a pretty deep Facebook app allowing users to share content back and forth.

While these features all will eventually raise the bar for other sites, certain aspects are not yet fully implemented. For example, WBlender today only offers users a paltry 30 or so pre-selected clips and just 6 soundtracks to mash. Later this year the selection will widen when the WBlender is married to the video search feature, allowing all scenes from all shows to be mashed together. It's not clear whether users will be able to clip specific segments themselves from favorite episodes or not.

Overall, the site's execution is solid except for a few minor personal quibbles that aren't worth spending time on here. I believe a far bigger issue is the site's fuzzy strategy. A WB spokesman told me that "TheWB.com is not meant to be an archival library of every episode of every show ever made, but rather an entertainment destination that gives our viewers a lot of great entertainment, along with a reason to come back again tomorrow." This is meant to give "our programmers the ability to create themed programming blocks that mesh with our audience's sensibilities."

 

Yet how TheWB.com actually translates this strategy into which programs and episodes are available on the site at any given time is where I think it's going to generate considerable user frustration, not to mention a lack of competitiveness with its own syndication outlets.

Three shows "Friends," "Buffy the Vampire Slayer" and "Angel" illustrate the point. With "Friends" just 7 episodes are currently available on the site, inexplicably from 7 different seasons. If there's a thematic thread, it is neither stated on the site, nor intuitive to me. If I want to watch a specific episode from a particular season, I'm out of luck. Meanwhile TheWB.com shortchanges "Angel" and "Buffy" fans by offering just the first 5 episodes of each, while Hulu, as one example, already offers 22 and 34 episodes each program, respectively.

I think it will quickly become evident that TheWB.com's strategy to "program" its online network is at odds with the on-demand desires of users seeking unfettered access to the full catalog of all programs. Here we see legacy linear TV thinking being grafted onto a high-potential online platform, with the result being a confusing sub-par user experience.

I know I've said this before, but I continue to believe that Hulu is the reigning broadband video user experience king. Having cracked the code on how to deliver fast growth and user loyalty, TheWB.com would be wise to go to school on Hulu and borrow liberally from lessons it has already learned and acted on well.

Still, in fairness, this is still just the beta of TheWB.com. There's a lot to be excited about here, but getting the site's strategy aligned with user expectations is a key building block to eventual success.

What do you think? Post a comment now.

Wrapping up a busy June, I'd like to quickly recap 3 key topics covered in VideoNuze:

1. Execution matters as much as strategy

I've been mindful since the launch of VideoNuze to not just focus on big strategic shifts in the industry, but also on the important role of execution. I'm not planning to get too far into the tactical weeds, but I do intend to show examples where possible of how successful execution can make a difference. This month, in 2 posts comparing and contrasting Hulu and Fancast (here and here) I tried to constructively show how a nimble upstart can get a toehold against an entrenched incumbent by getting things right.

While great execution is a key to successful online businesses, it may sometimes feel pretty mundane. For example, in "Jacob's Pillow Uses Video to Enhance Customer Experience" I shared an example of an arts organization has begun including video samples of upcoming performances on its web site, improving the user experience and no doubt enhancing ticket sales. A small touch with a big reward. And in this post about the analytics firm Visible Measures, I tried to explain how rigorous tracking can enhance programming and product decisions. I'll continue to find examples of where execution has had an impact, whether positive or negative.

2. Cable TV industry impacted by broadband

As many of you know, I believe the cable TV industry is a crucial element of the broadband video industry. Cable operators now provide tens of millions of consumer broadband connections. And cable networks have become active in delivering their programs and clips via broadband. Yet the broadband's relationships with operators and networks are complex, presenting a range of opportunities and challenges.

On the opportunities side, in "Cable's Subscriber Fees Matter, A Lot," I explained how the monthly sub fees that networks collect put them on a firm financial footing for weathering broadband's changes and an advantageous position compared to broadband content startups which must survive solely on ads. Further, syndication is offering new distribution opportunities, as evidenced by Scripps Networks syndication deal with AOL in May and Comedy Central's syndication of Daily Show and Colbert Report to Hulu and Adobe. Yet cable networks are challenged to exploit broadband's new opportunities while not antagonizing their traditional distributors.

For operators, though broadband access provides billions in monthly revenues, broadband is ultimately going to challenge their traditional video subscription business. In "Video Aggregators Have Raised $366+ Million to Date," I itemized the torrent of money that's flowed into the broadband aggregation space, with players ultimately vying for a piece of cable's aggregation revenue. These and other companies are working hard to change the video industry's value chain. There will be a lot more news from them yet to come.

3. Video publishing/management platforms continue to evolve

Lastly, I continued covering the all-important video content publishing/management platform space this month, with product updates from PermissionTV, Brightcove and Entriq/Dayport. Yesterday, in introducing Delve Networks, another new player, I included a chart of all the companies in this space. I put a significant emphasis on this area because it is a key building block to making the broadband video industry work.

These companies are jostling with each other to provide the tools that content providers need to deliver and optimize the broadband experience. The competitive dynamic between these companies is very blurry though, with each emphasizing different features and capabilities. Nonetheless, each seems to be winning a share of the expanding market. I'll continue covering this segment of the industry as it evolves.

That's it for June; I have lots more good stuff planned for July!

Though broadcast TV networks have been aggressively pushing their shows online, there has been simmering angst about what impact this will ultimately have on their traditional economics.

I have explored this issue recently in "Does Broadband Video Help or Hurt Broadcast TV Networks?" and in two posts on Fox's "Remote-Free TV" initiative here and here. NBCU's CEO Jeff Zucker has helped to stoke this concern, publicly calling broadcasters' #1 challenge the risk of exchanging "analog dollars for digital pennies."

Thus I was both a bit surprised, but also encouraged, to hear Albert Cheng, Disney/ABC's EVP of Digital Media tell me in a recent briefing that despite the fact that online revenue per program per eyeball is currently less than it is for on-air, he's confident that online will eventually catch up and surpass on-air. I don't regard these comments as idle boasts. A thick PowerPoint deck covering its online video strategy, which Disney/ABC shared with me, reveals the meticulous thought and in-depth audience research that is guiding Disney's online video initiatives. Not to mention ABC.com is the most-used network web site.

Cheng is quick to point out that Disney/ABC has followed a careful and consistent strategy since it moved into online distribution a few years ago (note Disney/ABC was the first network to work with iTunes and first to offer programs for free. Other networks quickly followed). The focus has been on continued learning and refinement.

From a strategy standpoint, Disney/ABC's video player, powered by Move Networks, is the centerpiece. The focus is on delivering a high-quality, consistent user experience in which ads are engaging, but not intrusive. While other networks have received more ink for their syndication efforts Cheng is quick to point out that access to Disney/ABC's player has always been open, allowing other sites to refer their users, if not actually integrate the player.

By making an RSS feed available of its online programs' meta-data, Cheng believes Disney/ABC can achieve much of what others gain through syndication deals (see how Hulu displays results for a "Lost" search below, subtly noting "Watch at ABC" This is the same concept I noted in my recent Hulu vs. Comcast post), while avoiding the downsides of ad sales conflicts, business rules implementation and delivery overhead.

By controlling their own ad inventory, Disney/ABC avoids the sometimes one-sided revenue sharing deals widely-discussed in the industry (Hulu alone is rumored to keep 90%) and the channel conflict that inevitably results from having two sales teams calling on the same media buyers. Cheng does see a role for online aggregators, but mainly for library or off-network product, especially as a backstop for traditional syndication.

Cheng's rationale for broadband's eventual revenue superiority to on-air ultimately boils down to this: since broadband can offer both superior targeting and engagement vs. on-air, by definition it deserves higher pricing. But getting to that vision from today's reality is where Disney/ABC's hard work of evangelizing to advertisers and ongoing testing is key (and where the company's recently announced "Ad Lab" comes in).

What do you think? Post a comment and let everyone know!

The crew over at Hulu must be gleefully fist-bumping each other this week as Hulu scored a key strategic and public relations coup in adding to its lineup two of Comedy Central's most popular programs, "The Daily Show with Jon Stewart" and "The Colbert Report." Though officially positioned as a test, Hulu still deserves big-time kudos as the deal is an endorsement of its value proposition.

The deal and Hulu's execution illustrate a larger point that I've been making for a while: one of broadband's three key disruptions is that it enables new aggregators to gain an edge on larger incumbents by changing the dynamics of competition. To be more specific, in this case, I think that Hulu has out-executed Comcast, America's #1 cable operator by delivering new value to consumers and gaining important PR momentum. Here's why:

Second, and more concerning is that, as a Comcast digital subscriber, when I tried to find The Daily Show and Colbert in Comcast's VOD menu, all that is available are five older Colbert clips and 1 older Daily Show clip. My guess is these haven't been updated in a while. No full-length Daily Show or Colbert programs are available at all in VOD.

While the Comcast spokesperson told me that the company works closely with its programming partners like Viacom to figure out the optimal mix of programming to make available on VOD, I think an unavoidable conclusion here is that Comcast (and other cable operators) is constrained by its inability to monetize VOD programming with advertising (what this week's "Project Canoe" is meant to address) and to easily add new programming on the VOD menu. These programming gaps create opportunities for upstarts like Hulu to capitalize on.

It may be unfair to zero in so narrowly on Comcast's execution with Daily Show/Colbert, yet things weren't much different when I searched for MTV's popular "The Hills" on Hulu, Fancast and Comcast's VOD. While Hulu doesn't appear to have a deal for full episodes of "The Hills" it masks this cleverly by providing thumbail images and easy navigation back to MTV's site where the video lives, for over 50 episodes (this is tactic Hulu uses for ABC's shows as well). On the other hand, Fancast displays just 5 full episodes, 2 from this season and 3 from last. And on VOD there are also just 5 episodes, though all from this season.

I think it's pretty significant that Hulu, a site that only went live 3 months ago can not only gain access to hit Comedy Central programs like Daily Show/Colbert, but can execute quickly. Hulu is using its advantages - flexible technologies, interactive features (clipping, embedding, sharing), monetization capability, savvy PR and startup pluck to compete with far-larger incumbents like Comcast.

Of course Comcast racks up billions of VOD views each year and has vast resources, making it an important player in on-demand programming. Yet Hulu has managed to make Comcast's advantages look a little less intimidating. I asked the Comcast spokesperson about this. She acknowledged Hulu's progress, but maintained that Comcast believes its mulit-platform approach is stronger.

In the big picture that's true, but when it comes to winning consumers' hearts and minds, it's often execution, not broad strategy that carries the day. And don't forget, when Hulu is unshackled from the PC - with its content freely riding Comcast's broadband pipes all the way to the TV - execution will matter even more.

This week Hulu provided a textbook example of how broadband-only aggregators can gain a foothold against well-established incumbents. Comcast and other incumbents should be taking notice and getting their game on.

What do think? Post a comment and let everyone know!

One of the best hours I spent at NAB was the one listening to Hulu's CEO Jason Kilar. Too bad it was scheduled for 5pm on Day 3, resulting in a desultory crowd of only a 100 or so. Broadcasters and others could learn a lot from Kilar and Hulu's early experience.

Hulu, which was derisively referred to as "Clown Co" prior to its launch, is anything but. In my previous review of its beta, I gave it a B+. One month since its official launch, I now move it up a notch to A minus, and as I'll explain later, an A is within reach.

Hulu is as well-thought out a broadband video enterprise as currently exists, for at least three reasons:

Clarity of purpose - While Hulu evokes Google with its lofty goal, "to help people find and enjoy the world's premium content, when, where and how they want to," it has provided discipline to keep Kilar and his team focused on meaningfully supportive differentiators.

Relentless user-focus - Hulu is Apple-esque in its devotion to what Kilar called an "atypically strong user experience." The team has sweated over and uses every design and technology lever available to make Hulu easy and enjoyable and accessible to the mainstream market.

Organizational capability - Hulu has a startup mentality where every decision is do-or-die. It may feel intangible if you've never worked in a startup, but personal ownership is an incredibly important advantage. Inculcating this ethos despite a $100 million investment and $1 billion valuation is no mean feat.

Several recent spins through Hulu showed how these come together. Hulu now has 50+ content partners, but is uncluttered by UGC. This is a place for only high-quality programming. Finding and playing video is a snap. Graphics and fonts are simple and clear. As Kilar said the site's 16:9 graphics, differentiated from standard square thumbnails, suggest this place is different from the rest (no "Tokyo at night" orientation here). Here you can also easily clip and share favorite scenes, which Kilar says has been done 100k+ times on 12K sites since launch.

And how about this - do a search for "Lost" - the popular ABC program which is NOT available on Hulu - and you'll get results pointing you offsite to ABC.com. Talk about putting the user first!

Hulu's real lesson to broadcasters and others is that if you create a high-quality user environment, you open up real opportunities and options. These include getting above average CPMs from advertisers (through effective units like the 7 second introductory "brand slate"), wringing value out of programs no longer on-air (example "Arrested Development" was #1 or #2 most popular on Hulu), pre-empting non-revenue producing/non-branded environments like file-sharing sites and YouTube, allowing new programs to be easily sampled and last but not least, re-capturing users who prefer online over the traditional on-air model.

Hulu still has major challenges ahead: massively building out its content library, proving its syndication value to content partners who could as easily go direct to distributors, making its overall economics work, and of course, navigating the treacherous political waters of its big media backers. If it does all of these, it gets an A. Hulu's impressive progress to date gives me every reason to believe it will.

What do you think of Hulu? Post a comment!

The press releases began flying today, timed with NAB's kickoff. Here are a few that caught my eye:

Move Networks Raises $46 Million

Move continues its fund-raising prowess, raising a large C round. As more content providers push the HD quality bar, Move's content delivery services have increased appeal.

Signiant Powers Hulu's Distribution Efforts

Hulu, the NBC-Fox aggregator is using Signiant's media management platform to ingest content from the various content partners it works with.

Widevine Provides Content Security for Microsoft's Silverlight

For the first time Microsoft has used a third-party content security system to add a layer of protection for content providers using the company's new rich media plug-in.

EveryZing Introduced "RAMP," Signs Up Cox Radio

Building on its recent launch of EZSearch and EZSEO to enable video discovery, EveryZing has introduced a management console for the products for which Cox Radio will be the first customer.

Live Streaming Quality Bar Raised Via Mogulus-Kulabyte Partnership