Posts for 'Hulu'

  • MTV Networks Dips Toe Into Syndication Waters

    I was very happy to see news today of MTVN striking a big video syndication deal for its multiple networks' content with AOL Video.

    Recently I praised Comedy Central's launch of TheDailyShow.com, but I took it to task for what appeared to be a destination-centric strategy, which was further supported by some executives' remarks. In this age of syndication, I thought that was a wrong-headed approach. Coupled with Viacom's misguided lawsuit against Google/YouTube, it felt like further evidence that MTVN was falling out of step with key broadband opportunities.

    Today's news shows renewed hope that this may not be the case. I know these deals don't get done in a day, but I'd really like to see more syndication momentum from MTVN (and other content providers for that matter) to spread its content far and wide. Broadband Internet users don't expect to have to go to destination sites to get their favorite videos, they want them accessible where they already frequently visit. Hulu and CBS, to name two content providers that are solidly focused on syndication understand this, as do many others.

     
  • Broadcast TV Stations Most Threatened by Broadband/On-Demand

    Last week a journalist interviewing me for a story asked: "Which industry or industries are potentially threatened the most by the rise of broadband video and on-demand usage?"

    It's a tough question to answer because there are so many different variables at play. However, if pressed, my answer would have to be local broadcast TV stations. Taking aside the current WGA strike which exposes yet another industry vulnerability, local TV stations find themselves on the short end of just about every macro trend being driven by broadband and on-demand adoption. To thrive in the future, stations are going to have to radically reinvent their business models. It's by no means an impossible task, but it is going to require savvy and aggressive strategic moves.

    Consider the perfect storm local stations are up against:

    1. Broadcast networks (ABC, CBS, FOX, NBC) are avidly pursuing broadband distribution of their hit shows, creating competition to the traditional model of geographic programming exclusivity for local stations. Initiatives such as Hulu and CBS's Audience Network can be thought of as 'digital replicas" of the old analog affiliate model. Networks have gotten broadband religion; notwithstanding their finessed protestations, they're only going to be increasing their digital bets, leaving their affiliates with new competition for eyeballs at every turn.

    2. On demand viewing is shattering prime time viewership and the all important "lead-in" to late news broadcasts. Between DVRs and VOD, more and more of the world is habituating itself to watching programs when they want to, not when they originally ran. So appointment viewing is out and along with it the concept of audience aggregation. Strip out prime time and the local station needs to build audience for its own shows and newscasts by itself.

    3. Local news, weather and sports content are the mainstays of local newscasts, yet the availability of this kind of content is becoming pervasive and conveniently accessible. Remember when you had to stay up late to find out what the scores were? Doesn't that seem quaint now? These days every spec of information about these key categories is just a click away, further undermining local newscasts' value.

    4. Advertisers have more options than ever and are gradually going to move spending to approaches that are both more ROI-centric (e.g. Google) and a better match for their customers' media behavior. Think about it - if you're a Honda, Scion or Volkswagen dealer targeting younger demos, is local TV really the best way to reach this audience? The range of options for local advertisers is already robust and is only going to become more so in the future.

    All of this said, however, all is not lost by any stretch. With the right leadership, I happen to believe that local stations can find ways to manage their way through the chaotic days ahead. Tops on my list would be embracing broadband as a new programming platform to leverage their local expertise, blasting their content out through every possible distribution path, radically re-training their ad sales teams to be Internet-literate, cross platform-obsessed warriors and re-creating their brands' perceptions for the broadband and on-demand era.

    Broadcast TV stations need to look no further than their cross-town rival newspapers to understand the gale-force competitive winds coming their way. Hopefully with these examples plainly visible, they'll prepare themselves appropriately.

     
  • Exclusive Brightcove Update with Jeremy Allaire

    Yesterday I did an hour-long briefing with Jeremy Allaire, Brightcove's CEO/founder at their Cambridge offices.

    Background

    If I were to make a list of the 5 questions I've been asked most frequently over the last two years, "What do you think about Brightcove?" would easily be on the list. Certainly a lot of the attention Brightcove has generated relates to its fund-raising leadership. Through three rounds, the company has raised $82 million, including the monster $59.5 million C round closed in January 2007.

    By my count the only pure-play, private broadband video company that has raised more is Hulu, which raised $100M in one round from Providence Equity. But Hulu's probably not a fair comparison given that NBC and News Corp are the company's primary owners and are contributing exclusive content. (btw, if anyone has a different take on who's raised more, please leave a comment)

    So this briefing was a great opportunity to get a first-hand update and also channel many of the follow-on questions I've been asked about Brightcove. (Full disclaimer, Brightcove is a VideoNuze sponsor.) Jeremy also shared some new stats with me that haven't been disclosed before.

    Positioning

    Brightcove's positioning has shifted around in the 18 months since its official launch causing many industry tongues to wag.

    Jeremy explained that in the summer of 2007 the company did a candid assessment of its competitive standing across areas in which it was involved. While his original vision included a consumer-facing destination site (named Brightcove TV), this assessment concluded that with YouTube's dominance, Brightcove's goal to be number 1 in that business was unlikely to ever materialize. Further, the potential for conflict with its own media customers had become real. So though Brightcove TV had 8 million unique visitors in August, 2007 according to comScore (making it the number 5 player in that space), Brightcove decided to de-emphasize it and reduce investment spending on it to zero. As a result, Brightcove TV now functions mainly as a showcase site.

    The company narrowed its focus to its broadband media publishing and management platform, which Jeremy says is now used by 4,000 professional publishers (sample list here), which Brightcove thinks makes it number 1 among its competitors. These publishers operate 7,000 web sites with an estimated combined reach of 120 million unique visitors per month.

    The platform business model includes an annual software licensing fee with upside revenue based on the customers' usage. Jeremy denied that the company is taking ad revenue shares in lieu of platform fees, a rumor that has persistently circulated in the market. Brightcove has also continued to build out a professional support team serving the gamut of design, support, integration and customization required by customers.

    Broadband Video Market and Advertising

    From Jeremy's vantage point the major media companies Brightcove is serving are aggressively focused on building out their direct-to-consumer broadband video destinations, and only recently have they begun also considering syndication. Brightcove's customers' business models skew overwhelmingly in favor of advertising support, with only negligible interest being shown in Brightcove's commerce capabilities.

    On this point Jeremy and I have been in agreement for a long time - the macro factors driving ad-supported broadband businesses are very strong, while those driving paid downloads continue to be challenged. The key catalysts for paid models will be mass connections from broadband to TVs, better portability and improved competitiveness with the DVD platform. In the longer-term all of these will no doubt fall into place, however, for as far as the eye can see, broadband is going to remain an ad-dominated industry.

    The follow-up question of course is, what kind of advertising will predominate? Brightcove supports a range of options and Jeremy said that recently interest in overlays is running very high, though 15 second pre and mid-rolls are still used by 99% of its customers today. There's a lot of planning or rolling out of overlays coming shortly by Brightcove customers. People.com was shown as an example of a hybrid pre/mid-roll and overlay model that Jeremy thinks will become more prevalent.

    Syndication

    Brightcove is also starting to see heightened interest in syndication, and the company offers a set of tools to support it. One example Jeremy showed which I haven't followed is Sony BMG's "MusicBox" service, which offers an array of syndication options. Sony BMG demonstrates that for sites serious about syndication, it's about far more than moving video files around to third parties. Of course the goals of syndication are still to proliferate the content and brand to drive new revenues from far-flung corners of the Internet, but the mechanisms for optimizing this can be quite involved. There's integration of players, advertising, widgets and more. I've been very bullish on syndication for a while, and the actions by Hulu and CBS's Audience Network to distribute their content show real signs of life in the syndication model.
     

    Going Forward

    Not surprisingly, Jeremy's extremely bullish on broadband's future growth and sees opportunities galore to grow Brightcove's revenues by deepening its penetration of existing customers, driving more international business, especially in Asia, and expanding its fledgling presence in the enterprise/government sectors, where there's also been a lot of recent interest.

    Regarding competition, Jeremy says Brightcove still sees internal development as an alternative being considered by some major media companies, though to a lesser and lesser extent recently. He also volunteered that both Maven and thePlatform are two companies Brightcove sees most often competing for deals. When asked what differentiates Brightcove, Jeremy cites product quality, ease-of-use, customer/market leadership, quality of its people and R&D. On this last point, he believes Brightcove's relatively deep pockets have helped it maintain a far more aggressive R&D budget, which grew by 300% this year.

    Key upcoming priorities include launching "Brightcove Show", its new HD initiative, "Aftermix", its mash-up feature, which just finished up its beta test, multimedia capabilities (photos and audio) and enabling a slew of social/sharing features.

    I couldn't resist asking Jeremy about Brightcove's last round valuation rumored to be north of $200 million. I've heard much skepticism in the market that the Brightcove's platform-centric strategy does not justify this lofty figure.

    Jeremy's response is that based on the company's current revenue and recent growth trajectory, it has "grown into" its valuation and that its multiple is comparable to others he's aware of. His main objective is building a "significant global business" and if that's accomplished then there will be numerous options open for what ultimately happens with the company. He wouldn't comment on M&A, IPO or other potential exits, only saying that he feels no pressure from his investors to liquify their positions any time soon.

    To achieve his global ambition, Jeremy says he's focused primarily on what actions Brightcove needs to make to dramatically scale the business, which he thinks can drive a real premium for Brightcove's valuation. To the extent that broadband remains mainly an ad-supported business, I think Jeremy correctly understands that scale - in customers, streams, usage, geographic reach, etc. - are absolutely central to success. When asked the classic "what keeps him up at night?", he cites as his chief source of insomnia the challenge of building out every part of the organization to support his goal of massive scale.

    As Brightcove continues to evolve and grow, one thing is for certain - all eyes in the broadband industry will be watching its progress.

     
  • Google's Android: Striving for Broadband's Openness

    Google's announcement on Monday of its "Android" mobile operating platform is another example of open platforms' appeal and underscores why broadband video has grown so quickly and is so compelling.

    For those who missed the news, on Monday Google announced its Android mobile platform and the Open Handset Alliance, with 33 other companies, aiming to accelerate innovation and application development for mobile devices. In essence the goal is to develop a widely-deployed open platform, comparable to the Internet itself. Mobile video would certainly be a key beneficiary if Android succeeds.

    This push to openness in mobile can be seen as an attempt to emulate what's unfolded in the broadband video industry over the last 5 years. The result of broadband's openness has been nothing short of staggering, Whether it's video found at YouTube, iTunes, Hulu, NYTimes.com, MLB.com, Cosmopolitan.com or countless others, the torrent of video that's been unleashed, the shift in consumer behavior that's ensued and the capital that's been invested in this sector are all the direct result of broadband's open pipe.

    In fact, as I have said innumerable times, the reason why broadband video delivery is the single most disruptive influence on the traditional video industry is precisely BECAUSE it offers an open platform for producers to send video directly to their target audiences. As such, it eliminates the requirement for video producers to land a deal with a traditional gatekeeper to the home such as a broadcast or cable TV network, or a cable TV, satellite or telco service provider.

    In short, the ability for producers to connect directly with their audiences strikes at the heart of the traditional video distribution value chain, threatening a permanent re-ordering of the economics of the video business. It enables all kinds of players who have been shut out of the video game to now jump in.

    And while broadband video is admittedly still in its embryonic stage from a revenue standpoint, its long-term appeal portends vulnerability for those who cling too long to the traditional closed, walled-garden model. The Internet has shown us all the power of open over closed models, of interoperability over proprietary approaches, and of often chaotic, but user-centric growth over top-down control.

    Broadband's ecosystem is experiencing a rapid "layer-cake" effect where new technologies and applications are being built on top of preceding ones. The result is a vibrant, entrepreneurial culture in the broadband sector. If Android succeeds the same will be true in the mobile video sector as well.

     
  • NFL Demonstrates Syndication is Not Right for Everyone

    As many of you know, in general I'm a big-time advocate of syndication as a strategy to permeate broadband video into all the "nooks and crannies" of the Internet. Many content providers have embraced this path, most recently Hulu and CBS (with its Audience Network). The purpose of syndication is to ensure that content reaches users where they currently visit, as opposed to requiring them to come to a new destination. That "destination-centric" approach was of course the way the traditional media industry worked.

    But the NFL shows that syndication isn't right for everyone. In instances where there is genuinely unique content, it can make sense to pursue a pure destination strategy.

    To illustrate, yesterday I missed part of the Patriots-Colts game. Though I did catch the end, I was eager to see the big plays. During the parts of the game I saw there were several promos for video available at NFL.com. So post-game I started pinging the NFL's site and it turned out that within about 1 1/2 hours of the end of the game, there was a 5:13 edited montage posted. It included most of the big plays and was available exclusively at NFL.com.

     

    The NFL caused a kerfuffle earlier this year when it issued highly restrictive rules governing use of and monetization of its game video. But having had this experience, I think they made the right call. When you have must-see content and own all the rights, I think it is indeed better to pursue a destination strategy. You get all the views. You get all the monetization. You get all the site loyalty and cross-promotion opportunities. You get everyone linking to you. And you have the exclusive archive.

    It's rare to own something as valuable as NFL game video. But if your video does have similar attributes, then I would encourage considering destination over syndication. If you go this route though, being highly proactive to serve users' interests, as the NFL is doing, is essential to success.

     
  • Hulu 1.0 Gets a Solid B+

    I'm now back from Digital Hollywood and I've had an opportunity to give Hulu 1.0 a spin as part of its private beta. I've also looked the Hulu offering at AOL which is not yet comparable (less content, fewer features) to the one at Hulu.com. So I think that for now using Hulu through the private beta is the only way to get the full 1.0 experience.

    My initial reactions are positive and I give Hulu 1.0 a solid B+, with many of the fundamentals well done, but with certain features needing improvement, as to be expected from a beta launch. All in all, considering the short development window in which Hulu was created, the Hulu team deserves much credit.

    Hulu 1.0 should more than silence those who snarkily pre-labeled it "Clown Co" and misunderstood it to be a "YouTube killer", which it is not. Hulu has not embarrassed its primary investors (and content providers) NBC and News Corp in any way, and in fact, has set the stage for taking back control of how its full-length content and clips are distributed online. This was of course the investors' main motivation - creating a legitimate platform for them to control their online destiny and capture the lion's share of the economics.

    Design and Video Quality
    Hulu sports a clean, open design format, heavy on thumbnail images. It's easy to find your way around, and there's little risk of getting lost in the process. The home page, seen below, offers 3 main branches, Popular Episodes (will number 1 on the list ever be anything but an episode from The Office though?), Most Popular Clips (looks like all provided by Hulu, none by users) and Recently Added (a nice addition here would be to expose the original air date without actually having to click through).

    Once clicking into a clip or full length video, the video player experience was excellent. Not only is the player consistent for all videos, but the quality was as well. I never experienced any delays, re-buffering, pixelation, audio/video out of synch or other typical video issues. In full screen mode there was a little degradation, but was certainly above the acceptable-quality bar.

     

    Content
    Currently there are 34 individual content providers (though many under common parentage) contributing a broad range of current and older TV programming and films. While the other 2 big broadcasters CBS and ABC are missing, there's plenty of cable network and studio fare available. All is easily navigable through the browse function.

    The biggest knock on the content is its inconsistency. For example, click on "24" and you can choose from 3 episodes from Season 1 and one from Season 6. Battlestar Galactica gives all of Season 1, but nothing else. Same for a classic like The Mary Tyler Moore Show. Huh? All of this makes it confusing for the user to know what to expect. If all this is due to rights or other limitations, it would be good for Hulu to signal or explain this somehow.

    Advertising
    Certainly one of the best decisions Hulu made is how it's initially implementing ads, though the implementation doesn't appear consistent across all video, or at least the ones I watched. There are no pre-rolls, though there are 5 second sponsor messages up front, but only for certain shows it seems, not all of them. There are mid-rolls, typically 15-30 seconds, and fortunately these are show only one at a time, not in pods. And there's a countdown so it's clear when video will resume.

    Of course, the bigger question is whether this limited amount of advertising is sufficient to make Hulu's economic model work, especially if sometime down the road, online consumption cannibalizes on-air consumption.

    Features
    Many of the expected features are offered - embed, share, full screen, create a playlist and user reviews. One feature that has great potential is the "create a custom clip". This allows users to manipulate a timebar to create their own favorite clips. I could see this being very popular, especially for passionate fans. And it allows a whole new range of short form video inventory to be created with no incremental effort by Hulu staff.

    Yet for now the create a clip capability is buried in the "Share" feature, which seemingly only allows the custom clip to be emailed. And pinning down your desired start and stop points is very tough. Since custom clips are the only UGC-like opportunity in Hulu, these should be given more prominence. Ideas could include showcasing a users' gallery of favorites, allowing them to be saved to playlists, syndicating them to partners' sites and allowing them to be mashed up.

    Wrap-up
    In general, while I think Hulu1.0 is an admirable starting point, the custom clip situation underlines the one major disconnect I have with Hulu: I sense that in its zeal to become a site focused on premium, non-UGC content, it managed to miss out on emphasizing a community-building, social-networking focus that would help make it feel more interactive and inviting.
     
    These are exactly the types of things that have helped make YouTube such a hit. Offering some of these features doesn't mean Hulu becomes a YouTube competitor, vying for UGC supremacy. Rather, it means giving users some of the social tools they love, which they can now use with premium content only Hulu has to offer. If and when Hulu embraces these opportunities as well, an "A" grade will be attainable.
     

    UPDATE: Reed Price, MSN Entertainment's Editor-in-Chief emailed me to remind me that MSN (an initial Hulu distribution partner) has already rolled out a relatively extensive integration of Hulu video. He provided a number of links including these 4:

     
    Thanks for the heads-up Reed. When I see that other distribution partners have integrated Hulu I intend to write another post comparing/contrasting the distributors' various approaches. I have a hunch they'll vary widely.
     
  • Hulu Launches Private Beta

    Not breaking news now, but Hulu lifted the veil of secrecy a bit today, releasing some screen shots and setting up a private beta (I'm trying to yank some strings to get access), in advance of a planned public launch early next year.

    Hulu's been surrounded by a bunch of naysayers from the beginning, though much of the nay-ing has been based on little else than cheap shots about the name, delayed launch, etc. Things that in the grand scheme of things mean virtually nothing in my opinion and only serve to distract attention from the real question at hand: can Hulu become NBC and Fox's (for now) formula for success in the broadband video era?

    Now it's time for Hulu to silence the rabble. Until I get my own hands on it, I'm going to reserve in-depth commentary. But at least several things that look intriguing:

    • Shorter commercial breaks and overlays - Looks like the tension between user focus vs. advertiser focus is skewing toward users. A welcome change from traditional media thinking.
    • Widespread distribution - I've been a big fan of this from the start. Deals with AOL, Yahoo, MySpace, Comcast, etc. ensures that Hulu content is widely available where users already are.
    • More content deals - One of the knocks on Hulu was that neither CBS nor ABC joined up front. However, recent deals with Sony and MGM show Hulu continues to gain traction with other premium providers.
    • Features - Beyond the standard range of embed, full-screen, send-to-friend features, it looks like there's an interesting "custom clip" capability to let users crop out scenes from favorite shows to pass along. This user control could enable massive new short form video inventory and could be a precursor to more interesting and creative user-generated mashups. All of this is highly monetizable.

    More thoughts on Hulu to come.

     
  • DailyMotion Raises $34 Million, Is Category Over-Funded?

    dailymotion.jpg

    WSJ reported today that DailyMotion, the French video sharing site, has raised $34 million in a round led by Advent Venture Partners LLP of London and AGF Private Equity. This financing adds to a wave of capital that has poured into the overall ad-supported video sharing/video aggregator platform space in the last few months.

    Companies that I think fit in this group that have recently raised big money are Joost ($45 million), Veoh ($26 million), Metacafe ($30 million) and blip.tv ($10 million). Hulu, the NBC-News Corp JV which raised $100 million could even be considered in this category. And thinking a little more broadly you could include sites like Heavy.com, Break, Vuguru, Next New Networks, DaveTV, Babelgum, BitTorrent and others which are creating and/or aggregating broadband programming.

    To be fair, each of these companies has a slightly different approach to their content strategy (pure aggregation vs. original development vs. hybrids), market positioning and technology capabilities. However, as best I can tell, they're all trying to offer distinctive video content into broadband-only delivery networks and to one extent or another, surround this programming with interactive tools. The intended result is unique viewing experiences.

    In the aggregator roles they play, they're muscling themselves into the market owned by traditional video distributors like cable and satellite operators, and more recently telcos. These new companies are all very interesting to watch because ultimately they must do at least 3 things to generate traffic and revenue: (1) differentiate themselves from each other, (2) add value to content providers/producers relative to CPs/producers relying solely on a direct-to-consumer approach and (3) shift viewing time from the traditional distributors' programming to their own.

    Any one of these would be a pretty high hurdle to get over. Doing all three will be even tougher. Yet a lot of smart money keeps backing these companies, further demonstrating how hot this overall category is -- and how quickly it could become overfunded. But I don't expect things to cool down any time soon. We can expect further funding in this space as investors clamor to get a piece of the action in broadband video.

     
  • Video Syndication Activity Builds

    fox.jpg

    News earlier this week that Fox Entertainment Group would be working with Brightcove to ramp up its syndication efforts adds to the drumbeat around this trend that was already pretty steady.
     
    Six months ago in my December, 2006 e-newsletter, "7 Broadband Video Trends for 2007", I identified broadband video syndication as important going into 2007. Back then I noted that "Syndication is the handmaiden of the ad-supported broadband video business model. Successful online advertising requires scale and targeting. Syndication provides both." I think we're seeing that play out.
     
    Whether the NBC-News Corp JV, CBS Interactive Audience Network, FEG deal, or countless others I've heard will be announced soon, they all point to same underlying fundamentals. Producing high-quality video is expensive. Content providers want to maximize their ROIs. So they want their content in as many places as possible to aggregate as large an audience as they can, so they can harness online advertising's potential. While none of this is a surprise by online standards, it is a departure from the traditional video models of tight control, limited distribution and exclusive deals.
     
    It's very promising to see the how much progress is being made so quickly to evolve to Internet-centric distribution approaches. More evidence that the media industry's future will be quite different than its past.
     
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