Posts for 'NBC'

Overshadowed this week with the launch of HBO Go is that Synacor has been powering access to the subscriber-only portion of NBC's Olympics video for 14 of its cable operator customers, reaching 9 million subscribers. As Synacor's CEO Ron Frankel told me earlier this week, this is the most extensive TV Everywhere authenticated access instance to date, though it is really just a continuation of the kinds of services Synacor has been offering for years.

Synacor has flown somewhat below the radar as it has steadily built out its content offerings, with deals with 60 different providers now in place (e.g. MLB, NHL, MTV, etc.). Synacor offers a portal to its customers which provides its cable operator customers with single sign-on access via pre-integrated billing and user ID management. This is the same way that TV Everywhere is intended to work as it rolls out. Given its experience, Synacor looks like it will be a key player in making TV Everywhere happen in 2010.

What do you think? Post a comment now (no sign-in required).

Undoubtedly we've all had the experience at one time or another of watching (or trying to watch) a particular online video, only to have some problem arise that interrupts our experience. To the average user, it's a mystery what might have happened. Is it a problem with my computer? With my personal Internet connection? With my Internet service provider? With the source of the content?

Regardless, it causes user frustration, which can lead to clicking away from the video, possibly never to return. More often than not, the content provider isn't even aware of these user problems. As online video becomes more central to content providers' strategies and P&Ls, inferior user experiences are a growing concern for content providers. And given the vagaries of the Internet and the exploding volume of video being consumed, it's an issue unlikely to go away anytime soon.

That's where Conviva comes in. Conviva gives content providers unprecedented insight into their users' viewing behaviors as well as tools to quickly identify and resolve problems. As Darren Feher, Conviva's new CEO explained to me when I met up with him recently, and in a subsequent demo, the company's studies show that at least 25% of all streams suffer one problem or another. Affected users watch between 30-80% less video than those who don't have problems.

Here's how Conviva works: a small bit of its code is integrated by the content provider alongside the Flash or Silverlight player, whichever is used (in either case no user download involved). Conviva is also integrating with online video platforms (so far just thePlatform, but others to come), so the step is eliminated for the content provider. When deployed, Conviva's code monitors the user's video experience and sends back "heartbeat" reports every 10 seconds to the Conviva console. The console gives the content provider multiple views of their users' experiences, including things like a geographic distribution of current viewing, what player's being used, the average time it's taking to start streaming, the average duration of viewing, the amount of buffering, and so on. Conviva shares the science behind all of this if you're so inclined.

Conviva's secret sauce is mashing up all that in-bound data in real-time and detecting if/where problems exist, and when they do, what the source is. Problems could include buffering on the user's machine, issues with the currently-used CDN, congestion in the local ISP, etc. In addition to these telemetry/analytics services, the company also offers a service it calls "Conviva Distribution" which will seek to remedy problems as they arise based on a set of pre-configured policies. For example, if the user's machine is buffering, Conviva will adjust the stream being sent to a lower bit rate. Or if the CDN being used is the problem, Conviva will switch to another CDN (of the content provider's choosing) in mid-stream, unbeknownst to the user. The content provider gets real-time visibility into what troubleshooting is happening.

In addition to improving the user experience, Darren believes this degree of insight opens up new opportunities for content providers. For example, say there's a higher value set of streams, maybe for a subscription service or a live event. Those streams can be tagged and monitored separately, and have greater resources allocated to them to ensure up-time. Improved visibility into videos that are going viral means their placement on the site and their monetization can be enhanced. Another example is better-informed customer service agents responding to issues specific to a certain set of videos.

Some of what Conviva does is similar to analytics products like Omniture, performance measurement from companies like Keynote and Gomez and some of the reporting CDNs themselves provide to customers. But Conviva seems to bring together user viewing data in a unique and far deeper way than any of these. This week Conviva is helping NBC better understand its Olympics streaming using Silverlight. Conviva also counts Fox, ABC, NFL and others as customers. Conviva started life as Rinera Networks, pursing managed P2P distribution. It has raised $29 million to date from UV Partners, New Enterprise Associates and Foundation Capital.

What do you think? Post a comment now (no sign-in required).

In last Friday's "4 Items Worth Noting..." post, I made a quick reference to the Megawoosh Waterslide video - what I thought was a genuine user-generated video of a German man barreling down a huge waterslide into a small pool. It turns out that I, along with many others, got punked. It's a fake, created through effects by a German marketing firm and sponsored by Microsoft Office. If you want all the details, NewTeeVee has a great write-up.

The waterslide incident contrasts with a second incident that happened to me just two weeks earlier. Taken together, I think the two represent a fascinating, yet unexplored side-effect of the broadband video revolution that all of us as human beings are currently experiencing. Let me explain what I mean.

In July 31st VideoNuze Report podcast, Daisy Whitney was very excited to describe the "JK Wedding March" viral video phenomenon (19 million + views to date) and how YouTube was publicizing on its blog that it was generating exceptional click-throughs and revenue for the video's background song "Forever" by Chris Brown through overlay ads.

When I quickly watched the video, my internal "authenticity detector" went off loudly as I wondered whether the wedding march was authentic or simply staged to generated buzz and sales for the song. I expressed this skepticism to Daisy on the podcast, and it wasn't until I did further research, and found the young Minnesota wedding couple interviewed on the "Today" show that my suspicions were allayed.

Meanwhile, when I quickly watched the Megawoosh video I thought, hey, it's an outlandish stunt. I wondered about the engineering involved to pull it off, but my authenticity meter remained relatively quiet.

Here's what I think the difference is: In the JK Wedding March I saw an obvious commercial opportunity that made me suspicious, while with the Megawoosh slide I did not see such opportunities so I was more willing to accept it as genuine. My authenticity lens has been shaped by having watched many broadband videos over the years where brands were involved in subtle and clever ways that I've become very aware. On the flip side, I've seen so many incredible user-generated stunts, that I've become conditioned to thinking that just maybe, anything is possible to pull off and some people's willingness to risk injury and death in the name of fleeting celebrity is unlimited.

Last Monday, in "Netflix's ABC Deal Shows Streaming Progress and Importance of Broadcast TV Networks," I tried making the case that from Netflix's perspective, in order for its Watch Instantly streaming service to succeed, it would most likely need to strike more deals with the broadcast TV networks (as it announced with ABC).

Now how about the flip side of the question: how can broadcast TV networks make online video payments a significant revenue stream?

There is certainly no lack of interest by broadcasters in getting paid for online access to their content. For example, CBS has joined Comcast's TV Everywhere trial, and its CEO Leslie Moonves has been outlining his arguments for why cable's authentication plans should generated new revenue for the network. News Corp head (and Fox owner) lately Rupert Murdoch hasn't been shy about his interest in charging for content, though his first focus appears to be on newspapers. And Disney CEO Bob Iger (and ABC owner), recently told the WSJ, "People are going to pay for content. We are not worried about that." Meanwhile NBC's Jeff Zucker is trying to reposition NBCU as a cable network company (i.e. one that sells ads AND gets paid for its programs).

As I think through how broadcasters can succeed with getting paid, I keep returning to 3 core beliefs: first, broadcasters' efforts should not be undertaken individually, but rather through its joint initiative Hulu, second, the model needs to be subscription-based, not per program-based and third, the subscription service should be made in partnership with incumbent video service providers (cable, satellite, Netflix, etc.) and convergence device makers (Roku, Xbox, etc.).

Hulu has established a strong online brand, built a large audience and demonstrated online savvy. I have the most confidence in Hulu to be able to identify the differentiators needed to drive new value vs. free, including things like more timely access to hit programs, deeper libraries, higher quality streaming, options for downloading and mobile, etc. And assuming the federal government didn't step in and cry "collusion!" Hulu would provide the greatest negotiating leverage.

The key challenge for Hulu would be gaining the rights from the networks, producers, talent and others to launch such a comprehensive service. These stakeholders would be understandably wary, not knowing exactly how to value what they'd be providing.

Several months ago, I suggested a Hulu subscription service was in the offing, but so far Hulu has stayed on message, only emphasizing its free, ad-supported model. I hope it and its parents recognize that time is of the essence. With each passing day, as more people use Hulu ever more intensively, their expectations for free are being set, thereby raising the bar on their eventual willingness to pay. I do believe broadcast networks have any opportunity to evolve their business model and charge, but they must not dither. The online medium is still immature enough that they can influence its rules by acting now.

What do you think? Post a comment now.

Yesterday's announcement by Netflix that it will be adding to its Watch Instantly library past seasons ABC's "Lost," "Desperate Housewives," "Grey's Anatomy" and "Legend of the Seeker" is another step forward for Netflix in strengthening its online competitiveness.

At a broader level though, I think it's also further evidence that the near-term success of Watch Instantly and other "over-the-top" broadband video services is going to be tied largely to deals with broadcast TV networks, rather than film studios, cable TV networks or independently-produced video sources.

Key fault lines are beginning to develop in how premium programming will be distributed in the broadband era. Content providers who have traditionally been paid by consumers or distributors in one way or another are redoubling their determination to preserve these models. Examples abound: the TV Everywhere initiative Comcast/Time Warner are espousing that now has 20+ other networks involved; Epix, the new premium movie service backed by Viacom, Lionsgate and MGM; new distribution deals by the premium online service ESPN360.com, bringing its reach to 41 million homes; MLB's MLB.TV and At Bat subscription offerings; and Disney's planned subscription services. As I wrote last week in "Subscription Overload is On the Horizon," I expect these trends will only accelerate (though whether they'll succeed is another question).

On the other hand, broadcast TV networks, who have traditionally relied on advertising, continue mainly to do so in the broadband world, whether through aggregators like Hulu, or through their own web sites. However, ABC's deal with Netflix, coming on top of its prior deals with CBS and NBC, shows that broadcast networks are both motivated and flexible to mine new opportunites with those willing to pay.

That's a good thing, because as Netflix tries to build out its Watch Instantly library beyond the current 12,000 titles, it is bumping up against two powerful forces. First, in the film business, well-defined "windows" significantly curtail distribution of new films to outlets trying to elbow their way in. And second, in the cable business, well-entrenched business relationships exist that disincent cable networks from offering programs outside the traditional linear channel affiliate model to new players like Netflix. These disincentives are poised to strengthen with the advent of TV Everywhere.

In this context, broadcast networks represent Netflix's best opportunity to grow and differentiate Watch Instantly. Last November in "Netflix Should be Aggressively Pursuing Broadcast Networks for Watch Instantly Service," I outlined all the reasons why. The ABC deal announced yesterday gives Netflix a library of past seasons' episodes, which is great. But it doesn't address where Netflix could create the most value for itself: as commercial-free subscription option for next-day (or even "next-hour") viewing of all prime-time broadcast programs. That is the end-state Netflix should be striving for.

I'm not suggesting for a moment that this will be easy to accomplish. But if it could, Netflix would really enhance the competitiveness of Watch Instantly and its underlying subscription services. It would obviate the need for Netflix subscribers to record broadcast programs, making their lives simpler and freeing up room on their DVRs. It would be jab at both traditional VOD services and new "network DVR" service from Cablevision. It would also be a strong competitor to sites like Hulu, where comparable broadcast programs are available, but only with commercial interruptions. And Hulu still has limited options for viewing on TVs, whereas Netflix's Watch Instantly options for viewing on TVs includes Roku, Xbox, Blu-ray players, etc. Last but not least, it would also be a powerful marketing hook for Netflix to use to bulk up its underlying subscription base that it intends to transition to online-only in the future.

Beyond next-day or next-hour availability, Netflix could also offer things like higher-quality full HD delivery or download options for offline consumption. Broadcasters, who continue to be pinched on the ad side, should be plenty open to all of the above, assuming Netflix is willing to pay.

I continue to believe Netflix is one of the strongest positions to create a compelling over-the-top service offering. But with numerous barriers in its way to gain online distribution rights to films and cable programs, broadcast networks remain its key source of premium content. So keep an eye for more deals like the one announced with ABC yesterday, hopefully including fast availability of current, in-season episodes.

What do you think? Post a comment now.

YouTube mobile video uploads exploding; iPhones are a key contributor - The folks at YouTube revealed that in the last 6 months, uploads from mobile phones to YouTube have jumped 1,700%, while in the last week, since the new iPhone GS was released, uploads increased by 400% per day. I didn't have access to these stats when I wrote on Monday "iPhone 3GS Poised to Drive User-Generated Mobile Video," but I was glad to see some validation. The iPhone 3GS - and other smartphone devices - will further solidify YouTube as the world's central video hub. I stirred some controversy last week with my "Does It Actually Matter How Much Money YouTube is Losing?" post, yet I think the mobile video upload explosion reinforces the power of the YouTube franchise. Google will figure out how to monetize this over time; meanwhile YouTube's pervasiveness in society continues to grow.

Nielsen study debunks mythology around teens' media usage - Nielsen released a new report this week "How Teens Use Media" which tries to correct misperceptions about teens' use of online and offline media. The report is available here. On the one hand, the report underscores prior research from Nielsen, but on the other it reveals some surprising data. For example, more than a quarter of teens read a daily newspaper? Also, 77% of teens use just one form of media at one time (note, data from 2007)? I'm not questioning the Nielsen numbers, but they do seem out of synch with everything I hear from parents of teens.

Paid business models resurfacing - There's been a lot of talk from media executives about the revival of paid business models in the wake of the recession's ad spending slowdown and also the newspaper industry's financial calamity. For those who have been offering their content for free for so long, putting the genie back in the bottle is going to be tough. Conversely for others, like those in the cable TV industry, who have resisted releasing much content for free, their durable paid models now look even more attractive.

Broadcast TV networks diverge on strategy - Ad Age had a good piece this week on the divergence of strategy between NBC and CBS. The former is breaking industry norms by putting Leno on at 10pm, emphasizing cable and avidly pursuing new technologies. Meanwhile CBS is focused on traditional broadcast network objectives like launching hit shows and amassing audience (though to be fair it is pursuing online distribution as well with TV.com). Both strategies make sense in the context of their respective ratings' situations. Regardless, broadcasters need to eventually figure out how to successfully transition to online distribution, something that is still unproven (as I wrote here).

NBC and MSNBC nicely executed their "Inside the Obama White House" minisite, built to accompany this week's exclusive 2 night special, which itself boosted NBC's ratings. The minisite offers all the broadcast programming, chunked into logical parts. There's also web-only video, searchable clips and playlist functionality. The minisite presents the video in a very digestible, clear manner, so if you forgot to TiVo the special like me, you don't miss anything.

When you begin playing the video there's a pre-roll for Applebee's, which appears to be the primary sponsor, though Sprint has some banners too. Mid-rolls run after most segments and then the next programming segment resumes. Applebee's awareness is very strong, though I think they could have benefited from varied creative (I certainly won't forget its Steakburgers and Carside service)

Following are 3 key themes from VideoNuze in May:

1. Hulu Moves to Center Stage

Already on a roll, Hulu gained lots of mind share in May. After YouTube it is clearly the most-buzzed about video site - not a bad accomplishment for a site that just celebrated its one year anniversary.

The month began with the announcement that Disney would invest in Hulu, at last making available ABC and other programs in Hulu's ever-growing portal. Hulu gained stature during the month as the statistic from comScore released in late April - that Hulu was now the #3 most-popular video site, with 380 million video views in March - was repeatedly recirculated. (Hulu was separately disputing data released from Nielsen showing a far-smaller audience.)

In addition to the Disney content, Hulu also announced its first live event, tonight's concert from the Dave Matthews Band. Capping the month was last week's Hulu Labs announcement, showcasing the desktop app that moves Hulu one step closer to being TV-ready.

Hulu's growth and top-notch user experience continue to set the pace in the online video world. Still, as I noted in my post about the Disney deal, what's still unproven is the Hulu business model and how it plans to navigate the convergence of broadband and TV. The spin coming from its owners is that financial progress is being made, yet Hulu's per program viewed revenues continue to be a fraction of those derived from on-air viewership. Sooner than later, I predict the Hulu growth story is going to start to give way to the Hulu financial story, which may yet include subscriptions.

2. Susan Boyle Shows Power and Conundrum of Viral Video

It was hard to miss the Susan Boyle phenomenon in May. As of last Thursday (before the finale of "Britain's Got Talent" in which she placed second) her original video had generated over 235 million views, according to tracking firm Visible Measures. Ms. Boyle's sensational performance has mainstreamed the term "viral video." The idea that you can become a worldwide personality is truly a broadband-only invention.

Yet 3 1/2 years after SNL's "Lazy Sunday" video became the first bona fide big media YouTube hit (despite NBC's efforts), the process for copyright holders and distributors to monetize these viral wonders remains immature. The NY Times described the interplay over the Boyle viral videos between YouTube, Fremantle, ITV and others, and why those hundreds of millions of views are still under-monetized. But with broadband distribution's increasing importance, this won't last; viral monetization rights are inevitably going to become a key part of the upfront negotiating mix.

3. Mobile video growth

Mobile video continued to get a lot of attention from content providers, service providers and handset makers in May, with initiatives from NBC, NBA, E!, Samsung, Sling, among others (a full listing of mobile video news is here). The mobile video ecosystem is responding to data indicating surging consumer acceptance, primarily driven by the iPhone. In May Nielsen released a report indicating mobile user growth from Feb '07 to Feb '09 was 74%, and that iPhone users are 6 times more likely to consume mobile video. The crush of new smartphones coming in the 2nd half of '09 promises that mobile video usage is going to continue growing rapidly. Limelight's acquisition of mobile ad insertion company Kiptronic is likely the tip of the deal iceberg as companies position themselves for mobile.

What do you think? Post a comment now.

While broadband video consumption continues to surge, mobile video usage is also now showing strong signs of growth, mainly due to the iPhone's popularity. In fact Nielsen just reported last week that iPhone users are 6 times as likely to watch mobile video as are other mobile subscribers. And for Q4 '08, it reported that 11.2M people watched mobile video, with 51% stating they're new to the medium, viewing for less than 6 months. This is still small compared with the 150M or so people (U.S.) watching broadband video each month, but with an onslaught of new or upgraded video-capable smartphones hitting the market, mobile video is poised to grow rapidly.

All of this is very good news for content providers, for whom this "3rd screen" (after TV and PC) opens up all kinds of new opportunities. Many have been participating to date in carrier-provided (e.g. VCast, FLO TV) and other (e.g. MobiTV) subscription services that have achieved solid growth. But with still advertising the primary business model for many content providers, they've been eager make ad-supported video available to growing base of mobile video users as well.

NBC for example has been pursuing ad-supported mobile video, and last summer, made a big mobile push with its Summer Olympics coverage. Still, as Stephen Andrade, NBC.com's SVP and GM and Robert Angelo director web/mobile, told me recently, inserting ads in its mobile-distributed video has been painfully laborious and grossly underoptimized. To address these issues, NBC recently struck a deal with Kiptronic, an ad serving firm that specialized in non web-based content.

Stephen and Robert explained that their overarching goal with NBC.com video is to "publish once, distribute everywhere" - a goal I often hear from other video content providers as well. However mobile-distributed video was siloed and not fully incorporated into its online/broadband work flows. This was especially problematic on the ad side, where mobile inventory wasn't exposed in DART, on which NBC has standardized its ads. As a result a lot of mobile inventory was unsold, and even when it was sold, advertisers were required to jump through a bunch of new hoops to get their ads to NBC, which itself then "hand-stitched" the ads to its mobile-distributed video.

After looking at multiple solutions to address these issues, NBC chose Kiptronic's kipMobile. Stephen and Robert said the key was kipMobile's flexibility in plugging into NBC's existing content management system and work flow. Now when an NBC producer uploads video, upon preset instructions kipMobile transcodes the HD source file into relevant mobile formats and transfers them to Akamai (NBC's CDN). When a mobile user calls for a video, kipMobile determines which format is best-suited for that particular device, dynamically grabs appropriate ads from DART and combines the two into a file which Akamai then serves to the user.

Beyond dramatically simplifying NBC's work flow, Stephen and Robert are also excited about the new revenue potential, given NBC's booming mobile usage (Q1 '09 video streams jumped to 9.6M from 2.5M in Q1 '08 with mobile page views increasing from 32M to 96M in the same period). Looking deeper into the usage patterns, NBC sees more than half the mobile video usage occurring at home, as users increasingly look at their mobile device as an alternative screen when the TV isn't available. While 75% of NBC mobile usage is iPhone-based today, they're seeing strong adoption by non iPhone devices. Though still early, geo-identification is creating yet another ad opportunity unique to mobile.

NBC and many other content providers are going to be riding the wave of surging mobile video consumption. kipMobile and other monetization solutions will become increasingly important as these content providers seek to unify their online/broadband and mobile work flows and to fully monetize their views.

OK, Hulu now has ABC in its corner for the next 2 years, along with a re-upped program exclusivity commitment from NBC and Fox. But the nagging question remains: even with all its premium content, fabulous user experience and surging traffic, when will Hulu prove its business model? How that question gets answered will be the real test of Hulu's ultimate success. And with 3 of the 4 broadcast networks now hitching themselves to the Hulu locomotive, the answer is also going to be pivotal to how the industry navigates the broadband video era.

To be clear, VideoNuze readers know that I've been a big fan of Hulu from Day 1. The site has only gotten better over time, not only with more content added, but by continued improvements in the user experience. All of this has no doubt contributed to Hulu's rapid rise up the usage rankings, landing it in the top 3 for the first time in March, with 380M views, according to comScore.

A source familiar with the Disney deal told me the deal was entirely predicated on Disney's desire to tap into Hulu's audience in order to increase ABC's online reach. Among other evidence indicating Hulu's upside potential, comScore data apparently showed that only 8% of the ABC.com audience visits Hulu and only 13% of the Hulu audience visits ABC.com.

To me, three indicators of how much the Hulu deal meant to ABC are the 2 year exclusivity commitment, the redistribution rights for ABC programs to 3rd parties Hulu gained (except for grandfathered ABC partners), and that ABC will allow its programs to be viewed outside of its much-celebrated video player for the first time.

Importantly, the former two terms effectively foreclose any full-length program distribution deal with YouTube and others. For now at least, ABC will limit its relationship with YouTube to clips only. That's a pretty big call; remember YouTube is the category leader that not only has a 40% share of the market, but is also currently over 15 times the size (in streams) of Hulu. There's also YouTube's relationship with Google, which of course has the most formidable online monetization engine (albeit one that hasn't been fully leveraged by YouTube as yet).

The YouTube decision underscores my ambivalence about the broadcast networks' singular embrace of Hulu because there's little evidence that Hulu has yet developed a profitable or sustainable business model. I've written previously about the paucity of ads in Hulu (and broadcasters' own sites for that matter) and how this is creating user expectations that are going to be hard to reset when more ads are inevitably loaded in. One of the reasons users love Hulu is because it is so light on ads. But will Hulu's traffic flatten or decline when the non-skipppable ad load is 2x, 3x or 4x what it is currently?

Further, there was no evidence of customized ad creative or formats meant to incent deeper engagement (unless you count the companion banners prompting users to click to learn more). Deeper engagement and interactivity are supposed to be the calling cards of broadband video advertising. But the ads on Hulu appear to be the same as seen on-air, suggesting Hulu hasn't been able to persuade its brand advertisers to invest in custom creative to leverage the Hulu environment.

Now I know we're in a recession, but still, over a year since Hulu's official launch, and with its tremendous traffic growth, I think all of this is cause for real concern. Hulu is being embraced by the broadcast industry as its main online video vehicle, yet it isn't close to proving it has a model that can actually make money. I don't have insight as to what's going on here, but I hope the networks that are exclusively entrusting their prized programs to Hulu - and consequently incenting huge real-time shifts in viewer behavior - do.

Longer term of course, the networks' bet on Hulu becomes even more profound. That's because as convergence devices of every stripe bring broadband viewing all the way to users' TVs, there's going to be inevitable cannibalization of viewing traditionally done through linear on-air/cable delivery. (Btw, despite much-heralded research to the contrary, anecdotal evidence suggests this is happening already. Just go ask any college student about their viewing behavior.)

Down the road, networks are going to be increasingly reliant on broadband-based ad revenue as their main meal ticket. And if all that's being served up are digital pennies, nickels or dimes - as I believe Hulu is delivering today - then even all the usage in the world will still leave the networks very hungry indeed.

Now that ABC has thrown in with Hulu, you have to believe CBS will as well. With all of the networks on board, they're increasingly betting the industry on the hope that Hulu can figure out its business model. For their sake, let's hope it can.

What do you think? Post a comment now.

Watching President Obama's appearance on "The Tonight Show with Jay Leno" on NBC.com over the weekend was a classic reminder of how so many sites miss out on so much of their total broadband video advertising opportunity.

The interview, which lasts over 24 minutes, carried just one 15 second pre-roll ad, (for Subway, when I watched it) along with a companion banner. Twice during the interview, Leno interrupted the President to pause for a TV commercial break, but when he did so, there was no mid-roll ad inserted by NBC.com. There was also no post-roll ad appended, just a promo graphic for the show itself.

If you figure there were at least 4 potential 15 second avails (1 pre-roll, 1 post-roll and 2 mid-rolls), but only the pre-roll was filled, it means that NBC.com missed out on 75% of the potential ad revenue that each full stream viewer would have generated. In reality the percentage is probably even higher because the mid-rolls could likely be 30 seconds or more.

That degree of under-monetization is pretty disappointing. Don't get me wrong, I'm not advocating that broadband video streams become overwhelmed with ads, which would surely cause a consumer backlash. But I do believe that providers of premium content like NBC.com (and there are few videos more premium than the first time ever a U.S. President has appeared on the "Tonight Show") must recognize and monetize their opportunities effectively. There are at least three reasons why:

First, and most obviously, broadcast networks' poor recent financial performance demands that they seize every available money-making opportunity. Not doing so is just bad business. How many businesses succeed long-term when they don't execute on all chances to generate revenue?

Second, NBC.com and other premium video providers are setting a bad precedent for consumers' expectations. If I can watch 24 minutes of Leno with just one 15 second ad, then if and when NBC.com tries to increase the ad load, I'm inevitably going to be displeased. In short, NBC is devaluing its own content by not serving notice to broadband viewers NOW, that a "price" - in the form of watching ads - must be paid for access.

Third, and tying together the first two reasons, is that it is urgent that networks learn how to achieve economic parity between programs viewed via broadband delivery vs. on-air delivery.

That's because the era of broadband-connected TVs has already begun, and is poised to gain further steam as new devices and connected TVs proliferate.

As this happens, online viewing will no longer be merely supplemental for many viewers to on-air, as it often (thought not exclusively) is today. Rather it will be substitutive. That means viewers will watch Leno via broadband on their TVs, instead of via cable/satellite/telco or over-the-air delivery. Just as "Tonight" would never go 24 minutes on-air without an ad pod (which consists of more than one just 15 second ad btw); NBC.com should never let this happen online. Doing so will cause major damage to its future P&L.

In his Media Summit interview last week, NBCU's Jeff Zucker said the company has already evolved from "digital pennies" to "digital dimes." Yet Hulu's recent stiff-arming of Boxee underscores the reality that networks are nowhere close to economic parity between online and on-air delivery of their programs today. Neither consumers nor technology are standing still waiting for them to catch up. Behaviors, expectations and future economics are being formed right now.

NBC.com - and others - need to be mindful of this and ensure that when they put their premium video online they're fully capitalizing on their ad opportunities. If they don't, then 5 years from now Mr. Zucker will wind up like so many of today's newspaper CEOs - lamenting, not praising, his company's "digital dimes," long after his "analog dollars" have evaporated.

What do you think? Post a comment now.

This week's drama between Hulu and Boxee shines the strongest light yet on all of the disruptive forces broadband-delivered video has unleashed: the fight for how video content will reach your living room in the broadband era, and who exactly will control the process. It is a litmus test for major networks in how they intend to transition from the orderly and closed traditional distribution world to the new, open and messy one.

For those who haven't been paying close attention, this week Hulu's CEO Jason Kilar announced in a blog post that its content would no longer be available to users of Boxee, which is an open source media player that connects broadband delivered content to the TV with a friendly and social interface. Boxee has quickly become a darling of the early adopter and techie set (it's still in "Alpha" release, and only runs on Mac OSX and Ubuntu Linux).

Despite not having a formal agreement from Hulu, several months ago Boxee was able to extend its product to enable Hulu viewing. Hulu promptly became Boxee's #1 content source, and according to Boxee's CEO Avner Ronen, it was recently generating 100K streams per week (note that this amount is still chicken feed relative to Hulu's 240 million monthly streams). Boxee doesn't interrupt Hulu's business model; Hulu's content and ads are shown in their entirety. One would have thought the calculation for Hulu and its owners would be pretty simple: more streams = more ads = more success.

Yesterday I checked in with senior executives around the industry to see what's going on here. The picture that emerges is one of big media companies trying to reassert their control over how users access their content. In his blog post, Kilar says "our content providers requested that we turn off access to our content via the Boxee product, and we are respecting their wishes." According to everyone I spoke to, the unnamed content providers can only be Hulu's two owners, NBC and Fox.

Embracing broadband delivery by backing Hulu was progressive thinking by NBC and Fox. And as long as its skyrocketing usage was perceived as a net positive for on-air distribution (research has shown no cannibalization, higher sampling, more awareness, etc.) and its usage was mainly computer-based, all was fine.

But what Boxee did was extend the Hulu experience to sanctified ground: the TV itself. And that opened a real can of worms for the networks. Are they aiding and abetting "over the top" user behavior which could lead to "cord-cutting," in turn jeopardizing their highly profitable cable operator relationships? Are they undermining their own P&L's because Hulu usage on TV will cannibalize on-air delivery which carries higher revenues/viewer? Are they setting a dangerous precedent that any scruffy startup can distribute their prized programming without a formal relationship? And so on. These questions were too significant and Boxee's implications too profound to go unchecked. So Hulu's owners snapped its leash.

There's just one problem here: what's the impact of the decision on Hulu's users and by extension, the Hulu franchise? A quick perusal of the comments to Kilar's post says it all: people are ballistic and they are deeply confused. They don't get the arbitrary logic of why it's ok to watch Hulu in lots of other ways, but just not through Boxee. And they raise the nightmare scenario that this decision will only serve to fuel piracy, an outcome networks were expected to avoid given the devastating Napster precedent their music industry brethren experienced.

One can only imagine the anguish being felt by Kilar and the Hulu team. Having sweated every detail to create the best video experience out there, it is now watching that goodwill evaporate due to its owners' squeamishness. Better yet, one wonders what the folks at Providence Equity Partners, which invested $100 million in Hulu at a $1 billion valuation, are thinking? Did they sign up at this stratospheric valuation only to see NBC and Fox circumscribe Hulu's reach?

I've been saying for a while now that broadband's openness makes it the single greatest disruptive influence on the traditional video distribution value chain. The Hulu-Boxee situation illustrates this perfectly. Once content providers embrace broadband they inherently give up some of their traditional control. And there's no going back; once the proverbial genie is out of the bottle, it can't be put back in. Hulu, NBC and Fox are learning this first hand. With everyone now watching for their next move, I'm betting a change of heart is forthcoming. Hulu will be back on Boxee in one form or another soon enough. Resistance is futile.

What do you think? Post a comment now.

(Note: Hulu-Boxee is going to be outstanding grist for the Mar 17th Broadband Leadership Evening's panel discussion. Early bird discounted tickets are available through the end of today)

"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

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.

Even before the recent economic crisis, broadcast networks were facing unprecedented challenges. An article in yesterday's WSJ, "Network Audience Keep Eroding" caught my attention as it highlighted the current season's viewership shortfalls. The article pointed out that 4 of the 5 major broadcasters have suffered double-digit percentage declines in same day prime-time viewing among 18-49 year-olds as compared with a year ago.

To me, the overarching thematic challenge that broadcasters now face is how to successfully address the core 18-49 year-old audience. This group is important not only for traditional reasons relating to its appeal to advertisers, but also because it represents the leading edge of audience behaviors that will only accelerate in the future.

So what should broadcasters be doing? Here are three suggestions:

Broaden definition of programming and brand promise

Broadcasters must re-imagine what constitutes compelling visual entertainment. The traditional paradigm of 30 and 60 minute time blocks, scripted to accommodate pre-set advertising pods and programmed sequentially on specified evenings is increasingly meaningless in an on-demand world. Programming should be looked at as anything that entertains the audience, on their terms, period. This is particularly relevant for 18-49 year-olds who arguably have the most entertainment alternatives.

Though it breaks with traditional success formulas, network executives should be excited by this, as it loosens creative constrictions. Further, it offers up the opportunity to expand a network's "brand promise" to become positioned as a "wherever, however, whenever entertainment provider." Going forward networks should view themselves as being in the entertainment business, not just the TV business. This would also help bring advertisers along, as they too are suffering from diminished consumer access.

Embrace new distribution platforms, and help drive new development

In the above vein, broadcasters must fully embrace new distribution platforms like broadband, mobile, VOD and DVR. Creating programming specifically for these platforms, suited for each one's strengths and weaknesses is essential. Simply repurposing TV shows for these platforms is insufficient to meet 18-49 year-olds' entertainment appetites.

Further, broadcasters need to take a leadership role in how these new platforms evolve. It is not enough to accept what technology and service providers choose to prioritize and offer. Instead broadcasters must have their own roadmaps and requirements, and work actively to see that their needs are met. This is a new role for broadcasters and they need to learn to embrace it.

Focus on experience, not just ratings

Broadcasters need to look at their shows as the hub of an ongoing and immersive entertainment experience, not just a once per week interaction to be measured in ratings points. A network's "customer relationship" is repeatedly put on hiatus between episodes (and worse, between seasons!), thus undermining the viewer's loyalty and engagement. A friend recently lamented to me that NBC is offering just 14 new episodes of "The Office" this season. Realistically, what kind of customer relationship should NBC expect to have when so many other weeks of the year pass without offering a product to its customers?

Broadcasters have incredibly compelling assets that can be the basis for deeper audience engagement and experiences. Mining all the various interactive tools and capabilities which 18-49 year-olds already regularly engage with are crucial to bonding with audiences and creating excitement and ongoing loyalty. To be sure, some of this is already happening, but in perusing the networks' web sites it's obvious there's a lot more that can be done.

Final Thoughts

Broadcasters are getting squeezed by audience fragmentation, new technologies and the shift to on-demand consumption. The 18-49 year-old cohort is ground zero for networks to maintain their future health. What the networks choose to do, and how well they succeed at it is surely a business school case study in the making.

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.

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.