Web TV / IPTV / DTV

No sooner do we opine that STB based plays are losing out to OTT Web TV plays, than along comes a set of stats to back us up (see above) - from NewTeeVee:

The amount of time U.S. Internet users spend watching video is up an impressive 40 percent year over year. Watchers tuned in for 273.1 minutes of online video in the month of November 2008, up from 195 minutes in November 2007, according to comScore.

Here is the "in-the-money" shot:

The number of videos viewed increased 34 percent, to 12.7 billion videos, up from 9.5 billion last November. But the number of video viewers is not growing quite as fast; it was up 6 percent, to 146 million from 138 million. Still, that’s stayed fairly constant since last year at about three-quarters of total U.S. Internet users (which is not in itself a fast-growing category).

This is far faster than IPTV service growth in the Online Video bake-off.

It still doesn't come close to TV mafrket share of course, where those sorts of attention numbers noted above are measured in hours monthly, but its a healthy sign for a major future industry

Netflix is to offer online Video on Demand via a variant of the closed Set Top Box play, by putting the STB in the TV (from the WSJ):

On Monday, Netflix Inc. is expected to announce a deal with Korea's LG Electronics Inc. that will make a Netflix online-video service available on a new line of high-definition TV sets from LG due out this spring. The online service offers 12,000 movie and television titles.

The issue with this business model is that its a closed system play, and requires the customer to make a capital investment upfront (and/or Netflix to make a subsidy). As IPTV players are finding out (and as we predicted when we set up this blog over 2 years ago) the "free ride" via laptop to TV is winning out - as the WSJ notes:

Instead of the often expensive packages of video content from cable and satellite providers, the Internet could theoretically deliver a much wider array of entertainment and information choices -- many of them free.

Intel, Apple Inc. and others have promoted specially tailored PCs, set-top boxes and other new devices for bringing video from the Internet to living-room TV sets. Few people bought them, but industry executives believe users will be more receptive as Internet connections become a standard feature of more ordinary gadgets -- such as TV sets, high-definition movie players and videogame consoles.

Two things need to be dissected here - firstly, will IP connectivity become standard in many consumer electronics devices, including TV - yes, absolutely. Secondly, will people prefer proprietary locked in media systems running over IP to open / full service IP capability - answer, No. And furthermore, the User Interfaces in most specialised "Media Centres" to date have not been very good, which is why (apart from overpricing) takeup is pretty low. (Apple being teh notable exception here in media UI to date)

LG predicts its plasma and LCD Internet TV sets will cost roughly $300 more than comparably-sized sets without online capabilities. Unfortunately, that's the price of a decent home router, a VGA to TV converter and a low end PC which gives you internet to TV connectivity plus all the other things a PC can do. Thats a cr*p deal in normal times, in the 2009/2010 Crunch its a harder sell.

Our take - the CPE (Customer Premise Environment) endgame here will be content independent, the desire for a media lock in at STB level is low enough, trying to lock in the TV as well is a far tougher ask. Do i have to buy another TV to get Amazon movies? And another for Blockbuster? Heck, why not just load up Hulu or iPlayer and get a TV converter?

Still, one thing we can guarantee - these will be sold hard to consumers, but we think it will be a hard sell as well.

TechCrunch reports on Joosts' travails:

Joost’s two year old online video service was a pretty darned smart idea when it first launched.

Instead of streaming video through the Joost website, users would download a Mozilla-based client and watch it there instead. The user experience could be more tightly controlled. And more importantly, the Joost client had built in person-to-person file sharing. That meant Joost had lower bandwidth bills. It also meant that Joost didn’t need to worry about overloading servers while showing live events - users would just grab the stream from others automatically.

No, it was a dumb idea from the start, we and many of the Web TV people said so for the reasons that it eventually did fail.

Today they announced they’re discontinuing the software application altogether, but they aren’t saying why. It’s clear that Joost’s strategy has been fluid over the last few months as they try to figure out a way to compete with the much more successful Hulu. It’s honestly not clear that they really can. Joost doesn’t offer anything particularly unique or compelling to users over competing sites with proprietary content (Hulu with Fox and NBC, TV.com with CBS).

Joost raised a big $45 million round of financing way back in 2006. It’s not clear how much of that is left. If they want to succeed they’re going to have to do something pretty radical.

If one was writing this as a case study, the kinder cut would say that it was very early days, they took a calculated risk on a technology option, and the market went the other way. The unkind cut would say that Joost was the classic "Dumb Money" Bubble play - people who knew little about Web TV backed guys with $45m not because they knew about Web TV, but because they were highly regarded for selling a web phone arbitrage service to other guys who knew little about VoIP. To paraphrase Monty Python, this is not usually a successful method of selecting investments.

So what to do now? One option is for Viacom and CBS to "do a Hulu" in essence, and make Joost the Web TV conduit for their content. That will at least build some value in the business which would allow a sale or merge in future, as well as give the option of continuing as a standalone. That will not be cheap. The other option is to do distribution deals with successful players for their content (YouTube is looking....) and leave Joost to the deadpool. One of those is a low cost option, the other is not.

Gloomy prediction for 2009 - Joost sold for scrap in Q2. The "stay the course" option would be more interesting to see but the business case is far harder to justify.

Two articles today show how fast YouTube is changing its strategic position - first, the LA Times shows how its rapidly moved from Wild Westonomics to something looking like Respectability:

A similar scene has been playing out digitally at YouTube, the Internet’s video town square. In addition to its long-standing campaign to crack down on illegally copied material, in September the site outlawed videos depicting drug abuse and last week tightened its guidelines further to restrict profanity and sexually suggestive content. In other words, before the money wagons roll in...

...some law and order needs to be imposed.

This has been the impact of The Crunch - it became clear that the world of infinite Freeconomic subsidy is over. About 3 months ago we started researching for a big project on the future of online video, and YouTube has been moving its position by the week (I've had to revise our predictions of its future twice already ). the endgame, of course, is to crank up that ad placement rate above 3% - if you look at their economics, nothing - not even distribution cost savings - drives their success more than increasing teh % of video streams with Ads placed against them.

Thus:

Videos that YouTube considers objectionable will no longer qualify for its daily honor roll pages, where the most widely viewed clips are showcased. These “browse” pages often act as a kind of viral launch pad, from which many of the Web’s most-watched videos blast off. Exile from these areas, while not explicit censorship, cuts deeply into a video’s chances to get noticed.

and, like Ning, its startedin to have a go at reducing the porn content....but one slow step at a time:

In explaining sexually suggestive content, the site includes a list of elements that could get a video flagged, including when “the subject is depicted in a pose that is intended to sexually arouse the viewer.”

Adding a layer of murkiness is just how YouTube plans to enforce such slippery rules on the thousands of videos it gets every day. The site says videos that violate its new content guidelines will be “algorithmically demoted,” suggesting the implausible idea that computers would be able to determine, for instance, if a video was intended to arouse, educate or make an artistic statement.

The second post was this from the NYT - it may be a PR puff piece, its hard to tell, but its asserting that people who play the game can make serious money on YouTube:

One year after YouTube, the online video powerhouse, invited members to become “partners” and added advertising to their videos, the most successful users are earning six-figure incomes from the Web site. For some, like Michael Buckley, the self-taught host of a celebrity chatter show, filming funny videos is now a full-time job.

Mr. Buckley quit his day job in September after his online profits had greatly surpassed his salary as an administrative assistant for a music promotion company. His thrice-a-week online show “is silly,” he said, but it has helped him escape his credit-card debt.

He may be the very tip of the hit head of a very steep power law, its hard to tell - but hey, give it a go:

All he needed was a $2,000 Canon camera, a $6 piece of fabric for a backdrop and a pair of work lights from Home Depot. Mr. Buckley is an example of the Internet’s democratizing effect on publishing. Sites like YouTube allow anyone with a high-speed connection to find a fan following, simply by posting material and promoting it online.

Granted, building an audience online takes time. “I was spending 40 hours a week on YouTube for over a year before I made a dime,”

But hey, if you're laid off why not give it a go......... worst / worst you've learned a new skill.

How long will it take YouTube - its hard to tell exactly, but deals with long form legal media (such as MGM) distributors and a new focus on quality "pro user" generated content should shift the ratio of advertised traffic - and a small shift makes a big change.

Ad for Siemens Washing machine (seen on TechCrunch) featuring racks of the non-webserver variety

Link:

Now I understand why the Vikings were so keen to go to Valhalla!

(Web 2.0 point - thats an Ad and you watched the whole thing without complaint, right?)

Update - Wrong, as it turns out - for (many of) the women anyway (I don't believe the men who protested ). Though, as Helen Keegan points out ruefully, there were probably women involved throughout the production process.

And, as Janet Parkinson has pointed out before, the majority of buying decisions on web are made by women, and certainly the majority of people buying white goods are women. So, who was the Ad made for, who was it trying to catch the attention of?

So - two lessons here - it is possible to make Ads people will watch, and it is possible to totally miss the audience - even in cyberspace.

I dipped in and out of the Le Web videostream on this 2nd day (which seemed less reliable, I had hoped to see Marissa Meyer of Google talk, there were rumours of Big Things - not quite so big as it turned out). Anyway, I had noticed that the IM stream that I mentioned yesterday, though still irreverent, had attracted what seemed to be PR flacks - Prof Brian Cox and especially Gary Vaynerchuck getting a bit of pimping ( or were they just groupies ) before their talks - and people trying to divert users to their websites plus the standard people trying to "bark" for their agenda. Interesting that it took about a day for the "marketeers" to find the IM stream though, and how much less pleasant it was once they had.

But it only hits you en passant that what you are doing - dipping into a live video stream from somewhere else in the world, interacting with other observers and attendees - was something unknown just a few years ago, now its just something you get irritated with when the stream crashes for a while or the "ads" are too invasive. (Next step for TV IM - the ability to block some posters from your text stream)

And that, treasured readers, was the Future of TV in action - that was an interactive channel, up for 2 days, the videos are all up for watching again.

Incidentally, my overall take on Le Web was that it was not so much a Web conference as a sort of EuroTED play, with a wide variety of stuff - from romantic love to far off nebulae - that was fairly marginal Webgeek stuff. Interesting to the average renaissance man or woman, but I wonder whether "Le Web" is the right term for it?

Still, seemed like the attendees had a good (if cold and starved) time

Update - sharp write-up here by David Galbraith on GigaOm - amongst the observations:

- All companies that would have been described as portals, 10 years ago, are now described as Social Media
- One of the few Americans here, Marc Canter, in a bright orange Hawaiian shirt, stands out against the sea of metrosexual black like a ray of sunshine

And "a panel on brands talked about spreading the love; Susan Wu, CEO of ohai, spoke of selling love in the form of virtual goods; conductor Itay Talgam discussed how to orchestrate it; and Helen Fisher of Rutgers talked about how to recreate it with drugs."

Ah, a bit of California then

I can't make Le Web this year, but there are multiple opportunities to listen in - there is a Twitterstream, Liveblogging and a Videostream. Of the 3, the Videostream is the most interesting - but not for the reason you think (ie moving colour pictures). No - you see, as well as the video and audio, there is a backchannel running alongside it - and the commentary there is everything the commentary on stage ( and surprisingly also on the Twitterstream ) is not - funny, irreverent, snarky - and informed. (See on image below)



The parallel Twitterstream was far more po-faced, almost worshipful - either the PR flacks were out in force or everyone was nervous of saying what they thought. Or they really thought everything was perfect in that most perfect of conferences - but I don't think so - the anonymous backchannel was busy pricking the presumptuous, highlighting incongruities, going off on tangents, having a good moan etc.

I loved it. It totally enriched the experience - text commentary is the Future of Video

And for the social media gurus, here's the kicker - these people were not my "friends", they were anonymous commenters - no relationship necessary, no scraping of my profile possible - and they were being honest and amusing, great company really! (I suppose there is a barrier to entry due to the content under discussion, but still....)

Update - this article by Paul Carr is exactly the sort of tone that was going down in IM

The above chart is my analysis of data from the ITIF and shows the broadband speeds of various countries against the services you can obtain at that speed. As you can see, the UK is hardly a stellar performer at a mean speed of 2.6 Mb/s - and now comes evidence that it ain't even that good..

The deplorable speed of British broadband connections has been revealed in the the latest figures from the Office of National Statistics, which show that 42.3% of broadband connections are slower than 2Mb/sec.

As far back as last year, telecoms regulator Ofcom was claiming "the average headline speed has doubled in a year to reach 4.6Mb/sec".

However, the ONS figures suggest that average is being heavily weighted by a small proportion of truly high-speed connections, such as the 24Mb/sec ADSL2+ broadband offered by ISPs with Local Loop Unbundled services.

More worryingly, the ONS statistics are based on the connection's headline speed, not actual throughput. That means that many more British broadband connections could well dip below the 2Mb/sec barrier when it comes to actual speeds.

We do argue internally as to bandwidth required for SDTV (Standard Definition TV) my view is for a contended line you want 3.5 - 4Mb for a PAL level of quality (Video and US NTSC and levels are lower, c 1.5 - 2.5 Mbps in my view). I have noticed my connection - ostensibly 8Mb/sec - has very seldom got above 1 Mb/sec over the last few weeks. It makes using video quite an issue, and even rich media websites are a pain in the *rse.

The worrying thing for the UK is that video media is one thing we're rather good at - but if we are competing on cart tracks while others have autobahns, we will be left behind.

Blockbuster is handing out Set Top Boxes (STBs) ....sez Engadget:

For a "limited time," the outfit will offer the 2Wire-built MediaPoint player for free with the "advance rental of 25 first-run movies, TV shows, foreign or classic films from Blockbuster On-Demand (previously Movielink) for $99." After that, rentals are $1.99 apiece, and a Blockbuster subscription is not required. The unit itself measures 8- x 8- x 1-inch and includes two USB ports, an SD slot, Ethernet / WiFi and an HDMI port, and it should be available at the company's website and in select retail stores very soon.

Ie Box $99 with 25 movies thrown in. The issue they face is that STBs have friction - it usually costs c $99 to supply one (equipment, logistics, transaction etc etc) compared to an Over the Top internet play, and most people already have one (or even two, plus a games console) so yet another is the last thing they want.

Its clearly an attempt to combat Netflix, who have gone for a multiple distribution channel approach, and no doubt is the fastest and easiest play. But in our view, Blockbuster would have been better off with a software player solution like BBC iPlayer and selling a black box to allow people to connect PCs to TVs. Lower cost, lower friction and with Blockbuster's better content portfolio a much smoother play, plus it takes a free ride over existing infrastructure.

It is a dearly held wish in Webland that the TV dies as a media, and all that attention (and resulting Ad dollars) flow into the online economy. Well, don't hold your breath, TV is doing just fine. While we were researching for our work on the Future of Online Video we found that TV viewing had hardly declined at all due to net usage in recent years, and formal confirmation of this comes from a Nielsen report today (reported today on Wired):

As of third quarter 2008, the average person in the U.S. watched approximately 142 hours of TV in one month [up 5 hours on a year ago]. In addition, people who used the Internet were online 27 hours a month, and people who used a mobile phone spent 3 hours a month watching mobile video. Furthermore, the average time a U.S. home used a TV set during the 2007-08 television season was up to 8 hours and 18 minutes per day, a record high since Nielsen started measuring television in the 1950’s

So - 3 / 27 / 142 hours, and assuming the customer value to be roughly equal that equates to roughly 2%, 15%, 83% of attention. Given that US online advertising is close to that (or not, e-Marketer again slashing its 3 months ago slashed estimate another 1/3rd a week ago) its not got far to grow.

However, as well as watching more TV, people are also using the Internet more often – 31% of which is happening simultaneously. I await combined TV/Laptop ads with eager anticipation.

Other key facts from the report include:

- Americans spend more than 6 hours per month watching timeshifted TV, which is more than double the amount of time they watch video online.

- Men are more likely than women to watch video on mobile phones, while women are more likely then men to watch video on the Internet.

- During the third quarter, there was no shortage of online video content with events including the Olympics, Major League baseball games, the political conventions and debates, and the financial crisis. Online video use grew steadily through the quarter.

TV remains the dominant choice for most Americans, yet timeshifting as well as videos on the Internet and on mobile phones, continue to be the trends to watch.