Web TV / IPTV / Online Video

Telecom.TV's Leila Makki and The Really Mobile Project's Vikki Chowney teamed up to do some interviews in this video shot at the TEDxTuttle event (we did quite a bit of the behind the scenes stuff).

Readers of this blog are invited to go back to an article we did earlier this year on YouTube economics, which showed that it swings hugely on the % of its videos (very small today) that can be advertised against. The problem with UGC video is that its seen as very risky, for a variety of reasons (taste, quality, legality). Today, YouTube carries on in its attempts to make money by increasing the % withcuration of the "hit head" of its UGC video collection. :

We decided it was time to spread the wealth. Today we're excited to announce that we're extending the YouTube Partnership Program to include individual popular videos on our site. Now, when you upload a video to YouTube that accumulates lots of views, we may invite you to monetize that video and start earning revenue from it. To determine whether a particular video is eligible for monetization, we look at factors like the number of views, the video's virality and compliance with the YouTube Terms of Service. If your video is eligible for monetization, you will receive an email and see an "Enable Revenue Sharing" message next to your video on the watch page, as well as in other places in your account:

Once you've chosen to enable revenue sharing, YouTube will sell advertising against your video and pay you a revenue share into your Google AdSense account each month.

This is thus an attempt to get the UGC videos that actually could make money to actually make money, by wrapping them in a program that is safe to advertise against, and has proven its quality by the quantity of hits. Videos are more expensive to serve than searches, owing to their bigger file size, so the transaction return per Ad has to be higher - hence the curation only of the "hit head" UGC videos.

By the way, if a proof of the general economic uselessness of the Long Tail in current new media was needed*, this is it. Follow the money, as they say...... in venality veritas.

(*apart from being a large number to bamboozle dumb companies to part with plenty of money to buy your New Media entity, that is )

Techfluff TV (Hermione Way's video vehicle for capturing the fluf... - I mean vibrant and lively - side of Eurostartup technology) has landed on the Torygraph online blogs. First Videoblog is that above. We wish the venture well.

Apart from giving Techfluff.tv the oxygen of publicity they would never get otherwise, (You owe us bigtime, Hermione ) we blog this as it also nicely illustrates a trendlet - ie the non-appearance of Web TV on "print" organs' sites compared with say the BBC's move to online "print" media. The endgame for all media is multimedia we would suggest, and its interesting to see how dominated by text the print media's online sites still are.

I will be giving an update at the Media Futures - Beyond Broadcast conference to the work we did last year for the Telco 2.0 Initiative on the Future of Online Video. Its been a fairly fascinating time, since we completed the report (which you can buy, over here ) the landscape has changed fairly radically - the pressure on YouTube to make money has intensified, and just this week Joost has come off the rails (which we predicted in the October talk, by the way).

Here is a precis of the report, it's the original talk I gave last October:



I will be talking specifically about the following areas tomorrow:

Updating the structure of the emerging market - it changes on a monthly basis, though (and I would say this of course) much of it is fairly predictable if you dig under the hype and look at the economics. It has also become far more rational now that "Ad-venture" capital (dumb money venture capital based on the belief that Video Advertising will be easy) has drained out the market.

The economics of the New Media, and comparing YouTube and Hulu. I will also go through the "what you have to believe" to believe either that YouTube is doomed (the Credit Suisse numbers) or is actually fine and dandy (YouTube proxy claims). We don't think its out the woods yet.....

Scenarios for the Future, especially the chaotic "Pirate World" that will emerge in the 2 to 5 year horizon, and strategies that traditional and new media need to look at adopting.

In addition (and by popular demand ) if time allows I will look at the media value chain as a general case and see what we can learn about the future of Newspapers*......trailing our next major report, of course

*In essence, the future of Journalism and the future of Newspapers, or Journalists, are not travelling in the same directions.

Went along last night to the Bafta 3D TV event last night, showcasing the latest in 3D television and screen technology as well as a discussion session. Absolutely fascinating stuff. As far as the technology, I am going to show my deep admiration of Roo Reynold's writeup of the technology (and my deep lazyness) by copying it wholesale. The main technologies on display were:

1. Active LCD shutter glasses darken one eye, then the other, in sync with the alternating image being shown on a standard display. This halves the effective frame rate by sharing the display across both eyes, and being an active system requires power to operate the shutters and also to be in sync with the display. Expensive glasses, but off-the-shelf (though high-end) screens or projectors.

2. Passive polarised glasses work much like the old red and green glasses, but using polarised filters rather than red/green means you get a full colour experience. It means cheap, passive glasses but complicated and expensive screens and projectors. If you’ve seen a colour 3D movie, this was probably the way it was delivered.

3. Autostereoscopic display is a stupid name for a screen which displays 3D without needing glasses by use of a lenticular or ‘parallax barrier’ layer in front of a specialised (usually LCD) display, presenting a different image based on viewing position. No glasses, but a very limited viewing angle.

On the discussion panel were:

- Andrew Oliver (CTO and founder, Blitz Games Studios),
- Colin Smith (Technical Analyst, ITV),
- Brian Lenz (product design and innovation, Sky),
- Chair: Guy Clapperton (Freelance/Guardian journalist).

I'm afraid I didn't take many notes (Roo has some notes, read his post too) so will just give you the headlines as I saw them, along the good old 4 box media value chain:

Content Creation

Firstly, the amount of captured 3D content available is tiny today - but, it is possible to reprocess 2D digital content for 3D. There are 2 main axes of complexity:

- Content complexity - simple pictures where not a lot moves - eg cartoons - require far less reprocessing. A movie with lots of detail and lots of shot angles changing takes far more processing.

- Output size - The bigger the required screen, the more reprocessing required, so the cost of reprocessing for Web TV and home TV will be lower than for Cinemas

Secondly, it appears that capturing 3D images in essence resolves itself to strapping 2 cameras a distance apart and processing the 2 streams, thus getting binocular vision. This will be possible for pro-amateurs to do in fairly short order I suspect.

Thirdly, the most compelling content in my view was computer games and sport - both big markets for paying customers so I think the economic impetus is there

Aggregation

Different players are using these systems as ways to re-open the Set Top Box (STB) wars, ie 3D TV is an ideal way to force out the current STB and get your one in. Unfortunately there is a good old standards war (see 3 standards above) with different players promoting different systems, which will confuse the market. (In this case my hypothesis is that the home market will go with a system that means not replacing the existing TV set - option 1 above - which also seems to be the preferred option for computer gaming )

Distribution

Can be broadcast via TV, Internet or Mobile ad will be shipped on CD and DVD, so 3D will occur on all platforms. Thus any hope that this will allow Broadcast TV or Cinema to differentiate itself from IPTV/WebTV is in my view misplaced.

Customer Premise Equipment (CPE) market

I delved into the economics of the various approaches - for both the cheap glasses options you need to buy new TVs, whereas getting the complex glasses is sub £100 even today and will go down, but you get to keep your £600+ TV so option 1 looks best. Conversely for cinemas you probably want to have cheap glasses so option 2 or 3 are best. Killer question therefore in my view is what will work best on Web TV on laptops, will people be OK to spend heaphone sort of money for complex glasses.

I saw PC, XBOX and PS3 engines doing 3D rendering, the Wii has not go the oomph apparently (but imagine some of the Wii games in 3D).

Spent quite a lot of time asking about re-prpcessing existing content - my take is its early days, but ultimately this is like compression - its about getting good algorithms and then crunching them on bloody great engines, so I'd expect on-they-fly 3D reprocessing of simple graphics like games fairly soon commercially and then up the scale with more and more complex content on bigger and bigger screens.

A word on the Cinema market - watching sports or concerts in a cinema will be far more realistic with this sort of gear, but whether this will allow them to charge any form of premium for long is unclear.

At any rate, last night persuaded me that 3D TV in various forms is a 1-2 year not a 3-5 year event, unless the commercial wranglings make it profoundly economically uninteresting.

So, we've been a bit busy here at Broadstuff Towers but have had a quick scan of the Final Digital Britain Report. We will reply in more detail in our more in depth analysis next week in our Digital Britain Retort, but headline thoughts are that not a lot has changed from the much criticized interim report, despite a lot of feedback. The Big Lobby Battalions seem to have largely got their way, despite all the work of the Unconferences of the Great Unwashed up and down the land. Our overall impression is that all remains much the same except:

(i) The "how shall we fund the last 1/3rd" question is going to be by a £6 per consumer copper line Next Generation Network Tax (aka a Stealth tax) rather than telling BT/Virgin to fund it as part of their remit, or the government moving money from elsewhere (like public bankers bonusses)

(ii) Continued pandering to the File-sharing Clampdown lobby (or at least an unwillingness to grasp the nettles).

(iii) Raiding the Licence Fee funding to pay for other dodgy "prop em up" plays like local TV news, failing commercial TV models etc. There is a risk of this being a slush fund open season without some form of strategy, as the BBC Trust has rapidly pointed out.

(iv) There are a few oddities, like the digital radio push - odd, as this is a miniscule part of the pie and would cost a fortune to re-equip every household with new radios < ah, light dawns - electronic goods lobby 1, consumer 0...

Much of the execution of all this seemingly falls to Ofcom, a regulator with little skill or experience in provisioning, never mind implementing, such projects. This is not the equivalent of building the motorways, railways or canals, its more equivalent in ambition to taxing the peasants another groat a year to pay the tollbooth keepers to tidy up the cart tracks a bit. (Ovum comes to a similar conclusion)

But to us the real question is what happens to the report - with Lord Carter gone, and the UK in the dog days of a lame duck administration, its hard to believe much will happen this side of an election. (Scarier still in a way if it does, as an exhausted government will have no stomach for a fight with the big lobbies)

Silicon Alley Investor has just written a rather good article outlining why TV will go through the same pressures that Newspapers and Music are going through. Points I liked were:

The best content creators will do just fine. Video storytelling won't go away. Compared to the people who produced Battlestar Galactica, the Sopranos, and West Wing, etc., the folks who post to YouTube generally suck at it. So great content creators won't have to worry about them.

The lousy content creators will disappear. No big loss. And no big change.

The cable companies will become dumb pipes, and they'll get disintermediated. We won't need Brian Roberts to negotiate a deal with the Tennis Channel for us (or, rather, to prevent us from getting the Tennis Channel because of some contract dispute). We'll just go direct.

The phone companies will remain dumb pipes.

The wireless companies will become dumber pipes.

The competition between the multiple dumb pipes will eventually, we pray, result in lower prices for consumers for the only thing we will really need: Ubiquitous high-speed Internet access.

Box and device companies will remain box and device companies. Unless Apple somehow creates a new global chokepoint via the iPhone.

Networks that produce live news, sports, and entertainment will offer the content direct to consumers. But they'll no longer get paid big carriage fees from cable companies.

A few clever online aggregators--YouTube? Hulu? Cable companies? Netflix?--will create nice video portals and build powerful new businesses. At these portals, you'll be able to sign up to watch anything in the world on any device you want. You'll be able choose among multiple subscription models (monthly, a la carte). You'll also have a basic "what's on" option in case you just want to watch TV.

When will this happen? Over the next 5-10 years. And it will leave today's TV industry looking like today's newspaper industry.

And why do I like it - because we worked out this a year ago, and its available in far more detail than SAI does it for sale in our report on the Future of Online Video (go here for a copy, rool up, roll up!).

Yes, at the risk of blowing our own trumpet, We Woz There (see the slides above giving the scenarios for the industry that put the SAI work into context). Also see some of the other work in previous posts here and here and here).

Nice to see these expert analysts get there eventually .

Two articles on Techmeme discussing the interesting issue of how an EPG (Electronic Program Guide) will work for Web TV. Will it be provided in the knitting, or be a 3rd party service that rides "over the top" of a Web TV service. Firstly, the "in the knitting" ploy - news that beeTV has taken $8m funding.From TechCrunch:

Here’s how they pitch it:

“beeTV offers the platform operator’s subscribers their own Personal Content Channel (PCC), which resides in their set top box (whether IPTV, cable, satellite, mobile or DTT), their mobile phones and their PC. This unique Personal Content Channel identifies the subscriber, searches all the content sources, including broadcast TV, subscription TV, VOD, SVOD, PPV, and PVR/Catch-up and pushes the relevant content to that subscriber.”

The company’s recommendation engine comes in three flavors: beeSTBox is its flagship product which was launched at the recent DEMOfall 08 conference in San Diego (see video below). It’s a solution designed for multicast distribution platforms including cable, satellite and IPTV. To manage, control and share your online TV viewing experience, the company created a product called beeWeb, and it’s also bringing the PCC to mobile devices to enable always-on connectivity and the ability to interact with set-top boxes on the go. It currently has an iPhone application in the works that will allow TV viewers to control their STBs, get recommendations for shows & movies that are relevant to them and available in their specific TV subscription, and also enable them to watch trailers and set their STBs to record or create notifications for the shows they would like to watch.

The other option is that the datastreams will be captured in over the top services - we've already noted that Twitter is being used in this way, and here is an interesting addition to this trend fromn Fred Wilson's blog about one of their funded companies' observation:

Simulmedia was founded by Dave Morgan, founder of Real Media and TACODA and a veteran of the online ad targeting business, to deliver similar products and services to the TV market. So he knows a bit about all of this stuff.

The post describes a little experiment Simulmedia did to analyze TV channel surfers using only Twitter posts as their data source. Simulmedia explains why they turned to Twitter data for this work:

To investigate surfing behavior further we tapped into data from Twitter, where dozens of people announce to the world that they are channel surfing every day. Unlike traditional ratings or second-by-second set-top-box information, Twitter has rich qualitative information that reveals motivations behind viewers’ surfing.

I've put the graph up at the top of this post.

The interesting question is which model will win in the endgame.

In essence beeTV stands for the top down definition of what a small group of designers think the user will want, and is embedded into the system - probably walled - and the real customer is the producer.

The Twitter based system is more darwinian in its evolution, floats above any one WebTV system, and will only work if the customer wants to use it so by default will be focussed on the user.

Also, having run a company selling complex systems into the cable and Telco world, I can testify that sales cycles are very long - wheraes an over the top service gets a "free ride" and rapid adoption, albeit with less control. In my view, the former is how things used to be built, the latter is increasingly about how things will be done in future.

Speaking at the D7 Conference, Mark Cuban says that despite the growth of YouTube, the Internet video market over the last decade has actually been a disappointment. CNET:

The problem, he said, is that when Google bought YouTube it focused on ubiquity rather than making money. The result, he said, is that the market can't really sustain itself.

"This is a company that is literally subsidizing the bandwidth for the world," Cuban said, speaking at the D: All Things Digital event. That's a risk, Cuban said, if someone were to ever find a better search business model than Google.

"I think its a real disappointment to see where Internet video has come," Cuban said, noting that the industry still doesn't have advertising standards, among other shortcomings.

Yes and no. In our Future of Online Video work we use the model in the diagram above to show what is happening. The X axis is time, the Y axis is total market share in financial terms. Internet technology tends to destroy existing value at a faster rate than it creates new value. This is due to 3 main reasons:

(i) It is initially heavily subsidised by offset economics, Google, as Mark notes above, or VC funding etc

(ii) It is operationally lower cost and is being set up by startup skunkworks, so can subsist on lower revenues anyway (and thus highlights the main structural weakness of teh incumbents)

(iii) It "cheats" by not paying its full way in full in the early days - content piracy for example.

Typically teh new media goes for market share first (using its advantages) and only competes on economics later. This is standard and it makes it harder for incumbents to combat new entrants.

However, Cuban did point to how some of the incumbents are crossing over - and the structural issues they still face:

"Hulu has done some great things and they are focused on monetization," he said, but also added "they have some big pockets that they have to appease."

But big picture, at the end of the graph you will see what happens time and time again with new media models emerging:

- They do have an S curve, they do figure out how to make money eventually - Movies, Radio, TV, Newspapers 1.0 all went through this phase.
- The old incumbents decline inmarket share, but still stick around for a long time

Our models predict that the TV/Movie/Video industry is starting to enter a period of major turmoil now, which will exist for about 2-3 years (depending on wider economic conditions) but in 5 years time a clear New Media industry will have arisen. The music industry and print newspaper industries are further down this curve. What is easy is predicting what will happen, harder is predicting who will be around.

As Cuban notes, YouTube, which still relies on massive Google subsidies, will eventually have to pay its way as a business model - but right now it is "crashing" the market. One of the other predictions we make is that incumbents will use all means at their disposal to reshape the market structure - attacks on piracy and low cost bandwidth are already starting.

We also predict an attack on Google's market dominance/subsidy of Online Video will occur.

There has been a lot of ink spilled, pixels pointed and hot air raised about Twitter going into TV, and no one quite knows what its all about (TechCrunch sums it all up quite well).

However, despite all this hoo-ha, one thing we have noted in the last few weeks is that twitter is being used by communities to talk about broadcast TV shows on subjects ranging from heavy politics to light entertainment. In fact, you are now getting people starting to comment on the show-as-it-happens on Twitter and getting followers because of this.

When Joost started out, they were hoping to capture this conversation in the service, but I think the flexibility and independence of Twitter has made it the more universal framework.

Now that, as they say, is interesting. For 10 years Broadcasters have been thinking about how to use the backpath to get users more engaged - from mobile phone-in numbers to interactive TV, its been a ardy perennial of the broadcast industry.

The post on the Twitterblog on the subject is quite interesting:

Twitter is very open. As a result, thousands of different applications, web sites, and mobile interfaces have been created by developers. These different approaches add variety and relevance to Twitter and in general make the ecosystem more interesting. However, Twitter's openness is not limited to the web or even to mobile phones.

During the 2008 presidential elections, Hack The Debate showed us how Twitter could make television interactive and possibly even have a democratizing effect on the medium. The power of Twitter was harnessed to create new, compelling, and engaging programming. CNN was an early innovator with Twitter too. Our openness made it all possible.

Twitter's open approach might have the power to transform television—the dominant communications receiver worldwide. We're very excited to see where these experiments take us.

The reason, as we point out in our research on the Future of Video, is that it can potentially emerge as a "Good Enough" service that allows old time broadcast to be interactive enough for most users much of the time, and thus is a bulwark against the theoretical rush for the online, interactive TV experience.

That a unified comms chat service has taken up the mantle is both concerning (for Broadcasters) and fascinating (for Industry disruption). May well be worth the TV industry inventing its own microblogging system with benefits.....