Analysis for 'Portals'
4 Items Worth Noting for the Jan 25th Week (Netflix Q4, Nielsen ratings, AOL-StudioNow, Net Neutrality Webinar)Friday, January 29, 2010, 10:09 AM ET|
With the new Apple iPad receiving wall-to-wall coverage this week, it was easy to overlook other significant news. Here are 4 items worth noting for the January 25th week:
1. Netflix Q4 earnings increase my bullishness - On Wednesday, Netflix reported blowout results for Q4 '09, adding almost 3 million subscribers during the year (and a million just in Q4), bringing their YE '09 subscriber count to 12.3 million. Netflix also forecasted to end this year with between 15.5 million and 16.3 million subscribers, implying subscriber growth will be in the range of 26% to 33%. Importantly, Netflix also said that 48% of its subscribers used the company's streaming feature to watch a movie or TV show in Q4, up from 41% in Q3 and 28% a year ago. Wall Street reacted with glee, sending the stock up $12 yesterday to a new high of $63.04.
VideoNuze readers know I've been bullish on Netflix for some time now, and the Q4 results make me more so. A key concern I've had has been around their ability to gain further premium content for streaming. On the earnings call, CEO Reed Hastings and CFO Barry McCarthy addressed this issue, offering up additional details of their content strategy and how the recent Warner Bros. 28-day DVD window deal will work. On Monday I'm planning a deep dive post based on what I heard. As a preview, I'm now convinced that Netflix is the #1 cord-cutting threat. Cable, satellite and telco operators need to be watching Netflix very closely.
2. Nielsen announces combined TV/online ratings plan, but still falls short - This week brought news that Nielsen intends to unveil a "combined national television rating" in September that merges traditional Nielsen TV ratings with certain online viewing data. This is data that TV networks have been hungering for as online viewing has surged, potentially siphoning off TV audiences. I pointed out recently that the lack of such a measurement could seriously retard the growth of TV Everywhere, as cable networks hesitate to risk shifting TV audiences to unmeasurable online viewing.
Nielsen's move is welcome, but still doesn't go far enough. As reported, it seems the new merged ratings will only count online views that had the same ads and ad load as on-air. That immediately rules out Hulu, which of course carries far fewer ads than on-air, and sometimes uses custom creative as well. Obviously if the new Nielsen ratings don't truly capture online viewership they'll be worth little in the market. Ratings are a story with many future chapters to come.
3. AOL acquires StudioNow in bid for to ramp up video content - Also not to be overlooked this week was AOL's acquisition of StudioNow for $36.5 million in cash. StudioNow operates a distributed network of 3,000 video producers, creating cost-effective video for small and large companies alike. I'm very familiar with StudioNow, having spoken with their CEO and founder David Mason a number of times.
AOL is clearly looking to leverage the StudioNow network to generate a mountain of new video content, complementing its Seed.com "content farm." In addition, AOL picks up StudioNow's recently-launched Video Asset Management & Syndication Platform (AMS) which gives it video management capabilities as well. For AOL the deal suggests the company is finally waking up to video's vast potential. But with the rise of online video syndication, it's still a question mark whether creating a whole lot of new video is the right strategy, or whether AOL would have been better served by just partnering with a syndicator like 5Min.
Meanwhile, AOL isn't the only portal realizing video is the place to be. In Yahoo's earnings call this week, CEO Carol Bartz said "Frankly, our competition is television" and as Liz wrote, Bartz also said "that makes video really important." Yahoo just partnered with Ben Silverman's new Electus indie video shop, and it sounds like more action is coming. Geez, the prospect of AOL and Yahoo competing on acquisitions? It would be like the old days again.
4. Net Neutrality webinar next Thursday is going to be awesome - A reminder that next Thurs, Feb. 4th at 11am PT/2pm ET The Diffusion Group and VideoNuze will present a complimentary webinar "Demystifying Net Neutrality." The webinar is the first in a series of 6 throughout 2010, exclusively sponsored by ActiveVideo Networks. Colin Dixon from TDG and I will be hosting and we have 2 fabulous guests, who are on opposing sides of the net neutrality debate: Barbara Esbin, Senior Fellow and Director of the Center for Communications and Competition Policy at the Progress and Freedom Foundation and Chris Riley, Policy Counsel for Free Press.
Net neutrality is a critically important part of the landscape for over-the-top video services, and yet it is widely misunderstood. Join us for this one-hour session which promises to be educational and impactful.
Enjoy your weekend!
4 Items Worth Noting for the Nov 16th Week (FCC's Open Access, Broadcast woes, Droid sales, AOL cuts)Friday, November 20, 2009, 9:46 AM ET|
Following are 4 items worth noting for the Nov 16th week:
1. FCC raises "Open Access" possibility, would further government's control of the Internet - As reported by the WSJ this week, the FCC is now considering an "Open Access" policy that would require broadband Internet providers to open up their networks for use by competitors. The move comes on top of FCC chairman Julius Genachowski's recent proposal for formalizing net neutrality, a plan that I vigorously oppose. Open Access gained steam recently due to a report released by Harvard's Berkman Center that characterized the U.S. as a "middle-of-the-pack" country along various broadband metrics. The report has been roundly dismissed by service providers as drawing incorrect conclusions due to reliance on incomplete data.
The FCC is in the midst of crafting a National Broadband Plan, as required by Congress, aimed at providing universal broadband service throughout the U.S. as well as faster broadband speeds. Improving broadband Internet access in rural areas of the U.S. is a worthy goal, but the FCC should be pursuing surgical approaches for accomplishing this, rather than turning the whole broadband industry upside down. As for increasing speeds, major ISPs are already pushing 50 and 100 mbps services, more than most consumers need right now anyway. Broadband connectivity is the lifeblood for online video providers and any government initiative that risks unintended consequences of slowing network infrastructure investments is unwise.
2. Broadcast TV executives waking up to online video's challenges - Reading the coverage of B&C/Multichannel News's panel earlier this week, "Free Streaming: Killing or Saving the Television Business" featuring Marc Graboff (NBCU), Bruce Rosenblum (Warner Bros.), Nancy Tellem (CBS) and John Wells (WGA), I kept wondering where were these sentiments when the Hulu business plan was being crafted?
Hulu is of course the poster child for providing free access to the networks' programs, with just a fraction of the ad load as on-air. While the panelists agreed that the industry should be dissuading consumers from cord-cutting, Hulu is (purposefully or not) the chief reason some people consider dropping cable/satellite/telco service. For VideoNuze readers, it's old news already that broadcast networks have been hurting themselves with their current online model. What was amazing to me in reading about the panel is that what now seems obvious should have been very apparent to industry executives from the start.
3. Motorola Droid sales off to a strong start - The mobile analytics firm Flurry released data suggesting that first week Verizon sales of the Motorola Droid smartphone were an estimated 250,000. Flurry tracks applications on smartphones to estimate sales volume of devices. While the Droid results are lower than the 1.6 million iPhone 3GS units sold in that device's first week, Flurry notes that the iPhone 3GS was available in 8 countries and also had an installed base of 25 million 1st generation iPhones to draft on.
The Droid's success is important for lots of reasons, but from my perspective the key is how it expands the universe of mobile video users. As I noted in "Mobile Video Continues to Gain Traction," a robust mobile ecosystem is developing, and getting more smartphones into users' hands is crucial. I was in my local Verizon store this week and saw the Droid for the first time - though it lacks some of the iPhone's sleekness, the video quality is even better.
4. AOL's downsizing suggests further pain ahead - AOL was back in the news this week, planning to cut one-third of its employees ahead of its spin-off from Time Warner on Dec. 9th. The cuts will bring the company's headcount to 4,500-5,000, down from its peak of 18,000 in 2001. As I explained recently, no company has been hurt more by the rise of broadband than AOL, whose dial-up subscribers have fled en masse to broadband ISPs. Now AOL is going all-in on the ad model, even as the ad business itself is getting hurt by the ongoing recession. New AOL CEO Tim Armstrong is clearly a guy who loves a challenge; righting the AOL ship is a real long shot bet. I once thought of AOL as being a real leader in online video. Now I'm hard-pressed to see how the AOL story is going to have a happy ending.
Enjoy your weekends!
4 Items Worth Noting for the Oct 19th Week (FCC/Net neutrality, Cisco research, Netflix earnings, Yahoo-GroupM)Friday, October 23, 2009, 10:17 AM ET|
Following are 4 items worth noting from the Oct 19th week:
1. FCC kicks off net neutrality rulemaking process among flurry of input - As expected, the FCC kicked off its net neutrality rulemaking process yesterday, with all commissioners voting to explore how to set rules regulating the Internet for the first time, though Republican appointees dissented on whether new rules were in fact needed.
Leading up to the vote there was a flurry of input by stakeholders and Congress. Everyone agrees on the "motherhood and apple pie" goal that the Internet must remain open and free. The disagreement is over whether new rules are required to accomplish this, and if there are to be new rules what specifically should they be. As I argued here, the FCC is treading into very tricky waters, and law of unintended consequences looms. Already telco executives are talking about curtailing investments in network infrastructure, the opposite of what the FCC is trying to foster. The FCC will be seeking input from stakeholders as part of the process. Even though chairman Genachowski's bias to regulate is very clear, let's hope that as the data and facts are presented, the FCC is able to come to right decision, which is to leave the well-functioning Internet alone.
2. New Cisco research substantiates video, social networking usage - Speaking of the well-functioning Internet, Cisco released its Visual Networking Index study this week based on research gathered from 20 leading service providers. Cisco found that the average broadband connection consumes 4.3 gigabytes of "visual networking applications" (video, social networking and collaboration) per month, or the equivalent of 20 short videos. (Note that comScore's Aug data said of the 161 million viewers in the U.S. alone, the average number of videos viewed per month was 157.) I'm not sure what the difference is other than Cisco is measuring global traffic and comScore data is at U.S. only. Regardless, the Cisco research continues to demonstrate that users are shifting to more bandwidth-intensive applications, and the Internet is scaling up to meet their demands.
3. Netflix reports strong Q3 '09 earnings, streaming usage surges - Netflix continues to stand out as unaffected by the economy's woes, reporting its Q3 results late yesterday that included adding 510,000 net new subscribers, almost double the 261,000 from Q3 '08. The company finished the quarter with 11.1 million subs and projects to end the year with 12 to 12.3 million subs. If Netflix were a cable operator it would be the 3rd largest, just behind Time Warner Cable, which has approximately 13 million video subscribers.
Netflix CEO Reed Hastings also disclosed that 42% of Netflix's subscribers watched a TV episode or movie using the "Watch Instantly" streaming feature during the quarter, up from 22% in Q3 '08. Hastings also said in 2010 the company will begin streaming internationally, even though it has no plans to ship DVDs outside the U.S. He added that in Q4 Netflix will announce yet another CE device on which Watch Instantly will be available (just this week it also announced a partnership with Best Buy to integrate Watch Instantly with Insignia Blu-ray players). Net, net, Watch Instantly looks like it's getting great traction for Netflix and will continue to be a bigger part of the company's mix. Yet as I've mentioned in the past, a key challenge for Netflix is making more content available for streaming.
4. Yahoo's pact with GroupM for original branded entertainment raises more questions - Shifting gears, Yahoo and GroupM, the media buying powerhouse announced a deal this week to begin co-producing original branded entertainment for advertisers. The idea is to then distribute the video throughout Yahoo's News, Sports, Finance and Entertainment sections. GroupM has had some success in the past, as its "In the Motherhood" series, created for Sprint and Unilever, was picked up by ABC, though it was quickly canceled. As I pointed out in my recent post about Break Media, branded entertainment initiatives continue to grow.
Less clear to me is Yahoo's approach to video. CEO Carol Bartz said last month that "video is so crucial to our users and our advertisers..." that "there's a big emphasis inside Yahoo on our video platforms" and that "a big cornerstone of our strategy is video." OK, but these comments came just months after Yahoo closed down its Maven Networks platform, which it had only acquired in Feb '08. Having spent time at Maven, I can attest that its technology would have been well-suited to supporting the engagement and interactivity requirements of these new Yahoo-GroupM branded entertainment projects. Yahoo's video strategy, such as it is, remains very confusing to me.
Note there will be no VideoNuze email on Monday as I'll be in Denver moderating the Broadband Video Leadership Breakfast at the CTAM Summit...enjoy your weekend!
Tuesday, October 6, 2009, 9:31 AM ET|
Yesterday was one of those days when meaningful broadband video-related news and announcements just kept spilling out. While I was writing up the 5Min-Scripps Networks deal, there was a lot of other stuff happening. Here's what hit my radar, in case you missed any of it:
Adobe launches Flash 10.1 with numerous video enhancements - Adobe kicked off its MAX developer conference with news that Flash 10.1 will be available for virtually all smartphones, in connection with the Open Screen Project initiative, will support HTTP streaming for the first time, and with Flash Professional CS5, will enable developers to build Flash-based apps for the iPhone and iPod Touch. All of this is part of the battle Adobe is waging to maintain Flash's lead position on the desktop and extend it to mobile devices. The HTTP streaming piece means CDNs will be able to leverage their HTTP infrastructure as an alternative to buying Flash Media Server 3.5. Meanwhile Apple is showing no hints yet of supporting Flash streaming on the iPhone, making it the lone smartphone holdout.
Hulu gets Mediavest multi-million dollar buy - Hulu got a shot in the arm as Mediaweek reported that the Publicis agency Mediavest has committed several million dollars from 6 clients to Hulu in an upfront buy. Hulu has been flogged recently by other media executives for its lightweight ad model, so the deal is a well-timed confidence booster, though it is still just a drop in the bucket in overall ad spending.
IAB ad spending research reports mixed results - Speaking of ad spending, the IAB and PriceWaterhouseCoopers released data yesterday showing overall Internet ad spending declined by 5.3% to $10.9B in 1H '09 vs. 1H '08. Some categories were actually up though, and online video advertising turned in a solid performance, up 38% from $345M in 1H '08 to $477M in 1H '09. Though still a small part of the overall pie, online video advertising's resiliency in the face of the recession is a real positive.
Yahoo ups its commitment to original video - Yahoo is one of the players relying on advertising to support its online video initiatives, and so Variety's report that Yahoo may as much as double its proportion of originally-produced video demonstrates how strategic video is becoming for the company. Yahoo has of course been all over the map with video in recent years including the short tenure of Lloyd Braun and then the Maven acquisition, which was closed down in short order. Now though, by focusing on short-form video that augments its core content areas, Yahoo seems to have hit on a winning formula. New CEO Carol Bartz is reported to be a big proponent of video.
AEG Acquires Incited Media, KIT Digital Acquires The FeedRoom and Nunet - AEG, the sports/venue operator, ramped up its production capabilities by creating AEG Digital Media and acquiring webcasting expert Incited Media. Company executives told me late last week that when combined with AEG's venues and live production expertise, the company will be able to offer the most comprehensive event management and broadcasting services. Elsewhere, KIT Digital, the acquisitive digital media technology provider picked up two of its competitors, Nunet, a German company focused on mobile devices, and The FeedRoom, an early player in video publishing/management solutions which has recently been focused on the enterprise. KIT has made a slew of deals recently and it will be interesting to watch how they knit all the pieces together.
Product news around video delivery from VBrick, Limelight and Kaltura - Last but not least, there were 3 noteworthy product announcements yesterday. Enterprise video provider VBrick launched "VEMS" - VBrick Enterprise Media System - a hardware/software system for distributing live and on-demand video throughout the enterprise. VEMS is targeted to companies with highly distributed operations looking to use video as a core part of their internal and external communications practices.
Separate, Limelight unveiled "XD" its updated network platform that emphasizes "Adaptive Intelligence," which I interpret as its implementation of adaptive bit rate (ABR) streaming (see Limelight comment below, my bad) that is becoming increasing popular for optimizing video delivery (Adobe, Apple, Microsoft, Apple, Akamai, Move Networks and others are all active in ABR too). And Kaltura, the open source video delivery company I wrote about here, launched a new offering to support diverse video use cases by educational institutions. Education has vast potential for video, yet I'm not aware of many dedicated services. I expect this will change.
I may have missed other important news; if so please post a comment.
Video Research Around the Web
- U.S. Homes Adding SVOD Services Falls To 3.9% in 2Q, Kantar Reports B&C
- As streaming surges globally, Roku is falling behind abroad Protocol
- World-Wide Streaming Subscriptions Pass One Billion During Pandemic WSJ
- Cable Now Controls Nearly 70% of U.S. Fixed Broadband After Biggest Year Since 2008 Next TV
- Cord Cutting’s Worst Year Ever: Analyst B&C
- Disney Plus Will Surpass Netflix in Customers by 2026, Research Company Says Next TV
- Tubi Says Streaming Rose 58% In 2020, With Half Of Viewers Younger Than 35 Deadline
- U.S. SVOD Revenue Spiked 39% in Q3 to $5.5 Billion Next TV