Seeing Through the Muddle: Video Grows up on the Web, but Where is the Mainstream Content?
 |
 |
|||
About Kara NortmanCurrent Investments:Blue Flame Data Current Boards:Current areas of interest:New Media, Consumer Internet, Software as a Service, Wireless |
||||
 |
 |
|||
EmailWe are bombarded daily with blogs, podcasts, RSS feeds, and companies with unusual dot placements in their names proclaiming video content has officially moved to the web. Google has launched its video upload program, which allows anyone to upload digital files to reach a larger audience, and they recently signed a deal with UPN for an exclusive online premiere of Everybody Hates Chris; Yahoo has taken 200,000 square feet of office space in Santa Monica for its production unit in an effort to become the CBS of the web; AOL just announced it will offer classic television shows from Time Warner archives through an online, ad-supported model. In addition, in the past week both CBS and NBC have entered into deals to enable greater access to video on demand through Comcast and DirecTV respectively.
Yet, I still can’t pay for an episode of Curb Your Enthusiasm online or pull down an old re-run of Three’s Company with ease. And I’m willing to watch ads to get content — lots of ads, particularly rich media, customized, interactive ads with dancing handbags and bouncing basketballs that are targeted precisely to my geo and demo. I can find a few things, such as a couple of scenes of Trump dumping his latest victim, or a moving picture of some guys reenacting their own personal interpretation of Jackass.
But where is my MTV (which happens to be HBO for me) @$#$%!
It is fair to say video is growing up on the web, but most of the content today is user generated or developed specifically for the web. While some types of content thrive, it remains difficult to access mass market studio content.
Technology: The Middle Drives the Muddle
The wide scale deployment of DSL- and cable-based broadband services has led to an upsurge in watching, creating and serving up video from the home. Broadband has fueled a technology-led transformation of how information is gathered, disseminated and consumed. Content is becoming more visual, interactive, on-demand and varied than ever before.
In addition, companies, governments, non-profits and your average consumer are increasingly moving from analog video to digital video. With cheaper digital video cameras, videos can be emailed/uploaded to portals immediately, eliminating many of the manual steps, cost and uncertainly traditionally in between the video producer and outlet. Kodak and Nikon both recently released Wi-Fi enabled cameras. The $599 Kodak EASYSHARE-ONE camera comes with a Wi-Fi wireless networking card that connects with any Wi-Fi network in range. Once connected, users can instantly email pictures to friends and family, or upload them to a photo Web site.
Video has now moved to the web in real-time.
It’s All About MY TV
Broadband penetration and digital technology has made the generation and consumption of video content prolific and easy, but is amateur video on the web here for real? Will the fanatic soccer dad finally set up a live, web-based, 24/7 channel dedicated to the footage of the Springfield boys “Goalbusters” soccer team, chock full of key game footage and 10-year-old Jimmy’s personal profile? Will web-based production tools and community sites let an NYU film student become the next Scorsese with $100, a Canon Optura and an iMovie production suite?
The answer is a rising yes. User generated and
original web content is here en masse.
The web has changed the way we live, eat, sleep, chat, date, express, listen
and watch. Our online actions no longer have discrete start and stop points,
but rather we are all constantly in the process of doing, blogging, responding,
collaborating, and creating. Video has a prime spot in the new user-generated
web, where the surfer is now the creator. Today the clichéd long tail
is growing longer and users are generating ever more video content. Portals
like Bigboys.com and Stupid Video, and client players from companies like
Veoh Networks and Popcast, let end users create their own video destination
channels, as specific and targeted as desired.
Original production houses are also popping up with both small, web-based production companies like ManiaTV! and ChannelBlast, and web powerhouses like Yahoo. Even emerging cable channels — such as Al Gore’s 24-hour news station Current TV — are trying to aggregate entirely viewer-contributed broadcasts of anywhere from 15 seconds to 5 minutes. In addition, new revenue models are emerging to support user-generated efforts. Companies such as YouTube and Revver, recently out of stealth mode, have developed video destination sites dubbed “the flikr of video.” Revver tags amateur videos to affix content-relevant ads to the video. As additional revenue models support user-generated video, it will continue to grow. Clearly, user-generated video is flourishing online, so why is it so hard to rent The Notebook on my PC? Where is the major studio content?
Studios Will be Slower to the Punch
While the studios have tried to offer content through Movielink or CinemaNow, consumers have been slow to adopt because the sites are sluggish and cumbersome. A complete Movielink download takes 1-2 hours and the content must be viewed within 24 hours or the DRM will kick in and the content will not play. The big studios and media companies are not ready to set their prized IP free into Cyberspace. While the recent moves by NBC and CBS are a step in the right direction, in the case of NBC, consumers can only purchase select shows via DirecTV if they have an updated DVR.
It will take some time for Fox or NBC to work with Google or Yahoo to put a full library of their content online. Even for promotional purposes, studios must get authorization from actors and various guilds to show clips. While Google et al. are currently courting the large studios, we will wait awhile before the studios partner with the major portals/search sites to provide searchable content. Copyright issues and the need for human vetting add further complexity. We will continue to wait before the automated, free-for-all world wide web finds common ground with the heavily DRMed studios. Because of Hollywood’s licensing/copywriting issues, Internet-based distribution models, as well as models for moving content around the home (from PC to set top box), have been slow to develop.
Hope Floats
TV and movies are in a similar place to music five years ago: buy the DVD or download illegally. Disney has proven to be one of the most aggressive players to exploit new revenue channels. Their recent agreement to allow iPod customers to download ABC TV shows is a move in the right direction. The end user experience is not perfect, with reports of slow downloads and complaints about video quality when moved to a bigger screen. However, with the ABC content, Apple is starting to do for TV and movies what the company did for music: demonstrate that consumers are willing to pay for DRM-protected content at a fair price point. Before the iTunes ABC offering, the only way to get TV content online was to download the show illegally using BitTorrent. In the first three weeks of the video iPod service, Apple sold 1 million downloads at $1.99 a shot. Hopefully other major networks will follow ABC’s lead, and we won’t have to wait long for online access to full feature movies.
Traditional media companies are also starting to move some timely news content online, possibly the first step in dipping a toe in the fast moving web water. In the past couple of months, Viacom’s CBS News and Time Warner’s CNN both introduced revamped sites offering free video news stories on demand. This move is motivated by the rapidly growing opportunity to capture sizeable ad revenues from marketers eager to advertise around rich-media news and information. In the last six months, leading news brands such as the AP and Reuters have also announced their plans to leverage their video news products and to build news portals of their own, thereby gradually withdrawing the supply of their video news feeds from the broader syndicated marketplace.
News video is a natural place for media companies to experiment online. News content has a short shelf life and thus the drive for timely reach trumps fear of piracy. TV news is trying to reach a diverse audience that does not want to be chained to a 6:30 time slot or spend 30 minutes rehashing the Michael Jackson trial. Media companies get it, and are working to cash in on the growing influence of the web as a news source. Most media companies are selling ad packages that bundle web time with their traditional TV package. Web-only ad deals are becoming increasingly attractive because consumers can be more precisely targeted and required to watch an ad before seeing the video (vs. channel surfing away). Success in this realm will hopefully convince others to follow. As parent companies such as Viacom and Time Warner see the uptick in online ad revenues generated from their news properties, they will likely be more motivated to move traditional studio content online.
Near-Term Video Trends
Technology has arrived, more and more user-generated and current event content is moving online, and traditional studios will take time to make their move. So where does that leave us?
In the near-term, physical media — such as DVDs and home networking devices such as DVRs — will continue to thrive. User-generated content and clever original content developed for large portals will continue to grow exponentially, supported by rich media ad revenues. New sites that figure out how to create an easy to use UI and/or editorial system may become popular destination portals. Affiliate networks will arise to create marketing and distribution for user-generated content. Corporations will continue to explore video as a means for communicating with their employees through intranets and with their customers through external websites.
Finally, dynamic content clearing houses for the efficient delivery, exchange and trading of videos will emerge as new types of content find an audience and a business model. Local news content filmed by CBS’s Buffalo affiliate may be appealing to another network affiliate across the country. Or a citizen videographer in Tanzania may capture footage of the rare white giraffe that could be valuable for a National Geographic Channel feature. Historically there has not been an efficient marketplace for buying or exchanging video content.
Battery recently made an investment in The NewsMarket, a company built to leverage and catalyze this trend. The NewsMarket has developed a web-based platform to manage and distribute broadcast quality video from Fortune 2000 enterprises, governments, events and citizens to broadcast newsrooms and websites around the world. Today, The NewsMarket delivers video to 5,000 media outlets in 140 countries (traditional broadcast or online). In the future, this platform can be used to build and run a dynamic marketplace for user-generated or small affiliate-generated video distribution.
The Muddle is a Wrap
Rich media is moving online at a rapid pace. It seems as simple as “the Earth revolves around the sun” and “a2 + b2 = c2.” An Internet connected device — whether a PC alone, a TV redirecting content through a Sling Media box, or a MediaCenter powered home — will become the primary delivery vehicle for video content. As such, “stations” will pop up on the web. Those with great original content, fantastic UIs and/or editorial selection processes will emerge from the pack. Traditional media companies will gradually learn how to use the web to provide their audience with a more personalized and accessible channel for their favorite content. Longer term, major entertainment companies and studios will figure out how to protect their IP enough to serve pent up demand and generate higher revenues. As studio content moves online, a whole world of peer-to-peer licensing and word-of-mouth marketing models will emerge.
For now, there is a legion of 24 fans and Alias junkies who are waiting with bated breath...
Please do not hesitate to drop me a note at kara@battery.com if you are building a company involved in facilitating or creating rich media on the web and are looking for venture funding, feedback, or a good conversation about rich media trends.
© 2005 Battery Ventures. All rights reserved.