Tuesday, November 30, 2010

Tony Soprano And The Future Of YouTube

I am what media research organizations would classify as a light television viewer - someone who watches just a few hours per week at most.  Based on our demographic profile, light television viewers like me are extremely sought after by advertisers.

Up until recently, about half my limited television viewing time was spent lazily channel surfing with no specific idea of what I wanted to watch - just bouncing up and down the channel line up with a glazed look on my face until something grabbed my interest.

The other half of the time was, and still is, spent watching stuff I specifically intended to watch.

And other than our weekly family "Glee"viewing party (including, quite inappropriately, my 8,10 and 12 year-olds), the Sunday Jet's game, the odd big live event (Academy Awards, Grammys, Superbowl, etc) and the occasional breaking news story, most of this "appointment television" occurs on my timetable via DVR or VOD technology, or a Netflix DVD or stream.

It takes a pretty fine-tuned TV advertising plan to reach me.  And it is getting harder.

Over the past 6 months or so, I have almost completely replaced the channel-surfing portion of my TV diet with YouTube clips, watched on our family's 22" iMac down the hall in another room.

With a beer or glass of wine in hand, I now surf YouTube, which has, under the wary and litigious eyes of the biggest media companies in the world, aggregated an unrivaled library of video entertainment.

YouTube reported last week that 35 hours of new content is uploaded to the service every minute, twice the amount from just a couple of years ago.  And while much of it is family videos or silly user generated attempts at viral fame, a significant amount is copy-right protected content from the likes of MTV, HBO and AMC, uploaded in reasonably good quality by individuals wanting to share and discuss their favorite pop culture moments.

Here is one of the clips I watched the other night...


... one of the greatest scenes in television history, uploaded in decent quality by a random YouTube subscriber with no apparent connection to HBO.  The big question - where are the ads?  My guess is that a pre-roll ad unit in front of a seminal TV moment like this is worth... $25 per thousand? $50? $100?  A $50 CPM against the current 2 million view count represents $100,000 in potential revenue for this one clip.

Or why doesn't HBO insist (I am assuming they know this clip exists) on promotional messages for current HBO programming?

Next I watched this...

... from the 2003 MTV Video Music Awards - one of the funniest openings ever of any awards show. (Was there any doubt Jimmy Fallon would become a superstar?)

But also uploaded by a random YouTube subscriber with no authorization.

And this content is owned by MTV, the company that threw down their gloves and sued YouTube in a very public dispute just a few years back.

According to an article in The New York Times last month, some of the big entertainment and media companies are beginning to work with YouTube in finding mutually beneficial ways to capitalize on the site's enormous social media power.

The article described an unauthorized clip from Mad Men that Lions Gate (the rights holder) allowed to remain on YouTube in exchange for a 50% ad revenue split.
If YouTube can structure deals like they did with AMC with HBO, MTV and all the other premiere content owners, the revenue opportunities are substantial.

Of the approximately 2 billion daily video views on YouTube, 14% include ads, helping the company finally reach profitability this year with over $400 million in revenue.  Just doubling the ad load could bring YouTube within range of $1 billion, putting it in the same ad revenue league as some of the larger cable networks.

YouTube has ambitious plans to convince users like to me to start browsing the service on my television.

NY Times tech columnist David Pogue recently wrote that browsing the web on TV is an idea whose day will never come.  Not sure I agree.  At a party recently, a group of us stood around a web-connected TV laughing at some random YouTube clips.   For the most part though, surfing YouTube in it's current form is a solitary, small-screen, head-phone insulated experience.

However, might YouTube, with so many resources at their disposal, be able to reformat the experience for lean back viewing, integrating longer form programming as they develop better relationships with their network partners? 

They are working on it.  Here is a link to a job posting for a new position at Google:  "Product Manger, YouTube on TV".

And might YouTube's growing clout provide some leverage to Google in their grander Google TV initiative?

Whether they succeed in bringing the service to TV or not, YouTube is clearly a major force for the entertainment and ad industry's to reckon with.

Tuesday, November 2, 2010

My Experience With Cable's "TV Everywhere" Platform

ESPN, arguably the most valuable TV programming franchise in the world, is making all their programming available online, live, to authenticated Time Warner Cable subscribers.  Seems like a huge story, but much like the entire "TV Everywhere" initiative introduced by the cable industry nearly 2 years ago, the actual service is shrouded in quiet - like the stealth launch of a new product that all stakeholders are unsure about, as it represents enormous disruption for their industry.

I could find no mention of the new offering in any Time Warner Cable marketing materials or on the customer web site.  There was some coverage in the trade media, but quite frankly, I expected to see much more.   I initially found out about it on a blog, which took me to this ESPN/Time Warner Cable co-branded web site:

After entering my account number and customer code, within seconds I was watching Sports Center and a bit later, a college football game - basically, a live feed of the cable channel, without commercials, although I am sure that will change quickly.

The problem with TV Everywhere has been the lack of compelling content.  Up until now, the most prominent programmers to participate - Time Warner's TNT, TBS and HBO - have only made limited content available; and very little promotion has resulted in minimal consumer adoption. 

Some toes in the water, but no real commitment.  And as a result, everyone had heard about TV Everywhere, but very few have actually experienced it.

(Comcast's TV Everywhere initiative features a somewhat broader line up of content but has struggled with the additional issue of a poorly designed authentication process, frustrating the customers that tried to sign on.)

Not surprising, it is ESPN that is the first to make such a dramatic move.  They are consistently among the most innovative and technologically nimble of all the media brands.  Yet both ESPN and Time Warner Cable have significant risks to consider.   ESPN's subscriber fees are the highest in the business, bringing the company billions in revenue from their cable, satellite and telco distribution partners.  And for the distributors, live sports is among the most valuable and highest rated programming, justifying in large part why consumers are willing to fork over so much money every month for a bundled package of programming options that includes channels they never watch.
Yet as more and more consumers are connecting their TV's to the web through one means or another, and they start to see some of their favorite programs outside the realm of the set top box, the whole business model of the bundle weakens.   A column in Tech Crunch earlier in the year addressed the looming bundle versus a lá carte challenge facing the cable companies:

 "... on the Internet the more empowered consumer has become comfortable with picking and choosing the content for which they pay. Thus the success of iTunes over the Rhapsody model. So the really interesting business question which TV Everywhere raises is whether the old media model of bundling all-you-can-eat content in a single monthly price can work in the digital age of this empowered consumer.  Perhaps, in parallel with TV Everywhere, cable companies would be wise to also offer the option of paying for online video content on an a lá carte basis..."

With so many big guns (Google, Apple, Amazon) and smaller ones (Netflix, Hulu) aiming at them with lá carte options for consumers, the cable industry will need to respond quickly.