GoogleTube in search of tv riches

Is the Googleplex really the Dark Star, which attacks with sheer mental power all media conglomerates in the whole world? As we learned once from a tiny startup from Redmond, Washington: softwarebased world domination schemes are doable. It’s mostly a matter of the right timing combined with right cash flow.

Of course, Big G is to Microsoft what Austin Powers means to Mini-Me. They are much younger. Now look at that: Both are going after tv riches. The Microsofties conquer ally with old media since the nineties of the last millenium. From WebTV to WinCE STBs – nothing ever worked out. Their final (?) quest: selling Windows-based IPTV backend systems to telcos, so they can sell Windows-based STBs to consumers. Let’s see.

Googlianism works differently. The first law: For every problem there’s an algorithmic solution. The second law: If there’s no algorithmic solution, hire somebody who might find it. And, not to forget: As long as it might sell ads, it’s good.

And that’s how Google is going after the stupid box. Their cuckoo-approach, as published two months ago (listening into everybody’s home to serve the right ads) could have been a part of a Think Different! campaign. Their last move makes more sense. Google just hired Vincent Dureau, CTO of iTV/IPTV middleware company OpenTV.
FierceIPTV knows: Dureau was responsible for developing OpenTV’s key technologies, global business relationships and, in the early days, building its engineering team from scratch. OK. Quite a standard move, so far. But the good part starts here: Most interestingly, Dureau took the lead of OpenTV’s advanced advertising technologies, even penning a white paper that reads: “We believe that addressable advertising, where specific video ads are targeted to specific audiences will become central to advertising on digital television within the next 5 years… advertisers will be ready to pay premium rates to cable operators who can demonstrate increased efficiency of their advertising network through targeting.”

Here we go: Old media, be afraid. The main difference between the big tv networks and the cable networks with their smaller reach is: well, the footprint of the large networks allows them to sell their ad inventory with a premium. But IPTV means the possibility of a gazillion channels. AdSense-based IPTV should mean. the playing field gets more even. And as ad spending won’t explode, the monies have to come from some other segment.

But now the caveat: People spend onliy 5 percent of their time searching, but search commands over 40 percent of the online advertising market, writes Guide.

Via FierceIPTV

Pricing Digital Movies

Why are downloads as expensive as physical as the same content burned on a silver disc? Anne Thompson of The Hollywood Reporter has a really interesting piece here. And CinemaTech has got the discussion.

The basic question: with downloads you get instant gratification, but otherwise less. Lower video quality, no bonus material, annoying DRM, no physical goods, no artwork and covers and booklets. OK, convenience has it’s price tag attached. But of course digital downloads and physical goods are not on the same level. It’s pure content versus content plus a thing. Something you can touch, collect, show off, present to somebody.

What got some people steaming, was Ben Feingold’s (Sony’s president of worldwide home entertainment) remark on pricing: Currently there is basic parity in the electronic or physical landscape. That’s what makes sense at this particular time.

Comments like price parity is NUTS are of course on track. From a consumer’s perspective, price parity looks greedy and pointless.

But Anne Thompson’s makes an important point: The reality is that the studios are so invested in such brick-and-mortar video retailers as Wal-Mart and Best Buy and Target that they can’t afford to alienate them. The big box retailers represent about 60% of the studios’ $24.5 billion in annual DVD revenue. At the recent quarterly meeting at Wal-Mart headquarters in Bentonville, Ark., where the studios bid for positioning in their stores, Wal-Mart made clear to the assembled studio home video reps, according to sources, that it does not view digital downloading favorably. And the prospect of Wal-Mart ordering fewer copies of just a title or two sends a chill into studio hearts.

The Grinch lives in Bentonville, Ark.

Via CinemaTech

Channeling Online Video

YouTube and Yahoo Video claim to become more tv like. In a nutshell, the idea goes like that. Instead of just offering vast numbers of video files, you can subscribe to channels. According to Yahoo, a channel is a series of videos from the same source or user. If you like a channel you can add it to your Favorites page. YouTube-channels are somewhat similar. It’s just that every user (and his content) are defined as channels.

Of course, that’s not a textbook definition of a tv channel. As usually a channel wouldn’t rely upon a single source of content. But aggregate content of different sources to build a program stream, which is watchable.

Now listen to this. According to Reuters, YouTube wants to create a personalized programming experience akin to TV viewers surfing channels with a remote control.

On Read/WriteWeb, Richard MacManus ask himself: The “personalized programming experience” I can dig, but why compare that to tv channel surfing with a remote control? He’s right. Internet guys like to talk about video as rich media. Probably because tv (as the prime rich media example) is big and loud (and sometimes still stuffed with money. Compared to YouTube, any not too crappy cable channel looks like the rich uncle, with more people working on catering than YouTube’s total headcount).

But the real differences is not the quality of the content encoding (OK, YouTube videos tend to look like having been soaked in lukewarm dishwater for at least a week). The BIG difference makes the interface. YouTube et al rely upon the web, the richest interface you can get, displayed on high res screens, with keyboards and mice attached.

Remote controls are like keyboards poor cousins. Well designed for a single purpose, but not really versatile. So any interaction which is a bit more complex than switching channels and turning the volume down asks for pretty arcane user inputs. The screen as a displaying device is pretty much useless – if you want to display a certain depth of information. The resolution, be it PAL or NTSC, is abysmal. And even HDTV doesn’t solve this problem, as the viewing distance is too high. That’s why iTV or Video on Demand are such complex endeavours. You always have to reduce the information level to minimum, because there’s no way to display it anyhow.
Of course, linear tv ist still the 800 pound media gorilla – especially in terms of consumer hours spent on. It’s ubiquos, easy to use, totally ungeeky and sometimes even quite entertaining. And the imcumbent to beat in terms of spare time spent.

But what’s a personalized programming experience akin to TV viewers surfing channels with a remote control? Calling it channels might even be the right approach, as everybody understands the concept (a branded collection of content). But tying channels to content producers is quite off track. Even Spielbergs have their bad days and produce some stuff really do not want to watch. For a channel, what you need are aggregators, editors and program directors.

If you can’t join them: beat them.

Or at least scare them to death. Look at Google’s funny presentation of an interactive TV research paper. The gist: in a perfect world, iTV would be an ubiquos reality, any marketeer’s dream and the perfect pasttime for many a people who’s idea of entertainment isn’t watching a PC scanning itself for viruses. But as we all know, the world is far from perfect (Global Warming, Cialis spam, Cherry Coke – just to mention a few). So since one and a half decades and for the next foreseeable time, iTV can consistently be described as the future of tv (and future it stays).

The reasons are plenty: a hodgepodge of industry interests and players is frequently churning out standards which are practically nowhere deployed (MHP). The computing power of the targeted hardware (A.K.A. settop boxes) is dwarfed by any 10 Dollar wristwatch from a street vendor in Paraguay. And most walled garden of the operators aren’t landscaped after the hanging gardens of Semiramis, but obviuosly more likely with the desert Gobi in mind.

Yes, it’s a mess. But who’s better equipped to fix up a mess than Google? After all, they brought (some) order to the web (which is after all the mother of all messes). Introducing Google TV. Or at least a paper called Social- and Interactive-Television Applications Based on Real-Time Ambient-Audio Identification.

In a nutshell, the idea goes like that. Many people watch tv and surf the web at the same time. Combining those experiences in a somehow converged appliance is still a pipe dream. Connecting PC and STB is mostly not an option. Making people doubleclick to switch a program is the not-so-elegant status quo: first change the channel on the remote control, than switch web sites.

Google’s approach is somehow between big brotherish and ingenious. The only thing you need is a PC with a microphone and a tiny piece of software. The mike listens into the room, the app samples and irreversibly compresses the viewer’s ambient audio to summary statistics. These statistics are streamed from the viewer’s personal computer to the audio-database server for identification of the background audio (e.g., ‘Seinfeld’ episode 6101, minute 3:03). Meaning: transmitted won’t be your stupid talk about nuking your next door neighbor, but just the audio fingerprint of the background noise formerly known as television (and if 10 minutes after you talked about nuking your neighbor 20 square jawed hulks with blackened faces politely knock on your door, you’ll know that somebody has put a trojan onto your system).

Far fetched? Audio fingerprinting is already here. UK-based Shazam recognizes music you play to it, same goes for Fraunhofer Institut’s AudioID. This solution is quite elegant. You get rid of most of the existing complexities, don’t have to care about channel numbers, locations, distribution networks or else. You’re back to the program itself (which even could be a DVD you watch and Google TV will tell you that there’s a guy watching the same movie over and over just like you and you can start to talk, chat or whatever about your mutual obsession).

The paper describes four different types of applications: Personalized Information Layers, Ad-hoc Peer Communities, Real-Time Popularity Ratings, and Video “Bookmarks”. The impact on advertising is partially addressed, too. Well, networks, be aware. Will Google harvest the info clouds surrounding any piece of programming and at the same deliver targeted ads, based on context and consumer behavior (and thereby taking away your bread and butter)? Most likely, not. Even if Don’t piggyback isn’t totally covered by the famous Don’t be evil. But wait for those kind of apps and ads to show up combined with IPTV offerings. Additional lines of contextual content, combined with AdSense for IPTV. To be watched either picture in picture or on a second screen (PC, handset, …).

More to read: Official Google Research Blog: Interactive TV: Conference and Best Paper,
and Chris Riley: Clues on Google TV?

Addendum: The more I think about it, the more obvious it is. The mad professors at the Googleplex are good for many far fetched ideas. But let’s put it like that: the audio part is such an obvious privacy nightmare scenario, that they can’t be serious about it. No way. So we have to divide the paper in two parts. The relevant part for Google is the iTV-backend, with the app and ad serving.
But would have anybody in the whole world noticed just another iTV paper without the harebrained audio scheme attached? Right. And here we go. One paper. And Google positions itself as an interesting player in the TV/iTV market.

Get That Movie. Now.

On Ars Technica, Andres Bylund is giving us a real treat: Blockbusted! Movie rentals of today—and tomorrow compares the different means of renting a movie (at least, if you’re US-based; but most things ring quite true for the rest of the western world, too).
It’s a nice round-up. There’s definitely nothing wrong with it, but it’s a bit misleading, too. Because Bylund is comparing Apples to Oranges, and throws in some Bananas, too. The only thing WalMart, Blockbuster, Netflix et al. do have in common is movies. Which is a bit like pedestrians, trucks and a Porsche sharing just one thing: sometimes, you find them on a road. It’s good, but not good enough.

It’s a way of thinking coming straight out of a product world. But the important thing we need to apply is the use case, and the values behind it. In the as-of-today-world, comparing WalMart (DVD buy) and Blockbuster (DVD rental) doesn’t make too much sense. Not, because of WalMart’s target group. It’s just that people, who buy DVDs almost never rent. And vice versa.

I liked the comparison between Blockbuster and the local rental store, and how the latter did carve out its niche. But Neflix is a completely different beast. Not like hey let’s get a beer and rent a movie. It’s more like HBO without a schedule and some preselective choice (I might like to watch this or that movie later this month).

So what about VoD and downloads? Those two could be closely related. But don’t have to. Look at iTunes, as an example. it’s hyperconvenient, the store entrance is always right in front of your PC. You buy your song, you download it, you (kinda) own it. But it’s a dematerialized product. iTunes gift certificates range probably even lower than mail ordering a bunch of flowers. Uhm, thanks for not completetly forgetting my birthday.

Never forget: the physical world has its treats, too. Will VoD replace local rentals? Could be, should be and in all likelihood sooner or later it will dwarf the storebased rental business. But please don’t leave too much nacho crumbles in the matter transmitter.

Addendum: The NY Times on What Netflix Could Teach Hollywood

Which tells partly the tale from the long tail – but gives you a good idea in what kind of business Netflix really is: Out of the 60,000 titles in Netflix’s inventory, I ask, how many do you think are rented at least once on a typical day?

The most common answers have been around 1,000, which sounds reasonable enough. Americans tend to flock to the same small group of movies, just as they flock to the same candy bars and cars, right?

Well, the actual answer is 35,000 to 40,000. That’s right: every day, almost two of every three movies ever put onto DVD are rented by a Netflix customer. “Americans’ tastes are really broad,” says Reed Hastings, Netflix’s chief executive. So, while the studios spend their energy promoting bland blockbusters aimed at everyone, Netflix has been catering to what people really want — and helping to keep Hollywood profitable in the process.

Five million families now have Netflix accounts, and the company has basically reinvented the concept of a quick-turnaround mail-order business.

TV – all Ad-Free, A-La-Carte?

There’s a new (?) meme on the block: ad-based tv is/should be dead. The future of tv is ad-free, no-tier, and totally à la carte. Listen to Steve Rubel of Micro Persuasion fame: As the technology gets more sophisticated and the generation that grew up with the Internet , iPods and always on connections become adults, I see a day coming when a lot of TV content will a) be paid for and b) consumed ad-free. Nice try. But, guess what: a) is already here and b) is highly unlikely to happen.

The fundamental misunderstanding starts with the words as the technology gets more sophisticated. Of course, technology is crucial. But at this point, usage patterns and applied business models are more important.
a) is easy. It’s called pay per tier, and is basically the pretty successful formula which has propelled US-based cable networks from MTV to CNN to Discovery into the global top position regarding multichannel tv. The basic math behind it: a multichannel operator sells easy to understand program packages to the consumer. The programmer gets a certain portion of the subscriber fee and decides by gut and market research in what programs to invest. So why not breaking it down into selling separate pieces of content?
Let’s make a sidestep. In the Boston Globe, Alex Beam toots almost the same horn (at least, according to Steve). Remind me again: Why am I paying $50 a month for services I don’t want? Oh, that’s right. Because the cable TV monopolists say I have to.

The basic principle of a successful multichannel tv environment is simple. Networks are packaging shows into a channel. Cable operators are packaging channels into tiers. According to Beam, selling tiers is just a greedy, oversimplistic one size fits all approach. According to Rubel, selling ad space is just an annoying habit of channels inc., to be broken by the powers of technology. Vivat, à la carte.

Beam proposes. I pay to get 80 channels, about 20 of which I actually want to watch. Hey, Mr. Comcast, let’s make a deal. I’ll pay you, say, $25 a month, and you beam me the 20 stations that I want to watch. Makes a fiver for the connection and one Dollar per channel each. Sounds good, true and populistic. But, unfortunately, not feasible. Ask Mark Cuban. He did the math (trust him, not me: I’m just running my micro tv network somewhere in old Europe – he’s a selfmade billionaire). The big difference is, that in an à la carte world, the cost of reaching an audience is outrageous.

And it’s not just the price tag. Because of the cost of reaching an audience, à la carte  programming favors inherently the big, the established, the incumbents. Mark’s example is the movie market. Look at which content rises to the top in terms of revenues from consumers and visibility. The content from the biggest companies who have spent the most money to market.

OK, you might say. Unbundling tiers might not be that great an idea. But the unbundling of channels into separately sold pieces of content is a technological given. Everybody builds it. So it has to come, it’s already happening.

According to Steve, in the future – as technology progresses – you will have to pay for the best programming, even if it’s carried by ABC, NBC, Fox or CBS. These shows will be sold a-la-carte, as subscriptions or in packages and they will all be delivered over the Internet protocol. Nice try. But technology’s just one (important) piece of the puzzle.

To quote myself (sometimes, I like that): can $1.99 downloads substitute broadcast tv? Only if you’re a Hollywood producer. Or could you imagine every tv household shelling out $200 a month at least just for watching tv content (and that number’s not even based upon the real tv usage hours)? So even in a virtually broadcast-free world, we’ll have to look for ad support. Otherwise, people will have to find themselves some new (and cheap) hobbies pretty soon.

So one thing is the business model applied to usage patterns. You can’t beat free beer with almost free beer. But free beer and premium imported Pilsener can peacefully coexist. Because they’re catering to different markets.

Would you pay for a download of Jerry Springer? Nobody would. Those who watch, can’t afford. Those who could afford, don’t watch. Would you pay for a download of Desperate Housewifes – if it would have never been aired on network tv? Most likely: not. Because you would never ever heard about it (if somebody didn’t spend some gazillions on marketing). Because it would never ever had been produced (if somebody didn’t wager some gazillions on production).

Placeshifting vs. Mobile Video Services

What’s placeshifting? Services like Slingbox or Orb use your broadband internet connection at home to stream your favorite shows to your PDA, your handset or laptop. If you like the idea, it’s highly likely that you’re not working for a mobile network operator.

MocoNews ha a nice wrap up of a report by ABI. Of course, the handest only moble video offerings aren’t that versatile, compared to Orb’s multidevice approach. But rebroadcasting regular tv shows to a handset is a rather futile approach anyway. First thing: screen resolution and real estate. We’re moving to HDTV in the living room. But you’ll never carry mobile phone with a 60″ screen.

So esentially the fun starts with made for mobile content and services. Looking at the different, German production companies and carriers already produce some stuff, which partially is made for miobile only consumption, partially as some kind of augmented tv service – depending in the time of the day.

In the long run, augmented television services and some time critical content will be the only stuff which will be broadcasted in a traditional way. Everything else will be pushed to devices for local caching. Because storage prices (with virually unlimited production capacities behind) will fall always much faster than bandwith, which is restricted by its spectrum limitations.

Via unmediated