An Invitation To Read My New Book

As my last post from nearly three years ago announced, I no longer post to this blog and do not permit comments to old posts due to the immense amount of spam I still get here (get a life, people!).

However, this site still gets hundreds of reads a week so I wanted to invite anyone coming through here to read my new book, Digital Disruption: Unleashing the Next Wave of Innovation. It’s available at Amazon (shortcut link at forr.com/DDbook) and other places). There is also a short post about it on my current blog: Why My Hardcover Book Counts As Digital Disruption. And for those wishing to take it to the next level, read more about what Forrester Research can do to help you become more digitally disruptive at forrester.com/disruption.

I now return you to your regularly scheduled programming. ;)

This Blog Has Moved: Read My Posts At My New Blog…

Folks, please note that this blog has been permanently moved to Forrester Research’s (my employer) blog platform. There will be no further posts on this site. Instead, please visit me at:

http://blogs.forrester.com/james_mcquivey

where I will cover video, as well as other critical media transition points. See you there!

Disney/ABC joins Hulu: What it Means

Today Disney and Hulu confirmed the long-running rumor that Disney would join News Corp. and NBC Universal as equity partners in the most successful professional video content site. According to the Wall Street Journal, Disney will take an equal share by ponying up a similar amount of cash that the prior equity investors put in. 

I applaud this move. It’s going to bring short-term and long-term benefits to the industry. This move:

• Creates needed short-term online advertising efficiency. I’ve recently written a report for Forrester about the struggles of online TV shows, including Hulu, when advertisers are cutting back every expense. By joining forces and standardizing the ad buying process, ad formatting, pricing, and so many other friction-laden processes, these major networks are going to keep some portion of ad revenue that might otherwise have been lost.
• Keeps YouTube on the professional video sidelines. YouTube had made a good effort to bolster its online TV show offerings with some CBS content and some links to ABC. But it hasn’t been enough to change what users expect from YouTube. (Tidbit: While YouTube accounts for nearly half of all video views, it only accounts for less than a fourth of video minutes because people go there for short clips.) With ABC clearly aligned with Hulu, it makes it less likely that any of these players will care to sustain YouTube’s online TV ambitions in the future.
• Makes it nearly impossible for CBS not to join. CBS has invested millions in its own effort and it may not want to give that up. But so did ABC — in fact, ABC was really the boldest of the networks in terms of technology investment and strategic energy. With the other 3 networks heading down the yellow brick road arm in arm, it makes sense for CBS to benefit from the same market power Hulu will now command.
• Sets up the cable industry for Hulu 2.0. If you’re paying attention, you have noticed that neither Hulu nor ABC have shown up on the Xbox, the Roku player, Blu-ray, Connected TV or any other over-the-top solution. This is because they are saving themselves for the cable industry. They don’t want to upset the cable industry, sure, but more importantly they want to position themselves to partner with cable to deliver Hulu 2.0 to the cable subscriber. Where Hulu 1.0 will remain free for online viewers, Hulu 2.0 will provide not just 4 episodes of a TV show, but all the seasons of the show to date, plus back seasons, and even new release movies. And all of this will be available online as well as on the TV. That experience will be available to premium cable subscribers and the revenue will be shared back to Hulu. 

What do you think it means? For content players, device makers, consumers?

The mobile Web: The future of TV remote control

Hands up, anybody who has ever controlled their TV, DVR, game console, DVD player, or other fancy video gadget using the Web rather than a maze of slow clicks on an old infrared remote control.

Anybody? Congratulations, both of you.

I’ve been playing with Verizon’s newly updated Web-based remote control feature to do exactly that and I’m telling you, it’s sweet. Sorry that most of you aren’t FiOS TV subscribers so you won’t be able to try it, but for the few who are, give it a trial run.

You have to have an HD DVR and you have to sign up first, but within 24 hours they’ll get you up and running. You can then log in and control your DVR from your PC. If you’ve ever fallen asleep waiting for your DVR to respond to your remote control as you wade through a labyrinth of menu options, you’ll appreciate the speed and efficiency of this solution. 

Here you see me deleting yet another episode of Bob the Builder, all in the name of research.

Controlling complex TV equipment from the PC is a no-brainer — the next step will be to port all of that control to the mobile phone.

To wit, I’ve been playing with the iPhone app that controls the Boxee player (which as faithful readers will know I have placed on my hacked Apple TV with much rejoicing).  Boxee is relatively simple to control with the Apple TV remote (though I  my kids keep losing the tiny thing) so it’s not like you need to turn to the iPhone app, but why not? Once you start getting the hang of controlling things from a more intuitive interface (the PC with a mouse, the iPhone with its touch surface), it makes you realize that the future of living room control is not to have a $500 Logitech universal remote or even to put a touch screen on your TV set. It’s much simpler than that — we’ll all just use our mobile phones to control our TVs, DVRs, game consoles, and everything else CE makers conspire to place in our living rooms. And that control can be live, as in, here’s what I want to watch right now, or offline, as in, let’s delete all of those Palladia concerts I recorded in HD while I was convalescing that now consume half the DVR hard drive (sorry, Neal Peart and the rest of the Rush gang).

Once we have a protocol for letting mobile devices speak to the TV, they won’t be limited to simple command and control functions. Here are a few scenarios that I can easily conjure:

1. Want to play Uno on the TV? Okay, you might prefer harder fare when you think of card games. Either way, we can’t play card games at our house until the little ones are in bed because they gnash and tear at the cards. In fact, we can’t play card games at our house after they go to bed because of aforementioned history of gnashing and tearing has depleted our card reserves. But in a mobile-controlled TV world, bent cards are a thing of the past. Imagine if each player could employ their own mobile phone as their hand. The TV can keep the draw pile, the tableau, or whatever else the game requires.
2. Let me share my photos with you. Today people share pictures and video taken on their mobiles by gathering around the 3-inch screen or posting them on Facebook. But nothing’s more immediate than “publishing” my photos directly to your Connected TV or cable set top box when I drop by for a visit, either over wi-fi or the 3G network. And if I can share photos with your TV from my iPhone, why can’t I also “publish” my mp3 playlist to your surround sound speakers?
3. Need a keyboard, anyone? As more and more of your friends get Connected TVs and are joining chat rooms to swap ideas about the latest episode of Fringe while it’s airing live, you’ll be the one who doesn’t have to use a cumbersome USB keyboard to add your $.02 to the chat. With an iPhone or Android app that speaks to your Connected TV, you’ll be good to go — whether to enter a username and password or for constructing lengthy analyses of Agent Dunham’s wardrobe.    

Your turn, I’m sure you have better ideas of what such a mobile-controlled TV world could be like. Add your comments and let’s see what rises to the top.

Apple TV vs. Roku vs. SlingBox

NOTE: This post is nearly four years old but continues to get traffic, enjoy the read, though I shut down comments years ago because of spam, sorry. In the meantime, please check out my book, Digital Disruption, published Feb 2013 at forr.com/DDbook.

Original post:

This is now the third post I’ve written where I’ve confessed that some unscheduled downtime for health reasons proved to be a marvelous excuse to lay on the couch and watch a lot of TV shows and movies. In my case, I can also claim it’s research because I have to try out all the gadgets in my video setup, which keep changing thanks to upgrades. So in my most recent (and hopefully final) hiatus, I spent some quality time with the Apple TV (hacked to include Boxee), the Roku (recently enhanced with Amazon Unbox capability), and the SlingBox + SlingCatcher combination. Some thoughts:

• Apple TV still doesn’t float my boat. I did an extensive post on this some weeks back lamenting the fact that this box doesn’t do more than it does because despite repeated attempts to give it a break, I still only find it handy for two things: 1) watching movie previews (which I’m a sucker for, especially anticipating the summer releases), and 2) watching Hulu thanks to Boxee. Now that Boxee has added Pandora streaming — brilliant move, guys — it’s even that much more interesting to me. I personally believe this “hobby” — as Jobs and others at Apple keep calling this product — is headed for the trash pile unless it finds a way to stream ad-supported video and then builds an iPhone-like app store to allow 3rd party development for the box.
• Roku + Unbox doesn’t do much for me. I’ve written extensively about Roku’s sucker punch, its $99 Netflix box that is so easy to use that it is flying off of Roku’s shelves. And I was genuinely interested in the Amazon Unbox upgrade that happened a few weeks back because I wanted to see how well it was integrated into the experience. The integration is smooth and elegant. However, I found myself questioning the value of the addition. At my fingertips I have 3 ways to get movies on demand: my cable system, Apple TV, and my Roku + Amazon. And they all have similar problems — it’s hard to navigate that many movies effectively unless you’re looking for an obvious choice like the Dark Knight. Though I will admit I used the Roku the most of the three boxes, 99% of it was spent trawling through our queue of 150 Netflix Watch Instantly titles. The fruit: I strongly recommend The Diving Bell and the Butterfly, a haunting and poignant true tale of a man who suffered a massive stroke that left him with only the use of one eye. Run, don’t walk, to your nearest Netflix Watch Instantly option. While there, do everything you can to avoid Sphere, yet another Sharon Stone movie you don’t need to see.
• SlingBox + SlingCatcher. The SlingCatcher is a loaner from the people at Sling. I’ve used a demo before and was fully aware of its features, but there is something to be said for having it in your home for an extended visit. Here’s what I learned: 1) the people at Sling can do more with video quality over limited bandwidth than anyone I’ve dealt with. I’ve always been impressed with the SlingPlayer’s ability to give me great quality video over wireless connections at home or on the road. But the SlingCatcher has to do one more thing, it has to be able to sling portions of your computer screen to the SlingCatcher. I fully expected the quality of this experience to be subpar. Uh-huh. It’s remarkable. Take a standard size Hulu window, tell your SlingCatcher you want to sling the video to your TV screen and boom, in a few seconds you’re watching full-screen web video from your computer on your TV with no wires attached. Genius. It’s also relatively impractical, however, so as much as I was thrilled to do it, I haven’t done it spontaneously.

By spontaneous, I mean, when I say to myself, “Hmm, I want to watch some video,” the three responses my brain offers are: the PC, the DVR, and the Roku Box, in that order (the DVR follows the PC because with six children, the competition for the DVR is pretty intense). The others don’t come into it unless I’m trying to test something or my first three options are occupied. Lately, I’ve started supplementing that list with some DVR cheating via SlingBox (no need for SlingCatcher), where I can use my PC to snoop in on the DVR while the kids play the Wii or watch a Blues Clues DVD.

I pay close attention to that spontaneous response because it’s the beginning of a habit that will eventually form.

My habits will form differently than yours (you probably don’t have six wonderful children to shape your environment as I do), so it’s not important what my habits are or even what yours are, but what they are in aggregate. To that end, I will keep surveying our fellow citizens to see what habits are emerging. In the meantime, what early habits and preferences are emerging in your life?

DVRs threaten the 10pm primetime hour

Note: Sorry that posts have been so sparse the past two months. In the few posts I’ve offered during this time you’ll see I keep saying I’ve just gotten over a sickness and will be back to work on the blog. Alas, my never-ending cold turned out to be double-pneumonia so I dropped out for a few weeks to kill it once and for all. I really am back this time! I will do a few posts to catch up on things that happened while I was out, starting with this one.

Last week TiVo shared an analysis of its Stop||Watch ratings service that reveals a likely long-term impact of DVR use. They found that when people have a DVR, the majority of the primetime viewing they do is timeshifted in some way, whether started late to skip commercials or recorded for later viewing. No surprise there. But here’s the interesting tidbit: because people still want to watch the 11pm news in time to go to bed, if someone doesn’t start watching the 8pm and 9pm shows until 9pm, it means the 10pm show is just dumb out of luck. Even if it gets recorded, it is less likely to actually be viewed. 

Is the 10pm hour dead? (Note for Central and Mountain time people, for you, we’re talking about the 9pm hour. In fact, given that C/M shows run on an hour-earlier schedule, one wonders if this same effect is as true in those time zones. Since the urge to go to bed presumably doesn’t strike an hour earlier, maybe these people are more comfortable watching the 9pm show at 10pm in time to catch the evening news at 10:45, still making it to bed shortly after 11pm.)

The most disturbing thing about this whole analysis is it suggests that NBC Universal head Zucker has a crystal ball.

He’s the guy who cut the budget for 10pm programming as well as authorized increased reality programming (say, Deal or No Deal) which is cheaper to produce than ER, which recently had its farewell episode after an amazingly long but dwindling run. He’s also the force behind The Jay Leno Show, the 10pm primetime talkshow that hopes to cheaply fill the slot that — according to TiVo — fewer and fewer people will be watching. So is the Leno effort just a way to cut costs or is it also strategic? This is the hard part to swallow. Gulp. It may actually be a smart move. Yeah, it probably won’t be a ratings killer every night. That’s why NBC is happy it will be cheap to produce. However, once in a while, say, when a ship captain who was held hostage by Somali pirates is booked, the show will become current events, the kind of thing people will want to watch live, joining the few things in the pantheon of TV that are true DVR-busters like sports and news. 

It may turn out that the 10pm hour will become the new Today Show — a cheap way to fill time that periodically strikes it big. And that’s just the first long-term trend in TV that the DVR will force. A bigger question is hanging out there in the balance that remains to be answered, namely, in the future, how will we know which shows we should watch?

Sounds like a silly question, but I’m serious: today you rely on the networks to do all the filtering for you. If the idea is a good one, they’ll invest heavily in it, attract the right talent, promote it heavily, and schedule it in a winning spot. You probably don’t consciously think through all of that, but they certainly do. And we are the beneficiaries of all that sweat and effort. But in a world where we watch hours of TV shows on our PCs and can DVR all of the content coming off the air, how relevant is programming and scheduling? In an all on-demand world, there’s no scheduling at all, leaving you no way to know which shows are worth your time.

What do you think? How will the market signal to us which shows are hot and which are not?

One obvious answer is word of mouth, but what will that look like? One additional trend that will increase under these conditions: the rise of star producers like J.J. Abrams and Joss Whedon. In the old days, you didn’t need to know that Aaron Spelling created your favorite TV shows. That was clout Spelling used behind the scenes. But in the future, more producers will have to take their pitch directly to their fans in the audience, something Whedon has already said he wants to do, as soon as he can figure out a way to fund it.

We’re just at the beginning of a fundamental shift in the way we not only watch TV, but how we decide what we should watch in the first place. Your suggestions on how this will evolve are more than welcome.

There’s an online TV storm a brewin’

I wrote earlier this week about how Hulu is now streaming as many views as Comcast does via VOD. But what I didn’t take time to include is the dark side of online TV shows. The fact that many networks are pulling down some of their top shows (e.g., The Mentalist and It’s Always Sunny in Philadelphia.), and how the ads on these wildly popular shows are not all selling.

So I took the time to compile all the evidence that an online TV show storm is brewing and did an analysis for Forrester clients that was published earlier in the month. The great news is that Forrester recently recognized its 10,000th Twitter follower and to celebrate, they let him choose a Forrester report to make available to all of Forrester’s Twitter followers. This individual (@jpthomp on Twitter) chose my report about the coming online TV show backlash. That means good things for all of you, go to the following link to register to get a copy of the report (thanks, jpthomp!). http://snipurl.com/emg3g 

When you get a hold of the report, you’ll see that I envision a lot of experimentation with online show availability throughout the rest of this TV season and possibly even throughout the rest of the year. And with online TV shows failing to sell out their ad inventory, some naysayers inside the major networks are going to be arguing for much more aggressive anti-online measures. We think it will take some time, but online TV can be brought back around again as the recession matures and as executives realize that online TV is not a separate kind of TV, it’s simply the extension of existing TV experiences across multiple platforms. In the report, we sum up the call to action this way:

OUR PLEA: INTEGRATE ONLINE TV INTO THE TOTAL VIEWER EXPERIENCE

If you expect us to end with a summary of all the reasons that online TV shows are the future of TV and a plea to preserve this threatened species, prepare to be disappointed. We said online TV was the most important thing to happen to the video industry not because it was the future of TV in and of itself but because it would help move us quickly into the future of TV, something Forrester calls OmniVideo; this is a state in which consumers can watch TV shows and movies on any platform they want, controlling what, when, and where they watch. In this future, not only will consumers be satisfied, but producers and distributors will make more money than they do today. That’s why we now plead with the industry to quickly learn from the mistakes they’re going to make in the next few months and get back to fully supporting online TV shows — not as a separate business but as an integrated consumer experience that complements and enriches traditional TV.

Check out the report yourself, see what you think. Let’s buckle our seat belts and see what happens over the next few months.

Hulu breaks 300 million view barrier

This week, Hulu released comScore’s latest VideoMetrix chart that shows the site broke through the 300 million views in a single month barrier. This barrier is significant for a few reasons: 1) it’s higher than I thought it would be, so I’m humbled; and 2) it’s roughly the same number of streams that Comcast does each month in its onDemand system. To illustrate both points, let me quote myself from last October when Hulu reached a meager 150 million views:

This is phenomenal, it’s precisely the year-end target I had for Hulu in December. Now I have to ratchet that up to 200 million. To go from 0 to 200 in under a year is remarkable. Consider that in its best months, Comcast VOD streams 300 million video views. That’s a big number. Hulu will be at the level some time next year. Without having to invest in VOD servers the way Comcast did. (See my original blog post for more.)

Let me reproduce the VideoMetrix chart (source: comScore, February 2009) so we can do some analysis.

Quick note for those new to this kind of stuff, “aHulu (Hybrid)” refers to the fact that some portion of Hulu’s views come from its syndication partners like AOL and MSN. That means any Hulu views that occurred there are not counted there, instead they count back at Hulu. We don’t have any solid estimates of what portion of views are coming from Hulu.com itself vs. its syndication partners, but I have a hunch it’s shifting more toward Hulu over time as Hulu has attempted to brand itself more aggressively.

Looking at this chart, we can do some fun math (I know, not two words you’re used to seeing together). We can see, for example that the average viewer is watching Hulu about 16 minutes a week, far ahead of everyone but YouTube (which accounts for the lion’s share of the Google Sites line). That means the average viewer might watch a show every other week, which indicates the beginning of a habit. Hulu beats everyone else in minutes per stream, at 6.7 minutes, comapred to 3.5 for both Google and CBS. That’s obviously because Hulu people are watching full-length content. Most interesting, though, is the fact that Hulu now accounts for 5% of all online video viewing minutes. The only other site that has more than a single percent of viewing minutes is YouTube, which accounts for 29% of viewing minutes.

Yes, YouTube still rocks the house. But Hulua is clearly the second most important US online video provider. 

And it has only been in business for a year. I’m starting to regret boasting about the fact that I never saw Hulu as a YouTube killer the way some people did when it was first announced. While it’s not technically a YouTube killer (these numbers attest to that), it’s certainly a YouTube distractor since it actually has a model for making money from these views, which  YouTube does not. 

 

2009 is the year of the Connected TV

(sorry to long-time readers for the recent radio silence — between traveling and coming down with two successive bouts of some kind of flu, I have not been keeping up my end of the deal. I’ll make it up to you, I promise :)

I wrote about Yahoo’s TV Widget Engine in January, calling it the Belle of the CES Ball. I still stand by the sentiment, so much so that I wrote a very deep dive on the concept for Forrester clients which was just published this week. If you’re a client, check out the report here (and even if you’re not a client, you can see a summary at the same link). I won’t give away the precious detail here, but let me riff about the report’s implications a bit.

The most important thing Yahoo’s TV Widget Engine does is open a platform for innovation in the connected TV space, I said that before in the original post. However, the innovation that will matter most is programmer-led innovation that enhances TV viewing, by adding interesting information and interactivity over the live TV experience.

Why should content owners do this? Becuase this is the first technology innovation in a decade that will actually encourage live viewing of television. 

What do I mean? Already, there are people who keep their laptops on their laps (where else?) during American Idol or Dexter so they can chat with friends or follow Twitter conversations related to the show. NBC even encourages people to text to a special SMS number during Heroes to get special updates and clues during the show. But all of those exepriences are outside of the TV screen and therefore limited to the few people willing to manage multiple devices. Imagine if broadcasters and programmers could do the work for you, overlaying the experience on the TV screen to increase your enjoyment of the show — as well as your desire to watch it live when the online buzz is the greatest.

The problem is we have a short window in which content owners (networks, producers, publishers, etc.) can establish the habits that will favor them in the long run. If they don’t catch on quickly, they’ll miss this chance to drive *gasp* actual live viewership and instead, technology innovators will focus on widgets that deliver other benefits that aren’t programming-centric. I personally think weather, horoscope, and personal ad widgets — while of interest to specific subgroups — will never catch on on the TV to the degree that program-specific widgets will. Why? Because people watch TV to watch TV, not read the news or scan personal ads. That’s what the PC is for.

Am I right? We’ll find out soon enough because Verizon just announced that later in the fall it will be pushing an open-widget development platform to its Verizon FiOS TV customers’ set top boxes. For those who did not know, Verizon has been developing widgets since 2006. However, the widget environment was proprietary and did not allow outside parties to contribute. Verizon has changed that with this latest version and as a show of force, it has built a Twitter widget designed to automatically scour tweets to find any that mention the show that you are currently watching — change the channel, and the widget will search for and display any new tweets related to the new show on your screen. 

This is a genius move. It demonstrates the value of synchronizing widgets with live TV without waiting for the Yahoo! widget platform to find its way into homes.

If I’m right (and Verizon finds a way to let customers know about this feature — which is always a problem when you push free features to set tops, most people never know they’re there), Verizon’s 1.6 million customers will be a very attractive test best for interactive TV widgets. If you are a developer, get hopping, let’s see what you can do.

Why Hulu is clashing with potential partners

Two news items from last week are worth commenting on in the same post:

1. Hulu insisted that Boxee pull its Hulu player from Boxee. For the un-nerdy, Boxee is the open-source media player software that I put on my Apple TV a few weeks back. Until last week, it allowed you to access Hulu online videos direct to the TV without the help of a PC. 

   The Boxee/Hulu experience is tremendously satisfying. Plus, it preserves all the advertising that Hulu needs to sustain itself. However, by making it super easy (some might say, convenient) to get online TV shows to the TV, Boxee is a threat to Hulu’s content partners, many of whom are still petrified about cannibalizing linear TV shows. So while those partners may be willing to support PC-based viewing, the moment Hulu is easily accessed on the TV, they get creeped out. Never mind that 5 million PCs in the US are currently connected to TVs for exactly this kind of experience — far more than AppleTV or Roku will ever have.
    

2. Hulu pulled its content from syndication partner TV.com. TV.com is a CBS-owned TV fan site that previously focused on chat rooms and clips, but as of a month ago announced an online TV player strategy designed to monetize its 5 million viewers more effectively. The secret sauce was access to Hulu content (Fox + NBC) as well as CBS content, delivered through a player experience that was remarkably Huluesque.

   Design infringement aside, it’s hard not to see this one as an effort by Hulu to persuade CBS to allow CBS content to join the Hulu experience. If it’s not such an effort, it should be. Hulu is eager to allow syndication partners like Fancast and IMDB to succeed, but it doesn’t really want to enable CBS to have all the benefits of Hulu content without having signed up to be an official part of the system. Seems fair. Honestly, the only reason CBS wouldn’t want to do this is it would mean acknowledging that its costly and time-consuming solo syndication efforts were not enough. 

What’s going on here: Hulu is getting more and more powerful every day. And not just because it managed to get Alec Baldwin to promote it during the Super Bowl. It’s because Hulu gives people the thing they want most: easy access to top TV shows. But with great power comes great responsibility, at least in the mind of TV execs who suspect that Hulu will eventually erode their TV business (which has been steadily eroding anyway, not on an overall basis, but on a per-show basis).

With ad dollars tightening in a recession — across the board, mind you, not just in online video — TV execs who never liked the idea of online video in the first place are going to claw their way back into prominence inside their companies and start arguing for more restraint. We’ll see more removals of TV shows like The Mentalist, more announcements like that from SciFi about postponing Hulu streaming of  Battlestar Galactica until 8 days after broadcast.

All of this is part of something I call the coming online video backlash. It’s going to take this whole year, and it’s going to inspire a lot of hasty moves on the part of TV executives to pull previously available content. And consumers are going to hate it.

I don’t envy Hulu’s position in this. It has to keep the lines of access open to the providers of top TV content, but it has to make good on its promise of serving viewers. So far, it has done a great job, but at some point, it’s going to be forced to do something that will begin to tarnish its brand. I don’t personally think the Boxee removal qualifies — only a few tens of thousands of us are nerdy enough to have hacked our Apple TVs — but sometime soon, somebody at Viacom or Fox or Sony Pictures will recall content that was previously available. Expect it to happen around sweeps weeks or the season finale weeks. It’s gonna get ugly.