Why Sling.com matters

It’s a question I’ve been getting from the press since Sling.com was first placed in private beta test. “Why is Sling trying to create a website when Hulu, Veoh, Joost and others have already cornered millions of visitors?”

It’s a sensible question, but it doesn’t take into consideration Sling’s ultimate strategy.  The first issue to raise is a simple one: this is not that expensive of a site to run. The content is hosted by the content providers (including Hulu.com) so there’s no cost there. The only money they give those people is the privilege of letting them keep the lion’s share of the revenue associated with the content Sling.com is passing through.

The real point to raise, however, has to do with Sling’s secret plot to take over the world. Yes, Sling has a secret plan: they want to make it easy for you to take content from anywhere and watch it anywhere. Diabolical, no?

First piece of their plan is letting slingbox owners — the few, the proud — access their slingbox content from any Web browser, rather than through a proprietary application. This is critical. This will mean you can check your slingbox from any IP device, including iPhones and T-Mobile G1 phones. Get it? That’s a critical feature to add.

The second piece is in enabling people to watch online content on their TVs. This is not for Slingbox owners, it’s for an even smaller group: Slingcatcher owners. But it’s a very smart step, one I’ll be writing about at Forrester in early Q1 as I consider all the ways you can put Hulu on your TV set. Because the Slingcatcher lets you share PC and online content to your TV, aggregating the best content on Sling.com just makes it that much easier for Slingcatchers to access the best of the Web on the TV. It’s a small step, but it represents big thinking. 

Big thinking because once Sling can show that it has the technology in its Slingcatcher and the content on Sling.com, it will then start calling Samsung and other TV and Blu-ray makers to say, “Hey, want an Internet-connected TV strategy that puts the best of the Web on your device quickly? Partner with us!” Sling licenses the technology, pre-connects Sling.com (through a proprietary UI) to the device, and boom, instant Internet-connected TV strategy without the hassle of knocking out content relationships. It’s the same motive that led both Samsung and LG to work with Netflix. 

It’s going to be the race to watch in 2009. I’ll be tracking it: who gets Hulu to the TV, then CBS, then ABC (because that will be the order in which it happens). And all of this makes it easier for you and I to watch what we want, when we want. See why Sling.com matters now?

My interview with Albert Cheng: The Father of Online TV

To call Albert Cheng a TV industry insider is a supreme understatement. As the Executive Vice President over Digital Media at Disney’s ABC Television Group, Albert not only has a front row seat inside the industry, many would say he occupies the driver’s seat. Yeah, I’m mixing metaphors there, but you get what you get.

In fact, in my writings and in the speeches I give, I typically refer to Albert Cheng as the Father of Online TV. And though you can practically hear him blush when I say it to him over the phone for the first time, all hyperbole aside, it’s an accurate description of Cheng’s role in the dramatic changes sweeping over the television industry today.

It all started in April of 2006. It’s hard to believe it has only been that recently that ABC, in what seemed like an out-of-nowhere move, announced it would test streaming of two of it’s hottest shows, Lost, and Desperate Housewives, online, for free. Yes, free. The rest, as they say, is history. Today, ABC.com streams well over 50 million videos a month and is likely to cross the 100 million threshhold sometime next year. 

After Albert and I participated in the same conference on online video recently, I took the opportunity to interview him in more depth about his own experience with TV and his expectations of the future of the medium. The full-length interview I’m keeping to myself for a future project that shall remain nameless for now, but I’ll share three important things I learned from and about Albert Cheng here:

 

1. Cheng learned about TV technology from the VCR

One of my favorite images of Cheng’s childhood is of him watching the CBS soap opera As the World Turns alongside his mother each day. It became such an integral part of their lives that he admitted to following the show right up through high school. Unlike the soap opera itself, his relationship with it finally ended. “I lost track of it once I went to college.”

Buried in all of this soap opera goodness, however, were the seeds of the future. “In those days my mom’s schedule got busier. She couldn’t watch her soap operas during the day anymore. So she recorded them on the VCR, every day.” It was an early form of time-shifting, one that was rare elsewhere. But thanks to the Cheng household’s commitment to As the World Turns, the VCR was used as aggressively as most people use a DVR today. “My mom watched her daytime soap operas in primetime,” concluded Cheng.

This was a secret Cheng learned about new TV technology: it can make people watch more than they otherwise would. “Our media consumption started to go up, for sure.” 

2. How you watch depends on what you want to watch

Cheng lives a life of TV superabundance that he lives every day. “I have three televisions,” he begins, then with a pause, admits, “for a two-person household.” The largest television (65- or 70-inch, he can’t exactly recall) sits in the family room and is the center of their viewing life. There are two others in the home for specialized viewing – one in the home gym and one in the master bedroom. True to the lessons he learned at his mother’s side, he explains, “Our typical watching is predominantly time-shifted. It’s a combination of DVR and online.”

As I’m seeing more and more, where he watches depends on the show he wants to watch. “I choose shows for live viewing, then others that I record but prefer to watch on the TV.” He performs a kind of triage on potential shows. At the top are shows he has to watch on the big screen. “Even though Lost is available online [on his own network’s site, no less], I choose to watch it on TV.” For shows he wants to keep up with but doesn’t have to experience fully, he turns to the Web. “Online is a great way to keep up with shows I don’t have time to follow, but when I find a spare minute I can quickly catch up with.”

3. There’s a lot more to come in the future

In the long run Cheng proves he’s got what it takes to dream big. “I’m just going to put a flyer out there, this might be insane, but right now we see more and more 3D content for theaters and the TV.” I nod, thinking that I know where he’s heading with this. It’s the age-old maxim that in the end, all future predictions, when taken far enough, end up at the same place: Star Trek. With pervasive computers, matter replication, and clothing that doesn’t fit very well. I often end up there myself. In this case, I sense Cheng’s line of reasoning is headed straight to the holodeck made popular in the Star Trek: The Next Generation series.

“I’ll take it one step further and say there will be people who watch content in laser holographic 3D environments.” Bingo. “That would be the next theater level of entertainment, it eventually goes to the home, where you take virtual worlds and combine that with filmed entertainment. Then you get to 3D feel in a 3D world.”

I like that Cheng can think this big. I also like that someone with such unorthodox predilections is an insider with the power to lead us forward. Expect to see the mark of Albert Cheng on many a future video innovation.

As predicted: More media companies putting video on websites

It’s not the most amazing insight I came across today, but it is worth pointing out and commenting on. MediaPost yesterday ran a piece about the role of vide on media company websites, see it here: Video Use Will Continue To Rise, Per Web Influencers – 10/20/2008.

The gist of the story is that video is rapidly becoming a critical tool in the online sites of even non-video media companies like newspapers and magazines, half of which — according to the study cited in the article — feature video on their sites.

This is something we’ve been writing about for a while at Forrester, and I spent some time on it at Forrester’s Marketing Forum in LA earlier this year. It’s Phase 2 of what I called a 3-Phase evolution of online video. Phase 1: media companies with video assets and audiences combine the two online. Phase 1 started with ABC.com and came into full view with Hulu.com. Done. Phase 2 is the one we’re in now where media companies with non-video assets but considerable audiences supplement their content with video.

The slide describing the 3 phases of online video growth

This started a while back with sites like MarthaStewart.com, which added a very integrated video experience in early 2007. It still continues today as more and more newspaper outlets equip their journalists with cheap little video cameras and train them to capture video while they’re in the field. (This is a broadcast technician’s worst nightmare, all these people capturing video without a real knowledge of what makes for quality video, including lighting, white balance, etc., but as YouTube has shown, web viewers don’t notice or don’t care.)

Phase 3 is when marketers start producing significant video content that begins to compete with the media outlets. We see this already with Land Rover’s Go Beyond site, a fairly ambitious multimedia content site built around the brand. But there are precious few marketers committed to this kind of video experience on the Web just yet. I just spoke to a major financial service company last week who is trying to plan what technology they’ll use to support online video, but they confessed they didn’t really expect to have much video to watch — or many viewers to watch it.

That will change.

Joost goes flash

In yet another sign of the online video times, Joost today announced it would do Flash, Web-based streaming online at joost.com rather than relying on the proprietary, P2P client it launched back in early 2007.

My take: this is the right thing for Joost to do to match the friction-free experience sites like Fancast.com, Hulu.com, and nearly everywhere else is able to provide. Requiring that people download and run a separate application (not just a plug-in, as ABC.com requires) just isn’t consistent with the ease that online video has come to offer. Sure, it made sense in early 2007 when most top content wasn’t available online anyway. But that all ended when Hulu launched.

Furthermore: the days of the proprietary video player are gone. Sorry to Miro, Vuze, and the original Veoh player. There’s no need for a dedicated video aggregation application. the only chance for such a player is in the download for offline play world, which is where iTunes sits.

Adobe Media Player, a player designed to allow the downloading of streaming video for offline playback, is going to struggle in the balance for a while as people so excited about streaming don’t see the need for it yet. One of two things has to happen there: either people will eventually see value in offline playback, or wireless broadband will become so ubiquitous that we’ll never need untethered video playback. All depends on how fast Adobe can move the ball forward and convince big content providers to release their content for secure offline playback.

Cutting the cable cord, Part 2

This topic keeps coming up. I wrote about it recently and have been hearing more and more from people who do it about how they pull it off. The most common solutions are, in order:

• Hulu + ABC.com + CBS.com. That covers most of what people watch on TV.
• Netflix (especially if you have a Roku box, Xbox 360, or directly connect the PC to the TV)
• iTunes (as one guy said to me, “I spend $10 a month there to get the few things I can’t get elsewhere, still way cheaper than cable”)

And now the newest member on the list, as I wrote recently, the SlingCatcher. (Brent Harrison of SmokeJumping blog agrees here.) By the way, I was surprised the press didn’t really pick that aspect of the SlingCatcher up.

We’ll see if Sling can sell enough in a down economy to have its promised impact.

What about you, what are you doing to cut the cord? If you’re not, why not?

SlingCatcher – the first true cable-killer

If you follow the video space, you have been waiting for Sling Media’s SlingCatcher for more than a year now. First announced at CES of 2007, it was hard to tell whether the SlingCatcher was going to be more Apple TV or more SlingBox. It was reannounced at CES of 2008, and now it has finally arrived.

My verdict: This baby was worth the wait.

Sling CEO Blake Krikorian came by the office to demo the box a few weeks back. I was surprised he made the trip out to Boston just to demo the unit. Until I saw the demo. That’s when I realized why: in this case, seeing really is believing.

The SlingCatcher looks like the rest of the Sling family

No, it’s not the Darth Vaderesque unit itself that impresses. It’s the fact that this is the first over-the-top (OTT) set top box that can compete directly with cable. As I’ve recently written, the whole OTT set top category is very challenged. If you have a DVR and a DVD player, you have the killer combination that gives you access to and control over most of what you want to watch. Why get a box like this?

The SlingCatcher answers that question. As I wrote in my OTT ranking report, the number one thing that these boxes need to do to stand a chance is call CBS.com, ABC.com, and Hulu.com and set up deals for content distribution (sorry, CW, I, uh, didn’t have room to include you). With those deals in place, any OTT box would jump light years ahead of the pack and provide the first serious threat to cable at a time when people are already starting to consider cutting the cable cord.

The SlingCatcher does one better: If you have a computer in your home, you can use the SlingProjector software to sling anything from your computer to your TV without Sling having to cut a deal. And as you know, you can find just about everything you like, ad-supported, on your computer these days — prime time shows, classic episodes, even more and more movies (see recent Netflix-Starz deal). For everything else — by which I mean HBO — there’s iTunes, which, guess what, you can also sling to the TV.

For the increasing number of people who watch video on their laptops at home, this is a content boon that is not only rich, but elegant. The SlingProjector software can automatically identify the video image on your screen, so you don’t have to worry about PC menus or the taskbar showing up on your TV. Want to zoom in on just a portion of the screen? Go ahead. Want to play an online game on the big screen? You’re not limited to slinging just video.

Yeah, it’s that innovative. and yeah, this is going to change the game. At $299 (look for it on Amazon), the Catcher is not for everyone, even though it’s cheaper than putting an extra PC in the living room. But the real point is that this SlingCatcher system is ripe to be plucked from the box and embedded in TVs, DVD players, and even game consoles (Wii, anyone?). I expect the phone to be ringing at Sling once Samsung, Philips, and LG figure that out.

Panel of online TV heavyweights tells it like it is

Last night I had a chance to be the peanut butter and jelly in an impressive online video sandwich. I was spread between Michael Eisner on the one side and a panel of online TV heavyweights on the other. I’ll end the metaphor there before it gets out of hand, but it was a power-packed event, sponsored by Veoh Networks, where I presented the results of a study commissioned by Veoh and performed by Forrester Consulting about online video viewers.  

The panel, moderated by Veoh CEO Steve Mitgang, really packed a punch, with Albert Cheng of ABC, arguably the father of online TV viewing, Amanda Richman, SVP of digital at MediaVest, Greg Clayman (you have to follow the link, trust me), EVP of digital distribution at MTV Networks, Tom Morgan, CSO at Move Networks, and Patrick Keane, CMO of CBS Interactive. 

Pardon the lousy Blackberry photo quality

One highlight came early on when the topic of whether online video was cannibalistic of broadcast content or not. This is a question I get a lot, so it was great to hear them all answer with variations on the same theme:

Albert

TV viewing has never been higher. That’s what you would expect from it, you have a much bigger distribution pipe that used to be constrained and now it’s not. Viewing should go up. 

Greg

We went live with full episodes of South Park recently. Since then, South Park ratings have never been higher. 

Tom

Two hours before a show airs, we see a spike of people catching up on prior episodes. For two hours after the show, another spike where people who missed the show that night and didn’t DVR it can watch it to keep up. These are the shoulders of a show if you will, and they are increasing the audience.

I’ll be writing and speaking about this topic for a while to come, because I agree completely…for now. The day will come when habits move away from appointment viewing and everything becomes on-demand, just as Eisner said earlier in the evening.

Cutting the cable cord: is it time?

Some weeks ago, Nick Wingfield at the Wall Street Journal and I had a conversation that went something like this:

Nick: So are people ready to cut the cable cord yet?

[note from me: “cutting the cord” does not refer to childbirth, sorry; it’s a play on what has happened to the phone business as so many people — nearly 10% have gone cell-phone only in the past decade]

Me: No. We don’t see it in our data, in fact, we don’t really measure it that much because the numbers are so small.

Nick: Hmmm. [silence]

This silence made me uneasy. It’s a good question and it’s one I wanted to have an answer for. I told Nick that we would probably start tackling this in earnest in early 2009 because by then it would be measurable via surveys. 

Then something funny happened. In a series of in-depth interviews I did with people who watch more than an hour of online video a week (the average is 56 minutes a week), these participants volunteered to me that they had recently abandoned cable.

The range was surprising:

– A 24-year old employee by day and student by night. He and his young wife can’t afford cable on their tight budget. By buying a few iTunes episodes each month, streaming a bunch for free on CBS.com, ABC.com, and Hulu.com, and by having a Netflix subscription (and an Xbox 360 through which Netflix streaming can occur), they get all their video needs satisfied for half the price of their prior cable bill.

– A 37-year old homemaker with three kids who has never had cable before because it was costly (and because most if it was inappropriate for her children – I need to comment on that in a later post), is now happy that she will never need cable.

And then this: Nick’s article in today’s WSJ about cable cord-cutting. I’m not surprised he found the examples he did. I found mine without hardly looking. Looks like our next survey is going to have to dive deep into this!

Exciting times ahead, eh, cable companies?