April 30, 2009
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?
October 23, 2008
We’re witnessing the one dramatic change in the world of physical media. Now Samsung has joined LG in making Blu-ray players that also stream Netflix movies and TV shows. This Netflix strategy is the little engine that could:
- People first said it was weak because the content was so second-string. Netflix has recently fixed that by adding Starz and some Disney movies.
- Some complained that a dedicated $99 box from Roku (though priced to sell), wasn’t enough to move the market. However the LG Netflix/Blu-ray player showed that there was real depth to the strategy.
- The deal with Microsoft’s Xbox 360 to put Netflix content in the game console proved there’s a true multi-platform play there.
- Now Samsung’s entry shows that this is going to become a big deal across multiple players in the CE and computing world.
Lessee, Netflix 4, everybody else, 1.
With Steve Jobs again this week referring to the Apple TV as a “hobby” in order to downplay previous expectations, this leaves Netflix clearly in the driver’s seat when it comes to over-the-top delivery to the TV. Maybe not in volume yet, but it will.
The biggest issue here is what this means for cable. Netflix has set its sights not on Blockbuster or even on iTunes, but on Comcast, Cox, and Time Warner. The Netflix solution pulls content automatically from your DVD rental queue, provides an easier-to-use interface than VOD, and now has as much good content as a typical VOD system, this makes cable cord-cutting that much more possible.
This Netflix move could prove to be the most important wildcard of 2008. Now if only there wasn’t a recession hanging over these Blu-ray players…
Are you Netflixing your TV? Will you? Do tell.
October 7, 2008
On the train home to Boston from an exciting and successful event sponsored by Veoh Networks.
I’ll have more to say tomorrow about the great content we debuted there, but for now let me say how much fun I had listening to Michael Eisner (yes, the former CEO of disney) whose on-stage interview by Brian Steinberg of Advertising Age kicked off the event. He was witty and insightful, a nice combination.
Pardon the lousy quality of my Blackberry shot
Some of his most choice comments:
On the future of online video and “quality”:
You have to define what quality is. Quality starts with the script.
On the dilemma of whether advertisers will follow the lead of innovative content:
Advertisers always say they want the last big thing. But they really don’t. They say till death do us part, but they’re looking at the person across the street for the next thing.
On online video ad formats:
I don’t get the controversy — 30-second preroll is annoying as hell. Fifteen seconds I can handle.
On the future of on-demand content:
All broadcast and cable will be on demand, except for sports and the final episode of something great. Appointment viewing may still be the biggest business for another 2-3 decades, but on-demand is where it goes.
And for my favorite comment of the day, on the ability of Sarah Palin to generate online video views:
I would hire her today. That wink goes a long way.