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March 26, 2005
Industry Scramble for Product Placement Deals
DVR's chip away at the reliability of television advertising from the point of view of the advertiser. I think we all know that. One of the first responses has been to investigate putting more product placement deals directly into the content. Or in the venacular of the day: branded entertainment. (I swear that I am not making that phrase up!)
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Responding to a question at the Association of National Advertisers' TV forum on Wednesday, Mr. Moonves said, "There is still a cost associated with putting commercials into our shows. Is it something that should be looked at, we're looking to talk about it." Another senior executive at CBS said separate integration fees could become a reality later this year.
Apparently, the recent legal spat between Mark Burnett Productions and product placement agency Madison Road revealed the kind of catfights going on over who gets to share in such fees. Mark Burnett Productions currently charges integration fees of up to $5 million for The Apprentice, a show it produces for NBC.
I do not think that this trend can contribute too much in the way of profits at a CBS or any other major media outlet. First, if it goes too far, the audience will simply tune out of programs that acts as one huge commercial. And if this happened, it would cripple their real source of revenue: 30-second commercial spots.
Second, how many product placements can you do in a program before you reach that tipping point? One, Three, Ten? So, the number of deals would have to be limited to a handful of advertisers.
Finally, how do you deal with the large number advertisers whose products really don't fit into the show well? Maybe it might be wiser to say that if fit in, the show would have to be pretty warped to do so. This also would cover products who could only stand to look bad if fit into a comedy or reality show. For example: cancer awareness or Preperation H or erectile disfunction or Metamucile or (you get the point...)
I believe that Ford Motor company found some limitations to their huge product placement deal on the hit show 24 and have scaled that effort back significantly.
Posted by Martino Mingione at 01:06 PM | Comments (32) | TrackBackMarch 23, 2005
HP and Orca Interactive offer IPTV in China
HP is partnering with Orca Interactive to offer broadband TV solutions to telecommunications carriers and service providers in China.
The news comes at the beginning of the CCBN2005 conference and exhibition, taking place in Beijing.
HP will lead projects with customers incorporating Orca’s RiGHTv middleware applications for the delivery of IPTV services including broadcast television, video on demand, personal video recorder and other interactive television services.
The two companies have installed full-scale demo systems in Shanghai and Beijing to provide customers with a first-hand experience of their IPTV solution. It follows news of a benchmark test with HP supporting half a million subscribers to demonstrate the scalability for large-scale commercial deployments of IPTV.
“Orca and HP share a prominent global position strengthened through this relationship,” said Yosi Glick of Orca Interactive. “HP’s wide support coverage, strong solution integration and implementation capability in telecommunication and service provider areas, together with Orca’s telco-grade applications, provide the best of breed IPTV solution in China.”
Orca Interactive has formed strategic partnerships with a number of leading players in the field, and the RiGHTv solution enables HP to choose other components from a variety of vendors and allows for customization and upgrades to fit the evolving needs of operators, including control over the look and feel of the user interface.
Posted by Martino Mingione at 10:41 AM | Comments (11) | TrackBackMarch 17, 2005
Comcast Reaches TiVo DVR Deal
I read today that TiVo stock skyrocketed 75% on yesterday's news of its deal with Comcast. Let's do a little reality check:
Net loss last year at TiVo: $26.4 million
Number of total Comcast subscribers: 21 million
Number of subs paying extra for digital: 40%
If 50% of them paid Comcast another $10/mo. for TiVo: 4 million subscribers
So, if TiVo gets less than $1 per month per Comcast subscriber willing to pay the extra money, it could possibly earn an extra $45 million. And that is probably an unrealistically high target. Additionally, it will take years to attain it if it is even possible.
I do not intend to rain on TiVo's parade because any new revenue stream is a good revenue stream. However, stock traders might want to tread a little more cautiously.
Posted by Martino Mingione at 07:54 AM | Comments (87) | TrackBackMarch 10, 2005
CinemaNow in Reality TV Deal with Endemol
Web-based VOD service, CinemaNow, continues to expand its content line-up beyond movies-on-demand. The company, which in early February announced that it had signed an agreement to carry on-demand content from ABC News, has signed a deal with Endemol USA that will see it offering over 75 hours of the latter's reality programming for download. The deal will allow CinemaNow, among other things, to offer series of the show, "Big Brother," in their entirety.
In announcing the deal, CinemaNow argued that it is significant in that it demonstrates how production companies can use broadband VOD distribution to generate additional revenues from their shows once they go off the air.
CinemaNow customers will be able to download individual episodes of Endemol series or entire season packages on a pay-per-view basis or as part of a subscription to CinemaNow's Premium Plus SVOD service. The first title to be available as a result of the deal will be the third season of "Big Brother," which airs on CBS in the US. Other reality TV shows expected to be offered under the deal include the relationship series, "Anything for Love," which originally aired on Fox, and the family-based reality TV show, "Under One Roof," which originally aired on UPN.
Posted by Martino Mingione at 07:50 AM | Comments (291) | TrackBackAkimbo to Offer VOD Programming from WheelsTV
Akimbo Systems continues to secure content for its broadband Internet-based VOD service. The company--which so far this year has announced deals with BBC Worldwide Americas, A&E Television Networks and National Geographic Television & Film, and whose other content providers include Turner Broadcasting System, Granada International, Varsity Television, Quiksilver Entertainment, and indie film distributors, Undergroundfilm, GreenCine, Amaze Films, and IFILM--has signed a distribution deal with WheelsTV, a cable/satellite channel devoted to programming about automobiles.
WheelsTV programming covered by the deal includes "Wild About Wheels" (a series which WheelsTV says is dedicated to the "automotive lifestyle"), "Hot Streets" (covers the so-called "youth tuner lifestyle," i.e. the fashion among mostly young people of adding performance enhancements to compact, front-wheel drive Japanese cars), "True Top Speed" (an automotive-themed thriller), and "Top 200" (provides car buyers with profiles and "video test drives" of new vehicles, and is based on data provided by the Web site, Edmunds.com).
Posted by Martino Mingione at 07:39 AM | Comments (2) | TrackBackBT Confirms Plans to Offer Video Content over IP
In a speech at the IPTV World Forum, which is taking place in
London this week, Andrew Burke, who heads up the new entertainment unit of UK incumbent telco, BT, confirmed that the company is interested in offering at least some form of IPTV service:
"We want to be an entertainment facilitator," he told attendees. "We see several opportunities for delivering the type of content that normally broadcasters find it difficult to get to viewers."
Burke explained that BT does not plan to offer a full, multichannel IPTV service, but rather to follow an approach in which a portfolio of IPTV content is offered as a supplement to broadcast or multichannel television (note: such a service would appear to be similar in concept to the one offered by Akimbo in the US.
Posted by Martino Mingione at 07:31 AM | Comments (25) | TrackBackMarch 09, 2005
Microsoft, Google and Internet Protocol Television (IPTV)
Max Blumberg wrote a blog entry 2 days ago entitled 'Microsoft, Google and Internet Protocol Television (IPTV)'. Quoting him:
"Everyone is fighting for new media advertising revenue. Google and co are tripping over themselves to become the largest generators of Internet advertising revenue."
Max goes on with lots of words about IPTV possibly becoming big (blah, blah, blah). But here is his most interesting statement:
"And where is Google in all this? Controlling Internet advertising will not help if it does not have a significant stake in the new converged media.
"The logical move for Google would be to control the emerging IPTV search space, and indeed Google Video may indeed be its way in. Soon, you will undoubtedly be Googling your television set for your favorite TV content (with a few adverts thrown in for luck)."
My initial thought is this: Google does not understand the business of television advertising (currently $56 billion in the U.S.) and I doubt that they could put together a viable transaction infrastructure to attract the bulk of that revenue stream. Agencies' requirements for television advertising is very different from their SEM needs. If Google forced the same approach on the agencies, media buyers would probably not accept it.
But, Max's words are food for thought and might hint at moves Google could make investment-wise.
Posted by Martino Mingione at 10:13 AM | Comments (29) | TrackBackMarch 08, 2005
In Search of a New Ad Agency Model
Whenever one starts on the topic of new media technologies and their impact on advertising, the knee-jerk reaction is to study what the effect is on the existing media 'providing' companies. I am often guilty of this. However, this is only half of the story because there is an entire sector of marketers -- the media 'buying' community.
In today's AdAge is a good article to remind us of that fact. It is entitled 'In Search of a New Ad Agency Model', Small New York Shops Scurry to Find Opportunity in Change.
In brief: it looks at new startups that are defying the '30-second-centric structure' and whose efforts are 'unencumbered by holding-company overhead.'
"Why should you care about these new kids on the block? Because the success or failure of these agencies will offer clues as to the future of the agency model, and because their existence and ability to win business despite rampant overcapacity in the marketplace speaks volumes about the state of the business."
This is something that should bring a smile to Hugh Macleod at gapingvoid. Here is what he had to say about the 30-second commercial last spring. Many of his hughtrain ideas start with the observation that the old ways of marketing are dead.
The reasons I find this article interesting are: (1) new forms of television like IPTV and VOD are eroding the effectiveness of the agencies buying traditional television, (2) on-demand television will require advertiser support if it is to grow large with ample available content, and (3) I personally know that no one (media provider or media buyer) are ready for the great challenges ahead of them to transact any of these technologies -- the infrastructure simply does not yet exist.
Any agency with a newer business model is one worth watching.
Posted by Martino Mingione at 06:09 PM | Comments (18) | TrackBackMarch 05, 2005
Shows Facing Cancellation Can Overcome Wobbly Ratings With the Lure of DVD Sales
I was reading an article in the Wall Street Journal about TV shows "on the bubble" -- industry parlance for a series facing cancellation because of wobbly ratings. The article told of a story about how fans of the show Arrested Development have done what loyal fans typically do when their show might be canceled. But then it got interesting:
"In the past, such efforts typically failed if the show's ratings didn't generate enough ad revenue to cover costs. But the cancellation calculus is starting to change. Fox's 'Family Guy,' axed in 2002, is getting another chance on the air because sales of DVD collections of the show have been so hot. Indeed, fundamental shifts in how TV companies make money are starting to complicate cancellation decisions -- and small but dedicated groups of viewers are gaining newfound clout."
"Of course, audience size still matters a lot in prime-time network television. But now other factors are influencing the cancellation decision. DVDs have become such a gold mine -- profit margins reach 50% -- that broadcasters are increasingly open to the idea of keeping a ratings-challenged show on the air, especially one with a fanatical core of fans, in order to generate more episodes to sell later on DVD. Other nascent income streams -- on-demand services, and downloadable episodes sold on the Internet like songs -- also are giving consumers more direct power in programming decisions."
This story reminds us of what many people forget: that owners want ways of monetizing their content. In the WSJ story, monetization meant DVD sales later on. This is a key point that some VOD business models must heed -- the content owners must be rewarded somehow.
There is also a note of caution for content owners: be pro-active in seeking out ways of getting value. There is already a huge amount of swapping television shows already occuring online in P2P networks. I guess video just wants to be free (as in accessible).
Posted by Martino Mingione at 03:09 PM | Comments (23) | TrackBackThe Transforming Force of Video-on-Demand
I see that Brian Roberts, Comcast's CEO, attended his first 4A's conference last week. He was also the Keynote speaker. He said it was his first but "I know it won't be my last." The thrust of his speech was that VOD is a transforming force that will have a large impact on the media and marketing landscape.
I could not agree more. In fact, that is one of the motivations that led me to creating this blog. But looking beyond this small news item (it was only a speech after all), to me this is interesting for this reason: VOD must be monetized, ad revenue is the only realistic revenue source, and the #1 VOD guy came to the #1 advertising convention to talk about it.
| With 21.5 million subscribers, Comcast is the nation's largest cable TV company. It is turning TV sets into video library machines, enabling consumers to watch anything they want anytime they want. And the talk among the 1,200-plus attendees at the Hilton New Orleans Riverside conference center focused on the fact that VOD, in the end, may be far more transformational than TiVo. |
Marketing potential
As profound as the impact of VOD is for viewers, the potential for marketers, and their advertising agency partners, is equally tremendous. But capitalizing on it will not be easy.
AdAge went on to note:
Mr. Roberts at times during his talk took on an air of evangelism and sympathetic encouragement toward his new media agency and marketing partners. "We’re not afraid of change and we’re not afraid to change," he said. "We want to be a great partner to you."
Indicating Comcast's commitment to working with marketers, Mr. Roberts announced a new partnership with measurement firm Rentrak Corp. in which Comcast will begin to make monthly on-demand reports available free to programmers and advertisers. Reports will cover four standardized metrics: the number of VOD-enabled set-top boxes in a designated market; total views by program per month; the number of unique set-top boxes viewing a program by month; and the total minutes viewed by month.
Following Mr. Roberts' speech, panelists, led by MediaVest USA's Adam Gerber, the media agency's senior vice president and group director for strategy and innovation, discussed VOD's promises -- improved targeting and the ability to garner a higher percentage of a desired demographic -- as well as some of its perils.
But the largest current stumbling block is this: the business model does not yet exist to figure out how to properly monetize everyone in the VOD food chain. Therefore, much of the most valuable content is being withheld from the VOD streams in the first place. Read More >>
Somewhere in his speech, he was quoted as saying:
"When Marlon Brando died, many consumers would have paid to see a clip. If we are smart about legacy content, it could be enormously valuable if we can get past [content] ownership issues and develop ad models."
And that really is the key: sharing ad revenue. The companies that have value propositions fitting into that delicate business balance will be good ones to own.
Posted by Martino Mingione at 09:51 AM | Comments (72) | TrackBackBroadcast TV Ad Revenues Up 12% for 2004
NEW YORK (AdAge) -- While 2004 was another banner year for the broadcast networks, with ad revenue up 12.1%, from $10.5 billion in 2003 to $11.7 billion last year, fourth-quarter figures show just how tepid the market has been in recent months. Fourth quarter revenues were flat for ABC, CBS and NBC, with late night and children's programming hours particularly hard hit.
According to figures provided by the Broadcast Cable Financial Management Association, which compiles ad revenues provided by ABC, CBS and NBC, but not Fox, WB or UPN, prime-time advertising (8 p.m. to 11 p.m.) increased 4.6% in 2004 (from $5.9 billion to $6.1 billion), but for the fourth quarter it was flat, at $1.6 billion. Two other dayparts were hit particularly hard, late night and children's hours, which saw fourth-quarter ad revenues decline by 5.5% ($158 million) and 15.3% ($12 million), respectively.
Posted by Martino Mingione at 08:49 AM | Comments (974) | TrackBackMarch 04, 2005
Microsoft, Alcatel Enter Collaboration Agreement
Microsoft has entered a global collaboration agreement for IPTV with French telecommunications equipment giant, Alcatel, whose Digital Subscriber Line Access Multiplexers (DSLAM) and other broadband and triple-play technologies are widely deployed around the world.
Read More >>
Highlights from an interview with Microsoft TV's Graczyk and ITVT:
The agreement is non-exclusive. It integrates MSFT's software with Alcatel's networking products.
Microsoft says that it will also make it easier for Alcatel's existing customers to migrate to their software solution.
Alcatel has significant market share within their specialty, 70% with US telco's, and 50% worldwide.
Microsoft says they are commited to open architecture but they believe that telco's want an end-to-end solution.
The telcos are going to have to come up with a compelling reason why you'd want to switch from cable to telco TV.
Microsoft is doing what it takes to dominate IPTV from a business perspective. Remember, they signed a $400 million agreement with SBC just last fall. However, before anyone actually concedes this space to MSFT, keep in mind that not many people are actually getting their television from IPTV yet.
Posted by Martino Mingione at 09:15 AM | Comments (392) | TrackBackMarch 03, 2005
Atlanta Subway to Get TV and Radio
Most entrepreneurs have some interesting company they want to build and finding ways to monetize it is always a priority. Inevitably, advertising comes to the forefront. Whenever I chance upon these folks, I am asked how large a revenue stream might exist for their idea.
In that same spirit, I notice that our friends at Adrants have a posting that shows one such data point about the Atlanta Subway. Just putting up 15” flat monitors and offering local news from their ABC affiliate will take in $20 million in ad revenue over the next decade.
It goes to show that advertisers are desperate for captive audiences.
Grokster Fans Share Their Filing
In briefs filed with the Supreme Court two days ago, consumer groups asked the court to uphold the Ninth Circuit and rule that Grokster Ltd.'s and StreamCast Networks Inc.'s digital file-sharing technologies do not violate copyright law.
The court's answer could help determine the future courses of multi-billion dollar TV, movie and music businesses.
Quoting Broadcast and Cable:
"As did the ninth circuit, Consumer Federation of America, Consumers Union, Free Press and Public Knowledge, argue that the 1984 Sony Betamax case protects Grokster, StreamCast and others from secondary copyright liability (essentially liability as accomplices to illegal file sharing) because their peer-to-peer (computer-to-computer) file-sharing software also has legal uses.
They argue that to punish the technology rather than the abusers of it, as they say studios want to do, flies in the face of established fair-use protections.
The major studios and record companies counter that they want the companies punished and that not to make them liable for the illegal sharing that they directly profit from and constitutes the majority of their business flies in the face of established secondary copyright liability.
The Betamax case , which established home videotaping rights, should not immunize companies that are profiting from the illegally traded files, the studios argue. Betamax, they say, was about balancing effective copyright protection with "the rights of others freely to engage in substantially unrelated areas of commerce."
The new technologies tip the balance far to the side of content piracy, they charge."
Rather than a single library copy, digital file-sharing could mean that nobody ever had to buy a DVD or CD again, the content providers argue, denying billions of dollars to copyright holders and customers to online content businesses such as Apple's iTunes and MovieLink.
The Supreme Court will hear the case March 29.
Posted by Martino Mingione at 08:54 AM | Comments (32) | TrackBackMarch 02, 2005
Suspicions about Concurrent Computer
When it comes to proprietary VOD servers for the cable market, there are only three companies of note: Seachange, nCUBE (now CCOR), and Concurrent Computers. Their market share ranking is in that same order. Recently, CCOR replaced the Concurrent VOD equipment which Charter's St. Louis system. Does this tell us anything important?
It is rumored that Concurrent failed to integrate its equipment with the Digeo/Moxi-based Motorola Broadband Media Centers which Charter is offering in St. Louis. I read in a recent interview with ITVT, Concurrent CEO, Gary Trimm, denied this saying:
"We were, in fact, successful in integrating with the Moxi-Motorola platform. It was just very difficult, because Charter doesn't have a lab to test things in, so we had to test it in a live system."
MSO's rarely have test labs for any of their technology products, something I know first hand. That #4 Charter (the MSO with the weakest financials of the larger cable companies) would invest in test labs is even more problematic. It makes me suspect about Concurrent’s future if it is depending upon customer investment into testing to be successful.
Elsewhere in the article he told ITVT that the decision to redeploy the equipment had more to do with Charter's regionalization strategy than with any integration difficulties the companies experienced: "
"This is not a switch-out of our product just because they didn't like it. They're regionalizing their vendors, so that most of the Concurrent-powered systems are in one part of the country and most of the nCUBE or C-COR systems are in another part of the country. One practical reason for doing this is that you will have more centralization -- so you can have a regional library of video serving each region."
While the logic behind this is undeniable because 'regionalization' does force some standardization in the deployment of vendors, it too is a curious statement. Saint Louis is not just any Charter location - it is Charter Communication's flagship location and also where Charter's headquarters is located. If memory serves me right, Charter considers St. Louis a region all by itself. Therefore, it would mean that Concurrent lost the entire region!
Some believe that there is not much of a future for any of the proprietary VOD servers as cheaper off-the-shelf equipment can begin to do the job. My reading of the tea leaves: look for Concurrent to be making some bolder moves and/or acquisitions this year.
Posted by Martino Mingione at 06:13 PM | Comments (105) | TrackBackTime Warner Cable's Q4 Results Show Strong DVR Growth
In its Q4 results, Time Warner Cable revealed that its DVR service continues to see strong growth. The MSO added 153,000 DVR subscribers in the course of the quarter, bringing the total number of DVR-equipped Time Warner Cable subs to 862,000 at the end of the year.
It also added 171,000 SVOD subs during the quarter, for a total of 1.5 million at the end of the year. Revenues from its digital video services totaled $131 million, up 25% from the year-ago quarter.
Posted by Martino Mingione at 05:47 PM | Comments (313) | TrackBack
