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May 30, 2005
Starcom Abandoning CPM Models
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I believe that enough marketers have decried the traditional 30-second spot advertisement sold on a CPM basis, that when advertising into video on demand streams becomes a market, it will embrace some form of an ROI-based model. Here is more evidence of that in a recent Broadcasting & Cable article.
On a Cabletelevision Advertising Bureau panel loaded with some of TV’s top media buyers, John Muszynski, CEO of ad-buying giant Starcom, declared that they are abandoning traditional cost-per-thousand (CPM) advertising models based on the delivery of audience impressions. He wants to move toward “pay-for-effectiveness” models that reward media outlets for delivering consumers who are more engaged with his clients’ messages.
“Hear what I’m saying,” he told the audience. “If you engage with consumers, we will pay you for it.”
Cable execs love any kind of talk that might tilt money away from the broadcast networks, but this message, coming from Starcom, was especially significant. They’ve been preaching the “engagement” mantra for years, but now it looks like the agency may have figured out how to make it work.
Muszynski hinted that the new metrics resemble the kind of “cost-per-lead” generation deals used by the direct-response and online industries. But he wouldn’t reveal any other details, saying that he wanted to wait until the current ad-buying season is over. The implication: Some of the deals the agency is negotiating right now may be using the new approach.
Posted by Martino Mingione at 07:14 PM | Comments (0) | TrackBackAn Informal Polling of Television Viewers
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Last week, the Wall Street Journal wrote an article entitled Interactive Ads Start to Click On Cable and Satellite TV. Here is the introduction to that piece:
"When Sony Corp. launched a television ad for its action movie "XXX: State of the Union" last month, EchoStar Communications Corp.'s satellite-television subscribers got to watch a lot more than 30 seconds of explosions and fistfights.
"An icon appeared on the screen inviting viewers to push a button on their remotes if they wanted to learn more about the film. Doing so switched them to a 30-minute program giving more detail on the movie as well as interviews with stars Samuel L. Jackson and Ice Cube. It even included the first 10 minutes of the movie.
"The Sony ad was the latest sign that a growing number of companies are experimenting with interactive television commercials, a potentially powerful form of advertising that lets viewers opt to get more information about products -- and lets advertisers find out about viewers and their habits.
"Other advertisers also are sticking their toes in the water."
Seth Haberman, CEO of Visible World, and someone I know well and respect, takes issue with the interactive approach. He sees that it is wiser to make ads more relevant to the viewer. Visible World allows a marketer to storyboard a commercial; altering it to reflect the demographic of the viewer and incorporate data that is fresh and meaningful.
Note: I have seen what can become of ads using Visible World's approach. It is fascinating to watch and it always amazes me.
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Read the WSJ article about Interactive Ads. |
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Read the WSJ Interview with Seth. |
In video on demand (VOD) and for digital video recorders (DVR's, I have run across business models that assume interactivity must be apart of it. The industry lingo for the Sony example is "telescopic advertising" or telescoping. I have two questions that I would like everyone to answer.
If ads have to exist on television, do you prefer that they use an interactive appoach like the Sony example, make the ads more relavent a-la Visible World, or just stick with the traditional 30-second commerial?
No matter what you think about interactivity, do you think this is were television is headed to?
Remember, there is no wrong answer.
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Posted by Martino Mingione at 05:52 AM | Comments (1) | TrackBackMay 29, 2005
Ignore the Problem, It Might Go Away
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File this away in the Bury Your Head In The Sand department. In the Wall Street Journal comes an article entitled "Desperate No More? Networks See a Rebound in Viewers".
"The 2004-2005 television season ends today [May 25], and for the first time in more than a decade, the broadcast networks will not post a decline in viewers aged 18 to 49, the age group that advertisers most prize, according to preliminary data from Nielsen Media Research."
Then later in the article, it says:
"The 25-year slide of broadcast television networks ... is coming to an end," said Tom Wolzien, a media analyst at Sanford C. Bernstein & Co. in New York.
Amen. And I add this: let's break out the hats and start partying before the next Nielsen's come out!
Posted by Martino Mingione at 05:25 PM | Comments (1) | TrackBackNielsen Adding VOD in 2006 (maybe)
I suspect that video-on-demand will contribute significantly to Nielsen's obsolecence (as if there aren't enough other really good reasons for that to occur in the television ratings game).
This week, Nielsen told clients that it will start measuring VOD viewing beginning second quarter 2006. The phased-in approach will begin by rating "recently aired television programs," i.e. those programs watched within seven days of their airing on "regular, linear television." By the fourth quarter 2006, Nielsen will start rating "library product," which it defines as theatrical movies, PPV events, and older TV shows.
Phase one essentially insures that clients are getting credit for time-shifted viewing of their current programming.
Initially, VOD viewing will be combined with other playback ratings, such as from a DVR. But beginning in fourth-quarter 2006, the VOD number can be broken out, though that will require cable MSO's, TV networks and stations to cooperate to make sure that a VOD "flag" is inserted in order to "isolate" the VOD viewing. Nielsen pledges to have the technology in place to recognize that flag.
Saying it realizes most VOD is not recently aired regular TV, phase three, also beginning in fourth quarter 2006, means Nielsen will start measuring library product--like HBO movies--which will require embedding a code in each show, since it will lack the Nielsen codes on already-aired fare.
You can read the whole article at Broadcasting & Cable.
Posted by Martino Mingione at 08:27 AM | Comments (0) | TrackBackMay 28, 2005
Advertisers Want Something Different
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I am convinced that Marketers (a.k.a., Advertisers) will gravitate to a VOD ad market if it is (a) transactionally efficient, and (b) something more interesting than repurposed 30-second spots.
Even without a viable VOD market, Advertisers as a group are rethinking how they use their money, according to data from TNS Media Intelligence, which tracks ad spending in major United States media.
Broadcast television commercials accounted for 17.2% of all ad spending in 2001. Last year, that figure fell to 16.5%.
At the same time, advertisers have increased their allocations for media such as cable television, local radio, outdoor advertising and the resurgent Internet.
Picking up on that report, the New York Times wrote an article entitled "Advertisers Want Something Different."
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Read the NY Times article. |
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Saturday Night Live's sad but true joke about this trend. |
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Quantifying the size of a VOD Ad Market. |
May 27, 2005
Mobile Video Content Manager, LA
I have never posted a job lead here before. However, I saw this on craigslist. And some of you have been reading my recent entries about television and the cell phone.
We are currently seeking a Video Content Manager. This is a full-time opportunity to be part of an exciting company offering broadband delivery of video to mobile phones.
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Related: read about Nick being offered on Verizon's VCast service in the US. |
Enjoy.
Posted by Martino Mingione at 02:11 PM | Comments (0) | TrackBackMicrosoft: A Media Company?
Microsoft's approach to the mobile device market and television is a lot like the "Survivor" ethos. On the popular reality TV show, contestants are advised to "outwit," "outplay" and "outlast" their opponents. That might describe what Microsoft is doing in both television and mobile computing. I bring your attention to two developments in May.
First, on May 11th, Microsoft and Philips Electronics announced they will marry Windows with Nexperia. So what you ask?
Nexperia is a range of chips used in devices such as mobile phone handsets, DVD players, and digital television sets. Philips will extend this to include its Nexperia chips for in-car entertainment and next-generation digital TV systems later in the year, they said.
Philips will also add support for Microsoft's Windows Media Digital Rights Management 10 system in its chips for portable music and video players, the companies said in a joint statement.
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Second, at the Mobile and Embedded DevCon 2005 in Las Vegas, Microsoft unveiled 'Magneto' also known as Windows Mobile 5 OS. Magneto promises to combine the Smartphone, Pocket PC, and Pocket PC Phone Edition operating systems into one platform.
A number of new features are expected as well, including improved applications such as a PowerPoint viewer and more powerful versions of Excel and Word. Further usability enhancements incorporate improved one-handed navigation and the ability to add caller ID photos. While QWERTY keyboard support, persistent storage technology, and upgraded wireless manufacturer and carrier support allow more robust advancements.
Is there any doubt that Microsoft is insuring that it will continue to prosper in a world of digital convergence? Also, is there any doubt that Microsoft sees that video is going to be a key driver in developing future markets?
Let's not forget these other television related stories involving Microsoft:
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Microsoft signs a $400 Million IPTV deal with SBC. |
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Microsoft and Alcatel announced an IPTV deal. |
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MSN signs a deal for original television content with Mark Burnett. |
Broadband Growth Fuels More Online TV Content
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Microsoft Corp.'s MSN has signed a deal with Mark Burnett Productions to broadcast original content from the upcoming reality program Rock Star: INXS, which airs on CBS this summer.
The deal comes after MSN rival Yahoo announced its own exclusive arrangement with Mr. Burnett's company to produce a live boxing bout with contestants from NBC's The Contender, which will be available only to online viewers at Yahoo.
With broadband penetration among online U.S. households expected to hit 60% this year, the deals demonstrate the extent to which the major purveyors of video online -- which can only be viewed easily on broadband -- are vying to grab and show the most original content in the most innovative ways.
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Read the entire story about the MSN deal in AdAge. |
About the Burnett/MSN deal, AdAge goes on to say:
Advertising opportunities will include 15- or 30-second streaming video ads and standard Universal Ad Package ads on the Rock Star: INXS site and throughout the MSN network. "It gives advertisers multiple touchpoints throughout the MSN areas," said Karen Reidetzki, MSN's product manager. Online-TV package deals will also be offered, Mr. Riggs said.
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Read the story about the Yahoo deal. |
May 26, 2005
IPTV vs. Internet Television
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I thank Torsten Jacobi for pointing me in the direction of new business still in stealth mode called Brightcove. While the company is steeped in way too much mystery as to exactly what it's mission will be, I was intrigued by the fact that Jeremy Allaire was behind it. Jeremy helped shape the Macromedia MX platform development and significantly contributed in making Flash a central staple in Macromedia ongoing business and development strategy.
"We hope to help producers and publishers of video take us into the emerging era of Internet Television," said Jeremy.
That may sound like a benign sentence, but it does open up an very important point that I will elaborate upon. That is this: there is a vast difference between IPTV and Internet TV.
Yesterday, I pointed readers to an article written by Mike Quigley, CEO of Alcatel USA. He did a good job defining what IPTV is. He wrote:
"While the 'IP' in its name stands for Internet Protocol, that doesn't mean people will log onto their favorite Web page to access television programming. The IP refers to a method of sending information over a secure, tightly managed network that results in a superior entertainment experience."
And that is the key. You are not using the Internet to surf for video. Instead, the telco's are deploying IPTV as an alternative to digital cable and satelite. If you become an IPTV subscriber, you will hook up a set top box to your television just like you do now for cable (but the IPTV device will plug into your broadband connection).
Internet TV is quite different (or, "Internet of Video" in Jeremey's lingo) in terms of the model for the consumer, the publisher and for the infrastructure itself. Jeremy goes on to say:
In the Internet of Video approach the publisher has a direct communication channel to the consumer. The content publisher is able to directly reach the consumers on the multiple devices independent of any specific carrier or operator. The Internet of Video is in fact an approach that also attempts to be as device independent as possible. Thanks to open standards and formats which have helped create this opportunity, Internet Television wants to be just as the web is today. Accessible from any type of computer and connection around the world..... and not physically tied to the user living room or set-top box.
You can read more and also listen to Jeremy Allaire's thoughts at Robin Good.
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Read the Mike Quigley article about IPTV. |
May 25, 2005
Television Reloaded
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Coming out in next week's Newsweek is an article entiteled Television Reloaded. It covers in eloquent terms the changes effecting television, our choices, and how we will experience it.
Some of the tidbits:
The ethos of New TV can be captured in a single sweeping mantra: anything you want to see, any time, on any device.
To paraphrase sci-fi author William Gibson, the TV future is already here; it's just not evenly distributed yet. Early adopters have jumped on the new stuff because they offer two qualities traditionally lacking in the fading era of broadcast television: personalization and empowerment.
Another transition well underway is time-shifting, the ability to rearrange the schedule to watch programs at your convenience, not the networks'... Former FCC head Michael Powell called it "God's machine."
Video-on-demand provides another way to bypass what programmers offer at a given moment—and millions are already experimenting with it... "All the studios say it's a matter of not if but when... new movie releases will quickly air on cable TV," says Comcast's Roberts.
While time-shifting changes the when of television, "space-shifting" tinkers with the where. Now that you've stored your show on a TiVo, it's only logical to take it with you on your laptop, hand-held viewer or PSP game player.
IPTV hopes —to merge the lay-back culture of the living room with the bustling activity of the lean-forward Net. "This is the future," gushes Microsoft's Bill Gates.
Click here to read the whole story now.
Posted by Martino Mingione at 03:12 PM | Comments (0) | TrackBackMike Quigley explains IPTV
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Behind the acronym 'IPTV' lies an expanding universe of communications possibilities. Alcatel's president explains it all.
This week in a Business Week article titled "The Real Meaning Of IPTV", Mike Quigley, CEO of Alcatel USA explains some of the basics about IPTV. It's a good place to start for anyone trying to picture what the telco's are up to.
Note: I am going to side-step the point that he compares IPTV only to traditional television. The problematic part is that the cable companies can deliver this same functionality, too.
"Let's start with what IPTV is not. Specifically, it is not TV that is broadcast over the Internet. While the 'IP' in its name stands for Internet protocol, that doesn't mean people will log onto their favorite Web page to access television programming. The IP refers to a method of sending information over a secure, tightly managed network that results in a superior entertainment experience."
And why does Mr. Quigley think that the IPTV experience will be superior? He goes on to explain.
"Because it means ... a much more personalized entertainment experience to customers... In particular, IPTV allows the service provider to deliver only those channels that the consumer wants at any given time -- unlike traditional television broadcasting, where every channel is delivered to every home on the network. For the first time, it will be economical to deliver a college basketball game to everyone who wants to see it, for example, rather than just a particular local community."
He is correct. However, in my opinion his explanation is too wrapped up in vendor-speak. The average viewer does not care about the telco's economics. I would simply say this: a telco can keep all the television content ever produced and give it to you when you want it. That level service can be done affordably. That is something that traditional television cannot deliver.
But this is his most significant statement for how the business of advertising will change next decade.
" ... because the network ... has the ability to synthesize all sorts of information regarding the consumer's preferences, it's an excellent platform on which to add e-commerce, advertising, and other capabilities. In fact, as advertisers get better at divining the behavior of consumers with digital video recorders, they'll have a significant opportunity to decrease the use of low-impact broadcast ads and increase the use of personalized ads that drive meaningful business results and impulse purchasing."
I added the emphasis. That one sentence speaks a big truth. That is this: traditional television advertising is mass marketing and it is diminishing in effectiveness. The Internet is often a joke when it comes to the quality of its advertising but it does have this going for it -- targetability and ROI. We can only just begin to picture what will happen when those characteristics become a part of the visually high-quality medium called television. In future blog entries, I will have much more to say about that.
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Read the original entry that explains how large an effective VOD Ad Market might grow to. |
AgileTV receives $22 Million in Funding
With the explosion of digital cable channels, navigation to find what you want to watch can be challenging. In the Long Tail of video options that will arise from wide-scale deployment of VOD, that will become even more difficult.
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AgileTV's answer to all this is to just talk to the television and tell it what you want to see. Their business model is to license the technology to the cable companies and leave it to those providers to bundle that service to you. Click here (or on the image to the left) to see their interview on CNBC.
Recently, AgileTV secured a $22 million investment to fund the ongoing development and delivery of its voice recognition system for cable television.
“The cable industry is very focused on solving the challenge of finding ways to help consumers experience the full array of television programming available today,” said James Caccavo of Valence Capital Management, the New York based private equity firm that led the investment. “AgileTV’s voice navigation service is the solution. We believe the overall opportunity with the cable industry is very promising.”
Lauder Partners, a Silicon Valley-based venture capital firm that has invested in over twenty other cable or interactive TV ventures since 1990, also invested in this funding round.
The system (Promptu) employs a database of more than 100,000 phrases and delivers better than 90 per cent voice recognition accuracy. The response time from a viewer’s voice command to the requested programme appearing on screen is said to be less than a second.
The system is designed to scale from thousands to hundreds of thousands of customers from a single cable headend. The server-centric approach is claimed to be more cost-effective than embedded systems and is compatible with millions of deployed set-top boxes.
Developed and tested with significant input from several leading cable operators and their customers, consumer trials have apparently resulted in a very positive response.
“Our investors see the tremendous potential of voice navigation in delivering a compelling interactive television service that is a competitive differentiator for cable operators,” said Paul Cook, founder and chief executive of AgileTV. “This latest round will help support our continued growth and development as we deploy the service with cable operators.”Posted by Martino Mingione at 10:16 AM | Comments (0) | TrackBack
May 24, 2005
OpenTV announces IPTV solution
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At Telecom Video Europe in Amsterdam, OpenTV announced on May 10 the introduction of an IPTV edition of its software to allow network operators to deploy internet protocol services over broadband networks.
The new product, OpenTV Core 2.0 for IPTV, will be available next month. It extends the capabilities of OpenTV’s middleware to enable delivery over either IP networks or hybrid systems combining broadcast and network-based services.
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OpenTV Middleware Now in Over 50 Million Set-Top Boxes. |
Tim Evard of OpenTV explained: “With OpenTV IPTV, operators can now build IPTV services without compromising on advanced features such as video on demand, personal video recording and interactivity, while relying on a proven platform with global distribution, support services and a world-wide developer community with OpenTV applications and content ready to deploy.”
OpenTV says the product is aimed both at new entrants to the digital TV market, and cable or satellite operators that may wish to take advantage of their existing infrastructure in deploying internet protocol services. It will also enable over 35 set-top box manufacturer licensees to deliver IP capable set-top boxes with OpenTV Core middleware. OpenTV software is deployed in 50 million set-top boxes in 96 countries.
The solution may be attractive to existing network operators that may be planning to extend their offering to take advantage of broadband delivery over data networks. It will be competing with a number of middleware systems or application platforms from other vendors that have been specifically developed for IPTV services.
Posted by Martino Mingione at 05:46 PM | Comments (0) | TrackBackRentrak Hires Sandra Swain Kilbridge as Vice President, Business Development
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Rentrak Corporation (Nasdaq: RENT) announced today that it has hired Sandra Swain Kilbridge as vice president, business development. Swain is responsible for new business development activities to expand Rentrak's OnDemand Essentials™ service offerings and engage new customers.
She was most recently VP of programming acquisitions for Rainbow DBS/VOOM, and spent stints at Comedy Central and Showtime, working on those companies' VOD services.
She will spearhead new business discussions and service implementation scheduling with program networks, as well as creators of new on-demand entertainment. Swain Kilbridge reports to Cathy Hetzel, senior vice president at Rentrak.
Note: OnDemand Essentials is a Web-based ASP service which measures and reports anonymous, aggregate VOD usage data, and which is intended to provide cable operators, content providers and advertisers with customizable reports designed to help them better understand viewers' VOD content preferences. Click on the image to see an example.
Rentrak recently announced trial deployments of the service with Charter and Cablevision that should result in commercial deployments, and also recently announced a commercial deployment with Comcast. In addition, OnDemand Essentials is used by cable MSO, Insight, and by programmers, Music Choice and Mag Rack.
Posted by Martino Mingione at 10:38 AM | Comments (0) | TrackBackMay 23, 2005
A Joke about Shifts in the TV Audience
As part of the time-honored tradition of upfront week, TV's big stars skewer their own networks in well-oiled comedy routines. They typically acknowledge what people in the business are saying. My favorite was this one:
Saturday Night Live’s Amy Poehler and Tina Fey, in a special edition of “Weekend Update,” took swipes at NBC and its rivals. “Buy ad time on NBC,” Fey implored advertisers, putting a positive spin on NBC’s fall from first place in the 18-49 demo to fourth. “Out of 100 channels, we’re No. 4, and that’s pretty good!”
I guess that's one way to look at it.
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Read my thoughts about the upfront market this season. |
May 22, 2005
Amino and BitBand integrate IPTV solutions
BitBand provides video content delivery solutions over IP broadband networks for Telcos. The company targets deployments of TV-centric residential subscribers for telco's. BitBand says that more than 200,000 commercial subscribers are served by their technology.
Amino Communications supplies small, low cost set-top boxes and gateway products (and other products to other markets). I know of a deal back in August 2004 whereby Amino agreed to sell 20,000 boxes to UTOPIA.
BitBand Technologies and Amino Communications announce on May 10th the integration between BitBand's Video On Demand solutions and Amino's IPTV (Internet protocol TV) set-top box. This joint offering is being deployed in Ireland, by digital services provider Magnet Networks.
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Atlas Interactive to Use BitBand VOD Tech for Indian Deployment. |
The Third Screen in the UK
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It has been reported that mobile operators in the UK collectively paid £22.5 billion in 3G network licences. Video was originally seen as one of the big drivers for these 3G networks. Soon, we should see a big test of whether consumers accept watching television on your cell phone.
Orange has launched the first mobile telephone television service in the UK, allowing customers to watch news, sport and entertainment programmes on a 3G phone. Orange TV initially features nine channels: CNN and ITN News, Comedy Time, Cartoon Network, Toon World, Fashion TV and extreme sports, with dedicated coverage for reality television shows Big Brother and Celebrity Love Island.
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Related: read about Nick being offered on Verizon's VCast service in the US. |
Customers can download the TV application from the Orange World web site, and pay £10 a month on top of their normal bill to watch the channels. The subscription includes 1GB of data exclusively for use with the TV service, enough for around 20 hours of viewing.
“This signals the start of a huge new opportunity for our customers, broadcasters, handset manufacturers and production companies,” said Alexis Dormandy of Orange. “We’re talking to broadcasters about new, exciting content and we’re looking forward to adding more great Orange TV channels in the near future.”
Orange, which is controlled by France Telecom, already provides television to mobile telephones in France.
The Orange video service is streamed over the 3G network, rather than broadcast.
Rival operator O2 is planning to trial broadcast mobile television in the Oxford area using DVB-H, a variant of the terrestrial transmission standard, which is specially designed to reduce battery consumption and provide robust reception on the move.
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The Economist magazine highlighted this trend back in January 2005. |
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Read in Broadcasting & Cable about why live TV might be on your cell phone next year. |
May 20, 2005
IPTV Business Tactics, Part 2
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On May 11th, I relayed that SBC should have choosen a city like Cleveland, or Buffalo, or Los Angeles to start their IPTV beta in. Why? Because Adelphia had messed up those markets and consumers might be more receptive to IPTV as an alternative.
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Read the original entry explaining that logic. |
Well, right on cue: Comcast and Time Warner Thursday spelled out in a filing why the FCC should approve their plan to carve up bankrupt Adelphia Communications. In the filing were these juicy tidbits:
For starters, the two companies said the deal would allow Adelphia subscribers to receive advanced services such as cable telephone, high speed Internet and high-definition television.
Adelphia systems lag in delivering new cable products because of the company’s financial woes. The Coudersport, Pa. company declared bankruptcy in 2002.
For instance, Adelphia has no voice customers while Comcast and Time Warner serve 1,725,000 between them. Only 14.4% of homes passed by Adelphia systems subscribe to high-speed Internet whereas 21% in Time Warner franchise area subscribe and 18% in Comcast areas.
Among Time Warner subscribers, 5.3% buy high-definition packageswhile 6.7% of Comcast subscribers do. Adelphia, by contrast, sells HD service to only 2.8% of subscribers.
The companies also said the deal will set them up to better compete with regional Bell phone companies by boosting the size of their regional clusters.Posted by Martino Mingione at 02:51 AM | Comments (0) | TrackBack
May 19, 2005
And Growing Digital Cable ...
You cannot have cable VOD without digital, so ...
Projected number of TV homes with digital cable
| 2004 | 22.6 million |
| 2005 | 25.0 million |
| 2006 | 27.0 million |
| 2007 | 28.5 million |
| 2008 | 30.0 million | SOURCE: PricewaterhouseCoopers Global Entertainment and Media Outlook 2004-2008 |
SmartVideo offers free mobile video channel
My thanks to InformITV for this story.
SmartVideo is planning to provide an advertiser-supported video channel that will be available to mobile subscribers of all major global carriers.
SmartVideo Technologies is partnering with Digital Music Video Network to offer the service to smart phones and other devices. It claims to offer full-motion video and audio even to current 2.5G devices, and at over 24 frames per second on new 3G networks.
When the service launches in June, it will be accessible to 11 million or more devices with a WindowsMobile Media player. The service will subsequently be available across the United States to anyone with a mobile device running the Symbian or Palm operating systems in conjunction with a media player.
Users will simply access the service through the internet browser in the phone or other compatible mobile device.
The first service will feature top forty hits, but dedicated themed channels are planned in the near future. The DMV Network has a library of 40,000 music videos.
SmartVideo also offers live, streaming and video-on-demand programming from leading brands including ABC, NBC, Fox, and The Weather Channel.
Posted by Martino Mingione at 07:33 AM | Comments (0) | TrackBackMay 18, 2005
Stream TV IPTV service launches in Russia
Thank you to the folks at Informitv.com for pointing out this news item:
Sistema Multimedia has announced the commercial launch of Stream TV, Russia’s first broadband television service.
Stream TV will offer access to over 80 Russian and international television channels and nearly 50 radio services. Channels will include those of Chelsea and Manchester United football clubs in the UK.
Subscription charges will start at US$9.95 per month, with the ability to add new channels individually or in packages, for a day, a week or a month. The package includes an ADSL modem, set-top box, remote control and infrared keyboard. It can be purchased at the time of connection or through a 3-year installment plan.
Alcatel provided systems integration for the IPTV service using its Open Media Suite of software, the future of which must be in some doubt following its marketing partnership with Microsoft. NDS is providing content security, while Tandberg is responsible for video compression.
Posted by Martino Mingione at 06:41 AM | Comments (0) | TrackBackMay 17, 2005
Targeted Advertising - CarTV as a Proof Point
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Targeted advertising is a phrase mentioned in Online advertising a lot. Targeted advertising is a phrase that occasionally comes up in television advertising – almost always in connection with local cable companies like Comcast and Time Warner. I say ‘occasionally’ because while the cable companies can deliver this functionality for advertisers, they have not implemented any efforts in delivering this to advertisers.
Enter the future and video-on-demand. For the sake of expediency, let’s just say that that VOD is real. Let’s also stipulate that advertising will find its way into the medium somewhere along the line. One question is this: will advertisers pay a premium if it is possible to target their message on television?
My intuition has always been to say yes and there are intellectual reasons to believe this. However, I am a show-me kind of guy and I prefer seeing market validation that it is true.
One concrete data point might be this: CarTV. I read an interesting article from last week in ClickZ about them.
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Autobytel has integrated its Flash-based CarTV video player throughout its car-buying Web sites, which the company touts as a way to give marketers video advertising opportunities to reach in-market car buyers.
Several auto manufacturers have already signed on to show :30 video ads -- mostly repurposed TV ads at this point -- before, during, or after the CarTV video clips. The company expects to add :15 ads as an option in coming weeks. Ads are sold by segment, such as luxury or sports car segments.
Rates for ads on "automatic on" videos, which start playing without user interaction, typically run between $50 and $70 CPM, said Michael Rosenberg, Autobytel's SVP of marketing and media services. User-initiated video ads cost considerably more, between $175 and $225 CPM, he said.
Whoa, there. CPM’s in excess of $50?!? Just as a point of reference, broadcast television averaged $19.85 CPM in 2004.
So, a 30-second commercial appearing on the visually high-quality medium called television might get $20 CPM’s. That same commercial targeted with lesser video quality on a PC shown to a potential car buyer gets between $50 and $225! Sign me up for targeted advertising.
All I can conclude with is this: when VOD becomes advertiser supported, it would behoove the media companies supplying that inventory to target and sell more like the Internet.
Posted by Martino Mingione at 06:22 AM | Comments (0) | TrackBackMay 16, 2005
Online Video is for Real
Thinking about the future of television and pondering its impact on advertising is not the sort of thing you freely admit to in polite company. Never-the-less, my closer friends know that this is my job. In most conversations, my friends cannot envision how the Internet will be an effective vehicle for television.
Here are two recent news stories that point out the error of their ways:
First, witness what happened when comedian Jon Stewart went on CNN’s Crossfire to take on Tucker Carlson live on cable television. Jeff Jarvis, president of Advance.net noted:
“That episode got maybe 400,000 viewers on big old powerful CNN? Well that same segment was copied onto the Internet, where it got at least 5 million views. So what’s more powerful, the network CNN owns or the network no one owns? So now suddenly the distribution is exploded.”
Online video will augment television distribution in a manner similar to how online news expands a newspaper’s readership. The New York Times, Wall Street Journal, and many others already tell us that online readership substantially exceeds their paper readership. So, how far away is it before online viewership substantially expands a producer’s audience?
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Second, witness last week’s announcement of Mark Burnett’s upcoming online boxing event. Here are three professional matches at Ceasar's Palace airing on May 24 at 1 p.m., 2 p.m. and 3 p.m. EST, taking advantage of the broadband-connected at-work viewer.
But if that is not enough, ponder this. None of these boxing matches will air on television. Also, Intel and Toyota are sponsoring the event. And for anyone left who does not already know who Mark Burnett is; he is the creator of many hit television shows.
These two online television stories are not the only ones I could pick from. However, they are solid examples that make real the fact that the broadband revolution is blending television and the Internet together in interesting ways.
Posted by Martino Mingione at 02:10 PM | Comments (0) | TrackBackMay 15, 2005
Comcast Deploys 428,000 DVR- or HD-Equipped Set-Tops in Q1
In a conference call with financial analysts following Comcast's release of its first-quarter financial results, COO, Steve Burke, revealed that the MSO deployed around 428,000 "advanced" (i.e. DVR- or HD-equipped) set-top boxes in the quarter -- 200,000 more than it had anticipated.
Burke credited demand for DVR and HD services as a significant factor in the MSO's strong quarterly results: its revenues totaled $5.4 billion, up 9% from the year-ago quarter, while its operating profit totaled $2 billion; it added 200,000 digital subscribers and 414,000 high-speed data customers in the course of the quarter. Comcast plans to invest up to $300 million in its service this year, much of which will be used to increase the number of HD DVR's on its networks.
Time Warner Cable, meanwhile, has revealed that it deployed an additional 136,000 DVR's to its customers in the first quarter, bringing its deployed DVR base to just short of a million by the end of the quarter.
Posted by Martino Mingione at 02:45 PM | Comments (0) | TrackBackMay 11, 2005
IPTV Business Tactics
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The upcoming competition between cable companies and telco’s is well documented. The cable companies are offering telephone services (VoIP) and the telco’s are offering television (IPTV). One thing that remains to be seen is whether the telephone giants will gain traction in that battle. So, today, I wish to comment about a specific tactic that I find questionable.
Let’s lay out the basics:
The logical customer base for the telco’s are the existing cable customers. They are 70% of all U.S. television households and already pay something for the privilege of watching TV.
Cable subscribers are not the happiest lot and they may listen to a new option.
The largest group of dissatisfied cable subscribers probably has to be Adelphia’s -- the 7th largest. The Rigas family ownership disintegrated a while ago, capital outlays for improvements almost non-existent, the MSO being run through bankruptcy, and a just completed deal to be acquired by Comcast and Time Warner.
While Adelphia is spread out throughout the country, their largest concentrations are in Buffalo, Cleveland, and Los Angeles.
So, where does SBC Communications wish to make its first test of IPTV? In Texas! Time Warner Cable has some pretty button downed operations throughout the state and customer satisfaction there is not low. A highly ranked Time Warner exec told me that Verizon was going to test IPTV in Orlando – another well run cable television market for cable.
My two cents is this: if you are going to enter into a bruising battle for television households, start where the lowest hanging fruit is. Do not hit the enemy where they are strong.
Posted by Martino Mingione at 10:16 AM | Comments (0) | TrackBackMay 09, 2005
A VOD Ad Network is Possible
Last week I had the good fortune in two separate meals to be talking with one of the top people in the Comcast Spotlight advertising group and the top guy at Time Warner Cable’s advertising division. After covering our business of the week, inevitably we got around to talking about video on demand and the future of advertising.
I posed the following question to both gentlemen:
“Do you see a future whereby advertisers buy [insert cable company name] or will they buy X number of impressions with Y frequency and your company will supply a large part of that order?”
This is significant because these two cable giants will have most of the VOD ad inventory in the future. If either of them choose to go it alone, an ad network would be less practical. Also, an ad network could help their telco rivals.
Interestingly, both cable companies identified where their trip-wires might be, but it was not over the need for a VOD Ad Network (or VOD Rep firm) to represent the medium. In other words, if McDonalds bought 400,000 VOD ad impressions, each cable company would not be put off if SBC and Verizon got a portion of that order. They understand that both Comcast and Time Warner will be huge beneficiaries of the buy so why worry about the telco’s.
Why? The answer lies in understanding the past. Part of what Comcast, Time Warner, and Cox built to make local cable television advertising ready for transactions was an industry-wide rep firm called NCC. They understood that their best fortunes rested on Madison Avenue buying ‘local cable’ and not individual cable MSO’s. Obviously, their gut tells them that the same thing is required in the VOD world, too.
Good news. This means that those businesses that can provide a real value proposition but need to build a VOD ad network have a shot at doing so.
Posted by Martino Mingione at 10:47 AM | Comments (0) | TrackBackMay 03, 2005
VOD Advertising Quantified
Last week I made the claim that a new ad market that specialized in video on demand (VOD) and internet protocol television (IPTV) could surpass Internet advertising in dollar volume inside of 7 years. Then I went on vacation. When I returned, the two most popular questions in my email inbox were: "how did you come up with this claim" followed by "what type of advertising would that be?"
I will defer the "what type" question for another posting. This posting explores the "how does it get that large" question. A picture is worth a thousand words, so let's plot some established data points below. I am using the phrase "VOD Ad Market" to encompass all non-linear television inventory -- that is, video on demand streams, internet protocol television, and digital video recorders.
I looked up the first 10 years of actual dollars spent on Online Advertising as published at the IAB. You will see those numbers reflected in the blue line. Notice that Internet advertising grew from a paultry $55 Million in 1995 to a whooping $9.6 Billion in 2004. Very Impressive. You can also clearly see the Internet bubble that burst in 2000.
Next, I looked up projections about the growth of Online Advertising. The best source I found was JupiterResearch. They believe that Online Advertising will grow to over $16.1 Billion in 2009. I plotted it as a straight line in green continuing from where the IAB actuals numbers ended. Notice that the JupiterResearch projection appears realistic in part because it pretty much shows no increase in the IAB line's slope. Very reasonable.
Finally, I plotted the expected erosion in value of traditional television advertising. You can read more about this at VODscape. Basically, it boils down to this: as DVR/PVR penetration expands throughout America's television households, you can expect that at least 50% of the people will skip all of the ads. The ad buyers will discount (erode) what they are willing to pay for a commercial because of this. DVR penetration numbers are fairly well known. By plotting this ad-skipping effect against the existing $56 Billion television ad market, we can calculate how much traditional television advertising will eroded. I overlaid that with the red line. I believe that this is the pot of money that will leave linear television and go looking for more effective venues.
Observation: television's erosion is larger than the Internet! And that is comparing only the US television market versus the Global Internet market. This phenomenon exists because advertising on american television is still over 7X larger than the world wide web today.
Summary
The analysis indicates that the erosion of traditional television advertising will surpass all the advertising money spent on Internet by 2009.
That displaced money will find its way into all sorts of advertising venues. However, a well constructed ad market for non-linear television (that is, VOD/IPTV/DVR) is a natural place for it to go.
If just 70% of that agency money found its way into a VOD ad network, it would be about $15 Billion in size by 2009.
Play with the numbers yourself. If you think that the VOD advertising is too aggressive, or if you think the Internet will grow faster -- OK. But no matter how you slice it, a VOD ad market's first 5 years will be impressive.
And if you don't believe that this ad market will get off the ground: wake up and smell the deals. Just in the last 6 months, Tandberg Television bought N2Broadband for $130 Million. CCOR purchased NCUBE for $90 Million. I see that Pixelworks acquired Equator Technologies for $109 Million. All of these are VOD and IPTV plays.
Comcast, Time Warner, and other cable MSO's are experimenting with VOD ads. TiVo and Comcast are experimenting with telescopic ads. Alcatel is researching how to do IPTV ads. The Madison Avenue agencies are noticing television's diminished effectiveness and asking questions. You know that when this much money is sloshing around, companies will rise up to take advantage of it.
This is a new arena for venture capitalists, start up companies, Wall Street IPO's, telco's, and established media companies to play in for year to come. There will be winners and losers but most important: it will be new!
UPDATE:
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Why P&G, the world’s largest advertiser, is cutting $300 million from its TV ad budget. |
May 02, 2005
Channel 9 Cancels ITV Service
Success has a dozen fathers, failure dies an orphan. I am reminded of that adage because we read story after story about how digital television is changing everything for the better. Yes, but only where the business model works. Here is a story about an ITV failure brought to our attention by the folks at informITV.
Channel 9 has pulled the plug on its interactive service on free-to-air digital television in Australia just a year after its launch.
The Nine network is the highest-rating television network in Australia. The Nine Sports Active service offered viewers enhanced coverage of Australian football programming and had experimented with enhancements to other genres such as a BBC documentary about Pompeii. However, only a limited number of viewers with specific types of set-top box could receive the services.
Veronica Chalom at Channel 9 confirmed to the media that the service would close but declined to comment further.
In February, OpenTV announced that it had licenced playout systems for Channel Nine to provide cross-platform authoring for both digital terrestrial television and the Foxtel pay television platform.
The apparent failure of interactive services on digital terrestrial television is a blow to digital television ambitions in Australia, where uptake has been relatively slow.
At the end of March 2005 an estimated 777,000 digital televisions and set-top boxes had been sold in Australia. The Australian Government plans to end analogue transmissions in 2008, but it is expected that less than half of Australian households will have switched to digital by that time.
Posted by Martino Mingione at 10:12 AM | Comments (0) | TrackBackSwisscom selects Alcatel
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For any of you who like to know more about infrastructure companies who might benefit from continuted IPTV rollouts, put Alcatel on your watchlist if you have not already done so. Alcatel is in a number of deals and here is another in Switerland.
Alcatel will supply Swisscom with a VDSL-enabled broadband access network offering 25 Mbps to end-users.
“The step-by-step implementation of our triple play strategy reflects our company’s continued investment in the future of communications in Switzerland,” said Adrian Bult, chief executive of Swisscom Fixnet. “We are creating a new television experience, supporting changing user habits and triggering an innovative step forward in the television business.”
Swisscom broadband subsidiary Bluewin has been engaged in trials with the Microsoft TV platform. Earlier this year Microsoft and Alcatel announced a strategic partnership to deliver next generation television services.
Read More >>
And why keep up with the Swisscom news? SBC Communications also selected both Microsoft and Alcatel for their IPTV roll out.
Posted by Martino Mingione at 09:42 AM | Comments (0) | TrackBackHong Kong offers Gigabit residential broadband service
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When it comes to IPTV services, the United States is a little behind others in rollouts. While that might change after SBC and Verizon push forward their experiments after this year, here is a glimpse of how broadband and IPTV services intermix with each other.
A broadband package has been launched in Hong Kong, offering voice, video and data services over a Gigabit fibre-optic connection to the home. Hong Kong Broadband Network, a subsidiary of City Telecom in Hong Kong, is now offering a 1Gbps service for the residential market. The fibre-to-the-home service will initially be available to 800,000 households.
Prices and speeds are tiered with the top tier costing $215 per month for unlimited gigabit access. Although that is a bit pricey for the US market, it is not unreasonable if you are working from home and using the network for multiple purposes.
The entire route from the network center to the home is connected by optical fibre. In other cases, fibre-to-the-building provides access over conventional network cable in the customer premises.
HKBN has been developing its fibre network and now covers a million households in Hong Kong, with over half a million subscribers to voice, broadband and IPTV services.
Enormous bandwidth provides an indication of the potential for converged communication services over IP, including IPTV. While most broadband services offer slower speeds, there is no reason to assume that with next generation that Gigabit network speeds will not be available in the future.
Posted by Martino Mingione at 09:18 AM | Comments (0) | TrackBack
