Thursday, April 06, 2006

Digital Hollywood Day 4

Notes from Digital Hollywood, March 30, 2006, by Nicholas (Nick) Peters:

The theme of the day across panels I attended seemed to be how to personalize the digital communications experience – especially video -- so that either subscribers will be willing to pay for whatever they are getting, or content providers will be able to sell ads to pay to get it to consumers for “free.” Improved metrics will be an essential element for either model, as well as proper navigation and search tools, and targeted, findable, tailored content that actually delivers on its promise to users. Following are brief snapshots from panel discussions.

PANEL I: THE BROADBAND VIDEO TIPPING POINT.
Allison Dollar, CEO of Santa Monica-based Interactive Television Alliance, called the current state of broadband video “The 5th Wave, the real deal, with the technical infrastructure in place. Now it’s how do we search it, package it, monetize it, and make the consumer care about it.”

Robert Whitmore, founder of NPOWER Digital Media and STEM, said, “We are actually past the tipping point. The networks, the studios and Silicon Valley know the 21st Century media wars have begun.” The biggest programming challenge to traditional content providers is the explosion of “viewer-generated media,” and the biggest technological challenge everyone faces is “user access – finding the media they want, which the provider wants them to have.” He repeated several times that users will not tolerate too much ad push.

Dmitry Shapiro, CEO of Veoh, argued that broadband video via the Internet will be driven by an open forum of content with no barriers like fixed channels and time slots. He called it peer-casting, and said his company already distributes 1 million high bit-rate video shows a month powered by a PC-based software solution that functions as a download-based virtual DVR. He called it the “democratization” of broadcasting.

Furthermore, Shapiro said big content conglomerates are missing the boat by building huge websites to serve up broadband video with their content. “That’s not where the online video community wants to go.” He said users want to engage in “collaborative filtering” rather than “genres” that are pre-packaged and pushed at them. He cited the attraction to RSS as an example. “I don’t even know where the stuff is coming from and I don’t care. Once I’ve selected an RSS feed based on my own criteria, that’s all the validation I need. After that it’s all just information I’ve opted-in to, and I don’t know or care what brand it’s coming from.”



Karl Quist, founder and president of TotalVid, said he provides an archive of paid video downloads of niched videos from 50 categories such extreme sports, anime and martial arts…content not readily available via mainstream channels…in either a la carte or subscription models. He said such niche categories have an audience willing to pay more for hard-to-get video that meets their interests. Currently 2,500 titles from 350 rights holders and growing fast.

Michael Raneri, President of MeeVee, an integrated search and discovery “experience” that provides users with “snack” snippets of video to “guide” them, said building community is the key ingredient to success in digital video distribution. Search is “not intelligent enough yet,” he said. For now users will browse and have to find sources of content that are compelling for them where they can create a profile, and either opt-in or opt-out. Proper targeting is not yet supported by prevailing business models.

J. Chris Wagner, EVP and co-founder of NeuLion, provides an end-to-end production, encoding and aggregation platform that delivers DVD quality broadband video from the Internet to TV set-top boxes. “You have to have an audience to get advertisers to spend money. Affinity groups in living rooms in front of an increasing number of state-of-the-art TV sets have enough numbers to be attractive.”


PANEL 2: THE INTERNET VIDEO AND ADVERTISING MARKET:
Keith Richman, CEO, Break.com, distributing 300 million videos a month to 12 million unique users in a male 15-35 demo. “There are fears of ‘The Wild’ among advertisers worried about what it is their content will appear next to or be associated with if it ends up somewhere out of their control. That makes it harder to monetize ads than in a controlled environment.” He said about 15% of the streams he distributes a month end up outside of controlled environments.

Talking about viral campaigns, he said, “Most of them miss. There’s a 5% chance your campaign will have a life. It’s the nature of the beast.”

Adam Gerber, VP Advertising Products and Strategy, Brightcove, said ad buyers “will definitely see danger in ‘The Wild,” and as their guides, we’re going to have to manage monitoring and integration.”

As to content creation, Gerber said, “Ad buyers are learning that they need to do something different creatively for the broadband space. The message has to be less intrusive.” He said this is especially true for mobile applications: “You can’t repurpose a 15-30 second spot for mobile. You have to create something unique in 3-5 seconds.”

The increasingly broad pipe means “your brand is a commodity rather than a value-added element from a sponsorship,” Gerber said.

Greg Verdino, SVP, Roo, manages 120 sites configured as a network buy for advertisers, what Verdino called “a controlled environment” that maximizes the value, security and measurable ROI by offering clients a branded portal with turnkey services including content for them to brand and use.

Shawn Conahan, founder and CEO of Intercasting Corp., provides video blogs for mobile devices. “The biggest threat to incumbent media companies is a 15-year-old girl with a camera,” he said. “Mobile is ‘upload’ as well as ‘download,’ especially among young early adopters.”

“Think before you make your content available on the Internet . If you can’t afford to have it everywhere, don’t do it.”

Hilmi Ozgue, CEO, Maven Networks, provides a white label software platform to manage video. Creates desktop players that can stream video to a variety of applications. Software allows for targeting, profiling, managing a subscriber database. “It answers the questions, ‘What do we do with the video?”, he said. Client downloads the manager tool onto their hard drive, and creates their own branded broadband channel without having to worry about where in “the Wild” their external buy might find ultimately find their video showing up.

Darcy Lorinez, SVP, Global Rich Media, SAVVIS, an infrastructure company that acts as a premium rich media distributor. Competes with Akamai. “We harden the environment to make cut and paste difficult. How much are you willing to pay to protect your content?”

“Every brand is trying to create their own broadband channel,” she said. “P&G, J&J, others…for internal and general public consumption.”

Mobile video has a way to go, she added. “We’re seeing requests for bit rates to come down for 15-30 second clips for mobile applications. It’s not a good experience yet.”


Steven Starr, CEO, Revver, a viral marketing company that tracks activity and gives clients opportunities to monetize their content.

To get around ad buyer fears of “the Wild”, Revver embeds client videos in blogs creating a protective shell around the ad message, said Starr. “Advertisers are happy to be out in the Wild as a safely embedded ad versus being alone in the environment….The Internet is NOT about closed environments, but the elephant in the room is copyright infringement. ”


PANEL 3: PERSONALIZED VIDEO: ITV advertising and content (JOINED IN MID-PROGRAM):
Dan O’Brien, President and CEO, Gotuit Media, said 80% of Time-Warner’s and Adelphia’s Internet VOD demand is for music video content.

Other VOD elements that resonate are daily newscasts comprised of raw (b-roll) footage outtake style. Service includes indexing, and it’s monetized with display ads.

Greg Morrow, President, Pure Video, said he provides users a “content and social network” like GrindTV so they “can be found.” He said video on mobile is anticipated to reach 1.7 billion subscribers worldwide by the end of next year. He noted that video downloads onto mobile devices is very fragmented….iPods, phones, PDAs, etc.

The biggest challenges facing digital media, he said, are:
The need for an online ad equivalency like Nielsen is for TV.
The need of a unified digital upfront market like there is for TV.
Stabilizing ad unit specifications for ease in production and transferability.
Experimentation has blurred the line between content and ads.
Tracking technologies for mobile and portable video are “immature.”
Custom solution conundrum: customize, keep your client happy, kill your margins.


Kanaiya Vesani, VP Product Marketing, Terayon Communications Systems, real-time content customization for generic content that they process for local channel lineups, channel optimizing, simulcast digital and analog signals, and ad insertion. He said the digital asset communications shift is from one-to-many reach to one-to-one reach, analogous to the shift from one national ad switching to zoned regional ad insertions.

Mark Jeffery, Sr. Director, ICTV, distributor of web content to TV sets, with content processed in the network rather than in a set top box, and is navigable by remote control. He said his company’s applications are dynamic local ads, VOD showcases, live stream interactive ads, and active channel programming.

Jay Schiller, VP Biz Dev, Atlas On Demand, was big on rhetorical questions. He said the challenge is creating advertising that is a content format and business model the consumer wants. “Who will pay for all these models and technologies? When it will be time for the best of breed products to gain critical mass?”



PANEL 4: PERSONALIZED MOBILE EXPERIENCE PANEL:
Improved quality of video and is clearly seen as the killer app because of the phenomenal growth of daily sales of new mobile devices with impressive video capability – some 260,000 new units are being sold every day in the US by the major wireless providers Cingular, Verizon, Sprint/Nextel and T-Mobile, 200,000 of them new and the balance upgrades. Currently there are some 35 million video-capable units in the hands of American consumers, but only about 1.25 million are actual subscribers to video services, which means there is a huge growth potential within the existing client base as well as in the general market.

The big unknown is just how much consumers are willing to pay for multimedia add-ons to mobile phones when they also have other devices such as iPods and digital players.

Biggest barriers to full potential of personalized mobile experiences are:
Improving mobile search. Search is still being seen as having to be PC-driven via the Internet, and until that changes, mobile devices will remain somewhat limited in their ability to expand beyond simple communications, even if they have improved multimedia capability.
Achieving genuine interoperability with a variety of systems and capabilities that is simple enough for consumers to grasp and embrace.
Getting young early adapters – especially pre-teens – to pay. Said Pinnacle Systems president Jeff Hastings, “Older consumers don’t have the time to watch tons of video, and the younger kids who do have to rely on parents to pay. But the convergence of wifi and wifimax will bring down prices.”

Biggest successes expected in the coming year:
Social networking via mobile devices will explode as various affinity groups and social groups build their own mobile communities. Basically it’s a software-driven multimedia expansion of the notion of a family calling plan that links users together just like online communities such as mySpace. A global leader with 7.5 million subscribers worldwide – half of them in the US – as is AirG of Vancouver, Canada (http://www.airg.com/). They already have deals in place with major wireless and communications companies such as Verizon, Sprint/Nextel, Vodafone and MTV), said Fred Gharamani. Director..
Video editing applications through interfaces with the PC will allow the display and distribution of edited content via mobile devices. A leader in this area is Pinnacle Systems, recently purchased by Avid, the digital editing leader (http://www.pinnaclesys.com/). Pinnacle president Jeff Hastings said he builds mobile marketing platforms, and is currently focusing on linking SMS messaging and the PC browser for kids’ swap-and-share…”integrating the two platforms.”
Targeted video feeds to fanatic niche audiences such as sports fans will increase. An example is GoTV Networks which feeds 3-4 minute sports news and feature video segments daily, said VP Biz Dev Steve Bradbury. Everyone agreed the battlefield for the most important personalized content experience will be between the Internet and mobile, with the Internet dominating for a while yet. .