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Viodi View Newsletter - July 6th, 2005
....And Content Is Still King
By Ken Pyle, Viodi, LLC
It is always a blur being on a panel. Without overheads as a guide, I find it easy to go off on some tangent. One of the other challenges about being on a panel is the difficulty in taking detailed notes and really absorbing the comments of the panelists. As such, I cannot wait to review the video to see what I missed. What I do remember is that everyone was in agreement that content is still king and that technology is its queen. That is, the two have such a symbiotic relationship these days that it may be impossible to separate one from another.
The theme of my comments was that the content distribution industry, like most industries these days, is at a crossroads. Because of this theme, my comments and my research in preparation for this panel kept dealing with the rise of the Internet as a video content distribution medium.
The traditional cable distribution approach is truly going towards an on-demand world, as evidenced by by David Fellows, CTO of Comcast, when he suggested that Comcast will deliver over one billion on-demand streams this year. Impressive as this is, it pales in comparison to the more than one billion, on-demand, video streams that are being streamed monthly via the Internet, according to Accustream Media Research.
Content providers are increasingly moving their product directly to the Internet, as evidenced by MTV’s Overdrive web site or the recently launched TurboNick site. Then there are the new content providers, such as ManiaTV designed specifically for viewing on a PC or via the television connected to the Internet through a set-top box. That people are watching video on the Internet is evidenced by CNN, which just announced that most of their content is now available at no charge (other than watching advertisements).
These streams have value, as evidenced by the advertising rates of $20 to $50 cost per thousand views rate. Jack Meyers 2005 Spending Forecast forecasts online ad sales to grow 30% to over $10 Billion, which is significantly larger than the 4.8% for the overall advertising market. The online video advertising portion is expected to grow more than 40% this year.
Netflix’s CEO Reed Hasting predicts that this is leading to a world where the web has "5 million channels" versus the, "200 or 300 channels for IPTV". Netflix is putting money behind these words, purportedly investing an estimated $5 to $10 million this year in research and development to support Hasting’s vision. Further evidence that this market is real is provided by start-ups and organizations, such as Brightcove, Open Media Network and Akimbo.
The question for the operator, which is not a new one but still relevant, is how do you avoid becoming a big dump pipe? I do not have the answer, but I think the answer is somewhere in the following C’s:
- Cannibalize – Do not be afraid to offer products that preemptively compete against other products in your offering
- Convenience – Make it easier to do business with yourself than the competition. This also implies that the customer has a great deal of TRUST in your company and will allow you to do things to make transactions easy (e.g. keep their credit card on file)
- Communicate – Educate your customers as to the benefits of your offering; 1) inform customers and prospects about new services and 2) reinforce the benefits of your offering for those who already have your service.
Simply put, the customer must perceive that the operator provides a better value, regardless of whether the content is delivered via the Internet or through strings and tin cans.
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