Video Strategy: Evaluating the Online Video Platfoms

[Posted by Bobby Tulsiani]

In our first two reports in the Video Strategy series, we have detailed how online video has moved beyond the exclusive domain of media and entertainment companies. From travel to financial web sites, video is now ubiquitous across the internet. 

Our latest report, The Forrester Wave: US Online Video Platforms, goes beyond market sizing and best practices to call for online video to be managed as a product. Like any web product, be it site-search or recommendations, a company has the choice to build an internal solution or to utilize a third party solution.  In the Forrester Wave, we evaluate six vendors that offer product solutions for online video: Brightcove, Fliqz, Kaltura, Ooyala, Twistage, and VMIX. 

While the number of companies in the space is certainly larger than six, we decided to focus on a set of vendors that serve a variety of clients, regardless of size or industry.  For that reason, some vendors that primarily focus on high end media companies, such as Digitalsmiths, The Platform, or Move Networks were not included.

The space proved to be highly competitive.  Almost each of the six vendors had some strength that others could not fully match - while some led in monetization, others were stronger in distribution or user generated videos. Product managers evaluating the video platforms should carefully think about their goals and utilize our Wave tool to adapt the criteria weightings to select the right vendor for their needs.

The space is rapidly evolving with several of the vendors announcing new funding or partnerships just in the past few months. I expect online video to be even more of a focus for Forrester and myself as we move into 2010.  I look forward to hearing your thoughts, comments, and feedback on the Wave.

Hulu to Charge in 2010?

[Posted by Bobby Tulsiani]

For months, we have heard rumors that Hulu will eventually launch a paid service.  Well according to News Corp's Depuity Chairman, Chase Carey, that move could come as soon as 2010.

At Forrester, we have detailed the need to launch an online subscription service for online video in our Reinventing the TV Industry report.  I've always thought Hulu with its passionate community of users would be in good position to launch this service.  However, looking through the comments on EW's link to the story, Hulu's equity as a "free service" could alienate users.  I've posted a sample of the comments below:

• "Boo, break my heart. I’ll miss Hulu but there are other websites that do the same thing. I enjoyed Hulu but will not pay for shows. If I wanted to pay to watch TV I’d get cable."
• "Total crap. They already charge us for their content by having tons of commercials."
• "My New Years Resolutions: 1-eat healthier 2-exercise 3-delete Hulu from Favorites"

Certainly the comments don't reflect everybody's opinion, but they do illustrate the challenge web companies have in launching paid services.  In contrast, I consistenly hear friends rave about the "free streaming" they get from NetFlix (even though they are paying $10-30 a month).  A poweful lesson as more companies look to launch paid services on line that you may want to have your pay model in from day one.. 

Predictions for Summer Movie Season

[Posted by Bobby Tulsiani]

Well you wouldn't know it from the weather in New York today, but Summer movie season officially starts today.  Fittingly, a superhero movie, "X-Men Origins: Wolverine", kicks off the season and has already felt the effects of technology and piracy.

I don't think the piracy effect will impact the box office too much, but Fox studios may want to about the 37% rating on rotten tomatoes. With that, here are my official top 5 for summer 2009 (with thanks to some friends who helped debate the list last week):

1. Transformers: Michael Bay knows summer movies
2. Harry Potter and the Half Blood Prince: With a late start date, it will own July and August
3. Ice Age: Dawn of the Dinosaurs: Will Smith is taking July 4th off this year, and Ice Age grabbed the weekend
4. X-Men Origins: Wolverine:  A superhero movie has to make it in to the top 5..
5. Up:  Pixar and Disney haven't missed yet, and this year should be no different

Other favorites I'm looking forward to for the summer Star Trek (JJ Abrams style) and the Bruno movie (Sacha Baron's Cohen's follow up to Borat).  Overall, I think even though Hollywood has had held up nicely these first 5 months of 2009, I think it will be hard pressed to beat 2008 when you had Batman breaking all kinds of records.  It should be interesting...let me know what you think in the comments!

Is Netflix the Biggest Threat to the Cable Industry?

[Posted by Bobby Tulsiani]

Ad Age has a great article about Time Warner’s “TV Everywhere” program, which follows the recent news by Comcast’s for its “On Demand Online” service. Both moves are clearly an attempt to get ahead of cord cutting and cannibalization that could happen with the spread of online video.

The cable companies have closely been monitoring YouTube and Hulu to get a sense of the appetite for online video. But for all the attention they are focusing on those Internet giants, they might want to start paying more attention to their flank where NetFlix is making some aggressive moves (wait isn’t NetFlix a movie company!?).

NetFlix has been getting a lot of praise for its streaming platform that is being distributed across a wide range of devices. What is going less noticed is the range of content available on that service is much more than movies. NetFlix has a deal with ABC & CBCS (Hulu has neither) and just signed a deal with SouthPark (Hulu & Joost weren’t willing to provide cash payment):

With a real business that generates profits even in the downturn, NetFlix can continue to build its library while still compensating  creators:

“There was no talk of ad splits or guarantees or advances, just a payment for a show Netflix seemed really happy to have,” Mr. Stone said. “We’ve never given the show to anybody else to stream, but we like Netflix as a service. We use it.”

My colleague James McQuivey often talks about consumers flocking to convenient products. With drop dead easy connections to the TV, plans to launch an affordable streaming only service, and a loyal base of consumer - NetFlix may not only be the most convenient solution for movies, but also for TV.

Is Hulu Winning the Mind Share Battle?

[Posted by Bobby Tulsiani]

I was watching 24 on Fox last night, and even though I was fast forwarding through commercials I noticed the Hulu ad from the Superbowl was on again.  We'll save the discussion if brand recall works during fast forward mode for another day, and instead focus on Hulu's brand awareness campaign.

The Hulu folks have been gaining momentum - Nielsen recently blogged about how Hulu generated a fair amount of buzz after the Superbowl ad ran, increasing brand mentions online by 259%.  In conversation, I do hear people mentioning - oh "I'll Hulu that later" (granted I hang out with a pretty dorky TV crowd).  All of it got me wondering is Hulu winning the early mind share battle - and does it matter if they do take the early lead?

To play devil's advocate, here a couple points why a big awareness campaign may not matter:

• Ask Pets.com about big Superbowl campaigns to generate awareness.
• First mover mind share may matter less for full length TV online compared to categories like auctions (eBay) or video uploads (YouTube) that have far stronger network effects.
• Hulu may build category awareness for full legnth TV online, but have competitors (Joost, Sling, etc) draft off that free publicity.

Even without the splashy ad campaign, I think Hulu is defintely out in front due to a relentless focus on its end users.  But the race is far from over, and its a topic I'll be covering closely this year.  Would love to hear your thoughts.

Building on Chris Anderson’s Free: What Can You Charge For?

[Posted by Bobby Tulsiani]

Chris Anderson has penned an article for the Wall Street Journal today, “The Economics of Giving It Away.” Anderson, who was the author of the Long Tail, has been a popular voice in tech circles promoting the virtues of “Freemium” business models. In today’s article, Anderson acknowledges that the macro economic conditions have put more pressure on the paid side (the “mium”) of the model than ever before:

“But it does mean that Free is not enough. It also has to be matched with Paid… Free may be the best price, but it can't be the only one.”

Last winter, my colleague Sarah Rotman Epps and I both wrote about the prospects and forecasts for paid content online. In my report, I wanted to dive in and explore what value propositions people actually will pay a “premium” for. After all, people have been paying a premium price for goods for years and we can learn from that. Coke and Pepsi don’t sell sugar water, they sell “refreshment.” The local gas station dosen’t sell groceries, it sells “convenience."

We know Match.com isn’t selling subscriptions, it is selling “love” and we know The Ladders.com isn’t selling job listings; it is selling “your career”. Both of those seem like things people will pay for - online or offline. In my report, I developed a framework mapping such value propositions to paid products that I think may be useful to many of our clients.  As always, I would welcome the opportunity to hear case studies where you have developed such value propositions or feedback on our current framework.

Mark Cuban Goes off on the Internet Video Lie

[Posted by Bobby Tulsiani]

I just read Mark Cuban's blog entry on "The Great Internet Video Lie".  If you have time, be sure to check it out - but if you are pressed for time I'll quickly summarize a few of his points:

• Standard Internet video platforms (YouTube, Hulu, etc) on their own can not support large simultaneous audiences
• When you do a big event (eg. Obama's Inauguration), you must partner with one of a handful of CDNs
• None of these CDNs could support multiple events. So your favorite platform is going to have trouble airing both the Obama Inauguration & the Spurs/Mavericks game at the same time.
• Ergo.  It is a big lie that any Over the Top Platform can replace pay TV providers (cable, satellite, telco)

I always think Mark makes interesting points, though I am not sure who exactly has been "lying" about this one.  Even the word "lie" is probably a bit strong, guys like Madoff and Blagojevich have raised the bar on that word :-). Regardless, I wanted to point our readers to some of our research that talks about Internet video being a complimentary, rather than replacement, medium:

• "The Internet Television Value Chain":  We discuss how the Internet has opened a new release window for television and incremental revenue.  I also talked about the framework with Andy Plesser last year on a interview on Beet.TV.
• "The US TV Market in Transition: Succeeding in a Multiplatform World":  We surveyed consumers on their top criteria in watching video (quality, content library, interface, etc) and rank all of the emerging platforms (Internet Video, Mobile, VOD). We lay out our view - how these platforms will work together and how customers will choose many, not just one, to watch TV content.

Hope to continue the discussion - feel free to reach out or comment if you have any thoughts on these two mediums do or do not compliment each other.

TV Cannibals - Will the Economic Downturn Push them to Cut Cable?

Some interesting developments online have corresponded with our newest report, TV Cannibals - Managing the Effects of Online Video. Joost launched its new browser based portal full with full length shows (including big hits like Friends), SNL declared its intent to set up a web site, and the king of video, YouTube, added full length shows from CBS.

Our research in the TV Cannibals report is showing a double digit percentage figure for those saying they watch LESS TV as a result "of the increase in the number of free full-length TV shows available online." The WSJ just profiled several users who said they who were cutting their cable subscriptions in favor of Internet Video.

Will the economic conditions be the catalyst to push many more of the customers over the edge in cutting cable? Let us know what you think of the report and what you are seeing out there.

It's the TFE Economy, Stupid

While Congress was debating the $700 billion bailout this weekend, we at Jupiter Research were hard at working preparing our latest report: Television and Filmed Entertainment Spending: Understanding Consumer Behavior in Challenging Economic Times.

In the report, we dive into which customer segments are most likely to cut back on each type of TFE spending (movies, broadband subscription, DVRS, etc). Hope you will find the report timely and useful. As always, please do reach out if we can answer further questions in inquiry on the report.