Richard Gaspar's List: Move Networks

• Though Edwards noted that Move has solid funding in place (and will for some time to come), it is under growing pressure to achieve profitability more quickly than originally expected.  To do this, Move must "circle the wagons" and refocus resources on its core revenue generating business: the delivery of high-quality mainstream online video programming.  Non-essential activities (e.g., developing sustainable online video advertising models) must be de-emphasized and associated staff either let go or repurposed to support the core business - the delivery of high-quality online video.
• As evidenced by recent announcements, broadband users are turning to Internet video in droves. For example, Microsoft recently reported that, in the three months since Netflix/Xbox streaming services were first announced, Xbox Live subscribers have watched more than 1.5 billion minutes of streamed content across one million Internet-connected Xbox consoles.  This equates to approximately 25 hours per Netflix-enabled Xbox or two hours per week per device.  Similarly, according to Comscore, Hulu users watched 227 million videos in November 2008.  To date, Move itself reports that more than 58 million viewers have downloaded their video player and the company is adding 125,000 to 150,000 new viewers each day.  Any way you slice it, the audience for online video continues to grow, as does the amount of time these viewers spend watching online video.
• Second, Move will focus on growing its customer base and expanding its content relationships.  In support of this effort, the company is about to announce its presence as an international vendor.  In fact, Move just completed roll-out of the web video platform for one of Germany's top broadcast channels, ProSieben, which is providing a mix of live and VoD content for the channel.  If it can maintain its U.S. base of brand-name partners, international sales of its solution should do well.

  • Third, Edwards indicated that Move will select growth paths "more intelligently," employing a "less is more" strategy. He discussed two particular growth paths.
    
    1. Solutions Integration. It was quite apparent at CES that Move had been actively pursuing a number of embedded CE plays, showing Mobile Internet Devices (MIDs) and new Internet-enabled set-top boxes, among other platforms. While a direct-to-TV strategy is highly desirable, Move will pursue that market based on an ecosystem approach. It plans to release an SDK (and other necessary tools) to enable partners to embed Move's technology, thus pushing some of the development and integration costs out to the partners instead of having to shoulder everything internally.
    2. Virtual Operator Platforms. Move's core revenue model has always been built around video delivery in a service model. The technology behind these services is now being wrapped into a platform to enable an entirely new breed of service provider: virtual video operators. In general, a virtual operator works much like a traditional PayTV operator, leveraging the same business models but without owning the physical network infrastructure upon which the video is transported. At CES, Move quietly showed its platform strategy, and how it will be targeting virtual operators. While this may be delayed by short-term refocusing efforts, TDG believes this is a market which Move will definitely pursue.
    

1 more annotation...

• In an effort to slow Google’s siphoning of advertising dollars away from television, the nation’s six largest cable companies are making plans for a jointly owned company that would allow national advertisers to buy customized ads and interactive ads across the companies’ systems.
• Quarterbacking the initiative — code-named Project Canoe to emphasize that the companies must all work together — has been Stephen Burke, president of Comcast, and Landel C. Hobbs, the chief operating officer of Time Warner Cable.
• Cable companies and even Google — which has a deal with the satellite TV company EchoStar to sell television ads — see customized features in television as a potential gold mine.
• Collectively, the cable companies will initially put about $150 million behind the effort in order to build a national service that can sell targeted advertising across all six cable systems.
• “Addressable advertising on television is in many ways the holy grail, because it can offer ever more targeting ability than Google,” Mr. Moffett said (“addressable” is the industry term for targeted ads).
• 90 percent of all video consumed in the United States last year was done the old-fashioned way — watching shows as they came on TV — according to Starcom USA, whose clients include General Motors and Procter & Gamble. About 7 percent was via digital video recorder, 2 percent was online, and 1 percent was through video-on-demand services.

  • Both ABC and NBC have teamed with cable operator Cox on a video-on-demand service that allows viewers to watch shows such as "Desperate Housewives" and "30 Rock" any time they choose. The rub: they can't fast forward through commercials.
    
    After testing the offering, called "MyPrimetime," in Orange County, Calif., Cox has expanded the service into Connecticut and Rhode Island and plans to push into four more states this summer.
    
    The cable operator also just signed a deal to add shows from Fox later this year. (Fox, like The Post, is owned by News Corp.)
    
    "This is something the entire industry needs to get behind," Mike Shaw, ABC's ad sales chief, told advertisers during the network's annual "upfront" presentation.
    
    Network execs are seeking ad-supported alternatives to digital video recorders, or DVRs, which they view as a serious threat to advertising.
    
    Leading the charge is ABC, which was the first network to announce a trial with Cox and is in talks with other cable operators about similar services.
    
    A Cox customer survey at the beginning of the year found that 20 percent of MyPrimetime homes reported using the service as a substitute for their DVRs, while one-quarter said they would not have watched the shows at all had they not been available on demand.
    
    Advertisers like the idea of disabling the fast-forward button and have dabbled with on-demand services.
• Combined, the nation’s cable operators generate about $5 billion in revenue from selling local advertising in markets where they own the infrastructure to people’s homes, a small slice of the $70 billion television advertising pot. They largely compete with local newspapers and radio stations.
• For each hour of programming on a cable network, the cable operator owns about two minutes that it can sell to advertisers. The network, say ESPN or TNT, owns about 15 minutes that it can sell.
• The executives involved in Project Canoe think that, by working together, they can increase the cable industry’s take from $5 billion a year to $15 billion a year, according to an executive briefed on research compiled by Project Canoe.
• Another component of Project Canoe is interactive advertising, which allows television viewers to use remote controls to, say, request a brochure or call up more information about a product.

8 more annotations...

• 28 providers for online video delivery be it via streaming, progressive download, P2P or hybrid solutions
• 18-24 months from now, the CDN industry will once again see a round of consolidation in the market. But until that happens, as more customers flood the market, bitrates keep increasing, content becomes long-form, and more devices are being used for video playback, customer will have a lot of options in the market - especially with the VC money still flowing into the CDN space.