Jim Louderback

October 31, 2013

Dumb Ways to Fail on YouTube 6: Champagne on a Beer Budget

Filed under: Commentary,Internet TV,YouTube Tips — Tags: , , , , , , — Jim @ 7:53 pm

craft servicesNothing epitomizes big budget television to me like craft service. It’s a separate part of production that makes sure the actors and crew are fed. In many places, it’s even a union job. And if you’re considering it for your web video production, you’ve already lost.

I don’t mean to belittle the profession – it can be indispensable on large productions with mega budgets. And someday videos made for YouTube might actually be big and profitable enough to afford it. But in the immortal words of Buzz Lightyear: “Not Today Zurg”.

And that leads me to my sixth and final way to fail on YouTube – pretending you are TV.

Early on in my Revision3 days I met with a lot of companies that considered web video a gateway drug. Success on YouTube, they posited, was just a stepping stone to success on cable or broadcast TV. From National Banana to Ripe TV, their focus, storytelling and budgeting was all focused on finding the next big breakout TV format.

And while they were burning cash, folks like Shay Carl, Phil DeFranco and iJustine were making videos in their basements, and building huge passionate audiences that would ultimately lead to fame and at least a little fortune. But apart from moving pictures and audio, what these subterranean video dwellers were making had very little resemblance to typical TV.

It’s still true today. Even though some YouTube stars are pulling in millions of dollars a year, there just isn’t enough money going around to support even a fraction of the production expenses you see on the smallest TV shows.

Shortly after Discovery bought us, I was lucky enough to visit the set of a new show for one of our smaller networks. The production company was making 10 episodes, and the rough cost per episode was about $400,000. I later learned that even a mid-level reality TV show had a team of 20-30 folks that would descend on whatever slice of life was being exposed – and stay there for weeks!

Do the math. If you average about $5 in ad revenue for every thousand views, you’d need 80 MILLION views just to break even on that $400,000 production cost. That’s like scoring a “What the Fox Say” every time you post something. And that just isn’t going to happen.

Even what I consider the most successful “expensive” YouTube series – Video Game High School – barely broke even. They spent $22,979.32 on craft services, and nearly $700,000 overall – even with free labor and other creative financing techniques. You can check out the cost breakdown yourself in this great article show creator Freddie Wong wrote last year. So yes, you can spend TV-style money and maybe make a little money. But you’ll need to corral the most talented creators in the web-original video world and call in a LOT of favors. And even then you’ll probably still lose a lot. (as an aside, I’m looking forward to a similar analysis of Season 2 of VGHS).

So before you start shooting your super-amazing new YouTube series, take a close look at that budget. If you see the words “Director of Photography”, or “Grip” or you’re paying for a lot of special effects and sound design you should be afraid. Very afraid. Unless you’re the second coming of YLVIS – and you can do it every time – you’re probably throwing money away.

And if there’s a craft services line you better just throw in the towel. Because unfortunately, web video just isn’t big enough to support TV food.

Dumb Ways to Fail on YouTube 5: What’s the Frequency Kenneth

Filed under: Commentary,Internet TV,YouTube Tips — Tags: , , , , , , , — Jim @ 11:53 am

dan ratherNow that Revision3 is part of Discovery (and renamed Discovery Digital Networks), I’m once again exposed to traditional television production cycles. Shows here are planned, purchased and produced in seasons. These are typically finite frequencies – 6, 13 or occasionally 26 episodes, with very clear start and end air dates.

Want to fail on YouTube? Do the same thing. Thinking of your content in seasons – or even worse, delivering content at random intervals – is one of the most common ways to fail.

The most successful creators on YouTube know this intimately. Pick any top 50 channel at random, and you’ll probably find a set schedule of release that’s slavishly adhered to – whether weekly, daily, and even at set times during the day. Many top creators are even building new tightly-related properties for their channels that will increase weekly frequency while continuing to follow to a rigid schedule. The incredibly talented Dane Boedigheimer just launched the first of a family of weekly scheduled series to enhance his “Annoying Orange” franchise, while Harley Morenstein – known for his weekly Epic Meal Time – just launched another regularly scheduled gaming channel.

It’s a hamster wheel. Creating successful franchises on YouTube means that once you start you literally can never stop – or face audience erosion. Here at Discovery Digital Networks we call it feeding the content monster. The audience is always hungry – and has very little loyalty to boot.

I learned this early on in my Revision3 days when we brought a show over to Revision3 called “Epic Fu”. Created by the incredibly talented Zadi Diaz and Steve Woolf (and originally called “Jet Set Show”), Epic Fu was one of the early YouTube successes. The creators decided to move their show from Next New Networks over to Revision3, but ended up taking a few months off during the transition. Alas, even though they were slavishly dedicated to regular release, that gap caused a disastrous fall-off in views. With all the other new shiny on the web beckoning, the audience moved on, and we never really figured out how to bring them back.

“But Jim”, I can hear you complain, “what about shows like ‘Video Game High School’”? The popular series just came back with season 2 – about ten months after season 1 ended – and it’s still huge.

True, VGS is an anomaly – and a great show to boot. But even here there’s evidence that regularly scheduled content between seasons contributed to season 2’s success. During that 10 month hiatus, Freddie W and Brandon Jla released 22 new pieces of content on their channel, mostly video game themed. Even so, there was still a drop off between average YouTube views of season 2 vs. season 1– although that could easily be explained by the additional distribution the latest episodes received on their off-YouTube site and other places.

I’ve always thought of web-original video as more akin to talk radio and news than traditional television, and my experience bears that out. Regularly scheduled releases – at least weekly – and no gaps are required if you want to be successful. As a creator, you really want to develop habits, and regular temporal triggers make those habits easier to adopt. So take a tip from Daily Grace, Phil DeFranco and just about every other successful YouTube star: Irregularity is a path to irrelevance.

Dumb Ways to Fail on YouTube 4: Fake It Until You Make It

Filed under: Commentary,Internet TV,YouTube Tips — Tags: , , , , , — Jim @ 11:49 am

fake it until you make itAristotle advised readers that if they acted virtuous, they might then become virtuous. That adage has been adopted into by the “Fake It ‘till You Make It” crowd, who practice self-deception as a life strategy.

And for many, it actually works. Nevertheless, it is one of the dumbest things you can do on YouTube, and indeed on the internet in general.

I call it “stream fraud”, and I feel like I’ve been railing against if forever, but it’s only been three years. Back in 2010 I was mostly concerned with shady video ad networks and other low-life players, but since then it’s moved on to YouTube in force.

There are more than a handful of seemingly legitimate companies that will take your money and give you “views”. A quick search on Google for “buy youtube views” turns up a variety of alternatives – from Virool to Channel Factory and Vagex – most of them shady. The recent REELSeo forum had at least two companies promising to deliver 10,000 video views in just a few days on any video. The YouTube sections on many black-hat SEO forum sites have thousands of pages where these illegitimate techniques are discussed. Unfortunately these tools are used by more brands than you might think.

You can typically spot these fake view videos a mile away. How? Look for videos with hundreds of thousands – or millions of views – and just a smattering of comments. Or hundreds of likes and no dislikes. The best YouTube videos engage at least a few people, and if you’re not attracting even a few nattering nabobs of negativity, you’re just not doing it right.

Buying views isn’t just a waste of money – it’s outright fraud if in-page or in-stream ads are served. But if that’s not enough to sway you, YouTube’s not standing still either. At the end of last year they began to target channels and videos that were clearly juicing views, including wiping out more than a billion fake views from Universal Music alone.

But that didn’t solve the problem. I’ve continued to see blatantly faked view counts across YouTube this year – I even called out the problem during my Vidcon keynote in August.

clip_image001

The enclosed screen shot is just one of many examples I’ve found. Published on April 12th, 2013, this video has over a quarter million views, but just 5 comments. Even worse, it has 408 likes, but only one dislike. And that one’s not even legit – I actually put it in myself just to see what would happen.

 

 

 

 

 

Here’s another clue that this video’s views were faked. I grabbed this stats screen from YouTube just a few days ago – 23 more views, but nary a smidge of engagement:

clip_image002Notice that virtually all 250,413 views happened on just one day. That’s just not normal. And no shares nor subscriptions were driven from those views either. If it were a duck I’d call it decidedly odd.

But YouTube has recently started stepping up its enforcement. In mid-September they posted a video warning creators away from buying fake views, The relevant quote:

“YouTube believes that a view should be something that happens when someone decides to watch a video. If someone is tricked or forced into watching a video, that is not OK…. Anything that artificially increases views either through automated means or playing videos for people who didn’t choose to watch them is against our terms.”

So it’s not just a good idea, it’s the law. And in the last few days another round of crackdowns has begun in earnest as the company penalizes and takes down suspect videos.

So if you want to fail on YouTube, go buy a bunch of shady views. And when you get caught, good luck convincing your boss, your clients or your partners that it just wasn’t your fault. Congratulations! You just failed miserably at YouTube.

Dumb Ways to Fail on YouTube 3: Riding the Meat Puppets!

Filed under: Commentary,YouTube Tips — Tags: , , , , , , — Jim @ 11:43 am

Meat_PuppetsAssociation with a celebrity is a tried and true way to move the needle. Just put Tom Cruise in a movie, Tom Brady in a commercial or Tom Hanks as a guest host and watch viewers and sales go through the roof.

Surprisingly, it doesn’t work that way on YouTube. We’ve seen a parade of celebrities try to dominate this new medium by riding on their celebrity coattails, and have fallen flat. Everyone from Madonna to Miley Cyrus and Shaquille O’Neil has seen dismal results.

I’ve talked to a number of High Q-Score individuals, and attempted to guide them to success on YouTube – or mostly to scare them away. Because on YouTube it’s not about how famous you are – it’s about how authentic and accessible you will be.

You just can’t expect to toss up a few videos every now and then and never return. That celebrity halo that sells so much soap is just noise on YouTube. You have to actually work for your views – and that’s not what most celebrities want to hear.

That’s because at its core YouTube is a community. You can post videos and you might even get a handful of breakout hits. But without really engaging the community you’ll fall flat over the long term. And most celebrities just don’t want to put in the hard work to grow those group. It’s completely understandable, by the way. YouTube is still an emerging medium, and anyone with a notable Q-Score will make far more money by plying their trade on TV, radio or in theaters rather than on the web.

There is a massive exception though: music videos. In addition to being an incredibly personal medium, YouTube is also the world’s jukebox. A catchy song and some arresting visuals will keep ‘em coming back again and again. And if you can get naked on a wrecking ball in the process, even better!

But aside from music videos, a celebrity-themed channel where the celeb fails to show up at least a few times a week is a recipe for disaster.

September 22, 2013

Dumb Ways to Fail on YouTube (with apologies to “Dumb Ways to Die”) Part 1

Filed under: Commentary,Internet TV — Tags: , , , — Jim @ 9:38 am
Dumb Ways to Die

Dumb Ways to Die

As YouTube has become more of an institution, more and more brands and newcomers are attempting to stake out a place on the biggest video platform on the internet. And as they do, they keep making the same mistakes over and over again.
Also, as the site changes and matures, things that worked five years ago are no longer the smartest ways to build audiences and get views. This multi-part series will explore a variety of ways to deep-six your YouTube investment.

PUT ALL YOUR EGGS IN ONE BASKET: When Revision3 first got serious about YouTube back in 2008, we created a Revision3 channel and dumped all of our shows into it. That was less than successful. After carefully watching (read copying) those more successful than us, we started creating separate channels for each of our shows. Only then did we start to see traction for Diggnation, Film Riot, Scam School and our other popular shows.

But for some reason YouTube decided that it was smarter to follow the single channel model when it started doling out its $200 million dollars to launch new channels. Almost all of the channels (including our own TechFeed) shoved 7 or more separate shows into a single channel. Smarter YouTube experts – including Phil DeFranco with SourceFed and the Green Brothers with SciShow – resisted the advice. Unsurprisingly their single-show channels were among the few breakout successes, while most of the multi-show channels have faded into irrelevance.

Despite the overwhelming evidence, though, I still see media companies and other brands new to YouTube trying to load a slate of disparate shows into one channel. It still doesn’t work – and is clearly a recipe for failure.

Why? Because the way users consume YouTube content is very different from traditional TV. The “subscription” reigns supreme on YouTube, as the path to success is by amassing the biggest pile of subscribers you can. That’s because nearly half of all views are consumed via the feed of new programming that sits on the left side of the screen – and your subscribers are the ones that will push early sharing, comments and social buzz that will drive your views even higher among non-subscribers.

But if you have multiple shows in one channel, they have to *all* appeal to your subscribers for it to work. A variety of different shows, with different audience profiles, just won’t work. That’s because you’ll end up flooding your subscribers’ feed with shows they just aren’t interested in, and they’ll end up either ignoring your feed-entries or unsubscribing.

There are ways it can work – but it’s by creating variants of the same show rather than a variety of different shows. Check out two of our bigger channels – Rev3Games and SourceFed. Both use the same stable of 3-4 hosts and create variations on an existing show theme, rather than creating separate and distinct shows. So Rev3Games has video game “Reviews”, “Previews” and “Casual Fridays” – but all with the same mission of providing intelligent, personality-driven coverage of video gaming. Similarly SourceFed ties their daily news/lifestyle coverage with segments on “Today in History” and conversational round-tables like “Truth or Dare” and “Comment Commentary”.

Contrast that to the relative wasteland of “Amy Poehler’s Smart Girls”, Rodale’s “3V” or “the Intelligent Channel” – all destinations that tried to put a disparate lineup of shows into one channel and haven’t gained a lot of traction.
Next time we’ll dive into how these sorts of problems could be identified, and possibly discovered, before it was too late.

This column (and the entire series) also showed up on Video Ink here.

October 30, 2011

5 Tips For New YouTube Channel Partners

anklebite

HOW TO BE A BIG MAN ON CAMPUS!

Now that the worst kept secret in the industry is out, let me be the first to welcome the 2012 incoming freshman class of channel partners to the YouTube U. Hi Tony! Hey there Chris. Looking good Ashton!

As the sixth-biggest network on YouTube (per comScore), here at Revision3 we’re excited to have you traditional media folks on board. However, let me give you some words of advice. Despite your official anointment, it’s not like high school but with better drugs. YouTube is different. So let me be the unofficial Orientation Coordinator and give you 5 key tips to help you be successful with your new venture.

BEWARE THE UPPER CLASSMEN: You may think you’re the bee’s knees, but here at YouTube we’ve already got a strong group of stars that drive more views, comments and engagement than you’ve probably ever experienced. If you want to build your audience, you’ll need to play nice with them. Ignore them and they’ll ignore you, but if you treat them wrong, watch out. Hell hath no fury like an iJustine scorned, FPS Russia and RatedRR have a line on some *serious* ordnance and those Shaytards are a mean little band of ankle-biters. Oh, and don’t go messing with Harley Morenstein, or you’ll likely end up with a chicken inside a duck inside a turkey inside a pig inside your bed.

IGNORE THE COMMUNITY AT YOUR PERIL: Sure, in the old media it was all about making the video. Once it was out there, your work was done. But that’s not how it works here – homework is more than half the grade. If you really want to be successful, you’ll need to spend some serious time engaging with your audience. The biggest stars on YouTube know that once the video is released, the work has just started. They spend 40% or more of their time interacting with their fans, commenting, rating and curating their community. Oh, and don’t expect your assistant who writes your tweets to be able to step in here. The community can spot a fake a mile away.

THE ALGORITHM RULES: Sure, the YouTube guys may have promised you the moon. Just don’t expect them to promote your channel much. Yeah, you might get an occasional editorial mention, but YouTube is a mathematically-driven meritocracy. The brainiacs over in the engineering school are the real power behind the Dean– and their formulas will dictate whether your episodes are promoted, related and integrated into the viewing flow. So you’d better spend some time understanding how that selection process actually works.

PUBLISH OR PERISH: In the old world, shows were grouped in seasons, and they would come and go based on 13 and 26-week groups. It doesn’t work that way here. You’ve got to feed the content monster on a regular basis, or it’ll just go feed somewhere else and forget about you. Get a schedule down, stick to it, and don’t stop for anything. Yes, it’s a habitrail, but take your cues from the top hamsters, and don’t stop runnin’ for ‘nuthin.

YOUR VIEWS DON’T MATTER: Sure, you were the Big Man on Campus at high school, but here at YouTube U, you’re just another frosh. In fact, YouTube doesn’t really even need your video views. Heck, half of all the videos viewed on the internet happen there already. Nope, the reason the company is lavishing cash on you is because it needs your name to confer legitimacy. You’re the "halo car" equivalent of Chevrolet’s Corvette. Guys go to the showroom to ogle the muscle-car, but end up driving off in an Impala. And in the end that’s what advertisers will do too. They’ll ooooh and aaaah over your videos, but then they’ll end up buying the vast array of brand-safe video from unknown hosts that have already built huge communities. You’re a tease, not the main course.

But with all that said, we’re really happy you’re here. And if we can help with advice, collaborations, or directions to the bathroom, don’t hesitate to ask. Because now that you’re here on campus, the party can really get started!

October 29, 2011

5 Tips For New YouTube Channel Partners

anklebite

HOW TO BE A BIG MAN ON CAMPUS!

Now that the worst kept secret in the industry is out, let me be the first to welcome the 2012 incoming freshman class of channel partners to the YouTube U. Hi Tony! Hey there Chris. Looking good Ashton!

As the sixth-biggest network on YouTube (per comScore), here at Revision3 we’re excited to have you traditional media folks on board. However, let me give you some words of advice. Despite your official anointment, it’s not like high school but with better drugs. YouTube is different. So let me be the unofficial Orientation Coordinator and give you 5 key tips to help you be successful with your new venture.

BEWARE THE UPPER CLASSMEN: You may think you’re the bee’s knees, but here at YouTube we’ve already got a strong group of stars that drive more views, comments and engagement than you’ve probably ever experienced. If you want to build your audience, you’ll need to play nice with them. Ignore them and they’ll ignore you, but if you treat them wrong, watch out. Hell hath no fury like an iJustine scorned, FPS Russia and RatedRR have a line on some *serious* ordnance and those Shaytards are a mean little band of ankle-biters. Oh, and don’t go messing with Harley Morenstein, or you’ll likely end up with a chicken inside a duck inside a turkey inside a pig inside your bed.

IGNORE THE COMMUNITY AT YOUR PERIL: Sure, in the old media it was all about making the video. Once it was out there, your work was done. But that’s not how it works here – homework is more than half the grade. If you really want to be successful, you’ll need to spend some serious time engaging with your audience. The biggest stars on YouTube know that once the video is released, the work has just started. They spend 40% or more of their time interacting with their fans, commenting, rating and curating their community. Oh, and don’t expect your assistant who writes your tweets to be able to step in here. The community can spot a fake a mile away.

THE ALGORITHM RULES: Sure, the YouTube guys may have promised you the moon. Just don’t expect them to promote your channel much. Yeah, you might get an occasional editorial mention, but YouTube is a mathematically-driven meritocracy. The brainiacs over in the engineering school are the real power behind the Dean– and their formulas will dictate whether your episodes are promoted, related and integrated into the viewing flow. So you’d better spend some time understanding how that selection process actually works.

PUBLISH OR PERISH: In the old world, shows were grouped in seasons, and they would come and go based on 13 and 26-week groups. It doesn’t work that way here. You’ve got to feed the content monster on a regular basis, or it’ll just go feed somewhere else and forget about you. Get a schedule down, stick to it, and don’t stop for anything. Yes, it’s a habitrail, but take your cues from the top hamsters, and don’t stop runnin’ for ‘nuthin.

YOUR VIEWS DON’T MATTER: Sure, you were the Big Man on Campus at high school, but here at YouTube U, you’re just another frosh. In fact, YouTube doesn’t really even need your video views. Heck, half of all the videos viewed on the internet happen there already. Nope, the reason the company is lavishing cash on you is because it needs your name to confer legitimacy. You’re the "halo car" equivalent of Chevrolet’s Corvette. Guys go to the showroom to ogle the muscle-car, but end up driving off in an Impala. And in the end that’s what advertisers will do too. They’ll ooooh and aaaah over your videos, but then they’ll end up buying the vast array of brand-safe video from unknown hosts that have already built huge communities. You’re a tease, not the main course.

But with all that said, we’re really happy you’re here. And if we can help with advice, collaborations, or directions to the bathroom, don’t hesitate to ask. Because now that you’re here on campus, the party can really get started!

5 Tips For New YouTube Channel Partners

anklebite

HOW TO BE A BIG MAN ON CAMPUS!

Now that the worst kept secret in the industry is out, let me be the first to welcome the 2012 incoming freshman class of channel partners to the YouTube U. Hi Tony! Hey there Chris. Looking good Ashton!

As the sixth-biggest network on YouTube (per comScore), here at Revision3 we’re excited to have you traditional media folks on board. However, let me give you some words of advice. Despite your official anointment, it’s not like high school but with better drugs. YouTube is different. So let me be the unofficial Orientation Coordinator and give you 5 key tips to help you be successful with your new venture.

BEWARE THE UPPER CLASSMEN: You may think you’re the bee’s knees, but here at YouTube we’ve already got a strong group of stars that drive more views, comments and engagement than you’ve probably ever experienced. If you want to build your audience, you’ll need to play nice with them. Ignore them and they’ll ignore you, but if you treat them wrong, watch out. Hell hath no fury like an iJustine scorned, FPS Russia and RatedRR have a line on some *serious* ordnance and those Shaytards are a mean little band of ankle-biters. Oh, and don’t go messing with Harley Morenstein, or you’ll likely end up with a chicken inside a duck inside a turkey inside a pig inside your bed.

IGNORE THE COMMUNITY AT YOUR PERIL: Sure, in the old media it was all about making the video. Once it was out there, your work was done. But that’s not how it works here – homework is more than half the grade. If you really want to be successful, you’ll need to spend some serious time engaging with your audience. The biggest stars on YouTube know that once the video is released, the work has just started. They spend 40% or more of their time interacting with their fans, commenting, rating and curating their community. Oh, and don’t expect your assistant who writes your tweets to be able to step in here. The community can spot a fake a mile away.

THE ALGORITHM RULES: Sure, the YouTube guys may have promised you the moon. Just don’t expect them to promote your channel much. Yeah, you might get an occasional editorial mention, but YouTube is a mathematically-driven meritocracy. The brainiacs over in the engineering school are the real power behind the Dean– and their formulas will dictate whether your episodes are promoted, related and integrated into the viewing flow. So you’d better spend some time understanding how that selection process actually works.

PUBLISH OR PERISH: In the old world, shows were grouped in seasons, and they would come and go based on 13 and 26-week groups. It doesn’t work that way here. You’ve got to feed the content monster on a regular basis, or it’ll just go feed somewhere else and forget about you. Get a schedule down, stick to it, and don’t stop for anything. Yes, it’s a habitrail, but take your cues from the top hamsters, and don’t stop runnin’ for ‘nuthin.

YOUR VIEWS DON’T MATTER: Sure, you were the Big Man on Campus at high school, but here at YouTube U, you’re just another frosh. In fact, YouTube doesn’t really even need your video views. Heck, half of all the videos viewed on the internet happen there already. Nope, the reason the company is lavishing cash on you is because it needs your name to confer legitimacy. You’re the "halo car" equivalent of Chevrolet’s Corvette. Guys go to the showroom to ogle the muscle-car, but end up driving off in an Impala. And in the end that’s what advertisers will do too. They’ll ooooh and aaaah over your videos, but then they’ll end up buying the vast array of brand-safe video from unknown hosts that have already built huge communities. You’re a tease, not the main course.

But with all that said, we’re really happy you’re here. And if we can help with advice, collaborations, or directions to the bathroom, don’t hesitate to ask. Because now that you’re here on campus, the party can really get started!

October 26, 2011

The TV WAR of the Century

“There’s battle lines being drawn.
Nobody’s right if everybody’s wrong.
Young people speaking their minds,
Getting so much resistance from behind…”

– Buffalo Springfield

tvwar2We’re in the middle of a yet another huge platform war for future of internet video and TV. There are four players with different and often opposing viewpoints, each with a shot at success. The story over the next three years will be which one will provide a winning service to enable viewing across every glowing rectangle in our lives – from the smallest smart phones to the biggest smart TV. Below are the four platforms, ranked by my own current likelihood of their success – along with some of the interesting quirks and challenges that remain.

GOOGLE: With Android, Google TV and YouTube, Google wants to be everywhere. Android already leads the smart phone race, with 550,000 devices activated every day. They’re trailing in the tablet space, although sales figures compared to the iPad are eerily similar to the early days of Android phones. And even though GoogleTV has been a flop, the company is angling to have Android become the dominant operating system for Smart TVs – with GoogleTV coming along for the ride. That market’s wide open, as Yahoo’s early efforts falter, and none of the other contenders (Flingo, Boxee) separating themselves from the pack. And with YouTube providing a unique and desirable library of content, Google has a lever to use to aid adoption. To date, however, Google has opted for Youtube ubiquity vs. scarcity – and I don’t see that changing.

Speaking of GoogleTV, the next version (due out real soon now) should make it easier to navigate, discover and consume video. They’ve already taken a big step forward by embracing the Android marketplace, and allowing a wide variety of apps to load-in and be useful. I’m hoping that they take less of a one-size-fits-all approach, and focus more on integrating the web video into the already-existing TV experience in most people’s homes. And they better make it work with a standard remote control – only the geeks want a full-on keyboard in their living room. Finally, they need to bring the cost down to $99 or less – and focus on AppleTV and Roku, not the “TV PC”.

APPLE: The company currently has a dominant position in tablets, and owns significant smartphone mindshare and marketshare. AppleTV to date has been disappointing. The company has sold millions of the set top box, but as the smarts move into the TV, Apple has yet to enter the market. There’s little doubt that it will, though. But video is different from music : We’ll listen to our favorite songs over and over again, but most videos are viewed once, shared and then forgotten. Apple needs a rental or subscription service to truly compete with the other three here.

AMAZON: The company has no smartphone or TV presence, but is poised to disrupt the tablet world this fall with the Kindle Fire. At less than half the price of other iPad and Android tablets – with a 10” model on the way in early 2012 – and with both a rental and streaming video service Amazon presents an interesting challenge to both Apple and Google. The company is clearly betting that the tablet will be the dominant video consumption device of the future, and is looking to lock its customers into Amazon Instant Video (rental) and Prime Instant Video (subscription service). Interestingly, while the company’s Kindle book-reading software works across competing devices, their VOD services do not support Apple IOS.

MICROSOFT: With 50 million XBOX 360s sitting in front of TV sets around the world, Microsoft has the potential to be a major player here. The company is working to build a single interface across its smart-phone, PC platforms – called Metro. They are also rolling out the Zune video services across all of those devices, along with the XBOX360 as well. The Xbox currently has the broadest collection of traditional TV sources, with broader support for TV Everywhere than the other platforms. Unfortunately Microsoft does not make web-original video available to the Xbox, which limits its usefulness. And the lack of a Windows-based tablet to rival the iPad or Android devices, along with the poor performance of Windows phones put Microsoft behind both Apple and Google. But the Xbox 360 is such a strong device, with such great market penetration, that it’s impossible to count the company out.

It’s early, but Google is in the lead, with Apple nipping at their heels. If the Kindle Fire is as big a success as I think, Amazon may well challenge for the lead. As an aside, I predict that the Fire will be the best selling electronics product this holiday season.

And Microsoft? Unless Windows 8 and the Windows phone become runaway successes, it will be difficult for them to turn their 360 installed base into a dominant platform. But that’s just my early handicapping – there’s a lot of race yet to be run.

September 10, 2011

How YouTube Wins in the Great Unbundling of Cable TV

Filed under: Commentary — Tags: , , , , , , , , , , — Jim @ 9:52 am

stupid taxLast weekend I attended Vidcon, the annual gathering of YouTube celebrities, video bloggers, fans and others in this burgeoning online space. It was held across the street from CAA, but still worlds apart from the Hollywood glitz and glamour.

But it’s getting closer. Many of the early "vloggers" are now creating polished packages, rather than the slice-of-life vignettes that they built their audiences on. Hollywood agents and hangers-on were more prevalent, as a land-rush of sorts is underway for larger companies to sign up these new stars.

But for me, the most fascinating part of Vidcon was clarity around YouTube’s strategic direction, and what it wants to be when it grows up. I now firmly believe that YouTube is positioning itself to be a "super-bundle," sitting near the top of the emerging video hierarchy. Let me place them in context, though, by describing how I see the world evolving over the next three years.

The great unbundling
We’re in the early days of a great unbundling of services from transport. Over the past 30 years, TV services and the cables they run upon have been inextricably linked — you paid your cable bill, and got wire and channels together.

In the analog cable world that made sense. But now that most cable is digital, along with carrying two-way internet bits, the transport (which is basically just a collection of 1/0 bits) can finally be separated from the channels.

I know of at least three companies, and I assume there are many more, that are building what looks like a traditional cable TV bundle of local channels, super-nets like CNN and Lifetime and smaller channels like Current and Discovery. But rather than being locked into a single physical cable plant, these bundles will travel across the internet via cable modems and DSL. Soon you’ll be able to buy your TV bundle from, say, Comcast — even though you get your internet service from Time Warner or Verizon. And you’ll be able to watch any of those bundled channels on whatever internet service you happen to be sitting upon — whether it’s the hotel network in the Hanoi Hilton or your smartphone’s 4G service.

But that’s just an intermediate step. I see these unbundled cable services giving way to direct relationships between video content providers and customers. We’re seeing the beginnings of this sort of direct relationship today, most notably with HBO Go and CNN’s new "Everywhere" offering. Currently you need to have a paid relationship with a cable operator to use either of those two amazing services, but it’s only a small leap from the today’s programmer-controlled viewer authentication to tomorrow’s direct financial relationship. And that will give rise to a world with three distinct types of services, delivered over an internet/IP network, and with direct relationships with viewers: Super-Premium Channels, Super-Premium Bundles and Premium Independents.

Super Premium Channels
These single brand services provide libraries of unique and aggregated content to consumers for between $8 and $20 a month. We already have one Super-Premium Channel today — Netflix. And HBO is well positioned to be the second. After that, I’m not so sure. Fox’s recent eight-day exclusion was a cold face slap to Hulu, and unless Apple buys Hulu I don’t see its path to success. Showtime and Epix both have potential, but too much of their content has been licensed to Netflix. And like as not, consumers will only have pocketbook power to pay for one at a time.

Super-Premium Bundles
The problem with trying to re-create unbundled bundles of channels is that the content owners control too much power. These cable TV-like bundles will probably end up costing significantly more than a similar services from today’s cable operators. And that, I believe, will lead the big five networks to go direct, delivering their own super-bundles direct to consumers via the internet. Who are these big five? Comcast/NBC, Fox, Viacom, Time Warner and Disney. In the end, these are the companies that have built the biggest portfolios of individual channels and have built enough scale to appeal to men, women and children.

Take Disney, for example. It currently has a lock on kids with Disney and XD, it owns men with ESPN, and have at least a passable offering for women (and if it ends up buying Scripps Networks, they’ll really dominate here, with HGTV, Food and Travel). Disney is already building an extensive, direct to consumer video-based web destination that should equal or surpass what Time Warner’s CNN and HBO units have built. And the first pieces will begin to roll out early next year.

Premium Independents
So what about everyone else? These Super-Premium Bundles and Channels will be able to charge a monthly fee to consumers — everyone else will have to go free and direct via IP to compete. There will be very large businesses built here as well, but they will look much different than today’s independent cable networks. And as an aside, this is the opportunity my company, Revision3, is building for.

How will we watch?
In addition to the great unbundling, we’re also seeing the great "screenification." We have smartphones, smart computers, smart tablets and smart TVs. The only real difference is the size of the screen. Viewers increasingly want to watch their favorite shows on whichever smart screen is close at hand — and won’t settle for being limited to just the TV in the living room. And history shows that when technology creates an ability for consumers to get their media in new and more convenient ways, they figure out how to do it — legal or not (see Napster, BitTorrent).

So what about YouTube?
YouTube wants to be the sixth Super-Premium Bundle. The company already has a variety of premium content, and if the stories about the new channels they’re funding are true, they’ll have a plethora of premium offerings as well. The new "Cosmic Panda" interface is far more TV-like, and far more focused on helping viewers find a series or sequence of videos to watch — vs. the hunt-and-peck discovery model of the current site. Although the company will still be a vast repository of vacation videos and cats on skateboards, it really hopes to take its place as a legitimate premium service sitting alongside Viacom, Disney and the other three. Even better, it should remain free to all to boot.

How will we know if YouTube is successful? I’ll be keeping my eye on the NFL — when YouTube snaps up a package of football games in the 2013-2014 TV-rights renegotiation, then we’ll know that the company has truly arrived.

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