The online video business is a marketplace still in formation and it shows. Nobody knows just how to make money off web-delivered TV shows and a lot of scattered experiments are underway.
Nobody, it seems, is more scattered than NBC-Universal. Less than a month after it finally gave a name to its joint online video syndication venture, Hulu.com, NBC-U announced today it will offer content directly to viewers on a downloadable basis under a new service called NBC Direct. The programs, including hit "Heroes," will be available for one week after their initial airing and will have non-skippable ads embedded within them.
This move also comes less than one month after NBC announced it would stop selling commercial-free TV shows via Apple's iTunes and instead sell them via Amazon's Unbox service for the exact same price, $1.99/download.
So, in an effort to navigate the web video waters, NBC plans to syndicate content via Hulu.com, sell commercial free TV shows on Amazon.com and offer ad-supported downloads directly to consumers. Granted, these varied efforts each may reach a different kind of viewer with different kinds of content.
Still, it's kind of a mess, which is not surprising given that there is no magical business model for web video. Apple's iTunes, on the other hand, is not a mess.
iTunes serves today as the closest approximation to a widely known and utilized video middleman that exists on the Internet. In the old days, we would have called this middleman a TV "network."
Indeed, Jeff Gaspin, the president of NBC's digital division says that the NBC Direct experiment is a direct move to "eliminate the middleman." What remains to be seen is if Internet video shapes up to be a true direct-to-consumer business, at least in a big way, or whether after all the skittering to and fro, content providers will gravitate back to the web era's version of a TV network.
Posted by Cynthia Brumfield at 8:54 PM | Print | Comments (0)A relaxed and seemingly confident Ivan Seidenberg, Chairman and CEO of Verizon, gave an upbeat talk about his company today at Goldman Sachs' Communacopia investor event. Whether it's the state of the economy, the impact of the iPhone on Verizon Wireless, the potential slow-down in broadband growth or Verizon's decision to challenge the FCC's 700 MHz auction rules, it's all good.
On Whether Verizon Sees Signs of an Economic Downturn: "We've seen nothing that would indicate we're heading toward some down period," Seidenberg said. "We don't see any shift in IT spending and nor do we see any signal that it will be any different in 2008."
On Whether the iPhone, Offered by AT&T Exclusively, Has Hurt Verizon Wireless: "We think we're taking our share of the market and doing very well with it," Seidenberg said. Although Apple's recent announcement of a price cut for the iPhone may have resulted in a temporary dip at Verizon Wireless, "we see that rebounding again."
On The Trade-Off Between Faster FiOS Deployments and Dividend Dilutions: "We have franchises and are deploying to twelve million of those [18 million home deployment goal]. We have a gigantic opportunity in front of us which will now take us to the next step and scale it again," he said.
On Whether Verizon Will Experience a Seasonal Drop in Broadband Growth During Q3: "There is no seasonality with respect to the market's acceptance of innovation when it comes to innovative broadband services."
On Whether Broadband Growth Has Hit a Wall Generally: Seidenberg sort of side-stepped this question, but did say that the real focus should be on the entire advanced communications bundle. "What we're really going after is the upgrading of America," he said.
On Whether the FCC Hates Verizon for Appealling It's 700 MHz Decision:"We haven't made a lot of friends at the FCC about this, but we'll be OK."Posted by Cynthia Brumfield at 11:58 AM | Print | Comments (0)
AT&T now offers multichannel video service via its U-verse platform, but video content suppliers should take into account that the telco also offers other ways of watching video, Group President-Regional Telecommunications & Entertainment Ralph de la Vega said today at a Goldman Sachs investor conference. Referring to his talks with leading cable network content suppliers, such as Hollywood powerhouses Viacom, NBC-U, Fox and others, de la Vega said "I want that content provider to really have the vision and scope that I have. I am looking at our entertainment business across twelve million broadband customers, sixty-three million wireless customers and significant growth in the U-verse segment."
The goal is to get the scale discounts that cable networks and other entertainment companies routinely offer to cable operators. AT&T and Verizon and other competitive multichannel video providers don't get the same bulk rate discounts on programming fees that Comcast, Time Warner and other cable operators receive, although de la Vega said that AT&T pays a premium that doesn't exceed 30% more than what these top cable companies pay.
Still, if Hollywood won't negotiate bulk rates that take into account AT&T's wireless and broadband outlets, the telco can start investing in its own video content creation, which, according to de la Vega, it already has. "We're working with various innovative small companies that create content," he said. The kind of companies AT&T is working with are those "whose show didn't make it to prime time."
U-verse, meanwhile, is adding about 7,000 to 8,000 new customers per week. At that rate, U-verse should add, gross, 97,500 customers for Q3 07, almost double the 57,000 U-verse video customers the company served at the end of Q2 07.
One big hang-up in gaining new video customers is the amount of time it takes to install the fiber-to-the-node service. de la Vega said that AT&T is making great strides in that regard, with the average install time now taking 7.5 hours, down by an hour. In AT&T's best markets, the average install is running 6.5 hours and the best technician can get a customer up and running in four hours, he claimed.
Given these trends, "a weekly install rate of 10,000 is do-able," de la Vega said. The cost of deploying U-verse's infrastructure is dropping too, which should help more rapidly expand the U-verse footprint. "The Moore's law of faster, better and cheaper is going to play in this space just as it has in" the broadband and wireless spaces.
Posted by Cynthia Brumfield at 10:35 AM | Print | Comments (0)
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