A New Dawn For UK Broadcasting ?

Wow, we wake up this morning to a very different TV marketplace in the UK. OFCOM has told Sky that is needs to reduce wholesale pricing for providing its premium sports channels.

It's a bold move by the regulator which Sky is already wriggling out of by referring the directive to the Competition Appeal Tribunal.

If they lose, no doubt they'll create some new channels or put more stuff on the red button in order to preserve their virtual monopoly over top level non-reserved sports in the UK, so maybe the actual impact will be small.

Essentially what this does is create a more level playing field for sports rights, so it's also a hefty blow to sports organisations and especially Premiership footballers, whose hedonistic lifestyles are paid for directly from the inflated prices Sky pays for sporting rights in order to lock in customers to their broadcast services.

But is it the right move? After all, you could argue that there is a marketplace and ITV or Five could easily bid for the sports right directly. In retrospect the demise of Setanta probably did no good for Sky.

The situation is made more complex by the lack of independent broadcasters in the UK. There are the two PBS operators, BBC and Channel4, there's ITV and Five, and then there are Fox, BSkyB, Virgin Media's channels, which are all controlled (or will be controlled) by, yes you guessed it, BSkyB. The UKTV channels are in limbo (I expect their co-owners BBC Worldwide to buy them back and be privatised after the election and become a major new broadcaster).

Perhaps OFCOM would have done better to focus on the number of channels an operators should be allowed to run, or on the practices of the sports federations themselves.

It'll be interesting to see how this one plays out. Certainly OFCOM has created a more level playing field. Whether this is anti-competitive or not is difficult to see at present.

Children, Animals, Religion

They tell you never to work with children and animals. I guess they could add technology... So, that pet website with avatars aimed at kids might be a bad call...

Now, over the past fifteen years or so I've covered many major live events, from World Cup soccer to the Paralympics, from major MTV events to live sports. But, in terms of traffic, one genre stands out. First of all it was hundreds of thousands of viewers for a Hindu festival, and this week, it's been Easter celebrations in Spain. Half a million people a day for a regional online broadcast is a lot, so pre-judging what works online is foolish, it might often be the furthest thing from your sensibility.

I'm actually very proud to see a VidZapper channel reaching broadcast level - or at least cable level - audiences on a consistent basis.

The Price To Pay

There has been a fundamental difference between music and television. TV was a transient medium where a programme appeared once, and if it was shown again people complained (‘the BBC is full of repeats’). Music, on the other hand, was to be bought and listened to time and again.

But thanks to the ubiquity of content, music now has to follow some universal models, especially those being established for TV content online.

Apparently ‘Poker Face’ by Lady Gaga has been viewed 374,606,128 times on You Tube.

The economics of this are worth analysing.

Presuming that an ad could have been played next to the video each time, with a modest CPM of $20 (which if four times that an average TV channel would achieve for similar views), that’s around $7.5m of revenue.

Presuming that an absolute top hit historically sells around 10m copies at around 79c, that’s scarily close to the same revenue.

The trouble, of course, is that very few, if any, of those YouTube views were monetised (with Spotify plays probably being not much better).

Selling records was a very efficient model. Selling download is even more efficient (no wasted dupes). Advertising and payment collection revenues are, comparatively, a lottery.

The content industry is not going to be for the feint hearted in the coming years.

Go East

It's an exciting time for TV Everywhere as the company takes its first steps into the Chinese market. We'll soon be making an exciting announcement about a major new initiative. With Google hell bent on dominating pretty much every aspect of the internet world, ironically, it seems to be the last place where a company can compete unimpeded.

Five years ago at Narrowstep a surprisingly large proportion of channel viewership came from the People's Republic, and the opportunity to build a business in what will be the world's largest internet marketplace is too good to pass over.

The Times They Are A Changin'

News International's bombshell that it is to charge for online access to The Times and the Sunday Times websites has elicited widespread derision.

The company is a media powerhouse and I'm sure that it's done its sums before taking this bold step. The reality is that Google has taken so much money from the advertising market that it is strangling the content production market. The double whammy of the recession and the move by agencies to behavioural targeting means that there is no value in premium of targeted content on the web any more.

But what are the drivers ?

1) The content must not be available elsewhere - oh dear, NI are in trouble on this score; most users posting online seem to be happy to switch to guardian.co.uk, telegraph.co.uk or the BBC.

2) The quality of the content makes it command a premium - FT, Wall St Journal or The Economist perhaps, but not The Time, which is often little more than a mouthpiece for Murdoch's politics.

3) The content must be exclusive - but the tricks that NewsCorp has long deployed with sports in its television properties does not translate into news print.

4) Timeliness - the most important factor for me in news is that it is on the moment, but newspapers seem so sloooow in the Twitter world.

I'd expect the The Time to get 20 - 30,000 subscribers, which indicates a potential revenue of around £2m a month. But the hit on their advertising will be tremendous.

With rumours that NewsCorp is looking to buy out the stake in BSkyB that it does not own, what chance that we will see more cross-over of content between paid for company sites ?

But this move is not only bad for consumers, it is bad for advertisers who have failed to support quality content online. The myopia suffered by most media buying agencies over online media buying is staggering and is as threatening to their own existence as NI's move is to their own company's balance sheet.

Future Moves

A lot of companies going over the top and a lot of very similar looking EPGs were my impression of this year's IPTV World Forum.

It's five years since my previous company, Narrowstep, demonstrated a mini STB with internet TV on it, and finally the idea of combining traditional TV with Internet TV is becoming a reality.

The same curse seems to be afflicting a number of other much hyped initiatives. There was widespread consensus that both the Boxee box and Canvas platform are a long way from seeing light of day, highlighting some of the major issues facing the industry.

The first major problem is that STB chips don't run Flash in hardware, and most Internet video is either in a Flash format or is served via a Flash player. Intel's chips work well, but at a higher unit cost. It's going to be interesting to see if Intel manage to drop their prices before the traditional STB chip manufacturers raise their game.

Secondly, standards are, well, not standard. The TV industry is notoriously bad at standards and the number of rival platforms being developed do not augur well for Canvas, despite its ever increasing membership (most companies see it as a hedging move to join in). Meanwhile the more international HBB is evolving and Sky is doing spoiling deals all over the place and Virgin are set to roll out their new Tivo-based boxes.

I spent most of the show in a meeting room down the road where Vidiactive was holding its own meetings with leading network operators and chip and box manufacturers. It seemed so appropriate - Vidiactive is fast beginning to look like a parallel universe to the 'me too tv' approach of most incumbents.

Has YouTube Peaked ?

The latest ComScore figures for internet TV viewing show another decline in the YouTube audience. Meanwhile its totally dominant position in markets such as the UK is slowly being chipped into, largely by traditional broadcasters.

Figures around the UGC service bought by Google for $1.65b in 2006 are always obfuscated, but there are claims that YouTube is in line to make $1b in revenues this year, but I personally still doubt that this would be a profitably division if all costs such as legal and energy costs were factored in.

Attempts to monetise YouTube have ranged from the unsuccessful to the bizarre. I have long pointed out that all the service needs to do is introduce playlists, enabling a more traditional TV ad model, in order to succeed.

Instead YouTube is now focusing on a wide range of revenue tools from overlays to producing microsites.

But short form video has its disadvantages. There is a good reason traditional TV is still regarded as the topline medium for building brands. It all comes down to engagement.

YouTube treats video like any other web content. But the dynamic of video is very different. Whereas traditional websites make more money the more the user clicks, with television the broadcaster makes more money the less the user clicks.

But to the figures, skewed by being for February, making the fall from 13.2b to 12.8b video views potentially a seasonal anomaly. Overall viewing figures for video online also fell with services like Hulu experiencing greater drops. (Unlike the UK where the weather has a huge effect on viewing figures for online, in the US even the very bad weather that hit the North East wasn’t enough to have an impact, in my view).

So, is this significant ? I think it is. Coming on the back of Facebook overtaking Google as the most popular website, chinks are appearing (indeed, Facebook is serving more and more video). Google is a company with vast resources, but stretched very thinly in all kinds of directions. They are a company with a ‘our way or the highway’ mentality which starts with the conjecture that all traditional media is broken and needs to be fixed. Gradually, though, with video they have had to become far more traditional in their outlook, down to the oldest trick in the book – acquiring sporting rights. Google copying Murdoch, that’s a sign of the times.

There’s little doubt that YouTube will generate more revenues for YouTube in the coming years, but I get the feeling that a tipping point has been reached and online TV is experiencing a flight to quality.

HTML5 – What Does It Really Mean ?

It’s become the buzz phrase everyone in the internet TV world is getting all worked up about. But what does it really mean ?

First of all, let’s look at what HTML 5 is. Essentially it is the latest manifestation of the markup language which is used to construct web pages. When HTML was first developed by Tim Berners-Lee and others it was simple and allowed for laying out text and images and adding links and little else. The standards are set and ratified by W3.org. But, like most standards bodies things move slowly and the commercial world tends to take ideas and run with them.

The language has evolved and spawned a number of other associated standards such as CSS (cascading style sheets). Video first became possible by embedding other objects within a HTML page, and that is still the way it is handled today, you take a Windows Media, Flash Video or Quick Time object and embed it.

This means that there is very little flexibility and controlling the video and the video elements, such as the controls is complex.

Now HTML has evolved to its fifth iteration (which is unlikely to be ratified for many, many more years) many organisations have seen the opportunity to provide much more open control over video within the standard. HTML5 has concepts which are close to those found in applications such as Adobe’s Flash and Microsoft’s Silverlight.

However, there are a number of problems with this ambition to control video through HTML5. The primary one is that the main video codecs are proprietary (there is conjecture that Google bought On2 to create an open source codec, but I have no concrete proof of this).

The most commonly used codec now, especially for HD is H.264 (also called MPEG4), but bits of this are owned by an array of commercial companies who could turn around at any point and start demanding licensing.

Google has started to use and showcase HTML5 controls on YouTube, albeit using H.264 files. Here’s an example.

The reality is that HTML5 is in its infancy. For example, it isn’t yet supported by Internet Explorer (although IE9 will soon provide this capability). So, anyone developing a service will need to support both Flash and HTML5 for now.

But HTML5 is going lead to changes. It is likely to impact Microsoft’s largely unsuccessful Silverlight far more heavily than Flash in the short term.

Devices such as the iPhone and the iPad are likely to go directly to HTML5 support, cutting out Flash.

HTML5 also makes it considerably easier to develop across platforms. With most televisions set to have web browsers, HTML5 is a potentially more lightweight framework that does not demand hardware acceleration in the same way that Flash does – good news for lightweight devices such as smartphones and set top boxes. (However, recent tests show that the advantages might not be that great).

At VidZapper we’re working on a player building framework that is language independent, so that we can easily swap out the player and the codec wrapper. Indeed, in theory we should be able to combine different formats within the same playlist or schedule, although this isn’t exactly to be recommended.

You can read the full HTML5 standard as it stands here.

Here We Go Again

Another day, another idiotic idea to add Twitter, Facebook et al to a TV set. Google, Sony, Logitech and Intel really should know better.

It takes me back to the days hotel rooms had those dreadful televisions with a keyboard where, for a huge premium, you could send an email, browse the web and check the weather. They never caught on.

There are a number of reasons for this:

• TVs are good at showing video, but bad at presenting text - the resolution of even a HD set is too low.
• Keyboards and TVs don't mix
• Try checking your tweet whilst your other half is watching CSI - you'll be in real trouble
• Why bother when you already have a PC or a smartphone ?

To think that some of the world's largest companies are again chasing this mirage is startling and shows how far off the mark they truly are.

Lord Whitty misses the point

In the House of Lords debate on the Digital Economy Bill Lord Whitty objects to the powers offered under the new legislation for rights owners to "go after" ISP's and subscribers if they are involved in copyright theft & abuse. He talks about human rights - strange for a man who was very strongly in favour of ID cards and voted accordingly.

He tries to argue that the reason that sites like Spotify, Justin.tv, Ustream, Twitter and YouTube don't make any money for rights owners is that "single figure % points" of the public have heard of them........according to research produced by Consumer Focus an organisation he is involved with. One can only wonder which dark corner of the world his repondents came from and how selective the questioning was. See highlighted paragraph below. Presumably his researchers took a trip to Eastbourne to talk to the pensioners.

His point about his respondent group not understanding Copyright Law does not surprise anyone - but that does not mean that it is OK to rip copyright off - ignorance of the law is no defence. Perhaps if the question had been "Is it OK to steal things ?" the reponses would have been different.

The reality is that the internet is seen by the public as a free medium and unless pretty strong measures are put in place to protect rights owners IP the creative industries will be severely damaged. ISP's need to be squarely in the frame if they turn a blind eye to persistent offenders.

The good news is that the bill seems to have general support.


An extract from Lord Whitty's comments are below from earlier this week.

"Unfortunately, in terms of the balance of debate within this House, we seem to have a near unanimous position in support of the government proposals. Apart from the noble Earl, Lord Erroll, the noble Baroness, Lady Miller, myself and one or two others who have appeared maverick in this debate, this House seems to have accepted the wisdom of going through a whole range of changes in our approach both to the law and to the way in which our digital media operate. We have imposed police powers on ISPs which are reluctant to accept them. We have threatened several millions of our citizens with exclusion from the internet by administrative decree, with dubious means of identifying who was actually the perpetrator of the alleged infringement. We have seen the Government, putatively this House and other political parties backing protectionism rather than competition and innovation, moving towards an exclusion of people from digital access rather than the inclusion that the rest of the Bill-which I fully support-provides. It has landed us with a pretty much unenforceable law that will not get a penny back to the rights owners whom the legislation was intended to support.

Out there, however, there is no unanimity at all. There is a very widespread opposition to the Bill from individuals who feel threatened, from parents who are concerned that measures will be taken against them because of their children's use of the internet and from employers who are worried about the same thing in relation to their staff. Surveys conducted by my organisation, Consumer Focus, indicate that 75 per cent of the population do not understand what is lawful and unlawful in this context and that a rather higher proportion, when told what is lawful and unlawful, do not support those laws.

There are alternative ways of moving to a different system of accessing copyright material on the internet. Lawful systems of file-sharing exist in the music industry and elsewhere; it is just that they have a very low recognition by the public. The survey that we conducted showed that, of the 20 such systems that are or have been in operation, none has received an awareness level above single figures in percentage terms. Yet, ultimately, at various points in this debate, we have all agreed that a move to lawful systems of file-sharing is the aim of this measure.

Digital Economy Bill through the Lords

The new Digital Economy Bill has now completed all of its House of Lords stages and moves to its second reading in the House of Commons. This is the opportunity for the Bill to be debated back and forth and for the various lobbyists for the ISP's and other interested parties to get stuck in. In order for the Internet to be effectively policed content owners need to have a clear and simple way for the internet connections of persistent pirates to be disabled when suitable proof has been supplied. Fingers crossed that our politicians can deliver on this....................

Consolidation Price

More vacuuming up is going in the internet TV marekt as KIT Digital use the proceeds of their recent fundraise to purchase another of the old timers, Multicast. The $18m seems expensive for $12m of business next to the $6m of business they reportedly bought from David McCourt's depleted Narrowstep for just a £360k loan, but is, once more, loss making. Clearly, there is an economy of scale in this business and KIT are probably rivalling Brightcove in billings by now, but the former is very much a service business whilst the latter has grown organically based on core technology.

Moreover, KIT has a market cap of $123m after raising $15m recently on top of countless past raises, probably totalling over $100m and has not posted an operating profit in its history. The receivables and goodwill lines in its balance sheet should make anyone who stumped up for the $15m shudder. Worse still, an original shareholder would have been wiped out countless times - the ultimate sin, in my book.

Still, nothing ventured, nothing gained and there is now some maturity in this business with many of the pioneers - Narrowstep, Virtue, Move, Maven, Multicast, FeedRoom and White Blox amongst them, all having fallen by the wayside.

As usual, those with the deepest pockets are the winners, or perhaps their shareholders are the biggest losers?

It's About Glue

Don't you sometimes wake up in the morning and think that everything that is ever going to be invented has been invented? Despite the rapid growth, and acceleration in technology, this is broadly true. The principle of how music is recorded has evolved since Edison, but it's still about storing sound waves on physical objects.

Which is why I'm now such a believer in glue - the ability to make things already invented work together better. This is one of the main reasons that we've developed an advanced API for VidZapper and this morning we've just expanded it considerably adding capabilities such as microcharging and syncing events with specific parts of a video as well as improving the stats functions and the user generated features.

In a car analogy, essentially what we're doing is investing in the engine and letting others worry about the chassis.

This also makes it easy to add go-faster stripes! There are now plugins for VidZapper into social networks such as Facebook and Twitter, chat and discussion using Disqus, polling and surveys such as PollDaddy, eCommerce systems such as eBay, PayPal and Ecwid and many other applications such as live support.

Also, it has become much easier to build and syndicate widgets for other systems such as WordPress, iGoogle, Facebook and Beebo using the excellent Widgetbox. There's a guide on the VidZapper blog.

But we haven't neglected the chassis totally - we've released some 'kit cars' in the shape of new VZPlayer skins which are very easy to set up and customise just by editing an XML file.

All you need now is some player code to glue it all together...

See Vidiactive

For the many people who have been curious about Vidiactive, there will be a first public chance to see the technology in action at the IPTV World Forum at Olympia from 23rd - 25th March on Intel's stand (MR22). We will also be giving private demonstrations.

Because it changes the way that people use television, Vidiactive is difficult to describe, so it's well worth seeing a demo. Drop me an email if you'd like to have a closer look.

Bad Times

Oh dear, The Times thinks that MSN Video is 'the first serious competitor to the iPlayer'. Clearly written by a journalist who has never been online, or has missed 4OD, ITV.com and Seesaw.

Then there are the plugs for Silverlight - a technology dumped by ITV, but still used by the dreadful Sky Player. Seeing Microsoft and Murdoch in cahoots is interesting.

As Murdoch briefs his journalists to tow the party line more and more it's pretty sad to see not only partisan reporting, but such bad journalism. And Murdoch thinks we'll pay for this ?

Digital Desert

Recent reports suggest that Lady Gaga recently received from Spotify her royalty / revenue share cheque for...........$150. Her album has gone Diamond and Spotify is very widely used. A major UK sports event has been unable to justify building a website as the revenues are uncertain and a UK Federation who cannot get a TV deal for a series of live events have decided not to distribute online in the USA as the revenues are not guaranteed to cover technical costs. Airlines and shops are using the web to great effect but for pureplay IP (music, TV, movies etc) the ecosystem seems to be all about free content & piracy and therefore presents no opportunity for distribution of traditional "linear" content on a profitable basis. Services built around interactivity and which deliver an "outcome" to the user may be different but passive lean back experiences are not generally delivering revenues.

To pick up on Iolo's earlier post re; Love Film...... I love the service - no late returns and a pretty wide selection of content. If the above information is correct it suggests that from a economic perspective the consumer is happier to pay for a physical disk in the post than a download via the broadband internet.

Mashing It Up With VidZapper

Over the past few weeks we've been working on extending VidZapper's capabilities ahead of a new release by integrating it with a wide range of great online widgets and applications.

We've added Facebook and Twitter, Disqus for comments, Polldaddy for voting and surveys, Ecwid for ecommerce and OCC for live online support.

Also, the excellent Widgetbox has enabled us to leverage VZplayer to build widgets for all kinds of services, including WordPress, iGoogle, Facebook, Beebo and LinkedIn.

Finally, our colleagues at Viviocom have developed the first iPhone app for VidZapper - and Android version is on the way.

So, if you want to mash up your video, VidZapper's the best way to do it!

Tivo Premiere For Virgin ?

Tivo's new Premiere box seems to be a considerable step forward for those of us who want to combine broadband media seamlessly with traditional broadcasts and is certainly miles ahead of the functionality of boxes who just add iPlayer as a stand alone button. The new Tivo offering allows you to browse other episodes of a programme that might be available online.

However, the box is relatively expensive and seems to be restricted in its social television capabilities.

In the UK it will be only available through Virgin Media, who last year signed an exclusive deal with Tivo, and probably in a highly modified form.

Here's a demo of the interface:

Hate Film

I was long a fan of LoveFilm and what they achieved in launching a UK CinemaNow-like service, but then I subscribed and now this company has overtaken Orange as my most hated corporate ever.

Their website is primitive and stupid. Their delivery is sloooow. At the moment they haven't been bothered to deliver one of the two films they owe me. Their disks are so scratched that they don't work a third of the time.

And, to compound all of this, you cannot cancel the service online. Yes, you can do everything online (as long as you can put up with their crappy website, which proudly seems to use a programming language that was ditched by everyone else over a decade ago), but you can't stop paying them. Then you have to call them.... (** I have subsequently found a way of cancelling online **)

Thankfully they will soon be put out of business by online competitors and fail to achieve the sellout to CinemaNow that should have been their payday.

I am cancelling my subscription.

Will ITV Get Online ?

ITV know that they have to do more online, but their past does not bode well for the new management team taking over. But in my opinion the past failures were due to poor execution or ambition at the highest level, not because of bad ideas.

Imagine combining Friends Reunited with a programme like the BBC's Who Do You Think You Are ? ITV have been notoriously bad at leveraging their programme 'brands' as the BBC has done with Top Gear or Five with The Gadget Show. Indeed, ITV's old guard had a mortal fear of any kind of segmentation or narrowcasting. By the time ITV used on air slots to plug FR it was way too late and the site was in nearly terminal decline.

Another problem is that whereas TV remains parochial and geographically constrained, the internet works best if it is international, this is fine for a huge market like China or the US, but is a serious disadvantage in a relatively small market like the UK.

Then there was ITV Local, a quite brilliant idea by Lindsay Charlton and his team that was probably over-invested in, but was quite capable of generating modest profits in the short term and would have built a powerhouse for the future. There was, perhaps, over emphasis on video content, and I have to take part of the blame for that. But it was sad that ITV lost its bottle on this initiative - it is something that they might do well to revisit, especially with the BBC disadvantaged in the area of local news.

ITV.com meanwhile was the blind leading the blind. Dreadful technical implementation (when there were plenty of great off the shelf platforms available) hampered its development - not least the choice of Silverlight. The situation seems to have improved tremendously, but there is still a lot to do, and the surface of the commercial model for this service has barely been scratched.

So, a new era dawns and we have to see if an ex-grocer and an ex-postman can make a better hand of this internet TV thing than those TV execs did.

Common Sense At The BBC

Common sense seems to have prevailed at the BBC with the looming threat of a post-election world. Every element of their review seem to be steps in the right direction, from a reduction in the Beeb's online empire to more investment in television programmes.

You can read further details here and here.