Jan 21, 2015

Smart Content Is Fueling The MCN Revolution

Once dismissed as the domain of cute kittens and sneezing pandas, online video is coming into its own, and 2015 promises to be the year it leaves its childhood behind and becomes, if not an adult, then at least an adolescent.

The key to its growth will be the sort of smart data and smart content we highlighted at the 2nd Screen Summit at CES this month, which allows content owners to make better informed decisions about audience engagement, programming and advertising.

The very nature of the medium, which is mostly viewed on connected devices by users who are tied in to their personal social media accounts, means that content owners can easily understand who is watching, why and when. It’s then easy to use this data to target ads, offers and additional programming to the right target audience at the right time.

The power of this smart content is in large part why several challengers are arising to contest YouTube’s hegemony over the medium, first and foremost among them a new MCN called Vessel. Started by former Hulu CEO, Jason Kilar, the well-funded Vessel will have both ad-supported and subscription options for channels hosted by YouTube stars. They’ll create these channels by making YouTube stars an offer they can’t refuse: give Vessel 72 hours of exclusive access and in return, Vessel will give them a percentage of both subscription fees and ad revenue.

It’s a bold move, since most YouTube stars are loathe to move off the platform despite Google’s taking a sizable percentage (45%) of advertising revenue. The reason? The traffic from the site, which sees 4 billion video views a day is just to large to give up. And while hardcore fans may follow them onto a new site, more casual users won’t.

But it’s exactly those hardcore fans that Vessel is banking on. If just 15% of a YouTube star’s 4 million fans make the switch, that’s 600,000 subscribers. Multiply that across a dozen or more acts and you’ve got a sizable audience, one that’s particularly open to offers endorsed by the talent they follow.

Vimeo is also getting into the act, inking a deal last week with Disney-owned Maker Studios that would create a similar platform to Vessel’s on Vimeo’s Vimeo On Demand platform, where viewers would have access to exclusive content— content Vimeo would actually fund— for an as-yet-unspecified period of time.

It’s likely Vessel and Vimeo won’t be the only ones trying to make these sorts of deals with YouTube stars. (Newly video-centric Facebook is rumored to be making plays to lure stars away from YouTube.) For advertisers, the benefits of connecting with these stars are myriad, and that makes grabbing a piece of the market a very wise business move. It’s also a great way to connect with a younger millennial audience who, in a study done by Variety last August, were able to identify YouTube stars like Smosh and PewDiePie more readily than mainstream celebrities like Katy Perry and Jennifer Lawrence.

Another model worth watching is the one chosen by Endemol Beyond. The platform, a spin off of Endemol, the world’s largest independent production company, mixes exclusive content from YouTube stars like Michelle Phan and Matty B with new video series from the likes of Pit Bull and Drea DeMateo as well as clips from existing Endemol shows like Big Brother and Who Wants to Be A Millionaire, to create a channel that crosses both platforms and audiences, allowing Endemol to glean insights into viewers across the board. It’s a very smart idea and one that treats YouTube content the same as any other content, another step in the platform’s growing acceptance.

Lest you think YouTube is just standing idly by while new players slowly dismember it… the platform has taken several steps to retain its talent, chief among them being the creation of YouTube Studios, production facilities where established and up and coming talent can have access to higher level equipment and editing materials. They’re also working actively with their name talent to retain them, though no official word on whether that means renegotiated revenue splits.

YouTube is also getting into the professional content game, taking on the likes of Amazon and iTunes. Truth is, they’ve had this capability for a while, it’s just been under the radar and it took the release of The Interview, which premiered on YouTube, to bring the capability to most people’s attention.

It will be interesting to see how this segment of the industry develops, both from a business and from a creative perspective. The ability to make use of the rich data available to them to make better audience retention, programming and advertising decisions will definitely give them a strong head start.

This piece appeared on the 2nd Screen Society blog yesterday under the title "MCNs Come of Age."

Jan 12, 2015

To SlingTV Or Not To SlingTV? Defining The Question

Dish was the only television industry player with real news at CES this year. Their new V-POP, SlingTV, made its debut there with a considerably smaller channel line-up than many were expecting.

I think many people are looking at Sling the wrong way though, in that they see it as a substitute for a pay TV subscription.

It’s not.

It’s a competitor for Netflix or Hulu or even Spotify with a higher price point. The audience for Sling is not viewing it as a way to rid themselves of a bloated cable package, because they don't have a cable package, bloated or otherwise. For them, it's going to be a way to supplement their pre-existing online-only options, like Netflix, with some live TV.

So success will boil down to whether or not the target audience feels that they’ll watch enough live ESPN, Bloomberg and Disney Channel to justify paying $20 a month for it. It’s a curious proposition because if you’re comparing SlingTV to Netflix, which is $8/month (and has no commercials) you’d have to feel that SlingTV was more than twice as valuable as Netflix to be worth the outlay.

That's worth watching because the key value proposition of Sling is that it provides viewers with live TV. The sports and news offerings are adequate: ESPN doesn’t run every NFL or NBA game, and Bloomberg and CNN Headline news are just two voices. So the question becomes how badly does the millennial target want a live TV option?

It's an interesting question because realistically, many of the shows on Disney Channel and ABC Family are also available via Hulu and Netflix, though not, granted, their current season. So again, it comes down to the question of whether, say, the current season of The Fosters is worth $20/month or if it's okay to wait 6 months for it.

 (There's also option C, which is to buy the current season of The Fosters on iTunes or Amazon for about $20-$30, a one-time outlay.)

There’s also the advertising conundrum: Sling.TV is going to have advertising on it and Amazon, Netflix and iTunes don’t. Which makes paying $20 a month for the service an even tougher sell. There’s an interesting paradox there too: most of the programming on Netflix and Amazon got made because the first run versions appeared on linear network TV and were funded by the revenue from said commercials. If we start devaluing commercials and don’t come up with an adequate replacement, that deep well of programming the streaming services rely on is going to dry up in a hurry.

There's one other important thing to note about Sling: it makes V-POPs real. Charlie Ergen did the industry a huge favor by going first, which is the one thing most people (in any industry) don’t want to do. So now that the gauntlet’s been thrown down, look for more V-POPs to emerge. Some of which may actually try to be an alternative to a full-on cable package.

Stay tuned.

The Real Winner In Tonight's Golden Globes Awards

While broadcast television and commercial cable took a hit at the Golden Globes last night, the success of shows like Transparent and House of Cards should not be seen as a sign of their impending doom: far more people watch the shows on network TV than on any of the cable or streaming services.

What the win tonight signified was the solidification (for now) of subscription cable and streaming services as a home for the sort of high quality programming that wouldn’t be able to make it on broadcast TV, shows that are never going to be mass market phenomena, but which hit a segment of the market whose influence as tastemakers provides a reason to stick with them. 

That’s a huge win in terms of getting to watch quality television without having to rely on British imports: we've never had that sort of a home base in the US before. It also opens up opportunities for many more actors, writers and producers who’d been frozen out by the reality TV wave.

Broadcast TV pays actors and writers ca lot more than cable and streaming because it has a much larger audience than those platforms do. And it’s always going to have an audience, the same way James Patterson novels have an audience: more people read Patterson’s books than whatever’s won the National Book Award, but the National Book Award winner is likely to have far more influence on both the chattering classes and the next generation of novelists. Ditto quality TV shows versus standard issue sitcoms.

Which is awesome, because the way I see it, that lets everyone win.

Jan 9, 2015

Because They Can

The non-TV story at CES was all about the Internet of Things, whether it was wearables or smart homes/cars. There were hundreds of new products on display, but few of them seemed to actually solve any real problems and in some cases would seem to create them.

Now let me preface this by stating that I am the proud owner of a both a Pebble smartwatch and a smart home system from Verizon. I find them both very useful, the Pebble in particular as well as the piece of the Verizon system that texts me when someone has unlocked the door. (It’s a good way of keeping tabs on whether the kids are home from school.)

Unfortunately, much of what I saw on display did not reach that level of utility.  And every exhibitor seemed to gloss over the dirty little secret of the Internet of Things: In order for it to work, you’ve got to buy new things. You can’t retrofit your existing stuff. So while it’s great that a smart home app can tell your oven to start roasting a chicken, you’re going to have to buy a whole new stove in order to do that. Ditto blinds that raise and lower themselves according to the position of the sun: great idea, but do you really want to refit your house with new window treatments?

This is not to say that we won’t eventually get there with a lot of this stuff, just that it’s going to take a while. (It’s expensive to replace all your blinds.)

There’s also the utility issue I mentioned before: the answer to “why” for so many of these products is “because we can.”

Take Belty, the smart belt, for instance, winner of a CES Innovation Award. In addition to serving as a fitness tracker, it loosens and tightens itself as you (over)eat and then digest. Is this really a problem for people? Maybe I’m just a light eater, but the occasional Thanksgiving meal aside, I just don’t ever find myself wishing my belt was looser.

Ditto the “smart jar,” which helps you keep a running inventory of what’s in your pantry and whether you need to refill anything. A task I currently accomplish by opening a cabinet door and looking.

Volkswagen’s touch gestures seemed to fall in the category of creating problems. They claim that they are eliminating buttons and replacing them with hand gestures. Which looks sort of cool at a trade show, but would seem to cause problems in real life. For example, you open the sunroof by waving your hand near the roof of the car in a front-to-back swiping motion. (The opposite motion closes it.) Think of how many times people are going to be gesturing with their hands and have the sunroof fly open. Think too of how many people are not going to swipe hard enough or far enough as a sudden rain shower is drenching them.

That same VW concept car has a bar that runs along the dashboard. Swipe it with one finger to control the music, two fingers to control the navigation system, three fingers for something else. Think anybody’s actually going to remember that?

(In VW’s defense, they did show off a feature that’s part of their new navigation system that identifies open parking spots and directs you to them. That actually seemed quite useful… unless, of course, there’s a high concentration of VW drivers in your town.)

My final beef are the large tablet-sized control panels many car manufacturers were showing off. (Tesla’s was the size of two tablets.) They just seem dangerous. Drivers don’t need to be reading all that and the lack of a physical button makes the no-look push that much more difficult.

On the other hand, that may not be a problem if things like self-driving cars take off. Nvidia’s smart recognition software (below) , that identifies types of cars in real time, definitely provided a Wow! moment.

To leave on a positive note, there was one thing I thought was very cool, mostly because it resembled a science fair project: it’s called the Rockr2 and it’s a bluetooth enabled tube that has something that looks like half golf ball attached. The ball part emits vibrations and it able to turn everyday objects like empty cardboard boxes into speakers.

Because why buy a Jambox when you can use a shoebox…

Dec 18, 2014

From Beet.TV: 2nd Screens Yield Vital Data For TV Networks

This interview I did with Andy Plesser from Beet.tv outlines what we're planning on doing with the 2nd Screen Summit next month at CES.

Take a look.

Dec 15, 2014

TV's Accountability Issue

There were two interesting take-aways from the TV of Tomorrow show last week, that are somewhat interrelated. The first was that as viewing shifts away from linear to DVR, VOD and OTT, brands should hesitate to pour all their money into linear television advertising that doesn’t get seen. The second is that Netflix is eating into the networks viewership. It’s not that people are watching less of the programs the studios and networks produce. It’s that they’re watching more of it on Netflix.

Where, of course, they watch without commercials.

There are a few threads going with the way advertising is handled. The first is plain old measurement: why are we still relying on Nielsen diaries when it’s quite possible to know what every single set top box is tuned to at any given moment. That kind of reliable metric is currently available for digital media and since it’s feasible for television too, TPTB are starting to demand accountability.

Accountability matters because the lion’s share of ad budgets are still going into linear television. Which is quibble #2: Why? Why, when NBC’s head of research, Alan Wurtzel, opened the conference with a slide that showed linear viewing has slid to around 60% while noting that DVR Playback is not only largest primetime “network,” it’s four times larger than the other four major broadcast networks combined. (Given that Wurtzel’s stats constitute an admission against interest for NBC, I’ll take him at his word.) 

Despite the fervent wishes of both the networks and the advertising agencies that sell those commercials, no one is watching commercials on their DVRs. They’re just not. So you have accountability times two: why are we guessing at who is watching TV advertising and why are we pretending that they’re even watching it at all, C3 and C7 be damned. Which translates into more than a few CEOs asking “and why exactly am I paying for this?”

To which their CMOs are unable to come up with a compelling answer. 

It's important too, to ask why the idea of watching TV without commercials suddenly seems so appealing? Beyond the fact that most most commercials suck, that is. Well, Netflix has trained some 50 million of us to enjoy television without commercials. And it’s not all Orange Is The New Black. In fact, most of it is network programming. You see back in the day, networks had to wait until a show hit 100 episodes (usually sometime during season 5) in order to put a show into syndication. So seasons two, three and four just sat on the shelf, losing money. At least that was the pitch Netflix gave to the networks and studios who all happily gave up those recent seasons to Netflix for gobs of money. Then they got addicted to those gobs of money and even convinced themselves that Netflix was driving viewers to watch shows live because, you know, Breaking Bad.

Only now it’s become clear that Netflix is actually siphoning viewers away from live TV, in no small part because they can watch shows on Netflix without commercials. And having gotten used to those gobs of money, the networks are finding it very difficult to break their Netflix addiction. That addiction has many negative effects, not the least of which is that the commercials that do get shown on linear TV will go down in price because fewer people are watching them, and the delta between money lost from ad revenue and money gained from Netflix revenue is not moving in the networks favor.

Now if you’re thinking that just means brands need to shift their dollars from linear to digital video, think again: study after study keeps coming out about massive fraud and wasted dollars in that segment, so buying digital video is no panacea either.

Another fine mess we’ve gotten ourselves into.

The key is going to be figuring out what replaces interruptive advertising. There was a lot of talk about buying audiences rather than just viewers. But that's only a partial solution, a band-aid at most, because once you introduce people to the joys of ad-free TV, you can’t expect them to still watch 8 minutes of advertising for every 22 minutes of programming again, no matter how relevant those ads are.

I don’t know what the solution is: I’m not that smart. (And if I did know it, I certainly wouldn't be giving it away in this post.)

But it’s a problem. One the industry can’t just wish away.

Dec 11, 2014

Second Screen: It's All About The Data

We’ve seen the future of the second screen and it’s all about the data. Data is going to be the currency that fuels the entertainment industry in the years ahead and second screen will be the way that data is collected.

Think of how readily we give up personal information to search engines or to join social media sites. So why wouldn’t we give it up for something we really value: great entertainment? 

The industry has always held the ultimate consumer attraction — great stories, great stars, great sound — all of which have the power to draw unlimited audiences on a global scale for hours on end. What information would you give up about yourself if it was the only way to watch the Super Bowl? What would you give to get the final episode of your favorite series first? When you think of the data you give up to maintain virtual friendships with people you haven’t seen since fourth grade, you’ll understand the potential value of giving up that same data to have access to entertainment.

That’s why we’re convinced that the media and entertainment industry is in an amazing position to prosper in a future world where the real currency will be the data we are able to collect about our customers. The second screen is not about the screen. It’s about connecting the content company to their customer so they can learn more about them. 

Enabled by their fundamental interactivity, these second screen mobile devices will be the single, most popular way viewers will (literally) touch their programming, while paying for the experience with marketable information about their viewing, social and shopping habits and preferences. 

Without a second screen component, broadcast, cable and even streaming are going to be (virtually) unplugged; they will continue struggling to sell advertisers who are challenging their numbers based on outdated measurement tools. 

Once granted access to their customers data via second screen devices, however, those content delivery networks will hold the key to the largest untapped, demographic treasure trove in history; the data about who watches what, when and where will provide them and their business partners with accurate and irrefutable data, and measurable ROI. 

The second screen will be the ultimate destination in today’s smart entertainment supply chain. By completing this connection, content creators and owners will have a real-time feedback loop that will enhance both business and creative decisions. It will put the content owner and their advertisers in direct contact with their consumers for the very first time. It will enable content marketing to come from the most authentic of sources — the fans themselves. 

Audience measurement and analysis will become even more accurate and fast. And a new media and entertainment monetization engine will emerge, generating more profits, more productions, and more creative experimentation than ever before.

This post originally ran on the 2nd Screen Society web site and reflects our new thinking around the meaning and value of 2nd Screen. You can see it in action at the 2nd Screen Summit at CES, Monday, January 5th at the Encore. Tickets available now.

Dec 8, 2014

Prom King Brands And The Evolution of 2nd Screen

Seven years ago, I wrote a piece called “Your Brand Is Not My Friend” that talked to the fact that there are only a handful of brands “cool” enough that people actively seek them  out on social media. The other 99% of brands have to provide something of value to get people to pay attention to them.

What makes a Prom King Brand? It is, as the saying goes, a certain je ne sais quoi, but the easiest definition is a brand whose logo people will unironically wear on a cap or a t-shirt. So Nike. Starbucks. Apple. Plus sports teams. Colleges. Musicians. And of course, TV shows.

There’s a certain cool factor to TV shows that most brands just don’t have. So that people will engage with their accounts on social media and play around with their second screen apps. It’s not a little off for an adult to admit to being a fan of Homeland (especially this season) and therein lies the opportunity for brands to introduce an alternative to interruptive advertising (those 30 seconds commercials that have become increasingly jarring the more we rely on services like Netflix and Amazon that don’t have them.)

A branded promotion around a TV show— and that could be everything from sponsoring a companion app that allows viewers to play along with a show like The Voice, your basic Twitter promotion contest during the season premiere or an full in-show integration the way Dodge did with Defiance— will get traction from fans of the show and the brand will gather the halo effect of being associated with a Prom King brand. It’s a way to get consumers to pay attention and think good thoughts about your brand. When executed correctly, it’s also a way to get them interested in learning more about your product, either because it’s the prize for the competition or because you’ve positioned it in a way that makes them understand the connection between your brand and the show and why you’ve got something they might be interested in.

As second screen grows, along with the rich (and measurable) data that comes with it about who the viewers and fans are and what they’re doing online, it will become more of an integral part of the show’s production, with showrunners and their staff creating  experiences that feel organic to the show. That means networks will begin working more closely with advertisers to create unique properties for them, something that harkens back to the early days of television when brands worked closely with showrunners and networks.

I’m not sure interruptive advertising will ever totally go away. But for brand looking to stay on its customers good side, branded second screen experiences should provide a viable alternative.