GLGi: Cable TV and Broadband Video
Will Richmond
Council Member Biography
Will Richmond is President and Founder of Broadband Directions LLC, a leading market intelligence and consulting firm which specializes in broadband-delivered video. Many of the world’s largest media and technology companies subscribe to Broadband Video Focus, the firm’s market intelligence service. Mr. Richmond has worked in the broadband, cable TV, content, network infrastructure and software industries for over 15 years. During the mid-1990s he was the VP of Business Development at Continental Cablevision, then the 3rd largest cable TV operator in the U.S., where he was a co-founder of Continental’s pioneering high-speed Internet service. Since 2003, Mr. Richmond has worked with many early-stage and established companies in the broadband video industry. He is an acknowledged thought-leader in this area and is frequently called on by industry executives, investors, journalists and others to provide his insights. Mr. Richmond is a graduate of Cornell University and Harvard Business School.
Topics
► How is broadband video changing the traditional video distribution value chain?
► What are the key players in various media segments currently doing with broadband video?
► What are the major trends and technologies impacting the market?
► Which business models are working and what are their challenges and opportunities?
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© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 7
Profiting from Broadband Video’s Disruptive Impact
GLG PresentationNew York, N.Y.October 24, 2007
Will RichmondPresidentBroadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved.
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 8
Legal Disclaimer
All information contained in this document is proprietary to and copyrighted by Broadband Directions LLC, except as described below. You may not alter or remove any trademark, copyright or other notice from any copy of this document.
Broadband Directions and the Broadband Directions logo are trademarks of Broadband Directions LLC. All other trademarks used in the document, including the logos of cable networks reproduced herein, are the property of their respective owners. All web site images and content of companies excerpted in this document are the copyrighted material of their respective owners.
Neither Broadband Directions LLC nor any other party is responsible for any deficiencies in the accuracy, completeness or timeliness of any information contained in this document, or for any decision made using such information. In particular, information contained in this document was gathered over a specified period of time, and it is possible that such information has changed since it was collected and is out of date as of the publication of this document. The opinions contained in this document reflect the judgment of the author at the time of publication and are subject to change.
This document is designed to provide general information on the subject matter covered. It is not intended to provide personalized advice or guidance. You are responsible for properly analyzing and verifying any information you intend to rely on.
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 9
Definitions
• Broadband-delivered video is:– Delivered through broadband IP connections (cable modem, DSL)
– Served remotely from anywhere on the Internet to a user’s computer
– Sometimes downloadable to portable devices (e.g. iPod, Zune)
– Also called “Internet TV”, “online video”, “broadband TV”
• Broadband-delivered video is not:– “IPTV”, which uses set-top boxes and a “walled-garden” approach
– “Mobile TV” or “Wireless Video” (e.g. VCast, MobiTV, others)
– VOD served by a cable/satellite/telco set-top box
– TiVo or DVR video
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 10
Key Questions To Address
What changes are happening in the video distribution value chain?
What are media companies doing with broadband video?
What’s ahead?
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 11
$
$$
$/other
Traditional Video Distribution Value Chain
ConsumersAdvertisers
$$
$
Source: Broadband Directions LLC
Producersand
Rights Holders
Cable TVNetworks Retail
Distributors (cable TV or
satellite) Broadcast TV
Networks & Stations
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 12
“Broadband-delivered video is the
single most disruptive influence
on the traditional video distribution value chain.”
WHY?
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 13
Broadband is an Open Video Delivery Platform
Internet
Cable modemor DSL
Computer
Television
?
Broadband
Network
Portable Video Player(e.g iPod, Zune)
?
Source: Broadband Directions LLC
Video Servers(e.g. Yahoo, CNET, MLB)
Video Servers(e.g. YouTube, NYTimes, Budweiser)
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 14
3 Disruptions of Broadband Video
1. Established video providers can go “direct-to-consumer”– “Cable bypass” – 1st time to get video directly to audience– New economics based on retail, not wholesale model
2. New broadband video distributors can establish value– Define new services that are aligned with consumer behaviors– Change “basis of competition” among market participants
3. New video-focused market entrants can emerge– Numerous types of companies enter video market– New broadband/online-centric economics
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 15
Broadband video’s disruption is
REAL
not theoretical
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 16
1. Broadband Enables Direct-to-Consumer Models
Source: Broadband Directions LLC
ConsumersAdvertisers
$$$
$ Broadband access only
$
$
Cable TVNetworks
RetailDistributors (cable TV or
satellite)
Producers and
Rights Holders Broadcast TVNetworks & Stations
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 17
Examples of Direct-to-Consumer Models
• NBC/News Corp Hulu• Discovery Beyond• E “The Vine”• Lifetime Video Lounge• CBS Innertube• HGTV KitchenDesign• TNT Dramavision• Starz Vongo• CourtTV Extra
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 18
2. Broadband Enables New Video Distributors
$
$
Source: Broadband Directions LLC
Broadband Video Distributors
$$
ConsumersAdvertisersAdvertisers
Broadband access only
$
RetailDistributors (cable TV or
satellite)
Producers and
Rights Holders
Cable TVNetworks
Broadcast TVNetworks & Stations
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 19
Examples of New Video Distributors
Portals/Search• AOL• Yahoo• MSN• Google• Apple iTunes
Aggregators/Syndicators• Joost• Comcast• Amazon• Wal-Mart• Brightcove
UGC/Video sharing• YouTube• MySpace• Revver• Metacafe• Veoh
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 20
3. Broadband Enables New Video Providers
Source: Broadband Directions LLC
New Video Providers
(startups, incumbent non-video media or
marketers)
Broadband access only
$
ConsumersAdvertisersAdvertisers
$
$ $
$
Broadband Video Distributors
RetailDistributors (cable TV or
satellite)
Producers and
Rights Holders
Cable TVNetworks
Broadcast TVNetworks & Stations
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 21
Examples of New Video Providers
Niche providers• JibJab• Next New Networks• Cycling.tv• The Nine• Barrio305• WGSN
Print publishers• WSJ• NY Times• Businessweek• Better.tv
Online publishers• About.com• iVillage• CNET• NASCAR
Brand marketers• Dove• Smirnoff• MGM• Neiman Marcus• Frito-Lay
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 22
$
$$
$/other
SubscribersAdvertisers
$$
$
Producersand
Rights Holders
Cable TVNetworks Retail
Distributors (cable TV or
satellite) Broadcast TV
Networks & Stations
Current Video Distribution Value Chain
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 23
Future Video Distribution Value Chain?
Source: Broadband Directions LLC
All Video Providers
AdvertisersAdvertisers
$
$$
$
Broadband Video Distributors
Consumers
$
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 24
What changes are happening in the video distribution value chain?
What are media companies doing with broadband video?
What’s ahead?
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 25
Top 75 Cable TV Networks and Broadband Video
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 26
Top 75 Cable TV Networks Embrace Broadband Video
Broadband-Delivered Video Available at Top 75 Cable TV Networks' Web Sites
Yes99%
No1%
Source: Broadband Directions LLC
Broadband-Delivered Video Available at Top 75 Cable TV Networks' Web Sites
Yes99%
No1%
Source: Broadband Directions LLC
Year to Year Comparision of Top 75 Cable TV Networks Offering Broadband Video
71
68 74
-
20
40
60
80
Yes No
# o
f N
etw
ork
s
2005
2006
Source: Broadband Directions LLC
Year to Year Comparision of Top 75 Cable TV Networks Offering Broadband Video
71
68 74
-
20
40
60
80
Yes No
# o
f N
etw
ork
s
2005
2006
Source: Broadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 27
Advertising Model Dominates for Top 75
Business Models Used for Broadband Video by Top 75 Cable TV Networks
Advertising & paid downloads
2%
Subscriptions only2%Commerce only
6%
Advertising & subscriptions
4%
Advertising only86%
Source: Broadband Directions LLC
Business Models Used for Broadband Video by Top 75 Cable TV Networks
Advertising & paid downloads
2%
Subscriptions only2%Commerce only
6%
Advertising & subscriptions
4%
Advertising only86%
Source: Broadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 28
Broadband Becoming More TV-Like
Is a Video Window Embedded on the Network's Home Page?
No62%
Yes38%
Source: Broadband Directions LLC
Is a Video Window Embedded on the Network's Home Page?
No62%
Yes38%
Source: Broadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 29
Top 40 U.S. Newspapers and Broadband Video
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 30
Top 40 Newspapers Embrace Broadband Video
Broadband Video Available at Web Sites of Top 40 Newspapers
No3%
Yes97%
Broadband Video Available at Web Sites of Top 40 Newspapers
No3%
Yes97%
Source: Broadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 31
Sources of Newspapers’ Video
Source of Video for Top 40 U.S. Newspapers
Original video only5%
Both46%
Third party video only
49%
Source of Video for Top 40 U.S. Newspapers
Original video only5%
Both46%
Third party video only
49%
Source: Broadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 32
But Ads Not Yet Widely Implemented
For Top 40 U.S. Newspapers, Is Original Video Ad-Supported?
No70%
Yes30%
For Top 40 U.S. Newspapers, Is Original Video Ad-Supported?
No70%
Yes30%
Source: Broadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 33
Top 40 U.S. Magazines and Broadband Video
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 34
Top 40 U.S. Magazines
Yes, 28, 70%
No,12, 30%
Top 40 Magazines Offering Video at Their Web Sites
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 35
Top 40 U.S. Magazines
Own video, 20, 72%
3rd party video,4, 14%
Own & 3rd party video,
4, 14%
How the 28 Magazines Offering Video Source It
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 36
Top Broadcasters and Broadband Video
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 37
Broadband Video and the Broadcast TV Industry
1. Broadcast networks fully embrace broadband– Full streaming of episodes– Paid download models remain– Hybrids emerging (e.g. NBC Direct)– Syndication (Hulu, CBS IAN, ABC/AOL)
2. Local affiliates move video online– Streaming news clips and shows mainly– Viewers get on demand, online access
3. New aggregators and syndicators break down geographic boundaries– Companies emerging to syndicate local video– Voxant, Clip Syndicate (Syndicaster), TitanCast, etc.– Ad-based models
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 38
Local Stations Offering Broadband Video
Yes92%
No8%
Broadband-Delivered Video Available at 50 Select Local Stations' Web Sites
Source: Broadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 39
Ad Support is Prevalent
Ad-support85%
Ad-free15%
For the 46 Local Stations Offering Broadband Video:Ad-support or Ad-free
Source: Broadband Directions LLC
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 40
What changes are happening in the video distribution value chain?
What are media companies doing with broadband video?
What’s ahead?
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 41
Other Key Broadband Trends To Watch
• “Convergence” devices rolling out– Bridge PC/broadband and TV worlds– AppleTV, Microsoft Media Extenders, Xbox, Sansa TakeTV, etc.
• Improved ad targeting– Technologies to do video, audio, meta-data recognition– “AdWords” style business models
• Independently-produced video– Proliferation of independently-produced video, mainly ad-supported– Continued audience fragmentation
• Advertisers/Marketers embrace broadband– Lots of new “direct” campaigns using video– Reduce costs, increased tracking
• Peer-to-Peer (P2P)– Potentially alleviates bandwidth congestion– Lots of funding (Joost, Veoh, BitTorrent, etc.)
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 42
Conclusions
• Broadband most significant disruptive influence on video distribution value chain
• All players are re-thinking their business approaches
• Market is very dynamic – agility is key to success
• Broadcasters need to move forward aggressively
© Copyright 2007. Broadband Directions LLC. All rights reserved.
For ongoing commentary, visit:www.videonuze.com
Broadband video news and analysis….
© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 44
Thank You
Will RichmondPresidentBroadband Directions LLC
wrichmond@broadbanddirections.com617-699-4459www.broadbanddirections.com
© Copyright 2007. Broadband Directions LLC. All rights reserved.
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