GENERATION 247 - Web TV, Internet Streaming and Online Entertainment by Kevin Foong

Update on the Quarterlife story

Just a quick recap, so I love this TV series by Edward Zwick and Marshall Herskowitz. They originally collaborated with ABC but got dropped so the guys decided to go it alone and launch it on the internet with a 36-episode exclusive on MySpaceTV. During the writers' strike, the series got picked up by NBC.  But it bombed.  A host of commentators tripped over themselves to declare the Web-to-TV model dead.

Wrong, says Jordan Levin, who once ran a network himself and who is now CEO of Web production studio Generate. "To say it proved or disproved a model, that's insanity," he said at McGraw Hill's Media Summit. What the Quarterlife experience proved, he said, is that a show about whiny 20-somethings didn't work out on NBC, whose average viewer is in their late 40s. HBO digital distribution VP Rishi Malhotra agreed. "There's a difference between a place you can launch a program and the place where it can live and succeed," he said.

And what of Quarterlife?  After bombing on NBC prime time, it was moved to Bravo, which tried to kill it off by running it as a six-hour marathon on Sunday March 9, starting at 8 am.  guess what, it's doing alright. According to Michael Learmonth at Silicon Valley Insider, Quarterlife averaged about 169,000 vierwers per hour during its run about 38 percent less than Bravo normally gets on a Sunday between 8 am and 2 pm.

Banksy's Morons

I was just thumbing through my ambitious but modest street art collection last night with some new friends and discovered to my surprise that I had three copies of Banksy's "Morons". All originals, all limited editions registered with POW, two are signed and stamped the other is a stamped but unsigned original.  Anyone needs to round out a collection?

Free reigns on the internet and the penny gap

Chris Andersen is on this month's cover of Wired magazine and his article on FREE is very provocative. Here's an excerpt and you can read it in its entirety here.

"From the consumer's perspective, though, there is a huge difference between cheap and free. Give a product away and it can go viral. Charge a single cent for it and you're in an entirely different business, one of clawing and scratching for every customer. The psychology of "free" is powerful indeed, as any marketer will tell you.

This difference between cheap and free is what venture capitalist Josh Kopelman calls the "penny gap." People think demand is elastic and that volume falls in a straight line as price rises, but the truth is that zero is one market and any other price is another. In many cases, that's the difference between a great market and none at all."

UK online video growth

Today Hitwise reported that UK Internet traffic to online video websites increased by 178% between February 2007 and 2008. A Hitwise custom category of the top 25 video websites in the UK accounted for 2.22% of all UK Internet visits in February 2008, equivalent for one in every 45 Internet visits last month.

YouTube is the most popular video site in the UK and the eighth most visited website overall. The combined market share of its USand UK properties in February was 69.31% of all UK Internet visits to the custom category. One of the key reasons for YouTube’s success is the strength of its brand. The fourth and fifth most popular search terms in the UK during February were ‘youtube’ and ‘you tube’.

MySpaceTV was the fourth most visited video site in the UK during February, illustrating the close link between video websites and social networking. In addition to YouTube and MySpaceTV, there are a number of other video sharing websites gaining market share in the UK, such as Metacafe and Tudou .

Online video consumption averages are misleading

We all know that online video consumption is growing at a tremendous rate, after all, there have been different studies showing that online viewers watch over 180 mins of video per month, on average.  But guess what, that average is very misleading.

comScore and Media Contacts just released some stats from a joint study revealing that the heavy online viewers, who make up the top 20 percent of viewers, watch an average of 841 minutes of video. Moderate viewers, the next 30 percent, watch an average of 77 minutes. Light viewers, the bottom 50 percent, average a paltry 6 minutes. Rather than taking off with a wide majority of Internet users, online video is huge with a small segment of early adopters while mass consumption has not yet taken off.

Here's the really interesting bit, besides watching vastly different amounts of video, the three groups differ in the kind of video they watch. All three segments spend time at YouTube, which is by far the top video destination but heavy viewers also spend a lot of their time at niche often ethnic-language-culturally-centric video sites with small, targeted audiences, such as Ouou.com, MegaVideo.com, Youku.com, zShare, and Tudou.com.

Moderate viewers, on the other hand, tend to watch specific video content from broadcast TV groups, such as  ABC, CBS, and CMT. User-generated sites ManiacWorld and Glumbert also tested high with this group.

Light online viewers proved to be the heaviest TV viewers as one might expect with 46 percent of them watching more than 13 hours of TV per week.

The more internet TV folks understand the viewing habits of online viewers, the better job they can do of serving them and marketing to them.  And mind you, one should not expect these patterns to remain static, in fact, it is very likely that we will see very different stats at the end of the year.

Street art at its best

From one of my favorite blogsites, the Wooster Collective:

What's better than free?

This post is the result of a comment left by Daniel Heery on my Mar 14th Online Sports Video post.  Daniel got me thinking about the nature of the internet and its consequence, FREE.  Daniel's observation was with an abundance of free live sports broadcasts on many P2P networks, why would anyone pay?  A fair point and you can see my response here.

My favorite thinkers on this subject, Free, are Chris Anderson and Kevin Kelly.  Here's an excerpt from Kevin Kelly: "The internet is a copy machine. At its most foundational level, it copies every action, every character, every thought we make while we ride upon it. In order to send a message from one corner of the internet to another, the protocols of communication demand that the whole message be copied along the way several times. IT companies make a lot of money selling equipment that facilitates this ceaseless copying. Every bit of data ever produced on any computer is copied somewhere. The digital economy is thus run on a river of copies. Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free."  You can read the rest here.

Volomedia raises $3.5 million in third round financing

Formerly known as Podbridge, Volomedia reported that it raised the financing from Leader Ventures.  For those of you stepping into the free ad-sponsored video space, Volomedia is a provider of advertising, metrics, and reporting solutions for downloadable media, both video and audio.  Brian Steel, the CEO of Volomedia, says they plan to use the funds to accelerate growth and invest in multiple opportunities.  It's not clear what these are though.

Meanwhile here on the East Coast, iMediatreams of New Jersey is soon coming out of stealth mode with their own suite of online advertising measurement, targeting and reporting solutions.  Speaking with Ahmed Gomaa, Co-founder and President of iMediastreams, I learnt that their patent pending technology makes use of the huge amount of information about people presented in their blogs to enrich advertising targeting.  I love the cleverness and cheekiness of iMediastream's central concept, inferences can be drawn about people and their audiences from their blogs, it's free, why not exploit it.

Babelgum signals shift in strategy

The erstwhile Joost-slayer, Babelgum, has added to it's checkered history a significant shift (more like departure) from its original strategy. The Ireland-based P2P TV network backed by Italian ISP, Fastweb’s, founder Silvio Scaglia, is creating a 10 million euro fund to invest in 15-minute new and exclusive productions, “transforming [us] into a digital media studio”, viz. Variety, “Execs at the web platform are also looking into other ways to monetize the material, including the possibility of selling longer versions on DVD or to TV broadcasters.”

Babelgum's early strategy was to broadcast TV channels that soon switched to courting indie film makers, launching contests and sponsorship deals to give it access to original new flicks that might set it apart from the likes of YouTube . However, creating and running a film studio is a very different proposition from operating a P2P broadcast network operation. Anyone care to wager a bet on this latest strategy re-alignment announcement?

CrunchBase Information

Babelgum

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Do you have a Quarterlife crisis?

I love this American web TV series!  For a couple of reasons, firstly, it's great entertainment, it really captures the essence of being a 25-year old square-peg-in-a-round-hole, yearning to find a home for one's self evident talents (here's the science), and yes, I hear some of you screaming that I'm still a 25-year old ... so I should know! 

Secondly, it's a great experiment that I plan to repeat, but differently. I think the web-to-broadcast concept doesn't work and they've got the monetization model wrong. 

What I have in mind will blend (a) a web TV series with (b) reality gaming and (c) e-commerce.  Yes, it's new to the world stuff. The pilot should be out this Spring.  And thanks to Quarterlife's education of our audience on mySpace, our customer acquisition cost just plummeted.

Check out this video: quarterlife Trailer

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Online sports video

Screen Digest released its latest report, entitled "Online Sports Video: Rights, Revenues and Forecasts" today forecasting the number of streams/downloads served in the US market will increase from 5.2bn last year to 10.8bn by 2012. Most significantly, sports accounted for 35% of all online TV streams/downloads consumed in the US in 2007. In the same way that sport content was a major driver of pay-TV adoption, online sports will be the single biggest driver of consumption for online video.

Screen Digest forecast that US revenues from domestic online sports consumption will increase from $762m in 2007 to $2.3bn in 2012. Yet it will be advertising, not subscriptions that will generate the lions share of the revenue from online sports.

Unlike pay-TV sports, consumers have not been willing to separately subscribe to online platforms offering a 'TV bouquet-style' range of aggregated online sports content across multiple sports. Platforms such as ESPN and Sky Sports have moved towards offering online propositions as a mix of free 'value-add' to their existing pay-TV sports customers, or free ad-supported content to the entire domestic internet market. Notably, in the US, few major branded sports, save the MLB, have restructured their 'single interest' content and online access into very effective subscription propositions, successfully signing up fans directly through their own web properties.

The internet has given sports rights holders the means to take their content direct to the end viewer, anywhere in the world, completely bypassing third party aggregators and broadcasters like ESPN and Sky Sports, and even potentially new online platforms such as Yahoo!, YouTube and Joost.

The 'democratisation of distribution' created by the internet means that the sports rights holders can, for the first time in history, provide their own sports video services and directly compete with the very broadcasters and sports networks that traditionally pay huge sums for sports rights. It's a careful balancing act, but it's not inconceivable that in the not-too-distant future some broadcasters, unless they can continue to pay higher sums and deploy successful online propositions to monetize those rights, may find it harder to acquire premium sports programming.

CrunchBase Information

Yahoo!

YouTube

Joost

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Conserving cash for start-ups, or not

Here's a random walk post for my start-up colleagues who fear a looming recession and cash crisis.  Late last week, Jason Calacanis, CEO of human search engine Mahalo, posted 17 cost saving tips for start-ups. 

I like unconventional thinking, Jason certainly exhibits plenty and offers many workable ideas. Tips 11 and 12, however, caused quite a stir in the start-up blogosphere especially when Duncan Riley of Techcrunch took up the gauntlet with his post "Calacanis Fires People Who Have a Life". Duncan's post kicked off hundreds of comments and trackbacks both supporting and deriding Jason for Tips 11 and 12, see what the fuss was about. 

For those of you too lazy to click on the earlier link, here's Jason's Tips 11 and 12 in its entirety:

11. Fire people who are not workaholics ... come on folks, this is startup life, it's not a game. don't work at a startup if you're not into it--go work at the post office or starbucks if you're not into it you want balance in your life. For realz.

12. Get an expensive, automatic espresso machine at the office. Going to starbucks twice a day cost $4 each time, but more importantly it costs 20 minutes. Buy a $3-5000 Jura Industrial, get the good beans, and supply the coffee room with soy, low fat, etc. 50 people making one trip a day is 20 hours of wasted time for the company, and $150 in coffee costs for the employees. Makes no sense.

And a couple of Duncan's retort:

"[Calacanis'] helpful advice includes (our interpretation):

• If you do meetings, have them over lunch, because you shouldn’t let your employees eat alone
• Buy people who work hard a computer for home, so they can work after hours, on weekends and public holidays
• Urinary catheters are cheap, hook each employee up to one so they don’t waste minutes going to the restroom

OK, so I made the last point up."

Now I might not have worded Tips 11 and 12 quite the same but heck, how many of you have heard me say, "Always know whom you'd fight-to-keep and whom you'd fight-to-sack".  Different point but the same lack of sympathy. Still, you have to admit, my adage resonates with logic.

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Jason Calacanis

Mahalo

TechCrunch

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