This well attended panel session was more of an extended question and answer session, rather than new information or insights conveyed to the audience. Nonetheless, there were a few significant points made, which will be discussed later in this article. The event was organized by Draper Fisher Jurvetson and VLAB (MIT/Stanford) and took place on April 27th at Fenwick & West LLP in Mt View, CA. The panel moderator was David Price, Vice President of Business Development and Corporate Communications – Harmonic Inc.
There were five panelists:
- Erick Hachenburg, CEO – Metacafe (an on-line video entertainment web site),
- David McIntosh, CEO – Redux (provides crowd sourcing of TV via a discovery mechanism),
- Margaret Stewart, Head of User Experience – YouTube (very popular division of Google),
- Michael Yang, Venture Partner – Comcast Interactive Capital (a VC that has invested $500M in 90 startups),
- Paul Wehrley, Co-founder and COO of Clicker (produces a program guide for interactive TV)
The way we consume video is inexorably changing. YouTube alone sees a full day’s worth of video content (24 hours) uploaded to its servers every minute. The iPhone changed everything in regard to consumption of video on the go and now the iPad is shepherding in a new generation of smart mobile platforms that will enable video consumption to be richer and more flexible than ever seen. Content, conduit, and consumption are all expanding. What will the next phase of the video ecosystem look like and how will it be monetized? What metaphor will dominate how end consumers navigate the unfathomably large volumes of video available? Who will win in the new value chain?
To provide a framework for the discussion to follow, moderator David Price of Harmonic Inc. noted that video traffic was growing much faster than non-video web browsing traffic. Furthermore, there are more and more methods and devices (e.g STBs) being developed to link the web to TV sets. He stated that for AT&T's 3G network, 3% of the users consume 40% of the bandwidth (source unspecified). "Internet video users are doubling every six years and will overtake conventional TV viewers within the next 11-15 years," according to Mr. Price. And that milestone "may happen even faster," he said (we think it will if mobile video takes off in a big way). Netflix was cited as an example of a site producing massive amounts of Internet video traffic to customers watching its movies and other videos on-line. David's opening remarks were followed by brief comments from the panelists. Questions were then invited from the audience. The following captures the key takeaways from the answers provided.
Margaret Stewart of You Tube thought that "video curation" was an unexploited entrepreneurial opportunity. She noted the large number of users/consumers of Internet video, but relatively few video content producers. But neither she, or any other panelist addressed how such video content aggregation sites could make money. Indeed, no one talked about how You Tube or Hulu would make a profit, even though You Tube has recently been running commercials/ads ahead of selected videos. Ms. Stewart later commented that Digital Rights Management for user generated Internet videos continues to be an important issue for You Tube.
One panelist suggested that search engines are tracking what Internet videos people are watching, which was described as "crowd sourcing". We wonder if that violates the Electronic Privacy Act (ECPA)?
And what about the plethora of different video formats? Paul Wehrley of Clicker said that 90% of the Internet videos his company deals with use Adobe Flash. That would leave only 10% combined for all the others.
Perhaps the most interesting question was on the revenue producing business models to support video content development. Paul Wehrley of Clicker said he believed a Subscription model with authentication would dominate. This is what Comcast is doing with "TV Everywhere" for their cable Internet and digital cable TV subscribers. Erick Hachenburg of Redux thought that companies would sell premium content videos on an a la carte basis, but that "advertising may scale better than a subscription service as video production costs drop.
This author asked David Price will mobile video be a real business this year, especially in light of the new U.S. A/153 ATSC Mobile DTV Standard (AKA ADTV mobile video broadcasting standard -see reference 1)? David told the audience that Swisscom had deployed a European equivalent mobile TV broadcast standard (known as DVBH), but it wasn't very successful because people have become accustomed to getting unicast videos (e.g. conventional VoD or Internet Videos on Demand). As a result, Swisscom just introduced a unicast mobile video service based on H.264 (MPEG4) and turned off their DVBH. David stated that "unicast services will drive demand" but the key issue was whether there would be sufficient bandwidth available to mobile video users. Backhaul was cited as a gating item/ potential bandwidth bottleneck. Continuing, David stated, "there is no (viable) business model for (mobile) broadcast video services."
As that was quite surprising to hear, I asked if the U.S. ADTV standard was Dead on Arrival (DoA). David replied that the broadcasters would be unwilling to vacate the spectrum needed for mobile broadcast video (AW comment: unless the TV broadcasters became mobile video network operators). But he also pointed out a key advantage of the ADTV standard (which he referred to as "MH")-: the standard enables advertising to be placed on mobile phones which are displaying the broadcast video channels. Dave clarified that statement in a subsequent email exchange. He wrote, "it is intrinsically local and thus enables local advertising to be placed on mobile phones that are displaying the broadcast video channels.”
Whether that would be enough of an ADTV advantage to create a viable business model and attract a critical mass of customers remains to be seen.
1. Will the new mobile DTV standard enable Mobile Video to succeed in 2010?
Excerpt: With the recent ratification of the A/153 ATSC Mobile DTV Standard, US broadcasters are able to deliver live video content to a broad variety of mobile devices. The standard is the culmination of a development process that took about two and a half years.
The Mobile Video Coalition said that at least 70 stations would begin broadcasting using the standard. Several electronics makers, including Samsung, LG and Dell, have produced prototype devices. It is first likely to be available on netbook computers, according to a report in Broadcasting and Cable. According to the Coalition, the new standard will also allow for "emergency alerts that can be customized by market or location, live audio feeds, data-casting with traffic maps, closed captioning, ‘clip casting’ sports and news highlights that could be stored in memory on a device, ‘push’ video-on-demand for future viewing, time-shifted television, mobile digital video recording, interactive polling, electronic coupons, targeted advertising, [and] an electronic service guide for ease of tuning." Some observers now believe that mobile TV will really take off in 2010.
2. Workshop Report: Clearwire on track with rollouts and app tools, but MSO partners struggle with Business Models
- "We (the industry) haven't figured out how to monetize the video applications." -Randy Dunbar of Clearwire and Brian Coughlin of Time Warner Cable
- "It's definitely on our radar screen, but we don't have anything we can announce at this time." -TW Cable
- "Digital content rights are based on a given device, not on a service." -Katie Graham of Comcast
This author was quite perplexed by these justifications for not deploying premium (non-Internet) video over Mobile WiMAX. In particular, it was not clear why Comcast can offer On Demand Digital Video* over their managed network and cable modem based broadband Internet service, but not over mobile WiMAX. Why not make On Demand On Line available to "Bolt on" mobile WiMAX subscribers who don't have Comcast Cable Internet at home? If content rights management is the issue, why can't Comcast register each netbook/notebook PC or mobile WiMAX device that will access the video service?
* Comcast On Demand On line service is now called Fancast XFINITY TV. It requires both Comcast Digital Cable TV and High Speed (Cable modem based) Internet service. A Comcast email address is required for access authentication.
For more details, please visit: http://www.comcast.net/on-demand-online/
Kittar Nagesh, Service Provider Marketing Manager at Cisco also participated in this panel, which was somewhat of a misnomer "The 4G WiMAX Business Opportunity for Developers." Mr. Nagesh made three statements I thought were quite important:
- "Video will be 66% of mobile video traffic by 2013."
- "The spectrum Clearwire owns is remarkably important. It's important to make use of the spectrum (a wireless network operator) you have. It doesn't matter if it's used for WiMAX or LTE."
- "Machine to Machine applications will be phenomenally important. It will be an inflection point (for the broadband wireless industry). Innovation will explode in an unbounded fashion."