For those of you who have been reading this newsletter for these last few years, you know by now that I am not a hype-monger. My style is pretty disciplined and analytical when looking at the broadband video industry.
So don't let the title of this month's e-newsletter deceive you. I'm not trying to hype broadband video. However, I've concluded that the already furious pace of broadband video innovations, announcements and deal-making is going to increase markedly post-Labor Day.
I base this on the many sneak peaks and "heads-up" pitches I've been privileged to receive this summer. There are tons of announcements currently bottled up, ready to get uncorked in a few weeks. So despite the amazing developments we've all witnessed in the broadband video market in just the past few years, post-Labor Day, things are going to accelerate to a whole new level.
Why Broadband Video Activity Will Accelerate
The main driver of broadband video's acceleration is the near total consensus that broadband is creating a fundamental re-ordering of the video landscape. Virtually everyone in the broadcast and cable TV programming, multichannel video (cable/satellite/telco), film, advertising, online publishing, print publishing and technology industries now gets how significant broadband video is going to be for their businesses in the years ahead.
To be sure, there are some laggards who have not yet organized their companies appropriately to capture their broadband opportunities. However, many senior executives have already made significant changes to their organizations and strategic priorities to capitalize on broadband. In fact, each week brings news of yet another major company now planning to focus broadband as a strategic growth opportunity.
In the wake of these actions, these companies are developing new products, programming, services and technologies to gain traction in the broadband market. And of course, alongside the substance of these activities is the insatiable desire of these companies to draw attention to their initiatives. Hence both the development of these initiatives and the pace of announcements about them will be accelerating in the coming months.
What to Expect
The initiatives and announcements forthcoming in the next few months will be extremely diverse. However, in general they can be broken down into five key categories.
Business models — The ongoing development of scalable, profitable business models is the key to broadband video's success. As many of you know, I'm a big believer that ad-based models are where the industry will coalesce in the short-term, with consumer-paid, premium models developing over time and subject to certain additional building blocks being put in place. In the ad sector, expect many announcements from the ad networks and content publishing systems plus a raft of younger technology firms, all of whom are focused on the targeting, sale and delivery of video ads. Further business model innovation will occur in the development of hybrid models, bringing a blend of video downloading with ad-support, and allowing the user to choose which option(s) they prefer. This will unlock many new use cases for broadband video. Yet another area of intense focus will be on distribution and syndication of video. Look for many deals between third party aggregators and content providers, as all parties continue to experiment with the economics and optimal balance of direct-to-consumer vs. third party distribution models.
New services/user experiences — Some of the most exciting upcoming news will relate to new services and user experiences. All companies in the broadband space are innovating to deliver compelling new value to consumers. The "layer cake" effect is taking hold — as new technologies become accepted and widespread, new services can be layered on top. Consider this summer's CNN/YouTube Democratic debate. That would have been unimaginable even two years ago. But with the acceptance of YouTube and others, it is now possible to create such events. In the new user experiences realm, look for lots of activity in interactivity, social networking, high definition delivery, mashups, search, cross-platform experiences, etc. With all the new capital flowing into the video industry, there are tons of exciting announcements in the queue.
Exploding content choices — There is an intense amount of activity in the creative realm, from writers, producers and directors with diverse experiences and track records, as established media companies and independents continue to adopt broadband as their medium of choice. As I have written extensively in the past, what we are seeing is the lengthening of the "Long Tail of video." For the last 30 years, cable programming has been the Long Tail of video. Now, with broadband choices proliferating and becoming every more targeted, cable programming is moving up to be the "torso", with broadcast TV still firmly at the head of the tail. Broadband is forcing everyone to focus more clearly on which audiences they're attempting to reach, and what mix of online/on-air delivery will result in success. I'm expecting a flood of new programming announcements in the fall, as established media companies and independents jump on the broadband video bandwagon. Co-development deals for exclusive or "first-look" rights, often with major online players like AOL, MSN, Yahoo, Google will continue to grow.
New devices — Many of you know that I believe the last big technology breakthrough gating broadband's ultimate success is connectivity between the broadband/computer world and the TV itself. It's startling how much traction broadband video has achieved given that 99% of viewership is still on the computer. When the user experience is unlocked, allowing easy navigation and viewing right on the TV, broadband popularity will skyrocket. Of course there many current initiatives bridging these two worlds, such as Xbox, AppleTV, TiVo, Internet-ready TVs, etc. I expect that in the Fall, and particularly in the time leading up to CES in January, we will see a significant rush by CE companies and others trying to crack this nut. There is a lot of energy and capital focused on this one problem alone. As we move into '08, we'll finally start to see some leading cable operators bridge these two worlds with their own set-top boxes. If executed properly, this is probably the optimal solution, avoiding the need for a new box in the consumer's TV rack.
Corporate activities — Lastly, the next few months will bring a steady drumbeat of corporate activities in the broadband video world. In this catch-all category I include things like venture capital and strategic financings of broadband startups, merger and acquisition activity and musical chairs throughout industry leadership teams (people moving from well-established companies to early stage startups and vice versa). All of this jockeying is the normal activity attendant to an industry going through the rapid growth that broadband is witnessing.
Conclusion
So there's my list of announcements to look for post-Labor Day. It is by no means comprehensive, but hopefully provides an indication of some of the hot spots to watch.
And speaking of things to watch, next month I'll have some of my own exciting news to share, related both to this newsletter and also to the topics discussed here. I'm not quite ready to say much at this point, so for now I'll only mention that with all the frenzy of activity going on in broadband video, I think that I can add significant new value in helping industry executives track and better understand what's happening.
Please enjoy these last couple weeks of the summer. And if you're planning time off, come back from your travels rested and ready for the broadband video industry to shift into overdrive!
