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Over-The-Top Video at Issue in Net Neutrality Appeal

By Paul Sweeting

With the U.S. Court of Appeals for the DC Circuit in Washington preparing to hear oral arguments over the Federal Communications Commission’s net neutrality rules, a group of technology companies and online service providers filed a friend-of-the-court brief Thursday urging the court to uphold the FCC’s open internet order. The group includes Netflix, Amazon, Google, DISH, Skype and others that are part of the Open Internet Coalition.

“Most of us have come to rely on the Internet to communicate, exchange ideas, engage in commerce, watch videos, and play games. The Internet’s openness, however, is not a given; it is at its most vulnerable at the gate—the broadband access pipes that are controlled today by a handful of companies,” the group said in its brief. “The Nation sorely needs additional investment in broadband access to widen this gate. Such investment would be significantly hampered, however, if the current gatekeepers could lessen demand for the Internet experience by cherry-picking favorites among the immense Internet ecosystem.”

The case stems from an effort by the FCC to sanction Comcast in 2007 over the ISP’s alleged throttling of certain video-related data traffic on its network. At the time, however, the agency had no formal rules in place governing such practices. Comcast sued and the DC Circuit court (which hears most regulatory challenges) ruled the FCC lacked the legal authority to impose the sanctions.

The FCC responded by developing formal open internet rules under procedures that would give it the legal authority. The rules were approved by a closely divided commission in December 2010 and took effect last year. In July 2011, Verizon and MetroPCS sued the agency again, claiming the new rules still exceeded the FCC’s authority and harmed ISPs’ First Amendment rights to manage their own networks.

From the beginning, Netflix emerged as something of a poster-child for those supporting the FCC’s open internet rules. Net neutrality supporters feared that without such rules, broadband service providers that also provide video service, such as cable operators and Verizon FiOS, could block or degrade over-the-top services like Netflix that compete with the operator’s own pay-TV service.

The Open Internet Coalition was joined in support of the FCC’s position by several public interest groups and law professors, who signed onto a separate brief filed yesterday by the Center for Democracy and Technology. That brief took aim specifically at Verizon’s First Amendment claims, calling it “incorrect as a matter of law.”

Oral argument in the case has not yet been scheduled but is expected to happen in mid-2013.

 

 

Waiting For Ratings: The DVR Debate Heats Up In TV Land

By Paul Sweeting

Americans started showing signs of falling out of the habit of watching television in 2012. Total viewing time was down 2% in the first quarter of the year, and declined 1% in the second, the first time total viewing has posted sequential quarterly declines since Nielsen started tracking it. Viewing was up just under 1% in the third quarter, but would have been down but for the Summer Olympics in August. The fourth quarter is shaping up as another downer.

That decline in total viewership has started to show up in the ratings for individual shows and networks, as well. Through the first four weeks of the fall TV seasons, Fox has seen a 25% drop in viewers; CBS has seen a 12% drop; and ABC has seen an 11% decline.

Those declines have led to more urgent calls by the networks to shift the industry to a live-plus-7 standard (known as C7) for reporting ratings that would count both live viewing and time-shifted viewing via DVR up to seven days after a show’s initial airing. The current industry standard is live-plus-3 (C3). But with DVR penetration now at 46% of U.S. households the networks argue that time-shifting behavior has become so entrenched that C3 undercounts the number of people who watch their shows and, at least to some extent, see the commercials.

Even shifting to a C7 standard may not help, however. According to data compiled by Nielsen and the Wall Street Journal, C7 viewership is down nearly as much as live viewership. THrough the first four weeks of the season, Fox’s C7 viewership is down 25%, the same decline it has experience in live and C3 viewing. CBS was down 10%, while ABC was down 7%. Only NBC has seen its C7 viewership go up this TV season, by 14%.

The total number of viewers who watch a show within the seven-day window is larger than the number who watch it live, of course, so the networks would get credit for more gross ratings under a C7 standard. But the data bely the argument that total viewing is not declining but merely being time-shifted. Even accounting for time-shifting, viewership is down.

What to do? BTIG Research analyst Rich Greenfield argues the networks should forget about DVRs and the debate over how long to make the ratings window and embrace VOD. Especially so since he thinks most people really do skip the ads during DVR playback, regardless of what they say in surveys:

Watching live television is no longer top of mind and watching commercials is laughed at.  Consumers have essentially been trained to avoid TV commercials, particularly given a heavy ad-load with no personalization/targeting.

• We realize all the studies show that consumers with DVRs still watch lots of commercials, but do you seriously believe any of that based on your own viewing behavior or anyone you know?
• Does anyone under the age of 25 even understand what it means to watch “live” outside of sports?

Instead of fighting over DVR viewing, Greenfield says the industry should essentially make all content available on demand, so it can be accessed by the growing number of connected devices people use to watch video, with fewer, but more targeted ads:

The problem is not “when” people choose to watch particular content, it is that they are not watching advertising at all when they watch that programming.  You can try boosting viewership via C7 or even C14, but the ads are simply not being watched.

• Trying to charge advertisers for ratings points that are not generating ad views is a non-starter.

What Should the Industry Do?  The TV industry must find a way to put a dramatically larger percentage of content on-demand, with targeted advertising and a lower ad-load.  Nobody will use a DVR if they can get to whatever they want, when they want it, where they want it, especially if the ad load is lighter and the ads relevant.  The DVR has always been an ugly workaround for VOD, yet the pace of innovation related to on-demand programming (TV Everywhere with targeted advertising) has simply been far too slow and we are being kind.

If Greenfield had a TV show the network would probably cancel it.

 

Google’s New Remote Looks Back to the Future

By Paul Sweeting

The search for a better way to navigate among the growing thicket of channels and apps showing up on TVs continues. Google rolled out its bid to reinvent the TV interface Wednesday with an updated version of Google TV that adds voice-driven navigation. You can watch a demo here.

Voice-driven navigation isn’t new. Microsoft’s Xbox with Kinect already offers a version of it, and Samsung’s new line of TVs offers it as well. Many analysts anticipate the next version of Apple TV will incorporate Siri, the voice-driven personal assistant on the iPhone.

Google’s take is different from those, however, both simpler and more sophisticated. Unlike Microsoft, Google isn’t trying fully to replace the traditional D-pad remote control but to enhance its capability, going so far as to put a microphone for receiving voice commands in the hand-held remote itself. Google is betting that some tasks, like scrolling left/right or up/down, are still done more efficiently using your thumb than with voice or gesture, and leaves those tasks to manual control.

At the same time, the new voice recognition system leverages a lot of Google search technology. The system draws heavily on Google Now, Google’s personal assistant app for Android that pulls in an array of contextual information to anticipate what you’re looking for. Thus, Google TV will prompt you if your favorite team is playing and provides a direct link to the channel showing the game so you don’t have to go searching for it. The goal is eventually do display content much as Google Now display information cards to users.

Not a bad effort, but there is still plenty of room for experimentation to come up with a fool-proof, intuitive next-generation TV interface.

The new system will be available on Google TV-enabled LG sets.

YouTube Announces Its First Cancellations

By Paul Sweeting

Getting cancelled is a rite of passage for anyone trying to build a career in television. The same will be true even in the future of television, apparently.

AdAge reported Monday that YouTube is preparing its second round of investments in original programming for the video platform, as it tries to catalyze the next generation of TV. But only about 30-40 percent of producers who got funded in the first round will get funded this time. The rest, as far as YouTube is concerned, are getting cancelled.

“We looked at viewership they’ve been able to achieve, the cost of the content, and from that we are able to determine the channels that are delivering the best return on our investment,” YouTube’s global head of content strategy Jamie Byrne told AdAge. Spoken like a true network exec.

The cancellation rate, in fact, almost exactly matches the track record for new TV shows. According to data compiled by ScreenRant, between 2009 and 2012, 65% of new TV series were cancelled within their first season, which is right in the middle of YouTube’s projected range. Here’s the breakdown:

Canceled New Series Network Averages (Overall)
3 Year Average – 65% Canceled

2009-2010 – 57% Canceled
2010-2011 – 69% Canceled
2011-2012 – 68% Canceled

% of New Series Receiving a Second Season (By Network)
1) ABC – 39%
2) Fox – 38%
3)CBS – 36%
4) The CW – 30%
5) NBC – 27%

Spotify’s Netflix hangover

By Paul Sweeting

Spotify is closing in a new $100 million financing round that values the streaming music service at just over $3 billion, according to the Wall Street Journal. While impressive for a company that is yet to turn a profit and can’t say exactly when it will, it’s below Spotify’s earlier goal of a $4 billion valuation.

What happened to the other billion? AllThingsD’s Peter Kafka blames Netflix:

Investors already know what a digital subscription business looks like at scale.

That would be Netflix, which has some 27 million subscribers at around $8 a month. Today, after Carl Icahn goosed it a bit, Netflix has a market cap of $4.3 billion.

Spotify says it has 4 million paying subscribers at around $10 a month. Bear in mind that if you value Spotify at $4 billion today, you’re really saying it will be worth three times that — $12 billion — in a few years, when it would presumably go public [snip].

So even at $3 billion, Spotify backers will need to work hard to explain why their digital subscription business is worth so much more than Netflix when it comes time to IPO.

I’d add another explanation, that affects both Netflix and Spotify. Both companies have built their businesses largely around a single use case: on-demand subscription streaming (Spotify also has a small advertising revenue stream). Use cases, for both music and video, are evolving, however, and consumer preferences for how they access content services are not settled.

Some device-centric platform providers, moreover, are pressing rights owners to let them offer content across multiple use cases and under multiple payment plans in an effort to monopolize consumer spending, as Amazon has done in video by offering pay-per-view rentals, electronic sell-through, subscription streaming and DVD sales (and subscription DVD rentals in the U.K. via LoveFilm). Microsoft is now doing the same in music with Xbox Music, which offers free ad-supported streaming, subscription streaming, paid downloads and streaming from cloud-based storage.

The question hanging over both Netflix’s and Spotify’s valuation is whether a standalone content service, based around a single use case, can compete effectively in a world likely to be dominated by broad, device-based content ecosystems.

 

Election Shuffles Copyright, Technology Deck on Capitol Hill

By Paul Sweeting

Whatever else it accomplishes, Tuesday’s election could have significant impact on several public policy issues affecting the copyright and technology industries.

The entertainment industry lost one of its most loyal champions when California Democrat Rep. Howard Berman, whose district covered the Hollywood Hills, was defeated by fellow Democrat and incumbent Brad Sherman, who represented an adjoining district. The unexpectedly fierce battle between the two party stalwarts was the result of redistricting and California’s open primary system, in which the top two candidates are pitted against each other in the general election regardless of party.

While Sherman is expected to be generally friendly to Hollywood, Berman has been a senior member of the House Judiciary Committee, which oversees copyright and patent law, and there is no certainty that Sherman would replace him on that critical panel.

While Republicans retained control of the House — and the committee leadership that comes with it — the leadership of the Judiciary Committee is also facing a shakeup. The current chairman, Rep. Lamar Smith (R-Texas) is term-limited under GOP rules for committee assignments and is expected to make a bid to chair the House Science, Space and Technology Committee, according to Capitol Hill scuttlebutt. The current chair of the Intellectual Property subcommittee, Rep. Bob Goodlatte (R-Va.) is expected to replace Smith as chairman of the full committee, which would leave the gavel up for grabs on the IP panel.

Berman, a co-sponsor of the Stop Online Piracy Act (SOPA), was among several supporters of that controversial copyright bill who also will not be returning to Congress in January. Rep. Joe Baca (D-Calif.) was defeated in his reelection bid — like Berman, by another Democrat as a result of redistricting. Another SOPA co-sponsor, Rep. Mary Bono Mack (R-Calif.) was trailing her Democratic opponent as of Wednesday but the race had not yet officially been called. A fourth SOPA supporter, Rep. Elton Gallegly (D-Calif.) is resigning.

If Bono Mack does in fact lose, her seat on the House Energy and Commerce Committee, which oversees the telecommunications issues, including the Federal Communications Committee, would also be up for grabs. For the last four years Bono Mack has chaired the Commerce, Manufacturing and Trade subcommittee of House Commerce, with jurisdiction over online privacy and data security.

The FCC, meanwhile, is expected to get a new chairman in 2013 when current chairman Julius Genachowski steps down from the post.

The changes in critical committee assignments come as several important copyright and telecommunications issues are expected to be in play on Capitol Hill. While SOPA and its Senate counterpart the Protect IP Act (PIPA) are probably dead for now, some technology and public interest groups see their demise as an opportunity to push for a rollback of other strict copyright enforcement provisions enacted over the past several years. The entertainment industry could find itself fighting at a disadvantage against that push without long-term supporters like Berman and Bono Mack in key positions.

Other issues that could affect entertainment companies is an expected push for reform of the current retransmission consent system for broadcasters and proposed elimination of the compulsory license fee that cable and satellite providers must pay to copyright owners for carrying their programs.

Stay tuned.

 

 

 

As Cord-Cutting Grows, Cable Companies Looks to Silicon Valley

By Paul Sweeting

The third-quarter numbers for pay-TV providers painted a grim picture of the industry. According to an estimate by Sanford Bernstein, the industry as a whole lost 127,000 video subscribers in the quarter, but that was net of 119,000 new Verizon FiOS subscribers, 198,000 new AT&T U-Verse customers and 67,000 new DirecTV subscribers. Traditional cable TV providers got hammered.

Time Warner Cable lost 140,000 video subs in the quarter, catching analysts by surprise, and sending its stock plummeting. Charter Communications, Cablevision, and Dish Network, collectively lost 102,000. Comcast, the largest cable MSO, lost 117,000 video subscribers in Q3.

“In the U.S. it’s mostly a zero-sum game,” DirecTV CFO Patrick Doyle said on a conference call with analysts Tuesday.

While cable providers have been able to make up some of their video losses by adding broadband subscribers, they are also beginning to look to what many regard as the source of their problems — the innovators in Silicon Valley who are disrupting their business — and deciding that if traditional cable operators can’t beat ‘em, may they can join ‘em.

The industry’s research arm, CableLabs, plans to open a new research center in the heart of Silicon Valley in 2013 in an effort to engage with technology companies instead of fighting them or ignoring them.  The industry needs to “get re-energized,” Cequel Communications CEO Jerald Kent told Reuters.  ”Part of the message is this is not your grandmother’s cable business.”

The center will study cord-cutting and other trends related to consumer video habits, and will look to develop “co-innovation” labs with startups as well as leading research universities such as Stanford, to work on specific projects. CableLabs also hopes the center will allow the cable industry to develop a closer relationship with large technology companies pushing over-the-top video delivery and mobile video.

Will it work? Some analysts have their doubts, noting that cord-cutting is not fundamentally a question of technology but of cost and consumer convenience. But one area I think could prove fruitful is the integration of linear TV service with streaming set-top boxes.

The next generation of streaming set-tops and game consoles are likely to incorporate TV tuners, making them capable of functioning as cable or satellite boxes (or in the case of the new Boxee TV, receiving over-the-air broadcast channels). Up to now, pay-TV providers have been wary of allowing their services to be integrated with third-party set-tops that have their own user interfaces and in some cases their own payment relationships with consumers. But that wariness has done nothing to slow down the growth of over-the-top video, and some analysts see signs of its waning.

Speaking at the Digital Hollywood conference in Los Angeles last month, Wedbush analyst Michael Pachter speculated that the next version of Microsoft’s Xbox console, due in early 2014, will include a full TV tuner and will be able to communicate with “any piece of glass” in the home. “If you have 10 TV sets, you’ll be able to pull 10 signals and send them to any TV,” he said.

More critically, Pachter said he expects pay-TV providers to be far more open to integrating their service with Microsoft’s platform than in the past because the cost savings of not having to put their own advanced set-top box into homes would be substantial.

Co-opting over-the-top services and whatever other functionality is supported by a set-top — like gaming — into a single, seamless experience for their own subscription service could also help cable providers hold onto subscribers.

The new CableLabs research center may be where some of that starts to happen.

File Format Compliance: The Next Frontier in the Cloud

By Lyndsey Schaefer

As the industry continues to explore its passion for cloud computing, new cloud-based models are appearing each week for steps in the broadcast and production workflow that formerly required access to on-premises systems. However, content players are moving beyond the use of the cloud for jobs like file delivery and applying intelligent cloud solutions to problematic tasks that the industry has put up with for years.

One such domain is the issue of file format compliance against published specs. As the number of content sources, formats and distribution platforms grows, so does the issue of improperly formatted content being received by broadcasters via network file transfer for playback and non-linear delivery. In a recent webcast, Turner Broadcasting’s Michael Koetter, Vice President of News Technology, cited QA around file-based systems as a “huge and escalating cost” for broadcasters.

“According to a recent survey, each improperly formatted asset received takes a material amount of time to correct, and worse yet can put deadlines in jeopardy by triggering expensive crisis level reaction,” says Ian Hamilton, CTO and Co-Founder of Signiant, a leading technology provider of media file movement solutions. “For one operations manager responsible for content ingest that we spoke with, his people can spend as much as 20 percent of their time handling non-compliant files.”

And, it’s not just the inconvenience factor. Incompatible formats, the wrong number of audio channels or unsupported encoding schemes delay all-important time to air. They exact real hard-dollar costs in terms of time, labor, bandwidth and lost productivity and hard-dollar costs in bandwidth and staff time.

A new cloud-based approach from Signiant offers the promise of consistent validation of file-based content throughout the content distribution ecosystem. Instead of doing what the majority of content players do now – validating and correcting file compliance AFTER the transfer occurs – this new approach helps ensure that the right media format gets delivered for the right platform BEFORE the transfer occurs – saving everyone time and money.

“MXF and XML files are the primary target, but we’ll be adding other file formats as customers require them. It’s useful across the board where people are exchanging media in a specific format,” Hamilton explains.

Working with standards from the Advanced Media Workflow Association (AMWA) and the Digital Production Partnership (DPP), Signiant demonstrated this new file format compliance technology at SMPTE and IBC, and will be rolling it into the company’s intelligent file movement solutions in early 2013. The asset compliance tool, when integrated into the workflow, allows the broadcaster to define and reference specifications to which any file they receive must conform before it is sent. Signiant solutions then verify the file before it is delivered. Further, the software will not allow the file to be transferred if it doesn’t reach the technical standard required.

Hamilton says that complementary tools that can be bought from Quality Control (QC) vendors inspect the file at a much deeper level, but also at much higher time and resource cost. In contrast, Signiant’s compliance tool is a pre-flight check, so it can check the basics of the file without having to have access to the entire file.

The patent-pending technology works by providing a cloud-based directory of broadcast content specifications and a mechanism for automatically checking files against a chosen specification. By registering their own customized delivery specification or referencing an industry standard, media enterprises can provide a readily accessible, uniform means of asset validation to their entire content delivery ecosystem. Significant throughput improvements at the ingest stage are possible when content partners are able to ensure compliance easily prior to submission.

Signiant’s asset compliance tool is the digital equivalent of the carpenter’s adage to “Measure twice – cut once.” By checking for compliance first, before transfer, Signiant’s approach catches many errors very early in the workflow and lowers rejection rates and errors at later stages. This saves broadcasters time and money, and provides peace of mind that the asset can enter their transmission supply chain without disruption. It also puts content contributors on alert as to expectations, and should the asset needs to be redone, allows them to be fixed before the send.

Certainly, other checking and potential correction of the content must still occur after the transfer. Yet by putting cloud technology to work proactively, the industry has the opportunity to minimize the longstanding problem of costly errors upstream of the transfer, and opens the door to greater productivity.

For more information on Signiant’s asset compliance solutions, please visit www.signiant.com

 

Netflix Picks Its Poison

By Paul Sweeting

Netflix’s board of directors on Monday announced a new “shareholder rights plan,” otherwise known as a poison pill, in a bid to stave off a potential raid on the company by billionaire investor Carl Icahn.

The plan, which the board approved unanimously on Nov . 2, would be triggered if an “activist investor” acquired 10% of the company, or if a an institutional investor acquired 20%. Last week, Icahn revealed in an SEC filing that he has acquired 9.98% of Netflix’s shares, putting him just under the 10% threshold. Should it be triggered, the plan would flood the market with new, preferred shares, making it more difficult and expensive for Icahn or anyone else to gain control of the company.

In a statement, the company said the plan “is intended to protect Netflix and its stockholders from efforts to obtain control of Netflix that the Board of Directors determines are not in the best interests of Netflix and its stockholders, and to enable all stockholders to realize the long-term value of their investment in Netflix. The Rights Plan is not intended to interfere with any merger, tender or exchange offer or other business combination approved by the Board of Directors.”

The adoption of an anti-takeover poison pill is standard operating procedure for a company under assault by an activist shareholder and the move by Netflix was expected. What to expect now, however, is harder to gauge.

While Icahn has not yet publicly criticized Netflix’s management, he has made it clear in interviews that he thinks management should hand a “For Sale” sign on the company, and has even name-checked several potential buyers, including Microsoft, Google, Verizon and Amazon. Bernstein Research analyst Carlos Kirjner floats Apple as a possibility, because, why not? Whether any of those companies share Icahn’s view of Netflix, however, is far from certain.

Microsoft has already stated emphatically that it is not interested in acquiring Netflix. And it’s not at all clear that any other technology company would be interested, either. Insofar as a platform provider like Microsoft, Google or Apple would be interested in a subscription streaming service it would be because it could add value to its platform and devices, not because they’re interested in the subscription streaming business per se. But it would only add value if the service were proprietary to the platform. So why pay a premium for Netflix when you would only end up having to cut off a chunk of its current subscribers in order to realize its strategic value. It would be far cheaper to build your own content services — as in fact most of them are.

Btt if not a technology company, who might be interested in buying Netflix? BTIG Research analyst Rich Greenfield makes an intriguing case  for someone already in the cable programming business, such as Time Warner, or even Comcast, now that it controls NBC Universal.

“Let’s call Netflix what it is today: a premium cable network entering the third stage of its evolution (stage 1 is distributing other people’s old content, stage 2 is distributing other people’s new content and stage 3 is creating your own new content), which just so happens to be distributed via broadband (OTT, over-the-top) and which is trying to expand its network internationally,” Greenfield wrote in a blog post last week. “In turn, we believe companies that are experts at creating and distributing content should have an interest in acquiring Netflix.”

My own pick, based on no sourcing or inside information, would be Viacom. It’s Nickelodeon and MTV networks are suffering severe ratings slides as their core audiences shift to other platforms and Viacom needs to do something strategic if it doesn’t want simply to write off those audiences. At the same time, exclusive access to MTV, Nickelodeon and Comedy Central content could make a solid foundation for a compelling, over-the-top streaming service. Viacom’s leverage with cable operators might also gain Netflix a spot on some cable systems, expanding its distribution.

If no buyer emerges for Netflix, however, that poison pill is likely to come into play as Icahn looks for a payoff.

 

 

 

Icahn Eyes Netflix Cash Flow

By Paul Sweeting

When billionaire investor Carl Icahn bought up a big chunk of Blockbuster shares back in 2004 he was hoping for a quick profit from Blockbuster’s then-pending acquisition of rival Hollywood Video. Icahn, in fact, bought both ends of that deal as part of an arbitrage play pegged to shifts in the relative value of the two stocks.

When the Federal Trade Commission put the kibosh on the deal over antitrust concerns, however, Icahn lost his bet. In an effort to get at least some of his money back, he set his sights on squeezing cash out of Blockbuster. At the time, Blockbuster was investing heavily in Blockbuster Online in a bid to compete with Netflix and had moved to eliminate late fees — then a major chunk of Blockbuster’s revenue — in a bid to make renting more attractive in response to the widespread availability of sale-priced DVDs. Both initiatives cut severely into Blockbuster’s near-term cash flow.

Icahn decided Blockbuster should stop spending and keep the cash, which not only would boost the value of Icahn’s shares but could also be used to pay a dividend that would let Icahn get some of his cash back quickly. When then-CEO John Antioco resisted the shift in strategy, Icahn launched a proxy fight, took control of the board, ousted Antioco and brought in a new CEO, Jim Keyes, who cut spending and reimposed late fees.

In the end, the course-reversal didn’t work, and Blockbuster filed for bankruptcy two years later. Icahn now calls Blockbuster “the worst investment [he] ever made.”

Not so bad, apparently, that he isn’t willing to risk substantially the same approach to investing in Netflix, however. Icahn revealed in an SEC filing yesterday that he has accumulated a  9.9% stake in the streaming/DVD rental service, sending the shares up nearly 15% on the day (they have since give back a few points). In an interview with Bloomberg Television, Icahn made it clear he thinks the video streaming space is ripe for “consolidation” and he clearly hopes to be able to force Netflix into a sale. Icahn even mentioned several potential buyers, name-checking Microsoft, Google, Verizon and Amazon.

Netflix CEO Reed Hastings has repeatedly rejected the idea of selling the company, however, setting up a potential clash with Icahn. Should Hastings somehow manage to thwart a sale, though, we could well see a replay of what happened with Blockbuster seven years ago.

Like Blockbuster then, Netflix today is spending heavily on its international expansion plan in response to increased domestic competition. Also like Blockbuster, that spending is depressing Netflix’s near-term cash flow and earnings. In his interview with Bloomberg, Icahn also referred repeatedly to Netflix’s domestic cash flow, which he pegged at $2.5 billion per year, suggesting it wasn’t being properly valued by the market, in part because it is being obscured by the negative cash flow currently being produced by the international operations.

If Icahn can’t get his money out of Netflix via a sale, I don’t think he’ll hesitate to go after the cash it is currently spending overseas. Stop that spending and Netflix’s shares would likely rise. It would also make it easier for Netflix to borrow enough money to pay Icahn to go away, through some sort of Icahn-dictated special dividend — a tactic he has used before.

Either way, the shift in strategy could well leave Netflix worse off in the long run. But resisting that shift could leave Hastings worse off as well.

In 2011, Antioco wrote an article for the Harvard Business Review ($$) about his experience battling Icahn. Hastings might want to give it read.

Wal-Mart Bets on Boxee

By Paul Sweeting

Streaming video set-top box maker Boxee has landed an exclusive retail distribution deal with Wal-Mart for the new $99 Boxee TV device that features an antenna for receiving over-the-air broadcast signals and DVR with unlimited cloud-based storage, along with a handful of popular over-the-top streaming apps including Wal-Mart’s own Vudu service. The devices will start appearing in 3,000 Wal-Mart stores in the U.S. on Thursday, according to a report by Bloomberg, and will be backed by a major promotional push by the retailer,, including dedicated in-store displays and marketing materials being sent to Wal-Mart customers.

The deal is a coup for the five-year old startup, which has trailed well behind other streaming set-top makers such as Roku and Apple, whose Apple TV is the current market leader. Wal-Mart sells Apple TV devices in-store as well as online and offers Roku boxes via Walmart.com. But the dedicated displays and promotional support will give Boxee TV a major retail presence heading into the crucial holiday selling season.

Beyond its value to Boxee, however, the deal also lands Wal-Mart squarely in the middle of the debate over cord-cutting, and puts the world’s largest retailer firmly on the side of the cord-cutters. With its ability to receive broadcast channels and its DVR capability, along with its $99 price tag, the Boxee TV set-top is clearly aimed at consumers who might want to cut the cord but are reluctant to lose access to local stations.

Wal-Mart’s promotion of Boxee TV will also help increase the footprint of its own Vudu streaming platform by making it accessible to consumers who do not have a smart TV set with the Vudu app embedded. Vudu is available on Roku boxes but is not available on Apple TV. With Boxee TV, Wal-Mart will now be a major seller of a low-cost device that integrates its own, over-the-top streaming platform with access to local channels, bringing it a step closer to offering shrink-wrapped pay-TV in box via the retail channel.

That could end up being a greater long-term threat to established pay-TV providers than Netflix or Hulu will ever be.

 

 

Garcia Joins FilmTrack as SVP of Professional Services & Customer Engagement

By Lyndsey Schaefer

Industry veteran Theodore X. Garcia has recently joined FilmTrack as Senior Vice President of Professional Services and Customer Engagement, where he will work with major studios to help implement FilmTrack’s Technology Services, inclusive of content management, rights and avails.

Garcia’s many years as a consultant with Capgemini and most recently PricewaterhouseCoopers laid the groundwork for him to work with enterprise-level clients to help them leverage and scale with FilmTrack. He met FilmTrack owners Jason and Stephen Kassin at a MESA meeting, where their discussions eventually led to the opportunity for Garcia to join the firm.

FilmTrack is a leading provider of content and contract management for the global film and television distribution community. The company offers enterprise class solutions for delivery and display of rich media and content, contract administration, invoicing, rights management, availability and physical materials tracking.

“This new role allows me to work more closely with content creators and distributors, which is the heart and soul of the M&E industry,” Garcia says. “It allows me to participate in identifying opportunities for the new channels for content monetization, which require rights management, avails and tracking. All that Film Track offers sits squarely in the middle of globalization of content and digital delivery, which I think is fascinating.”

“With technology changing the way producers and distributors manage the increasing complexity of their businesses, Ted has the right background and expertise to keep FilmTrack at the forefront of new and emerging business models,” says Stephen Kassin, Co-Owner of FilmTrack. “We are bringing him here to help us build relationships and drive new business.”

In his new position, Garcia will wear the hat of a trusted business adviser to studio executives, which is very similar to the responsibility of a management consultant, he says.

“The difference is that within consulting, you need to be prepared with perspectives across a variety of topics; finance, supply chain, corporate strategy, new business models, etc., and be prepared with any relevant data that a client may need.  FilmTrack allows me to hone in on my true passion for content monetization and channel management utilizing the state-of-the-art technology offered by FilmTrack,” Garcia explains.  “My previous roles have provided me with the foundation and critical understanding of the complexity found within the content distribution arena and an appreciation for the complexities found within the studio environment. This experience has also created a personal and professional network that allows me to have conversations with key decision makers where I can marry my understanding of their business and technical issues with FilmTrack’s technology and services.”

For more information on Film Track, visit www.filmtrack.net. Garcia can be reached at: Theodore.garcia@filmtrack.net

Reading The Netflix Tea Leaves

By Paul Sweeting

Peter Kafka at AllThingsD had an interesting read on Netflix’s third-quarter results released yesterday. According to Kafka’s interpretation of what Netflix CEO Reed Hastings said in his letter to shareholders on the results – without quite spelling it out — is that Amazon is developing into a serious competitor for Netflix.

Here’s Kafka’s take:

The company used to have the Web home video market more or less to itself, and now it doesn’t. It’s facing competition from Amazon, Hulu and the cable companies, and is about to start fighting a joint venture between Redbox and Verizon.

That’s not a new observation, of course. But in this quarter’s letter to shareholders, Hastings spells out the strengths and weaknesses of many of his competitors, and it makes for very interesting reading [snip].

The breakdown: Jeff Bezos and company have been building up a digital streaming service that they’ve been bundling with their Prime service for a couple years now. And for a couple years, Netflix — as well as the studios that sell Amazon their programming — has said that consumers don’t seem to be using Amazon’s service very much.

If I’m interpreting Hastings’ comments correctly, that’s changing. Here’s what Hastings said about Amazon last quarter, which echoes comments he has made for several quarters: “We have yet to see Hulu Plus or Amazon Prime gain meaningful traction relative to our viewing hours.”

But here’s Hastings today: “Our estimate is that viewing of Amazon Prime Instant Video has yet to pass that of Hulu.” Perhaps I’m misreading Hastings’ comments here, but he chooses his words pretty carefully (and I’m told he does write these things himself). And to me, there’s a real difference there — one that reads as if Bezos is coming up in Hasting’s rear-view mirror.

I think Kafka is reading it correctly. As I’ve noted here before, Amazon’s streaming service is part of a broader, device-based Kindle Fire ecosystem that gives it leverage Netflix just doesn’t have as a standalone service. Amazon is also able to offer its users content in multiple windows, under multiple business models, and at different price points, making it more of a one-stop shop, even if it doesn’t have the breadth of content in its library yet that Netflix has.

Netflix’s broad distribution and its one-price, one-size-fits all offer make it a very simple service for consumers to understand and use, which many users clearly appreciate. But if I had to guess which of its competitors would be gaining on Netflix, I would guess Amazon because of the leverage provided by Amazon’s device strategy.

 

UltraViolet Marches Onward, But Can it Succeed?

By Chuck Parker

While the last official news from the UltraViolet website is from August 15th of this year, there was aninteresting panel last week and some interesting support statements from the BBC, Fox and Barnes and Noble the previous week.  The title count is supposed to be above 7,000 now, available to more than 5 million consumer accounts through Wal-mart/Vudu and Flixster (as well as the studios’ own title websites), with promises to be available soon on the Nook and M-GO.

But is this enough for success?

As both a consumer and industry evangelist, no one would like to see this succeed more than I do, but when you look at the initiative in the cold light of day, it is a tough, uphill climb.  Why the pessimist you ask?  You say its barely been a year after launch and there are already 5 million accounts and 7,000 titles, right?

Well, let’s back up and examine what ingredients are required for consumers to “cross the chasm” in market adoption of new products.  With roughly 110 million households in the U.S., UltraViolet (UV) is just approaching the 5% penetration point.  While that seems like a lot of consumers when comparing it to Netflix (22m+ subscribers) and Comcast (similar numbers), the right comparison here is the DVD player install base (near 100%) or the PC install base (also in the high 90 percentile in the US).  So, how do you convince consumers who are clearly buying and renting a lot of DVDs (despite the press to the contrary, see this blog) to start paying a little extra to have digital ownership?

First, consumers need to believe that there will be title ubiquity.  If this is only available on 50% or 75% of the titles that are available on DVD, then this is just another format that complicates their lives (“Hey, I want to get this on UV, but it isn’t available…”).  I know, I know.  Many of you are going to chastise me with emails and tell me that 5 of the 6 major studios are now supporting UV and that eventually Disney will have to come around.  Unfortunately, consumers don’t shop for titles by studio (shocking as that is), nor do they care about the challenges our industry faces.  What they know is that more titles are available to purchase digitally on their favorite list (let’s assume the “IMDB Top 100″ list represents that) from iTunes, Vudu and Amazon than from UV and for a price that is cheaper than the UV enhanced physical SKU.  What can the studios do about this?  Start by standing up themselves and making a public commitment to start putting every new DVD / Blu-ray title on UV (even if there is a not a UV SKU sold physically at retail) and give a reasonable time table to make their top 90% of SKUs available in the format (only Warner to date has demonstrated this kind of commitment).

Second, it is difficult to crow about having retailers signed up when the largest DVD / Blu-ray sales retailer (Amazon), the largest digital video retailer (iTunes), and the largest digital “rentailer” (Xbox) have not signed up for the program.  No matter how you slice up the markets where the consumers you want to attract are currently buying or renting, each one of these companies represents represents the lion’s share of them and I would venture to say you cannot create mass adoption without them.

Third, consumers’ appetites are VERY strong for accessing their content through subscription packages.  They sign up in droves for cable, satellite, telco and even Netflix/Hulu packages.  If you want to create mass adoption, work with those subscription services to allow consumers to stream the UV titles they already own thru their services as well (yes, make it part of the deal in your next licensing negotiation).  Once consumers can access the content they “own” through the video services they use to watch the other 35 hours of content each and every week, they will see it as a valuable feature and may consider it during their decision process to rent or buy titles (physically or digitally).

If you are interested, here today’s title count.  UV improved by 2% since our last review in September.

I am very curious to see what the marketing campaign leading up to Christmas looks like.

Ok, let the harassing emails ensue.

Cross-posted at the Thoughts on the Digital Video Space blog.

Pace of Technology Change Leaves Some Dealmakers Gun-Shy

The accelerating growth in the number of devices capable of accessing and displaying professional video content is having the paradoxical effect of slowing down routine dealmaking between content creators and distributors, according to some TV executives.

Speaking at the Variety Entertainment & Technology Summit earlier this week, A&E Network EVP of distribution Lori Conkling said uncertainty about how, where and when video will be consumed over the next 10 years has left many content owners gun-shy about long-term licensing deals.

“When you’re doing a 10-year TV Everywhere [licensing] deal with [a MVPD] there is a certain amount of risk there, because no one really knows where the business will be in 10 years, or what kind of devices might become widely adopted three to five years from now,” Conkling said. “Five years ago, who had heard of an iPad? But if everyone just stays in their corner and does nothing because of the risk, no deals are going to get done. Everyone is going to have to accept a little bit of risk to get deals done.”

According to MTV Networks SVP for strategy, content distribution and marketing Melody Tan, TV Everywhere itself may be contributing to the problem.

“Figuring out what windows or devices are part of your pay-TV subscription is becoming a real challenge [for consumers],” Tan said. “Consumers used to understand and accept that when content went to non-pay TV windows or came in a different format, like DVD, or it went to iTunes, that was a separate transaction. There wasn’t this sense you have now that, I have a pay-TV subscription so the content ought to be free to me in these other windows.”

The same could be said of some device makers as well, according to Univision SVP of digital distribution Renee Plato. “You have a lot of CE companies right now who want they’re screens to be used to view video content, but we need to make sure we’re getting paid for the value we’re bringing to these screens,” she said. “Unfortunately, CE and these other device makers are not always willing to step up there.”

The friction is likely to get worse as the rate of change increases.

 

CDSA Founder Larry Finley Inducted in the CE Hall of Fame

At a gala dinner last night in San Francisco, CDSA founder Larry Finley was posthumously inducted into the prestigious Consumer Electronics Hall of Fame. Finley was among an induction class of 12 industry leaders who were honored for helping found the CE industry as we now know it.

“This elite group of leaders has laid the foundation that our industry continues to build upon,” said CEA President and CEO Gary Shapiro. “Their vision, drive to excel and enthusiasm have helped to create the innovative CE products and services that have improved the lives of consumers worldwide. It is a pleasure to recognize this prestigious group.”

In the acceptance speech, Finley’s grandson and CDSA’s director Guy Finley explained: “Entertainment Matters. And it isn’t just the title of a conference I’m participating in at International CES in just a few months, it also explains that entertainment is and always has been a driving force behind all forms of new technologies. And it is a slogan that could very much define the career of my grandfather and one of the CE industry’s founding fathers, Larry Finley, whose relationships with leading Hollywood figures connected hardware with software well before Steve Jobs saw the importance of this synergy.” In his introduction, CEA’s Shapiro accentuated last night the significance of Finley’s many contributions in the formative years of the industry as the basis for the entire packaged home video industry.

CDSA was originally founded by Finley as the International Tape Association (ITA) in 1970 at the dawn of the audio cassette. Finley, a concert promoter in San Diego and partner with the Dorsey Brothers, later became a pioneer in TV broadcast as a late-night TV host in Los Angeles. This was followed by his pioneering work as owner of the International Tape Cartridge Corporation (ITCC), which produced and distributed eight-track cassettes on behalf of over 50 record labels worldwide. ITA, he non-profit association he later formed played a leadership role in the roll out of tape-based consumer entertainment, first in audio and then in video. Renamed the International Recording Media Association (IRMA), the association’s membership was deeply involved in the manufacturing development of the Compact Disc, DVD and then Blu-ray. As the Content Delivery & Security Association (CDSA) the group now exclusively focuses on protecting the intellectual property and copyrights of content holders worldwide.

“Over 40 years later Larry’s association still exists, working to protect the intellectual property of those entertainers he respected and loved,” his grandson Guy Finley explained at last night’s induction ceremony.

For TWICE magazine’s coverage of the event click here

Long Live Disc

By Martin Porter

I confess.  I haven’t been thinking a lot about discs lately.  I’m been obsessed with Boardwalk Empire (HBO Go), and working my way through massive TV epics like the Breaking Bad (iTunes), MadMen (Netflix).  The Freaks and Geeks box set that I was just given as a gift is sitting there on top of my TV set begging to be played., and I will get around to watching the series once my life gets a whole lot less mobile.

Yes, there is still room in my media life for discs.  And based on the latest numbers I’m not alone.  Just as a healthy reminder –worldwide replication  (every variety) is still nearly 17 billion discs (thank you Alison from Futuresource).  And this is an industry that is never going to face any serious capital overhauls and that can rest assured that they won’t have to be dealing with another format war (remember how risky those were?) anytime soon.

I’m long past grandstanding that discs remain our industry’s money engine…and with a little love, care, creativity — and attention — we can keep them around for quite some time.  Maybe we’re personally all so mobile and digital that we’re forgetting that most of our clients aren’t.  And we may not even have fully exhausting explaining to the consumer the unique attributes of the giftable, collectible, universal and superior BD.

Which is why a recent, totally unrelated editorial entitled “Long Live Paper” on the Op Ed page of the New York Times  caught my eye.  Following an announcement by the U.S. Education Secretary Anne Duncan that “textbooks should be obsolete,” the author retorted: “While e-readers and multimedia may seem appealing, the idea of replacing an effective learning platform with a widely hyped but still unproven one is extremely dangerous.” Nobody has even studied whether or not students learn as well from a digital textbook as they do with the physical alternative.

Could our industry say the same thing about disc?  Sure digital is the growth market but while we’re figuring out how to make money from digital let’s focus some more attention as an industry on what’s paying the bills and serving a proven, devoted market that will be standing  for years to come.  Plus: with UV marketed as a BD feature/benefit — we’ve given the consumer the best of both worlds (which is a hat trick the textbook business can’t provide).  And then there’s 4k around the corner, which could also give us all a nice, little bump.  Has our industry even measured the “enjoyment quotient” of consumers watching a digital download versus their own packaged BD?

Read the article.  It’s a reminder that we’re not alone, juggling the business dilemma of staying true to our current market while embracing and developing what’s next.

http://www.nytimes.com/2012/10/10/opinion/long-live-paper.html?_r=0

Fox Touts Global Digital Growth in Wake of ‘Prometheus’ Success

LOS ANGELES — Twentieth Century Fox New Media and Digital Distribution President Peter Levinsohn made a bullish case for the impact of global digital revenue on studios’ bottom lines at the Variety Entertainment & Technology Summit here Monday.

Levinsohn noted that consumer spending on home entertainment in the U.S. grew by 1.5% in the first half of 2012 after years of declining, driven largely by growth in digital channels, especially electronic sell-through. “Many of these new services are reaching critical mass,” he said.

Levinsohn was also optimistic about digital distribution channels in international markets, likening their growth to the “virtuous cycle” in theatrical revenue outside the U.S. As movie-going increased in emerging markets, he noted, exhibitors began to invest in more and better theaters, which in turn drove even greater theatrical admissions. “We see a similar opportunity in digital,” Levinsohn said, noting the rapid increase in fixed broadband penetration and mobile connectivity in emerging markets.

The critical issue for the studios, Levinsohn said, is to find innovative ways to capitalize on the growth in digital distribution that preserves the value of the studios’ content, pointing to Fox’s recent digital release of Prometheus three weeks ahead of its release on Blu-ray and DVD as an example of that kind of innovation.

Prometheus was the first title released as part of Fox’s Digital HD initiative, which will make all Fox new releases available for electronic sell-through two to three weeks prior to their arrival on disc for $14.99.

Levinsohn said more than 30% of the digital purchases of Prometheus came from consumers who were either making their first digital purchase or were trading up from their usual digital habits, suggesting the strategy drove significant incremental revenue for the studio.

Separately, Fox Home Entertainment president Mike Dunn told Variety that 71% of the subsequent disc sales of Prometheus within the first few days of their release came from Blu-ray, indicating the early HD VOD availability did not alienate premium disc buyers or cannibalize those sales.

“Results in those first weeks were really solid,”Dunn said. ” ‘Prometheus’ (downloads) actually outsold ‘Avatar’ by 11%, and while digital sell-through product is usually about 3% of total revenue in the first year of release, this will be more like 12%.”

Levinsohn called the conventional wisdom that consumers are moving, en masse, from physical media to virtual formats “a gross over-simplification,” noting that 61% of consumers buy and rent from more than one channel.

 

DIY Publishing

The publishing business is developing quite an active do-it-yourself niche. While self-published monographs and vanity presses have been around for centuries, digital technology is making sophisticated publishing tools available to amateur scribblers and creating new ways for aspiring writers to connect with an interested audience.

Amazon.com makes a number of self-publishing platforms and tools available, including Kindle Direct Publishing, the CreateSpace print-on-demand system, and the Kindle Owners’ Lending Library (KOLL). Amazon launched KOLL in the U.S. last year with a library of about 5,000 professionally published ebooks for lending. That sparked controversy among publishers since Amazon did not obtain licenses in all cases for including titles in the collection. In December, however, Amazon opened KOLL to self-published authors and it has since evolved largely into a platform for self-published authors to promote their books. It now has a library of about 200,000 titles, nearly all of them by self-published authors.

On Thursday, Amazon announced it would bring KOLL to the U.K., France, and Germany later this month in a bid to extend its self-publishing program to those territories.

Earlier this week, e-reader maker Kobo announced a deal to acquire France-based Aquafadas, makers of a digital self-publishing and multimedia platform, which Kobo plans to integrate with its Kobo e-readers and the Kobo app for iOS and Android devices (including Android-based Amazon tablets).

Both moves come on the heels of IAC/InterActive Corp.’s $20 million investment in a joint venture with Atavist, the Brooklyn, NY-based developer of digital publishing and multimedia tools it markets to individual authors.

Once upon a time, self-publishing was for writers who weren’t polished enough to get a “real” book deal. Now, it makes you an entrepreneur.

 

Google Wins One Too Late In Book-Scanning Case

Seven years after it started, Google last week finally settled the copyright infringement lawsuit brought against it by the Association of American Publishers over Google Books, the search giant’s ambitious program to digitize the world’s printed books. It might wish it had waited another week.

On Wednesday, U.S. District Judge Harold Baer dismissed a separate but related lawsuit brought by the Authors Guild and other authors’ groups against four university libraries for digitizing their collections and placing them in the HathiTrust Digital Library. Although Google was not a named defendant in that case, it was doing the digitizing under a deal it struck with the universities in 2005 — the same deal that in part triggered the publishers’ litigation against it.

According to Judge Baer, the law in that case was almost entirely on the universities’ side, particularly the fair use doctrine. “Although I recognize that the facts here may on some levels be without precedent, I am convinced that they fall safely within the protection of fair use such that there is no genuine issue of material fact,” Baer wrote in a 23-page opinion. “I cannot imagine a definition of fair use that would not encompass the transformative uses made by defendants.”

Google had raised a fair-use defense in the case brought against it by the publishers. But in settling the case without a trial, it left that question hanging. The details of agreement have not been released, but in a statement jointly issued by the parties after the settlement, it sounded very much as if Google had conceded that there was indeed a “genuine issue of material fact” as to whether its scanning project qualified as fair use.

“The settlement acknowledges the rights and interests of copyright-holders,” the statement read. “U.S. publishers can choose to make available or choose to remove their books and journals digitized by Google for its Library Project.”

One week later, Judge Baer said otherwise.

D’oh!

 

Where Social TV Is Going Wrong, And Hot To Get it Right (AdAge)

The biggest reason Twitter has the most of the social-TV market among consumers is that it’s the easiest way to have meaningful shared experiences around TV…

Studios Gaining the Upper Hand in Subscription VOD

Having been fooled once by Netflix, the studios seem determined not to let it happen again with subscription on-demand streaming.

According to a Reuters report Epix’s recent subscription streaming deal with Amazon, which replaced its previous, exclusive deal with Netflix, contains an earn-out provision under which Amazon’s licensing fee will increase as the number of Amazon Prime Instant Video subscribers increases. Epix is a partnership between Paramount, MGM and Lionsgate.

For the studios, the deal structure would make subscription video-on-demand more like pay-TV, where distributors typically pay the networks a per-subscriber fee to carry their channels. But it’s a marked contrast from the streaming deals originally put in place between the studios and Netflix.

Netflix’s original streaming deals were generally an outgrowth of its existing DVD purchasing arrangements with the studios. Netflix bought the discs outright and kept 100 percent of the subscription revenue they helped generate. When it launched its streaming service it typically paid the studio a flat fee for streaming rights and then kept all of the subscription revenue.

Those deals worked out extremely well for Netflix, particularly early on as its streaming service was growing rapidly, because the fees were based on subscriber levels at the time the deals were struck. Any upside from those deals in the form of new subscribers was reaped by Netflix, not the studios.

One result of that imbalance was that the studios became reluctant to license subscription VOD rights to other potential distributors, at least on Netflix-like terms.

Now, however, the studios appear to have found a deal structure they can live with by persuading distributors to let them share in the upside their content helps generate by attracting subscribers. In addition to the Amazon, Redbox and Verizon reportedly have agreed to a per-subscriber fee schedule for the streaming service they plan to launch later this year.

The question remains whether the new deals — should they become standard — still work for the distributor. netflix has long resisted per-subscriber license fees because they act as a ceiling on the distributor’s gross margins. But if Amazon and Redbox-Verizon are successful under the new terms the leverage will be with the studios in dealing with Netflix.

Cable Prices Are Too Damn High, Or Not

What’s going on over at Bernstein Research? On Monday Bernstein analyst Craig Moffett put out a report saying programming costs for cable and satellite providers had reach unsustainable levels and there’s no way further increases could be passed on to subscribers without a general revolt:

For years we’ve argued that… online video won’t overtake the traditional linear model any time soon. But we also recognize that soaring programming costs are the best counter argument to the stability of the status quo. At 10% per year, the $40 wholesale cost of goods sold today would more than double, to about $80, in another seven years. Incidentally, the monthly retail ARPU of Pay TV service today is about $80. This is a train wreck in the making. Again, something’s gotta give.

The rise in per-subscriber costs has been particularly steep since the beginning of 2010, according to Moffett, in part because subscriber growth has gone flat as consumers find other ways to get TV content while carriage and retransmission fees have continued to increase.

 

 

On Friday, however, another Bernstein analyst, Todd Juenger, offered a very different take, arguing in a new report that pay-TV prices are perfectly reasonable, adding for good measure that practice of offering channels in bundled program tiers that force some consumers to pay for content they don’t watch is actually quite fair because, even if you’re paying for something you don’t want others are helping to subsidize what you do watch.

The proportionality has been overblown, at least to those of us who make a living studying the economics of the industry, because the focus of the discussion has been centered on the rising cost of sports rights and affiliate fees, as opposed to the rising price to consumers of pay TV.

Compared to prices for other goods and services, the rate of inflation in pay-TV prices is far from out of line, according to Juenger.

 

 

Wonder what the office parties are like over there.

 

Barnes & Noble’s ‘Newco’ Gets a New Name

The joint venture between Barnes & Noble and Microsoft has been christened Nook Media, LLC, the companies announced Thursday. The venture, originally dubbed Newco, was formed in April following a $300 million investment by Microsoft in the booksellers, Nook ebook division. According to Thursday’s announcement, the unit will focus on bringing digital reading and educational content to B&N’s Nook e-reader and other digital devices and platforms, including “the imminent launch” of a Nook reading app for Windows 8.

Microsoft will own approximately 18 percent of the joint venture and B&N will own the rest. Barnes & Noble recently undertook a “review of its strategic options,” including the possibility of spinning off its Nook unit into a standalone company. On Thursday the bookseller said no decision had been reached on that question and offered no timetable for the completion of the review.

Whether Nook Media will ultimately provide more than ebooks remains an open question. Microsoft’s investment in the venture sparked speculation at the time that a Win 8-based Nook e-reader was in the works, and that B&N’s ebook store would be integrated with Microsoft’s Xbox Live Marketplace. Neither of those steps appear imminent, however, assuming they were ever part of the plan.

Barnes & Noble recently launched the Nook Video service, however, which appeared to carry Microsoft’s fingerprints. The studios making their movies and TV shows available on Nook Video are the same ones that offer their content through Xbox Live, and Nook Video includes native support for UltraViolet, as one would expect from a Microsoft-designed video service given Redmond’s heavy lifting to get UV up and running.

 

2nd Screen Society’s Subcommittee Aims to Simplify Second Screen Ad Campaigns

In understanding its impact and potential in the marketing industry, the 2^nd Screen Society has developed a new Advertising Subcommittee to forge collaborations between advertisers, networks, content creators and technology developers in second screen media.

The Advertising Subcommittee will be made up of industry leaders to represent each of the stakeholders in the emerging second screen domain.  Alongside Y&R, founding members of the Advertising Subcommittee will include second screen champions in content and technology development for this comprehensive industry alliance.

Stakeholders will collaborate on industry reporting and events. Important ROI measurements and Key Performance Indicators (KPI) benchmarks will be monitored and shared.  As thought leaders for second screen’s application in marketing, the Advertising Subcommittee will be instrumental in informing best practices to an exploding industry.  The group aims to simplify second screen implementation in advertising campaigns with a convergence of innovation and ideas from all major stakeholders.

“The explosion of mobile consumer usage is outstripping the ad campaigns targeted at that mobile consumption.” said Trevor Doerkson, the CEO & Founder of Mobovivo, a developer of companion apps for TV and Film.  “Ad campaigns targeted at mobile companion experiences to TV will help align actual consumer behavior to engagement with brands – when an athlete, musician, actress or ad appears on TV, the second screen is going to target today’s multi-tasking TV viewer.”

One 2^nd Screen Society Board member, Magic Ruby has already taken a lead in developing impactful second screen apps for movies and TV shows such as The King’s Speech and Sons of Anarchy.  “The second screen is becoming vital to the success of new TV shows and movies.  It’s also becoming a far more important to way for advertisers to engage with their customers.  The 2nd Screen Society and new Advertising Subcommittee shows participating advertisers, content creators and developers, how to make the most of this new and exciting medium,” said Thomas Engdahl CEO, President and Founder of Magic Ruby.

Members of the 2nd Screen Society led the second screen conversation at this year’s Advertising Week October 1-5 in New York City.  On October 1, a panel including Magic Ruby’s Engdahl, Xbox, GroupM and MLB discussed the “The Imminent Power of 2nd Screen Consumer Engagement” in a seminar at NASDAQ Marketsite, hosted by Y&R’s Rick Liebling.

“Second screen experiences need to focus on providing the consumer with relevant information, compelling entertainment and unique ways to engage with friends. The best way to achieve that is by fostering strong working relationships between developers and creative agencies that service brands – that is what this subcommittee aims to do,” said Rick Liebling, Y&RNY’s Creative Culturalist and Advertising Subcommittee curator.

For more information visit the 2nd Screen Society web site.

HITS Digital Marketing/Analytics Summit Wrap-Up

By Lyndsey Schaefer

At Friday’s HITS Digital Marketing & Analytics Summit, 150 attendees converged in Hollywood to discuss the ways that digital marketers measure the chatter behind their brands, and how they’ve adapted the way that they talk to their diverse audience of digital consumers.

The day’s Content Keynote featured Dwight Caines, President, Worldwide Digital Marketing, Sony Pictures Entertainment, who discussed Sony’s model for tracking the performance of a theatrical title, from the social buzz and search volumes it receives to help project box office and home entertainment revenues. He explained how the data changed even as the audience sat listening to him. Caines remarked that technology innovation will continue to drive adoption, and that in the future, he hopes a two-screen experience will be the new norm, where consumers can sit in a theater and have the ability to interact on a second screen.

Elizabeth Stephenson, Partner, McKinsey & Company, leads the strategy and analysis center there. Stephenson painted a picture of the world in which emerging markets will become the primary growth engine of the global economy. She also challenged the audience to think about the myriad ways to reach the consumer in a world where everything is connected.

A diverse panel of digital marketing executives discussed the transformational opportunities for entertainment. Moderator Blake White, Director, Advisory, PricewaterhouseCoopers, said that the new normal is that digital is the central driver of future operating models, consumer relationships and revenue growth.

“We look at the whitespace between theatrical and home entertainment – it’s a lull period, but if you can get people to start talking about it there, it’s more about the emotional connection,” says Michele Edelman, Vice President, Direct to Consumer Marketing, Warner Bros. Digital Distribution. “Social listening helps identify key influencers as part of your social strategy,” says Jane Mohon, Senior Vice President, Marketing Services, Sony Pictures Home Entertainment.

During the Retail Keynote, Dr. Phil Shelley, Chief Executive Officer, MetaScale & Chief Technology Officer, Sears Holding, described how Sears helped build customer loyalty using big data for personalized marketing and supply chain optimization. Shelley outlined Sears’ use of Hadoop for open source technology to handle enterprise workload, reduce strain on legacy platforms, reduce costs and bring new business opportunities. Shelley says that Sears used Hadoop to get down to customer specifics to use data as a single point of truth.

Twitter’s Robert J. Pietsch, Director of Sales, West for the social media company, shared that Twitter today has 140 million active users, sending out 400 million tweets per day. Pietsch shared examples where brands became human by using the conversation as a canvas. “Twitter allows you to take moments and turn them into momentum. It’s a canvas for broadcasting content, participating in cultural events and for driving transactions,” Pietsch says.

Twitter also drives traffic to movies. Twitter helped Paramount Pictures change the conversation surrounding its film, “Super 8,” which the audience originally thought was a horror film. Paramount and Twitter worked together to host exclusive Twitter screenings of “Super 8,” which then helped opening weekend box office surpass expectations by 52 percent. Pietsch said that the more tweets surrounding a film, the more the box office grows. He urged studios to use Twitter to build loyalty, engage with customers, appeal to franchise enthusiasts and use influencers to drive conversations.

A panel on metadata addressed the evolving technology and how it can be monetized. “It’s as much about defining the mapping the data as it is mastering and making it available internally as well as to digital clients,” says JR Yasgur, Vice President, Aggregated Metadata Management & Operations, Sony Pictures. “Metadata is essential. We’re launching new channels in new marketplaces around the world,” and having some way to promote the material in an online fashion is critical,” says Clyde Smith, Senior Vice President of New Technologies Fox Network Engineering and Operations. Panelists said that given the different platforms’ needs for different levels of metadata, having a gold standard for content is key.

“Hollywood storytelling is second to none in the world, and digital marketing and analytics are enabling the transformation of the industry,” Mishra says.

Pay-TV In a Box

Bloomberg reported yesterday that Dish Network is in talks with Viacom, Univision and Scripps about offering their channels over the Internet. The real story of those talks, however, may have more to do with set-top streaming box maker Roku than with Dish.

Earlier this year, Dish cut a deal with Roku to provide Roku with a package of foreign-language channels for which Dish owns exclusive rights in the U.S. DishWorld, as the service is called, is available to Roku owners whether or not they also subscribe to Dish’s satellite service. As part of the deal, Dish became a strategic investor in the set-top box maker, taking an undisclosed equity position in the company.

The talks with Viacom, et. al., reportedly involve creating a limited bundle of linear TV channels that could be offered over the Internet for less money than current cable or satellite programming tiers. Embedding that bundle of channels in the Roku set-top, which already includes over 100 on-demand channels, could go a long way toward creating a retail-friendly package consumers could buy and choose their own, customized mix of linear and on-demand channels: pay-TV in a box.

Roku is pretty clearly thinking along those lines. In July, it raised another $45 million investment round in the U.K. led by Now TV, a new web video service owned by U.K. satellite TV provider BSkyB. Roku said in announcing the investment it would use the new capital  to “increase engineering and production to support sales growth of both hardware and digital media services on the platform including advertising, games, transactional and pay-per-view video as well as content packages.”

Dish was rumored to be a silent participant in that deal as well.

 

 

 

An Over-The-Top Milestone

The over-the-top video phenomenon has reached an important symbolic milestone. According to a new report by NPD Group, the number of Americans who say the TV is their primary screen for watching web-delivered video now surpasses the number who rely on a PC or laptop for viewing.

As of mid-2012, 45 percent of U.S. consumers say they route their streamed video to the TV by one means or another, up from 33 percent who said so a year earlier. At the same time, the number of households who say they still rely primarily on a PC or laptop for online viewing dropped from 48 percent to 31 percent.

Most of the TV-based viewing relies on devices connected to the TV to retrieve the content, such as game consoles, Blu-ray Disc players or connected set-top boxes. But 10 percent of U.S. households currently own at least one connected TV, representing 12 percent of the installed base of consumer TVs in the U.S.

“The growth in connected TVs is another sign that online video is maturing,” NPD’s senior VP of industry analysis Russ Crupnick said in a statement. “Streaming video has moved from the dorm room to the living room; and, as more households obtain and connect TVs to the Web, we predict increased trial and engagement for video distribution services.”

Reaching the display tipping point, by itself, won’t have much substantive impact on current business arrangements within the online video or pay-TV industries. But the data underscore the growing need for online video service providers to think in terms of a 50-inch HDTV screen as the most likely destination for their streams, rather than a 15-inch laptop screen.

The data also highlight the degree to which the TV screen is no longer the exclusive province of traditional TV content and traditional TV services. Increasingly, it’s a shared space, where video content from traditional as well as non-traditional sources, to say nothing of games or prerecorded content, must compete for space, time and attention. Given the commercial value of TV time and viewer attention, that’s going to be a very high-stakes competition.

 

For Device Makers, Services After Sale Are Now Key

Once upon a time hardware makers could introduce a new device, give it an operating system and a few basic applications, and leave it to others to provide the content and services to play on them. Not anymore. These days, devices without a native content service attached is going naked and unarmed into the competitive fray.

Yesterday, Barnes & Noble introduced two new tablets, an upgraded 7-inch Nook for $199 and a new 9-inch model for $269. The big news, though, was that B&N went and built its own mobile video service (perhaps with some help from Microsoft) to support the new hardware, rather than rely on third-party services like Netflix or CinemaNow to provide the content.

It’s a familiar arrangement. The iPad has iTunes; Amazon has built a robust content ecosystem around the Kindle Fire; Google rolled its haphazard collection of app stores and content services into Google Play for the rollout of the Nexus 7 tablet. Microsoft is yet to reveal what content services may come bundled with its Surface tablets, but as CEO Steve Ballmer recently told the Seattle Times, Microsoft sees its future “as a devices-and-services company.” It would be no surprise to see the Surface come bundled with a mobile version of Xbox Live, if not initially then soon.

The big question is where the new breed of device-based content ecosystems will leave standalone services like Netflix, Hulu Plus or Pandora? As content consumption shifts inexorably to mobile devices, and mobile devices increasingly come with their own software ecosystems, services without native hardware support could find themselves on the outside looking in.

 

 

Cablevision to Court: Don’t Get Carried Away With Cablevision Case

When the federal Second Circuit Court of Appeals in New York overturned a lower court ruling in 2008 that had found Cablevision’s cloud-based DVR service to be facilitating copyright infringement it was a huge legal victory for the cable operator. Maybe too huge.

In its remarkable friend-of-the-court brief filed on behalf of the broadcasters in their copyright infringement suit against Aereo, Cablevision urges the same Second Circuit court not to get carried away with the legal precedent Cablevision itself helped establish.

“Cablevision has a strong interest in this case,” the brief acknowledges. “The district court relied squarely on the Cablevision decision in upholding the lawfulness of Aereo’s re-transmission system. Because Cablevision currently operates the system this Court upheld, it has a direct interest in the proper interpretation of the Court’s decision.”

Cablevision’s “direct interest” in the case, at least as Cablevision sees it, is not to expand or build upon the precedent it helped establish, but to limit it.

“In Cablevision’s judgment,” the brief argues, “Aereo seeks an expansion of Cablevision’s public-performance holding that would extend it far beyond the case’s facts, beyond its rationale, and in contravention of settled industry expectations.”

Why the seeming about face? Perhaps because Cablevision now fears that the Cablevision case could be used as a wedge by a competitor to gain market share at its expense, as Cablevision itself acknowledges, obliquely, in the filing.

“Indeed, but for the fact that Aereo’s content is transmitted over the Internet rather than a cable system, it is no different from the systems that Cablevision and other cable operators have been providing for decades,” the filing notes.

The court will have to decide the legal merits of Cablevision’s arguments. But the case provides a vivid reminder that, when it comes to disputes involving copyright and new technologies, where you stand often depends on where you sit.

 

TiVo Now a Takeover Target?

TiVo announced Monday that Verizon has agreed to pay the DVR developer $250 million to settle the patent-infringement case it had brought against the telco TV provider back in 2009. Verizon also agreed to pay license fees to TiVo through 2018 for use of its DVR technology in Verizon FiOS set-top boxes.

In addition to the cash payments, Verizon and TiVo “are exploring, among other things, future distribution of Internet video services developed through Verizon’s joint venture with Redbox by making content distributed via that service part of the diverse selection of linear and broadband-delivered content accessible to users of TiVo’s retail DVR products,” TiVo said in a press release.

News of the settlement sent shares of TiVo soaring more than 9 percent in midday trading Monday.

While the payout will certainly boost TiVo’s near-term earnings, the real upside for investors could be the settlement’s implications for TiVo’s future. The original DVR developer has won similar settlements from AT&T and from Dish Network, and successfully beat back a challenge to its DVR patents brought by Microsoft.

Cases remain pending against Cisco, Google-owned Motorola Mobility, and Time Warner Cable. But TiVo’s courtroom record in its long campaign to vindicate and defend its DVR patents remains unblemished. And with each victory its position becomes more secure.

The question for TiVo is, what does it do once it has established clear and unchallenged title to basic DVR functionality? It can force cable and satellite operators to pay a license fee to use the technology, as it did with Verizon. But those deals don’t help TiVo sell more standalone set-top boxes or up-sell consumers on TiVo’s own high-margin subscription service. If anything, those licensing deals likely limit the market for standalone DVRs and force TiVo essentially to compete with itself.

Clear and unchallenged title to DVR technology could make TiVo a more attractive takeover target, however, for some with designs on challenging cable and satellite operators for supremacy in the living room. Someone like Apple, for instance, which is angling to build its own user experience and user interface atop consumers’ existing pay-TV service.

Apple said when it launched its Apple TV STB that it wasn’t interested in adding DVR functionality to the platform. But earlier this year it partnered with TiVo to create TiVo stream, a service that allows users to stream recorded content from their TiVo DVR to their iOS devices, suggesting Apple may be warming up to the idea of incorporating DVR capability into Apple TV and the iTunes ecosystem.

Apple, in other words, might be able to make greater strategic use of TiVo’s patents than TiVo can. So long as those patents remained in dispute, the risk in acquiring them remained high. But as TiVo gradually clears the field of challengers, it may also be clearing the way for a strategic acquirer.

That may be the real reason, in fact, that TiVo’s stock is up in the wake of the Verizon deal.

 

 

Amazon Paying the Price for ‘Showrooming’?

Just in time for the Christmas rush, Amazon is getting the bum’s rush from Walmart stores.

The mega-retailer announced Thursday that it no longer sell Amazon’s Kindle Fire tablets and is removing all Amazon inventory from stores. The move follows a similar step by Target stores in May.

Amazon angered many brick-and-mortar retailers last Christmas by promoting a smartphone app called Price Check that allowed users to compare Amazon’s prices against the price of items in stores by scanning the bar codes — a practice called showrooming. While Amazon has since dialed back promotion of the app, hard feelings linger. The Kindle Fire, which in addition to its digital media capabilities also functions as a mobile Amazon storefront for all manner of items also sold by Walmart and Target, is unlikely to improve relations.

Amazon and Walmart also increasingly compete in digital media, with Walmart-owned Vudu and Amazon Prime Video going head-to-head in VOD movies.

“A lot of these technology companies look like they’re great friends in the beginning, and as they grow and add products, they move from friend to foe,” Fiona Dias, chief strategy officer of ShopRunner and the former chief marketing officer of Circuit City, told the New York Times. In addition to Amazon, she noted that Google’s recent decision to charge merchants to be included in product searches could lead to friction with brick-and-mortar retailers as Google edges into the consumer electronics business, as could Apple’s Passport mobile payments system and the increasing range of items being sold through iTunes.

Best Buy, Staples and RadioShack all said they will continue to sell the Kindle Fire this Christmas, although all are also more dependent on electronics sales than are Walmart or Target.

While the loss of shelf space in Walmart won’t be fatal to Amazon’s Kindle hopes, it does come at an awkward time for the e-retailer. Amazon recently rolled out its next-generation Kindle Fire HD tablets, at a time when the market for tablets is getting increasingly crowded and competitive. In addition to Google’s entry, with the Nexus 7, Microsoft will soon begin shipping its Surface tablets, and Apple is expected to unveil the new iPad Mini in the fourth quarter.

 

 

The 360 Degree Movie Deal

Speaking at an investor conference in New York yesterday, Viacom CEO Philippe Dauman acknowledged what should be obvious: The revenue windfall the studios enjoyed from successive packaged media formats (VHS, DVD, Blu-ray) is largely over and is not coming back.

Previous assumptions regarding packaged-media sales of movie, Dauman noted, have changed to the point that when greenlighting a film, Paramount has restructured deals made with actors, producers and directors to better reflect a “partnership” relationship on the economics of the film rather than a high upfront cost.

“We don’t mind sharing the upside [of a movie with talent] as long as we don’t have a downside, or we have a sharing of that risk,” he said, as reported by Home Media Magazine.

While the movie industry’s transition to the post-DVD world is still very much a work in progress, the music industry may present an instructive model. Like the movie studios, the record labels enjoyed a windfall profits with the introduction of the CD, which drove a massive library replacement cycle among consumers and which carried much higher prices and margins than LPs or cassettes. Also like the movie industry, the whole structure and economics of the business, whether by design or simple inertia, came to reflect those windfall profits, from executive salaries, to the value of artists’ contracts, to the number and type of service vendors the industry relied on.

With the loss of those windfall profits, however, first from piracy and later by the disaggregation of the traditional album in favor of single-track downloads, the music industry has been forced to adjust its revenue assumptions, its corporate structure and the basic relationship between artist and label.

One of the more promising innovations along those lines has been the so-called “360 deal,” in which artist and label share both the risks and rewards from all aspects of the artist’s career, including record sales, performance earnings, merchandise sales, sponsorship income, etc.

Like the music industry, the movie industry is confronting a future in which revenue comes in smaller chunks but from a greater number of sources. In the case of movies, that likely means new release windows, fewer exclusive distribution arrangements and longer ROI horizons. That’s not a formula that lends itself to big, guaranteed, upfront payments before the revenue starts to come in.

But it might some day lend itself to something like a 360 deal between a studio and the talent.

 

 

Investment and Innovation in Ebooks Continue Despite Discounting

When the U.S. Department of Justice brought its lawsuit against Apple and five leading publishers in April, charging them with conspiring illegally to raise ebook prices by forcing retailers to accept so-called agency pricing, many critics claimed the government’s action would actually harm competition in the ebook market and suppress innovation in the business.

Under agency pricing, ebook sales between publishers and retailers were structured as licenses, which allowed the publishers to set the price consumers paid while the retailer received a percentage commission on each sale. The system was largely designed, the government charged, to prevent the sort of deep discounting of ebooks that Amazon.com had pursued since introducing the Kindle. Higher prices, the government’s critics argued, would allow other retailers to compete fairly with Amazon, which in turn would attract investment into a still-nascent business.

When three of the five publishers agreed in August to settle with the government and abandon agency pricing, many of those same critics filed comments with the court urging it to reject the proposed agreement. They pointed to Microsoft’s $300 million investment in an ebook venture with Barnes & Nobel and Google’s introduction of the Nexus 7 tablet as a means of spurring ebook sales, both of which occurred after agency pricing was introduced, as evidence of its beneficial effects. Without the higher profit margins on ebooks made possible by the publisher-enforced higher prices, they claimed, those investments might not have been made.

The judge approved the settlement anyway. And what has been its effect on competition and investment in the ebook market? Not much.

On Tuesday, Barry Diller’s IAC/InterActiveCorp announced it is pouring $20 million into a new e-publishing venture called Brightline in partnership with Hollywood producer Scott Rudin. Brightline will in turn partner with Brooklyn-based indie publisher The Atavist to begin publishing non-fiction ebooks, expanding eventually into other platforms, including print.

Amazon, meanwhile, quickly resumed its discounting ways, dropping the price of HarperCollins titles to $9.95 in the Kindle Store, as they were before the agency pricing conspiracy. Apple quickly moved to match Amazon’s aggressive pricing.

For now at least, investment and competition seem alive and well in the ebook market, despite the death of agency pricing.

 

Microsoft Bets on Original Content

Microsoft is going Hollywood. On Tuesday, the software giant named former CBS chief Nancy Tellem to oversee creation of a new in-house studio that will create original content for the Xbox Live platform and Microsoft’s growing suite of devices.

The move is not Microsoft’s first foray into content creation; the company has been creating original games for the Xbox for years. But the hire of Tellem underscores Microsoft’s growing ambitions in the living room, and marks a significant milestone in the transformation of the Xbox from a video game console to a multimedia entertainment hub that doubles as both a content delivery platform and a device for controlling and interacting with the television set.

Earlier this year Microsoft unveiled its SmartGlass platform (demoed at the Second Screen Summit in July) that allows any mobile device to sync with and control the Xbox 360. Microsoft’s goal is to leverage the installed base of 35 million Xbox 360 consoles in the U.S. to turn SmartGlass into the dominant platform for second-screen and multi-screen experiences around both TV and game content. This fall, Microsoft will roll out its own, Surface, tablet, which is expected to play a key role in its evolving content strategy.

According to the New York Times, Tellem’s unit will be charged with creating both traditional linear content as well as interactive programming “that fuses video and gamelike content.”

Prior to joining Microsoft, Tellem worked at Warner Bros., in addition to CBS, and brings a wealth of experience both on the backlot and in the executive suite.

 

Round Two in Aereo Case Begins

The Barry Diller-backed broadcast TV streaming service Aereo got a nice write up in the New York Times this morning, which credited Aereo with walking a “fine legal line” between providing consumers with the tools to time-shift and place-shift local broadcast signals, and copyright infringement. But the broadcasters whose signals are being place-shifted think Aereo has actually erased that line, and on Friday PBS, Fox and Univision filed a brief with the federal Second Circuit Court of Appeals in New York asking it to overturn a lower court ruling in July that found Aereo to be on the straight and narrow.

The brief was not immediately available (ABC, CBS and NBC are pursuing a separate appeal). But based on excerpts reported by Variety, the broadcasters’ go right to the heart of the matter:

“The district court here reached a contrary conclusion regarding Aereo based primarily on the fact that, just prior to retransmitting a show to subscribers, Aereo first makes a unique copy of at least several seconds of that show for each subscriber and then transmits to its many subscribers from those unique copies,” the broadcasters’ brief stated.

“According to the district court, by interposing these intermediate copies in its chain of retransmission, Aereo makes ‘private’ what otherwise indisputably would have been public performances requiring a license. That reasoning, however, ignores the statute, which by its terms requires the aggregation of individual transmissions to particular recipients, ‘whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or different times.’”

The distinction between private and public performances is critical to the broadcasters’ case — and to their future business model. The district court’s ruling was based on the Second Circuit’s own opinion in the case brought by many of the same broadcasters in 2006 against Cablevision over its cloud-based DVR service.

In that case, the Second Circuit held that the streamed transmissions Cablevision subscribers made to themselves from recordings created and stored on the cable operator’s servers were not a public performance of the works, which would require a license, but a private performance accessible only to the individual subscriber, which do not.

Aereo was clearly engineered (and launched within the Second Circuit’s jurisdiction) to conform with both the technical and legal architecture of Cablevision’s cloud-DVR, which led the district court to conclude that Aereo’s streams likewise comprise private performances and do not require a license.

If the Aereo case results in another appellate court ruling that all a service provider needs to do is bounce a TV signal momentarily off a cloud-based DVR to transform “what otherwise indisputably would have been public performances requiring a license,” into something private that does not, it could open the door to a host of new services offering all sorts of new ways to use and consume TV transmissions without the consent of the network or the content owner.

That would obviously be a very problematic outcome for the networks and network programmers, which makes the stakes in the Aereo case extremely high.

 

Innovation Ensures Apple Meets Demand (FT)

Apple’s new iPhone may have disappointed some who were hoping for a more revolutionary new device, but some analysts argue that the biggest innovation is not in the smartphone itself – it is in the manufacturing and distribution network the group has put in place to satisfy pent-up demand at launch…

Nintendo Bets on the Second Screen

Pity poor Nintendo, trying to make some news today when most of the tech press was still sleeping off its Apple hangover. But the game company managed to make some anyway.

At a news conference in Tokyo, Nintendo announced pricing and availability for the Wii U, its next-generation game console (November 18 in the U.S., starting at $300). The real news, though, was TVii, a new video streaming and second-screen platform integrated with the Wii U console. While Nintendo up to now has lagged behind rivals Sony and Microsoft in adding non-game related video features to its consoles, the TVii platform is a major step toward closing that gap.

Wii U users will have access to Netflix, Hulu Plus and Amazon Prime Video, just as PlayStation 3 and Xbox 360 users have. Unlike those other consoles, however, the Wii U will be able to integrate with the user’s cable or satellite TV service, as well as their TiVo service if they have it. That’s possible because of the Wii U’s Game Pad controller, which is essentially a touchscreen tablet and can double as a remote control and second-screen device for the TV.

The Game Pad can be used to browse listings from streaming services like Netflix, or live TV listings and to control a TiVo DVR. The Game Pad also turns into a second-screen device when watching live TV using technology developed by i.TV. A content discovery engine will help users search for programs.

Nintendo officials confirmed to Engadget that TVii is supported by all major U.S. and Canadian cable and satellite services.

 

 

Liberty Media CEO: Starz Seeking Digital Partner (Home Media Magazine)

Ever since Starz LLC unit Starz Entertainment in February ended a controversial four-year, $120 million distribution agreement with Netflix, it has sought replacement subscription video-on-demand partners — albeit with restrictions, George Maffei, CEO of parent Liberty Media, told an investor group…

Technicolor, DreamWorks Animation Launch Cloud Video Store

In another sign of Hollywood’s bracing for the post-disc era, DreamWorks Animation is partnering with Technicolor to launch a cloud-based movie store and discovery service in the fourth quarter. Called M-Go, the service will offer movies and TV content for sale or rental and will be accessible from any connected device via app.

M-Go will launch with movies from the five UltraViolet studios — Warner Bros., 20th Century Fox, Paramount, Sony Pictures and NBC Universal – and the service will be compatible with the UltraViolet rights locker platform. As with UV, Disney is not yet participating in M-Go. Movies will be available day-and-date with the release on DVD and Blu-ray; selected TV shows will be available as early as one day after their original airing. Prices will be comparable with competing platforms the companies said.

The joint venture is being headed by CEO John Batter, who stepped down as head of production at DWA last year.

“When I was at DreamWorks we spent a lot of time thinking about how we can we help mass-market consumers make the transition from physical to digital consumption,” Batter told Daily Variety. “We were watching our DVD numbers go down and our hypothesis was that services and stores in the market were not properly constructed in a way that was getting consumers to move to digital.”

The M-Go app will be available on iOS, Android and Windows mobile devices, and will be embedded on connected TVs, Blu-ray Disc players and other devices from Samsung, Vizio and Intel.

M-Go will be the second major VOD initiative from the major studios to roll out this fall. Last week, Fox announced it will begin making movies available for electronic sell-through three weeks ahead of their release on DVD and Blu-ray, under a new format heading it calls “DHD,” for Digital HD.

For all its studio fire power, M-Go will be competing with several existing EST and VOD services, including Apple’s iTunes, Amazon Instant Video and Walmart’s Vudu service. Unlike many of those other services, however, M-Go is not associated with a proprietary technology platform, giving it the potential at least to become a truly ubiquitous, cross-platform transactional movie and TV service — much as Netflix has managed to achieve for subscription rentals.

The service is being powered by Technicolor, which built the back-end for LoveFilm in the U.K. and has experience integrated content delivery with multiple technology platforms.

 

Tablets Taking Time Away From TV: Nielsen

U.S. consumers watched an average of 6 fewer minutes of traditional television per day in the first quarter of 2012 compared with the same period in 2011, according to the latest Nielsen Cross-Platform Report. The biggest drop-off came in live TV viewing, which fell by an average of 9 minutes per day, followed by DVR playback. Time spent viewing DVDs and streaming video via game consoles either grew or held steady.

Less viewing via traditional methods does not mean less viewing overall, however. Instead, viewing is shifting to newer, mobile platforms, particularly tablets.

According to Nielsen, “Currently more than 15 percent of US TV homes own one or more of this fast growing device category. Smartphones, with a penetration greater than that of DVRs, and gaming consoles are increasingly being used as vehicles for content delivery. Today, nearly 36 million mobile phone owners in the U.S. watch video on their phones.”

Video game consoles are also playing a major role in reshaping viewing habits among households that own game consoles capable of streaming video content — what Nielsen calls “7th generation consoles.” While the average U.S. household spends only 14 minutes a day watching video via game consoles, those with Xbox 360 and PlayStation 3 consoles spend 32 minutes and 36 minutes, respectively, watching streaming video via their consoles.

The full report is available here.

 

Fox Goes UltraViolet for Early VOD Releases

Having experimented last year with offering movies in a premium VOD rental window just 60 days after their theatrical debut, 20th Century-Fox is trying again, with a more modest early VOD offering, according to a report in Friday’s New York Times. Starting later this month with the Ridley Scott Sci-Fi thriller Prometheus, Fox will make all of its new releases available for sale via video-on-demand for $15 three weeks ahead of their release on DVD, Blu-ray Disc and rental VOD.

As part of the initiative, Fox for the first time will make the VOD movies available in the UltraViolet format, enabling consumers to register the movies in an online rights lockers for viewing on multiple devices. Fox had not previously released UltraViolet movies.

Fox will also attempt some rebranding around the electronic sell-through offer, dubbing the effort Digital HD, or DHD.

The move represents the studios’ latest effort to boost sales of movies — the main impetus behind the UltraViolet program. Sales of movies have been flagging for several years as consumers have shifted more of their movie spending into Blu-ray and DVD kiosk rentals and subscription VOD services like Netflix.

Fox’s move could also go a long way toward cementing in place a sell-through-only window ahead of any rental availability of movies. The studios have been carving out an ad hoc sale-only window over the past two years, imposing post-DVD street date windows of varying lengths on Redbox and Netflix. But with its “DHD” rebranding, Fox seems to be aiming to formalize the idea of purchase-availability ahead of rental availability in consumers’ minds.

One key will be whether a 21-day window will prove long enough to shift a meaningful amount of consumer spending out of the rental window and into the purchase window. Fox is clearly trying to strike a balance between shifting consumer behavior and limiting the fallout from other retailers and distributors over the change in windows. Anything longer than 21 days could risk the wrath of Walmart and Best Buy, fearful that high-def DHD sales could cannibalize in-store sales of Blu-ray discs.

In an interview with the Times, Fox Filmed Entertainment chairman Jim Gianopulos said the studio would offer all upcoming releases in the new DHD window for an indefinite period while it monitors the results.

 

Amazon Fans the Kindle Fire

The iPad may finally have some serious competition, at least as a media player. At a news conference in Santa Monica, Calif., today, Amazon.com CEO Jeff Bezos unveiled a quartet of new Kindle Fire tablets, including one 4G LTE-equipped model that undercuts the price of a comparable iPad 3 by $230.

The new Amazon flagship tablet comes with the tongue-twisting name, the Kindle Fire HD With 4G LTE. It sports a 8.9-inch HD screen (1920×1200 resolution), Dolby Digital sound and 32GB of on-board storage. It will be priced at $499, compared to $729 for the 4G LTE /32GB version of the iPad 3. In another stroke aimed at undercutting Apple, Amazon will offer a 4G data plan for the device for only $49.99 per year, for 250MB per month of data and 20GB of Amazon Cloud storage. A comparable data plan for the iPad runs to $230 a year, Bezos claimed, bringing the full first-year cost of the iPad 3 to $959, compared to $549 for the 4G Kindle Fire HD.

In addition to the 4G version, Amazon also introduced a $299 WiFi version of the 8.9-inch Kindle Fire HD, along with a $199 7-inch version. The company also unveiled a second generation version of the original Kindle Fire, with twice the RAM and a faster processor for $159, a $40 price cut compared to the first generation Fire.

Amazon is betting heavily on superior WiFi technology in the new Kindle Fire HD to boost data throughput. All three versions of the HD will rely on 5Ghz WiFi, rather than the more standard 2.4Ghz, and will include multiple antennae to prevent signal fading or interruption caused by gripping the device. Bezos claimed the data rate for the new HD Fires will be 41% faster than on the iPad and 57% faster than the Google Nexus 7.

Amazon is also working on a service it calls X-ray for Movies that will let users call up additional information about the movie they’re watching or the actors by tapping on them while the movie is running. The additional information will come from IMDB, which Amazon owns.

More information on the Kindle Fire HD, along with links to the rest of the news from today’s Amazon news conference can be found here.

 

Netflix Is Doomed, Except for that Silver Lining

By Paul Sweeting

Netflix shares took (another) hit Tuesday after Amazon announced a deal with Epix to bring Paramount, Lionsgate and MGM films to Amazon’s Prime Instant Video service, robbing Netflix of exclusive it previously had on Epix titles (Epix says it is talking with other potential distributors as well). That brought out the Netflix bears in force. like Seeking Alpha contributor Colin Lokey, who called “game over” for the House of Hastings.

Slate economics blogger Matt Yglesias declared Netflix “doomed,” now that streaming movies and TV shows has become a commodity business.

“Cable companies have monopoly pricing power. Content owners have exclusive rights to copyrighted content. Hardware vendors have products that need cross-subsidy. Netflix has nothing,” Yglesias wrote. “At best, Netflix has appealing underlying technology that some other firm in a better position to make money in streaming video might want to buy.”

Reuters economics columnist Felix Salmon, however, had a very different take on the news. “Think about it this way: up until now, when Netflix has signed exclusive deals for TV shows and movies, the enormous sums involved can be broken down into two parts: one part for the right to show the material, and another part for exclusivity,”  Salmon argued. “If Netflix gives up on exclusivity, that means that it’s paying less for the material, and that all the money it’s spending appears on the screens of subscribers, rather than showing up also in the absence of that material on the screens of non-subscribers.”

BTIG Research analyst Rich Greenfield had a similar view (free registration required), calling the potential cost savings from no longer needing to pay for exclusives “a silver lining” for Netflix to the Amazon-Epix deal.

My take is that Netflix is probably right to stop chasing (and paying for) exclusivity even if it means more competition. If there’s a long-term problem for Netflix to worry about its a lack of leverage from a proprietary hardware play. Ever since Apple launched the iTunes Music Store to support the iPod, digital content services and devices have been growing ever-more closely entwined, strategically. Amazon has the Kindle Fire. Apple has the iPad.

In the U.K., Netflix competitor Now TV is owned by BSkyB, which in July led a $45 million “strategic” investment in Roku. Presumably, Now TV service will now come bundled with Roku boxes in England. While Netflix put Roku on the map, and also comes bundled with the set-top boxes, Roku in the past has not been shy about dropping content suppliers from its platform when they conflict with its strategic investors. Just ask the 25 foreign language channels that disappeared from Roku boxes once Dish put money into Roku and the Dish World network became the exclusive foreign-language program provider for the set-tops.

If I were Netflix, I’d worry about getting boxed out before I worried about losing exclusives.

 

Comes With Content Making a Comeback

One year after shutting down its Ovi Music Unlimited streaming service that came bundled with its smartphones, Nokia is trying again. On Tuesday, just ahead of its official unveiling of its first Windows Phone 8-powered Lumia handsets, Nokia announced a new music streaming service that will come bundled with its devices. Unlike Ovi Music, however, the new service will be free — no ads, no subscription fee. While the idea of bundling content with devices is not new, increasingly, content services are integral to device makers’ hardware strategies.

Nowhere is that more true than with Amazon, whose Kindle e-book readers and Kindle Fire tablets are essentially portable front doors to Amazon’s digital content stores. And sure enough, Amazon on Tuesday, just ahead of an expected announcement regarding a new-generation Kindle Fire,  announced a new deal with Epix to bring new-ish Paramount, Lionsgate and MGM films to its Prime Instant Video subscription service that comes bundled with the Amazon tablet.

The trend is becoming so pronounced that some analysts are speculating that content service providers will need to start building their own hardware to remain competitive. Simulmedia CEO Dave Morgan, for instance, makes the case of a Yahoo-branded TV in the current issue of Ad Age. Conversely, Brian Lowry of Variety wonders whether even Apple can remain competitive without its own subscription-based iContent services.

Here’s our prediction: The new Microsoft Surface tablets will come bundled with Xbox Live, giving the tablets their own, closely linked content service and taking the highly popular Xbox Live platform beyond the game console.

 

 

Amazon to go ‘Hollywood’: First comes NBC/Uni deal next a new tablet?

In its ongoing drive to leverage its position as a media machine, the web was abuzz all day over several confirmed and rumored announcements from Amazon.

First the real news:  The online retail giant announced earlier today that it has expanded its content licensing agreement with NBCUniversal Cable & New Media Distribution, adding hundreds of popular and award-winning TV episodes to Prime Instant Video, including prior seasons of Parks and Recreation, Parenthood, Friday Night Lights, Heroes, Battlestar Galactica and more.

“We are thrilled to have several of our iconic programs available to subscribers of Amazon Prime, a service focused on the best possible consumer experience,” said Frances Manfredi, President, Cable & New Media Distribution for NBCUniversal. “We look forward to further expanding NBCU’s content offering available to Prime subscribers in the near future.”

Now for the rumors:  The company sparked a wildfire (no pun intended) of interest in their plans to expand their device business when it invited the media to attend a press conference in Santa Monica on September 6th.  No details were forthcoming but that didn’t stop the buzzosphere from wondering if it a new Kindle Fire or a Smartphone — or both — are on the horizon.  And don’t think anyone overlooked the fact that the event is being held in LA with the six studios and major independents a short commute away.  Not surprisingly, several blogs have reported that the device is code-named Hollywood.

A second generation Kindle Fire seems to be a no brainer with the holiday buying season right around the corner.  CNET reported earlier today that it’s  a “good bet” that the press conference will feature a new Kindle Fire (or maybe multiple units and an e-ink Kindle with a built-in lighting option).  The tech news agency has been on this story for a while since they learned earlier this summer from a source that the next generation Fire would overcome reviewer complaints by including a camera and physical volume-control buttons as well as a higher resolution display and a variety of memory options..  A bigger screen unit that would take on the iPad is also a much-rumored possibility, while Amazon’s ability to  leverage its Prime Video library and content delivery power by subsidizing the cost of the unit or even offering a special advertising-supported version could also be a play.

And now for the real juicy stuff:  What if Amazon also used this press conference to really go after Apple with its first smartphone?  This has been the buzz all summer long since Bloomberg News set this story in motion in early July when it reported that Amazon was working with Foxconn on an Android and media-savvy smartphone device that was maximized to play movies, music and books.  In the litigious world of mobile devices, building up a war chest of patents and a team of patent-smart executives are considered the first and vital steps toward delivery of a digital device and this is exactly what Amazon has been doing all year long.

Then again, don’t expect Apple to sit still and take these announcements on the chin. While an announcement of the iPhone 5 is imminent (latest date is Sept. 12), the other buzz that would likely complicate any Amazon Kindle Fire 2 launch is the other big rumor in the mill of an iPad Mini that would enhance the device’s portability and affordability at the same time — and complicate things further for Google’s Nexus 7Either way, today’s Amazon news further emphasizes how vital a role Hollywood is playing in the launch of the next generation personal devices.

And while we’re on the subject of Apple…

And while we’re spending out summer Friday preoccupied with rumors, why not take a look at the latest “news” on the much-anticipated and likely still-unavailable Apple TV.
ZDNet reports that Pacific Crest analyst Andy Hargreaves held a recent meeting with senior Apple execs who gave him disappointing news about the possibility of a big-screen brother for the iPad.
“Relative to the television market,” the Hargreaves says, “Eddy Cue, Apple SVP of Internet Software and Services, reiterated the company’s mantra that it will enter markets where it feels it can create great customer experiences and address key problems. The key problems in the television market are the poor quality of the user interface and the forced bundling of pay TV content, in our view”.
Hargreaves added that Cue feels that this would be an “incomplete solution from Apple’s perspective unless it could deliver content in a way that is different from the current multichannel pay TV model” and he adds that “the differences in regional broadcast content and the lack of scale internationally also create significant hurdles that do not seem possible to cross at this point”.

Sharing the Summer Olympics: Unauthorized Streams Multiply, Even for Broadcast Events

By Stephanie Bohnert, Peer Media Technologies

The 2012 Summer Olympics gold medal match for women’s soccer began at 11:45 AM (PST) on Thursday, August 9th, 2012. While NBC broadcast this event live in the U.S. on television and online at nbcolympics.com, there were several live streams of this game available through presumably unauthorized online streaming websites. In this article we provide an analysis of one of those unauthorized streams, specifically a high-resolution live stream sourced from the BBC that was available on Rojadirecta.me. [For Peer Media Technologies’ analysis of P2P file-sharing of videos from the London games, click here.]

First, some background. Rojadirecta is a sports linking website that offers users links to external sites where streams of live sporting events are hosted, generally with Spanish or English audio. This site has a fairly high global Alexa ranking of 2,425 (even higher in Spanish speaking countries — 303 in Mexico, for example). During the 2012 Summer Olympic Games, this site allowed users to find streams of most, if not all, live events including 12 streams (4 English, 8 Spanish) of the women’s gold-medal soccer match on August 9th. The gold-medal match was also available for online streaming from Ucaster.eu, Mips.tv, Castamp.com, Yocast.tv, and Stream4U.eu. The image below is a screenshot of the 12 links available for this game on Rojadirect.me.

We focused on the stream with the highest listed bandwidth, “Vertigo Sports,” for our analysis. While Rojadirecta had this link listed as streaming at 1,826 Kbps, we observed this stream using a network protocol analyzer on our internal servers at roughly 1,113 Kbps. Despite this discrepancy, the quality was relatively high quality and definitely watchable as can be seen from the screenshot below of the medal ceremony following the game.

Using tools available to our network protocol specialists, we analyzed many aspects of this stream. First, this stream appeared to have been sourced from the live coverage feed from the BBC Sports network and was hosted by Veemi.com. The ISP behind the Veemi.com stream is the Bluemile, Inc., a U.S. company headquartered in Ohio. The stream itself is a RTMP stream utilizing Adobe’s Flash Media Server v3.5.4.210 to serve the content. Additional attributes of this video stream are listed in the table below.

Another item of note is that this stream was monetized by several ads. Running AdBlock software on this stream allowed us to analyze which ad networks were present. In total, we viewed five ad networks present on this Rojadirecta stream, including ad.adnetwork.net, ad.harrenmedianetwork.com, pagead2.googlesyndication.com, partner.googleadservices.com, and adcash.com. Due to its relatively decent Alexa ranking, we can speculate that Rojadirecta gets decent CPMs for its ads. It is likely that popular events like the 2012 Summer Olympics women’s gold-medal soccer match increased the site popularity of Rojadirecta, which in turn drives revenue from ads placed on the site.

The 2012 Summer Olympics have clearly been deemed a resounding success from a media coverage standpoint. However, despite the widespread availability of legitimate offerings on multiple devices and platforms—for example, MVPDs have reported close to 10 million new user account activations for TV Everywhere services specifically for access to the Olympics in the U.S. alone—high-quality streams were readily available from obviously pirate sites. We understand the economic incentive for the pirate sites (ad revenue), but what is the incentive for the pirate viewers if legitimate offerings are widely available and adequately marketed? We are left wondering, and would be interested to engage content distributors in further conversation about the impact of piracy on legitimate offerings.

About Peer Media Technologies, Inc.

Peer Media Technologies, Inc. is a leading provider of content protection, copyright enforcement and peer-to-peer and web measurement services for companies in the entertainment industry including major motion picture studios, record labels, gaming companies, software publishers and television networks. For more information, go to www.peermediatech.com or email info@peermediatech.com. 

Sharing the Summer Olympics: P2P Downloads of 2012 Opening Ceremony Appear Down from 2008 Levels

By Stephanie Bohnert, Peer Media Technologies

In the U.S. alone, it has been reported that 42 million viewers tuned in to watch the 2012 Summer Olympics opening ceremony in London. A few hours after the opening ceremony finished airing on Friday, July 27th, the full program was available to download from BitTorrent. The BitTorrent versions of the program are commercial free and include portions of the opening ceremony which were not aired in the U.S., notably the tribute to the victims of the July 2005 London bombings.

At Peer Media Technologies, we’ve been tracking the number of people attempting to download various versions of the opening ceremony on peer-to-peer (P2P) networks, using our Media Intelligence Service. Our Media Intelligence Service tracks initiated downloads of U.S. primetime TV shows and major U.S. movie titles on three P2P networks: BitTorrent, eDonkey, and Ares. Based on our methodology, we estimate that there have been roughly 280,000 initiated downloads of the 2012 Summer Olympics opening ceremony, with the peak of these downloads happening in the two days following the event. This observation is illustrated in the chart below.

Most downloads of the opening ceremony are observed to be coming from China and the U.S., which represent roughly 15% and 12% of total worldwide downloads, respectively. The table below lists the top 10 countries where we’ve seen downloading of the opening ceremony.  Interestingly, the top downloading countries are primarily in Asia.

Through this analysis we have identified four versions of the opening ceremony, which account for 87% of all P2P download activity of the event. The most popular version of the opening ceremony being downloaded on P2P networks is an SD version of the BBC broadcast with a file size of nearly 3GB. This single version accounts for nearly 50% of the total P2P download activity for the opening ceremony. The HD version of the BBC broadcast has roughly 20% of the total P2P download activity.

One reason for the relatively small number of 280,000 initiated P2P downloads may be that the event was widely available worldwide via NBC and BBC, and that despite complaints from some viewers that NBC didn’t stream the event live online, the vast majority of U.S. households that have a cable or satellite subscription could see everything they wanted to see. In fact, NBC announced it had served over 102.6 million streams of the London games through Sunday, August 5th to verified online and mobile devices.

It is possible to conclude that the network’s strategy to make the opening ceremony and other Olympic events as widely available as possible has therefore been a commercial success, with considerably diminished online piracy taking place compared to previous years. By contrast, in August 2008 the blog TorrentFreak claimed there had been over one million downloads of the opening ceremony in Beijing in the days after the original broadcast on August 8th. On the other hand, it is also possible that the UK opening ceremony was simply less compelling than the Beijing event in terms of viewer interest.

Another potential reason for the relatively small number of P2P downloads of the London games’ opening ceremony compared to Beijing is the increased availability of unauthorized streams of the content from a number of online sports sites. Essentially all of the most popular sports streaming websites (livetv.ru, rojadirecta.me, thefirstrow.eu, etc.) are hosting live Olympics streaming coverage. Some of these sites are hosting the content in multiple languages including English, Spanish, Russian, and Chinese. Additionally, several of these sites continue to stream previously aired London 2012 events, including the opening ceremony. As illegal sports streaming sites have gained popularity in recent years, it’s not particularly surprising that consumers are choosing to view sports via streaming as opposed to P2P downloads.

Dell Webinar Addresses Critical Data Issues for Studios and Service Providers

One hour can generate a terabyte of data and require massive amounts of computer processing time to render, presenting a new set of challenges to existing infrastructure. Creating, analyzing, storing, and accessing enormous amounts of digital data are pressing issues for many organizations, and solving these problems within their digital supply chain can even land some of them on the red carpet!

In an exclusive webinar for MESA on Wednesday, August 8th, Anthony Dina, Dell’s Enterprise Technologist, Server Solutions, will provide case studies and strategic operational insight that is designed to clarify to attendees how companies can reign in big data and harness its power to drive efficiencies in both IT costs and production processes.

“I don’t have to tell you that producing visual effects is all about bytes,” says Dell’s Steve Felice. As Pixomondo CEO Thilo Kuther further explains, “visual effects are not to be confused with special effects, which involve explosions on the set; visual effects involve explosions created on a computer.” For example, “Essentially every component of every frame in the 854 shots Pixomondo worked on for Martin Scorcese’s ‘Hugo’ — from Hugo’s clock to a menu or an umbrella — represents a chunk of data that must be encoded, stored, and manipulated.”

Then the data must be moved — securely. Pixomondo has a global network of studios in Germany, Los Angeles, Burbank, London, Shanghai, Beijing, New York, and Toronto in order to work on a 24-hour cycle that pushes data from one office to the next, following the sun.

Pixomondo couldn’t afford to lose a day of productivity; “Hugo”’s editing schedule was 20 weeks shorter than usual. They turned to Dell to take control of the massive data that drove an intense work schedule, and Dell in turn got to root for an Academy Award-nominated customer!

In the one-hour webinar, Dell will share some of the answers that Pixomondo, as well as other leading companies, have found to efficiently and effectively create, analyze, store, and access enormous amounts of digital data with their solutions. The results: Pixomondo can perform its “magic” without any downtime. For a short video on how Pixmondo does more with Dell, click here.

The technologies that a 24/7/365 global visual effects house uses to attack big data with ease are available for any business. “Taking Control of Big Data: No Magic Necessary” takes place on Wednesday, August 8th from 11 a.m. to Noon Pacific. The webinar is targeted toward executives, directors, and managers at studios; post production facilities; digital media service providers; production companies; broadcast TV, cable networks, and other content holders; and production partners and distributors in media and entertainment who are looking for efficient and effective ways to create, analyze, store and access enormous amounts of digital data. Audience questions will be answered in real time by Dell’s leading expert.

For additional information, visit http://mesalliance.org/webinars/2012/dell/.To register for the complimentary event, click here.

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