Internet Video Heads Mainstream
MARCH 20, 2007
SAN JOSE, Calif. -- Internet video may finally be close to hitting the mainstream as traditional players open up to the idea, said panelists at The New Video Summit yesterday.
The day-long conference dealt more in media jargon than tech talk: "Brands" represented the big-name ad buyers, and CPM (cost per thousand impressions) got bandied about a lot. The audience consisted mostly of true believers -- almost every question asked came from a text or video blogger.
Many experts where focused on whether the likes of YouTube Inc. and Joost can find the viewers and the workable business models they need. Prominent efforts so far have involved trying to get traditional media companies and advertisers on the side of the so-called video revolution.
Even carriers got some credit for trying to adjust.
"The more progressive of them realize they have to be ahead of this," said Josh Goldman, CEO of Akimbo Systems .
He cited AT&T Inc. (NYSE: T - message board) as an example, as the carrier is exploring services including video-on-demand on its U-verse platform. "They all see it as a matter of survival, so that they don't just become a pipe into the home," Goldman said. "They realize the revolution is upon us. That's why you see major -- tens of millions of dollars -- investments going into the creation of video headends."
And carriers do have something of value to barter with new media startups. "One of the great things about being a carrier is that you have a billing relationship with the customer," said Chris O'Brien, CEO of MotionBox.
That opens the possibility for, say, a wireless carrier to start a revenue-sharing deal with an Internet video site. (That's hypothetical; O'Brien later noted it's the landline carriers that seem more likely partners.)
Just as carriers are afraid of becoming commoditized bit pipes, ad agencies worry about their traditional moneymakers going away, panelists said. "They're hungry for new opportunities for getting out of the 30-second model," Goldman noted.
Part of what's holding them up is the predictable problem of large companies having to alter their routine. "The process just takes time. You're talking about very large companies that are accustomed to spending large budgets," said Matt Sanchez, CEO of VideoEgg.
But a few anecdotes showed that the traditional media machine is getting more pliable as Internet video gains importance.
Tara Maitra, vice president of content services with TiVo, said her company managed to get studios to accept TiVo's own digital rights management (DRM) software. Most wouldn't have considered it two years ago, given that Windows DRM from Microsoft Corp. (Nasdaq: MSFT - message board) is a better known option. But TiVo uses MPEG-2 compression rather than MPEG-4, making it incompatible with Windows DRM, Maitra said. How did TiVo convince the studios? The bait was TiVo's partnership with Amazon for the Unbox video downloading service launched in February. "Two years ago, the studios wouldn't have had a meaningful conversation with us," Maitra said. "It shows that if there's a new opportunity that seems viable, they're willing to be more flexible than they normally are."
Not everyone was so convinced that Internet video needs the traditional media players in order to succeed. Dmitry Shapiro, CEO of Veoh Networks Inc. , said in an earlier panel that localized advertisers could drive the industry, thanks to the precision of data available on who's watching particular videos.
"We're all drooling over Madison Avenue. Forget Madison Avenue," he said. "The market outside of Madison Avenue is 10 times the size of Madison Avenue. It's just hidden."
— Craig Matsumoto, West Coast Editor, Light Reading
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