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What Online Video Hasn’t Figured Out Yet

One of the best sessions I attended at Streaming Media East this week was on scaling Web video delivery. Dan Rayburn moderated, and participating panelists included execs from Move Networks, Level 3, CBSSports.com, and MLB.com. Two things struck me. First, these guys have done incredible things online, including building large audiences, rapidly improving video quality to true HD, and making money in the process. But second, there’s still a lot they’re trying to figure out. And these are the companies that are successful in the business.

Take the last question Dan Rayburn asked: What is the biggest thing holding us back from making the next leap in Web video? The answers were telling. Although the panelists generally agreed with each other, they also each had something to add when their turn came. John Edwards from Move Networks named rights management as the biggest frustration. Mark Taylor from Level 3 talked about monetization lagging behind distribution quality. Tony Fernandez from CBSSports.com cited the need to get more efficient at building systems for production and distribution. And Joe Inzerillo from MLB.com brought up the point that we don’t yet know what is “good enough” in Web delivery. If three percent of users have a bad experience because of legacy equipment or a low connection speed, is that acceptable from a business perspective?

In contrast, these are all issues that TV service providers have won the answers to after years of perfecting the system. Conditional access technology has satisfied the security demands of content providers. Operators enjoy revenue from both advertising and subscription fees. Relative efficiency is built in after years of tweaking delivery. And operators generally know what “good enough” is to keep their services up and running successfully.

All of this is to say that while the online video industry is moving forward at a rapid pace, there are challenges that will only get solved over time. And who knows what disruptive technology will upset the apple cart by then?

TV Predictions from Streaming Media East

Streaming Media East logo 2009It’s a sign that the TV industry has changed when conversations from the Streaming Media East (SME) conference start sounding an awful lot like they could be transplanted directly from The Cable Show. Yesterday I sat in on an SME session entitled “Online Video and Set-Top Boxes”. With execs from Verizon, Motorola, TiVo and Showtime, the panel talked about how to improve the user experience, and how to make money in the new convergent, interactive video world. Sound familiar?

There were a few new insights worth sharing, however. For example, it turns out Showtime is actually making money from the interactive application the company showed off at The Cable Show last month: a couple million dollars in annual revenue. Someone is making money from interactive television!

And, in keeping with the content delivery network aspect of the show, Verizon exec Joe Ambeault revealed that the operator is working out agreements with various producers to make their content available right at the edge of Verizon’s broadband network. My question: are all telcos destined to become CDNs?

Meanwhile, Motorola’s Nick Chakalos had some very interesting predictions for the audience at the very end of the panel. He believes that we’ll see three things over the course of the next twelve months: unique improvements to TV user interfaces, more content providers experiementing with new delivery models, and new video providers entering the scene to compete with traditional cable, telco, and satellite operators. It’s a brave new world.