Jeroen Verkroost

One day MBA – September 6th ‘07

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Introduction:You cannot covet what you do not see...

Program guide:1. Historical Background2. Recent TV developments3. Broadcast TV vs online TV4. What is popular online TV?5. Monetizing online video6. VOD and games consoles7. On to the future8. Pick your winner

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Today…Google is the most valuable brand in

the world, before Microsoft and Coca-Cola.

If you would put all users of MySpace and Facebook in a country of their own, they would be the 6th largest population in the world.

In the brand awareness top 5 there is only 1 brand that does not have anything to do with the internet.

Youtube serves a hundred million movies – each day.

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A brief online broadcast history 1992 Audionet starts; covers radio and sports online 1994 The first music streams served on the net:

November 18th: the Rolling Stones Voodoo Lounge concert at the Rose Bowl in Dallas was streamed – to an audience with 14.4k modems.

1997 The first video streams appear on the net 1998 VPRO starts 3voor12 - with the budget of 1 TV show 2001 Madonna in concert webcast reaches 9 million total 2003 VPRO turns 3voor12 into a permanent TV channel 2005 Youtube starts a video sharing site 2006 Chinese P2P video sites share P2P streams on the net 2007 YouTube reaches over 50 million monthly visitors 2007 Live Earth reaches 15 million online during the show

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Today’s TV – terrible?Bill Gates at the 2007 World Economic

Forum in Switzerland: “I’m stunned how people aren’t seeing that in five years from now, people will laugh at the TV we’ve had,”

“Certain things like elections or the Olympics really point out how TV is terrible. You either have to wait for the guy to talk about the thing you care about or you miss the event and want to go back and see it,”

“Internet presentation of these things is vastly superior.”

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TV trends:More stations

Multitasking

Longer commercial breaks

Personal Video Recorder

Less viewers

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Digital distribution – the next stepDigital tv is growing rapidly in the Netherlands,

with over 600.000 now watching digital cable or DVB-T through a set-top box.

Set-top boxes allow 2-way communication and interaction with the ”red button”

But, over 50% of Dutch digital viewers unplug their box again, preferring the analog cable signal.

And advertisers are not buying red-button features because of providers’ technical differences

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Digital TV channelsTV stations that are not in

the analog cable packagesUsed by distributors to “fill”

their offering of 50 – 100 TVchannels in digital TV

Currently reach is very limited Exclusively “Niche” channels – no new RTL4 in

there.Dutch Public Broadcasters are very active in

starting digital channels.Commercial broadcasters see no businessmodel.

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Non-linear TVDue to capacity and automization available through

DVR’s (Digital Video Recorders) TV becomes a non-linear experience.

Viewers instead of stations program the TV night.In June 2007 24 percent of U.S. families owned a DVRAt least 50 percent of television programming is

watched on replay. 33 percent of DVR owners reports

watching more television contentthan before the DVR - but 88% watches less commercials...

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How smart can your TV get?Companies like Philips have been working on

“Smart TV’s” for years.The idea is to bundle services with the

hardware and grab interface control.These initiatives have not yet

been launched.Free digital set-top-boxes are

in the way.Consumers mainly show

a keen interest in HD.

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HDTV – breakthrough?A 32 inch HD ready flat TV now costs

1000 euro.At the end of 2007 no traditional

TV’s will be sold anymore95% of new TV’s is HD ready17% of consumers owns an HD ready

TV today58% of consumers considers buying

an HD ready TV28% will have an HD ready TV at

home in December Sales driven by a “large group of

affluent gamers in their late 20’s.

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58%

22%

22%

35% 55%

6%

0%

20%

40%

60%

80%

100%

TV Usage Online Usage

Light Medium Heavy

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sum

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Source: June 2005 Millward Brown Ad Accountability Study

PC and TV - a different audienceThe online video audience hardly overlaps the traditional broadcasters’ audience

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Case: Live Earth – MSN vs. BBC Live Earth was simultaneously streamed to 15 million online viewers by MSN. MSN viewers could stream all live shows to their PC’s simultaneously in high quality,

choosing their own mix of shows and switching between artists at will.

The BBC received 413 complaints because coverage of Metallica's live set was cut short.

Jonathan Ross praised performances that did not actually get shown to the TV audience.

The BBC later apologized for cutting away from footage of Metallica. The BBC also angered many viewers by cutting away from Wembley Stadium performances

by the Beastie Boys and Spinal Tap to show pre-recorded performances of Rihanna and Shakira.

This was made even more frustrating when the same footage of Rihanna performing "S.O.S." was shown again as part of BBC1's extended highlights package that was shown once the Wembley concert had finished, along with other material shown earlier.

To paraphrase David Bauder of Associated Press; ‘Television seemed shockingly old fashioned in how it followed the worldwide concert. Coverage on the internet was so superior it may one day be seen as the historical marker in drawing people to computers instead of TV screens for big events’

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TV – still the Primary Media DeviceTV is being challenged as the reigning media

consumption champion.Today 19 percent of consumer respondents spend

six hours or more per day on personal Internet usage. 

Only nine percent of respondents report the same level of TV viewing.

TV has almost been overtaken; 66 percent reported viewing between one to four hours of TV per day

A very close 60 percent report the same level of personal Internet usage.

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A professional broadcaster needs to provide some guarantees- Guarantees on quality, reach, availability;- Distribution control – who can watch and who can’t, in which territories (distributionrights); - Clear data and stats on volumes, viewing time and behaviour - in an accepted standard

“Current online tv-systems can’t offer these: you just push your content out, and depending on the network and their connections the signal may reach the audience the way you intended: you just can’t be sure."

The distribution costs are moved from the content provider to the internet service providers(ISP’s) who need to make additional investments to deal with extra traffic on the network - ISP’s could try charging those costs to consumers or content providers.

Another possibility for the ISP is traffic filtering, reducing available bandwidth. “This can become necessary to prevent heavy users from clogging up the network”.

Eventually this touches upon the Net Neutrality discussion: ISP’s could reduce bandwidth of online services like Joost and Skype in favor of own IPTV signal. This is a hot debate in the USA.

To the general audience, the online quality of service is great for watching YouTube, but not yet there compared to an old fashioned cable subscription.

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Online tv (tv via the internet protocol, IPTV) does not depend on the presence of a cable connection (in house or near the PC)

Easy to combine with other online activitities (multitasking) Can offer a richer viewing experience (interactivity,

personalisation) Is not scheduled but on demand (VoD, pick your video) Can integrate and bundle services (converged services) Offers open play - as opposed to distributors’ walled gardens

(Digitale Televisie, Digitenne, Mine), Available content is practically unlimited for advanced users.Cheap to make (no expensive broadcasting equipment

required)No limits on time and space – anyone can create and

distribute (FieldhockeyTV: 290.000 uu’s during Eurohockey in August 07).

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Most Popular Online Video: News Video is now reaching a majority of Web users. Nearly 70% of U.S. people

aged 35 and older are viewing Web video. "The Internet is still seen first and foremost as an information resource,"

said Lynda Clarizio, president of Advertising.com. "With news clips remaining the most popular type of streamed content, video viewing habits reflect that status."

62% of consumers view news clips online, 38% view movie trailers. 36% watch music videos, a close third. Consumers seem to accept video ads as part of the video experience - 94%

of respondents prefer ads to subscription fees. According to 63% of survey respondents, however, shorter ads would

make the experience more enjoyable. Shorter spots also deliver higher percent-viewed rates, according to data from the Advertising.com network.

With the rise of social networks, more diverse video content, increased interactive gaming, and other such advances in online entertainment I think we will see a shift in usage toward recreation."

51% of survey respondents said they would watch a television episode online if they missed it on TV, but 80% said online video usage does not cut into their TV time - demonstrating that TV still has its place.

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Popular Dutch online tv-portalsUitzendinggemist.nl (public broadcaster), RTL gemist

(RTL): portals with on-demand, recently aired TV shows PCZapper.TV: videoportal with 420.000 indexed net

videos from over 350 sources.TV op je PC: portal for (web)tv with over 5000 TV

show linksNederland.tv: a selection of 50 popular stations and

showsKijkdirect.nl: click a logo and watch TV on your PC,

links to 60 regional, national and international stations Kanalenkiezer: entertainment, sports, news, music tv-

channels

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Popular international TV portals BBC, ABC, CBS, FOX, etc: international TV broadcast websites, some only available

in-country. WWiTV: worldwide TV portal with both live and on-demand online TV – 2300 TV

stations FreeTube: portal with wide international offering of TV channels and shows Choose and watch.com: over 428 online TV channels, all categorised. Channelking : worldwide selection of 280 freely available internet TV channels. Viewmy.tv: webportal with worldwide channel overview – includes ratings and most

saved Selectvideo.org gigantische directory met meer dan 5 miljoen video’s, netjes

gecategoriseerd en zoekresultaten die eveneens te sorteren zijn op recent, relevant, favoriet, rating, populair etc.

wfiTV : Watch 1497 free internet TV channels – provides extensive overview over news, tv-shows, films, music, entertainment and sports channels.

Tioti.com (Tape It Off The Internet): over 2000 shows, beta closed, public launch “summer 07”

Streamic.com: over 200 real time TV Channels including NBC, ABC, ESPN and BBC1, categorized and ranked by site visitors .

TV Links : Britse directory met links naar de meest populaire tv-shows, cartoons en animatieseries . Has RSS feeds per show.

Peekvid : meer dan 700 afleveringen van populaire tv-shows, tv-series, cartoons etc, de afleveringen kunnen gedownload worden

TV-video.net : de allerlaatste tv-shows meteen nadat ze uitgezonden zijn

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Peer-to-Peer TV SoftwarePPLive/PPStream : programma (Chinese

site, programmainstallatie in Engels) met veel sport- en filmzenders

TVU Player : tv-speler (eerst downloaden), een van de grootste P2P programma’s met veel Amerikaanse zenders zoals NBC , ABC , ESPN en ESPN2

Joost (beta): de nieuwe online televisiedienst van de oprichters van Skype en Kazaa, werkt met download software

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Not just user-generated content

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Why Youtube is a success

- or asking to register

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"OMG ADVERTISING!!" Early user reactions to the new YouTube InVideo ad format: "If ads invade youtube, i will desert it,“ - “Long story short, it ain't a good idea." “The InVideo ad is MUCH better than a preroll ad, more innovative and interactive." “Much better then tacking [an ad] on the front like most video sites do." YouTube's InVideo ads are semi-transparent overlays, which run at the bottom of its

video player, and stream for 10 seconds about 15 seconds after a video begins. Many of the animations are interactive, users can click through to a page or streaming video spot.

Of the 20 or so advertisers that YouTube said are testing its InVideo units, ads have already appeared on the site for New Line Cinema, BMW, Fox and Warner.

Advertisers are reportedly paying $20 per thousand impressions. For now, YouTube is limiting the ads to official content partners, in hopes that it

won't be accused of profiting from copyrighted material. YouTube is protected by the "safe harbor" protection of the Digital Millennium

Copyright Act. That law generally protects Internet companies that host copyrighted content as long as they remove it upon request. Companies lose that protection, however, if they directly profit from the material. Courts still have to determine what constitutes a direct profit, but selling ads at $20 CPMs sounds like it could qualify

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Online Video Ad Types In-stream videos - pre/mid/post-roll, usually accompanied by smaller

companion banners In-stream banners (a.k.a., tickers, overlays or bugs) -  banners that

appear in the player at some point during video consumption.  User-Initiated video ads -a banner click pauses content and plays a

commercial. Another click delivers users to the advertiser's Web site.

Interactive video ads - Placed before or after a video stream, interactive display ads invite consumer engagement before moving on to video content. Interactive elements allow consumers to find out more information without leaving the site.

Video banner ads - not associated with video content, these video ads play automatically (generally muted) on a page or play when rolled over by a mouse. 

Player skin - sponsored ad graphics on the video player. 

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5.1 5.9

15.4

30.437.5

83.7

18.423.6

60.0

4.6 5.6

14.8

4.55.1

12.8

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0% Standard Ad

Video

Rich Media

% Lift

Aided Brand Awareness

Online Ad Awareness

Message Association

Brand Favorability

Purchase Intent

Rich Media and Online Video Effectiveness

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High amount of attention; Always a premium position

Ad can not be skipped

Reaches hard-to-get audiences

Generates addional reach in sold-out or expensive TV advertising

months

1 advertiser per stream

Exclusivity!

Strenghtens TV campaigns

Online video ad sales

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Online video ad spendThere are 135.5 million Americans watching

online videoOnline Video consumption grew 89 percent this

yearAre we cashing in on this phenomenon? Market research firm eMarketer predicts that

2007 online video spending will represent just 3.6 percent of the Internet ad market, or $775 million.

By 2011, the Web research firm expects the market to expand to $4.3 billion, still only around 10 percent of the online ads market.

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Video- The pancake slide

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Food and Shelter

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iTunes - No. 1 in legal VOD.....But for how long? In July, the Universal Music Group decided not to renew its contract

with Apple, saying it would instead sell music through iTunes on its own terms.

In video, NBC decided not to renew its contract to sell its programming via iTunes, because the companies were unable to agree on packaging and pricing terms. It expires December 2007. Currently, NBC shows like “Battlestar Galactica” and “Heroes,” which Apple sells for $1.99 an episode, account for about 40% of all iTunes video downloads.

The moves by NBC and UMG underscore a turning of the tables in the media distribution business. iTunes may be the No. 1 provider of legal downloads on the Web, but media companies have yet to profit from their respective arrangements. They say Apple under-prices content to sell more iPod, iPhone, and Apple TVs.

In August Amazon.com announced the launch of a new digital music store in mid-September that features DRM-free MP3 files from UMG, EMI and several independent labels.

NBC is also engaged with rival News Corporation in a free, ad-supported distribution venture called Hulu.

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VOD and the movie windows

KPN Interactive TV, UPC, Belgacom TV and Telenet in Belgium now pilot Warner Bros “Day and Date” (VOD).

Movies are available for VOD at the moment they appear on DVD.

Normally the sequence is Cinema release DVD rental release DVD to own release VOD release TV showing.

Warner Bros is testing in Belgium, Netherlands and Scandinavia.

Films offered are titles like '300‘ and 'Harry Potter and the Deathly Hallows' volgen.

Warner Bros will evaluate the effects on DVD sales and rental figures.

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Xbox 360: Wolf in sheep’s clothingDuring the the CES in Las Vegas Microsoft announced

DVR and IPTV functionality for the Xbox360. Robbie Bach: “The Xbox will be able to display live

streaming broadcast IPTV, and for instance record this while you are playing a game online via Xbox live.

The two big Xbox hardware innovations this year are HDMI and HD-DVD.

Bach: “We will make it easy for people to access and discover their favorite content and share their personal experiences with the communities they are part of.”

These features are designed to work with Microsoft IPTV edition platform, so the cable co. needs to be in.

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The Xbox360 “gaming” console

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Popular vod on Xbox360 - HD Film Top 10 January 2007

1 The Descent HD2 Beerfest HD3 Lady in the Water HD4 See No Evil HD5 A Scanner Darkly,6 World Trade Center7 Hard Candy HD8 Superman Returns HD9 An Inconvenient Truth10 Barnyard

TV Series Top 10 January 2007 1 South Park2 Skyland3 Enterprise HD4 Chappelle’s Show: Uncensored5 Avatar: The Last Airbender6 CSI: Crime Scene Investigation HD7 UFC Fights HD8 Supernatural9 Viva La Bam10 Robot Chicken

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PC – Finetune experience

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Wii – Finetune login

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Wii – Finetune playlist

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Wii Crossmedia lesson:Consumers are ready to program part of their

viewing experience.In the consumer biotope programming and

consumption moments will be separated.Computer - chair - lean forward environment

– management of interface and content.Console - sofa - lean back environment -

consumption of managed content.

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Playstation3 becomes TV with PVR

Sony maakte tijdens een persbijeenkomst op de Games Convention in Leipzig bekend te komen met PlayTV, een accesoire voor de PlayStation 3 die van de game console niet alleen een TV ontvanger maakt, maar ook een PVR (Personal Video Recorder). Daarbij zal het ook mogelijk zijn de opgenomen programma's over te zetten op een PSP om deze 'on the go' te kunnen bekijken.PlayTV maakt het mogelijk zowel in SD als HD televisie te kijken en maakt gebruik van de DVB norm. Het apparaat bevat een dubbele tuner, zodat gelijktijdig naar een programma kan worden gekeken, terwijl een ander wordt opgenomen. Een EPG van 7 dagen vooruit maakt het programmeren makkelijker. De uitrol zal begin volgen jaar plaats vinden in Groot-Brittannië, Frankrijk, Duitsland, Italië en Spanje; Australië en Nieuw Zeeland staan ook op het programma; daarna zal de rest van Europa volgen.

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Playstation 3: Soon a Set Top BoxSony will release a digital TV tuner which turns

the PS3 games console into a digital tuner and DVR.

This will work with DVB-T, and with it’s 2 tuners the PS3 would be the only device needed to watch and record digital television.

It features a 7 day EPG.The device will be HD playback capable.Recorded shows can be taken along on a PSP.Rollout in 5 major European markets early 2007This could pose a real threat to cable TV.

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Apple TV - YouTube poweredWatching YouTube on your big screen TV is actually a

lot more fun. You are sitting more comfortably, the screen is better and the clip quality is better. 

It becomes much more of a social event this way. It’s a lot of fun to watch YouTube TV with someone

next to you on the couch. Being behind a computer screen is always a solitary

experience. If the source file was good, the clips will look good,

even on our really big plasma TV. Entering text takes forever. Apple does not offer movies or TV shows in

Europe, so the available video content on Apple TV was very limited. This solves it.

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Coming up: Annotated televisionAnnotation; sharing comments on the

programming based on each show’s timeline. First there will be a passive version — a few bits

of content have “trivia” that pops up at specified timestamps.

Eventually timestamped tagging, commenting, annotation, etc. can be implemented”

“Imagine watching a show like Lost once, and then watching it again with user comments turned on to see what other people caught that you missed.”

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Coming up: the you channelMetadata frameworks can be used to build

the programming and community features of online viewing.

Imagine a personalized TV channel that only serves you shows your friends have rated well or are literally talking about.

The Lost producers could do their Alternative Reality Game in the show itself, allowing you to collaborate or compete with your friends, collecting clues while watching the show.

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Opening up the APIProduction of these next gen features is

expensive – if you pay the coders.Joost have just rolled out their API and opened

things up for anyone to make applications that integrate with their P2P TV client software.

This will open up the TV to a whole new generation of fan developers who will go far beyond RSS, chat, and clock widgets.

For a good example of what opening up can mean for the success of a web 2.0 site, just take a look at Facebook.

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The race is onOne thing is certain – viewing TV will eventually

become a connected experience. But who will own your online connection?

Philips/LG/Panasonic, through your (smarter) TV.UPC/Casema/KPN – through their digital TV box Sony/Microsoft/Nintendo – through your consoleJoost/Brightcove/anybody else - their websites

displayed on your TV screen

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The David Armano test

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Thank you

If the TV would disappear from our living room, how would we know what to point our

furniture at?

Jeroen VerkroostMail/Messenger: jeroen@verkroost.com

Blog: http://www.copypaste.nl58