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Aggregators

Special interest sites – another model for long tail internet TV

By | Aggregators, Content, IPTV, PCTV, TV, Venice Project | 9 Comments

In the hard copy March issue of SportBusiness International there is an article about SecondsOut.com – a site for boxing fans. They aggregate a global audience for second tier boxing matches which they stream on their site, charging on a pay per view basis.

This is the internet at it’s best – national TV channels can’t find enough audience for most of these fights and so they don’t get screened, but the internet is able to pull together sufficient audience to create a business opportunity that didn’t exist before and satisfy a demand that was previously left wanting.

Apparently sports broadcasters are often not interested in showing title fights where a mandatory challenger for a match has little interest domestically.

This model could work for other sports. Tennis has a lot of parallels with boxing – an individual sport, high profile top matches/bouts, a long tail of less popular events and truly international competition. I think this could also extend to sports that don’t have a significant TV presence at all today, e.g. squash and table tennis.

It needn’t just be sports either – hobbies like cooking, magic (as in pulling rabbits out of hats) and needlework might also be interesting. (Re-reading this list I wonder if it provides some weird kind of window into my psyche!?!)

I’m starting to build a picture of a world where we get mass market shows like Lost from the sites of the producers, niche sports from special interest sites, mainstream sports from club sites, movies directly from the studio sites and archive material from companies that specialise in buying up old rights.

We will find these shows either because we know the sites (as a boxing fan I would have bookmarked SecondsOut), via their natural search rankings if we know what we want, or via aggregators/recommendation sites when we want something new. The aggregators will be social media sites – (e.g. like TIOTI).

As I wrote yesterday, the content would be micro-chunked and monetised
via in-chunk ads, or via per unit micropayments (this is kind of what
is happening already on SecondsOut).

This vision doesn’t leave much space for IPTV plays like BTVision, channel based plays like 4OD, or even dear old Joost.

I have deliberately ignored the delivery infrastructure side of the equation. To my mind that will be separate from the service provider side – not integrated. It seems to me that the quality is already good enough that an integrated service provider-infrastructure play is not the way to go. But I may be wrong about this – clearly the guys behind Joost and Babelgum think so. Remember also that I think that picture quality is of secondary importance to most people.

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The Long Tail theory is playing out well for music lovers

By | Aggregators, MySpace, Social networks | 6 Comments

Broken CD

Background – anyone unfamiliar with Chris Anderson’s Long Tail Theory can check out his book, his original Wired article (which gets it down to five pages).

I was reading in the Economist this morning about the death of the UK record store. HMV and Virgin are both struggling, and Music Zone with 104 shops has gone into administration.

Part of the story is that supermarkets retailing the top 100 bestsellers now account for a quarter of all album sales. (This fat head apparently accounts for a third of the album market, so the supermarkets seem to have captured the lions share.)

The other part of the story is, of course, the internet. Etailers like Amazon now account for 11% of the market, legal download sites for 3%, and illegal downloads are on top of this. All the internet channels are growing fast, while the overall music market is shrinking as rising download sales can’t compensate for falling DVD sales.

One of the conclusions of the Economist article is that all this is bad news for small record labels and those who love their music. The argument is these companies rely on record shops to stock their music and knowledgeable shop workers to recommend them to punters.

I am not so sure about that.

It ignores the other side of music on the web – sites like LastFM, Pandora and parts of Myspace and Bebo are all about music discovery.

These sites are offering new ways for people to find new music – either via automated recommendations on LastFM or Pandora, or via recommendations from friends (in the internet sense of the word ‘friend’) with similar taste on the social networks.  I would say that these tools are better at helping lovers of niche music find what they are looking for – the internet is great at aggregating small niches.  Indeed I have friends that were struggling to get sales via record shops who now excitedly show me their MySpace sites and the traction they are getting (one of them even reads this blog – Hello Scott!).

So far from getting left in the cold by the demise of the record shop I think that niche music lovers (and I am one) are leaving record shops because they are better served on the internet.  More choice, lower prices and greater convenience.

Over at the other end of the market, mainstream music lovers are also doing well.  They get their music much cheaper from Tescos than they ever did from HMV.

This is the long tail theory playing out in practice, and it is good for consumers.  It is not good for legacy distribution networks – from record shops to record labels.  For music artists, I think it is a mixed blessing.  Some have very successfully embraced the internet (look at Lilly Allen – warning, this link is to her MySpace site which isn’t exactly easy on the eye!) but many others feel they are suffering from a lack of copyright protection.

As an interesting aside – I’m not sure why, but whilst record shops are in decline, book shops are in resurgence.

Agencies – more English than tea and crumpets?

By | Aggregators, Real estate, Venture Capital, Web2.0 | 2 Comments

What is it with us Brits and agencies?

They are everywhere in this country, much more so than in the US, for example.

I`ve been feeling it most in advertising through our investment in Buy.At, and estate agents have been figuring prominently in my thoughts about the property sector (of which more below and in a later post). Then yesterday I had lunch with an old friend who runs a company that sells candidate assessment tools and he was complaining that recruitment agencies are a problem for him in driving innovation in his sector.

Don’t get me wrong, good agencies can offer tremendous value add, and my friends at Blue Barracuda are a great example of that. Unfortunately, however, not all agencies were created equal, and some can be a real drag on innovation.

The power of the web is that it can offer a lot of the services we typically rely on agents for. Two of the main services – finding stuff and pricing it are really done bettter via the web – that way you can be more sure the search is exhaustive and the benchmarking accurate. 

The other thing an agent does for you is help you figure out what you want. In this area the agency model is conflicted. The service here is really consultancy, yet the payment is typically a percentage of what you buy. So incentive for the agent is to get you to make a purchase quickly, without wasting his time. It is this dimension that can get in the way of innovation.

This is a bit of a rant, but I hope our love of agencies doesn’t hold back our internet sector. For example zillow.com in the US property sector has an innovative model of building a permanent database of properties that the owner can simply mark as for sale when they choose (or can show a `make me move` price). This wouldn’t fly today in the UK because estate agents control 99% of the market, but it has a chance in the US where a much greater proportion of homes are sold direct.

The Venice Project – early thoughts

By | Aggregators, IPTV, PCTV, TV, Venice Project | 16 Comments

SkypeFounders 

I got an email this weekend (along with many of you, I’m sure) announcing that the Venice Project has entered its public beta phase.  For those of you that don’t know the Venice Project is the latest venture from the founders of Skype and has been a stealth mode TV over the internet project for some months now.  They are rumoured to have employed hundreds of people, principally in New York, but also in many other geographies.

If you are a regular reader of this blog you will know that I have more than a passing interest in this space, so I’m curious to understand the significance of this venture.

The whole project is shrouded in secrecy with participants in the private beta signing non-disclosure agreements, so there isn’t much info out there.  I think there is enough info to scrape together some early thoughts and observations though.

  • They are following ICQ and GMail in what is becoming a standard approach to viral marketing – make it a little mysterious, limit participation in the beta to invitation only, have existing beta participants invite their friends and create an impression that there is exclusivity in being part of the beta programme
  • The service combines P2P delivery with legitimate content deals – so there won’t be any Napster style difficulties with copyright (rumour has it that the public beta launch is behind schedule because the content deals have taken a long time to pull together).  The service includes social features, like chat and ratings
  • They are going into public beta early with a service that still has glitches – I aplaud this move, it shows courage and confidence in the revolutionary nature of what is on offer
  • Coverage on the web is mixed so far (although very early days).  This report on Webtvwire says the GUI is poor which could be a killer and video is stuttery, informitv is more positive, (although they admit to having signed an NDA)

 

Zennstrom and Friis have fantastic pedigree across two really successful companies and I’m sure what I’m about to say won’t be news to them.  To me P2P delivery is interesting, but the really exciting play is in the service level, and a few things seem to be missing.  At this stage I should say that I haven’t participated in the beta – so anyone who has direct experience of the service (and can share) please chip in.  And if anyone wants to invite me…..

Firstly – I don’t think a service based on content deals is the right way to go, long term.  This is a walled garden approach.  Music has shown us that content should be separated from distribution.  Right now an integrated service might be the best way to get something started though.

Secondly – search on the service is limited to stuff you have watched – that seems almost crippling to me.

Thirdly – the social elements of the service are great, but they are missing the aggregator/fileter piece that is critical for the long tail.  This is one of the things that makes internet TV interesting to me.   

As an example, a friend of mine has invested in an internet TV channel dedicated to cycling Cycling TV – aggregating niche audiences worldwide to find critical mass in a way that is impossible over traditional TV distribution infrastructure – you couldn’t find this on the Venice Project with its walled garden approach and limited search – yet this sort of thing is a large part of the promise of internet TV.

This is a screenshot from the service:

VeniceProjectScreenShot

BTVision and a look at how close we are to tomorrows webTV world

By | Aggregators, BT, IPTV, PCTV | 8 Comments

WebTV 

This week BT announced the launch of BT Vision, their new IPTV service.  There are lots of details on RadioandTelly but in summary you get:

  • A set top box which supports Freeview (UK free to air digital terrestrial TV service)
  • Set top box incorporates PVR which can hold 80 hours programming
  • Electronic programming guide which combines 14 day TV schedule and defined range of downloadable on demand content (sports, films, music etc.)
  • Access to BT Podshow (BT site which has licensed content and some UGC on it, but is v. careful with respect to copyright)

This is a first step towards the future vision I have been talking about, it gets TV’s connected to the internet, but open web access is going to be the killer app.  IMHO that is going to be the thing which motivates people to move.  Huge content libraries are interesting, but I’m not suffering for lack of choice at the moment, the thing I am missing is being able to go looking for stuff that interests me.

Open web access is also the enabler for mass adoption of aggregators and filters like TIOTI.  The likes of TIOTI can get off to a good start with early adopters and people who watch TV on their PC’s, but as pointed out by the Beeb balancing your laptop on your knee can only take you so far.

(As an aside reports on the BBC website are now suggesting that TV piracy is rampant on the web.  And the good news for UK plc is that we have a lead here!  Apparently we account for 10-25% of all TV piracy – not bad for a little island.  And all because we love American soaps.

It is worth noting though that more and more stuff is being made available legally according to Paul Pod of TIOTI.)

Other services available in the UK today (Telewest Teleport, CinemaNow and Homechoice) are all similar in that they only make their pre-defined libraries available.

These services all control the EPG as well – so whilst in theory it wouldn’t be difficult to open up web access to do so they would need to rebuild their user interface – which I understand is a tricky business.

On the subject of interfaces – I learnt of a new company today, Miniweb who are building a standards play around managing the internet-set top box-TV connection and user interface.  Seems interesting, but you know my thoughts on set top boxes – no more use than a chocolate teapot in a true webTV world.

Another important enabler that is having an impact today is the combination of improving compression codecs and improving bandwidth.

As I come to the end of this (rambling) post I realise I have been thinking about this back to front.  We won’t suddenly switch to open webTV because someone like BT makes it available in easy pre-packaged form.  It will start from the bottom up – like Napster created iTunes.  So the interesting data to look for is TV shows downloaded from the web.

More on the future of TV

By | Aggregators, IPTV, PCTV, TV, Web2.0 | 11 Comments

The kernel for this piece was this presentation from Bear Stearns by Spencer Wang on the future of the entertainment industry I found on Raphael‘s (Leafar) and Nick Carr‘s blogs.

The presentation uses value chains as a framework to analyse TV and chimes well with a lot of what I wrote in Internet TV the end of the world as we know it, internet TV and the future of set top boxes, and why internet tv will mean the end for channels.

My central theme has been that it is difficult to underestimate how disruptive the internet will be to the TV industry

This diagram from Spencer’s presentation sets out the current value chain for TV with the future players boxed underneath.

 TV value chain 4

In my earlier posts I have been talking about content packaging and distribution. 

In distribution it is easy to see the internet emerging dominant and the existing players only surviving to the extent they become ISPs.  Set-top boxes as we know them are mostly about signal transcoding, and EPGs – all that will happen in the PC, as will local storage.

Moving to content packaging, one of Spencer’s key conclusions is that we can:

Expect New Viable Aggregators to Emerge

Channels as we know them are aggregators designed for a limited distribution world.  These new aggregators will be filters and recommendation engines – not a list of 24 hours worth of programmes for each day of the week.  Spencer suggests that the well known internet brands might dominate – my gut is that today’s start-ups have a good chance.  (Or a good chance of selling out to these players at big prices 🙂 .)

Spencer also takes the argument further.  He points out that the barriers to entry for producing content are falling.  Camcorders have sufficient quality and video editing software is cheap and runs on your home PC.  This will disrupt the TV production industry – they will lose market share to user generated content and low budget professionals and might find themselves very unprofitable unless they cut costs and enable themselves to sell programming more cheaply than they do today.  If they don’t do this the new aggregators and filters will find better value alternatives for us.

The good news for the industry is that lower prices and more choice will likely increase overall demand.

Next I hope to look at the IPTV offerings available today from BT and others to see if the future is visible in today’s services.

Internet TV and the future of set top boxes

By | Aggregators, IPTV, PCTV, TV, Venice Project | 9 Comments

This is a follow up to my post last Internet TV – its the end of the world as we know it.  There were many comments (for which thank you all) which were the result of some fairly bold statements, a couple of which deserve a little more consideration.  This is about the future architecture for the home and the place for set top boxes.  I will write another about the future for channels and what consumers might want.

It was Fred Destin’s comment on the post above over the weekend that finally stimulated me into action.  As an investor in DailyMotion and Gotuit he knows a thing or two about this space.  (By the way, check out Gotuit to see it’s lightning fast embedded Flash player – nice.) 

That said, I don’t agree with his points, which is good, we learn from disagreement.  With these posts I’m giving my best guess as to how things will pan out – that is what we do as VCs when we back early stage companies, so this debate will help us guess better.

To the meat of the post then. 

As I said, I think Set Top Boxes (STBs) are on the way out.  STBs (set top boxes) are better than PCs for TV apps today.  No question.  It might even stay that way – but I believe that over time they will disappear.

The main reason I think the PC will eventually replace the STB is that all the functionality that is required can be easily provided on the PC (and MSFT is working hard on this via Windows Media Centre and Vista).  Once everything is internet connected the TV needs to be networked to the PC so the set top box becomes redundant, an unnecessary expense.  At the moment it is subsidised by TV service providers, but if I’m right about channels going too then the subsidy will disappear.

The argument hangs on the ease of replicating STB functionality on the PC so I’m interested in evidence and thoughts on this point.

As with any purpose built hardware set top boxes are expensive to develop and maintain.  Custom chips don’t come cheap.  The difficulty of writing good software can be seen in the quality of the electronic programming guides we all use (think about Sky – it works fine, but not much in there, no search for example, and if you ever had Ondigital in the UK you will know what I’m talking about).  

For the ‘no set top box’ vision to come to pass people will need to have PCs in their living rooms.  Either that or some kind of remote control that directs the PC from the living room.  New software will be needed too, so that people can control their PC in familiar ‘sit back’ mode, probably from a device that doesn’t look too different from today’s remote controls.  My guess is that people will populate their TV schedule on their PCs and then drive their viewing in sit back mode.

None of this seems that difficult, and the benefits to consumers are huge.  Being able to control our TV schedule from our PC will give us access to programmes and filters that will be very hard otherwise.  Doing that from a set top box will be hard …. unless it has a full keyboard and browser.

Whilst it won’t be difficult, there is still an awful lot that doesn’t work.  For example, connecting a PC to a TV is still v. difficult.  So this stuff will take time and as I said in my last post there may be space for some successful STB style devices before we get there.