Niemeyer Review Newsletter

The Niemeyer Review Newsletter is a weekly look a key topics for the business of advanced video and television, covering platforms including broadband, DVR, VOD, interactive TV and mobile. The newsletter has an emphasis on analysis of current trends to inform strategic understanding, and how this understanding can translate to near term action.

Why Google TV Can Succeed In Spite of The Cable Companies

The announcement of Google TV has certainly got a lot of attention. I think it could (maybe) gain a good deal of consumer, developer, advertiser and network traction. Even be a Game Changer.

While my 10 years in the advanced TV/video business has taught me to be a curmudgeon about “Net Meets TV” efforts and there are many devils in the details that will affect chances for success, I find myself being somewhat optimistic about Google TV. Welcome to 2010 – (some) things have changed.

With many Google TV topics to discuss, I’m going to focus on one here – can Google TV get market traction without any cable, satellite or telco IPTV operator cooperation beyond the deal they now have with DISH?

I’m going to say yes. Why? I believe there are three classes of apps that can be deployed on Google TV and only one of them requires operator cooperation. The remaining two classes can represent significant market opportunities.

The classes of apps are:

  • Tightly TV-Coupled Apps
  • Loosely TV-Coupled Apps
  • Not TV-Coupled Apps

Tightly TV-Coupled Apps – These are apps that directly relate to what’s on TV at that moment and depend on communication between Google TV and the operator’s set top box (STB). An example – a DISH customer tunes his STB to The Weather Channel. The STB communicates the channel change to Google TV which launches a Weather Channel app with local weather info in a live graphic feed at the bottom of the screen (this could easily carry targeted ads as well).

Loosely TV-Coupled Apps – These are Google TV apps that directly relate to what’s on TV but don’t have the benefit of communication with an operator STB, because Google and the operator haven’t done the business side deal. Or it could be technical challenges or whatever other reason.

How would this work? Using the Weather Channel app example, there are two ways.

One is via technology. Google TV picks up information encoded in the TV feed from the network and identifies what’s being viewed. It’s an old technique. Over 10 years ago, WebTV and other platforms supported analog TV in-signal information encoding called ATVEF. On a modern HD signal it could be done via metadata or watermarking.

But there’s another way that’s proven to be technically feasible and simple to deploy. I’ll call it HLTA – Human Launches The App. I change the channel to The Weather Channel with my cable remote, I pick up my Google TV remote and launch the Weather Channel app. It’s definitely non-optimal but how much harder is that than launching any iPhone, Android or PC desktop app? If a Loosely TV-Coupled App provides enough utility, I’ll pick up two remotes to use it. And once the app is launched, it can be tightly synced to the TV program via the Internet and cloud-based servers. This isn’t new tech either. 10 years ago, I was part of the team at a VC funded tech start-up named Spiderdance that did exactly that, syncing PC game show apps with programs on networks including NBC and MTV.

Not TV-Coupled Apps – These are apps that have nothing to do which what’s on a TV channel, using the HD big screen simply as an output device – a very big colorful compelling output device. To me, one of the first best fits is social games. If you are one of the 35 million daily players of Farmville (the very popular Facebook game and cash cow for developer Zynga) and it’s evening time, wouldn’t you like to spend some of your hours and hours and hours playing it sitting in front of the biggest display in your house, the one in front of your comfiest sitting spot and attached to your best sound system? While Zynga has not announced plans to support Android, it would be hard to believe it’s not on their product roadmap, at least for the mobile market (Zynga today launched their iPhone Farmville client). And Google TV will include a Flash player (the PC Farmville client is Flash based). But it’s not just social games. Non TV-Coupled Apps could include any PC or mobile device activity that could be considered leisure time and benefit from a very nice big display.

So back to my original question – can Google TV gain market traction without an operator deal beyond the current one with DISH? With two out of three app categories not requiring operator set top box integration, I say yes.

And there probably won’t be another Google TV/operator deal, at least for 18 months, judging by what’s happened with Google TV Ads (web-based buying and reporting for linear TV commercials). Past the deal Google had in place with DISH at the launch of Google TV Ads in 2008, there haven’t been any major operator deals since. The Fear Of Google is quite strong.

And what of the TV networks’ own Fear Of Google standing in the way of Loosely TV Coupled Apps? Two thoughts. First, some Loosely TV-Coupled Apps likely won’t need network deals (TV related social media for example) as long as they can successfully manage copyright infringement issues. Second, it will only take a few early adopter networks having success with Google TV apps at driving viewing and engagement for other networks to move in and try it. There’s an expression I first heard applied to new technology in the oil industry that works for TV networks as well – “Nobody wants to be first and nobody wants to third.”

I’ll leave you with one more thought. Market success for Google TV may well drive even the largest cable operators to do integration deals with Google. Five years ago, the mobile carriers had a very cable-like view of the world. But with market success for the iPhone and Android, and now a robust mobile app market (Steve Jobs said earlier this month that Apple has paid $1 billion to iPhone app developers), mobile carriers have had to loosen up their walled gardens. Google TV may lead cable operators to follow suit.

What I Took Away From The Cable Show (other than the tsotchkes), plus A Brief Google TV Note (For Now)

(Regarding the news in advanced TV from last week – Google TV – I think it could be a Big Deal and a Game Changer. Possibly, maybe. There are a lot of “devils in the details” in gaining consumer traction. Plus, gaining advertiser, network and operator traction will depend on business side issues including the Fear Of Google that has prevented Google TV Ads, in the two years since its 2008 launch, from expanding past local avail inventory on DISH (and some national avails on DISH from a handful of networks). I’ll be covering Google TV in more detail in a coming newsletter.

One thing I’m sure about Google TV, it’s generated a lot of interest. I got my two cents into Business Week today – I’m quoted in the BW article Advertisers Give Google TV a Warm Reception.)

Week before last I attended The Cable Show (aka NCTA) in LA – the glitz of the cable network side of the business with the raw excitement of the cable operators’ initiatives (maybe raw excitement is overstating it). Nonetheless, there were some interesting trends in evidence, here’s a topline look at some of them.

Mood up – Attendance (about the same?).

While NCTA has not released attendance figures for 2010 (2009 in Washington DC was about 12,000), the show floor seemed as crowded as last year. What was definitely up was the mood of the attendees. Cable networks and operators are both reporting improving financials as the economy recovers. Technology vendors seemed to be in a good mood too as the cable operators appear to actually be moving forward on various advanced TV initiatives.

This year’s Big Theme – the coming (date not specified) world of All Devices Welcome Cloud Based Cable IPTV.

CEOs and other execs from the cable operators were very eager to tell us how the cable TV plant is going to integrate with the full range of consumer purchased devices that can consume IP delivered video. And that the cable plant itself is going to go to IP based delivery and a cloud based architecture to support this plus provide more rapid services development. Comcast CEO Brian Roberts even admitted the pace of cable’s innovation has been too slow (oh really?), asserted there’s been a “pivot” in that pace and said he wants to “liberate from the box” (the operator owned set top box). Dear Cable Operators – it’s like I don’t even know you anymore.

A Note.

As an optimist, I’d like to believe that cable is really speeding up the pace of innovation and I’d love to see a flexible TV plant happen. It could open up television viewing to support a wide range of new services and provide more value to cable subscribers. However, regarding cable company pronouncements of national scale deployments of advanced technologies, I’d like to quote Elvis – “A little less conversation, a little more action please.” On the list of things we’re still waiting for in mass scale – adequate program guides, interactive TV applications (EBIF and/or tru2way), addressability (aka targeting), a broad portfolio of VOD content from ad supported TV networks, VOD ad insertion, adequate VOD measurement, non-cable company device compatibility (how’s that CableCard thing going?), a 100% digital plant and a robust TV Everywhere.

(A final Google TV note, for now. Was the MSO’s NCTA 2010 embrace of All Devices Welcome Cloud Based Cable IPTV and declared acceleration in their stipulated too slow innovation driven by their knowledge of the Google TV announcement coming the next week? Just saying…)

It’s iPad Mania!

It felt like the iPad has created a Teachable Moment for media and cable C-level executives about digital technology innovation with regards to video. Over and over the iPad was cited in the general sessions. Comcast’s Brian Roberts even showed a very cool iPad demo via a video. It showed a well executed prototype iPad program guide that also functions as a remote control. Select a program and the set top box changes the channel. Even cooler… the iPad was not directly controlling the set top through the IR port. It was sending a command up through the broadband connection to the cable plant and back down to the set top (via an EBIF app on the box). (You can see a video of it here.) It also integrates with social networks to enable sharing recommendations. Innovative, well done and rapidly developed. Maybe the cable companies are changing their stripes. Maybe.

The Secret of Success in Getting Your Digital Media Product Traction With Media and Cable Companies.

Get the teenaged kids of media and cable C-level execs to use it. If I had a dollar for every time they cited their kids’ use of media on a general session panel, I would have had enough for several top-shelf drinks, which I felt like I needed after hearing that example so much. A cautionary note… teenagers living in extremely prosperous households may not necessarily be representative of all 307 million people in the United States.

Where Did Linear Addressable (aka Targeted) TV Advertising Go?

In 2008 and 2009 it got a lot of talk from CEOs on the general sessions and cable execs on the panel sessions. In 2010, it was as if it didn’t exist. But, early trials have shown it improves advertising efficiency and advertisers really want addressable TV. So what’s up? I spoke to a number of industry insiders and consensus opinion is early field trials indicated linear live addressable on today’s cable plant is just too technically challenging to be deployed in scale.

Given that advertisers really want addressable TV advertising, where is the demand likely to go? First, it may go to the satellite TV providers as they have declared they are moving forward with it. And it could go to VOD addressable, provided the operators deploy the means to do it. Finally, it will probably go to broadband video, where standard web tools make it much easier to target ads, even though it is more difficult to gain the demographic data to base the targeting upon.

A further note on addressable TV advertising – a demo of DVR-based ad insertion

I saw a very interesting demo at the NDS suite. It was a NDS/BlackArrow demonstration of DVR-based addressable advertising insertion into timeshifted or live TV viewing. (Full disclosure – I was part of the team when BlackArrow was founded and spent four years there so I’m prone to be in favor of this concept.) TV ads are stored on the DVR hard drive, selected by various demographic criteria and inserted into a program as it is viewed.

While this was technology demo and not a fully productized offering, it was running seamlessly on a Cisco Explorer DVR set top that cable operators are currently buying, providing a plausible path for rollout. DVR-based insertion seems to be a very scalable way to deploy addressable advertising. And while it is limited to households with sufficiently capable DVRs, those are likely to be households more desired by advertisers because of their demographics and they are more “at risk” for ad exposure because they have DVRs.

Fox Cable announced the first online diginet from a major cable network family that isn’t ESPN

(A diginet is a TV network without a linear TV channel shown via broadband or VOD or both – ESPN’s diginet being

It’s Speed2 – a broadband-based live streaming and on-demand network offering motorsports programming not seen on the Speed linear TV channel (namely no NASCAR and a lot of European race series not available on TV in the US). It will have a “beta” launch in June on Time Warner Cable in Charlotte, NC and then rollout in other markets and operators over the summer. It does have a TV Everywhere like aspect – you have to be getting the Speed linear channel to be authenticated to watch Speed2. Speed2 will have both SD and HD content and include some of Speed’s back library of shows on-demand.

So why is it a big deal to be the first non ESPN diginet? First, ESPN is such an outlier because their enormous carriage fee revenue stream (SNL Kagan estimated at $4.08 per subscriber in 2009) gives them the financial headroom to launch ESPN3. By comparison, Speed was estimated to get $0.20 per subscriber. And, to me, ESPN3 has seemed like an extension of ESPN rather than a new network. Admittedly, Speed2 feeling like a separate network could well be a function of my being a huge European motorsports fan and my getting excited about access to racing with acronyms few understand (like BTCC, WTCC and FIA GT1 / GT3). At any rate, I’ll be tracking the business model implications of Speed2 closely.

This is a related offering to that described in the The Diffusion Group report I co-authored with Colin Dixon (I recently started contributing to TDG as a Senior Analyst, in addition to my continuing efforts) – The Economics of Over-the-Top Online Delivery – How Television Networks Can Shift to Online Content Delivery. Speed2 is similar to the model proposed in the report in that it will offer live streaming and on-demand online content in SD and HD, and (while not noted by Fox Cable) undoubtedly contain advertising. There’s no mention of pay per view or subscription fee based services. Time will tell if those are on the Speed2 roadmap.

Better Monetization through Better Counting: Measurement Matters A Lot for Advanced TV/Video

Next week is the informative and stimulating TV of Tomorrow Show presented by Interactive TV Today ( – San Francisco March 3 & 4). ITVT calls it “The Experts Conference” and it is. If you have attended in the past, you know it’s a must go for people in the advanced TV and video space. There will be two days of panels and sessions featuring key participants in the advanced TV/video landscape. You can see the full schedule here.

I’ll be moderating a panel at 9AM on Wednesday March 3 – “Better Monetization through Better Counting: Measurement for Advanced TV and Video”

We’ll have an excellent group of panel members:

  • Andrew Capone, SVP, Marketing & Business Development, NCC
  • Jane Clarke, Managing Director, Coalition for Innovative Media Measurement (CIMM)
  • Cathy Hetzel, President, Advanced Media Information Division, Rentrak
  • Todd Juenger, VP and General Manager, Audience Research and Measurement, TiVo
  • Tracey Scheppach, SVP/Video Innovations Director, Starcom Worldwide

As I note in the description… “As advanced TV and video platforms afford new capabilities, they also create new opportunities and challenges for measurement. Metrics can support the growth of new platforms by reflecting added value created for consumers, content distributors and advertisers. But – to adapt an advertising maxim – ”if you can’t count it better, you can’t sell it better.””

By “advanced TV and video” I mean advertising using advanced TV technologies like addressable ads, interactive TV, VOD and DVR as well as other platforms including online video and mobile. This includes TV Everywhere style models and so-called “Over The Top” (Internet delivered video viewed on the TV).

This highlights one of our key topics – with so many potential outlets for advanced video advertising, how do you achieve relevant and usable ad campaign metrics in such a complex cross platform/technology/content provider/operator world?

On the topic of metrics, here’s a few selected numbers that I think inform the importance and urgency surrounding measurement for advanced TV/video.

  • 90% of US TV households have multichannel TV service (cable, satellite or telco IPTV)
  • 36% of US households have DVRs

Takeway – There’s little room for growth in the number of multichannel subscribers (and lots of room for expensive intra-industry competition or future externally driven decline). And while DVR penetration (the biggest internal challenge in TV advertising) has slowed from the peak of 7.25% of households a year, it’s still running at 6% and we’ve now passed the 1/3 mark in total. Quality of metrics will have a big impact on monetization of advanced TV advertising and placement of top-rank TV on VOD – cable’s best (and highly underdeveloped) defense against Over The Top competition.

  • 62% of US households have broadband
  • Cost of delivering one hour of HD quality video for large video providers – likely about $0.05/hour and continuing to drop rapidly – for the very largest it’s even less
  • $129 – price of the lowest cost BluRay player at Best Buy that’s Internet-connectable and NetFlix streaming capable
  • 48% of NetFlix subscribers streamed more than 15 minutes of video in Q4 09. NetFlix now features streaming most prominently on its web site to both current and prospective subscribers. NetFlix subscriptions are at 12 million and accelerating, while subscriber acquisition costs fall. In the first three months after the Nov. 08 launch of NetFlix on Xbox LIVE, one million boxes were activated for NetFlix and the average viewing during those three months was 25 hours per box.

Takeway – Today (as in right now) it’s possible to deliver low cost HD quality video to TVs in almost 2/3 of US homes via the Internet via low cost boxes being bought in big box stores. NetFlix has shown that lots of people will watch streaming video via PCs, BluRay players, Xboxes, Rokus, TiVos, Net-capable TVs and other devices. NetFlix is plowing the ground for Over The Top, what ad supported video enterprises will follow, drawn in part by these new platforms’ potential for better metrics?

  • Payment Per Click for top position in Google AdWords (the text ads in search) by big TV spending brands
    • About $3.50 per click for “SUV” – brands including Chevrolet, GMC and Acura
    • About $20.00 per click for “auto insurance” – brands including eSurance, Progressive and Nationwide
  • Payment Per Impression at a broadcast TV primetime 18-49 CPM of $35 – $0.035

Takeaway – TV has lacked the technology capacity for performance currency advertising and there’s been a strong fear of its supposed commoditization of TV ads (see my newsletter “Embrace The Click – Taking Advanced Video/TV Ads Beyond CPM”). But there’s a company in Mountain View, founded 13 years ago, that has done pretty well with performance based ads (2009 revenues of $24 billion if you need reminding). If TV and video providers want some of that “Google Money” it seems to make sense they’re going to have to make friends with performance metrics as an ad currency.

So, there’s a lot at stake and a lot to talk about regarding measurement and metrics. I’m looking forward to the panel very much. We have a set of panelists who really know measurement and metrics as it relates to advanced TV and video advertising. We’ll look at the opportunities in the space but we’ll also cover the real word friction and challenges in metrics today, and how best to address those.
I’ve copied the full panel description below. Clearly there’s a lot to cover and will we may only get to some of the topics. But I’m sure we’ll have an informative and lively discussion. I’ll report back after the panel on what was discussed.

Panel Description

Better Monetization through Better Counting: Measurement for Advanced TV and Video

As advanced TV and video platforms afford new capabilities, they also create new opportunities and challenges for measurement. Metrics can support the growth of new platforms by reflecting added value created for consumers, content distributors and advertisers. But – to adapt an advertising maxim – ”if you can’t count it better, you can’t sell it better.”

This session will look at topics in measurement for linear and non-linear TV, broadband video, mobile video, and other media/platforms. It will also look at issues of cross-platform measurement. Topics to be discussed include the current state of measurement for TV platforms including linear, interactive, addressable, VOD and DVR, as well as for video delivered via broadband, mobile, portable devices, game platforms and CE devices (including connected TV’s); how quickly progress is being made toward new metrics currencies, both for currently popular and for emerging advertising units, and what the current status is of engagement metrics; the current status of cross-platform metrics and what impact the Coalition for Innovative Media Measurement (CIMM) will have and when; the areas in which demand is most exceeding availability in measurement; the areas in which measurement advances are likely to occur in the coming years; whether the slow pace of advancement in metrics is constraining the growth of advanced video advertising; whether TV Everywhere and OTT should be measured in basically the same way as traditional TV; who owns the data and how best to measure consumer behavior across platforms without violating privacy; and how to ensure consistency of metrics and metrics standards intra- and cross-platform.