The current marketplace for consumer video is comparable to the online music space before the iPod era. There are many services and devices, but none have succeeded in obtaining critical mass. Example of providers include: Google, Amazon Unbox, AOL Video, Yahoo Video, CinemaNow, Movielink, Akimbo, MovieBeam, Sling Media … And Apple‘s ambitions in this area are clear – via its recently-released AppleTV. Add to the competitive picture the current incumbents in delivery of video to the living room. They include Comcast, DirecTV and EchoStar, and Sky Television who have invested billions over decades to establish their current positions. The three US service provider leaders have earned 50 million subscribers - which account for nearly half the US households. These providers will seek to grow their current position and are expanding into IP-delivered media to hedge their bets. Furthermore, there are several much-publicized newcomers, such as VuDu and Joost , and others coming in from the side, such as Walmart and its new digital video store, backed by its strong established relationships with copyright holders for video content.
I believe that the main reason for the slow adoption of online video so far is the lack of a compelling service that just works. The future will belong to the provider that can offer integrated online and broadcast video to the living room by addressing the current market pain points:
1) Consumer pain:
- Their content is locked to a specific device and content provider: Comcast video goes to their Comcast STB & TV (in Comcast UI); YouTube goes to their PC (in YouTube UI); Verizon packaged video (V Cast) goes to mobile phones (in Verizon UI).
- It's hard or impossible to find/watch shows they've missed, shows they like, or shows they "own".
- Existing set-top box UIs are not user-friendly: half of digital TV consumers use just channel flipping and dislike multiple remotes to get at different video sources.
- They are subjected to a constant barrage of ads that are irrelevant and annoying – DVR is an aid, not a solution
2) Advertiser's Pain
- They are dissatisfied with the current limitations of broadcast media
- Audience fragmentation is making it more difficult to reach large audiences with effective and defensible results.
- They are frustrated with the inability of legacy providers like Nielsen to offer basic digital tools and services that help manage digital placement, procurement, and monitoring, reporting, analysis and campaign management.
3) Content owner's pain - “Content is still king” BUT:
Current content provider revenues are flat to declining; Piracy looms (YouTube phenomenon); Freeview models are appearing around the globe, threatening established business models.
New Players
The following recently-funded startups are interesting in that they bring innovation that would enable a web player to acquire a dominant position in the living room: click to view a list.
None of these provides an easy, overall solution to all the pain points described above, but they address at least part of the problem such as new ways to monetize video content; better customer control of video content; secure and/or cost-effective managed platforms for video content owners; and better reporting tools for advertisers to manage their digital campaigns.
