Digital Media Strategies

We cover all of the major media sectors, including advertising, TV and video, music, games and social media.

January 16, 2015 17:16 MGoodman

When Sony first launch its cloud gaming service, PlayStation Now, it allowed for individual game rentals in increments of 4-hours, 7-days, 30-days, and 90-day. This model, however, is confusing, cumbersome, and costly. For example, God of War: Ascension cost $5.99 for a 7 day rental and $14.99 for 90 days while NASCAR ’14 cost $5.99 for a 4 hour rental and $39.99 for 90 days. PlayStation Now needed uniformity in pricing and a simple subscription model.

Sony knew that this was an issue and according to a November post on the PlayStation blog by Director of Marketing of PlayStation Now, Peter Jamshidi, a subscription option “was coming” to PlayStation Now. Well that time has arrived. At CES, Sony unveiled a subscription service for PlayStation Now. This service includes unlimited access to about 100 titles and costs $19.99 for one month or $44.99 for three months.

This announcement is a big step forward for Sony as it rounds out the PlayStation digital distribution model. At its core, there are three ways to monetize games – subscription, rental, and sell-thru (plus free). Sony has now embraced all of them, including free. The only remaining question is whether Sony has priced PlayStation Now’s subscription service to high. At $19.99/month or $44.99 for three months PlayStation Now is charging a pretty high premium compared to a service like OnLive, which has monthly packages ranging from $9.99 to $12.99. As evidenced by Netflix and other subscription VOD services the sweet spot for cloud based on-demand subscription services seems closer to $10 than $20.

January 12, 2015 20:11 lkawasaki

The 2015 Golden Globe Awards was filled with surprises for the TV entertainment industry and was a significant indication of changing consumer viewing behaviors. Amazon made history earning Golden Globes in both categories it received nominations, best TV series, musical or comedy and best actor in a television musical or comedy series for its original series Transparent. In doing so, Amazon beat out nominees from Netflix, HBO, Showtime, Channel 4 (UK), FX, and CW in the respective categories. Meanwhile, Netflix which was nominated in seven different categories won best actor in TV series, drama for Kevin Spacey portrayal of Frank Underwood in House of Cards.

Another significant observance from the Golden Globes is that the top four U.S. broadcast networks, ABC, CBS, NBC and Fox did not win any awards. This is big for the TV industry as it brings further credibility to online video service and shows the diversity of programming in Hollywood. This was not only a victorious night for the individual services but also reinforced the changing landscape in TV entertainment. More and more individuals are seeking alternative means to access television programming and video service providers continue to enhance the value proposition of on-demand entertainment.

January 12, 2015 17:11 lkawasaki

Digital advertising revenues are closing the gap with traditional media as consumers internet usage continues to grow. In fact in many countries ad spending on traditional platforms such as print (newspaper/magazine) and TV have started to flatten out and in many cases even decline.

Digital advertising is driving the majority of growth in the Western European advertising market, with all countries expected to see double digit annual growth rates between 2014 and 2018. The video advertising and social networking segments are expected to see the highest growth across all territories. Digital media will account for more than half of total ad spend by 2018 in the United Kingdom, Denmark and Sweden. In contrast, despite continuous growth in digital ad spend, traditional advertising mediums will continue to dominate in Germany, Italy and Spain as these remain the favorite means for major brands to reach audiences.

For a detailed breakdown of Western Europe advertising market forecast by country and segment please see the Advertising Market Forecast: Western Europe. The key territories covered in this forecast are the United Kingdom, Germany, France, Italy, Spain, Denmark, Finland, Norway, Sweden and the Rest of Western Europe. The segments covered include: TV, print, radio, cinema, out-of-home (OOH), search, display (video/banners/others), classified, social networking and mobile advertising.


January 7, 2015 07:47 MGoodman

This morning I participated on a panel at CES on Internet TV and its impact on multichannel video providers. As these panels so often do the conversation ranged across a series of topics, including the future of windowing in television, the decline of television viewing, the impact of interactive advertising, and what television will look like in the future. Some takeaways from this panel include the following.

  • OTT video is leading to a democratization of television. In the past, consumers had little choice but to subscribe to what one or two video providers offered. Today, the growth of broadband (fixed and wireless) and connected devices is giving consumers the freedom to choose what they want to view, when they want to view it, on what devices, and even where they want to view it. In addition, these options give consumers more control over what they have to pay than ever before.
  • As consumers video options become more numerous the need for search, discovery, curation and personalization become ever more important. Within the next five personalized, curated content will become the norm, at least in North America and Western Europe. One result of this will be consumers becoming much smarter about how they watch video. Today, it is difficult at best for consumers to find the content they want. And who has the time to search through multiple services and TV apps to find the best value for a movie or TV show. For example, that movie you just rented on Vudu might also be included in Netflix for no additional charge or for free on VOD via your multichannel video provider.  As we move into a world of unified search and discovery consumers will be able to make more informed decisions.
  • Regarding the question of whether consumers are viewing less television the answer depends on how you define the question. If you consider television viewing to only include linear TV then yes television viewing has declined, about 4% YoY according to Nielsen. But television viewing is not just linear TV, the same programming is also viewed via VOD, catch-up TV, DVRs, and SVOD. It is viewed on TVs, smartphones, and tablets. In total, consumers are viewing far more television than ever before.
  • Lastly came the question of content acquisition and the question was posed could windowing survive in an on-demand world where Netflix, Hulu, and Amazon are making entire series available day and date. The answer is yes and no. Not all programming is suitable for windowing. For example, sports programming and reality series are not suited for windowing at all. However, TV series are uniquely suited for windowing and this practice will not go away. Content owners want to maximize the return on their programming the best way to do this is to ensure that they maximize the revenue produced in one release window before allowing it to be shown in another window. Earlier windows have more value and allow content owners to extract greater value from the distribution partners in this period. For provider in later release windows to move up they would have to compensate content owners greatly to make up lost revenue in earlier release windows. A scenario not likely to occur.


December 29, 2014 20:26 MGoodman

BitTorrent, once the scourge of the Internet, is making an effort to reinvent itself as a legitimate content provider. In June of 2013, BitTorrent first began allowing select artists to legitimately distribute content via the BitTorrent platform.  Now they are expanding it.

In September of 2014, Radiohead’s Thom Yorke made his second solo album, Tomorrow’s Modern Boxes, available via Bit Torrent. Over 116,000 users downloaded the free track, A Brain In A Bottle and its accompanying video, in the first 24 hours after its release. Downloaders then had the option to pay $5.99/£3.86 for the rest of the album. In the first two month after launch the album was been downloaded 4.4 million times.

To further entice artists and address their concern that they are not making enough from streaming music services, artists keep 90% of the revenue generated via BitTorrent Bundles. In comparison, Spotify pays out 70% of revenues to artists. In addition, artists get all the associated data, including number of impressions and downloads, as well as stream information and email addresses.

Now BitTorrent is expanding into video. Children of the Machine, an eight-episode science-fiction series, will be available on Bit Torrent in August 2015 as either a free ad-supported version, or ad-free version for $4.99. A premium version of the show containing bonus content will be available for $9.95.

By its very nature, torrenting is a social act, one that makes it a great way to share content like music and video. With content becoming more and more social every day artists will be able to spread their own BitTorrent Bundles. Should this gain traction it will present serious problems to services such as Spotify, Pandora, Rdio and others who are already struggling to become profitable.

December 24, 2014 20:20 MGoodman

According to Netflix CEO Reed Hastings, broadcast TV is like a horse and the horse was only good until we had the car.” In today’s video market “non-linear digital TV is the car, and it will replace the old broadcast model within a few decades.”

It’s hard to disagree with Reed Hastings vision of the future given his track record. He is after all the man who envisioned a home entertainment future dominated by streaming services while everyone else was running around trying to figure out if Blu-ray or HD-DVD was going to be the dominant distribution format for the next decade and beyond.

On the surface moving to a non-linear digital model sounds like a great idea. Really, who needs the networks? Aren’t they just standing in the way of you and I getting access to the programs we want, when we want them? From a consumer perspective this sounds like a great idea. Do we really have to wait until 2030 for it to become a reality? But from a business perspective it has a few issues that must first be reconciled.

Over the past several years the television industry has increasingly adopted the home video industries business model and used windowing to maximize revenue. Does Read Hastings really think the broadcast and cable networks are going to give up the $100s of billions in advertising revenue and carriage fees they currently get from linear TV?

TV shows first air on linear TV allowing broadcast and cable networks to generate advertising revenue and carriage fees. In 2014, television generated $77.5 billion in advertising revenue just in the United States. After airing on linear TV, shows are released to various on-demand services (e.g., Netflix, Hulu, Amazon, BBC iPlayer), creating a second window for broadcast and cable networks to generate revenue. Still later these programs are release via sell-thru (physical and digital) thereby creating a third revenue window. Assuming Reed Hastings is right and linear TV goes the way of the horse and carriage someone is going to have to make up all that lost advertising and carriage fee revenue.

Netflix needs linear TV to supplement its original programming with lower cost, lower risk syndicated TV shows. Despite all the hype surrounding House of Cards, Orange is the New Black, and Marco Polo TV, 2nd run TV shows acquired from broadcast and cable networks form a key component of Netflix’s content library. When Netflix decided to pay $2 million per episode for Blacklist there was far less risk involved than when NBC originally green lighted the series. Netflix knew how big the audience is for the show, how it is trending, who the audience is, and how that audience aligns with their subscriber base. All this allowed them to make an informed decision on Blacklists ROI. Take away linear TV and all of a sudden Netflix’s content acquisition decisions become a lot more risky. Just take a look at the success rate for new TV series each fall to get an idea how risky program development can be.

If Reed Hastings thinks Netflix could succeed charging $20, $30, maybe even $40 a month as programmers look to OTT video providers to compensate them for lost linear TV revenue then there is a strong likelihood his vision will likely come to pass, however, if he wants to continue to be a low cost provider of syndicated programming then he needs linear TV to be happy and healthy in 2030 and beyond.


November 25, 2014 19:54 MGoodman

NVIDIA is joining Sony’s PlayStation Now as the latest major player in the gaming industry to tackle cloud gaming with the launch of the NVIDIA Grid Game Streaming Service. Many have tried, none have succeeded (yet), but that has not diminished the enthusiasm of NVIDIA, Sony, and many others for cloud-based gaming.

Unlike past entrants in this space, NVIDIA and Sony are well-steeped in the gaming industry and stand a far better chance at success. A comparison of the two services yields a more complete feel for PlayStation Now whereas NVIDIA Grid Game Streaming Service still has some bugs to work out. That being said, we don’t see Sony and NVIDIA competing head-to-head in the market, at least not in the short to mid-term. While both are launching cloud-gaming services, they appeal to different segments of the market, PlayStation Gamers vs. PC Gamers. This gives NVIDIA some breathing room in the short-term to work out the kinks before the space becomes more crowded and the two do start to challenge each other.

For a more detailed analysis of the two services see NVIDIA Goes off the Grid with Cloud Gaming Solution.

November 21, 2014 21:16 MGoodman

Netflix, Amazon and other online video services have long been black holes, where massive amounts of viewership goes in but little to no information regarding that viewership ever get reported out. This, however, is about to change. In a much anticipated move, The Nielsen Company announced that they will begin use the content's audio to identify which shows are being streamed, enabling them to begin reporting viewership data for these services as early as next month.

Nielsen’s solution is not perfect. They are only tracking shows from the major broadcast and cable networks and studios so ratings will not be available for SVOD originals like House of Cards, Orange is the New Black, or Alpha House. In addition, Nielsen can only track viewing that occurs on TVs. Viewing to SVOD services on laptops and desktop computers, tablets and smartphones cannot be tracked at this point in time, Though Nielsen hopes to be able to do so in the not so distant future.

Despite these short comings, the ability to finally shine the light of day on the inner workings of Netflix, Amazon, and other online video service providers is a significant step forward.

  • This will affect rights negotiations between rights holders (e.g., studios, broadcast and cable networks) and online video service providers. Rights holders will gain visibility for the first time into how SVOD is impacting viewership of linear and traditional VOD.
  • Though Nielsen is not measuring viewership of SVOD originals like House of Cards, Orange is the New Black, or Alpha House initially they are sure to do so at some point in time. When they do that information will impact negotiations with writers and actors. Really could you imaging House of Cards without Kevin Spacy because Netflix won’t pay what he is asking for the highest rated show on Netflix?

If nothing else it is going to be fascinating seeing who is viewing what on Netflix, Amazon and other online video services. I for one can’t wait.

November 18, 2014 17:31 lkawasaki

The NYC Television Week Conference brought together many industry leaders to discuss the future of the TV ecosystem in a two days event broken-down by Content, Multiplatform, Next TV, and Advertising. Some of the key topics discussed at NYC Television Week include the following.

Scalability of live streaming.

“Scale will be the theme in 2015”, Jen Loeffler, Principal Technical Evangelist, Adobe Primetime.

With growing demand during big events like the World Cup, Olympics, and Super Bowl, industry leaders from NBC, Disney (ESPN) and Adobe discussed some of the challenges of scaling live video online. As a result of consumer expectations regarding video quality for sporting events the bandwidth required to deliver them is greater than any other video type (excluding 4K UHD). Also, each viewer gets their own individual video stream so the more people that watch online, the more bandwidth that is consumed. Failure with these high profile events is not an option, yet buffering issues, bandwidth limitations and poor implementation of authentication protocol can leave users frustrated with the experience. While consumers want a higher quality experience, the focus for the industry should be on the technology front, including preparation, scale projection and delivery capacity during major events. This will require all players in the distribution ecosystem to work together to deliver higher levels of scalability.

Digital measurement capabilities need catch up with a fast moving multiplatform TV ecosystem.

“The industry is so far ahead of measurement capabilities”, Jane Clark, Managing Director, Coalition for Innovative Media Measurement

During the research and measurement roundtable, industry leaders from AT&T Ad Works, Rentrak, Katz Media and CIMM discussed the need to move beyond the traditional measurement models (eg: Nielsen) and the need for a more customizable video measurement capabilities. As we continue to see fragmentation of viewership, the challenge is to aggregate the dots, and Nielsen seems to be hearing this message with their recent announcement on adopting new measurement standards to include streaming video on demand numbers and dynamic ads.

Programmatic is an inevitable business change for TV, but still has a lot of work to do on the technology front

“2015 will be a big year for Programmatic”, Robert Dalven, Head of TV Strategy, Videology

“Buyers are willing to pay for premium inventory”, Sean Downey, Director of Media Platform, Google

“We want all screen and household to be addressable”, Keith Kazerman, SVP of National Advertising Sales, DIRECTV

“TV is not dead, TV needs to evolve”-“Addressable television is a complement to linear television and traditional television. It’s not replacing it”, Jamie Power, Sr. Partner of Addressable Television, Modi Media

During the Next TV Summit and Advanced Advertising session, buy-side leaders in the video and TV space discussed the future of advanced advertising and programmatic advertising. While ad dollars continues to move to digital, the buy-side industry leaders agree that TV needs to act more like digital in terms of better targeting, and every pay TV provider seems to be working to build technology to have targeted ads. Despite the continuous talk around this topic, few believed that programmatic will completely disrupt both the supply and demand side of advertising and content inventory businesses. Whether programmatic advertising in the TV space grows will be largely determined by programmers.

November 14, 2014 08:01 wshi

Though there is not much special in YouTube Music Key, the music streaming and subscription service Google launched on Thursday 12 Nov, I wouldn’t call it “a bore”.

Firstly, the “not so special” part.  YouTube Music Key is clearly joining a rather loud party.  According to Strategy Analytics’ media and music forecasts, streaming is the fastest growing segment in the digital music industry.  Spotify, Pandora and a plethora of other services have increasingly gained popularity.  Actually we have found YouTube’s participation in the game long overdue, considering that YouTube has been selected as a top destination when consumers look for music, in a recent Strategy Analytics survey.

The service is still in an invite-only beta stage.  Initially it will be available in the US, UK, Spain, Italy, Finland, Portugal and Ireland, and will be made available to the global market when the beta stage is over. Supporting Android (and iOS to come soon) as well as desktop, YouTube Music Key offers a promotional rate of $/£/€ 7.99 out of a normal rate of 9.99 per month, to early adopters/invitees.  YouTube Music Key adds a "Music" tab to its mobile app and its website navigation that will show music videos, recommended and trending playlists, plus featured songs that pop up on any channels to which you may subscribe, based on your listening history on YouTube and your music library on device. This ability to market to potential users far surpasses that of any other service.

There are two issues facing Google, however.  One is the positioning of YouTube Music Key vs. the existing Google Play Music All Access.  Currently, a paid subscriber of GPMAA will get a subscription to Music Key, and vice versa.  However we believe Google needs to either consolidate the two services or clearly differentiate them to make the prepositions more attractive.  Incidentally, Apple is facing a similar issue with its iTunes Radio after it acquired Beats Music.  It would be interesting to see how the two industry giants should solve their, probably luxuriously enviable, problems.

Another issue is how to stand out from the more established players, especially Spotify, and in the US, Pandora.  Despite the YouTube brand clout, when it comes to payment, the brand may even play to Google’s disadvantage among consumers, as it has been known for being “free”.  Therefore we think a kind of collaboration with mobile carriers may be a route to consider.  As we have seen, AT&T, Sprint and especially T-Mobile have been active in offering music streaming services through bundling with OTT services (while Verizon is the only one among the top carriers in the US market that has not done so).  Similar partnerships are also not uncommon in other markets.

Then, the “not boring” part.  Google acquired Sonza in July, giving YouTube Music Key a significant advantage in the ability to provide listeners a degree of curation unmatched by Spotify and others.  A more visible difference though, is that, as a video sharing platform, YouTube has a vast repertoire of music videos, and has become a de facto platform of choice for artists to publish their official music videos.  This is an asset YouTube Music Key is riding on.  When a song that has an official video released is being streamed, the subscriber will have the chance to download or stream the video at the same time.  So, in addition to listening to the songs, I would be able to watch them as well.  This may well have become a daily experience in the desktop environment, music video playing on while I’m working on a Word document or checking out my friends’ Facebook update.  On a mobile device, especially on the go, I find the user experience unusual, without trying it out first handedly though.  However, YouTube also promised that the music will not be switched off even if I lock the screen or switch to another application.

Anything else that YouTube Music Key is different from Spotify? Oh, yes. If you include all the unofficial music, bootleg copies, concerts, remixes, parodies and lyrics videos, YouTube has a music library unmatched by any other service out there.  And it plays Taylor Swift.  Is she heralding a move away from Spotify to YouTube?  Watch out for Digital Media Strategy’s in depth analysis on the shifting balance of power in the music industry.