Digital Media Strategies

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

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.

November 10, 2014 20:29 MGoodman

In an effort to continue to improve its search and discovery portfolio and develop a next-generation TV guide, Rovi acquired 4 year old start-up Fanhattan for an undisclosed sum. In 2010, Fanhattan acquired The Movie Database (TMDb), a crowd sourced movie database that contains metadata on more than 1.8 million movies, TV shows and people, and which over 2,000 editors curate over 250,000 pieces of content monthly. 

TMDb powers Fan TV, a content discovery app (launched in 2011), enabling 2.3 million users in the U.S. to search for movies and TV shows across linear, on-demand and over-the-top services.

More recently, Fanhattan has developed a Fan TV set-top-box (STB) “that combines linear TV channels, video-on-demand and streaming services in a unified discovery experience.” The Fan TV STB is designed to be bundled with a pay TV service. Cox launched a limited trial, since discontinued, of the Fan TV STB in July 2013. Time Warner Cable Inc. followed up with a more substantial commitment, making Fan TV available to its entire subscriber footprint for a one-time fee of $149 in August 2014.

Fanhattan provides Rovi with several benefits.

  • TMDb provides Rovi with a deep pool of metadata at little to no cost, augmenting Rovi’s existing metadata footprint.
  • The Fan TV app provides Rovi with a powerful tool for research and to test new features.
  • Fanhattan pairs well with another recent Rovi acquisition – Veveo. Veveo's natural language user interfaces should benefit from TMDb’s and Rovi's existing metadata. In addition, Fanhattan's gesture-based UI should be a nice complement to Veveo’s voice-enabled UI.
  • Recently, Rovi’s focus on Personalized Discovery Solutions has put it in competition with companies like ContentWise, ThinkAnalytics, and Jinni Media. Rovi has also recently introduced a cloud-based guidance solution that targets multi-screen use, including legacy set-top boxes and IP devices. Fan TV supports this initiative well, though it is not likely that we will see much until mid-to-late 2015.

October 14, 2014 21:22 MGoodman

First revealed in August, Amazon has completed its $970 million acquisition of Twitch. This acquisition marks the second largest investment by Amazon, trailing only its acquisition of Zappos and further underscores Amazon's intention to be a dominate player in the media industry. Often times Amazon’s acquisitions are designed to fulfil a specific niche or need. LOVEFiLM provided Amazon entry into subscription VOD in Europe, Zappos was an online clothing retailer, and KIVA Systems helped Amazon further automate its order fulfilment system. Twitch is unique, and warranting of its high cost, in that it fulfils multiple needs.

  • Live streaming is the next big growth area for digital video.
  • Twitch has a loyal user base that can be monetized.
  • Twitch will help jump start Amazon’s entry into digital advertising and close the gap with industry leader Google.
  • Enhance Amazon Prime and help grow Prime membership.
  • See the game, buy the game.
  • Amazon wants to be a player in the video game industry.

For more detail on the reasons behind Amazon’s acquisition of Twitch and its implications see Strategy Analytics Insight Amazon has Big Aspirations with Twitch Acquisition




October 3, 2014 18:19 MGoodman

It has been reported in several publications that Tesco is considering selling off Blinkbox, its online movie service. According to The Guardian, Dave Lewis, Tesco’s new chief executive, “has kicked off a strategic review of the service and intends to seek a buyer.”  It should be noted that Tesco has not confirmed this report.

When Tesco acquired an 80% interest in Blinkbox in April 2011 it made a lot sense strategically as physical sell-thru revenue (e.g., selling DVD and Blu-ray movies at retail) is in decline. According to the British Video Association, physical sell-thru revenue in the U.K. fell by $170 million in 2013 to $2.25 billion and physical rental revenue declined by $97 million to $307 million. However, despite Tesco’s best efforts, Blinkbox has failed to gain any real traction in the UK’s $1.6 billion online video market (see Strategy Analytics  2014 OTT Video Market Forecast - Europe for a more detailed analysis of the European online video market).

According to Strategy Analytics 4Q 2013 ConsumerMetrix Survey only 6% of UK internet video viewers used Blinkbox in the past month (see Exhibit 1). In comparison, 72% used the BBC iPlayer, 28% used Netflix, 20% used LoveFilm/Amazon, and 17% iTunes. As a result, Blinkbox is contributing little to Tesco’s bottom line. According to the latest figures filed at Companies House, Blinkbox, in the year to February 2013, had revenues of $5.11 million, up 39% YoY from $3.67 million. Tesco can at least take heart that they are doing better than their U.S. counterparts. According to Strategy Analytics 4Q 2013 ConsumerMetrix Survey only 3% of U.S. internet video viewers used Vudu (Walmart’s online video service) in the past month and 2% used CinemaNow (Best Buy).

Tesco, Walmart, Best Buy and other retailers have failed to understand the changing nature of the home video market. For years the home video market was based entirely on the rental and sell-thru business models, however, Netflix changed all that. The introduction of subscription video services has completely changed consumer home video consumption patterns and devalued ownership. In 2013, SVOD accounted for 54% of consumer spend on OTT home video in the UK and by 2018 this will grow to 78%. Blinkbox, however, does not have a SVOD service. It only supports electronic sell-thru and digital rental, this missing out on the lion’s share of consumers spend on online video. Unless, Tesco intends to revamp Blinkbox’s  business model they are best off cutting their losses and selling Blinkbox. 

October 2, 2014 19:34 MGoodman

Despite facing some unique challenges in France, Netflix is off to a strong start attracting over 100,000 subscribers in the first 15 days since launching, according to French newspaper Le Figaro. To put this in perspective, Netflix has achieved nearly 20% of CanalPlay’s scale, Canal+ SVOD service in France, in just two weeks.  According to Le Figaro, CanalPlay has acquired 520,000 subscribers since launching three years ago.

It should be noted, however, that Netflix is offering the first month free, after which the service will cost subscribers €7.99 - €11.99, so it remains to be seen how many of these subscribers Netflix will retain when the trial period is over. For further analysis of SVOD in France and Netflix’s long-term prospects see Strategy Analytics Insight Netflix Off to a Strong Start in France.

September 30, 2014 19:20 MGoodman

As we noted in this July 2014 Digital Media Strategies Insight (Supreme Court Sides Strikes Down Aereo But Open the Door to Other OTT Providers) in the Supreme Court’s majority opinion they define Aereo as a “Cable Company.” According to Justice Breyer, “Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the law to reach.” Throughout the majority opinion the justices cite the similarities between streaming TV services and cable systems. 

Now the FCC is stepping through the door opened by the U.S. Supreme Court as it prepares to define Online Video Providers (OVD) that deliver a linear stream of programing as Multi-Channel Video Providers (MVPDs), similar to cable, telco, and satellite providers. This would reverse a prior FCC ruling that “that having a facilities-based transmission path was necessary to be an MVPD. It should be noted that this only applies to OVDs that provide a continuous linear stream of pre-scheduled programming, not Netflix or similar providers which provide on-demand video programmer without a linear lineup.

By defining Online Video Providers (OVDs) as MVPDs this ruling will even the competitive playing field for OVDs trying to create virtual MSOs and increase competition by giving them access to must have programming via the must-carry and retransmission consent rules, while simultaneously opening them up to program-carriage requirements.  This ruling, however, is not without challenges. As noted by the National Cable & Telecommunications Association this ruling has the potential to give rights to online entities the FCC does not track or license and may not have physical facilities in the U.S. That being said consumers will benefit from the increase competition.

September 8, 2014 13:54 lkawasaki

Compared to sell-thru and rental, subscription is a relatively new business model in the home entertainment industry. But this is not keeping it from dominating consumer home entertainment spending. In 2013, consumer spending accounted for 47% of OTT video revenue. Of this, SVOD made up 47% of the consumer spending category. By 2018, consumer spending will account for 54% of OTT video revenue, of which SVOD will comprise of 74% of the consumer spending category.

While there are many SVOD services across Europe, it is important to note that Strategy Analytics only estimates pure-play OTT SVOD players. In other words, we only account for stand-alone OTT video services; we do not include SVOD services that are value-added to a Pay TV service.

For a detailed breakdown of Western Europe OTT Video by country and segment please see the full 2014 European OTT Video Forecast and Market Overview Report (European OTT Video Revenue to Reach $9.45 Billion by Year-End 2018).