High Hurdles for Broadband-to-TV Jump, Conference Told

Viewing TV content on the Web has fewer hurdles, with consumers paradoxically used to poorer quality as technology advances, Girard said -- dropped calls with cellphones would never be tolerated on landlines. Only a few hands rose when Girard asked the audience who set his or her DVR to record at its highest bitrate, which takes up more space. Consumers are prioritizing accessibility for now, but video quality is improving online anyway, said Josh Freeman, executive vice president of digital media for Discovery Communications. Ashwin Navin, president of BitTorrent, said browsability and portability are also concerns for consumers, which is why the BitTorrent application will ship in 5 million consumer electronics devices this year.

“The economics are too compelling on cable” for programmers like HBO to put much online, said Robert Quicksilver, chief content officer of TidalTV, a broadband video startup in beta. HBO was the first to break iTunes’ $2 ceiling on episode downloads in a recent deal (WID May 14 p10). But some shows’ only hope may be online, Quicksilver said, pointing to his time at Fox running Arrested Development, cancelled after 3 seasons but among the most streamed and downloaded. “You can monetize 2 million” online, unlike on broadcast, he said. “Time is of the essence” for HBO to make any money online, as its content is frequently swapped, Navin said.

Discovery is struggling with “fragmentation” between linear simulcast, “custom mobile,” WAP and other video platforms, finding it “operationally cost-prohibitive” to sell advertising across them all, Freeman said. It can repurpose some short-form content from properties such as Animal Planet to non-TV platforms, he said. It’s better to conceive of making programming for “infinite screens,” even if the technology is years off to do that, Girard said, as TVs and mobile devices have a “combinatorial nightmare” of viewing sizes.

‘A Purpose-Built IP Box is Dead in the Water’

Trying to incorporate the interactive nature of the Web in TV is probably a waste for all but the most social programming, such as American Idol, and for targeting advertising, Girard said. “Television itself is a lean-back experience,” Quicksilver said. The CW’s Gossip Girl, whose online episodes were yanked after the network determined it was cannibalizing broadcast viewers, draws an audience that chats online while they watch, so it would be pointless to build a chat function into its broadcast, Freeman said. “There’s no substitution happening for things that are working really well on your laptop,” Navin said. “The TV Guide of the Web is going to be word of mouth, not search,” Girard said.

The set-top box is so entrenched in U.S. homes that “a purpose-built IP box is dead in the water,” Navin said. While closed platforms Xbox and TiVo had made it popular to watch broadband content on TVs, TV makers aren’t likely to fare as well and have shown no interest in open broadband connection standards, Freeman said. Even if TiVo is the “Trojan horse” for broadband on TV, as Girard says, it’s only found in 5 million homes, Navin said.

Asked about net neutrality’s effect on video online, Girard said there’s no other choice but for consumers to chip in for the bandwidth they use, possibly through a pay-per-gigabyte model being tested by some ISPs. “The answer is not to somehow limit the amount of bandwidth people can consume,” but to charge them more, which BitTorrent users would happily accept, Navin said. -- Greg Piper

Digital Media Conference Notebook…

The digital media industry is an advertising free-for- all, with no model dominating, Ron Berryman, general manager of the Fox Stations Group at Fox Interactive Media, said in a keynote. “We're about to embark on what I see as a revolution” after a lengthy evolution, he said. Data show consumers spending an hour longer online each day than a year ago, but three in four viewers don’t want to pay for TV programming online, the same ratio that find in-stream ads “intrusive,” he said. A 26-cent gap per ad shown to a viewer between broadcast and broadband platforms shows the need for more creative use of ads, Berryman said. Berryman showed FIM’s use of ads in on-demand streaming: Sponsorship through the entire program, metadata using program content to serve contextual ads at the top of the player, interstitial ad displays any time a viewer pauses a program and a branded frame around the player. FIM’s video search site, which uses a flippable-pages format for search results, wraps contextual ads around content by search query and metadata, he showed. Video bitrates are getting high enough to provide TV-like quality while providing much more targeted advertising, Berryman said. As an example, he showed an NBC.com live feed of the Today Show with multiple ad formats around the player. When he resized the window, the bitrate went from 1400 to 2400 kbps, a relatively new wrinkle useful in full-screen viewing, Berryman said. FIM’s efforts have paid off, bringing profits through 2007 with nearly $1 billion in revenue and sales growth of 100 percent over 2006, he said. It also broke off its ad network into a separate group, now serving 1.5 billion ads per day, he said.

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The major labels seem intent on frustrating digital deals at all costs, a view shared by digital music entrepreneurs and a former label executive alike at the conference. Labels’ embrace of MP3 sales was the “falling of the Berlin Wall” in digital music, but securing rights to their catalogs is “not as straightforward as it should be,” said Dave Jaworski, CEO of Passalong Networks, citing what he called a “department of business prevention” at some labels. It’s painful to realize “they're not the stars of the show anymore,” said Bill Crandall, vice president of AOL Music. Ted Cohen, managing director at consultancy TAG Strategic and former EMI digital chief, said he “gave up and left” because the company focused on per-unit value over “mindshare,” or selling to a mammoth audience for a lower cost. The label spurned his suggestion to release all “gray content,” such as live recordings and bootlegs whose rights weren’t clear, in a 50-50 split with artists, he said: “Both sides would win, but nobody wanted it.” The success of Guitar Hero -- using covers by studio musicians -- led labels to license artists’ tracks, though MySpace Karaoke still can’t get licensing from U2, Prince and other big names to let fans sing along, though unlicensed karaoke sites flourish, Cohen said. The so-called 360 deal, encompassing tickets, merchandise and historically non-label businesses alongside recordings, is labels’ biggest pursuit because they're not bleeding revenue, Crandall said. All agreed that “access” to music eventually trumps ownership, because “we're all busy, we don’t necessarily want to make a side career of getting and maintaining music,” as Crandall said. Music services’ goal should be to “entertain the shit out of me,” balancing playlists between music similar to the user’s preferences and left-field tracks, Cohen said. Music quality is where digital photography was in 2005, he said, dominated by MP3s but with people ripping tracks at higher bitrates. “Find a 6-year-old today that knows anything about” higher quality tracks, said Richard Gottehrer, founder of The Orchard. Passalong’s Jaworski pointed to “pretty wild stuff in the pipe” to improve the quality of MP3s, apparently under development by his company, but refused to divulge more at Cohen’s prodding.