Mobile marketing may help slumping TV networks.

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Commercials On The Go

Laurie Burkitt, 07.14.09, 07:24 PM EDT


Michael Jackson‘s memorial service drew a surprising number of eyes to TV sets July 7. Even more surprising was the number of people who watched the farewell on their phones–nearly 1 million.

Turns out there are more than a few folks rallying around 2.5-inch screens to watch breaking news or their favorite shows, if only a few minutes of them. Over 13 million Americans tuned in to handsets in the first quarter of the year, a 52% spike from the year before, says Transpera, the largest mobile video ad-network in the U.S. If the numbers keep rising, so will the ad dollars–or at least that’s the hope of television networks, which have been mourning their own loss: $1.5 billion in ad revenue in the first quarter of 2009, a drop of nearly 11% from $12 billion at the same time last year, says the Television Bureau of Advertising.


Television networks and viewers have shifted from the tube to the Web in the last few years. Now they are migrating to mobile devices. CBS ( CBS news people ), ESPN, MTV and Disney ( DIS news people ) have launched programming specifically for phones. Some are live broadcasts that air the same commercials as seen on TV. Others are on-demand videos with pre-roll ads, similar to what is found on video-streaming site Hulu (which is expected to launch an iPhone application soon).

In late-April MSNBC rolled out a Rachel Maddow iPhone app, one of the network’s three for the smart phone. Fans can watch three- to five-minute snippets of the show as well as the entire episode. The iPhone capability, along with formats for other phones, including the Blackberry and Palm Pre, pulled in $750,000 for MSNBC in June.

Mobile efforts aren’t raking in enough to make up for the ad drop from TV advertisers, says Jeff Maurone, MSNBC’s product manager, but they are bringing in some extra cash. The U.S. mobile TV broadcasting market, subscription-based and advertising-funded, was estimated at $200 million in 2008. It is expected to jump 50% in 2009, says research firm Strategy Analytics. Advertising across all mobile platforms, including mobile display and short messaging, jumped 35% to $648 million in 2008.

Advertisers, including Ford and Microsoft ( MSFT news people ), are buying spots within mobile network content because it helps them reach younger audiences, says Frank Barbieri, chairman and CEO of San Francisco-based Transpera. Other brands prefer it because the phone is captivating and free of clutter. Screens are too small to have multiple ads on one page and mobile viewers can only activate one Internet page or iPhone application at a time. The average cost for ads on mobile TV ranges from $5-$10 per thousand impressions for a banner ad and $30-$40 per thousand impressions for video.

Mobile TV is rather new to the U.S., as American telecommunications have been slow to develop cellular technology that would enable video viewing, and consumers–until now–weren’t interested in it. South Korea led the development, and now half of the country’s 45 million cellphone users are watching from their handsets. Japan and Hong Kong have latched on to the practice as well.

Now the U.S. audience is expected to grow, as broadcasters and technology companies have created a technical standard for transmitting video to portable devices. The technology, known as Mobile Digital TV (DTV), will be tested in Washington, D.C., later this month, and the standard will be set by September. Five of its local TV stations, including local affiliates of CBS, NBC, PBS and Ion, will broadcast programming fit for phones.

Emeryville, Calif., company MobiTV, which provides subscription-based content across 20 mobile networks, such as AT&T ( T news people ), Alltel ( AT news people ) and Sprint ( S news people ), boasts 7 million subscribers, a 600% growth in the past three years. Qualcomm‘s ( QCOM news people ) subscription fee mobile television service, Flo TV, is in the midst of expanding to 100 major U.S. cities.

The million viewers who tuned into Jackson’s memorial service are just a start. “Mobile TV will only get bigger,” Barbieri says. “And for advertisers too; they know that when you do something on your phone you’re paying attention.”

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Media money moving into mobile

By Alexei Oreskovic – Analysis

SUN VALLEY, Idaho (Reuters) – The traditional media industry may be under fire as the weak economy crushes advertising spending, but companies and investors are scrambling to stake out territory in the new world of mobile content.

Media conglomerates, hardware makers and telecommunications carriers are all eyeing the nascent wireless media market, spurred by smartphones like Apple Inc’s iPhone and Research In Motion Co Ltd’s BlackBerry.

Highflying start-ups with strong mobile credentials, such as microblogging site Twitter, have increasingly become the subject of acquisition rumors even as their unproven business models mean a deal is unlikely at this week’s Sun Valley media and technology conference organized by Allen & Co.

Bob Davis, partner and digital media specialist at venture capital firm Highland Capital Partners, said traditional media companies such as television networks will end up having to buy start-ups to gain the mobile expertise they need.

“I don’t think they have the DNA to develop leading-edge applications in technology. They’ll watch the market mature and buy into the winners,” Davis said, adding that deals will take time in this economy and credit market.

There are signs that mobile deals are gaining steam. Mergers and acquisitions involving mobile media and technology jumped 46 percent in the first half of 2009 from a year ago, for a total of 16 deals, according to Jordan Edmiston Group. In contrast, M&A in the broader media, information, marketing and related technologies sector fell 30 percent.

Amazon.com Inc and IAC/InterActiveCorp, for example, both acquired companies developing iPhone applications this spring, and in June, Amazon bought mobile advertising service SnapTell.

Silicon Valley venture capital firm Kleiner Perkins Caufield & Buyers also announced in March a $100 million fund focused on start-up companies developing apps for the iPhone.

“The one that’s probably positioned the best on this is Google,” said Roger Entner, senior vice president for telecom research at The Nielsen Co.

Because of Google Inc’s proven ability to make money through advertising on the desktop Internet, Entner sees a good chance it will become the winning brand in mobile.

CONSUMERS MORE WILLING TO PAY

Telecommunications carriers also see a chance to play a bigger role. AT&T Inc’s 2008 acquisition of Wi-Fi service provider Wayport is an example of a carrier trying to control the gateway to mobile content.

“In the wired Internet, the carrier was a dumb pipe,” said Robert Jackman, who co-heads the technology, media and telecommunications group at investment bank Jefferies.

“In mobile Internet, carriers will play a bigger role,” he said. “If you can’t control end-to-end through to the billing relationship, you can’t control the end-customer.”

nd some mobile forays have been less than successful, like the money-losing Sony Ericsson. But in a sign of its strategic importance, Sony Corp CEO Howard Stringer said he is committed to the handset venture with Ericsson.

“We want to make this partnership work,” Stringer said at Sun Valley.

Unlike the existing PC-based Internet market, where consumers have grown accustomed to getting content for free, the rules of the game in mobile are still being written.

The market for iPhone paid apps and sales of digital books on Amazon’s Kindle e-book reader suggest that consumers may be more willing to open their wallets in the mobile world. “They’re paying for things we never thought they would pay for even two years ago,” said IDC wireless analyst Scott Ellison.

Apple’s “in app purchase” feature, which allows content providers to sell services beyond the initial download of an app, holds the promise of more monetization.

According to Juniper Research, direct and indirect revenue from mobile apps is expected to exceed $25 billion by 2014, compared to $7 billion in 2008.

Adapting to the mobile wave, rather than getting crushed by it, is an increasing priority for media companies. But, as with the broader changes affecting traditional media in the Internet age, the path remains murky.

“They know it’s coming,” said Peter Sealy, CEO of The Sausalito Group, a business and marketing strategy firm. “The analog world is trying to figure out a business model that makes sense to them and that the consumer will buy into.”

(Reporting by Alexei Oreskovic; Additional reporting by Gina Keating in Los Angeles and Sinead Carew in New York; Editing by Tiffany Wu and Richard Chang)

YouTube to Focus on Long-Form Video Model

Director of content and partnerships says strategy is one of the most significant changes to date.

By Stephanie Robbins — Broadcasting & Cable, 7/8/2009 3:17:11 PM EDT

Having successfully tackled the short-form content market, YouTube is now focusing much of its attention on the long-form model, Jordan Hoffner, director of content partnerships at YouTube said in his keynote at the NATPE LATV Fest in Los Angeles Wednesday.

“Being in a long-form business is not a bad thing,” Hoffner said. “Hats off to our friends at [the networks]. There’s growth there. We’re here in the growth business.”

He said this shift was a big strategy change for the company-one of the most significant to date.

Hoffner believes half the battle is making this content easy for the user to find.

He touted the site’s new show landing pages, which highlight both short- and long-form content. “This is the first navigation we’ve had on YouTube in years,” he said. “You are always one-click away from long-form content no matter where you are on YouTube. You have to find it in a clean, well-lit place.” These show pages, he says, allow users to easily move across the network.

But, partnering with networks and studios to house their content on YouTube has, at times, revealed a difference in priorities.

“There is a struggle with how users search and find content versus how studios and networks value from it,” he said.

Hoffner says media companies want to focus on “windowing” – such as releasing a certain amount of episodes at a time, while he believes monetization will come from users being able to search for and find all the content they want, when they want.

Monetizing this content with pre-roll ads seems to be becoming more acceptable to the users, Hoffner said.

“The experience is not like watching commercials on television and I think users are ok with that. We are seeing longer view times.”

He also says the economics to the advertiser are appealing.

“Brand advertisers are ok with advertising on this content because they have been doing it for years,” Hoffner said. “They are becoming a bit indifferent about where the show exists – the important thing is that it’s on that show.”

Hoffner also addressed YouTube’s main competition — NBC Univeral-owned Hulu.

“I think Hulu is doing a really good job. It has locked up three of four networks,” Hoffner said. “But, they’re not delivering the videos from Iran or videos that bring people together.”

He said Hulu is a great product that supplements a DVR and views them as a great competitor. “As long as there is more stuff out there, we are always going to be in good shape as a community.”

Hoffner is also focusing on giving viewers the best experience possible, despite additional costs, and is not blind to the fact that connection speeds are increasing and HD is the new thing.

“It’s kind of like HD and the networks. No one is making extra on commercials,” he said. “It’s just the cost of doing business.”

Hoffner also understands the need for YouTube’s partners to have quality control.

YouTube’s partnership with Sony and Crackle allows them to embed their own players into the site so they can control their content. Similarly, as part of the company’s recent content deal with Disney-ABC Television Group and ESPN, the network’s will also be integrating their player in its YouTube channel, in addition to providing short-form content to be placed directly into the YouTube video player.

As far as the online video business has come, Hoffner reminded attendees that, “we’re still early in the online revolution.”

Viewers still watch 153 hours of television programming each month compared to three hours of online video, according to data he cited.

“We’re patient,” he said. “We want to give people a reason to come to YouTube.”

Rise of Web Video, Beyond 2-Minute Clips

“Momversation” on Blip.tv is relatively long-form, with 20-minute shows.

Published: July 5, 2009

When motion pictures were invented at the end of the 19th century, most films were shorter than a minute, because of the limitations of technology. A little more than a hundred years later when Web videos were introduced, they were also cut short, but for social as well as technical reasons.

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Two years ago, David Wain broke the first episode of “Wainy Days” into three parts for the Web.

Video creators, by and large, thought their audiences were impatient. A three-minute-long comedy skit? Shrink it to 90 seconds. Slow Internet connections made for tedious viewing, and there were few ads to cover high delivery costs. And so it became the first commandment of online video: Keep it short.

New Web habits, aided by the screen-filling video that faster Internet access allows, are now debunking the rule. As the Internet becomes a jukebox for every imaginable type of video — from baby videos to “Masterpiece Theater” — producers and advertisers are discovering that users will watch for more than two minutes at a time.

The viral videos of YouTube 1.0 — dog-on-skateboard and cat-on-keyboard — are being supplemented by a new, more vibrant generation of online video. Production companies are now creating 10- and 20-minute shows for the Internet and writing story arcs for their characters — essentially acting more like television producers, while operating far outside the boundaries of a network schedule.

Some are specifically introducing new shows this month with the knowledge that TV networks generally show repeats and reality shows over the summer.

Yet TV networks get much of the credit for the longer-length viewing behavior. In the past two TV seasons, nearly every broadcast show has been streamed free on the Internet, making users accustomed to watching TV online for 20-plus minutes at a time. By some estimates, one in four Internet customers now uses Hulu, an online home for NBC and Fox shows, every month. “Dancing With the Stars,” the popular ABC reality show, draws almost two million viewers on ABC.com, according to Nielsen.

“People are getting more comfortable, for better or for worse, bringing a computer to bed with them,” said Dina Kaplan, the co-founder of Blip.tv.

Ms. Kaplan’s firm distributes dozens of Web series. A year ago all but one of the top 25 shows on her Web servers clocked in at under five minutes. Now, the average video hosted by Blip is 14 minutes long — “surprising even to us,” she said. The longest video uploaded in May was 133 minutes long, equivalent to a feature-length film.

Dave Beeler, a producer of “Safety Geeks: SVI,” about a threesome who make the world more dangerous as they try to protect it, said the “fallacy that anyone post-MTV has no attention span” is being refuted by the success of original video Web sites.

While online video is not going to replace television anytime soon, it is now decidedly mainstream. About 150 million Internet users in the United States watch about 14.5 billion videos a month, according to the measurement firm comScore, or an average of 97 videos per viewer. Although the Web lacks a standard for video measurement, comScore says average video durations have risen slowly but surely in the past year, to an average of 3.4 minutes in March.

To be sure, many of the most-watched videos are still as short as a song. But YouTube, the dominant video destination, recently recognized the trend and added a “Shows” tab to its pages, directing users to long-form TV episodes and movies. Jon Gibs, a vice president for media analytics for Nielsen, said online video — projected by eMarketer to be a $1 billion business in 2011 — is at a pivotal point.

“Historically it has been very much a clip-based experience online,” he said. “We believe we are moving into a transition period where more of that viewership is going toward long-form video.”

Much of the video innovation is coming from people who — empowered by inexpensive editing equipment and virtually no distribution costs — are creating content specifically for an online audience.

“On the Web, producers have this delicious freedom to produce content as long as it should be. They’re starting to take advantage of that,” Ms. Kaplan said.

What took so long? Tom Konkle, Mr. Beeler’s production partner on “Safety Geeks,” suggested that the shorter-is-better rule reflected limitations in Internet speed and server space. As computer power has improved, the video experience has too.

“A few years ago, three minutes ‘watching’ your computer felt like a novelty; now, it’s as familiar as your television set,” he said.

Two years ago when the comedian David Wain was stitching together the first episode of his series “Wainy Days,” he called Rob Barnett, the founder of the video distribution site My Damn Channel, and asked whether a nine-minute video would seem drawn out. Mr. Barnett deferred to the creator, and an hour later Mr. Wain called back with his mind made up: he would slice the first episode into three parts.

“I bet you, if this phone call happened today, we’d go with a nine-minute piece,” Mr. Barnett said. “I think it comes down to quality winning out over minutes and seconds.”

In short, the storytelling is superseding the stopwatch. “If there’s good storytelling and good production values, people are willing to engage with the content,” said Eric Berger, a senior vice president of Crackle, the Sony video site.

More than anything else, the longer viewing spans may speak to the maturation of the medium itself. Mr. Konkle said that the first kinetoscopes, in the 1890s, were about 30 seconds long, because the format required outrageously long strips of film.

“It was also accepted as fact that 30 seconds made for a good kinetoscope. This is what filmmakers thought the audience could handle,” Mr. Konkle said, drawing a parallel to the early days of online video. “It probably felt like a giant dangerous leap to short films of three minutes.”

Blockbuster movies now, of course, are measured by the hour, not the second; the most popular one last year, “The Dark Knight,” clocked in at two and a half hours.

Brands Experiment with Web Digital Content

Meet Simon, a laid-back groom who’s in way over his head in the world of wedding planning. And meet Rochelle, a budding bridezilla prone to shrieking meltdowns over flower arrangements. Watch these two head toward the Big Day, mockumentary style, and wackiness will no doubt ensue.

That’s the premise of a new series called Road to the Altar from MWG Entertainment, a Los Angeles digital production house that has gathered Pier 1 Imports, iRobot and Panda Express as brand integration partners and got semi well-known actors like Jaleel White (Urkel from Family Matters) and Leyna Weber (of Days of Our Lives) as stars. But don’t look for the show on any of the broadcast or cable networks. It’s available via YouTube, Joost, Sling and various mobile platforms.

The series is part of a burgeoning trend that has marketers partnering with Hollywood producers to embed their products into digital entertainment as a low-cost, low-risk addition to broadcast or cable. As the TV upfronts stall and ad budgets contract, marketers may increasingly turn to this kind of tailor-made entertainment that they can own, surround and promote.

For example, NBC Universal’s digital unit this winter presented a slate of in-development programs to advertisers, opening up those pieces of content early in the creative process to brand integration. So far, there’s a deal with Coca-Cola’s Nestea for placement in a short-form series called CTRL [see page 6]. More such alliances are in the works. Kraft’s Tassimo, Unilever’s Suave, AT&T and Procter & Gamble’s Tampax are stitched into online films that blur the line between selling and entertaining.

In some cases, such shows are drawing audiences on the scale of broadcast shows. Haute and Bothered, a Web series backed by LG Mobile and produced by Alloy Media + Marketing, has been viewed by 6 million people so far, and In the Motherhood, a Web series backed by Sprint Nextel and Unilever, racked up 17 million hits before hopping to TV as a short-lived sitcom. The yardstick used depends on the brand, but industry vets say that between 15 million and 20 million views for an eight-to-10 Webisode series is considered a hit.

The appeal for such vehicles is obvious: Industry veterans say it costs anywhere from $5,000 to $50,000 per episode to produce an original Web video series, with distribution and promotion costs usually double that amount. When it’s finished, there’s an hour or more of entertainment that can appear on multiple platforms, such as in-store networks, e-mail, blogs, mobile devices and interstitials for TV. In comparison, a traditional TV spot can cost as much as $1 million just for production, not including media buys.

On the downside, there’s a risk that no one will tune in. For instance, episode 1 of Road to the Altar, which launched in mid-June, has so far only gotten about 3,000 hits on YouTube. For their part, the networks don’t appear too worried about the competition yet. “They’re not diverting substantial dollars, but they’re dabbling and they’ll continue to do so,” Mike Davis, executive producer at Brand Arc, a branded entertainment firm, said of advertisers. “As the eyeballs justify the spending, they’ll funnel more into this area.”

That said, marketers that are dabbling in Web-only series are wary of repeating the errors of Anheuser-Busch’s Bud.TV, a $30 million attempt to turn the site into an entertainment portal. Keeping costs down (the production value on some online shows appears to be one step above Ed Wood’s Plan 9 From Outer Space), getting some well-known (but cheap) stars and tapping existing well-trafficked Web channels are three ways marketers are hedging their bets.

Lexus, for instance, is planning to broaden the audience for Web Therapy, an improv comedy series starring Lisa Kudrow with distribution on Hulu, iTunes and elsewhere.

Meanwhile, the efficacy of product integration in such Web-only series is hardly proven. Road to the Altar includes some placement by the sponsor. (The couple’s “wedding command center,” for instance, includes Pier 1 products with tags; at another point, the couple get a delivery of Panda Express food.) Robert Kandle, MWG’s vp-development, said he believes such placement is unobtrusive: “The guiding motivation for us is that they move the story forward.”

Producers and writers in Hollywood have become more comfortable with including marketers in the development process, said branded entertainment vet Stuart McLean, who helped barter the deal for the Unilever-sponsored Web series Love Bites. Both seem to be figuring out the medium together, said McLean, now CEO of Content and Company. “Just because you involve a brand early on in the conversation doesn’t mean the creative will suffer,” he said. “Both sides are working to build something custom and original with real entertainment value.”

HD pic stream still limited

By JENNIFER NETHERBY

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With millions of devices in homes now connecting HDTVs to the Internet, online movie services are poised to send a flood of high-def movies down those digital pipes. But the flow may be less than smooth, given limited broadband connection speeds in U.S. homes and the superior video quality on Blu-ray discs.

Vudu, Apple iTunes and Amazon Video on Demand have all added high-definition titles in the past six months. This fall, Microsoft (via the Xbox 360) and Roxio CinemaNow are each planning a major high-def push. In addition, almost every service is offering high-definition viewing via instant streaming so consumers no longer have to wait hours for large HD files to download.

But few expect digital downloads to be a serious competitor to Blu-ray discs anytime soon. That’s because most consumers don’t have broadband connections fast enough to stream HD video and, even if they did, most companies say HD streams can’t yet match the quality of Blu-ray.

The average consumer has only a 2.5-megabit-per-second broadband connection, said Mark Ely, VP of strategy for Sonic Solutions, which owns Roxio CinemaNow. To stream HD content in the standard MPEG-2 compression quality requires an 18-20 mbps connection.

Vudu’s well-reviewed HDX streams, which it touts as the highest-quality HD streaming, require a 10-mbps broadband connection, while its standard 1080p HD streams need a 4.5 mbps connection.

Because of broadband limitations, most companies in the space are positioning HD downloads as a complement to Blu-ray. That’s not surprising, since many are planning to offer their services through Blu-ray players in an attempt to expand their reach into the home. Sonic and Netflix, for instance, already have deals with LG Electronics to offer their services on BD players coming this fall.

Also limiting the potential growth of HD streaming and downloads is the amount of content studios make available and the terms under which they do so. So far, studios are releasing almost every new release, but since most HD new-release downloads and streams are available as rentals, they are available only in the VOD window, sometimes debuting after DVD and only available for a limited time.

Microsoft Xbox 360, which has been offering HD rental downloads since launching its video service in late 2006, will begin offering nearly every film it can in HD with instant-on streaming after it migrates to Zune video in the fall. Currently, the Xbox Live Marketplace has 5,000 HD titles, compared with 18,000 in standard definition.

Vudu says it now has 2,000 rental titles in HD and 200 more available as download-to-own. (Jennifer Netherby writes for Daily Variety sister publication Video Business.)