An amusing piece in the WSJ pits Sab Kanaujia, vice president for digital product strategy at NBC Universal, against Steven Starr, co-founder and chairman of Revver. Sab uses statistics to drive his point home:

Forecasts claiming that the new media will swallow traditional TV are grossly overblown. Today, almost half of the total media consumption in the U.S. is on TV—47% of 68 hours/week/user (Source: Veronis-Suhler 2006). Rest is split between radio, recorded music, print, Internet, mobile, etc. Future trends also point to the dominance of TV (48% of users’ media time in 2010).

Our outlook on TV isn’t nearly as optimistic as Mr. Kanaujia’s but his point that no one is making enough money online right now to leave their day jobs is certainly ringing true.

Recently at the All Things Digital conference, Steve Jobs described Apple as:

We’re in two busineses today, we’ll be very shortly in three business and a hobby. One is our Mac business, second is our music business, third business is the phone business, handsets. And the hobby is Apple TV. The reason I call it a hobby is a lot of people have tried and failed to make it a business.

It seems today that the new hobby is really a fourth business.

A film would cost $2.99 for a 30-day rental. Its digital rights-management software would allow films to be moved from a computer to at least one other device such as the video iPod or iPhone. The software would prevent movies being copied.

One studio executive said the service would “compete against cable companies and anyone else offering VOD into the home”.

It seems Apple is determined to do to movie downloads what it did to music downloads but this would mean that the AppleTV has to become as ubiquitous as the iPod. Perhaps it will be a hobby for a while.

Entrepreneur magazine has a profile of the startup YuMe, which helps advertisers looking to target video ads online. Of course, the new company discovered that the massive patchwork of players/competitors in the online video space created some snags:

“We’re finding that people who have the content and want to distribute it want control over the ad sales, and people who are actually distributing the content, like YouTube and other distribution agents, also think they have control or a share of the pie,” says Kadambi. For now, though, everyone seems to be working together.

“Everyone seems to be working together” sounds a bit ominous to us. It is true that much good content isn’t licensed because current business models aren’t profitable enough but that’s because there are a whole host of other infrastructure issues no one has dealt with starting with the overwhelming lack of good broadband in this country. Generating more demand for video would be trivial if the infrastructure was in place…

With the rise of YouTube came the implicit conclusion that the online video format wars were over and that Flash Video (.FLV) had rendered both Apple’s QuickTime (.MOV) and Microsoft’s Windows Media (.WMV) formats to the trash heap of history. But Steve Jobs may have found a way to secretly move YouTube away from the low-resolution and low-quality Flash Video format and strike a decisive blow against Adobe:

...Youtube will be encoding all of their videos into a “H.264 streaming-efficient compression format” specifically for the Apple TV. All of Youtube’s videos are currently encoded in Flash Video (FLV) format.

While no official reason is given for the mass transcoding of Youtube’s entire catalog, Macformat.co.uk believes it has to do with the iPhone.

“As far as I know even now, Flash content per se might not play on the iPhone from day one. But Apple clearly doesn’t – indeed, shouldn’t – care, as YouTube is for many people the most critical site that uses Flash.”

Indeed, both the iPod and iPhone can play H.264 encoded video, and so it seems the entire Youtube catalog may also become available to those devices later this year.

It’s almost as if Steve Jobs took a move from Bill Gates’ Microsoft monopoly playbook, by tying the video format to the hardware devices, content providers have no choice but to adopt Apple’s video software. Although it seems interesting that the Apple “tail” managed to wag the YouTube “dog.” Who needs whom more?

Jeremy Liew has an excellent opinion piece up at NewTeeVee that points out the current dilemma with trying to make money via online video advertising:

Suppose that instead of watching a video, that user spent the same five minutes looking at regular web pages instead. Comscore says that the average time spent per page for the entire internet is about 0.7 minutes (April 2007 data). So in 5 minutes they would have seen 7 pages. Since the average webpage has multiple ad units (say 2), they might have been exposed to 14 ad impressions in those five minutes. So even if a video ad unit had a 5-10x pricing premium, the site might still have generated more revenue from regular web pages in the same amount of time because they would have served 14x more impressions.

We’ve noticed that many video sites (YouTube included) have attempted to bridge this gap by using a hybrid model of including banner advertising along with video content but that probably still doesn’t make up the gap. That leaves only two options: hoping that the premium for video advertising will grow to 20x-30x that of banners (which may take years) or grow the amount of alternative text and interactive content surrounding video.

The inevitable slide continues:

Broadcast television revenue slipped 5.3 percent to $11.7 billion in first quarter, according to a Television Bureau of Advertising analysis of TNS Media Intelligence data. Local broadcast turned in the best performance, down 3 percent to $4.04 billion. Network TV had the toughest quarter, declining 6.5 percent to $6.7 billion. Syndicated TV was down 5.9 percent to $986.7 million.

Another couple of years and it will start snowballing…

Bad idea: repackaging the ol’ “captured on home camera” clip shows as a new-fangled internet-social-media-thingy.

Amateur video will form the basis of the show’s segments, but ABC News correspondents will build news stories and features around video captured on cell phones or digicams and uploaded to a companion Web site.

Remember, blurry and shaky handheld footage is still boring after you watch that tornado caught on camera for the umpteenth time since the 80’s.

Good Idea: Turner seems to have a better idea of what to do with the web, put some good content online for everyone to watch. What a radical idea:

Turner Broadcasting System’s TNT and TBS plan to stream all seven of their combined original summer series on their respective Websites. For the most part, they will be available the morning after they premiere on TV.

[...snip..]

Cable networks typically have had a harder time than their broadcast counterparts in streaming shows online because they have to get both the rights from studios and the go-ahead from cable operators.

[...snip..]

“From the studio side, it’s becoming part of the package of rights you’re willing and able to buy,” says Turner Entertainment Networks President Steve Koonin. “We take the streaming piece very seriously, and when we’re looking to greenlight series, this is something we push with the studios.”

Sounds like Turner has ABC beat on how to take advantage of the net which is a bit of a role-reversal as the article points out about the rights situation. Maybe this is the start of a new trend, it was easy for the public networks to get out of the gate first but now the cable tortoises may beat out the broadcaster’s hares…

While yesterday may have depressed our TV friends, Bloomberg (following the journalistic principle of ‘balance’ we’re sure) has made sure to put in a story to cheer them up:

From almost the dawn of television, the networks set standard rates for all advertisers based solely on the popularity of a program. Today, with spending on broadcast TV in decline, they’re scrambling to capture more of the ad dollars aimed at video on the Web.

ABC, Fox, NBC and CBS are telling advertisers they can shape any deal to suit any need, according to ad agency executives. That means companies such as Coca-Cola Co. or Procter & Gamble Co. can choose any combination of advertising - - on TV, over the Internet or on mobile phones—and work out individual terms.

That is a nice spin they are putting on it but begging ad-buyers to work out a custom deal for every single one just smacks of desperation, no? We would love to see what one of these ‘custom deals’ looks like.

After spending $1.65 Billion for YouTube and then $3 Billion on DoubleClick, Google is most certainly in an acquisitive mood. It comes as no surprise then that while GE is considering selling off its NBC Universal unit that analysts start throwing around the idea of GoogTube snatching it up:

Nicholas Heymann of Prudential Equity Group Inc. in New York said a company such as Google Inc. may be interested in buying NBC Universal as part of its effort to add to its mix of media offerings including YouTube.

Of course later on in the story they include the typical denial:

Google doesn’t comment on ``market rumor or speculation,’’ spokesman Jon Murchinson said in an e-mail.

It’s very doubtful that Google would ever buy NBC. Google is perfectly happy selling advertising to the longtail of web search but Google clearly does not want to get into the content creation business. Content production is an expensive and risky business (the reason GE wants to sell it off in the first place) and Google is accustomed to adding advertising to other people’s content. Other people’s content (much like Other-People’s-Money) is far more fun to deal with.

Broadcast TV is not far off from the Google biz plan. As we’ve explained here before Google can be classified as a media company instead of a mere ‘technology’ company.

Continuing on our theme from last week of Silicon Valley becoming a media capital, Robert Young over at GigaOm speculates that Google might soon cut its own distribution deals:

The parallels between an existing media company’s business model and the one that Google is pursuing are pretty strikingly similar, aren’t they? And as you click down further, you start to wonder what will stop Google from eventually going directly to the Bruckheimers of the world, cutting out the broadcast networks as middlemen?

Somewhere in PR heaven, another angel just got its wings. How else can you crown the success of the flack who managed to dump this puff piece on CIO magazine, titled ”Skype Founders Unveil YouTube Killer.” It’s so wrong on so many levels we don’t know where to start. Actually we do know where to start:

Firstly, if you are going to kill YouTube, you have to examine why YouTube is so popular. It runs on every browser, and every OS that supports Flash. ‘Joost’ only runs on high-end Windows PCs. But wait, there’s more:

De Wahl said Joost will replicate the complete television experience and ultimately fill a critical gap in online entertainment. “It will allow viewers to access all kinds of television over the Internet,” he said.

YouTube is also successful because it has loads of content (much of it illegal). Joost? They’ve been having some serious issues getting anything licensed. It gets even better though:

And how will it all work? Joost will use the kind of file-sharing architecture that powers Skype.

[...]

According to the London-based company, Joost will be “piracy proof” and capable of streaming video at broadcast resolutions, unlike other online-video services such as YouTube.

It’s interesting that they don’t mention that the founders of Skype were previously the founders of another famous company called Kazaa. You may have heard of it since it was a massive P2P filesharing system that was the YouTube-of-its-day. After they got their asses handed to them by irate copyright holders it seems that they’ve learned their lesson—sort of. They know now that they have to be anti-piracy but they are nuts if they think Hollywood will trust THEIR P2P network to be “piracy proof.”

Yeah, we’re the guys who created the Kazaa P2P technology but this time we promise to not let your products get stolen, no seriously.

Good luck on licensing all that content. So for those of keeping score at home:

YouTube runs everywhere, Joost only on new Windows boxes.
YouTube with tons of content, Joost with little-to-none.
Joost uses P2P technology originally used in massive file-piracy now claiming to be “piracy proof.”

Does that sound like a real YouTube killer to you?

(P.S.: on the plus side, Joost is higher quality than YouTube but its a pretty steep price they pay for improved images.)

Seth Steve Rosenbaum over at iMediaConnection makes an interesting argument on the future of TV:

So the future of TV is no longer about content creation, though there will be plenty of that. It is instead about content discovery-- finding media nuggets that are site-specific and user-friendly. Video discovery is at the heart of TV 2.0.

So, should Jeff, Les, or Bob be worried about their jobs? Actually, the answer is kind of yes because the media model that they manage is all about the economies of scale. Large networks deliver large audiences, which commands large dollar amounts. But the internet is about identifying, aggregating and monetizing small (but targetable) niches, and there’s little in the top-down media business that serves that purpose.

Conveniently, Seth is also CEO of Magnify.net which is a video search engine that aggregates the search facility of sites like Revver, YouTube, Yahoo! Video and Google Video.

Seth is only half right. It is true that the internet opens up the endless possibilities of specialized channels but he’s giving the traditional TV networks too much credit in the audience department. Most cable channels deliver pretty tiny audiences, so tiny in fact that many popular internet programs regularly attract larger audiences. MTV is dropping TRL for only having 300,000 viewers but Rocketboom has that many viewers daily.

Update: Thanks to Steve for pointing out his name isn’t Seth!