Big Studio Involvement in Online Video Takes a Step Forward

Joost Boost Worth $45 Million (free registration required)

The concern over Big Media's ability to control distribution of their content online should be more possible with the launch of Joost, the new online TV-cum-social networking start-up that is sure to get more blessing (and money) as they evolve. Not only have they received money from CBS and Viacom in this round, but they already have content agreements in place with Warner Music, National Geographic, Turner Broadcasting, The Cartoon Network's Adult Swim, CNN, Hasbro, the NHL, Sports Illustrated and Sony Pictures Television.

This looks like the VOD model they've been talking about for 15 or so years, only online instead of through your cable or satellite provider. The key differences between Joost and GoogleTube are (1) Professional media companies provide the content, not regular folks; and (2) it will focus on long-form programming (half-hour-plus), as opposed to short-form videos (under 15 minutes).

The key to this taking off, in my view, is the ability to watch Joost through your TV set, the ultimate lean-back medium, as opposed to watching it through your computer, a lean-forward medium. This will get easier as HDMI connections on TVs and ever-faster broadband Internet connections become more common. I'm not positive how fast the video stream has to be for the quality to approximate current 525-line standards, let alone HD, but it has to be faster than current 384 kbps standard.

And On The Flip Side of the Online Video Spectrum:

NBC Poised To Sell Digital Downloads. (Free registration required.)

Here's the latest attempt by Big Network TV to generate revenue directly from consumers for their standard TV offering. They'll be selling flotsam like five-minute video clips of SNL for a buck ninety-nine, although you'll also be able to buy sketchy-quality videos of shows like "The Office" as well.

I predict this will not work in the long-term -- meaning sustain a profitable SKU for anything longer than a year -- for the opposite of many of the reasons I elucidated in my preceding post.

The Most Successful Online Video Event So Far ...

... has got to be CBS March Madness product, located here. When they first came out in 2004 in conjunction with CSTV, it was as a $19.95 subscription. Starting last year, CBS started offering it free to viewers, with the cost underwritten by advertisers.

Now that's really starting to bear solid fruit: this Mediapost story (free registration required) reports that revenue has gone to $9 million this year, over double that of last year's $4 million, with advertisers such as AT&T's wireless unit, Kraft Foods and DiGiorno buying into the fun.

I can think of four key reasons why this specific online video offering has become so successful:

1. It's an event. March Madness has become the #1 sports event in America, and it generates a significant amount of low-level non-professional (and professional) gambling. So there's a lot of intense interest inherent in it. (I love serendipitous assonance.)
   
2. It's sports, a top avocation for the heaviest users of video, young men.
3. It's free. Appealing for obvious reasons.
   
4. It's a viable alternative to nothing. This is not an insignificant point. I would be willing to bet that the vast, vast majority of online video viewership of March Madness comes in the early rounds during weekday day games, when most people are at work and have no alternative method of or access to viewing games. Once you get later into the tourney -- specifically, Sweet Sixteen -- every game is on TV anyway, and plays at night or on weekends. The chances you'll be watching a relatively grainy online video versus watching the same game on better-resolution TV, especially hi-def, has got to be nearly nil.

If proven correct, then the implication here is that people respond to scheduled video events that are special in nature and not otherwise available to them. This is not the same viewing psychology as watching UGC on YouTube, or catching up on the latest 30 Rock on NBC.com.

Mark Your Calendars for March 31, 2008

That's when you should at least be starting to think about buying stock in companies that manufacture television sets and digital converter boxes. That's because, according to this story in eMarketer, people are waiting until the very last minute to convert from analog sets to digital sets. Analogs will become absolutely useless as braodcasters switch to 100% digital signals a couple of springs from now.

I'm all set with my TV itself, although my portfolio might need a little sprucing up before then.