Today's USA Today -- My Continuing Thoughts About Hulu's Likely "Winning" Suitor

A few days ago, USA Today had asked me for my thoughts about current speculation surrounding Hulu -- including its likely bidders to buy the company -- and the likely winner. A couple days back, Fox TV announced more content challenges for Hulu by withdrawing many popular shows for free viewing.

Jefferson Graham of USA Today asked me my continuing thoughts about the overall situation, which are found in two separate articles in today's USA Today.

Click on this link to read the first story.

And, click here for the related link.

Bottom line, all things being relatively equal in terms of price, of the three companies Jefferson Graham lists (i.e., Apple, Google and Yahoo!), the media companies behind Hulu would hand the reins over to Yahoo!, which it views as being the least threatening by far.

Cloud-Based Video Workflow Solutions -- Undeniable Factoids to Support Ultimate Undeniable Dominance

Online and mobile video, of course, are already central to enterprise strategies -- from premium content delivery (motion picture and television), to general sales and marketing, to educating and training, to consumer UGC. That means video workflows -- and workflow solutions (i.e., enabling tools used all along the chain of content creation to content delivery) -- are increasingly critical to each and every business, no matter how large or small.

And, to enable optimized video most efficiently and cost-effectively amidst the multi-screen and increasingly complex video world, cloud-based video solutions ultimately will be vital and will disrupt the current world of expensive and inflexible legacy hardware-centric solutions. We are still in the early innings here, of course, but this rise is inevitable.

Here are some compelling stats to back up this conclusion -- I have culled from a variety of sources (the sources are listed in parentheses). These stats represent a veritable treasure trove of research.

-- the overall market today for worldwide "video asset management" solutions is $10-$15 billion (KIT Digital)

-- by 2014, IP video traffic will be 6X greater than it was in 2009, and video will represent over 91% of all consumer IP traffic (Cisco)

-- the global smart phone market totaled 297 million units in 2010 (Citigroup Global Markets), will total 420 million units this year in 2011 (IMS Research), and will represent 90% of the overall mobile phone market by 2015 (Chetan Sharma); smart phones already represent the majority of new mobile purchases in the U.S. (Nielsen)

-- by 2014, IPTV/OTT delivery will grow 38X over 2009 (Cisco)

-- the global cable market was $127 billion in 2010, and will reach $200 billion by 2015 fueled by IPTV ("TV Everywhere"-type) services (BCC Research)

-- by 2016, the OTT (over-the-top services such as Netflix and Hulu) market will reach $16.4 billion (IMS Research)

-- 43% of consumers now use their mobile phone as their primary camera (PC Magazine), and this fast becoming the same with respect to video capture

-- the cloud services market will reach $72.9 billion by 2015 (IDC)

-- the mobile cloud computing market will be 100X greater in 2014 than it was in 2010 and will reach $20 billion (Chetan Sharma)

-- the U.S. government has already instituted a "Cloud First" policy -- and TechAmerica's Cloud Commission just reported its recommendations to the Obama Administration that will fast-track cloud adoption by government agencies -- click here for more information about these recommendations.

Cloud Commission Submits Recommendations to Obama Administration

I am pleased to report that TechAmerica's Cloud Commission, on which I am proud to have served, just now this morning released its long-anticipated recommendations to the Obama Administration. Here is the press release from the Commission itself -- click here. And, here is Sorenson Media's own press release -- click here to read.

I was honored to have been selected as a Commissioner and that Sorenson Media was the sole video workflow solutions company chosen to be part of this Commission that worked closely with President Obama's CTO & CIO. And, I am absolutely committed to have Sorenson Media continue to lead the way in terms of innovating cloud-based video workflow solutions. To learn more about Sorenson Media's industry first enterprise-grade cloud-based solutions, click on this link.

Praise Netflix for Its Price Changes -- Don't Bash It!

Netflix just recently changed its pricing structure of course -- essentially, higher overall pricing has been implemented for its combined online streaming and physical DVD business. And, the negative Netflix customer blowback has been substantial. In the minds of many, Netflix committed an act of treason by changing its pricing structure. The ultimate betrayal -- "how could you do this to us Netflix?"

Ridiculous! (And I am a long-time Netflix customer who will be impacted by this new world order). Instead of being bashed for its price changes, Netflix should be praised! Huh, what? What did you say? YES, that's right, Netflix should be praised.

Netflix has revolutionized the game in terms of online delivery of premium television and movie content. On that, we all agree. But, even more, Netflix has also revolutionized the game of developing new online business models -- new pricing structures -- new ways to monetize content in the brave new world of electronic delivery. The physical DVD business is going away -- and Netflix is experimenting with new pricing models to address the economic realities with which it is faced. Fine-tuning, if you will.

You see, cost structures are very different in the online premium content distribution game. Without getting into specifics of why the world is the way it is, Netflix only had to pay the studios once when it shipped its physical DVDs (i.e., it only had to pay for the actual physical copy of each DVD it shipped -- and then re-shipped -- to its customers). In the online delivery world, however, Netflix must pay the studios EVERYtime it delivers a new stream to a customer. And, the studios are charging Netflix an ever-increasing sum for the right to do this. (By the way, don't blame the studios either for doing this -- they too are trying to find a biz model that works for them in this brave new world which has disrupted the old one).

So, Netflix is simply trying to find a pricing structure that "works" -- a balancing act between pleasing its customers and increasing subscriptions on the one hand, and paying for its bills and making some money on the other hand. And, this kind of continuous pricing iteration will go on and on over time because we are still in the very early innings of online distribution of premium content. And, let's be clear -- other service providers will benefit from the learnings of Netflix!

So don't blame Netflix for "trying to figure it all out." Praise Netflix for being a market leader that has found a way to be profitable to date -- and is fine-tuning its biz model to be profitable in the future. The company simply wants to be a winner. Is that so wrong?

And, if you, as an existing customer or prospective customer don't like that, then vote with your dollars and go to another service provider.

Although that unlike Netflix, that other service provider may not be around in the future ...

Hulu -- My Thoughts About Likely Suitors in USA Today

Hulu rumours (Fleetwood Mac-type spelling) are swirling everywhere -- who will buy the largest Netflix challenger? I was asked by Jeff Graham of USA Today what I think -- here is today's USA Today article with my thoughts -- click here.

Of the three mentioned (Apple, Google, Yahoo!), and all things being relatively equal on price, I give Yahoo! the win here. Least threatening to the studios -- and is in most need for a major shot in the arm.

Paralysis By Being Broadbandless

Good morning -- it's that time again -- writing and posting time. Only I can't effectively do that, because my home broadband is "out" yet again -- not completely out (I can write and publish this post for some reason), but for the most part I am unable to reach any sites at all. Instead, I get the spinning wheel of death as my Mac frantically tries to find the sites I have selected. I have experienced this time and time again at our home where only DSL is available. Morning coffee essentially without Internet access -- what am I to do? Actually get some more sleep? Ahh c'mon! Instead, I sit here paralyzed and unable to find an effective topic du jour on which to comment for my Digital Media Update. Hence, my rant.

Rant #2 -- I just returned from my European vacation (which was complete with its own Chevy Chase moments). One of our stops was a nice class A hotel on the strand in Monte Carlo. Not cheap. So, wi-fi access throughout the hotel was a cinch, right? Wrong! While even Motel 6's give you broadband as part of the price of admission, Le Meridien of Monte Carlo apparently makes a decision for you to completely be off the grid so that you can instead focus your time by paying 20 Euros for a Mediterranean-side cocktail (that's about $30 for you and me). Now, if you are anything like me, staying off the grid simply is not an option (nor can you stomach a $30 cocktail no matter how thirsty you are). So, what's a tourist to do?

Monte Carlo's beach cafes to the rescue! While I couldn't access Internet in my own hotel, I could groggily stumble down to the beach cafes in the early morning hours, sit down, plug in the free wi-fi access code and buy a coffee or coke so that I don't feel completely sheepish for sitting down, checking in and use them for something I can't believe my hotel could not provide. These cafes were saviors -- without them, I would have been paralyzed (or would have turned on my smart phone data plan which would have been a debacle; I have a traumatic story to write about regarding a previous European vacation and streaming Rhapsody all day from a houseboat on Lake Como with what I had thought was an unlimited data plan ... alas, but that's for another day).

Broadband -- don't leave home (or be at home!) without it ...

Sorenson Media Chosen as 2011 Global 250 Top Private Company

Okay, am back from vacation (hence the dearth of blog posts of late) -- Budapest, by the way, is absolutely the most beautiful city by night.

My first post back is about my company, Sorenson Media. I try to address diverse digital media and technology topics in my blog, and not use it purely as a soapbox for what we do at Sorenson Media. But, there are times -- like today -- where I can't resist. Specifically, I am proud to announce that Sorenson Media has been recognized by AlwaysOn as a 2011 Global 250 Top Private Company. This is a big deal because the list of possible winners spans the globe -- and we were selected among literally thousands of domestic and technology companies that had been nominated by investors, bankers, journalists and insiders. Click here on this link to read our official press release that just hit the wires this morning.

I am proud of the team here at Sorenson Media. I have oft-written about the critical foundational importance of passion, from which all else flows. And, my team has it in spades (not to mention our investors, who are passionate about the overall market opportunity and our position within it). We are proud of this recognition.

Online Video Then & Now -- Ever-Increasing Complexity

This is a guest post -- originally published today in respected industry blog Gigaom -- by Sorenson Media's COO, Eric Quanstrom, about the ever-increasing complexity of online and mobile video in the past few years. A "must read" by a very very smart and talented guy (with whom I have had the pleasure of working now for nearly 5 years both at Sorenson Media and my former company SightSpeed).

In 2007, online video was the future. YouTube had just been acquired for $1.6 billion. Well-funded competitors such as Joost, Veoh, Babelgum and Revver were all familiar names producing short-form entertainment or hosting user-generated clips. Everyone was using Adobe Flash, which was by far the dominant format for video encoding and playback on the Web browser. Back then, Internet Explorer held 86 percent of the browser market. For most, online video was a straightforward affair: You put a video online; you made it short; and you hoped for the best.

Fast forward four years: YouTube is still around, but everything else has changed. None of the other user-generated video companies still exist in their original form. Adobe Flash is still the default option for video playback, but it’s far from ubiquitous. Browsers are now a grab bag of market share: IE (39 percent), Firefox (30 percent), Chrome (16 percent), Safari (6 percent) and Opera (2 percent).

Meanwhile, HTML5 promises to reinvent the video experience through the native use of the video tag and built-in codec support. And Apple iOS devices — which don’t support Flash — have now grown to more than 2 percent of all web browsing, with no sign of slowing. Finally, there’s a revolution taking place on the TV screen: Internet-connected “smart” TVs are everywhere, and video game consoles and other devices are providing a home to every type of content known to man.

Consumers today demand a TV-quality experience across every device they own. Among key demographics, video is now an always-on, always-with-you endeavor.

In 2007, moving video from camera to production to finished output involved little encoding mastery. That experience was mainly about getting a single compression right — a 1:1 ratio of source files to renditions, if you will. Back then:

• Codecs mainly served a single purpose: Flash playback. Most consumption occurred through progressive download, usually over HTTP. The biggest drawback was buffering, or the starting, stopping, stuttering and waiting for a video experience as files arrived at different times.
• Higher bit rates, which offer the promise of higher quality, simply take up more bandwidth, which increases wait times and consumer abandonment rates. Internet connection speeds, especially those in the United States, were also fairly slow. The median U.S. download speed was less than 2 Mbps.
• Screen resolutions were fairly small. Since they were consistently lower than 1024×768 pixels, that meant native 1080p video was impossible and 720p video was out of reach for a significant portion of Internet viewers.

How are things different today?

• There are a wide variety of codecs and player types. Flash is still the dominant Web-only playback runtime, but it features a variety of codecs. It’s also common to see H.264/AVC as the primary codec for Apple’s iOS devices. And the coming HTML5 wave includes WebM, Ogg Theora and H.264/AVC as natively supported codecs, depending on the browser choice.
• The median download speed for the nation is 3 Mbps.
• The primary method for delivering video is streaming, and with the advent of adaptive bit rate technology, companies are creating a better user experience. But adaptive bit rate is based around multiple renditions of the same video, which means cutting it into five-second chunks with multiple bit rates supported.
• More than 85 percent of browsers support screen resolutions higher than 1024×768, compared to only 26 percent four years ago.

Today, the testing, tuning and optimizing of one video to a given screen involves a lot more work: There are many more codecs, screens and processor types that go into delivering an optimal playback experience to an audience. That’s all forcing video content providers to think about more than just the creation of content.

Publishers now have to consider which video players, which browsers, how much network bandwidth and which supported devices they plan to target. They need one rendition of the file for each combination of target device, bit rate and network they choose to deliver to. It’s not uncommon for the most ambitious video distributors to create and deliver upwards of 100 video renditions per source video asset.

So what is the solution?

The video production industry needs to take a strong guiding hand to educate and inform content creators what their choices are, how they might plan efficient strategies to meet their goals, and how to future-proof their infrastructure for what are undoubtedly irreversible trends.

Profiled in San Diego - Why City Is a Great Place for Tech

Click on this link to see my interview and profile in the North County Times -- the major newspaper servicing northern San Diego. In this profile, I discuss my company Sorenson Media and why San Diego is a fantastic place for tech and to raise a family. I also discuss my wife, Luisa's, new non-profit organization focused on family -- Giving Tree Movement -- click on this link to read more about this.

Lots of talent down here in Southern California. And, lots of passion about changing the world in all respects.

Apple's iCloud - A "Cloud" in Name Only (& Another Marketing Sleight-of-Hand)

Apple's upcoming iCloud music and media services -- coming soon to rival Amazon's and Google's own cloud-based services. Finally, just like with Amazon and Google, consumers like me can access all of our iTunes music and movies anywhere and from any device, right? That's the revolutionary power and promise of the cloud after all.

Wrong. Very wrong. Unlike Amazon's and Google's cloud-based services, Apple's iCloud floats only in Apple's skies. It is not a true cloud at all. In Apple's cloud, consumers will be able to access their media content only from Apple devices (media content is downloaded and synced to each Apple device, it is not streamed like it is in true clouds). Think about that ... wow ... that is amazingly brilliant. Remember Apple's old advertising slogan "Think Different"? Well, they certainly did. Our friends at Apple thought long and hard about how they could continue to lock down consumers within their overall eco-system. They used marketing speak of the power of the cloud -- but, the game remains the same. Push a closed eco-system so that enamored consumers buy Apple devices -- over, and over again. That's how Apple makes its money of course -- through it high margin hardware (iPhones, iPads, Macs, iPods). As much as you may think that Apple cares about selling services, that ain't the game. That is the Trojan Horse. Margins are thin in the services game -- but, not in Apple's hardware game where it can charge top dollar for beautiful design and experiences.

Brilliant, yes. And, Apple's biggest trick? Its sleight of hand in using the label and power of the cloud to promote a service that is anything but a true cloud ... and making most of us believe it.