Big Media Looks to Win the Web


PALO ALTO, Calif. – Do TV networks get the Web? Sure, all the networks have huge investments in the Web and have significant online presences, but these media giants continue to wrestle with the best way to present content (free versus paid) and how best to attract advertisers. On the flip side, many Internet companies have their own ideas about video distribution.

“One of the things I’ve noticed the past year or so is that the Silicon Valley view of video on the Web is very YouTube-centric,” said Bill Gurley, a partner in Benchmark Capital and moderator of a panel here earlier this week at the AlwaysOn Summit. “There are a lot of questions of what’s being done and not done and there a lot of biases I don’t think are accurate.”

Google’s YouTube is known as the site most responsible for the explosion in user generated content (UGC). But many YouTube contributors also took liberties with the UGC idea, posting commercial movies and network TV shows, much to the chagrin of the studios. Viacom, for one, is embroiled in a billion dollar lawsuit against Google’s YouTube over alleged copyright infringement.

But while fighting copyright theft, the networks are now going to great lengths to get more of their content online and under their control. NBC and Fox, for example, launched earlier this year. The site features “professional content” including TV shows, feature films and video clips, which it streams for free, supported by pre-roll and mid-roll ads.

ABC has also moved aggressively to leverage its broadcast assets on the Web.

“When we started looking three and a half years ago at what was happening with our content, we saw indications that what was happening was similar to in the music industry; people were distributing over the air to peer-to-peer networks,” said Albert Cheng, executive vice president of Digital Media at Disney’s ABC Television Group. “We wanted to be proactive…. It’s obvious people are doing this because they want the product and aren’t getting it the way they wanted to.”

ABC was the first studio to do a deal with Apple to offer full episodes of network shows via iTunes. “That put us on the map. Next we wanted to offer episodes for free and ad-supported,” said Cheng. It took ABC 62 days to build a player and get the structure in place to show episodes at its site where Cheng said over 400 million episodes have been viewed to date and over a billion ads served.

On tap for the fall are improvements to the player including full screen viewing and embedded ads.

ABC has been working with Move Networks for its streaming technology and video publishing. Panelist John Edwards, Move Networks’ CEO, said the networks require a TV-quality viewing experience on the Web (including mobile viewing), interactivity and lots of measurement data to be able to monetize viewership.

“We want to be the first to deliver 10 million concurrent users on the Internet,” said Edwards.

From the Internet side, Yahoo is moving to be a big player in video. Earlier this year it paid $160 million for online video provider Maven Networks.

Todd Teresi, senior vice president of Yahoo’s Publisher Channel, said Maven is helping Yahoo meet its objective of helping companies with video distribution “on a prolific basis. Yahoo brings a pretty sizable distribution throughout the Yahoo network, whether it’s Yahoo movies or Yahoo TV or our other partners like or distributed through eBay.”

At the movies

While movie studios may seem to be dragging their feet in terms of Web distribution, there are structural and contractual issues that prevent them from moving far beyond offering previews.

There’s a process Hollywood has followed for 50 years called sequential distribution,” explained Thomas Lesinski, President of Paramount Digital Entertainment. As movies become more expensive to make, studios are leaning on decades-old system to ensure they get their investment back as well as profits.

Sequential distribution is the theatrical release of a movie, followed four months later to retail video distribution channels and download-to-own, and 30-to-40 days later to pay-per-view, and still later to cable and free TV audiences.

“It’s a very lucrative model,” said Lesinski. Ironically, his own job is to figure out ways to disrupt that model and figure out ways for the studios to make digital distribution a bigger part of its growth strategy.

“The trickiest part of it is that a lot of these distribution windows make a lot of money for the studios and a lot of them are tied to long term agreements,’ he said.

Michael Montgomery, president of Montgomery & Co. said the best laid plans are still affected by the state of the economy, consumers’ buying power and cut throat competition.

“Many media companies are somewhat skeptical about the economy,” he said. “Every major media person I’ve spoken to in the past month has that skepticism and fear that anything I sell will be cheaper three months from now.

“That being said they all recognize that more and more of their business is going digital. They’re looking for something unique and powerful, especially if it has premium content.”

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