The Future of Online Content Distribution

The biggest challenge: Discovery

Long form content is content that is over 5 minute, which means, not advertising, sketches, e-learning, or YouTube® instructional video - mostly which are not content distributed for direct profit.

Three major challenges currently (Sept. 2012) face the online distribution of movies and TV shows.

  • Discovery of relevant content (I can't find the movie)
  • Enabling technology (smart devices are outnumbering boxes)
  • Bandwidth

The online market for content is in constant evolution. Ooyala, a CDN and online video distributor, announced that the use of tablets for watching long-form video jumped 45% in their most recent quarter. There is a very large difference in which devices are used to watch online media between the younger demographic, which is more inclined to use newer technology without a remote, and the generation just 10 to 20 years older.

CDN: A Content Delivery Network. CDNs may or may not have their own content distribution platform. Most often they are simply giant Internet networks with bandwidth in the terabyte range, that sell bandwidth to others, and may offer distribution architecture to clients who subscribe. CDNs commonly have "edge servers," which are Internet servers that are distributed around the world at strategic points of delivery, so that the network "pipes" don't get unnecessarily clogged with traffic. For example a video that originates in New York and is seen in San Diego, will have fewer "hops" and clog up the network less if it is distributed from a server in San Diego.

The biggest challenge facing both content distributors and viewers is that content can't be found. Both NETFLIX® and HULU® have some advantages in this area. One key to Netflix's success is they have a recommendation engine that constantly places relevant content selections before the viewer. One key to Hulu's success is that they also have a recommendation engine that will link you to relevant content anywhere it is available, not just the Hulu site. The Hulu model, in my opinion, is probably closer to the model that will win because it gives their customers what they want.

Having worked in artificial intelligence, I can say that recommendation engines can work very well to provide relevant content links. They can let you tailor your queries by many criteria that screens out most of what you don't want to see, while showing you exactly what they want.

Currently recommendation engines should show you recommendations, or let you search by:

  • Most popular
  • New
  • Past favorites
  • Independent producers
  • Genre
  • Niche genres
  • Search by title, actor, subject
  • Length or media type
  • Viewer rating
  • Emotional depth
  • Time period of production (recent, last 10, 20, 30, 40, 50, 90 years)

Update 10/29/12: Roku has added universal searth to their device, which indicates "Roku’s new search facility allows its customers to search movies, TV shows, actors and directors across Netflix, Amazon Instant Video, Hulu Plus, Crackle, Vudu and HBO Go." ""...will take you straight to your desired movie or show,”" Roku search cuts across OTT universe

From having written technical documentation, managed and written marketing and sales communication, and investigated search and classification schemes at length, I can tell you several things:

  • Viewers want to watch, not search. They want to get to what they want to see in just a few clicks.
  • Viewers do not want to look through long lists of items.
  • Limited selection works much better for viewer choice and satisfaction than long lists. Too many selections leads to frustration.
  • Categorizing items more than one or two deep stops people from searching. At four deep, the searched for item simply does not exist in the mind of the viewer.
  • Pictures are potent. They have an emotional draw. So do titles. Descriptions are the closing argument. Both a bad picture or bad description chase viewers away. Don't leave writing to someone technical who can simply put one word in front of another. Descriptions are marketing.
  • Advertising where people are looking will likely be the best way to get an audience's attention.
  • People love the simplicity of search, but are often disappointed by the results. If you want satisfaction, allow search, but provide a better user interface experience. Using "More Like" and "Less Like" can be very beneficial.

Also see: Roku, TiVo, Epix Ask if Internet Television Is Already Broken

Next page: Online market of the future.

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Online market of the future

In 2001 I envisioned a large XML database containing at least the database information on the previous page, with a recommendation and search engine. It would link people to any content they wanted to view. The content could be on any or multiple Web sites. Once linked, the viewer would pay at the Web site of their choice.

Smart devices of today generally don't let you discover content at all. They simply guide you to selected pay distributors where you are subject to their inventory. This will likely be their ultimate downfall in a competitive market, despite their convenience for watching movies.

The 2012 number of Roku and Boxee devices is around 5.5 million. The number of people connecting their TV via laptop and these set top boxes, supported by surveys in 2011 and 2012, is around 16,500,000. The growth in the Netflix customer base since 2007 offsets the 1/3 reduction in people viewing by PC/laptop, but the total amount is being reduced by smart devices with limited offerings, by around 2 million.

Typically markets converge into 3 main suppliers and several niche suppliers. The online content market may do the same, but there is a very good possibility it may be very different. If independent recommendation engines become the norm, then the market may split into a thousand pieces. As cable TV becomes more focused on channels that sell, and niche and Independent content producers compete by going to online marketing and delivery, and the younger demographic seeks more of niche and Independent content, Independent Internet content delivery sites are likely to become more popular.

What may happen is that content producers opt to market to their market via online distribution. They may do it by subscription or individual content sale, depending on the nature of their product and business model. For example, you may get access to a group of How To, several Cooking, Culture, and similar programs by subscribing to a particular Web site for online delivery. You may get access to a certain producer's movies at his (or the studio's) Web site, paying $10 to 12.00 individually for the new release.

How will these programs be found? Partly through a recommendation engine. Partly through targeted advertising.

Advertising is a problem. Small companies or individuals have very small advertising budgets. If the competition for advertising space is high, then prices will rise. Advertising may have to go to an opt-in subscription model for content. When there are thousands of selections, getting found is difficult. The recommendation engine would help alleviate this problem.

Also see: Apple TV, Roku, WD, Sony, D-Link: Battle of the $99 Set-top Boxes

Next page: How will you be viewing in the future?

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How will you be viewing in the future?

Which device will you be using to display content on your TV, or tablet, in the future? There are several market forces. Pushing the change in technology in your living room are the smart devices and the set top boxes.

Smart devices allow you to select icons that connect you with selected pay services. Since 2007, 2/3 of the people who watched Netflix by connecting their PC to the TV, have since changed to these smart devices. Even though they limit the viewer's selection to only a few services, they are a major force in the marketplace. They emphasize convenience over surfing. Lesson: As mentioned before, too many selections leads to less satisfaction. But selection comes at a price. You can't watch YouTube, or a vast number of other content providers.

Set top boxes compete directly with smart devices, and have been around longer. ROKU® has 3 million devices in use, and BOXEE®, has over 2 million devices in use. Both enable you to surf the Internet to see or select any content you want. If you want to watch YouTube, or a vast number of other content providers, you generally can.

People prefer the home theater experience over going out, at least to going out every evening for content. The statistics on "cord cutting" don't yet indicate that people in droves are giving up cable for the online experience. The smart device makes finding great content very convenient. But the younger generation likes viewing over tablets. (Cell phones, not so much.) Portable devices, like tablets, are excellent for viewing any content you want, from any Web site you want. And both Roku and Boxee work on these devices, making selection even better.

So two competing forces will decide who wins the battle for your eyes. Viewers want selection. The device that can provide market winning selection will have a major share in the market. Viewers want convenience. The device that can provide convenience will win a major share of the market. No single device is likely to dominate entirely. Some viewers want subscriptions, others want individualized choices.

But the likely overall winner: Independent "content recommendation engine" (paid for by advertisers): Convenience. Selection. (This could be an individual Web site (we tried it on FlixStreamer.com - but it takes more people to do it), or Bing, Yahoo, Google, Hulu, etc.)

- Dorian

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Reference

Companies mentioned, or commonly mentioned on this Web site:

Amazon.com® is a Registered Trademark of Amazon.com, Inc.
AOL® is a Registered Trademark of AOL Inc.
BOXEE® is a Registered Word Mark of Boxee Inc.
BLOCKBUSTER® is Registered Trademark of Blockbuster L.L.C.
iTunes® is a Registered Trademark of Apple®
CINEMANOW™ is a trademark of BBY Solutions, Inc.
Comcast® is a Registered Trademark of Comcast Corporation
Disney is a business name of Disney Enterprises, Inc.
Fandango℠ is a proprietary service mark of Fandango, Inc.
FIos® is a Registered Trademark of Verizon Trademark Service
HBO® is Registered Trademark of Home Box Office, Inc.
HULU® is Registered Trademark of HULU®, LLC.
Moviefone® and Moviefone.com® are Registered Service Marks of AOL Inc.
MOVIES.COM® is a Registered Trademark of Fandango, Inc.
MOVIEWEB® is a Registered Service Mark of MovieWeb, Inc.
NETFLIX® is a Registered Trademark of NETFLIX®, INC.
REDBOX® is a Registered Trademark of Redbox Automated Retail, LLC
ROKU® is a Registered Word Mark of Roku, Inc.
Sony® is a Registered Word Mark of Sony Corporation
Sundance Institute is not trademarked, but is used since 1981 by Sundance Institute, which hosts the Sundance Film Festival
Sundance Channel® is a Registered trademark of Sundance Enterprises, Inc.
TiVo® is a Registered trademarks of TiVo Inc.
VUDU™ is a trademark of VUDU, Inc.
XBOX® is Registered Trademark of Microsoft Corporation.
YouTube® is a Registered Trademark and Service Mark of Google, Inc.
Any trademark not listed out of oversight is a Trademark or Registered Trademark of it's respective owner.

Mention of any business in this article is not intended to endorse, disparage, or favor any business.

Movie names that are mentioned are not given reference citations. This is because numerous studios are involved in production, and they then assign distribution rights to multiple distributors, and these rights can be sold to other distributors. For production and distribution information on any movie mentioned, consult the Internet Movie Database, or other authoritative listing.

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