When we hear the term DivX, what usually comes to our mind is a media player, or a set of Codecs that we shove into our QuickTime or Windows Media Player to be able to watch a certain type of media file. Did we ever think that this company would take a leap and begin to think about competing with the likes of Apple iTunes in Content Distribution? Well, they have.

They have just signed a deal with Warner Bros.  which gives them the right to digitally distribute their movies. This is in addition to their existing deal with Sony that distributes movies via a plethora of platforms using the DivX technology- including the game and mobile devices. These two deals now give DivX access to virtually half of the world’s movies!

The reason behind such firms backing DivX is their secure platform which prevents piracy. Besides, why should a studio restrict its distribution to one particular digital outlet? Warner also have a deal with Microsoft’s XBox to distribute their movies as well as with Cinema Now- a leading online retailer of movies in digital format in the US.

This is a development that is going to majorly challenge Apple’s closed-loop distribution of- Ipod/Iphone-Itunes-AppleTV. Why should a distributor or a digital retailer like ITunes (or Cinema Now) restrict access to a particular device? DiVX are likely to make the whole movie distribution eco system a bit more open. Although, their temptation to get a bigger share of the revenues via distribution to a proprietary device is quite visible in their DiVX Connected device. This device is a heaven for anyone who indulges in torrents every now and then for a bit of .avi fun!

Lets wait to hear how DivX front this distribution deal, and how much are they going to charge consumers for the movies. Apple’s ability to lead the pricing models for the digital content is quite likely to be affected here. Cinema Now sell movies from anywhere between 10 to 16 dollars. An equivalent of that price in the UK might not under-cut Apple’s current pricing… but then who knows. There is a great potential for DivX to take a leap into an advertising funded model here as well.

I say keep an eye on DivX!

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We based personalisation technology to deliver an experience unique to each user is not new. Amazon has been doing it for quite some time, and even some basic movie rental sites have tried it. Most of these personalisation software rely on your behavioral pattern to make recommendations.

Come to think of it, why has this persoanlisation not come to the TV sets as yet? Afterall, in the age of on-demand, or even scheduled digital viewership, this is but a painless task… and seemingly simple that too.

Well an Italian company seems to have finally delivered it. Bee TV,  a startup being run by some acclaimed industry professionals, with the ownership of a Ducth BV holding company seems to be making in-roads into this area.

Their technology works at an upstream level. They work with platforms and broadcasters to deliver  the experience and interface as opposed to selling it directly to the consumers. One can see an obvious business model advantage in their approach, as platforms are the lowest hanging fruits- you go with a few, you would reach million of homes automatically.

However, in my opinion, there is such an opportunity for this type of personalisation to be delivered to the consumers, independant of the platforms- via either a media centre platform, or via a PVR platform. Even a device like Apple TV should be able to do it. For all you know, the new Genius function in ITunes might just deliver this experience on Apple TV for audio-visual content. Alhough it can not be fully beneficial untill Apple TV becomes a PVR.

It is at least a step towards a new direction. Also, can you begin to think how the Google TV Ad serving would work in conjunction with something like this…? Beautifully!

You can watch a demo of the Bee TV service at:

http://www.bee.tv/demo.asp

Pricing of Content

July 11, 2008

One thing is for sure, the on-demand, commercials-free nature of broadcast has huge implications for the pricing of TV content, for both consumers and advertisers. Afterall the media owners, or the content producers, have to generate streams of revenue that would continue to justify the ever-increasing costs of production.

In an on-demand world, there is quite a possibility of doing a pricing model where consumers get to decide whether they want to see any advertising at all or not. If they do, one can even push the extent of advertising they would be exposed to. For instance, if a consumer decides to pay 100% of the price for a movie, he or she may watch it without any advertising. But if he or she decides to let advertising subsidize it, the payment might actually be just 50% of the actual price.  On devices like Apple TV or other media centres, this is quite possible to do even today.

Apple have just patented a technology whereby they can “insert” advertising into any audio-visual media file (mpeg4 etc). What this technology does is that it puts “tags” within the file at various intervals, and then when a viewer reaches that point in a programme, the programme is interrupted and a series of ads are streamed-in from a remote location. The movie or programme continues once a number of ads have been watched. This service is much like an ad-server for internet banner or search advertising. This allows for insertion of ads with precise targetting as each and every playback can have different advertising inserted.

Now from the pricing point of view, how would advertisers begin to pay for something like this? Interesting thought, as the waste element of mass TV broadcast advertising can now be down to zero. As in internet advertising you pay for a click, you would in this case be able to pay for a “view”.

Google have also started experimenting with content distribution via their ad-sense server- and are figuring out ways of incorporating advertising into streaming content. It is over the internet on computers for now, but it might well be on the televisions of future. I will write more on the innovations in the TV sets business in the later posts. For now, click on this New York Times link for a read on Google’s initiative:

http://www.nytimes.com/2008/06/30/business/30google.html?_r=2&adxnnl=1&oref=slogin&partner=rssnyt&emc=rss&adxnnlx=1214845383-dD7MC4+qhkFGE45rIjp/gQ&oref=slogin

Everyone is impressed by the growth of PVRs/DVRs. It is truly overwhelming, and of course the reason is that these devices completely changed the viewing experience for us.

The first big thing about the PVRs was that it liberated programming from the shackles of TV listings, and allowed you to watch what you wanted to watch, whenever you wanted to do it. The second advantage was that it allowed you to skip advertising- just like any other recording medium would have been able to do.

In essence, what PVRs/DVRs actually do is store hours of content on a hard-drive next to your TV so that you can access it anytime- making your viewing experience virtually that of “on-demand” TV. But do remember that it is a virtual on-demand experience. What would happen if the TV really became on-demand? What would you do with your PVRs? Why would you want to spend money buying storage capacity in your home, when your broadcast provider is already doing that for you at a remote location?

If there is ever a case of having some sort of storage or digital play-back device at home, it is that for a device like Apple TV, or a generic media player attached to your TV. What that allowd you to do is “rent and buy” movies and TV series for you to keep- just like your old DVD collection. A mixture of an Apple TV like device, with a PVR might just be a better answer. There are some devices in the market currently that aim at doing that, though without much of an organised interface, or thought behind them.

There are also quite a few services that offer video-on-demand. Virgin’s limited on-demand TV is one example. All the major broadcasters such as BBC, ITV and Channel four have their programming accessible through the internet- though ironically so far you can only play that programming on your computer.

From an advertising point of view, PVRs or on-demand TV presents a very simple challenge. How do you insert commercial breaks back into programming? Afterall, not all content can be branded, and there is a limit to a viewer’s capacity to watch “sponsored” programming, and ad-breaks still are a relatively more favourable choice then seeing a dish-washing liquid being talked about in an episode of Heroes.

There are technologies that are being worked on and experimented with to get the commercial breaks back into digital media files (that can be played back on TV- on-demand). Keep reading this blog for more on those.