Message From Michael -- October 13, 2008

VETTING THE VEXING VIDEO REVOLUTION

ADVENTURES IN VIDEO LAND

THE UNKNOWN INFLUENTIALS

LEADING MEDIA COMPANIES COMPARISON

COCKTAIL CHATTER – RICH AND RICHER


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VETTING THE VEXING VIDEO REVOLUTION. Whew… you know that headline caused some headaches to create. Anyway, you’ve all heard about the amazing growth in online video. Research firm, ABI Research, notes that while just under a third of online households had watched video streamed through a browser a year ago, now the ratio is more like six out of ten. Even with a recent downward revision, online video ad spending is expected to grow an incredible 55% this year, after jumping 74% last year. Now for a little perspective. That translates to $505 Million a year, and research firm eMarketer predicts that with an annual growth rate of between 50% and 70% that by 2012 online video ad spending will reach $3.4 Billion. Putting that figure into perspective, total Internet advertising is expected to reach $51.1 Billion in 2012, according to market intelligence firm IDC. U.S. Internet advertising will reach $23 Billion this year alone. Another note of perspective, the eMarketer firm notes that the TV market already hovers around $70 Billion a year.

Much of that growth is also dependent on growth in broadband access and broadband speeds. Which brings us to another piece of perspective. Internet network connectivity firm Cisco says that by 2012, Internet video will be – get this -- nearly 400 times the U.S. Internet backbone just eight years ago in 2000. The company says that even now, online video (PC and TV) accounts for a third (32.2%) of all consumer traffic worldwide. And, in a report that received a lot of press, research by Forrest Consulting for Veoh Networks shows heavy users and younger users of video account for much of that use. Consumers between the ages of 13 and 24 account for only 15% of the online population but represent 35% of active online video users. Add to that, says Veoh, consumers who watch more than an hour of video account for 40% of all viewers and three-quarters (75%) of ALL online video viewing. Research firm TeleGeography Research (which has a very cool submarine cable map showing all the under sea connections) says the amount of Internet bandwidth grew more than the Internet demand… at least this year. And a final footnote, Congress has passed the Broadband Data Improvement Act which promises to keep better track of who has access to the Internet and who does not, as well as better track the oft-criticized data standards.

ADVENTURES IN VIDEO LAND. The shoot-out at the Wild Wild Web’s version of the O.K. Corral may well be with video. Just keeping up with the proliferation of choices has produced a proliferation of sites. You know of course about NBC and Fox venture, Hulu, and regular readers will know about Joost which boasts 40,000 titles and a recent upgrade to work around plug-ins. Then there’s the Veoh networks which describes itself as an “Internet TV service” bringing together large TV and film studios with independent producers and user-generated content. But more keep coming: From the people who brought you the Slingbox comes video portal Sling.com. From the venerable TV guide group comes OVGuide, which really has an amazing list of video sites on everything from anime to wine, from Asian films to adult films, from fitness films to videos about pets. Then there’s the video search engine, Blinkx, which says it searches 26 Million hours of videos on everything from world news to travel, and then allows you to email it or embed it.

Then there’s the Holy Grail of PC to TV and vice versa video. The folks at Sling have created Slingcatcher which it describes as a “universal media player” which can access video from your Slingbox, PC or the Internet and put it on your TV. The folks at TiVo meanwhile have teamed up with Nero AG of Germany to actually replicate the TiVo recordable experience onto your PC. Of course, some versions of Microsoft Corp’s Vista operating system already have some of these same capabilities. Meanwhile, the growing user-generated video production capabilities continue to keep growing. There are the established sites like Photobucket. But they’re being joined by both established companies and up-starts. From established company Adobe comes Adobe AIR which allows you to develop rich Internet applications, including video, onto your desktop and across operating systems. From The Participatory Culture Foundation comes makeinternettv.org which provides, along with a Wiki, a simple six-step process to get your video polished and published on the Internet. And, to quote the old song… the beat goes on. There are too many options out there to list them all. So, we’ll have future video updates on MfM.

THE UNKNOWN INFLUENTIALS. A list compiled by BusinessWeek of the most influential people on the Web is a round-up of the usual suspects – Amazon’s Jeff Bezos, Microsoft’s Steve Ballmer, Mozilla’s Mitchell Baker, Craig Newmark, Steve Jobs, Jerry Yang and Jimmy Wales. You might even have picked Jon Stewart or Arianna Huffington. But how about Jonathan Kaplan, Maria Thomas, Loic Le Meur, Gabe Rivera or Jack Ma. Kaplan is the mastermind behind the Flip camera; Le Meur created Seesmic.com, a sort of video Twitter; Rivera created Techmeme, ‘the tech news source of record’; Thomas created Etsy, a site that buys and sells homemade arts and crafts but who is probably better known for her NPR connections; Ma is the CEO of China’s premier e-commerce player Alibaba. And then there are the ones you want to know – Joi Ito, an entrepreneur and angel investor in operations like Flickr and Six Apart who works with Creative Commons; or Peter Thiel, a PayPal alum whose The Founders Fund has helped startups Slide and Yammer.

LEADING MEDIA COMPANIES COMPARISON. The #1 media company, based on ‘total net U.S. media revenue’, is Time Warner with $35.6 Billion. Following up in second place is Comcast Corp with $26.9 Billion, Walt Disney Co. with $17.5 Billion, followed by News Corp. with $15.7 Billion and DirecTV Group at #5 with $15.5 Billion. No great surprises. You can check the list out for yourself by searching Advertising Age’s site. What is somewhat surprising is the number of companies that reach the top 100 list simply on the basis of search. Aside from Google and Yahoo, there’s Idearc (which oddly lists its home base as DFW Airport) and is the backer of Switchboard.com and Localsearch.com; Donnelley Corp which has a $2.7 Billion revenue stream based on yellow pages; and Yellow Book whose $2 Billion revenue is based on the obvious. Also somewhat surprising is the number of companies I’ve never heard of – Vallassis which has $2.3 Billion in revenue based primarily on newspaper inserts; or Bonnier, a Stockholm-based magazine company which made its foray into the U.S. after buying 18 magazine titles from Time Warner. Then there are the other surprises – like Major League Baseball which makes it into the top 100 media list based on $400 Million in net revenue.

But, for me at least, the surprise is the difference in revenue generated by some firms between their U.S. and their worldwide operations. For example, based on worldwide revenues, AT&T would be far and away the number one media company with a whopping $118.9 Billion. Second place would go to Sony Corp (which, interestingly, bills its address as both Tokyo and New York) with $75.2 Billion, and third would go to Microsoft Corp., with $60.4 Billion in worldwide revenue. And this is what I found particularly surprising. Of that $60 Billion, ‘only’ $1.9 Billion comes from its U.S. operations. Doesn’t that strike you as odd? In a similar, but somewhat less surprising vein, of number 12 Google’s $16.6 Billion in worldwide revenue, a mere $6 Billion comes from the U.S., while number 20 Yahoo gets ‘only’ $3.8 Billion from the U.S. of its $6.9 Billion in worldwide revenue. Both Disney and News Corp earn the same amount of revenue overseas as they do in the U.S. Even QVC/Expedia/DirecTV-owning Liberty Media Corp. made most of its money worldwide ($9.4 Billion) with the U.S. part accounting for ‘only’ $1.3 Billion.

COCKTAIL CHATTER. Okay, I’ll admit I’m on some kick about lists, but anyway, to carry on -- The richest member of Congress is Sen. John Kerry whose fortune of $231 Million includes his wife’s claim to the Heinz ketchup fortune and which Roll Call magazine says is probably under-stated. The magazine says the second wealthiest member of Congress is Democratic representative Jane Harman of California whose $226 Million in declared wealth comes from those JBL, Infinity and AKG Acoustics you buy. Third is Republican representative Darrell Issa of California whose $161 Million declared net worth is based on car alarms. And fourth at $81 Million is Sen. Jay Rockefeller of West Virginia. Democratic Senator Dianne Feinstein of California comes in 8th at $52 Million and Senator Edward Kennedy comes in 9th at $47 Million. Republican presidential candidate Sen. John McCain comes in 13th at $20 Million. At 17th is Democratic representative Nancy Pelosi at $19 Million. New York Senator Hillary Rodham Clinton came in 29th at $10 Million. The Roll Call article only named the top 50 and did not include Sen. Barack Obama. On a semi-related note, thirty of America’s richest CEO’s lost more money in two minutes than most people earn in a year ($50,000), according to Forbes.com. And that was before the latest stock market free-fall. For example, News Corp CEO Rupert Murdoch and Berkshire Hathaway CEO Warren Buffett lost $63.38 a second last year. Of course that still left them with a net worth of $50 Billion for Buffett and $6.8 Billion for Murdoch.

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