SharkJumping

I was originally going to write about my failed attempt to find anything of value in IP video service DaveTV, but it broadened out to a look at the overall sector, including which analogies I could draw from our earlier music services which faced similar issues.  What surprised me was that it pointed out to me how strong Apple's position is, especially if they enter the set top or DVR marketplace.

The alternative video distribution concept is a good concept, but a tough one to execute, especially in the short run.  We're seeing an explosion of cable-bypass alternatives (see post), including video iTunes, XBox 360 Marketplace, Akimbo, Windows Media Center's various content providers, Google Video, You Tubes, etc. but they have such a mind boggling set of challenges, that it's hard to see how it will work for the next few years, especially while forward thinking traditional providers such as Comcast and DirecTV launch additional VOD offerings.

The general concept is that the Internet broadband explosion is finally creating the types of video opportunities that Long Tail followers have dreamed about for years - go around the distribution gridlock of traditional retail & broadcast (Wal-mart, Comcast, etc.) and create compelling niche services for Internet users, starting with their PC's, but rapidly moving to portable devices and to the TV itself, generally through some type of additional hardware.  Eventually the mainstream content will come on board, and millions of users will follow ("let a hundred flowers bloom" - Chairman Mao)

In the short run, however, the overwhelming obstacles make even the music business look compelling, and that's saying something :)

1. Content:  only iTunes is reaching any type of critical mass in certain content areas such as TV shows - the rest of these services have a mixed bag of niche content (porn being a common winner here), but not enough of any one area to truly provide a good experience for those followers.   I understand the issues with getting enough content coverage - when we launched Rhapsody in 2001, it was primarily Classical and independent music, but we had great coverage in both sectors for consumers interested those categories.  So if you can only get a limited set of of content, don't scatter it around like I'm seeing today  - Stand for Something, whether it's Bollywood movies or Kiteboarding videos, but cover it better than anyone else!   BTW: I can see why Sling Media (See post) likes their model since it relies on a set of content already produced and captured by the end user - now if I could only get my routers to forward to each other for more than 30 minutes at a time.
2. Devices:  only the video iPod is selling in enough volume to create a viable marketplace in portable players, with Apple claiming 12M paid video downloads to date.  Sony can't seem to connect services correctly to the PSP, leaving its content to be provided by homebrew methods.  No one has ever bought a PiMP/Portable Media Player, so there is no market there.  On the TV side, the requirement to offer yet another hardware box is a killer for all of those companies, while XBox 360 hasn't yet sold enough to create a viable Media extender market.  The PC is working incredibly well for America's Funniest Home video equivalents (You Tubes, Revver, etc.), but isn't a great platform for most other content.  But again, focus on the key platform (in our case at Rhapsody, it was initially the PC), optimize your service for that platform, and only later expand into the sexier, but smaller categories such as portable or TV.
3. Pricing Models:  Only iTunes has a consistent approach, which means $1.99 for shows and $.99 for music videos - it's incredibly clear what the proposition is.  The rest are a total mess, with some mix of free, a la carte, and subscription, without any coherence that I can find, and no easy way to filter them - e.g. on the Windows Media center, I can't for the life of me figure out what I'm paying Akimbo for since it looks like everything requires an additional fee.  When we launched Rhapsody, we had one value proposition - unlimited streaming to a PC for $10 a month - it wasn't meant to appeal to everyone, but it was very clear what the value was.
4. Interface:  Why is this so hard?  Again, only iTunes has a consistent interface, which fits its simplified business model.  DaveTV and Akimbo are next to useless when you attempt to wade through their offerings, never pointing out what is free or paid and having almost no programming approach to offset the mixed bag of content (e.g why is there a Podcast category on DaveTV if there is nothing in it?)  For gods sake, hire a couple of editors and deploy some content management tools - it's a pretty cost-effective way to make your site seem more alive, to focus on content you have, and to program away from program holes.

I don't own a video iPod, and actually don't see any reason to do so since I think well executed subscription models are much more compelling (e.g. if Vongo was better - see post), but I never really looked at how Apple is approaching it until now, and they would seem to be the likely short term winner here, just as they were in the music space due to the same reasons - content, pricing, hardware, interface.  I think the XBox 360 could still provide an alternative in the TV space in a couple of years when the price comes down and the installed base goes up, but I can't imagine why the rest of the players (outside of pure User Generated Content sites like You Tubes) will make it.