The Video Market—Hot or Not in 2009?

At recent video industry events, optimism filled the talks of virtually every speaker, from content generators, to service providers and even extending to the normally staid world of venture capitalists.

A theory is the online video market is *so* ready for prime time that no economic turmoil or consumer malaise can stop it, even if progress may slow. To turn this on a cynical head, perhaps it is true that so much money and hope has been invested, and so few other emerging markets exist with such promise, that the market really must happen to maintain the momentum.

No matter where the level of optimism deserves to be pegged, a few very interesting facts have emerged as we exit 2008. A few key observations include:

• Old media and new media fans are beginning to agree that online video does not cannibalize broadcast video in any way, and in fact, evidence is mounting that MORE eyeballs are heading to broadcast if online media promotes it. As seen in the Beijing Olympics, online highlight reels and special interest stories actually created more interest in broadcast content. One way to think of online video is as a channel for syndication. Just like TV syndication increases the longevity of a show, it also increases viewers by making content available at different times and through more sources. Online video, therefore, is just a syndication method, allowing a much broader reach. Of course, figuring out how to monetize that broader reach is still a major issue. In the long run, it’s clear that eyeballs, and dollars, will shift away from traditional broadcast services to new services, and among one new service to the next.

• Once upon a time, at least 10 months ago, the market was convinced that online video was all about short clips and specialized online content. Long form TV shows and movies would have no consumer acceptance. What a difference a year makes! With the availability of premium, quality long-form content, acceptance (at least among younger demographics) for PC video watching, and technologies that fling PC content to a TV, long form, mass market content is where the eyeballs are trending. Yes, YouTube is still quite popular—for user generated, short form content—but consumers are keen to pay for quality, longer viewing experiences. (As an aside, video for mobile devices is still a market where short form content—user generated or paid premium—still have a strong play). Again, this is another market where monetization models are being explored.

• A big problem exists with the proliferation of content sources and content digesting/viewing devices. While there are popular formats for content, there are no standards, per se. Consumers are already overloaded with the number of formats, and could go for broke having to buy multiple devices to get and play back content. To date, some of the devices have been successful, like the Netflix-Roku box, but the content is limited to what Netflix has available for download. It seems the proliferation of sources and devices will continue (an opportunity for revenue), but the market will have to rationalize if truly widespread consumer acceptance will occur. While I have many ideas about how the future needs to involve in this space, that complication topic will be addressed later. In the meantime, keep your eyes on Apple, Sony, Netflix, Google, Nintendo, Yahoo, and Microsoft, among others!

• Money abounds in the online video market. Big names, like the CSI TV show franchise, are investing in new and innovative online content, trying to use online presence to enrich the broadcast experience—without cannibalizing their broadcast efforts, since that’s where the proven dollars are today. Venture capitalists are actively engaging this market, too. While valuations are smaller and money is harder to get, venture capitalists are still hunting for new companies. Clearly, to them, they want people with unique ideas and first mover advantage; no longer can the me too, and me three, get money. The online video market fascinates the VCs because revenue models around content and advertising online are completely uncertain. Yes, this means risk, but it also means incredible potential upside. (To watch an enthusiastic VC panel from NewTeeVee Live conference, click on the following link)
  
  

As we head into 2009, the online video market certainly provides much intrigue-and much hope-and I look forward to telling you more in the coming months.

Financing IT in the current climate

Over the years I have often written about the potential for far greater use of financing solutions in both the acquisition of IT based solutions and their operations. With many, if not most, of the major IT markets now in the grip of the fallout from the wide-spread global economic panic, now is an opportune time to once again examine what financing solutions have to offer.

For the majority of organisations IT purchases still tend to be funded directly out of capital budgets, frequently with little thought, and even less research, being given to using any other method of payment. Until comparatively recently the concept of “financing” IT solutions has usually meant some variation on the leasing of the hardware, and perhaps the software, deployed in a solution. However, over recent times we have begun to see some new funding packages coming into IT, although mostly for those in the millions of dollars bracket.

A few suppliers of IT finance, notably those of one or two of the larger infrastructure players, have recognised that a large proportion of IT projects now consist of multiple components and phases that usually require significant up front funding and investment. In many circumstances the investment at the start of projects may not lead to direct business (and cost) benefits until months, occasionally very many months, later. For many organisations, this cost/benefit gap can create a major hurdle. In the current economic climate there is every likelihood that such cost/value delivery perception gaps could severely inhibit project approval. It could even significantly delay some projects that have already received the go ahead.

Thus there is a clear need for agile “project financing” solutions to enable organisations to implement IT solutions. This type of financing should enable solutions to be implemented when business conditions / business opportunity indicate, rather than when internal funding becomes available. This approach would make it possible for more projects to pass the deliver fast ROI test, and therefore help businesses move forward in the current economic climate.

I am firmly of the opinion that with the financial markets and national governments making the cost of capital relatively low, there is a major opportunity for agile funding services for IT projects to step out of the shadows. I see great potential for IT-based business transformation projects to deliver serious business value if only the funding can be obtained. I hope that the financing arms of IT vendors and the financial services industry are ready to step in and provide the kick start needed to allow sensible projects to take place rather than be mothballed.

There is little understanding about the possibilities that financing can provide to IT solutions, with only very large enterprises usually having the time to perform any form of research in the area. Clearly there is a need to educate mid- and small- enterprises on the pros and cons of IT financing. In fact the IT vendors, channels and their sales reps could do with such education as well to help their customers make good choices. Equally, with national governments today being so tightly intertwined with the markets it is not beyond the realms of plausibility for government inspired or backed schemes to be sanctioned, or at the very least new tax breaks introduced for a short period to help keep IT, and thus businesses, moving forward.

Taking the reins at Freeform Dynamics

Today, I take over from Dale as MD (or CEO, depending which side of the Atlantic you are on) of Freeform Dynamics. It’s pretty much three years to the day that the company first went live, and it is testament to Dale and Helen’s vision back then, and their driving efforts since, that in such a short period we should have developed a reputation for world-class research of the global IT market.

Freeform Dynamics was founded on the basis that while organisations might baulk at the ongoing costs of their research subscriptions, they would still need the best possible information to support their own activities. Fundamental to the Freeform approach, ethos and culture is keeping tuned into the real consumers of IT, not just CIOs but decision makers and technology users across the board. It is true that as we approach the end of 2008, we are living in very different economic times to three years ago. However, it is perhaps based on this initial philosophy that we are seeing demand for our community research services increasing, even in the current climate.

We’re in an enviable position, and while I am in no way complacent I am nonetheless delighted to be building on the sound foundation that Dale has put in place. It takes a lot of gumption to see when is a good moment to hand over the reins, particularly when things are going well, and I’d like to thank Dale wholeheartedly for both getting Freeform Dynamics to where it is today, and offering me the opportunity to take things forward. I look forward to working with you all in 2009.