On the eve of the 2009 CES show, perhaps it’s time for a few more thoughts on what should prove to be The Big Story at this year’s show: televisions and set-top boxes with internet access baked in, for direct internet video access.

For the last few years, numerous companies in the ‘computer’ business (on either the hardware or software side) have made repeated attempts to market solutions involving the PC as a viable long-form internet video delivery platform - with little to no success. Lately, though, perhaps enough anthropologists and/or behavioral scientists have been hired to finally convince at least a few of these companies that despite all the bells and whistles, a computer might never be a television after all (as they say in the south, “you can put a brick in the oven, but that don’t make it a biscuit”).

So while certain companies might have enjoyed a substantial technological head start in internet video, through a stubborn insistence on leveraging the home computer, the opportunity was missed. But no matter: here comes the CE industry - as of Thursday in Las Vegas, it’s their market now.

Apple undertook a conscious expansion into the CE industry several years ago with the iPod (in fact, dropping ‘Computer’ from their corporate name) - is it too late for other computer-centric companies to make a similar move? 

The recent Intel/Yahoo initiative is a particularly interesting case in point.  Both companies, as Yahoo Connected TV vice president Patrick Barry poetically puts it, “emerged from the ocean of the PC”.

Intel Intel has been especially forward-thinking regarding the convergence of the home computing and consumer electronics industries for some time now, having launched the Intel Digital Home Group several years ago.  The Digital Home Group, active in both processor design and standards development, is particularly close to my heart, as it’s made up of both anthropologists as well as computer scientists.

Yahoo We’ve been pretty hard on Yahoo lately, but they do have some heavy OEM hitters lined up to implement their embedded internet TV ‘widgets’ system: Sony, TiVo, and Samsung. Also worth noting, the Connected TV initiative intends to follow a purely advertising-supported model, and studies routinely show consumers prefer advertising to subscription fees.  Lastly, yet another issue (and one that holds true for all internet video contenders) is the remote: as Netflix CEO Reed Hastings recently noted, a Nintendo Wii-like pointing remote will likely be required as internet-enabled television hardware matures.

At any rate, given their recent setbacks, expect Yahoo to bet the farm on this one.

Net Neutrality.  Up to now, the conventional definition of the concept has been that internet service providers shall be prohibited from “blocking or slowing content from some applications or companies” (as quoted from a recent NetworkWorld article).  Arguably, the definitive infraction against this particular notion of Net Neutrality was Comcast’s recent ‘managing’ of Bit Torrent traffic via the insertion of spurious connection reset packets.

However, the whole issue the issue of Net Neutrality (at the last mile between the ISP and the consumer, at least) is rapidly becoming a moot point: in preparation for the expected explosion of demand for longer-form video over IP, most major carriers are now scrambling to assemble and/or acquire proprietary content delivery networks (CDN)s to avoid the ever more congested and unpredictable system of routers out there in the public cloud (a recent post about just what Google, Microsoft, and Verizon are up to can be found here).

So while your neighborhood ISP might maintain a commitment to Net Neutrality itself, the real action is well upstream, as major corporations join already established CDN players such as Akamai, Edge Networks, and Yahoo’s Cloudfront to distribute and/or cache digital media content out along the edge of the cloud, in effect forming competing private mini-clouds to minimize the role of the public internet itself.

Put another way, in the purest sense of the term, Net Neutrality has already become something of an anachronism – not due to any localized slowing down of unfavored packets at the ISP level, but due to a globalized speeding up of favored packets on CDNs, before they ever reach the ISP.   A recent Wall Street Journal article touches on just this nuanced distinction: according to Google, their recent proprietary internet/CDN initiatives “do not rely on the carrier’s unilateral control over the last-mile connections to consumers, and also do not involve discriminatory intent“ - and even the independent public interest organization Public Knowledge (whose directors include internet academic and Obama advisor Lawrence Lessig) now maintains that “caching in no way is a part of the Net Neutrality issue.”

I’m of the opinion there’s considerably more gray area here.  But no matter - since the public internet will simply not scale to meet the anticipated bandwidth demand once short-tail (mainstream) premium digital media over IP becomes widespread, both carriers and content owners will increasingly invest in proprietary content delivery networks - and as consumers buy into the mass-market internet video offerings made possible by these high-performance CDNs, the very concept of Net Neutrality will seem increasingly quaint - and the “internet” as a whole will come to resemble the American health care system: multi-tiered and largely privatized.

So to the extent long-form video over IP ultimately enjoys widespread mass-market success,  the innocent ideal of a truly egalitarian and fundamentally neutral internet is destined to end, no matter what your local ISP’s policies are.

Don’t shoot the messenger…  

Last week, I quipped about president-elect Barack Obama’s recent commitment to video-taping the weekly Democratic radio address.

The more I think about this though, the new presidential over-the-top social viral video strategy brings up some interesting questions:

For starters, as the new administration is keen to leverage the benefits of ubiquitous online video distribution, what keeps the public from possible Obama video fatigue? 

As of today, we are in week five of the elect-president’s weekly video address and already audiences are dropping off faster than a second rate soap opera could on broadcast TV.

As of writing this post, the new administration’s first video address posted to YouTube on November 15 generated 247,600 average weekly video streams.

However, for Mr. Obama’s more recent weekly messages, viewer attention declined noticeably.

Videos published to YouTube in week three and two generated only 174,805 and 115,106 streams respectively - that’s as much as 46% fewer streams delivered compared to Mr. Obama’s first weekly video address.

But then again, last week’s video addressed the nation’s pressing issue of steadily raising job losses, as a result garnering a record 445,613 streams in only seven days. 

Clearly, subject matter matters as audiences have an acute understanding of what they deem important enough to log on, view, and listen repeatedly. 

The other thought I had, the idea of a regular viral presidential video address will capture eyeballs and minds not just among US audiences, but also around the rest of the connected globe.

By design in and outside of YouTube, Web video by nature is shared freely and abundantly. Mr. Obama’s taped messages make no exception.

Thus, from East to West, North and South, the first of these weekly video messages are likely spreading globally and virally as we speak.

Does that mean Germany’s Chancelor Angela Merkel will soon start her own weekly video campaign?

Are any regular video posts forthcoming from the heads of state in France, the UK, Iran, or Iraq?; prepared to deal with the resulting online feedback of citizens everywhere chiming in?

Interestingly, as little as ten years ago all of this would have been unimaginable.

YouTube and its ample offspring of amateur video snack sites simply didnt exist. Neither did the prerequisite broadband lines, nor PCs with processors fast enough to make Web video fun.

Fast forward, in one swoop the US presidential web video address legitimizes how far we have come in democratizing media in the past years.  

This one’s for the history books.

Rather than trying to avoid (undesireable) discourse and debate, the new White House resident seems to signal honest interest in point-to-point dialogue versus the age-old hub-and-spoke system of commercial journalism. 

The question remains whether the idea of open viral dialog can help jointly create something better down the road. 

Or is the Web’s innate capability of cheap and ubiquitous distribution to and by all merely a zero-sum game?

Well, history books might tell.

The groundswell of interest in finally getting internet video over to the television in such a way that avoids the clunky computer-centric workarounds we’ve seen to date is picking up steam - just in time for next month’s CES show.

While this is much as we expected, a more surprising (and related) development is the resilient strength in game console sales:

• As of October, the video game industry is up 18% year-over-year, and remains on track for a record year.
• Microsoft reports November was its biggest xBox month ever in Europe, with sales up 124% over last November.
• According to a recent Pew Internet & American Life Project survey, more than half of American adults play video games, and 20% play every day.  More importantly (because after all, this is the future we’re talking about here), a full 81% of respondents between the ages of 18 and 29 are home video gamers.  And the gender gap is less than one would think: while 55% of adult males play, surprisingly, 50%of adult females report playing as well.

Needless to say, given the current economic climate, numbers like these are quite impressive – and suggest the game console could be a much more viable solution to that pesky internet video ‘last yard’ problem than previously thought.  With that, a brief overview of the three competing platforms:

Sony Due to an ongoing price war, Sony now loses money on each PS3 it sells, according to Macquarie Securities analyst David Gibson.  However, the company is firmly committed to the PS3 as an integral part of their long-term internet video strategy, and just rolled out a newly revamped Playstation Network direct video download service for the PS3.  What’s unique about the PS3?  Sony is able to leverage its unique position as both a CE manufacturer and a major film studio, and recently made Sony Pictures’ summer Will Smith vehicle ‘Hancock’ available via download prior to the DVD release.

Microsoft The complex and expensive prospect of upgrading the home PC to Vista Premium or Ultimate just to get internet video to the television has unsurprisingly proven less than compelling to most consumers.  In contrast, over the recent Thanksgiving weekend Microsoft reports a 25 percent increase over last year’s already robust sales of 310,000 xBox units - in short, it’s clear where the growth is.  Like Sony, Microsoft has a direct video download service for their game console (and like the Playstation Network, the xBox Live Marketplace offers a large number of titles in HD).  What’s unique about the xBox 360?  The Microsoft download library is larger than the recently launched Sony service’s, and in addition, the xBox can now also stream content from your Netflix ‘Watch Instantly’ queue (in other words, but an xBox, get Roku functionality for free).  While (like Roku) titles must be added to the queue from the Netflix website, the ability to both stream and download (and the better selection for both) gives the xBox an edge over the PS3 in terms of internet video functionality.

Nintendo Here we have a bit of a wild card.  Thanks to their groundbreaking motion-sensing remote control (and a unique selection of games made possible by it), the Nintendo Wii is the market leading game console in the US, selling 34.6 million units for 2008 Q3 (compared to 16.8 million for the PS3 and 22.5 for the xBox).  The company has been remarkably circumspect regarding its plans for internet video, though – so look for some kind of announcement shortly, perhaps at CES in January.  What’s unique about the Wii?  With no hard drive, any internet video solution would be streaming-based – which is just as well, since the Wii has only 480p (DVD) resolution anyway (although it’s worth noting that real-world demand for HD video has proven surprisingly low).   But perhaps the most interesting aspect of the Wii is the motion sensing remote – as user interfaces get more advanced to support direct internet video access from the TV, we expect this point-and-click technology to replace the cluttered button-filled remotes of today.

Who knows, Apple TV and Vudu have certainly gotten a lot of things right, but neither has yet made a meaningful impact on the market – perhaps the Trojan Horse of online mutli-player video gaming will be just the added value proposition needed to make for a compelling ‘Last Yard’ solution.

OK. I admit. I am pretty psyched about president-elect Barack Obama’s recent commitment to video-taping the weekly Democratic radio address.

Psyched because it seems much more than a simple “move-over-radio” battle cry; more than just postulating the World Wide Web as the latest of many presidential (one-way) bullhorns available.

For one, the “YouTube”-ization of the weekly Democratic radio address means that a rather arcane political messaging system is coming of age.

In other words, the good old weekly radio address (finally) preps to going (legitimately) video and viral and social, in the same way as anyone’s video blog out there could.

In a way (unknowingly) echoing this season’s ABC and NBC marketing slogans, Barack Obama and team invite us to “start here” and “chime in” - but this time outside the very TV broadcasting system that for so long determined what we would see, when, and for how long.

It is certainly nothing new that a publicly elected official is unafraid to engage in a form of political messaging that - once out the door - is no longer in his control.

That’s how traditional TV (or radio and print media for that matter), works. In this the Web is no different.

But it is major that aforementioned politician whole-heartedly embraces the collaborative Web and the truly conversational two-way nature of online video given that this is past his election campaign, and that he is none less than the next President of the United States going social on his entire constituency. 

Recently asked by CNN’s Sunday talk show host Fareed Zakaria about what advice if any he would give the incoming president, Al Gore’s response was simple: “Make more expository speeches. … [the] people are downloading”.

The presidential radio address as a viral video message for all to engage with plays right into that, ups the ante for you and me, the White House versus traditional media.

Let’s see if and how this will pan out.

Have you pinged the president-elect lately?

It was almost two years ago now that Apple dropped the ‘Computer’ from its corporate name, reflecting the company’s growing presence in the consumer electronics space.  We believe the next iPod-like disruptive CE devices will be an completely new generation of network-enabled TV and set-top hardware offering direct and simple access to internet video ‘baked-in’ - and we believe some compelling implementations are right around the corner.

Meanwhile, consider an exchange from a panel at last week’s ‘Future of Television East‘ conference in NY: asked whether the emergence of such hardware would have much impact on the (currently computer-centric) internet video space, a panel member representing a major software firm essentially reduced the issue to that of merely a difference in user interface ergonomics  - keyboard/mouse vs. remote.  To paraphrase the panel member, “the user will get to the content whatever way the user gets to the content” - but yet minutes later, this same panel member was admitting that user uptake of their internet video TV technology was “not happening as quickly as we’d all like to see”.

Why is that?  Well, if a company’s solution to the problem of getting video from the internet to the TV involves putting a personal computer between the television and the internet and administering it all from the desktop rather than from the couch, they are just not going to see much uptake from Joe the Plumber – instead, the average user will wait for a ‘lean back’ solution to become available, saving him or her from having to get up and touch the computer at all.  Although this is precisely the point at which we currently find ourselves, we don’t see the situation lasting very much longer - again, we believe internet–enabled TV hardware will be the big story of 2009 (one of the issues that’s kept this from happening so far is the development of a useable motion/pointer remote, but that’s on its way too - more on that here).

Clearly, there are major ease-of-use differences between the personal computer/media server internet TV model and the (as yet unavailable) embedded hardware internet TV model - in terms of set-up, user experience, and maintenance.  But while the various software incumbents might have a stake in downplaying these differences, they fail to recognize the inevitability of standalone internet video devices at their own peril – because this new generation of hardware will also require a new generation of lightweight system software and highly efficient video codecs/players (a potentially substantial new market).  Furthermore, to the extent internet-enabled TV and set-top hardware is successful in the broader mass market, a new user application market could also emerge for these ‘quasi-computers’ (Apple’s App Store is a good example of an appropriately simple and elegant approach to distribution and administration for such an entirely new software model).

Amazon has an industry-leading online retail business to support its ‘Video on Demand’ internet video initiative. Netflix has an industry-leading DVD rental business to support its ‘Watch Instantly’ internet video initiative.  The iTunes video service?  Apple is, well, Apple.   And Movielink is owned (and supported) by Blockbuster.  Alone among the major video services, relative old-timer CinemaNow was out there by itself in the still very nascent long-form premium content internet video space.

Until yesterday.

As Sonic Solutions’ Chief Technologist Jim Taylor was sitting on a Future of Television East panel here in New York yesterday, his company was announcing the acquisition of CinemaNow.   Known for the Roxio DVD authoring software, Sonic had recently chosen CinemaNow as the storefront service partner for their Qflix DVD-burning system (CinemaNow’s other main partner to date is HP, which offers direct access to CinemaNow from their MediaSmart line of HD TVs and Connect set-top box - in fact, both ship with $20 CinemaNow coupons).

Since we believe the next phase of internet video will be about long-form premium content accessed directly from dedicated  network-enabled CE hardware, we were particularly interested to read Sonic Solutions’ CEO David Cook’s take on the move:  “With broadband-connected consumer electronics hitting the market in ever greater numbers, there is a growing need for a service that gives consumers one-click access to premium entertainment on any device in the digital home.  The combination of CinemaNow’s content and embedded device strategy with Sonic’s technical prowess and broad PC and CE distribution promises to fulfill CinemaNow’s original mission.”

A smart move for Sonic Solutions…  unlike the current Qflix system (which requires a PC), look for a combined Sonic/CinemaNow to offer Qflix-enabled hardware with embedded access to CinemaNow - no computer needed.   Such a device could compare very favorably to an AppleTV or Amazon/TiVo solution.

While we’re on the subject of record long tail voter aggregation and its impact on democracy, the unprecedented accumulation of small-size incremental financial contributions during the current US presidential campaign marks another success story for the long tail of citizen ingenuity.

According to OpenSecrets.org, over 90% of an impressive $640 million raised by the Barack Obama campaign came from individuals rather than corporations or entrenched interest groups.

And the bulk of that was contributions under $200.

Amazing what a lot of a little can accomplish in its aggreate value - to the benefit of all.

On that note, for all you digital media marketers out there (opportunistically speaking, of course), the current long tail campaign donation phenomenon clearly demonstrates the significant power of consumers’ take on ”motive and opportunity”.

From digital video and online books to for-pay widgets and Twitter posts, monetizing the long tail of any of these things depends on whether they truly matter to people and their lifes.

Meaning, if “the cause” is right, wallets open up.

It clearly worked during the recent Presidential campaign. What does that mean to future branded product campaign designs?

To be sure, way way before Chris Anderson’s pointed Wired article (re)discovered the right side of the curve for us, something as old, tried and proven as democracy knew to utilize the long tail phenomenon all along; to ensure that all, not just a select few partake in shaping government at large.

So, in many ways, we’re only coming full circle here.

Who knew? Democracy as an ingenious grass-root marketing campaign.

Glad it worked so well this time.

As it stands, this country is about to (re)discover the power of long tail voting.

Not since the 60s has the United States seen this kind of voter turnout. Individuals previously ignorant to the democratic process are expected to come out and vote in what clearly is a historic election.

We, members of the digital technology and media industry, have used the long tail idea gladly and often, at least since Chris Anderson’s highly recognized Wired magazine article about “the few that dominate”.

We have since flocked to the long tail concept to describe how the aggregate number of individuals previously ignored by commercial systems can populate and popularize anything from micro blogs to amateur-produced snack-size videos, or en-gross selling of long forgotten books on amazon.com.

The same “saftey in numbers” phenomenon may now be just what it took to change the direction of an entire country.

While the latter remains a promise until proven, no matter who you vote for tomorrow morning, the former is happening as we speak.

Already a record number of those previously discouraged or put off by politics have returned from their voting duties; young, first-time voters, african-americans, hispanics, immigrants, all joined by millions of others in a common believe that its worth standing in line for hours on end, convinced that the time and cause is right.

Of course our industry’s arsenal of lingo would be incomplete if we couldn’t add to the long tail moniker all sorts of related terms.

Think discovery, collaboration, and sharing. Add hyper-targeting and monetization to understand how much the past 21 months of presidential campaigning have benefited from their first dabble with Web 2.0.

Not to mention the unprecedented number of supporting broadband connections that helped to fuel the national debate.

Still, it is not entirely clear whether any side has gained on the other in its particular ability to leverage the long-tail power of the Internet.

It just might simply be a zero-sum game.

But hey. Who’s counting?

For now, let’s go and vote!

PS: For those of you eager to combine your long tail capabilities until the very last second of the democratic process, go to Current TV and fire up your Twitter and your Digg account.

PS II: To be sure, while both campaigns leveraged the long tail power of the Internet, they also knew that a linear TV feed was still a medium key enough to agree to last minute Saturday Night Live appearances or to buy millions of dollars worth of traditional broadcasting airtime to get the message out. Shelly Palmer’s recent post makes several salient points on the deliberate old-school-ness of those decisions. Be sure to check it out.

On first glance, the latest Neilsen Online numbers suggest Youtube continued its utter domination of the web video streaming space in September, delivering over 20 times the number of streams delivered by runner-up service Yahoo Video and roughly 35 times the number of streams delivered by Hulu.

But take into account that while the typical Youtube stream averages only 2-4 minutes in running time, the typical full-length TV episode Hulu streams tends to be at least 10 times that length - and that while the ongoing Viacom lawsuit has effectively forced Youtube to remove all unlicensed copyrighted material from its site, Hulu offers more widely appealing current mainstream TV fare.
Then the simple aggregate number of streams delivered starts to make a less illuminating metric.

So, program length and mass appeal – two attributes that fundamentally differentiate Youtube from Hulu.  As it happens, Youtube is moving to address both.

Program Length Although a 10 minute/1GB maximum remains in place for the unwashed masses, this restriction has been removed for a select number of approved Youtube Channel partners.  One such partner is CBS, which is at least sticking a toe in the water by making full-length episodes of vintage shows such as ‘Star Trek’ and ‘MacGyver’ available.  Not exactly ‘The Office’ –  but while (like theWB.com and the Netflix ‘Watch Instantly’ queue) the tentative nature of the move is betrayed by the staleness of the content, it’s interesting to note that major Youtube parner CBS also happens to be the sister company of Youtube’s intellectual property rights nemesis Viacom (CBS and Viacom were spun off from each other in 2005).    What’s also worth noting is that it’s not only full-length TV content Youtube is moving towards – with its Screening Room channel, YouTube is streaming an increasing number of full-length independent films – an entirely new paradigm for the king of short-form video over IP.

Mass Appeal Historically, the prototypical Youtube content provider has been the amateur, uploading self-generated content of the ‘check-out-my-dog-skateboarding’ variety (in other words, amusing stuff but not worth sitting through embedded ads for).  These days, however, the typical Youtube upload is just as likely to come from a corporate entity such as Universal Music Group, the BBC, Britney Spears, or CBS - all of which currently post clips of their proprietary content via dedicated Youtube Channels (with customizable wallpaper, the channels can look almost as individually branded as mySpace, although thankfully less visually chaotic and noisy).
The most-viewed of these channels is in fact run by CBS.

So…  is Youtube looking to compete against Hulu directly?  It would appear so: some CBS clips now contain very Hulu-esque embedded ads - another paradigm shift for Youtube.  With its unrivaled amount of eyeballs, the Google-owned service has already proven to be a potent (and free) promotional resource for the commercial entertianment and advertising industries – so as Youtube now moves from streaming short-form clips and viral videos to long-form/short-tail (mainstream) commercial entertainment, it’ll be interesting to see if their dominance in short-form/long tail (niche) user-generated video will be a factor - and if the non-embedded ad revenue model will give way to more embedded ads.

But for either Hulu or Youtube, one issue remains – the longer the running time of the content, the more necessary it becomes to bridge that pesky 10-yard gap from the home internet access point behind the computer to the television in front of the couch.

Here at digitalmissive, we believe that sooner or later it’s gonna come down to hardware.