Facebook v. YouTube - My VidCon Interview

VideoInk's Todd Longwell interviews me at VidCon -- discussing Facebook versus YouTube (is it really a zero-sum game?) and all things video.  The meat of the interview starts at the 90 second point.

Digital Media's Top Deals, Developments - Q1/Q2 2015 - Your "Cheat Sheet" (& My Predictions)

[REVISED -- to discuss the significance of yesterday's breaking news about German media giant taking a controlling position in leading "under the radar" MCN Collective Digital Studio and to include today's reports that Facebook is developing its own streaming music service a la Spotify and Apple Music]

Six months ago, in an article titled The Future of Digital Media in 2015, TechCrunch posted several of my predictions for the digital media world in 2015.  I later expanded that article for this blog to discuss my Top 10 Digital Media Predictions for 2015.  It's now time to look back at the first 6 months of the year in digital media -- look at the top deals, developments and trends (top 2 trends so far are (1) the accelerating "off YouTube" video movement, and (2) the industry's justified virtual reality (VR) obsession -- more on both below) -- and see how my earlier predictions stand up.  Consider this your "cheat sheet" of important activity in the digital media eco-system.    

Here are my original Top 10 Predictions below -- juxtaposed against where we stand now.


I.  PREDICTION (1)  --  this one was really a two-parter:

PREDICTION (1) Part 1 -- The mobile-driven premium short-form video YouTube economy “grows up,” and traditional media companies finally take notice on a mass scale.  Shell-shocked studio executives internalize that digital-first platforms are where they must be to reach smartphone-obsessed millennials.  MCN acquisitions will quicken as more studios jump into the M&A game rather than try to figure out this new content platform themselves.  Some leading MCNs ripe for acquisition include ... sports-focused Whistle Sports (in which Manatt Venture Fund is invested). 

THE REALITY FOR PART 1, 6 MONTHS LATER 

Interestingly, for the first 6 months of 2015, the pace of MCN-related M&A had slowed -- and had been replaced by an accelerated pace of more cautious strategic investment as media companies struggle to develop their digital-first video strategies and are too afraid to go "all in."  That "lull" proved to be temporary, punctuated by today's breaking news of German media giant ProSieben acquiring a majority stake in leading MCN Collective Digital Studio (CDS) (an MCN that had been flying somewhat "under the radar").  ProSieben had already owned 20% of CDS, so the deal (which values CDS together with its other MCN Studio71 plus significant new cash at $240 million) is logical.  Strategic investors frequently "try" and then later "buy" if they like what they see. 

I have always been bullish on those still-independent MCNs that had become market leaders and achieved significant scale.  These include (i) Whistle Sports (the leading sports-focused MCN and is also a client), (ii) Tastemade (the leading food and travel MCN), (iii) Mitu (the leading Latino-focused MCN), (iv) Machinima (the leading young male/gamer-focused MCN), (v) DanceOn (the leading dance-focused MCN, also a client), (vi) Frederator (another "under the radar" MCN with an animation focus and strong leadership pedigree), and (vii) Zoomin.tv (a Euro-based "under the radar" MCN that has deep video production roots).  All of these are "ripe" for M&A down the road -- a road that likely just got shorter today because one of their independent brethren (CDS) has just been taken off the table as of today.   

So, given all this activity, I think it's safe to conclude that the YouTube economy has "grown up" significantly in the past 6 months -- so much so that it has outgrown YouTube.  Now, for the first time, multiple powerful "off-YouTube" platforms exist, most notably Facebook (about which I just blogged in a detailed analysis) and Snapchat (which launched its highly strategic Discover video feature in January and later coyly announced its plans for global advertising domination).  That's why most MCNs have shed that moniker (which most never really liked anyway) in favor of MPN -- as in, "multi-platform network,"  And, in another trend worth watching, major media companies began to incubate their own MCN-like sites (e.g., Discovery Communications' women-focused TLCme).  

Here's a list of some of the most interesting related developments:

• Sports-focused Whistle Sports raised $28 million from strategics that included Euro-based media giants BSKYB and Liberty Global (Jan | Venturebeat)
• FremantleMedia increased its stake to become the majority owner of leading European MCN Divimove (Jan | Variety)
• Gamer-focused Machinima closed another $24 million financing led by Warner Bros. (Feb | The Wrap)
• Latino-focused MiTú Raised another $15 million from AMC Networks, among others (Feb | Recode)
• StarMaker Raised $6.5 million to grow its music/video app and talent network from Qualcomm Ventures and others (Mar | VideoInk)
• Otter Media's Fullscreen acquired social media studio McBeard (May | THR)
• Euro-based media giant RTL Group -- a true innovator amongst media companies in the digital-first new world order -- organized its overall MCN/MPN-related holdings (StyleHaul, BroadbandTV, SpotXchange and Clypd) into one central entity RTL Digital Hub (Jun | Broadband TV News)

And, certainly more general digital video-centric mega-M&A and mega-strategic investments multiplied, with some notable examples including:

• Live social streaming innovator Meerkat raised $12 million and Twitter launched competing Periscope to steal some (much?) of its thunder (Mar | TechCrunch)
• Verizon acquired once-giant digital media company AOL for $4.4 billion (May | Variety)
• Layer3 TV, the self-described “next-gen cable company,” raised $51 million from Participant Media and CAA among others (Jun | Multichannel)
• Video ad tech company TubeMogul raised $82.9 million in a secondary market offering (Jun | BI)

PREDICTION (1) Part 2 -- International also becomes a major new battleground for these borderless video opportunities.

THE REALITY FOR PART 2, 6 MONTHS LATER 

Not surprisingly, international has become a major battleground -- and even more intensely perhaps than anticipated only 6 months ago.  Here are some key data points (in addition to today's announced ProSieben/CDS deal -- which underscores this borderless global theme):

• Euro-based media powerhouses BSKYB and Liberty Global, as noted above, significantly invested in Whistle Sports' $28 million round
• Warner Bros., Sony Pictures Television and Asian telco giant SingTel created a new joint venture to launch their own "Netflix-Killer" for Asia (Jan | TechCrunch)
• MTV launched new international over-the-top apps, MTV Play (VOD) and MTV Trax (Music Streaming) in Germany, Switzerland and Romania (Feb | DigitalTVEurope)
• Culture Machine -- a new MCN/MPN focused on international content -- raised $18 million (Feb | VideoInk)
• 20th Century Fox partnered with leading Euro-based MCN Rightster to bolster its YouTube presence abroad -- with MCN Rightster's team managing Fox's YouTube marketing strategy for 35 channels across 17 international markets, including the U.K., Germany and France (Apr | THR)
• Canadian cable giants Rogers Communications and Shaw Communications entered into a joint venture to launch a new Canadian "Netflix Killer" called Shomi (May | THR)
• Chinese juggernaut Alibaba announced it too will soon launch its own "Netflix Killer" called TBO -- for China (Jun | Reuters)
• Netflix is now in 50 countries as of June 2015 (with close to 20 million international subs), with a major strategic push to China and plans to launch next in Italy and Portugal (Jun | THR)
• France media powerhouse Vivendi acquired DailyMotion, the YouTube of Europe, for approximately $240 million -- expect continued significant bold moves by this once-sleeping giant in the latter half of this year (Jun | Variety)

II.  PREDICTION (2) -- Major consumer brands follow suit and act in earnest.  Massive marketing dollars shift from traditional media to more measurable digital platforms in the form of branded content (not just ads), cannibalizing the former for the first time.  Major investments are placed on ad-tech companies to maximize and measure those spends.  We see a number of significant ad-tech exits like Yahoo!’s recent acquisition of BrightRoll for $640 million.  Several brands go further and invest big to become digital-first lifestyle media companies themselves a la Red Bull, developing and aggregating content.  GoPro, Pepsi and Marriott have proudly announced such ambitions.

THE REALITY, 6 MONTHS LATER

Certainly, brand activity has likewise accelerated, as brands begin to fully internalize the digital-focused transformation -- and opportunities -- of the media and entertainment business.  Fewer examples of new Red Bull "wannabes" in the first half of this year, but certainly a proliferation of "branded content studios."  And MCNs/MPNs are increasingly cutting out the middleman and playing the role of ad/creative agencies in the digital video eco-system.  Here are some representative examples:

• Conde Nast unveiled its branded content shop powered by editors (Jan | WSJ)
• Relativity agreed to program and develop digital content for Lexus' L/Studio (Feb | THR)
•  iHeartMedia Launched its own branded content studio (Feb | WSJ)
• Fullscreen launched a new strategic content group with former Chernin Group and Hulu execs  (Feb | Variety)
• Kia partnered with Yahoo! to create new branded series (Apr | Digiday)
• CNN unveiled its new studio to produce content for advertisers (Jun | WSJ)

III.  PREDICTION (3)  -- Seeing all this activity, Silicon Valley investors increasingly make pilgrimages down South to the epicenter of media content – LA.  

THE REALITY, 6 MONTHS LATER -- Few doubt this one.  LA is a serious new VC battleground.  Hale Boggs, Chairman of law and consulting firm Manatt Digital Media and the Manatt Venture Fund (which actively invests in digital media companies), confirmed this trend.  "Many principals from major NoCal VCs are spending more time visiting with companies here, and a lot of the larger funding rounds for LA companies are now being led by those VCs," Boggs said.  Some, like Rothenberg Ventures (a highly connected NoCal-based VC which also opened the first virtual reality accelerator, River), have opened new offices in LA.



IV.  PREDICTION (4) -- YouTube is increasingly under siege by new competing video platforms like Facebook and former Hulu chief Jason Kilar’s Vessel.  These “off YouTube” platforms lure content creators away with promises of more compelling care, feeding and economics (including the tantalizing prospect of real subscription revenues).

THE REALITY, 6 MONTHS LATER -- Vessel started the year off with a bang.  But, that bang now feels more like a whimper when compared with Facebook's massive growth (and strategic prioritization) of video -- and Snapchat's own accelerating video focus (including its strategically significant Discover feature).  "Off-YouTube" is a mantra chanted increasingly -- and with increasing volume -- across the globe right now.  The threat is real.  I addressed these developments in detail in two separate blog posts: (1) Facebook v. YouTube - Who Wins? 5 Part Test; and (2) YouTube v. Facebook, Amazon & Apple - Clash of the Video Titans (& the Role of DNA).  But, let's also keep in mind that this is not a zero-sum game.  All of this accelerating activity expands the overall video eco-system pie.  So, yes, YouTube ultimately may hold less overall market share.  But, there also will be much more to share.



V.  PREDICTION (5) -- Traditional pay TV packages likewise increasingly are under fire in the “Great Unbundling” that began in 2014.  What was unthinkable just one year ago (even 6 months ago!) became reality as HBO, CBS, Starz and others announced stand-alone over-the-top (OTT) services.  A parade of others follow suit in 2015.

THE REALITY, 6 MONTHS LATER -- No traditional PayTV bundle is safe anymore.  The "Great Unbundling" is real and comes in two flavors: (1) so-called "Skinny Bundles" --including DISH's Sling TV (which revolutionized the OTT space by giving "must have" ESPN as an add-on option); and Verizon's Custom TV); and (2) stand-alone OTT services (too numerous now to mention, but some of which are identified below).  And, even the kids aren't safe!  Nickelodeon anyone?  Oh yeah, it too launched its own stand-alone OTT subscription service.  In a truly remarkable sign of the times, Cablevision's CEO Kristin Dolan went so far as to speak the previously unspeakable amongst big traditional Pay TV providers -- announcing new "cord cutter" and "cord never" OTT packages.  Well, if you can't beat 'em, join 'em.  That's why Pay TV operators are increasingly willing to partner with SVODs (e.g., Cablevision offering Hulu and HBO Now).  Here are some more important developments and deals:

• MTV launched its new international over-the-top apps, MTV Play and MTV Trax (Feb | DigitalTVEurope)
• Sony launched its $50/month Vue OTT service (Mar | CNN)
• In Canada, government regulators mandated sweeping changes to Pay TV packages, requiring providers to allow customers to "pick and pay" individual TV channels (Mar | Reuters)
• Discovery Digital launched new adventure-focused vertical OTT service, Seeker (Mar | Tubefilter)
• Traditional media grand-daddy NBC jumps on the Netflix-ian "binge viewing" band-wagon for its new show Aquarius (Apr | Variety)
• Levity Entertainment Group, backed by Irving Azoff and Madison Square Garden Entertainment, launched new comedy-focused YouTube channel Wait For It (May | Variety)
• Verizon announced its initial content partners for its upcoming mobile-first OTT service, including media giant Scripps (home to Food Network, Travel Channel, HGTV and more) (Jun | Variety)
• AMC Networks began its invite-only beta test of its new horror-focused OTT video service, Shudder (Jun | Variety)
• Discovery Communications announced it plans to launch its all-access OTT service, Dplay (which includes live sports content) later this year first in Denmark, Sweden and Italy (Jun | Variety)
• Showtime just launched its $10.99/month stand-alone OTT video service with initial distribution partners including Apple TV and Roku (July | TechCrunch)

 
VI.  PREDICTION (6) -- Traditional media companies facing these tectonic shift in long-established business models – and major tech companies (Apple, Google, Amazon, Samsung) for which content is increasingly critical to fuel their own – take M&A seriously and one pulls the trigger as media and tech converges … literally. 

THE REALITY, 6 MONTHS LATER -- No mega-M&A deal has materialized quite yet, but major media moves by the major "tech" players continue unabated.  Some examples include (i) Amazon's ever-increasing investment in original programming (it just recently announced that it is "doubling down" on 2014's $1.3 billion original programming budget), and (ii) Apple's inevitable "coming soon" OTT video service (on top of its recently launched Apple Music).  It may be only a matter of time before one of these tech behemoths -- each of which already cloaks itself with media trappings -- tries to make that full transformation real.  At a minimum, Netflix -- the poster child for new, non-traditional media companies -- is directly in the line of sight.  

And, in a significant related trend, telcos have placed themselves directly into the center of this video vortex.  Cases in point: (i) AT&T and The Chernin Group's $500-$600 million Otter Media joint venture; (ii) Verizon's acquisition $4.4 billion acquisition of AOL; (iii) Dish Network's rumored merger talks with T-Mobile; and (iv) whispers to me from an industry insider that Vodafone may be eyeing Liberty Global. 



VII.  PREDICTION (7) -- On the music side, massive moves are made away from business model-challenged stand-alone services (Spotify and Pandora both still operate at a loss).  Like Apple buying Beats (which was never about the economics of Beats Music), numerous potential behemoth buyers exist.

THE REALITY, 6 MONTHS LATER --  No M&A yet.  And, while the M&A market waits, Spotify keeps raising boatloads of money -- the latest being a massive $526 million round announced in June at an $8.53 billion valuation.  For its part, Pandora is also continuing its stand alone ways and has been rumored to be looking to acquire a true on-demand streaming service to weather the increasingly turbulent digital music storm.  And while both Spotify and Pandora still operate at a significant loss, Apple finally launched its long-awaited Apple Music Spotify "Killer."  This puts even greater pressure on those two services.  As I recently wrote in a separate detailed analysis ("Spotify's Hangover From Apple's Hard Cider - 5 Daunting Dilemmas"), Apple can do what the stand-alone behemoths can't -- i.e., lose money in order to drive its over-arching multi-faceted business model.  Putting a further exclamation on this point, just today, reports surfaced that Facebook is developing its own streaming music service to rival both Apple Music and Spotify.  Hell, even Microsoft just joined the party more loudly by re-branding Xbox Music, Groove.  

With all this action (particularly Apple Music), other behemoths (like Amazon, Google, Samsung ... perhaps even Facebook before it launches its own) continue to eye Spotify and Pandora ... from the side-lines ... for now.



VIII.  PREDICTION (8) -- Gamers see real action too, as app developers increasingly focus on story-telling and compelling characters to build multi-platform media companies a la Rovio with Angry Birds.  Rather than take traditional media properties and “gamify” them, these companies flip the model with an Apps-first approach.  Finnish-based Silvermile and Seriously are two companies with Rovio roots to take … well … seriously.  VR also enters the ring with gamers at mass in 2015.

THE REALITY, 6 MONTHS LATER -- Virtual Reality (VR) is the big story of the first 6 months in the digital media world.  VR is absolutely top of mind of virtually everyone in the "industry" now on all sides of the house -- yes, games -- but also movies, education, travel, impact.  On the games front, story-telling in a more strategic, holistic sense, is increasingly the norm with large-scale game developers.  As a result of this frenetic activity, which includes continued massive VR-related investment (that noted futurist and VR thought leader Peter Diamandis already pegs at $5 billion of total invested capital), I have increased my VR-focused writing.  Here are some recent blog posts about the media world's well-placed VR obsession : (i) Virtual Reality Update - Latest Developments; (ii) VR - Power, Potential, Risks ... Thoughts of Leading Innovators In This Immersive Space; (iii) VR - The Engine of Empathy ... And Real Social Change; and (iv) Jaunt, VR & The Future of Media & Entertainment.



IX.  PREDICTION (9)  -- Which leads to wearables, where we see an Oculus under every hard core gamer’s tree next year, alongside their parents’ new digital health/fitness watch.

THE REALITY, 6 MONTHS LATER -- Okay, we now won't see an Oculus under every gamer's tree this XMAS season.  But, I didn't miss it by much.  Oculus just recently announced that it will start selling its first mass consumer headset in early 2016.  That's when things should really take off -- and early stage market leaders like Jaunt and Vantage.TV (a Rothenberg Ventures/River portfolio company) are accelerating content initiatives to meet that capacity -- as are juggernauts like GoPro (which is also harnessing the power of drones -- another major trend to watch -- literally) and Discovery Communications (which recently unveiled Discovery Virtual).  After all, technology isn't holding up mass adoption of VR right now.  Content is.  And, that's changing fast.



X.  PREDICTION (10)  -- All of this leads to the big one – a concept I floated 2 years ago.  Apple buys Tesla and installs Elon Musk as CEO.  Now THAT would be a headline for 2015 … and for the ages!

THE REALITY, 6 MONTHS LATER -- "Hey Elon, it's Tim Cook calling.  Wanna talk?"    



[Special thanks to Manatt Digital Media's Mary Ermitanio for her help assembling much of the data in this article.]

Facebook v. YouTube - Who Wins? 5 Part Test

At long last, just last week in time for the 4th of July holiday -- and in YouTube's own backyard -- Facebook shot off its video monetization fireworks, revealing for the first time how it planned to monetize its massively growing video business (and how video creators would share in it).  We already knew that Facebook video had become the first real threat to YouTube's dominance (a topic that I have previously explored) -- already crossing the "4 billion video views per day" threshold.  But, the rest was a mystery.

Well, mystery no longer (at least for the initial incarnation of Facebook video monetization efforts).  For a certain sub-set of its base (since these initial efforts are smartly an "experiment" in these early days), Facebook will now run auto-play ad interstitials in "suggested videos."  And, in what I find to be a bit of a surprise, it will split ad revenues 55/45 with creators a la YouTube (rather than give creators a higher split for, if nothing else, goodwill and PR -- remember, YouTube has been pilloried in the press about its 55/45 split).

So, what do I think about Facebook v. YouTube in this epic battle between the new mega-Challenger and the long-time Champ?  Which company has what advantage (and disadvantage) in the quest to be the most compelling home for video?  And, is it a "zero sum game" with one winner and one loser -- or does the entire industry "win"?

5 Part Test -- Advantage Who?:

(1) YouTube video is still the #1 "must publish" video platform and destination.

YouTube remains dominant, having crossed Facebook's "4 billion videos per day" threshold back in 2012.  Most creators still think, "you just gotta be there."  But, Facebook video is young (very young) and its growth has been explosive -- as has been overall creator and marketer excitement about the Challenger.  As one example, TV networks like HBO have now begun to sample their shows on Facebook "to leverage the massive reach of of their platform" (in the words of Jim Marsh, vice president of digital and social media) -- something that previously was virtually unthinkable in the YouTube-dominated world of not so long ago.  Cameron Saless, chief growth officer for "must know" digital-first video company Jukin' Media (a company I previously profiled), was just recently quoted saying "we're doing almost double the views on Facebook that we're doing on YouTube today, which a lot of people don't know."  When publishers start talking openly about those kinds of metrics (as is Jukin') and publicly pitting one behemoth against another, you know there is something really going on here.

So, Sheer Scale -- Advantage YouTube.

Growth and Overall Momentum -- Advantage Facebook.

(2) Facebook's video engagement rates surpass YouTube's.

That is the chatter everywhere (note Jukin' again) -- and that's massively important to both creators and marketers of course.  As I recently pointed out in VideoInk (welcome reporter Todd Longwell to VideoInk, by the way), Facebook has two seeming inherent strategic advantages over YouTube in this regard.  First, Facebook as much deeper and more precise information about its base than YouTube which, in turn, has the potential to lead to better targeting and higher CPMs.  And second, Facebook's DNA is also fundamentally different than YouTube's.  Yes, YouTube videos are share-able (and shared) of course.  But, YouTube is still primarily about personal and passive entertainment and engagement.  Facebook, on the other hand, is (and always has been) active -- it is all about sharing.  That is its raison d'être.  That's why Facebookers seek out their feeds multiple times throughout the day.  And, that bodes extremely well for Facebook's potential to build massive scale.

But note of caution -- as Todd Longwell pointed out to me in a direct exchange, is it really fair to equate Facebook video "engagement" with that of YouTube?  After all, Facebook counts auto-inserted, "auto-play" videos equally.  And, as Longwell also pointed out, video sound is likely frequently turned off in auto-play mode.  Further, paradoxically, YouTube's more passive "personal entertainment" DNA leads to more active user searching for precise videos that appeal to them (i.e., high relevance), whereas Facebook's more "active sharing" DNA and service-generated video auto-insertion likely lead to more video "noise" (i.e., low relevance), at least initially.

Viewer Engagement -- Advantage Facebook.

Relevance & Impact -- Advantage YouTube.

(3) YouTube still has the younger millennial audience that marketers most want to reach.

YouTube is still a (if not, "the") "must use" entertainment and communication platform for millennials.  It is part of who they are and what they do.  And, those millennials are whom marketers most want to reach.  Facebook reaches an older demographic (anecdotally, neither my 15 year old daughter or 13 year old son use Facebook -- nor do any of their friends; in fact, Facebook never enters into their Instagram, Snapchat, YouTube-dominating conversations).  To a certain extent, this is a double-edged sword, however, because it is the older Facebook demographic that has more immediate buying power.

Demographics of Base -- Advantage YouTube.

Buying Power -- Facebook.

(4) Both YouTube and Facebook give creators 55% of ad revenues.

Strange.  Facebook had the chance to score a big PR win by upping that percentage even just to 60%.  But, it didn't.  Opportunity lost ... at least for now.  (And note, Facebook's 55% creator revenue share will be apportioned by time amongst all creators in a particular stream, meaning that each individual creator's share apparently will be less than 55%).

Creator Economics -- Advantage Neither.

(5) Facebook is treading carefully with its new video monetization efforts -- while YouTube carries the baggage of a certain industry narrative.

Facebook, the Challenger and newcomer, is smartly treading lightly in its initial monetization efforts -- experimenting only with a subset of its overall base.  Facebook can, accordingly, gather data (including creator and customer sentiment) and adjust from there.  It can bob and weave, fine-tuning and dialing in the "right" compromise between monetization and customer experience.  It has no baggage in that regard.  YouTube, on the other hand, carries a full load of baggage (rightly or wrongly) in the form of negative creator sentiment.  Let's face it, the Champ (in any industry) always faces the heat -- and YouTube is no exception.  Creators -- and virtually all competing services -- have gone out of their way to deride YouTube's 55/45 revenue split.  This theme of "fundamental unfairness" (some have called it greed) has become a widely-held industry narrative.  And, once that kind of narrative is developed, it is difficult to shake.

Industry Sentiment & The "Baggage" Factor -- Advantage Facebook.

BOTTOM LINE

Each mega-platform has its own inherent advantages.  And, gloves are off ... as are more and more creator videos from YouTube.  It's no longer a YouTube only multi-channel network (MCN) world (which it essentially was less than one year ago).  It is now absolutely a multi-platform network (MPN) world.

But, this is NOT a zero-sum game between the giants.  The pie expands -- and the winner here is the overall video industry and eco-system -- including content creators and consumers.  Never before have there been so many opportunities to create content -- to find distribution for content -- to find an audience for that content -- and for us, the consumers, to find content that specifically speaks to us ... as individuals.  THAT is power my friends.

And this brave new digital-first video world is still very much in its infancy ....

Spotify, YouTube Killer? Why? And Does It Have a Chance?

Rumors in the digital media world are almost always true.  And, this one is no exception -- Spotify has officially announced that it too is joining the OTT video game -- focusing on short form videos with partners who include ESPN, Vice, NBC and Comedy Central.

Why is Spotify doing this?  And, does it have a chance?

Here are my "quick takes" on those questions:

(1) THE WHY?

Spotify needs to diversify its one-dimensional and thus far unprofitable business model -- pure and simple.  Yes, everyone uses Spotify around the world -- but that doesn't mean that a stand-alone music streaming business is long-term sustainable (at a minimum, the jury is still out -- with Pandora being another prime data point) (I recently wrote about this "Achilles Heel" in my separate post about Apple v. Netflix).  So, the "great hope" is that Spotify can take a significant portion of its reported 15 million paying subs (at $10/month) into the wonderful world of video and monetize that subset effectively and incrementally -- which is the "great hope" for an increasing array of behemoths who look to unseat the reigning champ, YouTube.  These include Netflix and Facebook (most significantly), Snapchat (increasingly interesting), Twitter/Vine, Amazon, Hulu, and Vessel (all of whom ultimately seek to get to the same place -- offering the widest breadth of compelling video content -- both short and long form).

(2) DOES SPOTIFY HAVE A CHANCE?

Interesting question.  Spotify's DNA is music (although it claims to be a tech company first and foremost).  And, Spotify's identity in our minds is music.  It is somewhat unnatural for us to shift that perception into Spotify becoming a broader full-fledged media company.  But, that certainly is not impossible -- and I personally applaud the effort -- because, as discussed above, Spotify must expand its business model to be long-term stand-alone viable.

So far, it isn't exactly clear how Spotify intends to monetize its move into video.  Odds are that it will ultimately offer a "freemium" model akin to its current music service -- with ad-supported video upselling to a paid subscription model for ad-free (and potentially more extensive video offerings only available to paid subs).  And, you can also bet that Spotify will offer both a la carte and bundled subscription packages -- i.e., one higher monthly price for both Spotify music and video, and separate lower-priced monthly fees for music or video only.

Then there is the issue of video monetization that all OTT services struggle with.  Thus far, stand-alone video services (both on the OTT and MCN side of the house) -- with the exception of YouTube and Netflix perhaps -- have been profit-challenged (just like their stand-alone music brethren).  BUT, we are still in the early innings of this overall fundamental media/video transformation fueled by millennial-driven mobile consumption, so we are in business model experimentation mode.  And, you gotta try.  Otherwise, you may be just plain "out" of the game in the long-run.

That's what Spotify is doing.  And, it certainly has a massive global audience that has demonstrated that it is willing to pay.  So, I applaud the effort.

(NOTE -- video creators, rejoice! -- more significant competition for your compelling work in this New Golden Age of Content).

Yahoo! Kills Its YouTube "Killer" - So, What's Still Alive?

Last week VideoInk broke a story that floored me -- "Yahoo Shutters Video Platform for Creators One Year After Anticipated Launch."  Yet, seems like I was the only one who was floored.  I searched all over for others reporting the news, but couldn't find it anywhere.  I reached out to two key reporters at top media/digital media publications and, shockingly, one hadn't even heard the news (nor seemed to think it was a big deal) while the other had heard, but was still sniffing around.  Out of an abundance of caution, I asked VideoInk to verify the story again -- which they did -- pointing to the leaked Yahoo! email that started the whole thing in the first place and verifying its authenticity.

So, people -- hear me out here -- and make no mistake.  This IS big news in the OTT video world.  Very big news.  If true -- if, in fact, Yahoo! is closing its self-publishing platform for video creators -- this development deeply demonstrates Yahoo!'s continued indecision and overall flailing (failing?) in the OTT video content space.  And, this certainly is not an opportune time for flailing -- for an unfocused/scattered/disrupted (you choose the word) video strategy (or complete lack thereof?) when the video focus/strategy/execution of others (behemoths like Facebook and Snapchat and others like Vessel) are ever more sharp, precise, resourced, abundantly clear ... and, with some, massively successful (by all accounts, Facebook is killing it).

Here's the relevant timeline leading to this apparent "leak."

Almost exactly one year ago, reports everywhere indicated that Yahoo! was only months away from launching its own video creator platform -- its own YouTube "Killer."  This was very big news at the time -- everyone covered it.  So, we all waited in anticipation.  After all, Yahoo! managed unique and uniquely compelling resources and ingredients (that I discussed long ago in a blog post from 2013) that gave Yahoo! the potential to drive real success as an alternative to YouTube.  But months ticked on and, alas, it never came.  Instead, silence.

That report, of course, followed Yahoo!'s attempt -- almost exactly 2 years ago -- to buy a 75% controlling interest in Dailymotion, the European YouTube (certainly not of the scale of YouTube, but still a force in its own right).  Alas, that never came either -- but this time, not for lack of trying.  Rather, French regulators killed it.  Movie over.  Fin.

Meanwhile, throughout this entire time-line -- these past two years covered by these major non-developments at Yahoo! -- the OTT video world changed radically.  What once was, in essence, a YouTube-only video world for creators ... is now a world of multiple competing video platforms.  And a rapidly growing "multiple" it is -- in which YouTube is no longer the only game in town for creators (case in point, Facebook once again).

And, what was happening at Yahoo!?  Senior video executives came and went and apparently took their individual video strategies with them out that revolving door.  Those that remained found themselves in an environment apparently emitting, shall we say, not the highest level of morale.  I have spoken with several of these video execs who have come and gone (I will keep their names confidential) and have heard one theme that is focused -- i.e., Yahoo!'s video "strategy" has been overtaken by confusing multiple layers of decision-making, internal conflict, and what some even called "chaos."  Not trying to be a muckraker here -- it gives me no joy reporting this (because I believe Yahoo! could succeed in some very meaningful) -- but am just reporting the current state of affairs as I have come to understand them from multiple sources.  And, Yahoo! is running out of time amidst the current great OTT video land grab of 2015.

So, what do we have now at Yahoo!?  We have a media regime headed by Kathy Savitt, an accomplished marketing executive, but whose official title itself is split -- "CMO and Head of Media" -- which alone connotes a certain lack of corporate focus and commitment.  We have had some major exclusive and very expensive video content announcements -- including Yahoo!'s exclusive rights to cult television favorite Community -- but Yahoo! does not actively promote that programming (it is mentioned nowhere on Yahoo!'s home page).  We have "Yahoo TV" and "Yahoo Screen" -- Yahoo!'s two primary video initiatives.  But have you even heard of them?  I hadn't ... at least not really.  Those two also are essentially invisible on Yahoo!'s home page, which is a major head-scratcher (to say the least) in this "new golden age of video" (and, again, with all the reach and resources Yahoo! continues to have).  Once I did find them, I can't really tell how "Yahoo TV" and "Yahoo Screen" are the same ... different ... complementary?

One thing we apparently do know now, however, is this.  Yahoo! is giving up on the mega YouTube-esque "killer" opportunity.  Throwing up the white flag ...

... at least, and unless, Yahoo! has a major Dailymotion-like acquisition trick up its sleep that will soon come to light and finally catapult it into the OTT video big leagues (where it absolutely could belong if it had the will and focus).

But, sadly, I don't see that coming.

Hope I'm wrong -- and will be the first to fall on my sword if Yahoo! works some mystical sleight of hand.

MCNs No More, "MPN" Please"! (or, What's In A "P"?)

As you readers know, I write continuously about MCNs (multi-channel networks).  And, recently, I have been writing about escalating challenges to YouTube.  So, where do the "'twain" meet?  At the nexus of the overall OTT video lexicon, that's where.

You see, several of the leading digital-first video networks formerly known as "MCNs" no longer answer to that name/acronym.  They prefer (justifiably) the new significantly expanded label "MPN" -- as in, multi-platform network.

What's in a name?

In this case, a lot!  "MPN" connotes mass distribution of videos across multiple distribution platforms -- not just YouTube.  While these mobile/millennial-focused new media companies initially birthed and aggregated their videos as channels on YouTube only (hence, the moniker "multi-channel" networks), now YouTube is only one of many (to be sure, still the most critical "one").  The new MPN game for most is to now initially build mass audiences on YouTube, but then take those audiences -- and monetize them -- off YouTube.  That's why these MPNs seek the widest spray of their video programming across the widest array of distribution platforms (including the likes of Facebook, Snapchat, Twitter, Vessel, Xbox -- just to name a few) to create a non-55/45 revenue story.  They just can't drive 55! (a musical reference that is likely lost on several of you ...).

Call it simple evolution in the OTT video world.  Just like Webster's continuously expands to meet the changing language of the times, the OTT video and digital media/tech dictionary expands to more accurately reflect movement in the overall space.

And, significant meaning in that movement there is ....

YouTube's Challengers Mount ... Are Real ... And Are Scary

YouTube -- the 800 pound King Kong video gorilla -- is increasingly under attack at every turn as it struggles to climb to further heights (here is my previous "must read" post, analysis and scorecard of the growing list of challengers).  And, since the last time I wrote at length -- less than 2 months ago -- those challengers mount and become evermore formidable.

Most significantly, Facebook, which is now part of every conversation.  Though focusing in earnest on video only a short time ago, Facebook already now drives more than 3 billion views daily (65% of which are on mobile devices)!  To put a further exclamation point on this eye-popping fact, white-hot "much-more-than-MCN" digital media company Jukin' Media tells me that, "it took 3 months to achieve the same scale on Facebook that took 3 years on YouTube" for its video content.  Just chew on that one a bit ....

And, to fuel continued mass adoption, Facebook just this past week erased one of its leading inhibitors -- its lack of an embeddable video player.  Now check that box -- Facebook has that too.  Make no mistake, Facebook also is fully immersed in the premium video content game, also just announcing major new partnerships with A+ Hollywood players including the likes of ESPN and mega-director JJ Abrams.

But, Facebook is not the only mega-social media threat to YouTube.  Try on both Snapchat and Twitter for size.

Snapchat -- of all major social networks -- appeals the most (by far!) to the demographic that matters most to marketers.  The young and the restless.  71% of Snapchat's U.S. users are 18-34 (45% fall into the 18-24% range) (here's a "must see" chart from Re/Code that lays it all out graphically) -- and those factoids (and its youth-quake reality) don't even capture Snapchat users under the age of 18!  And, I know from personal experience (I am the father of a 15 and 12 year old, after all) that Snapchat -- together with Instagram -- are the social networks of choice.  My two kids -- and the entire population we see -- consume Snapchat feverishly (and increasingly for video).

And then there's Twitter, which increasingly focuses on video and, to that point, just released its own "Meerkat Killer" -- a live video streaming app called Periscope.  Live streaming has become a major new battleground in the video wars (and Meerkat -- a company you definitely should know -- isn't simply standing around as Twitter challenges its recent dominance).

So many other categories of companies -- and mega-players -- who hope to de-throne YouTube.  And, so much time (since we are still in the early innings of OTT video).  Best to review all them via my earlier detailed analysis.

YouTube certainly isn't going away anytime soon.  I fully expect it to be "here to stay" for the long haul and a continuing massive player in the overall wonderful world of video.  But, YouTube certainly isn't the only game in town anymore.

Much like the relentless stalking character in the new movie "It Follows" (which I hope to see later today), Facebook and some other players are closing in ... and are downright frightening ....

VR 101: Lesson 1 -- DISTRIBUTION (& Its Challenges) -- #1 In a Series

[The following is the first in a series of posts about the burgeoning world of Virtual Reality (VR) by guest blogger Omar Noureldin of Manatt Digital Media.  He previously wrote a VR-focused "Cheat Sheet" overview of the VR space (and key players in it).]

To understand what the virtual reality (VR) distribution pipeline will look like, a stroll down memory lane vis-à-vis online video will be instructive. It took time for the online video ecosystem to develop into what it is today -- and that was largely because of disjointed and competing distribution platforms in its early years. Anyone with a smartphone, tablet or computer knows that YouTube -- despite new "real" significant challengers like Facebook -- continues to dominate this space with over 1 billion users.  But, this took time (and an acquisition by Google, which merged Google’s less than stellar Google Video platform). Still, the vast majority of YouTube’s content is user-generated.

Then there are the premium content platforms like Netflix, Hulu and Amazon, all of which have turned the prime-time TV model on its head. First, by reusing content, and now by creating original content. Vimeo is a growing player in this space (among numerous others) and has laid its stake in the ground by focusing on high-quality, high-resolution content and on content creators -- and it is now dabbling in VOD and SVOD models.

So, what does this mean for VR? What is the opportunity?

Well, the opportunity is for new digital distribution platforms to emerge that focus solely on VR content. The reason some believe nnovation will happen with these new distribution platforms, rather than from giants like YouTube, is because VR distribution will require advancements in packaging and transferring vast amounts of data across existing networks that are not necessarily ready to handle that kind of traffic.

Herein lies a massive challenge. High-quality VR content is not mobile friend ... at least not yet ... for a couple of fundamental reasons. First, current bandwidth capacities limit the amount of data that can be transferred, and mobile devices are limited in their storage capabilities. Second, mobile processors literally overheat and melt when trying to play high-quality VR content that is more than five minutes long.

Today, the big online video distributors are all about mobile, which creates a disconnect in strategy and focus if they want to move full force into VR. Moreover, YouTube is still trying to figure out how to be profitable in the traditional online video space, so many pundits believe that makes little sense for them to spend a lot of time, money and effort to develop new distribution channels for VR (especially when YouTube is now focused on developing its own premium original content, as original premium VR content is a ways away).

Instead, many predict a proliferation of VR-focused distribution platforms and companies experimenting with different ways to deliver the content—Vrideo is one of them. The company recently hosted a VR Meetup and panel discussion on this very topic in Santa Monica. As discussed earlier, there will need to be technological innovation at every level of distribution—packing, transfer, storage and processing.

Do not get me wrong, there is already talk of the big media and online video companies (Google, Amazon, Netflix, Disney, etc.) and telecoms (AT&T, Verizon, etc.) eventually going to war to acquire these smaller VR distribution companies.  But, it is likely to be an M&A war, not a technological advancement war.  Google has already invested a whopping $500 million into MagicLeap, which is developing VR technology that merges the real and virtual worlds -- so-called augmented reality.

Massive sums of money are being poured into VR right now -- and distribution is one of the keys to unlocking its potential.

[NEXT IN OMAR'S CONTINUING VR SERIES WILL BE LESSON 2 -- SOCIAL, followed by Lesson 3 -- Hardware, Lesson 4 -- Advertising, and Lesson 5 -- VR Rights.  Stay tuned ...].